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BEIJING and NEW YORK, May 02, 2022 (GLOBE NEWSWIRE) -- CH-AUTO TECHNOLOGY CORPORATION LTD., a company formed under the laws of the Peoples Republic of China ("CH-AUTO"), an electric vehicle manufacturing and design service company based in China, and Mountain Crest Acquisition Corp. IV (NASDAQ:MCAF) ("Mountain Crest"), a Delaware corporation that was formed as a publicly-traded special purpose acquisition company, today announced they have entered into a definitive merger agreement. Upon closing of the transaction, the combined company will operate under a holding entity named CH AUTO Inc., a Cayman Islands exempted company ("Pubco") and plans to trade on the Nasdaq Stock Market. The transaction reflects an initial equity value of approximately $1.25 billion. The transaction is expected to close in the fourth quarter of 2022 and Qun Lu, CH-AUTO's founder and CEO, will continue to lead the holding company as its CEO after closing of the transaction.
CH-AUTO started its business of automotive design service in 2003. CH-AUTO, through its automotive design service, is proud of its contribution to increasing the process of Chinese auto industry's annual output from 2 million to nearly 30 million vehicles during the past nearly 20 years, along with the transformation of the industry from imitation to innovation. As a design service provider to major mainstream Chinese auto brands such as Geely, Chery, FAW and GAC, CH-AUTO has led and participated in the design and development of more than 100 automobile models. CH-AUTO has also developed in-depth strategic cooperation with GFG Progetti SRL, a leading automobile design company founded by Italian design master Giorgetto Giugiaro, through a joint venture design company in Shanghai in 2019.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/21a3023e-a8b4-472e-976d-d77d7cfe6ae1
In 2015, CH-AUTO established a wholly-owned subsidiary "QIANTU MOTOR" (QT), aiming to build an electric vehicle brand for the global market. In 2018, QIANTU MOTOR's first all-electric urban super sports car, Qiantu K50, was launched in production. Qiantu K50 is China's first volume-produced all-electric super sports car and uses an aluminum-carbon fiber mechanical structure and a dual-motor all-wheel drive system. In addition, according to CH-AUTO's records, the unique battery safety management system of QIANTU MOTOR has maintained a record of zero battery fire accidents. CH-AUTO expects to release its Qiantu K20 model targeting the young Gen-Z customers with an affordable price in the second half of 2022.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/fa97a0e8-4201-4513-a990-30c70cc6e7d5
Mr. Lu commented, "We believe intelligent technology will change the future consumer ecosystem, and our company is collaborating with Tsinghua University Suzhou Automobile Research Institute and Cross-strait Tsinghua Research Institute to develop the next-generation vehicle intelligence system. At the same time, we expect the industrial trend of replacing traditional steel with materials such as aluminum and composite materials will profoundly change the structure of the world's automobile manufacturing industry. Large multinational auto companies may face significant difficulties in the process of transformation, while we believe that young consumers will welcome the personalized and differentiated experience that such materials bring. QIANTU MOTOR's vision is to be a leading brand of next-generation vehicles driven by technological innovation."
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/a5cf7293-8575-4ba3-b585-aaeaad4b517f
Mr. Lu continued, "The past two years have been quite challenging for us. We had to reduce our operations by slowing down the businesses of manufacturing of vehicles and automotive parts. By entering into this definitive merger agreement with Mountain Crest, we expect to see a positive and rebounding impact on CH-AUTO's finance capabilities, manufacturing and sales activities, and promotion of brand awareness. The entry into the Merger Agreement is an important milestone for CH-AUTO's business development strategy. Dr. Liu and I are excited about the development prospect for the combined company, and we expect that CH-AUTO will rapidly transform into a leading next-generation automotive company that is built on years of design and manufacturing experience."
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/7e840726-14bb-44ba-949f-302c07b0179f
Dr. Suying Liu, Chairman, CEO and CFO of Mountain Crest, commented, "CH-AUTO is a unique and compelling investment opportunity, being one of the first EV automakers in China with proven technology breakthroughs as well as manufacturing innovations, along with its enormous future growth potential through its existing and pipeline vehicle models. I am thrilled to be partnering with Mr. Lu and his exceptional team to bring their vision to fruition."
Transaction Overview
As part of the transaction, (1) each share of Mountain Crest will be exchanged for one share of Pubco, (2) CH-AUTO shareholders and the pre-existing Pubco shareholders will be entitled to receive approximately 125 million shares valued at $10 per share in Pubco, subject to closing adjustments, and (3) Pubco will assume net debt outstanding of approximately $460 million, for a total purchase price of approximately $1.7 billion. The agreement provides that any additional debt will reduce the purchase price.
The Boards of Directors of each of CH-AUTO and Mountain Crest have approved the transaction. The transaction will require the approval of the stockholders of both Mountain Crest and Pubco, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the fourth quarter of 2022.
Additional information about the proposed transaction, including a copy of the merger agreement, will be provided in a Current Report on Form 8-K to be filed by Mountain Crest with the Securities and Exchange Commission and will be available at www.sec.gov.
