HONG KONG, China — Shares in the electric vehicle arm of embattled Chinese property giant Evergrande doubled in Hong Kong on Monday after news of a possible buyer of the firm emerged.
Heavily indebted Evergrande has become the poster child of the years-long crisis in China’s real estate market, a crucial pillar of growth in the world’s second-largest economy.
The firm was earlier this year handed a winding-up order by a Hong Kong court after struggling for years to repay creditors after its 2021 default.
The crisis has impacted the company’s subsidiaries, hammering their share prices.
But Evergrande NEV briefly soared as much as 113 percent Monday as trading resumed after being suspended on May 17. That represented the biggest intra-day jump in nearly 10 years, according to Bloomberg News.
However, the firm’s shares are still worth just a fraction of what they were at their peak in 2021 before the crisis struck Evergrande.
Potential buyers of EV arm
The surge followed its announcement on Sunday that liquidators were in talks with potential buyers of almost 60 percent of the company’s shares.
READ: Embattled China Evergrande ordered to liquidate by Hong Kong court
The deal would see the buyer take an initial 29 percent stake and include an option to purchase another 29.5 percent later.
It also mentioned the possibility of providing a line of credit “for the purpose of financing the group’s continuing operation”, the statement added.
Evergrande NEV was last week ordered by Chinese authorities to repay 1.9 billion yuan ($262 million) of subsidies and incentives, which the company said “could have a material adverse impact on the financial position”.
In January, the company said its executive director Liu Yongzhuo had been detained “on suspicion of illegal crimes”.