On Monday, Evergrande New Energy Vehicle shares (Evergrande NEV), the electric vehicle unit of Evergrande, the troubled Chinese developer, went down sharply after a new initial public offering was canceled.
Evergrande New Energy Vehicle shares fell more than 10 percent to HK$1.95, after the company announced on Sunday that it would not pursue a listing on the Shanghai Stock Exchange.
The giant property developer is saddled with more than $300 billion of debt and warned in mid-September that it might not be able to meet its obligations. Last week, fears of a Chinese bankruptcy destabilized global financial markets.
According to a statement on Sunday, Evergrande NEV said its parent company’s cash flow problems would have a “material adverse impact” on its plans for large-scale production of electric cars.
Evergrande NEV acknowledged that “there is no guarantee the group will be able to meet its financial obligations”.
The subsidiary, which was to compete with American electric vehicles like Tesla, which are very popular in China, has already lost 80% of its value on the stock market since the beginning of the year.
Last week, the conglomerate reassured the markets by announcing a last-minute deal with Chinese bondholders. Yet Evergrande was also required to pay interest on a dollar loan, and the group failed to announce its status on the payment on Thursday.
Wednesday is also the deadline for paying interest on an international dollar loan for $47.5 million.
As of yet, the Chinese government has not stated whether it will bail out the private giant. Chinese experts speculate that Evergrande may be restructured similarly to Anbang insurance and HNA airline in recent years.
On Monday, the Financial Times reported that at least two local governments in China had seized Evergrande’s construction revenue to ensure that the developer completed the projects.
Last week, homebuyers protested outside Evergrande offices in several parts of the country demanding completion or a refund.