(Yicai) Oct. 9 -- Shares of Evergrande New Energy Vehicle Group sank after they began trading again following a six-day halt. The electric car unit of indebted property developer China Evergrande Group said yesterday that a plan to sell new shares to mobility startup NWTN had been shelved.

Evergrande NEV [HKG: 0708] closed down 8.9 percent at 51 Hong Kong cents (7 US cents) a share in Hong Kong today, giving the Guangzhou-based firm a market capitalization of HKD5.53 billion (USD706 million). Evergrande’s shares [HKG: 3333] plunged 12.7 percent.

Evergrande agreed in August to sell 27.5 percent of its EV unit to Dubai-based NWTN, which is backed by the Abu Dhabi Investment Fund and listed in the United States, for USD500 million. A unit of NWTN also agreed to extend CNY600 million (USD82.4 million) in guaranteed interest-free loans in three tranches to Evergrande NEV.

The share subscription deal was suspended because of “significant uncertainties” around the group, Evergrande NEV said in a stock exchange filing yesterday, adding that it would re-negotiate it.

On Sept. 28, Evergrande said it had “received notification from the relevant authorities that Mr. Hui Ka Yan, an executive director of the company and chairman of the board of directors, has been subject to mandatory measures in accordance with the law due to suspicion of illegal crimes.” That triggered a trading halt in the shares of Evergrande NEV, its parent company, and Evergrande Property Services Group. 

Evergrande NEV then said it received a letter from NWTN on Sept. 29 saying that it was pausing its related obligations in the share subscription deal and would not be making the second and third payments.

NWTN also said it hopes Evergrande NEV can confirm whether its parent company’s debt restructuring plan “needs to be readjusted, and whether there is a plan to launch a new restructuring plan.”

Evergrande revealed late last month that Chinese regulators had told the company that it could not proceed with the issuance of new debt as a result of an investigation into its main unit. That has disrupted the group’s previously outlined plans for restructuring its offshore debt.

Editor: Tom Litting