By Anne Riley Moffat and Craig Trudell
The electric-vehicle unit of defaulted property developer China Evergrande Group agreed to sell a roughly 28% stake to Dubai-based startup NWTN Inc. in a deal that could keep the carmaker in business.
NWTN has agreed to invest $500 million in China Evergrande New Energy Vehicle Group Ltd. in exchange for shares and a majority of the EV maker’s board, the companies announced Monday. The transaction is subject to conditions including Evergrande Group’s debt restructuring, as well as regulatory and shareholder approvals.
In its first report of financial results in two years, Evergrande NEV last month posted an $11.7 billion loss for 2021 and 2022 and warned of its ability to continue as a going concern. NWTN, founded by Chinese entrepreneur Alan Nan Wu, said it believes that Evergrande NEV can help meet demand for EVs in the Middle East, including the United Arab Emirates.
The companies expect the deal to close in the fourth quarter.
Evergrande NEV stock is an important part of the wider group’s debt restructuring, which is among the largest ever in China. Evergrande has proposed that creditors can choose to receive a combination of new debt and instruments tied to the shares of its property-services unit, its EV division or the builder itself.
At its peak valuation in April 2021, Evergrande NEV was worth more than Ford Motor Co. and General Motors Co., despite the company not yet having started sales. It began delivering electric sport utility vehicles late last year.