Evergrande Auto Considers Defending Bankruptcy Petition in Shanghai — Update

By Jiahui Huang

China Evergrande New Energy Vehicle is considering defending against a bankruptcy petition filed by one of its units' creditors in a Shanghai court.

The electric-vehicle unit of property developer China Evergrande Group said Thursday that its Shanghai subsidiary received notice of a winding-up petition filed by an individual creditor in a local court.

A separate court statement on Wednesday showed that the creditor is Shanghai-listed Zhejiang Chint Electrics and the court has scheduled a Sept. 18 meeting for the case.

China Evergrande NEV, also known as Evergrande Auto, said the winding-up petition won't have a material impact on its production and operating activities as the Shanghai unit's operations are "at a very low level at the current stage."

Zhejiang Chint Electrics said the company's Shanghai unit had failed to repay its debt on time, according to the court statement.

Shares of Evergrande Auto fell 5.4% to 25 Hong Kong cents, the equivalent of 3 U.S. cents, before trade was halted early Thursday. The company has applied for the resumption of trade in its shares from 9 a.m. on Friday, it said in a statement after market close on Thursday.

Evergrande Auto's Shanghai unit has a registered capital of about 3.01 billion yuan, equivalent to $423.2 million, according to data provider Wind.

In late July, creditors of two Guangdong-based subsidiaries of Evergrande Auto subsidiaries applied to a local court for bankruptcy and reorganization of the units. The two subsidiaries have a combined registered capital of around $1.03 billion, Wind data showed. Back then, the company said the winding-up petition had a material impact on the production and operating activities of the group and the two units.

Evergrande Auto, which once had ambitions of competing with Tesla and becoming a top EV maker, had a market capitalization of more than $80 billion at its peak in April 2021.

Last week, the company reported a first-half net loss of 20.25 billion yuan, almost three times wider than the same period a year earlier.

Parent company Evergrande Group was ordered to liquidate in late January by a Hong Kong court after the developer failed to reach a restructuring plan with creditors.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

September 05, 2024 06:53 ET (10:53 GMT)

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