Now Evergrande’s EV Unit Warns of Lack of Money | Bankruptcy News

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The warning shows that the besieged property developer’s liquidity crisis is worsening across all of its businesses.

Shares of China Evergrande’s electric car unit fell 26% on Monday after warning it faces an uncertain future unless it receives a quick cash injection and after saying it won’t. would not proceed with its plan to issue shares denominated in yuan.

The warning from China Evergrande New Energy Vehicle Group after the market closed on Friday was the clearest sign to date that the besieged real estate developer’s liquidity squeeze is worsening in other parts of its business.

In its press release, Evergrande NEV said it has suspended payment of some of its operating expenses and some suppliers have suspended their work.

Cash flow struggles mean the automaker that once had ambitions to take on Elon Musk’s Tesla Inc in the electric vehicle industry will now likely miss its target to start mass deliveries next year.

Shares of the electric car unit slipped as low as HK $ 1.66 ($ 0.21) in early trading before cutting losses by 2.2%. The company lost more than $ 84 billion in market capitalization from its peak in April, when it was valued at more than Ford Motor Co.

China Evergrande shares rose 5% to stabilize near the decade-long low they hit last week, while Evergrande dollar bonds were at struggling levels.

In the wider market, fears that a collapse of Evergrande could cause a global crisis have faded.

“I think the markets have picked up on this, on the balance of probabilities the shock and fear is over,” Kyle Rodda, analyst at IG Markets brokerage in Melbourne, told Reuters.

“The markets are only really waiting from now on for a doomed business that will not be allowed to pose major risks in China’s financial system – or that (contagion) will not spread through world markets. “

Evergrande missed a payment deadline on a dollar bond last week, and its silence on the matter has left global investors wondering if they will have to take significant losses at the end of a 30-day grace period.

His next major test in the public debt markets will take place on September 29, when he is due to make a bond interest payment of $ 47.5 million on his 9.5% dollar bond from March 2024.

With liabilities of around $ 305 billion, Evergrande ran out of cash and quickly became Beijing’s biggest business headache as investors feared a collapse could pose systemic risks to China’s financial system.

The stricken developer scrambles to raise funds to pay its many lenders and suppliers, as it oscillates between a messy collapse with far-reaching impacts, a managed collapse, or the less likely prospect of a Beijing bailout.



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