Evergrande New Energy Auto, laden with debt, has received some good news. Alongside the debt restructuring of the Evergrande Group, capital from the Middle East has arrived to aid, breathing life into Xu Jiayin's automotive dreams.
On Monday evening, August 14, China Evergrande Group announced that Evergrande Auto received a strategic investment of $500 million from NWTN Inc., a company affiliated with the UAE's sovereign wealth fund. NWTN Inc. entered an agreement with Evergrande, Xu Jiayin, and Evergrande Auto to subscribe to Evergrande Auto shares, paying approximately HK$38.9 billion or about $500 million in cash.
Upon completion, NWTN Inc. will hold about 27.5% of Evergrande Auto's issued share capital. Evergrande's stake in Evergrande Auto will be diluted to roughly 46.86%. Evergrande Auto will cease to be a non-wholly owned subsidiary of Evergrande, meaning its financial performance will no longer be consolidated into Evergrande Group's results.
Additionally, NWTN Inc. signed an interim financial support agreement. Subject to prerequisites, including collateral registration and filing, it will provide Evergrande Auto with a total of RMB 600 million in interest-free, guaranteed interim funds in three installments. These funds, designated for R&D, production, and sales of Evergrande Auto, will be paid progressively within five working days after the announcement.
The announcement specified that all investment funds will be used for the Evergrande Auto Tianjin plant, ensuring the normal production of the Hengchi 5 and the successive mass production of Hengchi 6 and 7. NWTN Inc. will also assist Evergrande Auto in penetrating overseas markets, aiming to export 30,000 to 50,000 Hengchi vehicles to the Middle East annually.
NWTN Inc. stated that the proposed investment deal is expected to conclude in the fourth quarter of this year, contingent upon multiple conditions, including the effectiveness of Evergrande Group's debt restructuring, confirmations from several creditors of Evergrande New Energy Auto Group regarding debt repayment plans, and approvals from relevant regulatory agencies and shareholders.
Public data reveals that NWTN Inc., headquartered in Dubai, UAE, focuses on promoting smart electric vehicles and sustainable energy. Backed by the UAE crown prince, it's the first in Abu Dhabi to receive a new energy vehicle production license. Last October, NWTN Inc. merged with a special purpose acquisition company (SPAC) listed on NASDAQ, making it the only UAE-based electric vehicle company listed in the U.S.
Evergrande Converts HK$20.9 Billion Loan to New Shares for Evergrande Auto The same Monday evening, another announcement from Evergrande disclosed its plans to convert loans into new shares, with Evergrande Auto conditionally obtaining an approximately HK$20.9 billion subscription. As part of the proposed offshore debt restructuring, various loans provided to Evergrande Auto by Evergrande and others are proposed to be converted into new shares of Evergrande Auto at a conversion price of HK$3.84 per share.
Agreements for share subscriptions and set-offs were established by Evergrande Auto on Monday. Several subscribing parties, including Evergrande and Xu Jiayin, conditionally agreed to subscribe, and Evergrande Auto conditionally agreed to issue a total of 54.41 billion new shares at HK$3.84 per share, with the total subscription amounting to HK$208.94 billion.
Per the set-off agreement terms, the subscription amount payable by the subscribers will be offset against the respective loans owed to them by Evergrande Auto. Upon completion of the share subscription, all repayment responsibilities for loans owed to the subscribers by Evergrande Auto will be fully discharged. Additionally, Evergrande agreed to waive any interest accrued on shareholder loans provided to Evergrande Auto from August 15 to the completion date of the share subscription.
