HONG KONG (BLOOMBERG) – China Evergrande Group’s electric car unit will not proceed with its proposed issue of yuan-denominated shares on the Science and Technology Innovation Board of the Shanghai Stock Exchange, according to a filing to the Hong Kong stock exchange.
The Hong Kong-listed unit of troubled China Evergrande Group and Haitong Securities have agreed to drop the listing after “due and careful consideration”, the statement said, without giving further details. The decision adds more uncertainty to the company’s liquidity situation after it said late on Friday (Sept 24) that it “is encountering a serious shortage of funds” and “has suspended paying some of its operating expenses and some suppliers have suspended supplying for projects”.
The company said it could not guarantee that it can meet its financial obligations as it keeps hunting for strategic investors.
In September last year, the company’s board proposed to issue no more than 1.6 billion A shares and pledged to use the proceeds to fund new-energy vehicle projects and working-capital replenishment.
Officially created when Evergrande Health changed its name to Evergrande NEV in July last year, the company bills itself as a carmaker but most of the money it does bring in still comes from its community health service business and nursing home facilities.
The electric vehicle unit is a relatively small part of Evergrande Group’s sprawling empire, which includes financial services and a bank, but which is primarily reliant on residential apartment sales.