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On the evening of October 25, both China Evergrande and Evergrande issued announcements that Evergrande's potential deal was suspended.

According to the announcement, the authorities were informed by the potential seller on October 25 that the potential seller had decided to suspend all discussions with the potential buyer about the potential transaction and decided not to implement the potential transaction. Neither party has entered into any sale and purchase agreement on the transfer of potential shares. At the same time, the announcement also stated that it is not expected to sign a financing agreement with potential buyers or otherwise provide any financing to the Company. The announcement also means that there is no follow-up to the previous announcement that the company's potential shares for sale have been acquired.

It is worth mentioning that, or affected by the news, Evergrande suddenly announced on October 25 that trading in the company's shares would be temporarily suspended from 1 pm today. In the above announcement, officials also revealed that China Evergrande will continue to suspend trading and Evergrande will apply to resume trading of shares from 9: 00 a.m. on October 28.

Evergrande Motor announced on the Hong Kong Stock Exchange on May 26 that the joint and individual liquidators entered into terms and conditions with independent third-party buyers on 16 May, jointly and on behalf of China Evergrande Group (liquidating), Evergrande Health Industry Group Co., Ltd., and Acelin Global Limited (collectively referred to as potential sellers). In total, potential sellers such as Evergrande Group hold a total of 6.348 billion shares, and subject to the conclusion of the sale and purchase agreement and subject to its terms and conditions, it is proposed that 3.145 billion potential shares for sale will be acquired immediately, and 3.203 billion potential shares for sale (accounting for about 29.5% of the total issued shares) will become an option subject to a certain period of time after the date of the sale and purchase agreement. At the same time, Evergrande also said that potential buyers will provide loans to Evergrande to finance the group's continued operation and development of the group's electric vehicle business. At that time, affected by the news, Evergrande shares also ushered in a big rise, closing at HK $0.71 per share, with a total market capitalization of HK $7.699 billion.

In July, officials also announced that discussions between potential sellers, potential buyers and companies were still ongoing; potential sellers and potential buyers had not yet concluded a sale and purchase agreement, and potential buyers and companies had not yet signed a credit agreement. At the same time, officials also stressed that as potential transactions need further due diligence, including but not limited to the financial proof of potential buyers and a comprehensive investigation of the group's assets, liabilities, business, etc., potential transactions may or may not take place. Due to the uncertainty of potential transactions, shareholders and potential investors should exercise caution when conducting share transactions. Unexpectedly, nearly three months later, the sale and purchase agreement finally ended in failure.

In fact, this is not the first time that Evergrande's strategic cooperation has failed. As early as April 5, Evergrande announced that its strategic investment agreement with Newton Group had been terminated, and that no further progress had been made in the company's proposed transaction and terms revision of the debt-to-equity swap. The proposed transaction and debt-to-equity swap will no longer be carried out. In less than a year, the two strategic partnerships have finally failed, which is also a fatal blow for Evergrande, and it is not easy to turn around later.

As we all know, Evergrande has been in a difficult situation in recent years. Relevant data show that as of June 30, 2024, Evergrande's turnover was 38.38 million yuan, a decrease of 116.16 million yuan compared with 154.54 million yuan in the same period last year, a loss of 20.257 billion yuan in the first half of the year, an increase of 13.384 billion yuan over the same period last year, and a gross profit of 2.433 million yuan, a decrease of 103.99%. The net loss totaled 20.257 billion yuan, an increase of 194.73% over the same period last year. As for the increase in losses, officials said it was mainly due to a decline in sales of Hengchi 5.

Data show that Hengchi 5 is the only listed model of Evergrande. As of June 30, 2024, Evergrande Tianjin factory has produced a total of 1700 Hengchi 5 and delivered a total of 1429 new energy vehicles. Previously, officials had hoped to become popular with Hengchi 5, but unfortunately the model did not have a hot market, which made Evergrande's financial situation worse and worse. To this end, the authorities had to suspend production of the Hengchi 5 last year in order to save costs.

No production also means no capital inflows, and turning to foreign aid has become the only way to rescue Evergrande quickly. But unfortunately, due to Evergrande's financial crisis, there is a lot of uncertainty in every strategic cooperation, and without timely financial integration, Evergrande's situation is naturally getting worse and worse. At present, Evergrande is facing a survival crisis. Under the background of factory shutdown, bankruptcy reorganization of subsidiaries and sustained financial losses, Evergrande tried to save itself by introducing potential third-party investors. I didn't expect it to come to nothing. After that, where should Evergrande go?

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