How many "surprises" does Xu Jiayin have that we don't know?
When the outside world thought that Evergrande was at the end of its rope, Evergrande Motors actually found a strategic investment. Evergrande announced a few days ago that the Newton Group from the Middle East will subscribe for about 27.50% of Evergrande's shares after the additional issuance, with a total consideration of about US$500 million.
If Evergrande’s debt-to-equity swap is successfully completed, Evergrande Auto will no longer be a wholly-owned subsidiary of Evergrande, and Newton Group will become the single largest shareholder of Evergrande Auto and has the right to nominate the chairman.
The Newton Group seems to have a strong background, claiming to be controlled by the Royal Group of the United Arab Emirates, and will be listed on Nasdaq in the United States in November 2022.
When did Boss Xu meet the rich man in the Middle East? And how to explain the order they took?
Xu Jiayin, Chairman of the Board of Directors of China Evergrande Group
Under the grass snake gray line, behind the Newton Group is actually a Chinese businessman, his name is Wu Nan, born in Jinhua, Zhejiang, born in the 1980s. What's more dramatic is that Wu Nan led a whole new energy vehicle "fudge" circle.
"UAE" car companies exporting to domestic sales
"In May this year, we have been negotiating with Newton Group." An industry close to Evergrande Motors revealed to "Phoenix Weekly Real Estate".
At the end of last month, Evergrande announced its plan to raise US$500 million through a placement of shares after releasing its annual report. At that time, Evergrande announced that its total liabilities were 183.872 billion yuan, and its net assets fell to a negative 68.65 billion yuan. The placement of shares sounds like a fairy tale Tan. If you look back according to the timeline, it may be after the two-month negotiations were finalized that Evergrande Auto released its financial report.
According to public information, Newton Group (NASDAQ: NWTN) is the only electric vehicle company listed in the United States in the United Arab Emirates. Before the listing, Newton Group announced that Al Ataa Investment LLC, which is controlled by the Abu Dhabi Royal Group, signed a 200 million US dollars PIPE subscription agreement with it.
But so far, none of the top three shareholders of the Newton Group has seen the Abu Dhabi Royal Group. The largest shareholder is Chunyi (Charlie) Hao, who holds 46.1% of the shares. The second largest shareholder is Double Ventures Holdings Limited, holding 21.4% of the shares, and the third largest shareholder is Xiaoma (Sherman) LU, holding 12.1% of the shares. Both the largest shareholder and the third largest shareholder have obvious Chinese names. What's more, founder Wu Nan controls 77% of the company's voting rights.
The chairman of the board of Newton Group is Wu Nan, the vice chairman of the board is Aaron Huainan LIA, the independent non-executive directors include Changqing Ye, Xinyue Geffner, and Lu Xiaoma, and the CTO is Yu Shiying. It can also be seen from the list of executives of the Newton Group that it is not a purely Middle Eastern company.
From the listed company information released by Newton Group, it can be seen that in the past three years (2020, 2021, 2022), its operating income was 0, and its total operating expenses for the three years were 62.1151 million US dollars. The operating profit in 2022 is -40.4458 million US dollars, and the net profit is -40.7193 million US dollars.
When Newton Group goes public in November 2022, Jinhua local state-owned assets will also participate in the investment.
"It's not some rich man from the Middle East investing in a Chinese company. Newton is a shell company whose executives are all Chinese. It has some funds but no business. Newton's investment in Evergrande Automobile can be regarded as the capital operation of a shell company." A senior industry professional engaged in new energy vehicle investment and consulting told "Phoenix Weekly Real Estate".
In fact, Newton Group is a U.S.-listed company packaged with Middle Eastern funds and operated by Chinese businessmen. It was formerly called ICONIQ and is headquartered in Tianjin.
Iconic and founder Wu Nan had frequent activities in 2018, claiming that their partners include W MOTORS (the Lebanese supercar Lycan, one of the most expensive sports cars in the world). But after the release of the concept car model during the 2019 Shanghai Auto Show, there was no news about Iconic.
Until 2022, the Iconic brand was renamed Newton, attracting investment from the Middle East, and transformed into a UAE car company.
In fact, the "white knight" of Evergrande Automobile's own financial situation is not optimistic. As of the end of 2022, Newton Group held approximately US$211.9 million in cash and cash equivalents, of which restricted cash was US$146,000. From the perspective of cash holdings alone, Newton needs to continue financing if he wants to come up with 500 million US dollars in real money.
As of the end of 2022, Newton's total liabilities are $71.97 million.
According to industry and commerce data, Newton Group’s entity company in China, Newton (Zhejiang) Automobile Co., Ltd., is wholly owned by ICONIQ, with a registered capital of 1.5 billion yuan and Wu Nan as its legal representative. On March 20, 2023, all the equity of this company was pledged to Zhejiang Jinhua Jinyi New District Development Group Co., Ltd. On July 9, 2023, which is the first ten days of last month, the legal representative was changed to MOHAMMAD RASHID AL HAF.
On the social platform Sina Weibo, there is a user named "Did Iconic get paid today?" He posted multiple Weibo posts from 2020 to 2021, claiming that Iconic has been in arrears of wages for a long time.
"Newton's funds are limited, and where the 500 million US dollars will come from is also a problem. The cooperation between the two companies can be seen as mutual help. Newton has obtained Evergrande's models in this way, and if there is a chance to develop, the listed company will get After such positive news, it may be possible to raise funds from the society.” The above-mentioned senior industry analysts.
"At the beginning, everyone had fantasies about the royal family in the Middle East, but it turned out to be Iconnick, who was disappointed." The above-mentioned insider close to Evergrande Motors joked. The stock price of Evergrande Automobile on August 15 can also see the mentality of investors. It rose 47.06% to 2.5 Hong Kong dollars at the beginning of the morning, and then fell sharply half an hour later. It finally closed at 1.73 Hong Kong dollars, with a rise of only 1.76% throughout the day. Almost equal to no rise.
"Married" four years ago
How did Newton Group and Evergrande get acquainted?
In 2018, Wu Nan introduced that Iconic has cooperative factories in the north and the south, of which the north is in Tianjin and is manufactured by Guoneng Automobile. Now it can be seen from historical public information that Wu Nan and Jiang Dalong, the founder of Guoneng Automobile, had frequent contacts, and the two had publicly participated in a local automobile industry conference in Tianjin.
In March 2019, Guoneng Automobile was sold to Evergrande by founder Jiang Dalong. Jiang Dalong left the market with 5 billion in cash, and Xu Jiayin took over Guoneng Automobile.
The predecessor of Guoneng Automobile is the old Swedish "Saab Automobile". "Saab Automobile" is nicknamed "Swedish God Car" in the industry, and it was the first to apply aircraft engines to automobiles. Later, Saab failed to manage well and went bankrupt, and was transferred to Jiang Dalong several times. Jiang Dalong bought Saab and returned to China to establish Guoneng.
When Jiang Dalong took control of Guoneng, he reproduced the classic Saab model Saab 93 and made an electric version of Guoneng 93. After Evergrande took over, 5,000 units were mass-produced, and a vehicle off-line ceremony was held. However, Guoneng 93 has been unable to go public due to limited qualifications.
"After Evergrande took over Guoneng, it has been trying to acquire qualifications, but it has never been successful. Of these 5,000 cars, a few were used in the factory, and the rest were sold as scrap iron for 2,000 yuan. To be honest, Guoneng The 93 car is still outdated, and it restores the Saab 93 to a large extent, with full marks for feelings, but it belongs to the product of the previous era." The above-mentioned insider close to Evergrande Automobile said, "Jiang Dalong found the face-saving boss Xu, and it was over. Go, now I don’t know where he is.”
Looking back, Guoneng is likely to be one of the earliest sources of disaster for Evergrande Automobile. "Phoenix WEEKLY Real Estate" learned that, in addition to Guoneng, Evergrande Motors later bought Hubei Tate (a wheel hub motor technology company) for 500 million because of Jiang Dalong's introduction. In the end, Evergrande sold Hubei Tate for 14 million at a low price, and lost in the middle More than 400 million.
Xu Jiayin and Wu Nan got acquainted, perhaps through the introduction of Jiang Dalong, or the matchmaking in Tianjin. What's more interesting is that the two of them also have a well-known new energy vehicle celebrity Jia Yueting in their circle of contacts.
When Newton Group was still called Iconic, due to poor management in 2019, it hired Byton co-founder Bi Fukang as CEO. Only 4 months later, Bi Fukang resigned in a flash and joined FF founded by Jia Yueting until 2022. Removal of CEO.
At this point, Wu Nan, Jiang Dalong, Xu Jiayin, Bi Fukang, Jia Yueting, a magical new energy "big flicker" circle appeared.
Moreover, Newton Group, Evergrande Automobile, and FF all have one thing in common. They did not deliver any products when they went public. In April 2023, Newton Group launched its first model, Rabdan ONE, but no vehicles have been delivered yet. "In addition to the blank check listing of new energy vehicle companies, other IPOs have sales. Newton is actually not the mainstream. Its listing operation is more empty than Jia Yueting's FF." The above-mentioned senior industry joked.
The possibility of 500 million US dollars arriving in the account?
According to the announcement, Evergrande Automobile’s share placement plan for Newton is: Evergrande Automobile will issue about 41.78% shares to China Evergrande Group, Xu Jiayin’s Xinxin (BVI) Co., Ltd., Xu Jiayin himself, Xu Jiayin’s wife Ding Yumei, and Ding Yumei’s Haobang Co., Ltd. 100 million shares, 521 million shares, 169 million shares, 417 million shares and 156 million subscription shares, totaling about 5.441 billion Evergrande New Energy Automobile shares.
After the issuance of new shares, China Evergrande Group, Xu Jiayin and Ding Yumei will hold 64.64%, 4.24% and 3.52% of Evergrande Automobile respectively. The consideration is that Evergrande Automobile will be fully released from the repayment obligations of related loans owed by Evergrande Automobile. Evergrande Group has also agreed to waive any interest accrued between August 15, 2023 and the Completion Date.
On this basis, Newton Group purchased new shares.
According to the announcement, all of the US$500 million will be used for Evergrande’s Tianjin plant. The normal production of Chi 5 and the subsequent mass production of Hengchi 6 and 7.
However, these seemingly considerable funds still need to overcome many difficulties to actually arrive.
As mentioned above, judging from the cash position of the Newton Group alone, it is not enough to pay 500 million US dollars. Furthermore, judging from the content of the agreement signed by Evergrande and Newton, the prerequisite for the arrival of 500 million US dollars is very strict.
According to the content of the announcement, before the allotment of shares, Evergrande Auto and Evergrande Group still need to meet 19 prerequisites, including: Evergrande Group’s debt restructuring takes effect, certain creditors of Evergrande New Energy Automobile Group confirm the debt repayment plan, and the transaction is approved by the relevant court, Arbitration institutions, government departments, regulatory agencies or any third-party authority and shareholder approval, etc.
Therefore, in this allotment, about 4.178 billion subscription shares issued by Evergrande Automobile, equivalent to about 25.66% of Evergrande Automobile’s total share capital after the completion of the debt-to-equity swap, will be deposited in relevant mandatory exchangeable bonds and Evergrande Automobile’s stock-linked shares. Custody account for notes.
Evergrande's introduction of a strategic investment could have been a powerful tool to persuade creditors to complete the restructuring, but the premise of the strategic investment requires that the debt restructuring be completed first. This is almost a logical paradox, and no one wants to be the first to let go.
Prior to this, similar strategic investment agreements appeared in the real estate industry. When Vanke announced its plan to invest in Tahoe Group, it also listed many harsh prerequisites, including "Tahoe formulates a debt restructuring plan and reaches an agreement with creditors. ". In the end, Tahoe’s debt restructuring failed, and Vanke decisively withdrew.
Is Newton Group a "white knight" to Evergrande? Or is the bamboo basket fetching water in vain? The decision is in the hands of Evergrande creditors.
