China Evergrande Group (PC) (USOTC:EGRNF)
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1 Year : From Dec 2018 to Dec 2019
By Kenan Machado
HONG KONG--China Evergrande Group Tuesday said it will buy a majority stake in the Chinese company that bought Swedish car maker Saab out of bankruptcy, making a $930 million bet on the expected surge in demand for electric vehicles in the world's second-largest economy.
The Chinese property developer, through majority-owned Evergrande Health Industry Group Ltd., will buy a 51% stake in National Electric Vehicle Sweden AB (NEVS), which in 2012 bought the assets and intellectual property rights of Saab Automobile AB.
China Evergrande also said it agreed to provide a three-year $1.1 billion unsecured loan to Evergrande Health.
NEVS has 500 staff members at its electric-vehicle research and development center in Sweden, with production bases in Trollhättan, Sweden and Tianjin, China, and plans another production base in Shanghai, the company said. NEVS also has two electric vehicle models that have reached production standards, Evergrande said.
The acquisition helps Evergrande capitalize on China's move toward electric vehicles as the country tries to improve air quality and reduce reliance on fossil fuels. Effective Jan. 10, China barred new companies from making only conventional vehicles, including hybrids that partly rely on gasoline-powered engines.
The deal may also help Evergrande move past its faltering $2 billion bet made on Faraday Future, the Chinese electric-car startup founded by maverick Chinese billionaire Jia Yueting, which promised to compete with Tesla Inc. After being caught up in litigation, Evergrande Health promised in December to pony up $1.2 billion by 2020 in addition to the $800 million already paid.
NEVS itself hasn't had much luck since taking over Saab's assets. In August of 2014, it lost its right to use the Swedish brand's name as it sought bankruptcy protection. Its losses at the end of 2017 stood at 996.26 million Swedish krona ($111.3 million), Evergrande said in its filing to the Hong Kong exchange.
-Write to Kenan Machado at email@example.com
(END) Dow Jones Newswires
January 15, 2019 05:54 ET (10:54 GMT)
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