Cango Inc. Announces Definitive Agreements to Dispose PRC Business

Rhea-AI Summary

Cango Inc. (NYSE: CANG) has announced definitive agreements to sell its PRC Business to Ursalpha Digital for US$351.94 million in cash. The deal structure includes an initial payment of US$210.64 million at closing, with remaining payments subject to tax obligations and credit risk exposure reduction.

This transaction follows a March 14, 2025 preliminary non-binding letter from Enduring Wealth Capital (EWCL) proposing to acquire control of Cango and dispose of its PRC Business. The deal's closing conditions include shareholder approval and completion of internal restructuring to separate PRC operations from international businesses, including Bitcoin mining and automotive trading.

If completed, Cango will file to terminate its 'China Concept Stock' status with CSRC. The agreement includes a reversal clause if the status isn't terminated within three months or if a proposed secondary acquisition of 10 million Class B shares by EWCL fails to execute.

Positive

• Substantial cash consideration of US$351.94M from PRC Business sale
• Strategic restructuring to separate Chinese and international operations
• Maintains Bitcoin mining and automotive trading business outside China

Negative

• Risk of transaction reversal if China Concept Stock status isn't terminated
• Complex payment structure with delayed installments
• Requires amendments to existing crypto mining purchase agreement

Insights

Corporate Finance Expert

This transaction marks a fundamental transformation of Cango's business model. The company is divesting its entire PRC operations for $351.94 million in cash - a figure representing approximately 88% of Cango's current market capitalization of $400.62 million. This substantial valuation suggests the company is receiving fair compensation for these assets.

The transaction structure is notable: $210.64 million upon closing with the remainder contingent on tax filings and reduction in credit risk exposure. This phased approach provides initial liquidity while protecting the buyer from potential liabilities.

Post-transaction, Cango will pivot to focus exclusively on its Bitcoin mining operations and automotive trading business outside China. This represents a dramatic strategic shift from its historical business model and introduces a substantially different risk profile for investors.

Several contingencies could derail the deal, including shareholder approval requirements and a complex reversal clause allowing the buyer to unwind the transaction if certain conditions aren't met within three months. The interplay with the previously announced crypto mining equipment purchase further complicates execution risk.

This disposal appears to be part of a broader corporate control change, as it relates to a proposed secondary acquisition of 10 million Class B shares from the founders by EWCL. The entire sequence suggests a comprehensive corporate restructuring is underway.

Regulatory Affairs Specialist

The planned termination of Cango's "China Concept Stock" status represents a significant regulatory development. By divesting its PRC business, the company seeks to position itself outside the jurisdiction of the China Securities Regulatory Commission (CSRC), potentially reducing regulatory complexity and compliance costs.

The transaction structure includes a notable regulatory contingency: if governmental authorities inform Cango that its "China Concept Stock" status won't be terminated despite the business disposal, the buyer can reverse the entire transaction. This highlights the regulatory uncertainty surrounding cross-border Chinese company operations.

The definitive agreement follows a preliminary non-binding letter of intent announced on March 14, showing the transaction has progressed through proper corporate governance channels, including review by a special committee and board approval. This process helps mitigate potential shareholder litigation risk.

The transaction further requires shareholder approval through an ordinary resolution at a forthcoming meeting, adding another layer of governance oversight. The company must also complete an internal restructuring to cleanly separate PRC and non-PRC operations before closing.

The amendment to the previously announced crypto mining equipment acquisition agreement shows management is proactively addressing potential conflicts between transaction documents, though further amendments will be necessary, introducing additional negotiation and execution risk into the process.

SHANGHAI, April 3, 2025 /PRNewswire/ -- Cango Inc. (NYSE: CANG) ("Cango" or the "Company") today announced that it has entered into definitive agreements to sell its existing business in the PRC (the "PRC Business") to Ursalpha Digital Limited, a company incorporated under the laws of British Virgin Islands (the "Purchaser"), for a total consideration of approximately US$351.94 million in cash (with initial payment of approximately US$210.64 million on the closing date and the remaining amount to be paid subject to the Company's fulfillment of certain tax filing and payment obligations and in quarterly installments based on reduction in the credit risk exposure, as of February 28, 2025, of the legal entities sold to the Purchaser due to outstanding balance of loans facilitated and financing leasing originated by these entities) (the "PRC Business Disposal").

The Company announced on March 14, 2025 that it received a preliminary non-binding letter of intent (the "Letter of Intent") from Enduring Wealth Capital Limited ("EWCL"), which proposed the acquisition of control of the Company by EWCL and the disposal of the Company's PRC Business to a buyer introduced by EWCL. Execution of the agreements with the Purchaser is a major step taken by the Company in response to the Letter of Intent and has been approved by the Company's special committee formed to assess and consider the transactions proposed by the Letter of Intent as well as the Company's board of directors.

Closing of the PRC Business Disposal is subject to various closing conditions including, among others, (i) the approval of the transaction by an ordinary resolution of the Company's shareholders at a shareholders meeting to be convened by the Company, and (ii) the completion of an internal restructuring at the Company that separates its PRC Business from its businesses outside China (including the Bitcoin mining business and automotive trading-related business outside China). There can be no assurance that all the closing conditions will be satisfied or that the PRC Business Disposal will be approved or consummated.

If the PRC Business Disposal is approved and closed, the Company will make a filing with the China Securities Regulatory Commission ("CSRC") for the termination of the Company's status as a "China Concept Stock" subject to CSRC's jurisdiction. The Company and the Purchaser agreed that the Purchaser shall be entitled to reverse the PRC Business Disposal if, within three months after closing of the PRC Business Disposal, (i) any governmental authority informs the Company that the "China Concept Stock" status of the Company will not be terminated notwithstanding the closing of the PRC Business Disposal, or (ii) an agreement for sale by the Company's co-founders, Mr. Xiaojun Zhang and Mr. Jiayuan Lin (collectively, the "Founders"), of 10,000,000 Class B ordinary shares of the Company to EWCL as proposed in the Letter of Intent (the "Proposed Secondary Acquisition") has not been executed or the closing of the Proposed Secondary Acquisition has not occurred due to any breach of agreement by the Company. If the PRC Business Disposal is to be reversed, the Company will be required to repurchase the PRC Business from the Purchaser at a consideration equal to the purchase price already paid by the Purchaser.

As the PRC Business Disposal may affect certain provisions in the On-Rack Sales and Purchase Agreement (the "Purchase Agreement") entered into by the Company on November 6, 2024 for the acquisition of on-rack crypto mining machines with an aggregate hashrate of 18 Exahash per second through issuance of Class A ordinary shares of the Company to the sellers (the "Share-Settled Transactions"), the Company has entered into an amendment of the Purchase Agreement with Golden TechGen Limited ("GT"), the expected largest seller in the Share-Settled Transactions who may amend the Purchase Agreement on behalf of all the sellers, ensuring that execution of the agreements for the PRC Business Disposal did not constitute a default under or violation of the Purchase Agreement. However, the Company expects further amendments to the Purchase Agreement in order to implement the PRC Business Disposal and GT has agreed to use its commercially reasonable efforts to discuss and agree with the Company on such further amendments as necessary.

About Cango Inc.

Cango Inc. (NYSE: CANG) primarily operates a leading Bitcoin mining business. Cango has deployed its mining operation across strategic locations including North America, Middle East, South America, and East Africa. Cango expanded into the crypto assets market in November 2024, driven by the development in blockchain technology, increasing prevalence of crypto assets and its endeavor to diversify its business. Meanwhile, Cango has continued to operate the automotive transaction service in China since 2010, aiming to make car purchases simple and enjoyable. For more information, please visit: www.cangoonline.com. 

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Cango may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cango's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the completion, amendment or reversal of any transactions entered into, proposed or considered by Cango; Cango's goal and strategies; Cango's expansion plans; Cango's future business development, financial condition and results of operations; Cango's expectations regarding demand for, and market acceptance of, its solutions and services; Cango's expectations regarding keeping and strengthening its relationships with dealers, financial institutions, car buyers and other platform participants; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cango's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Cango does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Yihe Liu
Cango Inc.
Tel: +86 21 3183 5088 ext.5581
Email: ir@cangoonline.com 

Helen Wu
Piacente Financial Communications
Tel: +86 10 6508 0677
Email: ir@cangoonline.com

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SOURCE Cango Inc.

FAQ

What is the total value of Cango's (CANG) PRC Business sale to Ursalpha Digital ?

The total consideration is US$351.94 million in cash, with US$210.64 million initial payment and remaining amounts paid in installments.

What are the main conditions for closing Cango's (CANG) PRC Business disposal?

Key conditions include shareholder approval via ordinary resolution and completion of internal restructuring to separate PRC Business from international operations.

How will the PRC Business sale affect Cango's (CANG) status as a China Concept Stock?

Upon deal closure, Cango will file with CSRC to terminate its 'China Concept Stock' status.

What happens if Cango's (CANG) China Concept Stock status isn't terminated after the sale?

The buyer can reverse the transaction within 3 months if the status isn't terminated or if the proposed 10M Class B shares sale to EWCL fails.