Management to Host Conference Call on
November 7 at 8:30am ET
CM Seven Star Acquisition Corporation (“CM7Star”) (NASDAQ:CMSS), a
blank check company formed for the purpose of entering into a
business combination with one or more businesses, and Kaixin Auto
Group (“Kaixin”), a leading premium used car dealership network in
China and its owner, Renren Inc. (“Renren”) (NYSE:RENN), today
announced that each company’s board of directors has unanimously
approved a definitive share exchange agreement. Pursuant to this
agreement, CM7Star will acquire 100% of the issued and outstanding
shares of Kaixin in a transaction valued at approximately $454
million (the “Transaction”).
Pursuant to the share exchange agreement,
Renren, Kaixin’s corporate parent will sell 100% of Kaixin’s equity
holdings to CM7Star in exchange for an initial consideration of
approximately 28.3 million CM7Star shares, subject to certain
indemnification arrangements. All amounts remaining in CM7Star’s
trust account at the closing of the business combination is
expected to be used for Kaixin’s growth. If no CM7Star shareholders
elect to redeem their shares and all shares reserved for management
are issued at the closing of the contemplated transaction, Kaixin’s
current shareholder and management will hold approximately 54% of
the issued and outstanding shares, and current shareholders of
CM7Star will hold approximately 46% of the issued and outstanding
shares.
Kaixin was founded in 2015 by its corporate
parent, Renren Inc., to capitalize on growth in China’s used car
financing industry. The Company operates a unique business model
that includes on-line and brick-and-mortar dealerships as well as a
network of parties that provide a range of value-added and
after-sale services. One of the most significant competitive
advantages Kaixin offers its partners and affiliates is its robust
tech-based solutions for sourcing, pricing, marketing and
management systems. Kaixin’s goal is to leverage its established
brand name to create a national dealership by consolidating the
fragmented market in China. Management believes it can drive
further value creation by selling value-added services and
maximizing customer retention.
Following the close of the Transaction, Kaixin
will continue to be led by its current management team with Mr.
Joseph Chen as Chairman of the Board of Directors, Mr. Ji Chen as
Chief Executive Officer and Mr. Thomas Ren as Chief Financial
Officer. Kaixin will remain headquartered in Beijing, China.
Mr. Sing Wang, CEO and Director of CM7Star,
said, “This transaction represents an excellent conclusion to our
strategic review process. The Chinese used car sales market is in
its infancy and is quickly accelerating with enormous growth
potential. Kaixin Auto Group, with its robust business model, is a
leading player in the high-quality premium segment with a seasoned
management team and proven track record of innovation and
execution. We are excited about Kaixin’s forward growth trajectory
and believe this transaction delivers excellent value to our
shareholders.”
Mr. Joseph Chen, Chairman of Kaixin and Chairman
and CEO of Renren, commented, “We are excited to enter into this
agreement with CM7Star as it provides us with the ability to
leverage Kaixin’s leading market position and accelerate its growth
in the rapidly growing premium used car sales segment in China.
China Minsheng Financial Holding, parent company of CM7Star’s
sponsor’s investment manager, brings strong market presence and
extensive experience in China’s auto market and we look forward to
collaborating with CM7Star and capitalizing on their industry
expertise. Furthermore, this transaction will allow Kaixin to gain
direct access to the U.S. capital markets, which we believe will
effectively bolster our goals to further penetrate the Chinese
secondary auto retail and after-sales service market.”
Key Transaction Terms and
Details
100% of the transaction consideration will be
newly issued ordinary shares of CM7Star and amounts remaining in
CM7Star’s trust account at the closing of the business combination
is expected to be used for Kaixin’s capital growth. Upon closing of
the transaction, Kaixin shareholders will receive approximately
28.3 million in shares as consideration and up to approximately
19.5 million additional shares based on incentive earnouts,
issuable in the future upon achievement of certain financial
results and/or stock prices, and subject to certain indemnification
arrangements. In addition, approximately 4.7 million shares of
CM7Star will be issued at closing or reserved for issuance to
Kaixin’s management under its equity incentive plan.
If Kaixin’s revenue equals or exceeds RMB5.0
billion in 2019 (USD 725.7 million), Renren will receive 1.95
million shares. If Kaixin’s 2019 Adjusted EBITDA equals RMB150
million (USD 21.8 million), Renren will receive 3.9 million shares,
increasing proportionally to 7.8 million shares if 2019 Adjusted
EBITDA equals or exceeds RMB200 million (USD 29.0 million). If
Kaixin’s 2020 Adjusted EBITDA equals RMB340 million (USD 49.3
million), Renren will receive 4.875 million shares, increasing
proportionally to 9.75 million shares if 2020 Adjusted EBITDA
equals or exceeds RMB480 million (USD 69.7 million).
Notwithstanding the Revenue and Adjusted EBITDA achieved by the
post-transaction company for any period, Kaixin shareholders will
receive the 2019 earnout shares if the stock price of CM7Star is
higher than $13.00 for any sixty days in any period of ninety
consecutive trading days during a fifteen month period following
the closing, and will receive the 2019 earnout shares and the 2020
earnout shares if the stock price of CM7Star is higher than $13.50
for any sixty days in any period of ninety consecutive trading days
during a thirty month period following the closing.
Timeframe to Completion
The transaction is expected to close in the
first quarter of 2019, subject to the approval of the shareholders
of CM7Star and other customary closing conditions.
Conference Call to Discuss
Transaction
Management will host a conference call to
discuss this transaction on November 7, 2018 at 8:30 AM Eastern
Time (9:30 PM Beijing/Hong Kong time on November 7,
2018).
Dial-in details for the conference call are as
follows:
United States: |
|
+1-845-675-0437 |
International: |
|
+65-6713-5090 |
Hong Kong: |
|
+852-3018-6771 |
China: |
|
400-620-8038 |
Conference ID:
|
|
4299047 |
A replay of the conference call will be
accessible by phone approximately two hours after the conclusion of
the call until November 15, 2018 8:30 AM Eastern Time, at the
following numbers:
United States: |
|
+1-646-254-3697 |
International: Hong
Kong: China: |
|
+61-2-8199-0299
+852-3051-2780 400-632-2162 |
Replay Access
Code: |
|
4299047 |
A slide presentation to accompany the conference call will be
posted on Renren’s Investor Relations website at ir.renren-inc.com,
and will be filed with a Current report on Form 8-K by CM7Star and
on Form 6-K by Renren, both of which will be available on the SEC
website at www.sec.gov.
Advisors
EarlyBirdCapital, Inc. is acting as exclusive
financial and capital markets advisor to CM Seven Star Acquisition
Corporation and Loeb & Loeb LLP, Addleshaw Goddard (Hong Kong)
LLP and King & Wood Mallesons are acting as its legal
advisors.
Simpson Thacher & Bartlett LLP and TransAsia
Lawyers are acting as legal advisors to Kaixin Auto Group. Skadden,
Arps, Slate, Meagher & Flom LLP is acting as counsel to Renren
Inc. Maples & Calder (Hong Kong) LLP is
acting as Cayman counsel to Kaixin and Renren.
About CM Seven Star
Acquisition Corporation
In October of 2017, CM Seven Star Acquisition
Corporation, a Cayman Islands exempted limited liability company
completed its initial public offering. Sponsored
by Shareholder Value Fund, a Cayman fund controlled by its
Board of Directors, which has selected CM Asset Management
(Hongkong) Company Limited (“CMAM”) to serve as the investment
manager for the fund. CMAM is a wholly owned subsidiary of China
Minsheng Financial Holding Corporation Limited, a HKSE listed
Company. CM7Star was formed as a blank check company for the
purpose of entering into a merger, share exchange, asset
acquisition, share purchase, recapitalization, reorganization or
similar business combination with one or more businesses or
entities. CM7Star’s efforts to identify a prospective target
business will not be limited to a particular industry or geographic
location.
About Renren Inc.
Renren Inc. (NYSE: RENN) operates a social
networking service (SNS) business, used auto business and SaaS
business. Renren's American depositary shares, each of which
represents fifteen Class A ordinary shares, trade on NYSE under the
symbol "RENN".
About Kaixin Auto
Group
Founded in 2015 as a venture into China’s used
car financing market by its corporate parent Renren Inc., Kaixin
Auto Group is a leading premium used car dealership in China.
Supported by the rapid growth of China’s used car market and
leveraging its own hybrid business model that offers both strong
online and offline presence, Kaixin has transformed from a
tech-enabled financing platform into a nationwide dealer network
that combines self-owned and affiliated dealers as well as value
added and after-sale services.
Forward-Looking Statements
This press release contains, and certain oral
statements made by representatives of CM Seven Star Acquisition
Corporation, Kaixin Auto Group, Renren Inc. and their respective
affiliates, from time to time may contain, "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. CM Seven Star
Acquisition Corporation's and Kaixin Auto Group's actual results
may differ from their expectations, estimates and projections and
consequently, you should not rely on these forward-looking
statements as predictions of future events. Words such as "expect,"
"estimate," "project," "budget," "forecast," "anticipate,"
"intend," "plan," "may," "will," "could," "should," "believes,"
"predicts," "potential," "might" and "continues," and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, CM Seven Star Acquisition Corporation's, Kaixin Auto
Group's and Renren Inc.’s expectations with respect to future
performance and anticipated financial impacts of the business
combination, the satisfaction of the closing conditions to the
business combination and the timing of the completion of the
business combination. These forward-looking statements involve
significant risks and uncertainties that could cause actual results
to differ materially from expected results. Most of these factors
are outside the control of CM Seven Star Acquisition Corporation,
Kaixin Auto Group or Renren Inc. and are difficult to predict.
Factors that may cause such differences include, but are not
limited to: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the share
exchange agreement relating to the proposed business combination;
(2) the outcome of any legal proceedings that may be instituted
against CM Seven Star Acquisition Corporation, Kaixin Auto Group or
Renren Inc. following the announcement of the share exchange
agreement and the transactions contemplated therein; (3) the
inability to complete the business combination, including due to
failure to obtain approval of the shareholders of CM Seven Star
Acquisition Corporation or other conditions to closing in the share
exchange agreement; (4) delays in obtaining or the inability to
obtain necessary regulatory approvals (including approval from
insurance regulators) required to complete the transactions
contemplated by the share exchange agreement; (5) the occurrence of
any event, change or other circumstance that could give rise to the
termination of the share exchange agreement or could otherwise
cause the transaction to fail to close; (6) the inability to obtain
or maintain the listing of the post-acquisition company's ordinary
shares on NASDAQ following the business combination; (7) the risk
that the business combination disrupts current plans and operations
as a result of the announcement and consummation of the business
combination; (8) the ability to recognize the anticipated benefits
of the business combination, which may be affected by, among other
things, competition, the ability of the combined company to grow
and manage growth profitably and retain its key employees; (9)
costs related to the business combination; (10) changes in
applicable laws or regulations; (11) the possibility that Kaixin
Auto Group or the combined company may be adversely affected by
other economic, business, and/or competitive factors; and (12)
other risks and uncertainties to be identified in CM Seven Star
Acquisition Corporation's proxy statement (when available) relating
to the business combination, including those under "Risk Factors"
therein, and in other filings with the Securities and Exchange
Commission (“SEC”) made by CM Seven Star Acquisition Corporation,
Kaixin Auto Group and Renren Inc. CM Seven Star Acquisition
Corporation, Kaixin Auto Group and Renren Inc. caution that the
foregoing list of factors is not exclusive. CM Seven Star
Acquisition Corporation and Kaixin Auto Group caution readers not
to place undue reliance upon any forward-looking statements, which
speak only as of the date made. None of CM Seven Star Acquisition
Corporation, Kaixin Auto Group and Renren Inc. undertakes or
accepts any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in its expectations or any change in events, conditions
or circumstances on which any such statement is based, subject to
applicable law. The information contained in any website referenced
herein is not, and shall not be deemed to be, part of or
incorporated into this press release.
No Offer or Solicitation
This press release is for informational purposes
only and shall not constitute an offer to sell or the solicitation
of an offer to buy any securities pursuant to the proposed
transactions or otherwise, nor shall there be any sale of
securities in any jurisdiction in which the offer, solicitation or
sale would be unlawful prior to the registration or qualification
under the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
No Assurances
There can be no assurance that the proposed
business combination will be completed, nor can there be any
assurance, if the business combination is completed, that the
potential benefits of combining the companies will be realized. The
description of the business combination contained herein is only a
summary and is qualified in its entirety by reference to the
definitive agreements relating to the business combination, copies
of which will be filed by CM Seven Star Acquisition Corporation
with the SEC as an exhibit to a Current Report on Form 8-K.
Additional Information and Where to Find
It
In connection with the transaction described
herein, CM Seven Star Acquisition Corporation will file relevant
materials with the Securities and Exchange Commission (the “SEC”),
including a proxy statement on Schedule 14A. Promptly after filing
its definitive proxy statement with the SEC, CM Seven Star
Acquisition Corporation will mail the definitive proxy statement
and a proxy card to each stockholder entitled to vote at the
special meeting relating to the transaction. INVESTORS AND SECURITY
HOLDERS OF CM SEVEN STAR ACQUISITION CORPORATION ARE URGED TO READ
THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION
THAT CM SEVEN STAR ACQUISITION CORPORATION WILL FILE WITH THE SEC
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT CM SEVEN STAR ACQUISITION CORPORATION, KAIXIN
AUTO GROUP AND THE TRANSACTION. The preliminary proxy statement,
the definitive proxy statement and other relevant materials in
connection with the transaction (when they become available), and
any other documents filed by CM Seven Star Acquisition Corporation
with the SEC, may be obtained free of charge at the SEC’s website
(www.sec.gov) or by writing to CM Seven Star Acquisition
Corporation Suite 1306, 13th Floor, AIA Central, 1 Connaught Road,
Central, Hong Kong.
Participants in
Solicitation
CM Seven Star Acquisition Corporation, Kaixin
Auto Group, Renren Inc., and their respective directors, executive
officers and employees and other persons may be deemed to be
participants in the solicitation of proxies from the holders of CM
Seven Star Acquisition Corporation ordinary shares in respect of
the proposed transaction. Information about CM Seven Star
Acquisition Corporation’s directors and executive officers and
their ownership of CM Seven Star Acquisition Corporation’s ordinary
shares is set forth in CM Seven Star Acquisition Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2017
filed with the SEC, as modified or supplemented by any Form 3 or
Form 4 filed with the SEC since the date of such filing. Other
information regarding the interests of the participants in the
proxy solicitation will be included in the proxy statement
pertaining to the proposed transaction when it becomes available.
These documents can be obtained free of charge from the sources
indicated above.
For investor and media inquiries, please
contact:
In China:The Piacente Group, Inc.Ross WarnerTel:
+86 (10) 5730-6201Email: Kaixin@tpg-ir.com
In the United States:The Piacente Group, Inc. Jean
Marie YoungTel: +1-212-481-2050Email: Kaixin@tpg-ir.com
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