China Evergrande New Energy Vehicle Group (Evergrande NEV), the vehicle manufacturing unit of bankrupt Chinese property firm China Evergrande Group, has been ordered to pay back all the subsidies it received from the Chinese government, according to a statement by the Hong Kong Stock Exchange (HKSE).
Shares in the Hong Kong listed automaker plunged from already depressed levels on the news it has been ordered to pay back around CNY1.9bn (US$2.62m) received from a number local authorities in China.
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The HKSE said the company had failed to meet the contractual obligations it had agreed to obtain the local government subsidies, including failure to set up a company headquarters and not meeting its production and sales targets.
Evergrande NEV also raised HKD2.7bn (US$346m) from private investors from its stock market listing in 2021.
The company produced just 1,700 Hengchi brand vehicles last year, incurring a loss of around CNY12bn, with production at its Tianjin plant halted earlier this year.
According to the HKSE, Evergrande NEV was required to return the subsidies within 15 days of receiving the notification or risk losing all its assets including the manufacturing equipment, the factory building and the land.
Evergrande NEV said it had applied for an administrative review od the decision, adding the refunds would have a “material impact on the financial position and operations” of the company.
Parent company China Evergrande Group was ordered to be liquidated in January.
