Nio’s CFO resigns as financing deals languish

2 min read
One of Nio’s offline shops on Sept. 28, 2019 in Beijing. (Image credit: TechNode/Coco Gao)

Electric vehicle maker Nio surprised many on Tuesday with the announcement that its CFO Louis T. Hsieh, a key executive responsible for taking the company public, is leaving the company effective Wednesday.

Why it matters: Little was revealed about why an executive seen as the company’s linchpin has resigned as it searches for new investment, amid growing investor concern about an imminent cash crunch.

  • Nio’s share price fell 2% to $1.48 by market close on Tuesday.

Details: Hsieh cited “personal reasons” for his departure effective Oct. 30, and the company is presently looking for a replacement, according to the announcement released Tuesday.

  • Chinese media had reported ahead of the announcement that Hsieh’s exit may signal a pending new investment where replacing the CFO is part of closing conditions for the deal. Nio declined to comment on the matter when contacted by TechNode on Tuesday.
  • The company’s ongoing search for investment will lead to further changes to ownership structure, according to Chinese media citing an anonymous executive. A Nio spokeswoman told TechNode that the company is continuing to fundraise, but did not provide details.
  • However, a US hedge fund manager told TechNode on Tuesday that the company has yet to close a recent $200 million convertible debenture offering to Nio’s founder William Li Bin and its main backer, Chinese internet giant Tencent.
  • The company has also been unable to finalize another deal involving Beijing E-town, a capital fund backed by Beijing’s Yizhuang district municipal government, which it announced in May.

EV maker Nio sees 50% revenue decline in Q1, expects continued slowdown

  • An experienced investment banker said to be well-respected on Wall Street, Hsieh assumed his role with the company in May 2017 responsible for fundraising, after he stepped down as the CFO of New Oriental, a Chinese online education company.

“Why would anyone putting new money in want to replace a CFO who was the conduit through which Nio was able to tap Western capital markets? That makes no sense.”

⁠—a US hedge fund manager to TechNode on Tuesday

Context: Nio recorded RMB 3.46 billion ($503.4 million) in cash and equivalents at the end of the second quarter, less than half what it reported the quarter before, according to the company’s financial statements.

  • Total liabilities more than doubled to $2.59 billion in Q2, including a total of nearly $250 million in short-term debt and the current portion of long-term debt. How much cash could be left after the third quarter if no further funds come in is unknown, but analysts say that the company is insolvent, or nearing insolvency.