Evergrande: Evergrande’s EV unit admits there’s no certainty it can pay debt

China Evergrande Group’s electric-car unit mentioned there isn’t a assure it might meet its monetary obligations because it continues to search for strategic traders to inject much-needed capital.

“The group is encountering a severe scarcity of funds,” the Hong Kong-listed entity mentioned in an alternate submitting late Friday. “In view of the liquidity strain, the group has suspended paying a few of its working bills and a few suppliers have suspended supplying for tasks.”

The assertion confirmed an earlier report by Bloomberg Information that China Evergrande New Power Car Group Ltd. had missed wage funds to a few of its workers and fallen behind on paying a variety of suppliers for manufacturing facility tools. These money stream difficulties imply the carmaker that had ambitions to tackle Elon Musk within the electric-vehicle sector will possible miss its goal to start out mass deliveries subsequent 12 months.

Evergrande NEV mentioned Friday that it’s negotiating with potential traders about promoting a few of its aged care tasks and abroad belongings with a purpose to “enhance the group’s total effectivity and to complement working capital.”

The corporate added, nevertheless, that it “stays unsure as as to if the group will be capable of consummate any such sale.”

Formally created when Evergrande Well being modified its title to Evergrande NEV in July final 12 months, the corporate payments itself as a carmaker however many of the cash it does usher in nonetheless comes from its group well being service enterprise and nursing house amenities.

Final month, Evergrande NEV reported a 4.8 billion yuan ($742 million) loss for the six months to June 30 and income of 6.92 billion yuan, the overwhelming majority of that — 6.89 billion yuan — from the group’s well being and aged-care enterprise.

The EV unit is a comparatively small a part of Evergrande’s sprawling empire, which incorporates monetary providers and a financial institution, however which is primarily reliant on residential house gross sales.

Shares in Evergrande NEV tumbled as a lot as 25.8% on Friday, bringing losses for the 12 months to 93%. In February, when the inventory was at its peak, Evergrande NEV, which hasn’t mass produced a single automotive, was valued at greater than Ford Motor Co. and Normal Motors Co.