CHENGDU, China, July 8, 2020 /PRNewswire/ -- Senmiao
Technology Limited ("Senmiao") (NASDAQ: AIHS), a provider of
automobile transaction and related services targeting the
online ride-hailing industry in China, today announced that its Chinese
variable interest entity has secured a RMB50
million (approximately US$7
million) investment from Hongyi Industrial Group Co., Ltd.
("Hongyi"), an affiliate of the largest
shareholder of Chengdu Road & Bridge Engineering
Co., Ltd., a construction engineering company publicly listed on
the A-Share market in China.
This investment was not made in Senmiao directly, but rather
into Jinkailong Automobile Leasing Co., Ltd. ("Jinkailong"), which
Senmiao controls through its majority owned subsidiary, Hunan Ruixi
Financial Leasing Co., Ltd. ("Hunan Ruixi"). Jinkailong is the
entity through which Senmiao operates its automobile transaction
and related services business ("Auto Business"), primarily in the
city of Chengdu. Senmiao intends
to use the capital investment for the expansion of Jinkailong's
Auto Business in Chengdu,
specifically to purchase more automobiles for its vehicle rental
business to short lease ride-hailing drivers and open additional
retail stores to provide auto financing and transaction
facilitation services to ride-hailing drivers.
Pursuant to the agreement governing this investment (the "JKL
Investment Agreement"), Hongyi has agreed to make a capital
contribution to Jinkailong of RMB50
million (approximately US$7.0
million) over the coming months in consideration of a 27.03%
equity interest in Jinkailong. As a result of the investment by
Hongyi, the ownership of the current shareholders of Jinkailong
(including Hunan Ruixi and certain other unaffiliated parties) will
be proportionally diluted, although Senmiao will continue to
control Jinkailong via existing voting agreements with certain
shareholders of Jinkailong.
Mr. Xi Wen, Chief Executive
Officer of Senmiao, commented, "We are delighted to sign this
landmark deal with Hongyi as we believe it will increase our
ability to further expand our market share in the rapidly
developing online ride-hailing industry in China. Hongyi, a corporate enterprise in the
business of real estate and industrial investment in Sichuan, has a strong track record of
successful business ventures and is an
affiliate of the largest shareholder of an A-share
listed company in China. This
agreement marks a significant vote of confidence by Hongyi in our
long-term strategy to monetize and generate profits in our
streamlined automobile transaction and related services business.
With the additional capital, we believe we are in an even stronger
position to weather the adverse impact that COVID-19 has had on our
business and focus squarely on expanding our auto business while
driving long-term sustainable growth for our shareholders."
The JKL Investment Agreement provides performance targets for
Jinkailong during a three-year performance commitment period
following the closing of the transaction. Failure to meet certain
performance targets will trigger the redemption right of Hongyi,
which would require certain shareholders of Jinkailong (including
Hunan Ruixi) to repurchase Hongyi's equity interest in Jinkailong.
One of these performance targets is that Jinkailong become public
though an IPO or be merged with a public company within three and a
half years following the closing. The JKL Investment Agreement
also provides Hongyi certain other shareholder rights, including,
but not limited to, dividend rights, a right of first refusal for
any equity transfer from the other shareholders of Jinkailong, a
tag-along right, anti-dilution rights, subscription rights and
priority in liquidation or dissolution of Jinkailong.
For additional information regarding this transaction, please
review the Current Report on Form 8-K that Senmiao has filed with
the U.S. Securities and Exchange Commission.
About Senmiao
Headquartered in Chengdu,
Sichuan Province, Senmiao provides
automobile transaction and related services including sales of
automobiles, facilitation and services for automobile purchase and
financing, management, operating lease, guarantee and other
automobile transaction services aimed principally at the growing
ride-sharing market in Senmiao's areas of operation in China. For more information about Senmiao,
please visit: http://www.senmiaotech.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning the
investment in Jinkailong described herein, the
development of Senmiao's auto business, the Chinese ride-sharing
and automobile financial leasing markets, and Senmiao's plans,
objectives, goals, strategies, and performance, as well as the
assumptions such statements and other statements that are not
statements of historical facts. When Senmiao uses words such as
"may," "will," "intend," "should," "believe," "expect,"
"anticipate," "project," "estimate" or similar expressions that do
not relate solely to historical matters, it is making
forward-looking statements. Forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties that may cause actual results to differ materially
from Senmiao's expectations, including, but not limited to, risks
and uncertainties relating to the following: the risk that the
investment by Hongyi may not be consummated timely or at all; the
risk that Jinkailong may not effectively utilize the investment
proceeds to grow its auto business; the risk that the anticipated
growth of Senmiao's auto business may not be realized; the risks
associated with the discontinuance of Senmiao's online lending
business; Senmiao's future business development; product and
service demand and acceptance; the risks and impact of the ongoing
coronavirus outbreak in China;
changes in technology; economic conditions; reputation and brand;
the impact of competition and pricing; the impact of government
regulations; fluctuations in general economic and business
conditions in China and other
risks expressed in reports filed by Senmiao with the U.S.
Securities and Exchange Commission. For these reasons, among
others, investors are cautioned not to place undue reliance on any
forward-looking statements. Senmiao's filings with the U.S.
Securities and Exchange Commission are available for review at
www.sec.gov. Senmiao undertakes no obligation to publicly revise
any forward-looking statements to reflect changes in events or
circumstances.
For more information, please contact:
At the Company:
Yiye Zhou
Email: edom333@ihongsen.com
Phone: +86 28 6155 4399
Investor Relations:
Rene Vanguestaine
Christensen
Email: rvanguestaine@ChristensenIR.com
Phone: +86 178 1749 0483
Linda Bergkamp
Christensen
Email: lbergkamp@ChristensenIR.com
Phone: +1 480 614 3004
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SOURCE Senmiao Technology Limited