What happened
Shares of Uxin (UXIN 9.41%), China's largest used-car e-commerce platform, jumped on Friday. The stock rose as much as 19.7% but is up about 15% as of 11:00 a.m. EDT.
The stock's rise comes as Uxin announced an agreement with financial technology platform Golden Pacer to divest its loan facilitation business to the China-based company. In addition, the two companies agreed to a number of business arrangements.
Uxin also said on Friday that it is raising capital through a private placement of convertible notes.
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So what
"After the divestiture and through the business cooperation," Uxin explained in a press release on Friday, "Uxin will provide inspection and valuation services to Golden Pacer's used car financing transactions, and Golden Pacer will provide certain loan facilitation services for Uxin's online used car transactions, including providing a guarantee in the event of default."
In addition, the two companies "will work together with third-party financing partners to achieve that Uxin will no longer bear any guarantee liabilities or credit risks for used car loans facilitated after the transaction."
In a separate announcement on Friday, Uxin also announced the private placement of $50 million of convertible notes. The notes mature in 12 to 15 months, with interest rates of 10% to 11%. In addition, the notes are convertible into Class A shares at a price of about $4.99 per ADR following 180 days of issuance.
"This new private placement will bolster our initiatives to optimize the online used car purchasing experience and better position us to extend our leadership in China's used car e-commerce sector," said Uxin CEO Kun Dai in a press release about the transaction.
Now what
Uxin said it expects to enter a definitive transaction and close the deal with Golden Pacer "as soon as practicable in the second half of 2019." The company's private placement of convertible notes is also expected to be completed sometime during the second half of the year.
