EVERG VEHICLE(00708) sells 20% stake of its overseas subsidiary to improve liquidity.

, EVERG VEHICLE (00708) announced that on November 25, 2024, its indirect wholly-owned subsidiary, National Electric Vehicle Sweden AB, intends to sell a 20% stake in AB Trollhttan Propellern 13 to Logistikfastigheter i Trollhttan AB for a total consideration of approximately HK$43.78 million. They also intend to sell promissory notes to ASI and DI for a principal amount of approximately HK$43.78 million for a total consideration of approximately HK$21.89 million. It is understood that the issuance of the promissory notes is to partially pay the consideration of SEK 240 million (approximately HK$175 million) that the buyer is obligated to pay for purchasing an 80% stake in an early sale transaction. The remaining consideration of the early sale transaction has already been settled in cash. The target company is an investment holding company holding properties in Trollhttan, Sweden, with a total area of approximately 400,000 square meters. The properties had not been operating for a long period and had not generated any income at least until 2022, and were transferred to the target company in 2023 for the purpose of improving liquidity for a subsequent sale. The board acknowledges that the terms of the sale transaction are not as favorable as they would typically support, considering the buyer's failure to fulfill their payment obligations under the promissory notes, as well as the buyer and its shareholders potentially seeking to take advantage of the seller's liquidity issues and lack of market liquidity for the 20% minority shareholding in a private company. However, considering that the legal representative of NEVS is an employee of the group and may personally be liable if NEVS enters into liquidation due to failure to repay debts (including taxes), the sale transaction will generate cash inflow for the seller, improving their liquidity. The board also notes that the group is generally in financial distress and unable to immediately provide funds to support its overseas subsidiaries. In light of these circumstances, the board believes that the agreements for the sale of the 20% stake and the promissory notes were signed and executed prior to obtaining board approval, and although they are somewhat unfair in the context of extended payment terms and promissory note discounts, they are acceptable, in line with general commercial terms, and in the overall interest of the company and its shareholders.