Luckin Coffee co-founder sells stake in Car Inc, China’s largest car rental firm, to BAIC subsidiary for US$180.6 million

Ride-hailing services provider UCar, which is controlled by Charles Lu Zhengyao, says it will sell all its shares in Car Inc

Jiangxi Jinggangshan BAIC Investment Management is back in the driving seat after SAIC decides against stake acquisition

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UCar, which is selling its 20.9 per cent stake, says it will use the proceeds to repay loans secured against the stock, and that it aims to optimise its debt structure. Photo: Xinhua

Published: 7:28pm, 20 Jul 2020Updated: 10:39pm, 20 Jul 2020

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.

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.