What’s new: Defaulted developer China Evergrande Group’s electric vehicle (EV) unit plunged in Hong Kong trading Monday after revealing its vice chairman had been detained.
China Evergrande New Energy Vehicle Group Ltd. said in a filing that Liu Yongzhuo, also an executive director, “has been detained in accordance with the law on suspicion of illegal crimes,” without providing further details.
Shares of the firm fell as much as 23% to HK$0.32 (4.1 U.S. cents) after trading resumed from a suspension pending the announcement. It recovered some of those losses to close down 6.02% at HK$0.39.
The background: The announcement further clouds the fate of the cash-strapped EV unit, following the lapse of a planned $500 million share sale to Dubai-based carmaker NWTN Inc. in late December.
As one of the three listed arms of China Evergrande, Evergrande NEV’s stock is a key part of the group’s multibillion-dollar offshore debt revamp. The real estate giant proposed in March that creditors choose to receive a combination of new debt and instruments tied to the shares of its property-services unit, the EV division or the builder itself.
Once vowing to be the world’s largest new-energy vehicle (NEV) manufacturer, Evergrande NEV recorded net losses of 27.7 billion yuan ($3.9 billion) in 2022 and 56.3 billion yuan in 2021, according to its financial reports.
The company had 183.9 billion yuan of total liabilities at the end of 2022, surpassing its total assets of 115.2 billion yuan. It has one available model, the Hengchi 5 EV.
Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
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