CM Seven Star Acquisition Corporation (“CM Seven Star”) (NASDAQ:
CMSS), a blank check company formed for the purpose of entering
into a business combination with one or more businesses, and Renren
Inc. (“Renren”) (NYSE: RENN), which operates a used car business
and SaaS business, today announced the successful consummation of
the previously announced transaction contemplated by the share
exchange agreement dated as of November 2, 2018 by and among CM
Seven Star, Kaixin Auto Group (“Kaixin”) and Renren (the “Share
Exchange Agreement”), and approved by CM Seven Star shareholders on
April 29, 2019.
Upon the closing of the transactions contemplated in the Share
Exchange Agreement in which CM Seven Star acquired 100% of the
issued and outstanding securities of Kaixin, Renren received
approximately 28.3 million ordinary shares of CM Seven Star,
representing 71.7% of the total outstanding shares of CM Seven
Star. An additional 4.7 million ordinary shares of CM Seven Star
will be issued in exchange for currently outstanding options in
Kaixin or reserved for issuance under the equity incentive plan of
CM Seven Star. Additionally, 19.5 million earnout shares were
issued in escrow. Approximately 20.4 million ordinary shares were
redeemed in connection with the closing of the transaction. Kaixin
has raised a total of $30.9 million from the business combination
and related transactions, including $2.4 million that remains in
the trust account established for the benefit of CM Seven Star’s
public shareholders following the redemption and $28.5 million from
convertible loans and a private placement.
Renren may be entitled to receive earnout shares as follows: (1)
if the combined company’s gross revenue for the year ended December
31, 2019 is greater than or equal to RMB 5,000,000,000, Renren is
entitled to receive 1,950,000 ordinary shares of CM Seven Star; (2)
if the combined company’s adjusted EBITDA for the year ended
December 31, 2019 is greater than or equal to RMB 150,000,000,
Renren is entitled to receive 3,900,000 ordinary shares of CM Seven
Star, increasing proportionally to 7,800,000 ordinary shares if
Company’s adjusted EBITDA is greater than or equal to RMB
200,000,000; and (3) if the combined company’s adjusted EBITDA for
the year ended December 31, 2020 is greater than or equal to RMB
340,000,000, Renren is entitled to receive 4,875,000 ordinary
shares of CM Seven Star, increasing proportionally to 9,750,000
ordinary shares if the combined company’s adjusted EBITDA is
greater than or equal to RMB 480,000,000. Notwithstanding the
revenue and adjusted EBITDA achieved by the combined company for
any period, Renren will receive the 2019 earnout shares if the
stock price of CM Seven Star is higher than $13.00 for any sixty
days in any period of ninety consecutive trading days during an
fifteen month period following the closing, and will receive the
2019 earnout shares and the 2020 earnout shares if the stock price
of CM Seven Star 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.
CM Seven Star’s company name has been changed to Kaixin Auto
Holdings and its ticker symbol on the Nasdaq stock exchange will
change from “CMSS” to “KXIN” effective at the start of trading on
May 2, 2019. No action is needed from current CM Seven Star
shareholders in relation to the ticker symbol change. The new CUSIP
is G5223X100.
Kaixin will continue to be led by its current management team
with Joseph Chen as Chairman of the Board of Directors, Ji Chen as
Chief Executive Officer and Thomas Ren as Chief Financial Officer.
Kaixin will remain headquartered in Beijing, China.
Sing Wang, Chief Executive Officer of CM Seven Star, said,
“Kaixin’s leadership has done a terrific job creating one of the
leading premium segment nationwide used car dealership networks
offering value-added and after-sales services in China. The
evolution of the automobile market sales cycle in China is ripe for
the value-added benefits that Kaixin’s differentiated model
delivers. We are excited about the ways this transaction will
leverage Kaixin’s dealership network platform to bring exciting
growth and solid shareholder value.”
Joseph Chen, Chairman of Kaixin and Chairman & Chief
Executive Officer of Renren Inc., added, “We are delighted to
achieve this milestone and welcome our new shareholder partners.
Sing and his team have been exceptional partners throughout this
process. We have a solid foundation in place and look forward to
further scaling our operations to bring our proven market solutions
to even more dealerships in China in this new chapter of
growth.”
EarlyBirdCapital, Inc. acted as exclusive financial and capital
markets advisor to CM Seven Star. Loeb & Loeb LLP acted as
securities counsel for CM Seven Star. Skadden, Arps, Slate,
Meagher & Flom LLP acted as U.S. counsel for Renren. Simpson
Thacher & Bartlett LLP acted as U.S. counsel for Kaixin. Maples
& Calder (Hong Kong) LLP acted as Cayman counsel for Renren and
Kaixin. TransAsia Lawyers acted as PRC counsel for
Kaixin.
About CM Seven Star
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 members of 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 Hong Kong Stock Exchange listed Company. CM
Seven Star 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. CM Seven
Star’s efforts to identify a prospective target business will not
be limited to a particular industry or geographic location.
About Renren Inc.
Renren Inc. operates a 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 its own and
affiliated dealers as well as value-added and after-sale
services.
Important Notice Regarding Forward-Looking Statements
This press release contains certain “forward-looking statements”
within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, both as amended. Statements that are not
historical facts, including statements about the pending
transaction between CM Seven Star Acquisition Corporation (“CM
Seven Star”), Renren Inc. (“Renren”) and Kaixin Auto Group
(“Kaixin”) and the transactions contemplated thereby, and the
parties’ perspectives and expectations, are forward-looking
statements. Such statements include, but are not limited to,
statements regarding the proposed transaction, including the
anticipated initial enterprise value and post-closing equity value,
the benefits of the proposed transaction, integration plans,
expected synergies and revenue opportunities, anticipated future
financial and operating performance and results, including
estimates for growth, the expected management and governance of the
combined company, and the expected timing of the transactions. The
words “expect,” “believe,” “estimate,” “intend,” “plan” and similar
expressions indicate forward-looking statements. These
forward-looking statements are not guarantees of future performance
and are subject to various risks and uncertainties, assumptions
(including assumptions about general economic, market, industry and
operational factors), known or unknown, which could cause the
actual results to vary materially from those indicated or
anticipated.
Such risks and uncertainties include, but are not limited to:
(i) risks related to the ability of CM Seven Star and Kaixin to
successfully integrate the businesses; (ii) the occurrence of any
event, change or other circumstances that could give rise to the
termination of the applicable transaction agreements; (iii) the
risk that there may be a material adverse change with respect to
the financial position, performance, operations or prospects of
Kaixin or CM Seven Star; (iv) risks related to disruption of
management time from ongoing business operations due to the
proposed transaction; (v) the risk that any announcements relating
to the transaction could have adverse effects on the market price
of CM Seven Star’s common stock; (vi) the risk that the transaction
and its announcement could have an adverse effect on the ability of
Kaixin and CM Seven Star to retain customers and retain and hire
key personnel and maintain relationships with their suppliers and
customers and on their operating results and businesses generally;
and (vii) the risk that the combined company may be unable to
achieve cost-cutting synergies or it may take longer than expected
to achieve those synergies. A further list and description of risks
and uncertainties can be found in CM Seven Star’s Annual Report on
Form 10-K for the fiscal year ending December 31, 2018 filed with
the SEC, in CM Seven Star’s quarterly reports on Form 10-Q filed
with the SEC subsequent thereto and in the proxy statement on
Schedule 14A filed with the SEC by CM Seven Star in connection with
the transaction, and other documents that the parties may file or
furnish with the SEC, which you are encouraged to read. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements.
Forward-looking statements relate only to the date they were made,
and CM Seven Star, Renren, Kaixin, and their subsidiaries undertake
no obligation to update forward-looking statements to reflect
events or circumstances after the date they were made except as
required by law or applicable regulation.
For more information, please visit: http://ir.kaixin.com
For investor and media inquiries, please
contact:
In China: The Piacente Group, Inc. Ross Warner Tel: +86 (10)
5730-6201 Email: Kaixin@tpg-ir.com
In the United States: The Piacente Group, Inc.
Jean Marie Young Tel: +1-212-481-2050 Email: Kaixin@tpg-ir.com
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