SCHEDULE 13D/A: Cango Inc. Co-Founders Divest Significant Stake, Triggering Major Governance Shift and Board Restructuring

Cango Inc.'s co-founders, Mr. Xiaojun Zhang and Mr. Jiayuan Lin, are selling 10 million Class B ordinary shares to Enduring Wealth Capital Limited for US$70 million, leading to a significant shift in voting control and planned corporate governance changes.

Summary

• Mr. Xiaojun Zhang and Eagle Central Holding Limited (wholly owned by Mr. Zhang) entered into a securities purchase agreement with Enduring Wealth Capital Limited (EWCL) on June 2, 2025.
• Eagle Central Holding Limited will sell 5,000,000 Class B ordinary shares to EWCL for a total purchase price of US$35 million, with US$7.5 million contingent on certain conditions.
• Mr. Jiayuan Lin, the other co-founder, director, and CEO, and his holding company will also sell 5,000,000 Class B ordinary shares to EWCL for US$35 million, with US$7.5 million contingent on certain conditions.
• The Issuer (Cango Inc.) is a party to the agreement and has committed to undertake certain corporate actions related to the Resale Transaction.
• The shares acquired by EWCL from Eagle Central Holding Limited will remain Class B ordinary shares, retaining 20 votes per share.
• Mr. Xiaojun Zhang will voluntarily convert all remaining Class B ordinary shares held by the Reporting Persons into Class A ordinary shares (one vote per share) after the transaction.
• Following these transactions, Mr. Xiaojun Zhang and Mr. Jiayuan Lin will collectively cease to hold more than 50% of the total voting power of the Issuer's outstanding shares.
• The Issuer's board and management team will be restructured as requested by EWCL, conditional upon and effective immediately after the closing of the Resale Transaction.
• The agreement was approved by Cango Inc.'s audit committee and board.
• The Resale Transaction requires shareholders' approval for the corporate actions the Issuer needs to take, including ensuring EWCL's acquired shares remain Class B shares.
• As of June 2, 2025, Cango Inc. had 134,798,949 Class A ordinary shares and 72,978,677 Class B ordinary shares issued and outstanding.
• Mr. Xiaojun Zhang beneficially owns 52,056,653 shares, representing 27.9% of Class A ordinary shares (assuming conversion of Class B and exercise of options) and 48.5% of the total outstanding voting power.
• Eagle Central Holding Limited beneficially owns 38,275,787 Class B ordinary shares, representing 22.1% of Class A ordinary shares (assuming conversion).

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly mixed. While the entry of a new significant investor (EWCL) and the founders realizing value can be positive, the loss of majority voting control by the co-founders and the conditional nature of the transaction introduce elements of uncertainty and potential shifts in company direction.

Positives

• The transaction introduces Enduring Wealth Capital Limited (EWCL) as a significant new investor, potentially bringing fresh perspectives and capital to Cango Inc.
• The co-founders are realizing substantial value from their holdings, with a total purchase price of US$70 million for 10 million Class B shares.

Negatives

• The co-founders, Mr. Xiaojun Zhang and Mr. Jiayuan Lin, will collectively lose majority voting control (falling below 50% of total voting power), which could signal a shift in strategic direction or leadership.
• A portion of the purchase price (US$15 million out of US$70 million) is contingent on certain conditions, introducing uncertainty regarding the full payment.
• The transaction is subject to various closing conditions, including shareholder approval, meaning there is no assurance it will be consummated.

Risks

• The closing of the Resale Transaction is subject to various conditions, including shareholders' approval, and there is no assurance that all conditions will be satisfied or that the transaction will be approved or consummated.
• The voluntary conversion of remaining Class B shares by Mr. Xiaojun Zhang into Class A shares will dilute his individual voting power per share, although his overall beneficial ownership percentage remains significant.
• The planned restructuring of the board and management team, while requested by EWCL, could lead to leadership changes and potential disruption if not managed effectively.

Future Outlook

The consummation of the Resale Transaction is subject to various closing conditions, including obtaining shareholders' approval for the necessary corporate actions. There is no assurance that these conditions will be satisfied or that the transaction will be approved or completed. If completed, the transaction will lead to a significant shift in voting power, with the co-founders collectively ceasing to hold more than 50% of the total voting power, and a planned restructuring of the board and management team as requested by EWCL.

Management Comments

• The Issuer's audit committee and board approved the Agreement.

Industry Context

This filing primarily details a change in beneficial ownership and corporate governance structure for Cango Inc. It does not provide specific information on broader industry trends or competitive landscape, focusing instead on internal corporate control and ownership shifts.

Management Changes

Corporate Governance

Related Party Transactions

• The transaction involves the sale of shares by Mr. Xiaojun Zhang (a reporting person and co-founder) and Mr. Jiayuan Lin (the other co-founder, director, and CEO) and their respective holding companies to EWCL.

Stakeholder Impact

• **Shareholders:** Will experience a significant shift in voting power and corporate control, with the co-founders losing majority voting power. The transaction is subject to shareholder approval, giving them a direct say in the proposed changes. The entry of a new major investor (EWCL) could influence future strategic direction and share price.
• **Management/Employees:** The board and management team are subject to restructuring as requested by EWCL, which could lead to changes in leadership and organizational structure.

Next Steps

• Cango Inc. is required to obtain shareholders' approval for the corporate actions necessary to ensure the shares acquired by EWCL remain Class B ordinary shares and to fulfill other obligations under the Agreement.
• The closing of the Resale Transaction is pending the satisfaction of various closing conditions.
• Upon the closing of the Resale Transaction, the board and management team of Cango Inc. will be restructured as requested by EWCL.

Key Dates

Keywords

Cango Inc., Schedule 13D, beneficial ownership, share sale, Class B shares, Class A shares, voting power, corporate governance, board restructuring, Enduring Wealth Capital Limited, Xiaojun Zhang, Jiayuan Lin, securities purchase agreement