- Neta has reached a debt-to-equity swap agreement with 134 core suppliers worth more than RMB 2 billion ($275 million) to prepare for the resumption of production, according to local media.
- Due to its high debt, potential investors want Neta to reduce its debt before they are willing to provide new investment.
Neta Auto, which is facing operational difficulties, has reportedly reached an agreement with its creditors, which may win it more time to save itself.
The electric vehicle (EV) maker has reached a debt-for-equity swap agreement with 134 core domestic suppliers worth more than RMB 2 billion yuan ($275 million) in preparation for resuming production, local media Jiemian reported today, citing the company.
Neta offered its suppliers a plan under which 70 percent of their claims will be converted into equity in its parent company Hozon Auto, while the remaining 30 percent will be treated as interest-free debt, according to the report.
Neta will divide the debt equally into 15 installments, which will begin to be repaid in May at a monthly rate of one installment, according to the report.
Separately, according to a report by another local media outlet, Yicai, Neta's proposal has received support from major suppliers including CATL (SHE: 300750) and Gotion High-tech (SHE: 002074).
Hozon Auto was established in October 2014 and obtained the qualification for automobile production in April 2017. At present, the company only has one automobile brand, Neta.
In November last year, Neta made large-scale layoffs as it encountered financial difficulties.
On March 19, Neta held a communication meeting with some suppliers at its headquarters in Putuo district, Shanghai, with the topic being the conversion of suppliers' debts into their shareholdings in the company, according to a report by another local media outlet, 21jingji, on the same day.
Neta proposed that it hoped to reduce its debt in this way in order to facilitate the smooth progress of new financing.
Neta discussed self-rescue plans with suppliers at this meeting to tide over the difficulties together, 21jingji quoted a Neta executive as saying.
The company's fixed assets are insufficient to repay its debts, and new financing is necessary to save it, the report quoted a supplier source as saying.
Neta's total liabilities currently stand at nearly RMB 10 billion yuan, of which nearly two-thirds are owed to suppliers, according to 21jingji.
Due to the high debt, potential investors want Neta to reduce its debt before they are willing to provide new investment, according to the report.
Neta is one of the earliest new forces in China's car industry and saw a surge in deliveries in 2021-2022.
It delivered 152,073 vehicles in 2022, an increase of 118.26 percent compared to 2021, according to data compiled by CnEVPost.
However, the company has seen weak vehicle deliveries over the past two years and has stopped publishing monthly deliveries since October 2024.
Despite Neta's operational hiatus in China, it is still expanding overseas.
The company announced earlier today that it participated in the 46th Bangkok International Motor Show, with the goal of selling more than 10,000 vehicles locally each year with two models.
On March 22, Neta announced that it had held a dealer conference in Thailand and secured a credit line of 10 billion baht ($294 million) from a Thai financial institution.
($1 = RMB 7.2611, $1=34.01 baht)
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