CIMC Vehicles (Group) Co., Ltd. (hereinafter referred to as “CIMC Vehicles”) recently made new progress regarding its H-share privatization and delisting plan.

Earlier, in conjunction with the company's announcement, we can learn that CIMC Motor has announced a potential H share repurchase and delisting plan in accordance with the relevant rules of Hong Kong's “Code of Corporate Acquisitions and Mergers”, and has obtained approval relating to registration with the State Administration of Foreign Exchange. It has also passed the board of directors review and sent relevant offer documents to shareholders. However, according to regulations and procedures, holding a shareholders' meeting to vote is a key part of deciding whether the privatization and delisting incident will be successful.

On April 18, CIMC Motor announced the results of the shareholders' meeting deliberation on the conditional cash offer to repurchase H shares and the voluntary delisting of H shares. According to the announcement, the H share repurchase offer and voluntary delisting resolution was approved by 99.906185% at the Extraordinary General Meeting of Shareholders, 98.722609% approved by the H Share Class Shareholders' Meeting, and 99.997506% approved at the A-share Class Shareholders' Meeting. The above resolution was officially passed.

What is obvious is that the H-share privatization plan proposed by CIMC Motor shareholders has been approved by a high number of votes at the shareholders' meeting.

Privatization and delisting is a complex decision-making process involving many aspects, including the company's strategic planning, shareholders' interests, market environment, and regulatory requirements. For CIMC Vehicles, the shareholders' meeting voted to pass the H-share repurchase bill, marking that it has basically reached the end stage.

However, according to the announcement in the offer document, it is still necessary to wait until the minimum valid acceptance ratio for H share repurchase offers received before 4:00 p.m. on May 2, 2024 reaches at least 90% of the H shares held by independent H share shareholders before it can be realized.

In other words,After the shareholders' meeting votes on the privatization plan, at least 90% of the shareholders' acceptance conditions must be met.This is the last critical step and condition required to complete the entire process. The rest is to carry out voluntary delisting in strict accordance with the dates approved and arranged by the exchange.

From the perspective of H share shareholders, if they choose to accept the repurchase offer, their H shares will be bought back by CIMC and delisted from the Hong Kong Stock Exchange.

According to the announcement, CIMC Motor's proposed repurchase price of HK$7.50 per H share is still a high premium over the issuance price of H shares. Compared with the opening price of HK$7.42 on April 19, there is also room for a premium. This means that shareholders may receive one-time cash compensation and return on investment if they accept the buyback.

However, if independent H share shareholders do not accept the H share repurchase offer, once the H share delisting is completed, the liquidity of independent H share shareholders holding unlisted H shares and H shares may be seriously weakened, and they will not be able to continue trading in the secondary market. Furthermore, after the H share repurchase offer is completed, the rights of independent H share shareholders to certain information about the company may be reduced.

Looking back at the whole incident, it can be found that CIMC Motor's H-share privatization and delisting plan is due to considerations of the company's future development.

The company stated in an announcement that the trading volume of H shares is low and liquidity is limited, which makes it difficult for the company to effectively finance all of the Hong Kong Stock Exchange. By repurchasing H shares and delisting, CIMC Motor hopes to reduce the costs and expenses associated with H share listing regulatory compliance and improve the company's operational efficiency.

Therefore, CIMC's H-share privatization and delisting plan is more of a strategic choice made by CIMC to improve capital efficiency and reduce operating costs.

As far as the market is concerned, CIMC's move may raise concerns about the liquidity and valuation issues of H shares in the Hong Kong market, prompting market participants to think more deeply about the current capital market structure.