Uxin Shares Skyrocket 15% on Loan Business Divestiture, Private Placement of Notes

The used car sales platform will receive about $150 million upon the completion of the two deals announced today.
Belinda ZhouJul 13,2019,06:55

Shares of Uxin Ltd. (Nasdaq: UXIN) jumped 14 percent at $2.68 per American depository share in intraday trading on Friday after it announced divestiture of its loan facilitation and private placement of convertible notes today.

The Beijing-based used car sales platform said it gained an aggregate of $100 million cash and a certain number of shares of Golden Pacer by divesting its loan facilitation to that financial technology platform.

After the transaction, Uxin ceased to bear any guarantee liabilities or credit risks for used car loans facilitated, which were transferred to Golden Pacer and third-party financing partners.

"We will be able to focus all of our resources on online used car transactions, which embody the key nature of used car e-commerce, and continuously optimize our product and service offerings, improve professional standards, and enhance the used car purchasing experience for consumers,” Kun Dai, the chief executive officer of Uxin, said.

The company announced that it sold convertible notes of $50 million to PacificBridge Asset Management at the same day. 

Each note bears rate of 10 percent or 11 percent for 12-month or 15-month maturity respectively, and it can be convertible into shares with conversion price of  $4.989 per ADS after a 180-day period after the issuance. 

“This new private placement will bolster our initiatives to optimize the online used car purchasing experience and better position us to extend our leadership in China’s used car e-commerce sector,” Kun said.

Both definitive transaction agreements are expected to be fully completed in the second half of 2019.

Uxin reported dramatic increase in its core business last month, seeing its quarterly net revenue reached $149.1 million, representing a year-over-year increase of 55% from that of 2018.

At the same time, Uxin narrowed its net loss to $42.3 million in the first quarter by 65 percent, compared to a net loss of about $121.6 million in the same period last year.

Since its debut on the Nasdaq in 2018, the stock has collapsed 71 percent.