(Yicai) April 8 -- Shares of China Evergrande New Energy Vehicle Group plunged after the electric car arm of embattled property developer China Evergrande Group said it had terminated a USD500 million investment deal with United Arab Emirates green mobility solutions provider NWTN.

Evergrande NEV [HKG: 0708] finished 10.8 percent lower at 22 Hong Kong cents (3 US cents) a share in Hong Kong today, after sinking by as much as 24 percent earlier.

The deal was terminated due to a planned transaction and revision of the debt-to-equity swap terms not progressing, Evergrande NEV said late on April 5. The Guangzhou-based company will continue negotiations with NWTN regarding revisions and will provide updates on the progress, it added.

Abu Dhabi Investment Authority-backed NWTN will pay USD500 million for a 27.5 percent stake in Evergrande NEV and the right to nominate a majority of representatives to the carmaker's board, it said last August. 

However, the deal is subject to 19 preconditions, including the effective restructuring of China Evergrande's debt and the absence of major adverse events, NWTN added at the time.

The main part of the debt-to-equity swap deal was that China Evergrande, its founder Xu Jiayin, and other creditors offset Evergrande NEV's outstanding debt of HKD20.9 billion (USD2.7billion) by subscribing to new shares of the carmaker. 

In January, Evergrande NEV said that the agreement with NWTN had expired at the end of the previous month, and the parties had not agreed to an extension.

Evergrande NEV planned to allocate the investment from NWTN to its Tianjin factory, it previously noted. The Dubai-based company would have also assisted the Chinese firm's overseas expansion, with the aim of exporting 30,000 to 50,000 of its Hengchi-branded autos to the Middle East each year, it added.

In January, Evergrande NEV Executive Director Liu Yongzhuo was detained by the police. The carmaker had also arranged for some staff to take leave, while production in Tianjin was suspended, according to its earnings report released last month.

China Evergrande's flagship unit Hengda Real Estate Group, Xu, and other senior executives were penalized for falsifying revenues by CNY560 billion (USD77.4 billion) in the two years preceding the builder's default in 2021, the Guangzhou-based subsidiary said last month. 

Editor: Martin Kadiev