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 Zhou
    Jul 12, 2019 12:00 PM  PT
Uxin Shares Skyrocket 15% on Loan Business Divestiture, Private Placement of Notes
author: Belinda Zhou   

Shares in Uxin Ltd. (Nasdaq: UXIN) soared 15 percent to $2.68 per American depositary share by midday Friday after the company announced it will divest its loan facilitation business and will get $50 million in a private placement of its convertible notes.

The Beijing-based used car sales platform said in a statement today that Golden Pacer, a FinTech platform, will provide $100 million cash and a number of its shares in the divestiture of Uxin's loan facilitation business. 

Under the agreement, Uxin will provide inspection and valuation services to Golden Pacer's used car financing line, while Golden Pacer will provide loan facilitation services to Uxin, the report stated.

Upon the closing of the divestiture, Uxin will no longer bear any guarantee liabilities or credit risks for used car loans facilitated.

"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 in the statement.

The company also announced today that it will issue convertible notes worth $50 million to investment funds managed by PacificBridge Asset Management through a private placement.    

Notes will bear an interest rate of 10 to 11 percent for the maturation periods of 12 and 15 months and can be converted into shares at  $4.989 per ADS after a 180-day period.

"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," Dai said.

Both deals are expected to be closed in the second half of this year, according to the report.

Last month, Uxin reported a dramatic improvement in its core business last month, seeing quarterly revenue reach $149.1 million, up 55 percent year-over-year. The company also narrowed its losses to $42.3 million in the first quarter by 65 percent, it said.

Since its debut on the Nasdaq a year ago, shares in Uxin collapsed 71 percent.