SCHEDULE 13D: Major Shareholder Adjusts Stake in Chijet Motor Following Earnout Miss and New Private Placement

Sentiment:

Beneficial Ownership Report 10 January 2025 9:30 PM

📋All filings for Chijet Motor Company, INC

Euroamer Kaiwan Technology Company Limited (EKT), a significant shareholder in Chijet Motor Company, Inc., has adjusted its beneficial ownership, surrendering shares due to unmet 2023 earnout milestones while simultaneously participating in a new private placement.

Capital raiseThe Issuer conducted a Private Investment in Public Equity (PIPE) pursuant to a Securities Purchase Agreement dated January 5, 2025.In this PIPE, the Issuer issued and sold an aggregate of 1,678,572 Ordinary Shares and Warrants to purchase up to 5,035,716 Ordinary Shares.EKT, a reporting person, acquired 672,619 Ordinary Shares at $1.68 per share and Warrants to purchase 2,017,857 Ordinary Shares at an exercise price of $1.00 per share as part of this capital raise.The funds for EKT's purchase came from its working capital.

Worse than expectedThe surrender of 354,232 Ordinary Shares by EKT indicates that Chijet Motor Company, Inc. failed to meet certain earnout milestones for the calendar year ended December 31, 2023, which suggests performance was worse than initially anticipated under the Business Combination Agreement.

Summary

Euroamer Kaiwan Technology Company Limited (EKT) and its director, Lichun Wu, reported beneficial ownership of 4,474,959 Ordinary Shares of Chijet Motor Company, Inc., representing approximately 48.82% of the outstanding class.
EKT surrendered 354,232 Ordinary Shares to the Issuer for cancellation on or about September 25, 2024, because certain earnout milestones for the calendar year ended December 31, 2023, were not achieved as per the Amended and Restated Business Combination Agreement (BCA).
On January 7, 2025, EKT participated in a private placement transaction (PIPE), acquiring 672,619 Ordinary Shares at a price of $1.68 per share and Warrants to purchase an additional 2,017,857 Ordinary Shares at an exercise price of $1.00 per share.
The PIPE transaction involved the issuance of a total of 1,678,572 Ordinary Shares and Warrants to purchase up to 5,035,716 Ordinary Shares to EKT and other investors.
EKT's beneficial ownership calculation includes 1,784,483 Ordinary Shares held prior to the PIPE (adjusted for a 1-for-30 reverse stock split on June 28, 2024, and the share surrender), the 672,619 Ordinary Shares from the PIPE, and 2,017,857 Ordinary Shares issuable upon warrant exercise.
The funds for EKT's purchase in the PIPE came from its working capital, contributed by its shareholder(s).
The Warrants are exercisable for three years starting January 7, 2025, and contain standard adjustments for stock dividends, splits, and reclassifications.

Sentiment

Score: 4

Explanation: The sentiment is mixed to slightly negative. The share surrender due to unmet earnout milestones is a clear negative indicator of past performance. However, the new capital injection through the PIPE, with a major shareholder participating, provides some positive offset by demonstrating continued investment and providing new funds, albeit at a relatively low share price.

Positives

The participation of a major existing shareholder (EKT) in a new private placement (PIPE) indicates continued investment and potential confidence in the company's future, providing new capital to the Issuer.
The new capital raise through the PIPE provides additional funding to Chijet Motor Company, Inc.

Negatives

EKT surrendered 354,232 Ordinary Shares due to the failure to achieve earnout milestones for the calendar year ended December 31, 2023, indicating underperformance against prior expectations set in the Business Combination Agreement.

Risks

The Ordinary Shares and Warrant Shares acquired in the PIPE are restricted securities, subject to Rule 144 and a six-month lock-up period, limiting immediate liquidity for investors.
The company is involved in multiple ongoing legal proceedings, which could pose financial and operational risks.
The value of the Warrants is subject to the future stock price performance of Chijet Motor Company, Inc., and their exercise price is subject to adjustment.

Future Outlook

The document does not provide explicit forward-looking statements or guidance regarding the company's future financial performance or strategic direction, beyond the terms of the Warrants and the ongoing earnout provisions from the BCA.

Industry Context

The document does not provide sufficient information to analyze how this announcement relates to broader industry trends or competitors. It focuses solely on the specific transactions and ownership changes of Chijet Motor Company, Inc.

Legal Proceedings

Greentree Financial Group, Inc. vs. Chijet Motor Company, Inc., and Equiniti Trust Company, LLC, filed August 27, 2024, in the United States District Court for the Southern District of New York (Case Number: 24-cv-6415).
Safety Shot Inc. f/k/a Jupiter Wellness Inc. vs. Chijet Motor Company, Inc., and Equiniti Trust Company, LLC, filed August 27, 2024, in the United States District Court for the Southern District of New York (Case Number: 24-cv-6420).
L&H, Inc. vs. Chijet Motor Company, Inc., and Equiniti Trust Company, LLC, filed August 27, 2024, in the United States District Court for the Southern District of New York (Case Number: 24-cv-6425).
Kin Chung Wong vs. Chijet Motor Company, Inc., and Equiniti Trust Company, LLC, filed September 6, 2024, in the Supreme Court of the State of New York, County of New York (Case Number: 654666/2024).

Related Party Transactions

Euroamer Kaiwan Technology Company Limited (EKT) is a significant shareholder and is considered a related party. Its director, Lichun Wu, is also a reporting person.
EKT's share surrender was pursuant to earnout provisions of the Amended and Restated Business Combination Agreement (BCA), which involved EKT as one of the 'Sellers'.
EKT participated in the Private Investment in Public Equity (PIPE) transaction, purchasing shares and warrants from the Issuer.

Stakeholder Impact

Shareholders: The share surrender due to unmet earnout milestones could signal underperformance, potentially impacting investor confidence. The PIPE transaction introduces new shares and warrants, which could lead to dilution if warrants are exercised, but also provides new capital.
Employees: No direct impact mentioned, but financial performance issues could indirectly affect employees.
Creditors: No direct impact mentioned, but the capital raise could improve the company's financial position.
Management: The unmet earnout milestones reflect on management's ability to achieve targets set in the BCA.

Next Steps

The Warrants issued in the PIPE transaction are exercisable for three years from January 7, 2025.
The earnout provisions of the BCA continue for 2024 and 2025, with potential for further adjustments based on future performance.

Key Dates

Date	Description
October 25, 2022	Date of the Amended and Restated Business Combination Agreement (BCA).
February 16, 2024	Date of the Original 13D filing by the reporting person.
June 28, 2024	Effective date of a 1-for-30 reverse stock split effectuated by the Issuer.
June 30, 2024	Date as of which 5,470,076 Ordinary Shares were outstanding, as reported in the Issuer's Form 6-K filed on September 30, 2024.
August 27, 2024	Filing date for lawsuits against Chijet Motor Company, Inc. by Greentree Financial Group, Inc., Safety Shot Inc., and L&H, Inc.
September 6, 2024	Filing date for a lawsuit against Chijet Motor Company, Inc. by Kin Chung Wong.
September 25, 2024	Approximate date of surrender of 354,232 Ordinary Shares by EKT due to unmet 2023 earnout milestones.
September 30, 2024	Date of filing of Issuer's Form 6-K with Condensed Interim Unaudited Consolidated Financial Statements as of June 30, 2024.
January 5, 2025	Date of the Securities Purchase Agreement for the PIPE transaction.
January 7, 2025	Date of event which requires filing of this statement (consummation of PIPE transaction); also the date Warrants become exercisable.
January 8, 2025	Date of filing of this Schedule 13D and Joint Filing Agreement.
December 31, 2023	Calendar year end for which earnout milestones were not achieved.
July 31, 2024	Termination date for the Securities Purchase Agreement if the Closing has not been consummated.

Keywords

Chijet Motor Company, SEC filing, Schedule 13D, Euroamer Kaiwan Technology, Lichun Wu, Private Placement, PIPE, Warrants, Earnout, Share Surrender, Beneficial Ownership, Restricted Securities, Reverse Stock Split, Legal Proceedings

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