Hua Ping replaced Lu Zhengyao as a major shareholder in car rental in Shenzhou? It’s actually a misunderstanding from the outside world


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Wen / Lei Jianping
Source: touch Web
Today, the Hong Kong Stock Exchange released a dynamic showing that Warburg Pincus investment has completed the acquisition of the car rental shares of Shenzhou Youche, worth about HK $1.125 billion.
The deal amounted to some 363 million shares, with an average price of HK $3.1009 per share, 36 per cent higher than today’s closing price.
After the completion of the transaction, Huaping investment’s shareholding in car rental in Shenzhou increased from 10.11% to 27.22%, replacing Shenzhou Youche as the largest shareholder of car rental in Shenzhou. Yuche, controlled by Lu Zhengyao’s family, retired.
Some media lamented that after 14 years of establishment of car rental in Shenzhou and 7 years of landing in Hong Kong stock market, they finally became “children of others”.
However, the reality is that at present, Hua Ping investment has not replaced Lu Zhengyao as a major shareholder of car rental in Shenzhou. The outside world has misread the information of HKEx.
There are preconditions for becoming a major shareholder
Before that, on April 16, 2020, Shenzhou car rental issued a notice that amber gem, the shareholder of the company, purchased 98.6 million shares of the company from the wholly-owned subsidiary of Shenzhou Youche at the price of HK $2.30 per share.
In addition, amber gem acquired shares conditionally from the wholly-owned subsidiary of China Youche at a price of HK $3.40 per share, with a total consideration of no more than US $115 million and no more than about 264080384 shares calculated at the exchange rate of US $1 to HK $7.7525 (the “second share acquisition”).
If the first stage is completed, the shareholding of Shenzhou Youche will be reduced to 21.27%, which is still the major shareholder of Shenzhou car rental, and the shareholding of amber gem will be increased to 14.76%. If the second stage is completed, the shareholding of Shenzhou Youche will be reduced to 8.81%, and the shareholding of amber gem will be increased to 27.22%.
Amber gem is a subsidiary of the U.S. private equity organization Huaping. In 2012, amber gem invested $200 million in car rental in Shenzhou, which is closely related to Huaping. That is to say, when the second stage is completed, Warburg Pincus will become a major shareholder of car rental in China.
In order to complete the second stage, certain preconditions shall be met, i.e. “the representations and warranties provided by UCAR Inc. are free from material violation or untruth; the business of car rental in Shenzhou is free from material adverse change; and the customary preconditions for other transactions of this nature.”
Therefore, under the current situation, the second stage investment of Warburg Pincus investment is not really completed.
According to an investment industry person, the reason why Hong Kong Stock Exchange has updated the 27.22% equity of Huaping investment in car rental in Shenzhou is mainly based on the input of Shenzhou car rental announcement information on April 16, which also brings misunderstanding to many people, but the investment of Huaping investment in the second quarter is still in progress.
According to the website, Warburg Pincus investment is expected to make an explanation soon.
It’s not easy for heavy asset companies
Lu Zhengyao’s commercial empire suffered a strong impact after Ruixing coffee counterfeiting. Prior to this, the ownership of car rental of Shenzhou Youche had been passively reduced, because on April 3, 2020, the stock price of car rental in Shenzhou fluctuated greatly. The holding amount of Shenzhou Youche also dropped from 29.76% to 27.65%.
Shenzhou Youche once said that due to the negative impact of the Ruixing coffee incident, there has been a run on financial institutions and suppliers. The company is actively communicating with all parties to minimize the negative impact and strive to maintain normal capital cooperation. Specific debt repayment is being arranged item by item.
Shenzhou Youche pointed out that if the run happens, it will cause great pressure on the company’s cash flow and even affect the normal continuous operation.
In fact, even without the influence of Ruixing coffee counterfeiting, the life of Shenzhou department is not easy, because it is a heavy asset industry, which consumes a lot of capital. The current epidemic will have a great impact on the business of car rental, special car and baowo car in Shenzhou, which will lead to the tightening of the capital chain of the whole Shenzhou department.
But Shenzhou department is not without value. Shenzhou car rental is still the largest car rental market in China. The specific value of Shenzhou special car also exists. What is needed is the opportunity to restart, the social life returns to normal, and the recovery of tourism economy.
In fact, the problems encountered by Shenzhou department are not only the problems of Lu Zhengyao’s team, but also the problems faced by most of the world’s heavy asset industries, and Shenzhou’s car rental counterparts in the United States are facing the same difficulties.
In this long winter process, the key is to see whether Lu Zhengyao’s team can withstand the crisis and turn it around. Otherwise, it may cause the control right of the enterprise to change hands, and the children raised by one hand will become the children of others.
(statement: This article only represents the author’s point of view, not Sina’s point of view.)