Shares of China Evergrande's EV unit drop after US$347 million share placement

HONG KONG :Shares of China Evergrande New Energy Vehicle Group Ltd reversed gains to drop as much as 3.1per cent to HKUS$3.42 by late morning on Monday, after the company said it planned to raise around US$347 million in a share placement.

Embattled property developer China Evergrande's electric vehicle (EV) unit said on Friday it would issue about 900 million shares, or 8.3per cent of the enlarged capital, at HKUS$3 apiece through a top-up placement.

The new shares are priced at a 15per cent discount to their Friday's close of HKUS$3.53.

Evergrande, the world's most indebted developer which has been stumbling from debt-repayment deadline to deadline as it grapples with more than US$300 billion in liabilities, said last month it plans to give future priority to its electric vehicles business over real estate.

In a filing late on Friday, Evergrande New Energy Vehicle said it intends use the proceeds on the research and development and production of its new energy vehicles, paving the way for putting the cars into production.

The EV unit has already done a top-up placement earlier this month, raising HKUS$500 million (US$64.17 million) by issuing 174.8 million shares at HKUS$2.86 a piece.

Evergrande's total holdings in the EV unit will drop to 58.54per cent from 63.84per cent after the new fundraising.

The unit is seeking Chinese regulatory approval to sell its inaugural Hengchi 5 sport-utility vehicles, as the embattled company vows to start making cars early next year.

Shares of Evergrande Group declined 1per cent, while Hang Seng Index eased 0.3per cent.

(US$1 = 7.7914 Hong Kong dollars)

(Reportong by Clare Jim; Editing by Tom Hogue and Ana Nicolaci da Costa)