The Hefei government signed a contract with NIO, with a total investment of over 10 billion.
However, NIO consumes money quickly and has been in financial difficulties for a long time. The withdrawal of Hillhouse Capital revealed that the capital market is not optimistic about NIO. Li Bin may not be able to turn around by relying on this signing alone.
On February 25, NIO announced that it had signed a framework agreement with the Hefei Municipal Government for the NIO China headquarters to settle in Hefei. The signing was held at the Jianghuai NIO Factory in Hefei.
The Hefei government will invest in the NIO China headquarters project through designated investment companies and market-oriented investors, with a total investment of 102 billion yuan.
Among them, NIO’s China headquarters project plans to raise more than 10 billion yuan.
Stimulated by this news, as of the close of the US stock market that day, NIO's share price closed at US$4.4, up 13.4%.
NIO seems to be in good times, but in fact the dilemma behind it is difficult to solve easily.
Frequent news about financing. In February, news spread online that Geely Automobile plans to invest US$300 million in NIO. Based on the US$3.07 convertible bonds NIO Automobile has just conducted in the primary market, Geely will account for
Geely holds less than 10% of NIO's shares, and after joining the shares, existing shareholders' shares will be diluted, and Geely is expected to become NIO's third largest shareholder.
Online news pointed out that the two parties have entered the negotiation stage, and NIO's cars will be manufactured by Geely.
CRRC contacted Geely Automobile to confirm the news, but Geely said it would not comment.
In fact, this is not the first time that Weilai has been rumored to receive new financing.
Intermittent financing rumors are popping up online.
On May 28, 2019, the day NIO’s first quarter report was disclosed, news came out that it had obtained 10 billion yuan in financing from Beijing Yizhuang State Investment Corporation. However, in October, Yizhuang State Investment Corporation stated that the agreement collapsed.
In October of the same year, Weilai announced that it was negotiating a financing cooperation of more than 5 billion yuan with the Wuxing District Government of Huzhou City. This cooperation was immediately stopped by the Wuxing District Government on the grounds that the risk was too high.
After NIO's third quarter 2019 financial report was released, its revenue and loss narrowed higher than market expectations. NIO's stock price rose 53.72% that day, with an intraday increase of more than 100%, closing at $3.72.
Subsequently, news that NIO was about to receive financing appeared on the Internet frequently.
In addition to the Geely Automobile mentioned above, Guangzhou Automobile Group, FAW, and Great Wall Motors, which have previously issued clarification announcements, are also rumored to be potential investors in NIO.
In addition, news also spread that the condition for capital to intervene in NIO is to replace Li Bin.
CRRC has called Li Bin several times, but as of press time, has not received a reply.
NIO CFO Feng Wei once said in the third quarter financial report release conference call: "NIO has made significant progress in financing projects, which are currently in progress. Relevant confidential information cannot be disclosed to the public." Even if sporadic financing is a drop in the bucket,
NIO has been very secretive about investment. Since February this year, NIO has successively announced some financing projects with solid evidence.
On February 14, NIO issued an announcement announcing that it had once again completed a US$100 million convertible bond financing project; on February 6, NIO officially announced that it had signed a convertible bond subscription agreement with an Asian investment fund that has no relationship with it.
According to the agreement, Weilai will issue and sell convertible bonds with a total principal amount of US$70 million to the purchaser in a non-public offering.
?Coupled with another investment of US$30 million, the total financing is 100 million.
But for Weilai’s operating expenses, this amount of funds is obviously not enough to solve the urgent needs.
On December 30, 2019, NIO released its third quarter financial report.
According to the financial report, NIO's net loss in the third quarter was 2.5217 billion yuan. As of September 30, 2019, NIO held a total of 1.9607 billion yuan in cash, cash equivalents, restricted cash and short-term investments, which was no longer enough.
2 billion yuan, the company’s cash and cash equivalents are only 980 million yuan.
The third quarter results announcement clearly stated that NIO's "cash balance is insufficient to provide the working capital and liquidity required for continued operations in the next 12 months."
In the four years since its establishment, NIO has suffered a total loss of more than 40 billion.
According to public information, NIO’s annual capital expenditure and operating cash expenditure in 2018 totaled 10 billion.
On average, Weilai consumes 30 million yuan every day.
Hillhouse Capital, the third largest shareholder of NIO, has withdrawn its shares to cash out its shares. As of December 31, 2019, it no longer holds NIO shares.
In the third quarter of 2019, NIO's stock price fell to US$1.19 per share, a drop of 81% from the listing price.
?After that, Hillhouse Capital began to significantly reduce its holdings of NIO shares, with a decrease of 68%.
In addition to Li Bin and Tencent, Hillhouse Capital has always been the third largest investor in NIO, holding 7.5% of the shares after the listing. Its importance as a partner to NIO is self-evident.
Regarding the divestment of Hillhouse Capital, NIO stated that this is a normal cyclical operation for investors.