Kaixin Auto Holdings (NASDAQ: KXIN) is screaming for the top in the market this morning after announcing that it has entered into a binding term sheet and will be making big management changes. Here’s what’s going on:
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KXIN Stock Rockets On Term Sheet & Management Changes
In the press release, Kaixin Auto Holdings said that it entered into a binding term sheet with Haitoche Limited on November 3, 2020. Moreover, the company has made big changes to its senior management.
when it comes to the binding term sheet, it explaines that haitaoche will merge with a newly formed, wholly-owned subsidiary of Kaixin. Once the merger is complete Haitoche will continue as the surviving entity and wholly-owned subsidiary of Kaixin.
In order to pay for the merger, KXIN said that it will issue a number of oridinary shares to shareholders of Haitaoche so that the transaction closes with Haitaoche shareholders collectively owning 51% of Kaixin after the closing of the merger. According to the Term Sheet, Haitaoche will continue selling vehicles. It will also contribute other projects to the company post merger.
In the release, the company said that it and Haitaoche have agreed to negotiate in good faith and to enter into a definitive agreement with respect to the merger. Of course, the closing of the transaction is subject to closing conditions and regulatory approvals.
KXIN also said that it will be making changes to its senior management and Board of Directors. Upon the closoing of the transaction, Haitaoche shareholders will have the right to appoint a majority of Kaixin’s directors. Renren, the current controlling shareholder of the company will have the right to appoint the remaining directors, as well as veto rights on certain major corporate matters.
In the release, the company announced that Mr. Chen Ji and Mr. Jinfeng Xie have resigned from their positions as CEO and COO. The board of directors has appointed Mr. Mingjun Lin, founder of Haitaoche, as the acting CEO.
Kaixin said that Mr. Mingjin Lin has substantial experience in automotive internet media. He has served in several management positions, including at TOM Online and Tencent, and was the founder of SUV.cn.
In a statement, Joseph Chen, Chairman at KXIN, had the following to offer:
On behalf of Kaixin’s Board of Directors and management team, I’d like to thank Mr. Ji and Mr. Xie for their contributions to the Company during their service in the management team. We wish them the best in their future endeavors. I would also like to warmly welcome Mr. Mingjun Lin to the Company. Mr. Lin brings to Kaixin his profound experience in internet and auto retail business. I look forward to working with him and am confident that his strong leadership and deep industry background will make him a tremendous asset to our management team.
This News Is Huge
The news released by Kaixin proved to be overwhelmingly positive. After all, with the merger in mind, not only will the company benefit from a larger product offering and audience, management changes are being made so that the company can better serve its shareholders.
All in all, if this transaction goes through, and all signs point that it will, the value of the company will end up substantially higher. So, there’s good reason that investors are so excited about KXIN stock this morning.
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