New Evergrande Power Plant Announced After Receiving Warnings Of Issues.
Key Sentence:
- China Evergrande New Energy Vehicle, the electric vehicle division of the financially troubled China Evergrande Group.
- Warned late Friday it had suspended some payments and warned of impending financial trouble.
“As of the date from this announcement, Evergrande Power Plant the group is in dire financial straits,” said a securities statement released at 10:50 p.m. local time in Hong Kong. “Given liquidity pressures, the company has stopped paying some of its operating costs, and some suppliers have stopped supplying projects.”
China Evergrande New Energy said it was trying to raise capital and sell assets but had not struck a binding agreement yet.
“Given the difficulties, challenges, and Evergrande Power Plant uncertainties in increasing liquidity mentioned above. There is no guarantee that the group will be available to meet its financial obligations under the relevant contracts,” the statement said. (See explanation here.)
Shares of China Evergrande New Energy fell 23% to HK$2.23 on Friday in Hong Kong on rumors of payment problems. Shares of parent company China Evergrande Group, led by billionaire Hui Ka Yang, fell 11.6% to HK$2.36 on Friday. China Evergrande Group is the most heavily indebted real estate company, with more than $300 billion in debt. Worries about defaults and contagion rocked global financial markets this week.
China Evergrande New Energy, which is 75% owned by China Evergrande Group, is officially known as Evergrande Health Industry Group; In 2020, the company changed its name. China Evergrande New Energy lost 7.6 billion yuan, or nearly $1.2 billion, last year due to rising vehicle marketing costs and falling healthcare profits.