Kandi Agrees to Sell Majority Stake in JV to Geely
Kandi Technologies Group Inc. (Nasdaq: KNDI), a leading maker of electric vehicles in China, said today that the giant carmaker Geely would be taking control of Kandi's primary operating unit.
Kandi said the increased stake in the joint venture would increase the Jinhua-based company's cash flow and would be accomplished through a series of steps.
Shares in Kandi, which announced the Geely agreement before the market opened, closed down today 11 percent at $6.10 per share.
Geely, which owns Volvo, Lotus, and several other brands, agreed to convert to equity its $46.7 million loan in the two companies' joint venture while Kandi agreed to transfer a 21.5 percent stake in the unit to Geely for $76.9 million.
At the completion of the moves, Geely would own 78 percent of the joint venture with Kandi owning the remaining 22 percent.
The joint venture, which dates back to 2013, was created as a 50-50 partnership between the two companies "to develop, manufacture and sell EV products and related auto parts," according to a filing with the Securities and Exchange Commission.
Now called Kandi Electric Vehicles Group Co. Ltd., the joint venture is currently "a holding company and all products are manufactured by its subsidiaries," the regulatory filing said.
The transfer of shares is expected to be completed within six months, Kandi said in a statement.
Earlier this month, Kandi reported revenue of $112.4 million for the 12 months through December. Its net loss was $5.7 million, or 11 cents per share, compared with a loss of $28.3 million, or 59 cents per share in 2017.
The company said its sales of EV parts grew 2 percent last year to $99.1 million, while off-road vehicle sales soared 145 percent to $13.3 million. Kandi said its joint venture with Geely sold 10,259 EV products in 2018, 10 percent fewer than in the preceding year.
The company announced in February that two of its vehicles, models EX3 and K22, received approval for import and registration in the United States.
In a separate filing today, Kandi also announced that two shareholders were seeking to sell 7.6 million shares of the company at $6.50 per share. The filing by Kandi, which filed late today to register the shares for public sale, were issued to Jinhua An Kao Power Technology Co. Ltd. and SC Autosports LLC in connection with Kandi's previous acquisition of the two companies.
The stock continued to slide in after-hours trading an additional 1 percent, or 7 cents per share, after the late SEC filing regarding the share registration.
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