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China Evergrande’s EV unit surges 87% as potential buyers eye control of cash-strapped carmaker
- The liquidators of China Evergrande reached an initial agreement on May 16 to sell a 29 per cent stake in Evergrande NEV to an unidentified buyer
- Production at Evergrande NEV’s Tianjin factory has been suspended since the beginning of the year
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Zhang Shidongin Shanghai
China Evergrande New Energy Vehicle Group (Evergrande NEV), the electric-vehicle (EV) manufacturing unit of insolvent property developer China Evergrande Group, surged in Hong Kong after the liquidator of its parent found a buyer for a stake in the listed arm.
The stock jumped 87 per cent to HK$0.71 on Monday, as trading resumed after being suspended over the past week. It extended a 53 per cent jump on May 17, when the shares were last traded.
The liquidators reached an initial agreement on May 16 to sell a 29 per cent in Evergrande NEV to an unidentified buyer, who will provide funding to help the carmaker resume production, according to a statement to the Hong Kong stock exchange on Sunday night. The buyers have an option to buy the remaining 29.5 per cent stake held by the liquidators, the company said.
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The deal, if completed successfully, will offer a silver lining to resurrect the EV maker that has been mired in a funding crunch after the collapse of its parent, whose chairman and founder Hui Ka-yan has been under police custody for suspected financial crimes. China’s securities regulator fined Hui 47 million yuan (US$6.5 million) and China Evergrande Group 4.2 billion yuan in March for falsifying revenue in the years leading up to its collapse.
The proposed stake sale may trigger a general offer for Evergrande NEV’s shares under the listing rules, the statement said.
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