Acquiring nearly 30% of the shares, Evergrande Auto surged by 100%

Evergrande Auto doubled in early trading:

Evergrande Auto, which announced a trading halt on May 17 to await the publication of insider information, has attracted market attention. Now, the matter of the immediate acquisition of 29% of Evergrande Auto's shares is gradually coming to light.

On the evening of May 26, Evergrande Auto announced that on May 16, the company was informed that the liquidators, on behalf of China Evergrande Group (in liquidation), Evergrande Health Industry Group Limited, Acelin Global Limited (referred to as the potential seller), and a third-party buyer independent of the company and its affiliates (potential buyer), had entered into a terms sheet. Based on this, the potential seller and potential buyer may enter into a final sale and purchase agreement regarding the sale of the potential seller's shares in the company. At the same time, the potential buyer has been identified as independent of the company and its affiliates.

As of the announcement date, the potential seller collectively holds 6.348 billion shares of Evergrande Auto, accounting for 58.5% of the company's total share capital (potential shares for sale). Upon reaching the sale and purchase agreement and being bound by its terms and conditions, the preliminary plan is to immediately acquire 3.145 billion shares of Evergrande Auto's potential shares for sale, representing approximately 29% of the company's issued shares. Additionally, there are 3.203 billion potential shares for sale, accounting for 29.5% of the company's issued shares, which will become the subject of an exercisable option for the potential buyer within a certain period after the sale and purchase agreement date.

Meanwhile, Evergrande Auto's announcement also revealed that the terms sheet mentioned the signing of a credit agreement. Under this agreement, the potential buyer (or a third party designated by the company with its consent) will provide a credit line to support the group's ongoing operations and drive the development of the group's electric vehicle business.

Currently, Evergrande Auto is facing a severe funding shortage. Its factory in Tianjin has ceased production since the beginning of this year. As of now, the factory has not resumed production.

The announcement also noted that once the sale and purchase agreement is formally signed, it may trigger a mandatory general offer obligation. According to the relevant provisions of the Takeovers Code, the offer period will commence from the date of this announcement. In addition, the company will apply to the Stock Exchange for the resumption of trading of its shares on the Stock Exchange from 9:00 am on May 27, 2024.

Previously, on May 17, Evergrande Auto suspended trading in Hong Kong. Before the suspension, the stock price of Evergrande Auto in Hong Kong surged significantly, rising more than 73% intraday