Chijet Motor Company Inc. Announces Issuance of Ordinary Shares to Holders of Contingent Value Rights

Rhea-AI Summary

Chijet Motor Company, Inc. (NASDAQ: CJET), a high-tech enterprise in the vehicle industry, has announced the issuance of 640,850 ordinary shares to holders of contingent value rights (CVRs) as of September 13, 2024. This action follows the failure to meet certain earnout milestones for the 2023 calendar year, resulting in two major shareholders surrendering the same number of shares for cancellation.

The company will distribute these shares pro rata among qualifying CVR holders based on their holdings. With a total of 1,300,706 outstanding CVRs, each CVR is entitled to 0.492694 Ordinary Shares. Fractional shares will be rounded down to the nearest whole share. This share issuance is in accordance with the Business Combination Agreement entered on October 25, 2022.

Positive

• Fulfillment of contractual obligations as per the Business Combination Agreement
• Potential increase in shareholder value for CVR holders

Negative

• Failure to meet earnout milestones for the calendar year 2023
• Dilution of existing shareholders' ownership due to new share issuance

Insights

Financial Analyst

This share issuance, while procedural, reflects Chijet Motor's failure to meet certain earnout milestones for 2023. The redistribution of 640,850 shares from major shareholders to CVR holders could be seen as a minor dilution for existing shareholders. However, the overall impact on the company's financial position appears minimal. The pro-rata distribution based on CVR holdings demonstrates fairness in the process. Investors should note that this action doesn't necessarily indicate improved performance or value creation, but rather fulfills contractual obligations from the previous business combination agreement. The rounding down of fractional shares may slightly benefit the company by reducing the total shares issued.

Legal Expert

This share issuance complies with the terms of the Business Combination Agreement (BCA), demonstrating Chijet's adherence to contractual obligations. The process of surrendering shares by major shareholders and reissuing them to CVR holders is a complex but legally sound mechanism to address unmet earnout milestones. The specific record date (September 13, 2024) and calculation method (0.492694 shares per CVR) show transparency and precision in execution. The rounding down of fractional shares is a standard practice to avoid complications. While this action doesn't raise immediate legal concerns, investors should be aware that such mechanisms can impact shareholder rights and voting power distributions.

Market Research Analyst

This share redistribution signals underperformance in Chijet's 2023 operations, as evidenced by the unmet earnout milestones. For investors, this could raise concerns about the company's ability to meet future targets in the competitive NEV market. The redistribution of shares from major holders to CVR holders might slightly alter the company's ownership structure, potentially affecting future decision-making dynamics. However, the relatively small number of shares involved (0.492694 per CVR) suggests a immediate market impact. Investors should view this as a reminder to closely monitor Chijet's performance metrics and market position in the evolving automotive industry landscape.

NEW YORK, Sept. 20, 2024 (GLOBE NEWSWIRE) -- Chijet Motor Company, Inc. (NASDAQ: CJET) (the “Company”), a high-tech enterprise engaged in the development, manufacture, sales, and service of traditional fuel vehicles and new energy vehicles (“NEV”), today announced that it is in the process of issuing a total of 640,850 ordinary shares of par value US$0.003 (the “Ordinary Shares”) to the holders of contingent value rights (“CVRs”) on record as of September 13, 2024 (the “Qualifying CVR Holders”) pro rata, based on their respective number of CVRs held. The record date for the Qualifying CVR Holders to receive such shares shall be September 13, 2024.

As certain earnout milestones provided in the Business Combination Agreement (the “BCA”) entered into by the Company on October 25, 2022, were not achieved for the calendar year ended December 31, 2023, two shareholders of the Company, Euroamer Kaiwan Technology Company Limited and Chijet Holdings Limited, surrendered a total of 640,850 Ordinary Shares (the “Earnout Shares”) to the Company for cancellation. Pursuant to the BCA, the Company shall issue the same number of Ordinary Shares as the Earnout Shares to be allocated among the Qualifying CVR Holders pro rata, based on their respective number of CVRs held. The total number of issued and outstanding CVRs is 1,300,706. Therefore, each CVR is entitled to 0.492694 Ordinary Shares.

A Qualifying CVR Holder who would otherwise be entitled to a fraction of an Ordinary Share (after aggregating all factional ordinary shares that would otherwise be received by such person) shall instead have the number of Ordinary Shares issued to such person rounded down in the aggregate to the nearest whole Ordinary Share.

About Chijet Motor Company, Inc.

The primary business of Chijet is the development, manufacture, sales, and service of traditional fuel vehicles and NEVs. State-of-the-art manufacturing systems and stable supply chain management enable the Company to provide consumers with products of high performance at reasonable prices. In addition to its large modern vehicle production base in Jilin, China, a factory in Yantai, China will be dedicated to NEV production upon completion of its construction. Chijet has a management team of industry veterans with decades of experience in engineering and design, management, financing, industrial production, and financial management. For additional information about Chijet, please visit www.chijetmotors.com.

Chijet Contact:
2888 Donshan Street
Gaoxin Automobile Industrial Park
Jilin City, JL. P.R.China
400-606-8888
EMAIL: info@chijetmotors.com 

Forward-Looking Statements

This press release contains forward-looking statements as defined under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, formulated in accordance with the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995. These statements, reflecting the Company's projections about its future financial and operational performance, employ terms like 'believes,' 'estimates,' 'anticipates,' 'expects,' 'plans,' 'projects,' 'intends,' 'potential,' 'target,' 'aim,' 'predict,' 'outlook,' 'seek,' 'goal,' 'objective,' 'assume,' 'contemplate,' 'continue,' 'positioned,' 'forecast,' 'likely,' 'may,' 'could,' 'might,' 'will,' 'should,' 'approximately,' and similar expressions to convey the uncertainty of future events or outcomes. These forward-looking statements are based on the Company's current expectations, assumptions, and projections, involving judgments about future economic conditions, competitive landscapes, market dynamics, and business decisions, many of which are inherently challenging to predict accurately and are largely beyond the Company's control. Additionally, these statements are subject to a multitude of known and unknown risks, uncertainties, and other variables that could significantly diverge the Company's actual results from those depicted in any forward-looking statement. These factors include, but are not limited to, varying economic conditions, competitive pressures, and regulatory changes. Because of these and other risks, uncertainties and assumptions, undue reliance should not be placed on these forward-looking statements. In addition, these statements speak only as of the date of this press release and, except as may be required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

FAQ

How many ordinary shares is Chijet Motor Company (CJET) issuing to CVR holders?

Chijet Motor Company (CJET) is issuing 640,850 ordinary shares to CVR holders.

What is the record date for Chijet Motor Company's (CJET) CVR holders to receive shares?

The record date for Chijet Motor Company's (CJET) CVR holders to receive shares is September 13, 2024.

How many Chijet Motor Company (CJET) ordinary shares is each CVR entitled to?

Each Chijet Motor Company (CJET) CVR is entitled to 0.492694 Ordinary Shares.

Why is Chijet Motor Company (CJET) issuing these new shares?

Chijet Motor Company (CJET) is issuing these shares because certain earnout milestones for 2023 were not achieved, triggering a provision in the Business Combination Agreement.