21 Nov 2021
Evergrande Auto to Raise $347 million Through Share Sales
The Index Today
As part of change efforts, China’s Evergrande New Energy Vehicle Group Ltd has announced plans to raise around $347 million through share placement to improve its financial position. Evergrande owners are hoping to shift the focus of the debt-ridden company towards electric vehicles and capitalize on the growing market.
The company, also known as Evergrande Auto will be selling 900 million shares with each share valued at three Hon Kong Dollars, a 15% discounted price in comparison to the last trade price. The upcoming transactions will mean sale of Evergrande Group shares in the auto unit. The earnings from the sales will be allocated towards the purchase of new shares in the auto business. More of the proceeds will be allocated towards research and development along with production plans. It is expected that the stake in the Evergrande Auto will decline to 57.36%.
In previous months, Evergrande announced its cash-strapped position and shortage of funds which were not enough to cover financial obligations. The company was unable to restart projects and halted its plans to raise funds through a second listing. Evergrande officials have been seeking investment and conducted talks to raise $63 million in stocks. The funds raised through the share placement will give Evergrande Auto a start to develop cars and layout the foundation for energy vehicles production.