Chinese ride-hailing services provider UCar, which is controlled by Charles Lu Zhengyao, co-founder of scandal-hit Luckin Coffee, will sell all its shares in Car Inc, the country’s largest car rental company, to a subsidiary of Beijing-based, state-owned car maker BAIC Group.
UCar will sell its 20.9 per cent shareholding, or no more than 443 million shares, in Car Inc to Jiangxi Jinggangshan BAIC Investment Management for up to HK$1.4 billion (US$180.6 million), the company said in a statement.
At HK$3.10 a share, the sale comes 86 per cent lower than a peak of HK$22 a share recorded in May 2015. UCar said it will use the proceeds to repay loans secured against the stock, and that it aimed to optimise its debt structure.
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The BAIC subsidiary was revealed as a buyer in an announcement in early June, but it walked away from the deal after Car Inc said on July 2 that it was in fact Shanghai-based, state-owned SAIC Motor Corporation, another car maker, which would acquire the 443 million shares from UCar and 170 million shares from Amber Gem, a unit of US private equity firm Warburg Pincus.
But earlier on Monday, SAIC Motor said a wholly owned subsidiary, SAIC Motor Hong Kong, had decided against acquiring the 613 million shares in Car Inc because of a disagreement over terms of the acquisition. Car Inc shares fell 4.9 per cent following the announcement, before they were suspended from trading.
The stake sale is pending UCar’s internal decision-making procedures and government and regulator approvals. In a separate announcement, the company said it will hold a shareholder meeting on August 4 in Beijing to discuss the sale.
Car Inc’s revenue and profit have slumped because of the coronavirus outbreak. In the first quarter, it recorded a net loss of 187.7 million yuan (US$26.9 million), compared with net profit of 390 million yuan in the same period in 2019. Its revenue slumped by 28.4 per cent to 1.3 billion yuan.
The stock has been on a roller-coaster ride over the past several months, slumping in April and May after the Luckin accounting fraud emerged in early April. But it soared by more than 20 per cent in June and July, after news emerged about the potential acquisition by BAIC and SAIC, respectively.
Lu has been entangled in the restructuring of Luckin Coffee. He was dropped as chairman earlier this month as the coffee chain start-up prepares to exit from Nasdaq barely 14 months after its stock debuted on the New York bourse amid great fanfare.
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More from South China Morning Post:
- Luckin Coffee appoints liquidators, financial advisers to restructure and salvage business after accounting scandal
- Luckin Coffee drops co-founder Charles Lu Zhengyao as chairman of new board, keeps investors guessing on who’s in charge of scandal-tainted chain