China Auto Logistics Subsidiary Signs Definitive Agreement to Acquire Owner and
Operator of Airport International Automall in Tianjin for
Company Plans to Develop a Major Used Car Operation Through
Previously Announced Joint Venture
TIANJIN, CHINA -- (Marketwired) -- 12/05/13 -- China Auto Logistics
Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China
of luxury imported automobiles, and a leading provider of
auto-related services, reported today that on November 30, 2013, its
subsidiary, Tianjin Binhai Shisheng Trading Group Co., Ltd.
("Shisheng") signed an equity transfer agreement with Hezhong
International Development Co, Ltd. to acquire Tianjin Zhonghe Auto
Sales Service Co., the owner and operator of the Airport
International Automall in Tianjin (the "Automall"). The Company plans
to develop the Automall into a key site for what it believes can
become one of the largest used car businesses in China.
Following an initial payment of RMB 240 million (approximately $39.2
million) to be paid within 5 days of the signing, the remainder of
the agreed purchase price of RMB 559,768,000 (approximately $91.4
million) will be paid in three additional annual installments with an
annual interest rate of 6%, after which 100% of the equity in the
acquisition will be transferred to Shisheng. In the interim, Shisheng
will have operating control of the Automall, although failure to
complete all required payments on time could result in termination of
The Company anticipates utilizing its cash flow and bank borrowings
to fund the acquisition. It also will be paying a finder's fee equal
to 1% of the purchase price in the form of 340,000 restricted common
shares under the terms of a Consulting Agreement, signed separately.
Focus on Developing Major Used Car Business
The successful completion of the Automall acquisition was a
prerequisite for proceeding with the joint venture, envisioned by the
recently announced cooperation framework agreement, that will own and
operate a domestic and imported used car business. The development
and growth of this business and related services will be the primary
focus of operations at the Automall, although space at the Automall
is also planned to be made for other auto dealers, and ce
businesses expected to generate fee and rental revenues for the
The Company envisions a substantial role for internet promotions and
sales in its used car business model, with above average growth
possibilities stemming from the strong growth of new car sales in
recent years in China. These, in turn, have been creating a rapidly
growing pool of used cars each year.
Increased Share Value and Exciting New Business Expansion
Mr. Tong Shiping, CEO and Chairman of the Company, stated, "I am
extremely pleased that we have been able to pull together the various
elements of this major acquisition. Based on extensive careful
studies, we believe that the real estate value of the mall and its
surrounding property, by itself, significantly enhances the value of
the Company and its shares. Further, we now have the key pieces in
place to develop what we believe can become a substantial, new
collection of growth businesses based on the expanding volume of used
cars in China."
He continued, "We will proceed cautiously to finalize and put into
place a business model utilizing our extensive experience in
automobile sales and our national network of automobile dealers, as
well as our expertise in developing internet based automobile related
services. We believe the fruits of our labor will become increasingly
evident in 2014 and beyond."
"Meanwhile," Mr. Shiping said, "I hope that our shareholders will
begin to see and share our excitement about this major new
development which, if successful, has the potential to dramatically
reshape our Company."
Additional details on the Equity Transfer Agreement are available in
the Form 8-K filed today with the U.S. Securities and Exchange
About China Auto Logistics Inc.
China Auto Logistics Inc. is one of China's top sellers of imported
luxury vehicles. It also manages China's largest imported auto mall
in Tianjin and provides a growing variety of "one stop" automobile
related services such as short term dealer financing. Additional
information about the Company is available at
Information Regarding Forward-Looking Statements
Except for historical information contained herein, the statements in
this press release are forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties, which may cause our actual
results in future periods to differ materially from forecasted
results. These risks and uncertainties include, among other things,
product demand, market competition, and risks inherent in our
operations. These and other risks are described in our filings with
the U.S. Securities and Exchange Commission.
DGI Investor Relations Inc.
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