On the evening of December 18, Evergrande Automobile announced that the strategic investment with Newton Group is still under negotiation.
Perhaps this news gave the market infinite reverie, believing that Evergrande Automobile still has a chance to come back to life, so the stock price soared by nearly 50% on December 20 for three consecutive days.
However, even if the $500 million is fully received, it will only be a flurry for Evergrande Automobile, which has a net worth of negative 32.8 billion!
On August 14 this year, Evergrande Automobile announced that it had signed a "Share Subscription Agreement" with Newton Group, and the other party intends to inject a strategic investment of 500 million US dollars into Evergrande Automobile.
As a sign of good faith, Newton Group will provide interest-free and guaranteed transitional funds with a total amount of 600 million yuan, of which the first tranche of 200 million yuan has been received, subject to the satisfaction of the pre-requisites.
In the announcement, Evergrande emphasized that Newton Group is a "listed company with ** national sovereignty and shareholding in the United Arab Emirates", giving people the impression of "Middle Eastern tyrants".
However, digging deep into various information, it was found that Wu Nan, the founder of Newton Group, and Xu Jiayin's "good brother" Wang Wenyin are inextricably linked, and the two sides jointly established Zhengwei Iconic (Shenzhen) New Energy Automobile Technology
In addition, as a listed company, Newton Group's financial status can be checked, and it only has $200 million in cash on its books.
Therefore, it cannot be ruled out that the $500 million is Xu Jiayin's vest funds.
One of the ways of China Evergrande's overseas debt restructuring is to convert debt into equity, and the replacement object is Evergrande Automobile and Evergrande Property.
The premise of the debt-to-equity swap is that the market price cannot deviate too far from the conversion price, otherwise the creditors will not agree to the restructuring plan in exchange for the best money.
To this end, Xu Jiayin adopted this method of "four or two thousand pounds" to raise the stock price!
500 million US dollars is not much, but it has the name of "Middle Eastern tyrant"!
However, this "good" only stimulated the stock price to travel for half a day, and it rose and fell back on the same day.
On September 28, China Evergrande issued an announcement saying that Chairman Xu Jiayin had been taken compulsory measures.
The next day, Newton Group sent a letter to Evergrande Automobile, suspending the performance of the relevant obligations in the share subscription agreement on the grounds of material uncertainty.
According to the agreement between the two parties, Newton Group has a number of preconditions for injecting capital into Evergrande Automobile, the most important of which is the completion of the debt restructuring of China Evergrande.
In other words, if the creditors do not agree to the restructuring plan, Newton will not inject capital!
At the beginning, Lao Xu wanted to settle $20 billion of overseas debts at a small cost of $500 millionNow that Lao Xu has been arrested, the $500 million is gone.
But Newton's capital injection is after all part of China Evergrande's offshore debt restructuring, and some procedural work still needs to be done.
On December 15, the restructuring support agreement signed by China Evergrande with some creditors on April 3 had expired and was not renewed, as many of the circumstances had changed significantly and needed to be revisited.
For example, the debt-to-equity swap, Evergrande Automobile's conversion price is 3HK$84, Newton Group's proposed share price is 0HK$6297, while the ** price on December 18 was only 0HK$31.
In this case, Evergrande Automobile announced that it is still negotiating with Newton Group, so as to give creditors a little hope and reach a restructuring agreement as soon as possible!