SHANGHAI, May 17, 2019 /PRNewswire/ -- China Rapid Finance
Limited (NYSE: XRF) (the "Company") today announced changes in its
business operations and to its board of directors (the "Board"),
acknowledged its inability to file its annual report on Form 20-F
in a timely manner and noted the receipt of notices from the New
York Stock Exchange (the "NYSE") that the Company is not in
compliance with the NYSE's continued listing standard with respect
to both the minimum average share price and its failure to timely
file the annual report.
Changes in Business Operations
The regulatory environment for the Company's business continues
to be challenging. Chinese regulators have instructed P2P
platforms nationwide to implement "triple reduction," which
includes (i) reducing outstanding loan balances, (ii) reducing the
number of lenders, and (iii) reducing the number of
borrowers. The Company recently received a notice requesting
changes to the Company's business practices in order to be in full
compliance with regulatory requirements set forth in Circular 175.
These events may have a negative impact on the company's financial
performance. As a result of these developments, fewer new lenders
are joining the Company's marketplace platform than are exiting. In
addition, the Company has informed the lenders on its
platform that it is transitioning from a "full redemption
when due" repayment structure to a monthly payment plan due to
insufficient demand for loan products as a result of the uncertain
regulatory environment and other factors. This means that
these lenders must rely on borrowers' monthly payment against their
investments in accordance with the contractual arrangement the
Company has with its lenders. An exchange has also been established
by the Company for those investors that prefer to sell their loans;
however, the Company provides no guarantees that investors will be
able to sell their loans and at what price they will be able to
sell them.
The Company will continue to operate its marketplace lending
platform and will concentrate on institutions as the primary
funding source. The Company has also significantly downsized
all parts of its operations relating to retail marketplace lending,
other than collections.
Going forward, the Company plans to focus on facilitating loans
through its micro credit company and continue to market its
decision science software to banks and other credit
intermediaries. The Company is also evaluating certain
strategic opportunities and fund-raising options for the future of
its business, in light of the current regulatory environment.
Russell Krauss, Vice-Chairman and
Co-CEO of the Company has transitioned his day-to-day
responsibilities to focus on strategic alternatives for the
Company.
Changes to Board of Directors
Effective April 12, 2019, the
Board has appointed Mr. Edward Yan
as an independent director and Chair of the Audit Committee and has
also appointed Chief Financial Officer Mr. Steven Foo to the Board as an executive
director. Mr. Zhou Ji'an resigned
from the Board for personal reasons effective April 29, 2019.
Delay in the Filing of the Annual Report on Form 20-F for the
Year Ended December 31, 2018 (the
"Annual Report")
On April 30, 2019, the Company
filed a Form 12b-25 to extend the deadline for the timely filing of
the Annual Report. The Company has been unable to file the Annual
Report by the extended deadline of May 15,
2019, and is therefore not in compliance with the continued
listing requirements under the timely filing criteria established
in Section 802.01E of the NYSE Listed Company Manual. On
May 16, 2019, the Company received a
notice from the NYSE noting such non-compliance.
This delay is the result of the recent change in the Company's
finance department personnel, including the Chief Financial
Officer, as well as the need to resolve issues relating to, among
others, consolidation of a VIE entity's financial statements and
other prior period adjustments that will likely result in the need
to restate prior period financial statements. In particular, the
Company expects that it will need to restate its quarterly results
for the three months ended March 31,
2018, June 30, 2018 and
September 30, 2018 that had
previously been announced, and such results should not be relied
upon by investors. The prior period adjustments are expected to
relate to (i) accounting treatment on transition from the previous
Safeguard Program to the loyalty incentive program for lifestyle
loan in February 2018 (i.e.,
recognition of the termination of the previous Safeguard Program,
and recognition of the new loyalty incentive program as refund
liability), (ii) recognition of lenders' virtual accounts' funds
held in custodian banks as restricted cash on balance
sheet, which were previously treated as off-balance sheet
items, (iii) accounting for coupon expenses paid to investors as a
deduction of revenue instead of sales and marketing expenses, and
(iv) consolidation of a VIE entity since the second half of
2018.
In accordance with NYSE rules, the Company will have six
months from the required filing due date to comply with the NYSE
listing standards (which period may be extended at the discretion
of the NYSE). The Company can regain compliance at any time during
this six-month period by filing the Annual Report. In the
interim, the Company's American Depositary Shares ("ADSs") will
continue to trade on the NYSE, subject to compliance with other
continued listing requirements, and to ongoing oversight by the
NYSE. The Company will continue to endeavor to file the Annual
Report and restated quarterly reports for the periods noted above
as soon as it is able to resolve the issues described above.
NYSE Notice of Non-Compliance with Continued Listing
Standards
On May 8, 2019, the Company
received a notice from the NYSE that the Company is not in
compliance with the NYSE's continued listing standard with respect
to the minimum average share price required by the NYSE because the
average closing price of its ADSs had fallen below $1.00 per share over a period of 30 consecutive
trading days.
Under the NYSE standards, the Company has six months following
receipt of the notification to regain compliance with the minimum
share price requirement. The Company can regain compliance during
the six-month cure period if on the last trading day of any
calendar month during the period or on the last trading day of the
period, the Company's ADSs have a closing share price of at least
$1.00 per share and an average
closing share price of at least $1.00
per share over the previous 30 consecutive day trading period.
The Company intends to cure the price deficiency and return to
compliance with the NYSE continued listing requirement within the
applicable cure period. As required by the NYSE, the Company will
notify the NYSE of its intent to cure. During this period, the
Company's ADSs will continue to be traded on the NYSE, subject to
compliance with other continued NYSE listing requirements. The NYSE
notification does not affect the Company's business operations or
its Securities and Exchange Commission reporting requirements and
does not conflict with or cause an event of default under any of
the Company's material agreements.
About China Rapid Finance Limited
China Rapid Finance (NYSE: XRF) is a leading fintech company
that operates an award-winning microcredit company and one of
China's largest online consumer
finance marketplaces. The Company enables affordable access
to digital credit for one of the world's largest untapped consumer
credit markets: China's
mobile-active consumers. The Company utilizes its proprietary,
mobile-first technology to select consumers for its platform. China
Rapid Finance was founded by Dr. Zane
Wang, who has decades of consumer credit industry experience
in the U.S. and China. For more
information, please visit http://ir.crfchina.com.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are made under the
"safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements can be identified by
terminology such as "may," "will," "expects," "anticipates,"
"aims," "future," "intends," "plans," "believes," "estimates,"
"likely to" and similar statements. The Company may also make
written or oral forward-looking statements in its reports filed
with, or furnished to, the U.S. Securities and Exchange Commission,
in its annual reports to shareholders, in press releases and other
written materials and in oral statements made by its officers,
directors or employees to third parties. Statements that are not
historical facts, including statements about the Company's beliefs
and expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: the Company's ability to file its Annual
Report in a timely manner or regain compliance with NYSE continued
listing standards, adjustments to prior period financial
statements, unexpected difficulties in the Company's pursuit of its
goals and strategies; the unexpected developments, including slow
growth, in the consumer lending market; reduced demand for, and
market acceptance of, the Company's products and services;
difficulties keeping and strengthening relationships with borrowers
or investors; difficulties of expanding data and channel
partnerships, potentially costly servicing activities; competition
in the consumer lending market; PRC governmental regulations and
policies; and general economic and business conditions in the
regions where the Company provides products and services. Further
information regarding these and other risks is included in the
Company's reports filed with, or furnished to, the Securities and
Exchange Commission. All information provided in this announcement
and in the attachments is as of the date of this announcement, and
the Company undertakes no duty to update such information except as
required under applicable law.
Investor Relations Contact:
The Blueshirt Group
Gary T. Dvorchak, CFA
+1 (323) 240-5796
gary@blueshirtgroup.com
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