Cayman Court States Allegations in Ctrip's Lawsuit
"Unsustainable" and "Unmeritorious," arising from "the cynical and
abusive presentation of a winding-up petition"
Court Further Notes That "far from seeking to advance a class
remedy on behalf of shareholders, [Ctrip] was seeking to advance its own
individual commercial interests"
Ctrip Consortium's Revised Non-Binding Proposal Comes
Immediately After Court Dismissed Ctrip's Lawsuit; Revised Proposal
Does Not Address Significant Issues Identified in Original
Non-Binding Offer
eHi Remains Committed to the Buyer Group Merger, which
Provides Shareholders Compelling and Certain Value
SHANGHAI, July 2, 2018 /PRNewswire/ -- eHi Car Services
Limited ("eHi" or the "Company") (NYSE: EHIC), a leading car rental
and car services company in China,
today announced that on June 29,
2018, the Financial Services Division of the Grand Court of
the Cayman Islands (the "Court")
issued a final judgment in which the Court dismissed and struck out
in its totality a winding up petition previously filed by Ctrip
Investment Holdings Ltd. ("Ctrip") after determining that the
complaints of misconduct made by Ctrip were "unsustainable,"
"factually incapable of proof "and "wholly unmeritorious."
In rendering its judgment, the Court adopted the Company's
assessment that Ctrip's petition arose "from the cynical and
abusive presentation of a winding-up petition" and further stated
that, "far from seeking to advance a class remedy on behalf of
shareholders, [Ctrip] was seeking
to advance its own individual commercial interests."
The judgment of the Court relates to Ctrip's attempt to impede
the consummation of the transactions contemplated by the previously
announced definitive Agreement and Plan of Merger (the "Merger
Agreement"), dated April 6, 2018,
among the Company, Teamsport Parent Limited ("Parent") and
Teamsport Bidco Limited ("Merger Sub"), a wholly owned subsidiary
of Parent. Parent and Merger Sub are affiliated with a buyer
consortium (the "Buyer Group") that includes affiliates of Mr.
Ray Ruiping Zhang (the Chairman of
the Board and Chief Executive Officer of the Company), The Crawford
Group, Inc., Dongfeng Asset Management, MBK Partners, Baring
Private Equity Asia and Redstone Capital.
Pursuant to the Merger Agreement and subject to the satisfaction
or, if permissible, waiver of all of the conditions to closing set
forth in the Merger Agreement, Parent will acquire all of the
outstanding common shares of the Company (each, a "Share"),
including Shares represented by American depositary shares of the
Company (each, an "ADS"), each of which represents two Class A
common shares of the Company, through the merger of Merger Sub with
and into the Company (the "Merger"), with the Company continuing as
the surviving company after the Merger as a wholly owned subsidiary
of Parent. In connection with the Merger, each of the holders of
Shares and ADSs other than Parent, Merger Sub or members of the
Buyer Group, will receive cash consideration of US$6.75 per Share or US$13.50 per ADS, without interest and net of any
applicable withholding taxes, in respect of their Shares and ADSs,
as applicable, which will be canceled in the Merger.
On April 13, 2018, following the
approval of the Merger Agreement by the Board, Ctrip filed a
petition and a summons for injunctive relief to the
Court. Ctrip's lawsuit sought, among other things, to
permanently enjoin the Company from relying upon (and to void) the
resolutions of the Company's board of directors (the "Board")
approving the Merger Agreement and to direct the special committee
of the Board (the "Special Committee"), which was authorized by the
Board to exclusively evaluate and negotiate the terms of the Buyer
Group's "going private" proposal and any other competing or
alternative offer, to review the preliminary, non-binding offer
made by Ocean Link Partners Limited on April
2, 2018 (the "Ocean Link Proposal") for the purchase of all
outstanding Shares, including Shares represented by ADSs, and
submit its recommendations to the Board. Ctrip and certain of its
affiliates have entered into a consortium agreement acting in
concert with Ocean Imagination L.P., pursuant to which the various
parties thereto including agreed to form a competing consortium
(the "Ctrip Consortium") and cooperate to pursue the acquisition
transaction contemplated by the Ocean Link Proposal and against any
competing transaction, including the Merger.
Immediately after the Court issued its final judgment against
Ctrip, in which the Court found that Ctrip's "attack on the
validity of the Board's decision to enter into the Merger Agreement
was clearly hopeless" and its claim that the Board's decisions were
driven by improper motives was "wholly unmeritorious," members of
the Ctrip Consortium submitted a revised non-binding proposal,
which was made despite the Ctrip Consortium's failure to
sufficiently demonstrate an ability to consummate the original
Ocean Link Proposal.
Commenting on the revised unsolicited, non-binding offer and the
Court ruling, the Company said: "The Special Committee, which is
composed of independent directors, has been reviewing the previous
offer from the Ctrip Consortium and will continue its review in
light of the revised proposal. However, the decision to make
this proposal immediately after the Court threw out Ctrip's
frivolous lawsuit and censured its behavior calls into question the
true motives of Ctrip and the Ctrip Consortium."
The Company also noted that claims made by the members of the
Ctrip Consortium that it holds 33.2% of the outstanding voting
power of the Company are misleading in light of the ongoing
legal proceedings relating to the validity of the prior transfer of
Shares to members of the Ctrip Consortium that the Company and
members of the Buyer Group are vigorously pursuing. The
Company believes that the ongoing legal proceedings will result in
another favorable judgment for the Company, which will cause the
Ctrip Consortium's actual voting power to be considerably lower
than the Ctrip Consortium's misleading claims.
As of the time of this release, the Buyer Group beneficially
owns approximately 37.5% of the outstanding voting power of the
Company, and the Buyer Group's members have agreed in writing to
vote all of their Shares in favor of the Merger and against any
competing transaction, including the Ctrip Proposal.
The Board and the Special Committee remain committed to acting
in the best interests of the Company and its unaffiliated
shareholders. The Special Committee continues to evaluate the
revised proposal from the Ctrip Consortium, but as of this time has
not determined that any proposal from the Ctrip Consortium is, or
could reasonably be expected to result in, a superior proposal to
the Merger in accordance with the requirements of the Merger
Agreement. The Special Committee had considered the initial Ocean
Link Proposal before unanimously recommending that the Board
approve and authorize the Company to enter into the Merger
Agreement with the Buyer Group, after giving due consideration to a
variety of factors, including price, committed financing, completed
due diligence and the terms of the fully negotiated and executable
transaction documents.
Further details relating to the Board and the Special
Committee's consideration of the Merger Agreement, the Merger, and
related transactions, as well as the proposals of the Ctrip
Consortium, are set forth in an amended transaction statement on
Schedule 13E-3 (the "Transaction Statement") filed with the United
States Securities and Exchange Commission (the "SEC") by the
Company and certain filing persons in connection with the Merger,
and the exhibits to the Transaction Statement, including the
preliminary proxy statement (the "Preliminary Proxy Statement").
SHAREHOLDERS, ADS HOLDERS AND OTHER INVESTORS ARE URGED TO READ
THESE MATERIALS AND OTHER MATERIALS
FILED WITH OR FURNISHED TO THE SEC CAREFULLY WHEN THEY BECOME
AVAILABLE, AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER, THE COMPANY, THE OTHER PARTIES TO THE MERGER AGREEMENT, AND
RELATED MATTERS.
Additional Details of the Cayman Court Ruling
On June 29, 2018, the Court issued
a judgment in which it dismissed and struck out Ctrip's entire
petition. In summarizing its decision, the Court said:
"[Ctrip's] complaints of misconduct are
unsustainable in the sense that it seems clear at this stage they
are factually incapable of proof and unmeritorious. In
addition, the main purpose of the Petition is quite obviously to
advance the rival bid supported by the Petitioner, not to advance
the class interests of the shareholders the Petitioner is supposed
to be representing."
Addressing Ctrip's allegations that the independent directors,
in approving the Buyer Group proposal, acted improperly by not
giving full consideration to the Ctrip Consortium's proposal and/or
providing preferential treatment to the Buyer Group because it
included Chairman Ray Zhang, the
Court said:
"…in circumstances where no
evidence was adduced by [Ctrip]
supporting a potential finding that the bona fides of the
independent directors was in question, the bare allegation that
they were improperly motivated was bound to fail."
"…there is no credible, potential,
direct, or inferential support for the allegation that the
April 6, 2018 Resolution was approved
not in the best interests of the Company, but because of partiality
towards the Chairman. I find that this allegation is wholly
unmeritorious and that it would be an abuse of the process of this
Court for such an insubstantial allegation to be further
pursued."
"[The resolution to recommend for
the Teamsport transaction was approved by the Board] three months
after the Consortium bid was first made, on the recommendation of a
Special Committee which retained its own reputable legal and
financial advisors. The whole purpose of the Special
Committee's appointment was to ensure that the Chairman's
involvement (or that of any other shareholder with a nominee on the
Board) with any bid did not distort any assessment of the bid
by the Company having regard to the interests of the shareholders
generally, as distinct from those shareholders who belong to the
Consortium."
The Court found Ctrip's actions and motivations for pursuing
litigation to block the Merger were not consistent with the
interests of all shareholders:
"In my judgement Ctrip's
commercial alignment as a supporter of the Ocean Link bid is the
most pivotal single consideration in the present case. It
colours both how its conduct, motivations and complaints ought to
be viewed. Ctrip is not simply 'a neutral' shareholder
concerned only to enforce its expectations as an investor in the
Company as to how the Company's affairs would be conducted. It is
obvious that Ctrip's main motive in petitioning is not simply its
status as a shareholder but primarily its status as a participant
in a rival bid to the one the Board has decided to accept."
In response to Ctrip's attempt to challenge the Company's
decision to investigate Ocean Link's transaction to acquire Shares
held by CDH Car, the Court concluded the Board had a duty to look
into the legality of the transaction and commented:
"I found it ironic that Ctrip
asserted the right of one bidding team to acquire shares to enable
it to block an opposing bid while simultaneously complaining that
the Company could not validly seek to respond to such
maneuvers."
Additional Information About the Transaction
On April 6, 2018, the Company
furnished to the SEC a report on Form 6-K, which included as an
exhibit thereto the Merger Agreement. All parties desiring details
regarding the transactions contemplated by the Merger Agreement,
including the Merger, are urged to review the Merger Agreement,
which is available on the Company's website or at the SEC's website
(http://www.sec.gov).
In connection with the Merger, the Company and certain filing
persons have filed the Transaction Statement with the SEC. Attached
as an exhibit to the Transaction Statement is the Preliminary Proxy
Statement relating to an extraordinary general meeting of
shareholders (the "EGM") which the Company expects to hold later
this year. At the present time, the Company has not called an EGM
for the purpose of authorizing and approving the Merger Agreement
and the transactions contemplated thereby, including the Merger. If
and when the Company calls the EGM, it will issue a press release
and file with the SEC an amendment to the Transaction Statement and
a definitive proxy statement attached as an exhibit thereto to be
used in connection with soliciting proxies for the EGM, and the
Company will prepare and cause to be mailed the definitive proxy
statement to its shareholders and ADS holders. In addition to
receiving the definitive proxy statement by mail, shareholders and
ADS holders will be able to obtain the final Transaction Statement
and the definitive proxy statement, as well as other filings
containing information about the Company, the proposed Merger, the
Merger Agreement, and related matters, without charge, from eHi's
website at http://ehi.investorroom.com and the SEC's
website (http://www.sec.gov) or at the SEC's public reference room
located at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Copies of these
documents can also be obtained, without charge, by contacting
the Company. Requests should be
directed to eHi Car Services Limited, Attn: Investor Relations
Department, Unit 12/F, Building No. 5, Guosheng Center, 388 Daduhe
Road, Shanghai, People's Republic of China,
200062.
The Company and certain of its directors, executive officers and
other members of management and employees may, under SEC rules, be
deemed to be "participants" in the solicitation of proxies from
shareholders with respect to the Merger. Information regarding the
persons or entities who may be considered "participants" in the
solicitation of proxies is set forth in the Transaction Statement,
including the Preliminary Proxy Statement filed as an exhibit
thereto, filed with the SEC. Information regarding certain of these
persons and their beneficial ownership of the Shares as of
April 26, 2018, is also set forth in
the Company's Form 20-F, which was filed with the SEC on
April 30, 2018. Additional
information regarding the interests of such potential participants
may be included a subsequently amended Schedule 13E-3 Transaction
Statement, preliminary or definitive proxy statement and the other
relevant documents filed with the SEC when they become
available.
This announcement is neither a solicitation of proxy, an offer
to purchase nor a solicitation of an offer to sell any securities
and it is not a substitute for any proxy statement or other filings
that may be made with the SEC should the Merger proceed.
About eHi Car Services Limited
eHi Car Services Limited (NYSE: EHIC) is a leading car rental
and car services provider in China. The Company's mission is
to provide comprehensive mobility solutions as an alternative to
car ownership by best utilizing existing resources and sharing
economy to create optimal value. eHi distinguishes itself
in China's fast-growing car rental and car services
market through its complementary business model, customer-centric
corporate culture, broad geographic coverage, efficient fleet
management, leading brand name, and commitment to technological
innovation. eHi is the exclusive strategic partner
in China of Enterprise, the largest car rental company in
the world. For more information regarding eHi, please
visit http://en.1hai.cn.
Safe Harbor
This news release may include certain statements that are not
descriptions of historical facts, but are forward-looking
statements. These forward-looking statements can be identified by
terminology such as "if," "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar
statements. Forward-looking statements involve risks, uncertainties
and other factors that could cause actual results to differ
materially from those contained in any such statements. Potential
risks and uncertainties include, but are not limited to,
uncertainties as to the expected benefits and costs of the proposed
Merger; the expected timing of the completion of the Merger; the
parties' ability to complete the Merger considering the various
closing conditions; the possibility that various closing conditions
to the Merger may not be satisfied or waived; how the Company's
shareholders will vote at the meeting of shareholders; the
possibility that competing offers will be made and other risks and
uncertainties discussed in the Company's filings with the U.S.
Securities and Exchange Commission, including the Schedule 13E-3
transaction statement and the proxy statement filed by the Company
in connection with the Merger. The Company does not undertake any
obligation to update any forward-looking statement, except as
required under applicable law.
For investor and media inquiries, please contact:
eHi Car Services Limited
Tel: +86 (21) 6468-7000 ext. 8830
E-Mail: ir@ehic.com.cn
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SOURCE eHi Car Services Limited