In a significant management shift, EVERG VEHICLE has announced the departure of a senior executive closely associated with its founder.

Recently, the company stated that, due to business adjustments, Xiao En has resigned from his positions as executive director and board chairman, following a recommendation from a major shareholder.

Two years prior, two other key figures from the founder's inner circle, Liu Yongzhuo and Qin Liyong, had already stepped down from their roles as executive directors at the automaker.

With Xiao En's latest exit, the company's board now lacks any longstanding associates of founder Xu Jiayin.

Primary Challenge: Maintaining Listing Status

The most pressing task for EVERG VEHICLE is to resume trading by the end of September this year to preserve its listed entity status.

However, given the current circumstances, the challenges are substantial. With just over three months remaining, the company must complete audits, issue overdue financial reports, and secure a "white knight" investor to demonstrate business sustainability.

Veteran Executive Steps Down

Concurrent with his resignation as chairman, Xiao En also ceased to be a member of the nomination committee, remuneration committee, and corporate governance committee.

According to Hong Kong exchange regulations, the nomination committee of a listed company must be chaired by either the board chairman or an independent non-executive director.

Therefore, Xiao En's departure further renders the company's personnel structure non-compliant with listing rules.

EVERG VEHICLE has stated it is seeking suitable candidates to fill the vacancies within three months.

This indicates that the company proceeded with the departure before securing a successor for Xiao En.

As a veteran associate of Xu Jiayin, Xiao En possessed over 30 years of extensive business experience.

He joined the EVERGRANDE group as early as November 2013, having previously served as an executive president and senior vice president.

Beyond headquarters roles, he oversaw multiple business segments, including serving as chairman of EVERGRANDE Tourism Group and as president and chairman of EVERGRANDE New Energy Group.

In early 2021, he succeeded Shi Shouming as executive director and board chairman of EVERG VEHICLE.

At that time, the EVERGRANDE group was still aggressively pursuing its diversification strategy.

Shortly before, in September 2020, EVERG VEHICLE raised approximately HK$4 billion through a top-up placing, introducing shareholders such as Tencent, Sequoia Capital, Yunfeng Capital, and Didi Chuxing.

In December of that year, EVERGRANDE Group also executed 17 substantial share purchases in the automaker using its own funds.

The following year, however, liquidity issues at EVERGRANDE began to surface, pushing Xiao En to the forefront to communicate with creditors and advance "project delivery" efforts, making several public appearances.

For instance, at an investor meeting in March 2022, Xiao En stated that the company's operational downturn was stabilizing and that it was going all out to ensure project deliveries. He noted that the Hengchi 5 model had rolled off the production line, obtained sales qualification, and was progressing towards mass production and sales preparations.

Yet, in January 2024, a liquidation order was issued for EVERGRANDE.

Xiao En could only continue to convey positive signals externally, offering official responses that the group would face difficulties head-on, take all legal and compliant measures, and steadily advance normal business operations while safeguarding the legitimate rights and interests of creditors.

In August last year, EVERGRANDE (03333.HK) was formally delisted, ending its 16-year listing history.

Its listed subsidiaries, including EVERG VEHICLE and EVERGRANDE Property Services, also faced the fate of being taken over or acquired.

Transitioning Away from Founding Group Influence

As early as August 2024, veteran EVERGRANDE figures Liu Yongzhuo and Qin Liyong had resigned as executive directors of EVERG VEHICLE.

Liu Yongzhuo was also a key figure in EVERGRANDE's diversification, having served as vice president of EVERGRANDE Group, chairman of EVERGRANDE Football Club, chairman of EVERGRANDE Spring Water Group, and chairman of EVERGRANDE High-Tech Group.

Qin Liyong joined EVERGRANDE Health Industry Group (later EVERG VEHICLE) in January 2018.

Following the recent departure of Xiao En, the board of EVERG VEHICLE no longer includes any members from the founding group's circle.

Furthermore, within the senior management team, only Cao Hui, General Manager of the Finance Center, and Fang Jiajun, Company Secretary, are former executives from the original EVERGRANDE Group.

Cao Hui joined EVERGRANDE in January 2008, having served as deputy general manager of EVERGRANDE Health Group and financial manager of EVERGRANDE Real Estate Group.

Fang Jiajun joined in 2009, serving as vice president of EVERGRANDE Real Estate Group, and vice president and company secretary of EVERGRANDE Group, with over 20 years of experience in mergers, acquisitions, and capital markets.

According to the resumption guidance, EVERG VEHICLE's board must include at least three independent non-executive directors; the audit committee requires at least three members; and the remuneration and nomination committees must comprise a majority of independent non-executive directors.

Therefore, further personnel appointments are expected.

Race Against Time to Avoid Delisting

The path to securing external support for EVERG VEHICLE has been somewhat turbulent.

In August 2023, it announced an agreement with Newton Group for a share subscription worth up to $500 million, with an additional CNY 600 million in transitional funding to be provided.

Upon completion, Newton Group would have held a 27.5% stake.

However, Newton Group soon paused the transitional funding and initiated renegotiations. By early 2024, the share subscription agreement officially lapsed, leaving EVERG VEHICLE without a potential rescuer.

Since 2024, affected by its parent company's liquidation, EVERG VEHICLE, as a core subsidiary asset, has been exposed to creditor claims.

In April last year, the company's shares were officially suspended from trading.

Subsequently, subsidiaries across locations including Shanghai, Tianjin, and Guangdong entered bankruptcy restructuring proceedings.

For example, in December, EVERGRANDE New Energy Vehicle (Guangdong) Co., Ltd. and EVERGRANDE Smart Auto (Guangdong) Co., Ltd. entered bankruptcy restructuring.

The registered shareholders were changed to Guangzhou Juli Modern Industrial Development Co., Ltd.

Guangzhou Juli was established in October 2024 with a registered capital of CNY 2.64 billion, jointly held by six state-owned enterprises from Guangdong province or Guangzhou city.

For EVERG VEHICLE, the most critical task now is to resume trading before September 30th this year to avoid delisting.