SCHEDULE 13D: Uxin Limited Secures Strategic Investment and Grants Extensive Registration Rights to Fame Dragon Global Limited

Uxin Limited has entered into a Registration Rights Agreement with Fame Dragon Global Limited, granting the investor rights to register newly acquired Class A Ordinary Shares and ADSs, following a significant share subscription totaling up to $27.88 million.

Summary

• Uxin Limited and FAME DRAGON GLOBAL LIMITED (the Investor) entered into a Registration Rights Agreement on March 17, 2025, stemming from a Share Subscription Agreement dated March 4, 2025.
• Under the Subscription Agreement, the Investor agreed to subscribe for Class A Ordinary Shares, convertible into American Depositary Shares (ADSs).
• The Company is obligated to file a Shelf Registration Statement on Form F-3 for the resale of these Registrable Securities (Class A Ordinary Shares and ADSs) as soon as practicable, but no later than 60 Business Days after the applicable Closing.
• Uxin Limited must use reasonable best efforts to maintain the effectiveness of the registration statement until all Registrable Securities are publicly sold or can be sold without volume or manner-of-sale restrictions under Rule 144.
• The Company will cover all registration expenses, excluding underwriting discounts/commissions and the Investor's outside counsel fees.
• The Investor is granted piggyback registration rights, allowing them to include their Registrable Securities in certain Company-initiated registration statements.
• The Investor can request the removal of restrictive legends from share certificates once the securities are eligible for resale under Rule 144 or an effective registration statement.
• The agreement includes mutual indemnification clauses, where the Company indemnifies the Investor for inaccuracies in the registration statement, and the Investor indemnifies the Company for information they provide for the statement.
• Uxin Limited acknowledges the Investor's intent to convert Class A Ordinary Shares into ADSs for future sale and commits to facilitating this conversion.
• The registration rights will terminate when there are no Registrable Securities remaining and all Class A Ordinary Shares have been converted into fully tradable ADSs.
• The Share Subscription Agreement involved an initial closing on March 17, 2025, where Fame Dragon Global Limited acquired 2,058,460,272 Class A Ordinary Shares for $10 million.
• A subsequent closing occurred on March 28, 2025, with Fame acquiring an additional 1,029,230,136 Class A Ordinary Shares for $5 million.
• The total aggregate purchase price for all closings under the Share Subscription Agreement is set at $27,876,507.
• A Lock-Up Agreement and Non-Competition Undertaking were also signed on March 17, 2025, with Kun Dai (Principal) and Xin Gao Group Limited (Principal Holding Company), restricting the transfer of their equity securities and engagement in competitive business.
• As of March 28, 2025, the total Class A Ordinary Shares outstanding for Uxin Limited were 60,266,116,054.
• Fame Dragon Global Limited beneficially owns 3,087,690,408 Class A Ordinary Shares, representing 5.1% of the class.
• Abundant Glory Investment L.P. beneficially owns 617,538,082 Class A Ordinary Shares, representing 1% of the class.
• Eve One Fund II L.P. beneficially owns 7,687,276,257 Class A Ordinary Shares, representing 12.8% of the class.
• Nio Capital II LLC beneficially owns 8,304,814,339 Class A Ordinary Shares, representing 13.8% of the class.
• An internal management restructuring at Nio Capital II LLC in March 2025 resulted in Bin Li no longer being deemed to control Nio Capital.

Sentiment

Score: 7

Explanation: The document reflects a significant new investment and provides the investor with clear pathways for liquidity, indicating confidence from the investor. The lock-up and non-competition clauses also suggest a commitment to stability and protection of the company's business interests. While not an operational update, the financing aspect is positive.

Positives

• Fame Dragon Global Limited is making a significant capital commitment to Uxin Limited, with an aggregate purchase price of up to $27,876,507, indicating investor confidence.
• The granting of registration rights provides a clear pathway for the investor to achieve liquidity for their shares, which is an attractive feature for strategic investments.
• Uxin Limited will bear most of the registration expenses, reducing the financial burden on the investor for future share sales.
• The Company's commitment to facilitate ADS conversion simplifies the process for the investor to trade their shares on a recognized securities market.
• The lock-up and non-competition agreements with key principal Kun Dai and Xin Gao Group Limited provide stability by restricting share transfers and preventing direct competition, aligning interests with the new investor.

Negatives

• The document does not provide information on the Company's operational performance or financial results, making it difficult to assess the underlying business health.
• The 'Plan of Distribution' explicitly states that the Company will not receive any proceeds from the resale of shares by selling shareholders, only from the initial subscription.
• Some Class A Ordinary Shares held by BOCOM are noted as pledged to a third-party lender and subject to enforcement, which, while not directly impacting Uxin's operations, could signal financial leverage or distress for a related entity.

Risks

• SEC Guidance may impose limitations on the number of Registrable Securities that can be registered on a particular Registration Statement, potentially delaying or restricting the investor's ability to sell shares.
• If the SEC requires any person selling securities under the Registration Statement to be identified as an underwriter and that person does not consent, the number of Registrable Securities for that person will be reduced.
• The marketability of the Selling Securities and the ability of any person or entity to engage in market-making activities may be affected by Regulation M of the Exchange Act.
• Hedging activities by the investor, while compliant with applicable laws, could potentially reduce the market price of the Company's publicly-traded securities.
• The Company and its Subsidiaries are subject to various laws and regulations, and non-compliance could lead to a Material Adverse Effect on the business.
• The document notes that some Class A Ordinary Shares held by BOCOM are pledged to a third-party lender and subject to enforcement, which could introduce volatility or uncertainty related to those specific shares.

Future Outlook

The document primarily outlines the terms of a new investment and associated registration rights, indicating the investor's intent to potentially sell these shares in the future. It also implies continued operations by Uxin Limited and its commitment to maintaining its Nasdaq listing. No specific forward-looking business guidance or financial estimates are provided beyond the transaction details.

Management Comments

• The Company acknowledges that the Investor intends to deposit the Class A Ordinary Shares with the Depositary in exchange for ADSs as soon as practicable for future sale.
• The Company agrees to use reasonable best efforts to maintain the listing or quotation of the ADSs on the Trading Market on which it is currently listed.

Industry Context

This filing indicates a strategic investment in Uxin Limited, a company operating in the online used car transaction platform sector, by an investment entity (Fame Dragon Global Limited) associated with Nio Capital. This suggests continued investor interest and capital inflow into the company or the broader used car market, particularly within the Chinese context. The internal management restructuring at Nio Capital II LLC, while noted, does not appear to deter this investment.

Management Changes

Corporate Governance

Related Party Transactions

• Share Subscription Agreement dated March 4, 2025, between Uxin Limited and Fame Dragon Global Limited. Fame Dragon Global Limited is an affiliate of Nio Capital II LLC, which is the general partner of Eve One Fund II L.P., the parent company of Fame.
• Registration Rights Agreement dated March 17, 2025, between Uxin Limited and Fame Dragon Global Limited.
• Lock-Up Agreement and Non-Competition Undertaking dated March 17, 2025, between Kun Dai (Director of Uxin Limited) and Xin Gao Group Limited (Principal Holding Company) with Fame Dragon Global Limited.
• References to the Second Amended and Restated Investors' Rights Agreement and Second Amended and Restated Voting Agreement, both dated March 26, 2024, which involve the Company, the Principal, the Investor, and other parties.

Stakeholder Impact

• Shareholders: The issuance of new shares to Fame Dragon Global Limited will result in dilution for existing shareholders. However, the capital raise strengthens the company's financial position, and the granted registration rights may improve future liquidity for the investor, potentially attracting more investment.
• Creditors: The capital raise provides additional funds to the company, which could improve its liquidity and financial stability, potentially benefiting creditors.
• Management: The lock-up and non-competition agreements with the principal (Kun Dai) ensure stability in key shareholder holdings and prevent direct competition, which can support management's strategic execution.

Next Steps

• Uxin Limited is required to prepare and file a Shelf Registration Statement on Form F-3 (or equivalent) with the SEC for the resale of Registrable Securities as soon as practicable, but no later than 60 Business Days after the applicable Closing.
• The Company must use reasonable best efforts to keep the Shelf Registration Statement continuously effective until all Registrable Securities are sold or can be sold without volume/manner-of-sale restrictions under Rule 144.
• Uxin Limited is obligated to facilitate the conversion of Class A Ordinary Shares into ADSs for the Investor.
• Subsequent closings under the Share Subscription Agreement are anticipated, with the aggregate purchase price reaching $27,876,507, and must occur no later than the first anniversary of March 4, 2025.

Key Dates

Recommendation

Keywords

Uxin Limited, SEC filing, Schedule 13D, Registration Rights Agreement, Share Subscription Agreement, Class A Ordinary Shares, ADSs, Fame Dragon Global Limited, Nio Capital, Abundant Glory Investment, Eve One Fund, Shareholder ownership, Equity investment, Corporate governance, Lock-up agreement, Non-competition, Public offering, Rule 144, NASDAQ