China Evergrande Group Chairman Hui Ka Yan in 2019. Photographer: Paul Yeung/Bloomberg
China Evergrande New Energy Vehicle, the electric vehicle unit of financially strapped China Evergrande Group, warned late Friday that it has suspended some payments and warned of financial difficulty meeting ahead.
“As of the date of this announcement, the group is experiencing (a) severe shortage of funds,” according to a securities filing released at 10:50 p.m. local time in Hong Kong. “In view of the liquidity pressure, the company has suspended paying some of its operating expenses and some suppliers have suspended supplying for projects.”
China Evergrande New Energy said it is trying to raise capital and sell assets but hasn’t reached any binding agreements.
“In view of the difficulties, challenges and uncertainties in improving its liquidity as mentioned above, there is no guarantee that the group will be able to meet its financial obligations under the relevant contracts,” the statement said. (See statement here.)
China Evergrande New Energy shares fell 23% to HK$2.23 on Friday in Hong Kong on rumored payments problems. Shares in parent China Evergrande Group, led by billionaire Hui Ka Yan, plunged 11.6% to HK$2.36 on Friday. China Evergrande Group is the world’s most indebted real estate developer, with more than $300 billion of obligations. Worries about non-payment and contagion rattled global financial markets this week.
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China Evergrande New Energy, which is 75% owned by China Evergrande Group, was formally known as Evergrande Health Industry Group; the company changed its name in 2020. China Evergrande New Energy lost 7.6 billion yuan, or nearly $1.2 billion, last year owing to an increase in marketing expenses for vehicles and a decline in healthcare-related profit.
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