Geely Auto plans to subscribe for up to $320 million of American depositary shares issued by ZEEKR

According to the news from Zhitong Finance and Economics APP, Geely Auto (00175) announced that on May 3, 2024, ZEEKR submitted a preliminary prospectus to the U.S. Securities and Exchange Commission for public offering. Subject to market conditions and final terms of the underwriting agreement to be agreed upon by ZEEKR, underwriters, and other relevant parties (if any), ZEEKR's offering is expected to include an initial offering of 17.5 million American Depositary Shares to be sold by ZEEKR. The underwriters will also have an option to purchase up to an additional 2.625 million American Depositary Shares after exercising the over-allotment option.

The expected preliminary offering price per American Depositary Share is between $18 and $21.

Assuming a preliminary offering price of $19.5 per American Depositary Share (i.e., the midpoint of the estimated range of the preliminary offering price as stated on the cover of the preliminary prospectus), ZEEKR estimates that it will receive net proceeds of approximately $3.086 billion or approximately $3.562 billion (if the underwriters fully exercise the over-allotment option). ZEEKR intends to use the net proceeds for the following purposes: approximately 45% for developing more advanced electric passenger vehicle technology and expanding the product portfolio; approximately 45% for sales and marketing as well as expanding ZEEKR Group's services and charging network; and approximately 10% for general corporate purposes (including working capital needs) to support the business operations and development of ZEEKR Group.

On the same day, the company has provided a written indication that it intends to subscribe for up to $320 million (equivalent to approximately HKD 25.056 billion) of American Depositary Shares to be sold in ZEEKR's offering at the preliminary public offering price and on the same terms as the other American Depositary Shares sold. The final number of American Depositary Shares to be subscribed by the company will be subject to the final offering price of the American Depositary Shares sold in ZEEKR's offering. The written indication is a non-binding expression of intent and does not create any legal obligations for any party. The company will comply with the applicable provisions regarding the proposed subscription matters under the Listing Rules in due course.

The company believes that the proposed spin-off is in the overall interest of shareholders. The proposed spin-off will (among other things) enable investors to better assess the group and focus on the main business operations of the group (excluding ZEEKR Group), while providing ZEEKR with continued direct and independent access to equity and debt capital markets when needed. Based on industry trends and assessments of the group's and ZEEKR Group's business and operations, the proposed spin-off will enhance ZEEKR's value, allowing ZEEKR to develop independently and fully unleash its potential, thereby benefiting shareholders.

The proposed subscription matters will enable the company to increase its investment in ZEEKR during market adjustments and strengthen the company's controlling interest in ZEEKR, ensuring the company's continued influence on ZEEKR's operations