CMSS To Combine with Kaixin Auto Group and Its Owner, RenRen Inc.

CM Seven Start Acquisition Corp. (CMSS), announced yesterday evening it has entered into a business combination with Kaixin Auto Group (“Kaixin”), a leading premium used car dealership network in China and its owner, Renren Inc. (“Renren”) (NYSE:RENN).  Kaixin was founded in 2015 by its corporate parent, Renren Inc., to capitalize on growth in China’s used car financing industry. The Company’s business model includes on-line and brick-and-mortar dealerships as well as a network of parties that provide a range of value-added and after-sale services.

CMSS will acquire 100% of the issued and outstanding shares of Kaixin in a transaction valued at approximately $454 million.  Per the share exchange agreement, Renren, Kaixin’s corporate parent will sell 100% of Kaixin’s equity holdings to CMSS in exchange for approximately 28.3 million CMSS shares.  100% of the transaction consideration will be newly issued ordinary shares of CMSS and amounts remaining in CMSS’s trust account at the closing of the business combination is expected to be used for Kaixin’s capital growth.

Following the close of the Transaction, Kaixin will continue to be led by its current management team with Mr. Joseph Chen as Chairman of the Board of Directors, Mr. Ji Chen as Chief Executive Officer and Mr. Thomas Ren as Chief Financial Officer. Kaixin will remain headquartered in Beijing, China.

CONSIDERATION

Upon closing of the transaction, Kaixin shareholders will receive approximately 28.3 million in shares as consideration and up to approximately 19.5 million additional shares based on incentive earnouts issuable in the future upon achievement of certain financial results and/or stock prices.

EARNOUTS

• If Kaixin’s revenue equals or exceeds RMB5.0 billion in 2019 (USD 725.7 million), Renren will receive 1.95 million shares.
• If Kaixin’s 2019 Adjusted EBITDA equals RMB150 million (USD 21.8 million), Renren will receive 3.9 million shares, increasing proportionally to 7.8 million shares if 2019 Adjusted EBITDA equals or exceeds RMB200 million (USD 29.0 million).
• If Kaixin’s 2020 Adjusted EBITDA equals RMB340 million (USD 49.3 million), Renren will receive 4.875 million shares, increasing proportionally to 9.75 million shares if 2020 Adjusted EBITDA equals or exceeds RMB480 million (USD 69.7 million).

Notwithstanding the Revenue and Adjusted EBITDA achieved by the post-transaction company for any period, Kaixin shareholders will receive the 2019 earnout shares if:

• The stock price of CMSS is higher than $13.00 for any sixty days in any period of ninety consecutive trading days during a fifteen month period following the closing.

And, Kaixin shareholders will receive the 2019 earnout shares and the 2020 earnout shares if:

• The stock price of CMSS is higher than $13.50 for any sixty days in any period of ninety consecutive trading days during a thirty month period following the closing.

In addition, approximately 4.7 million shares of CMSS will be issued at closing or reserved for issuance to Kaixin’s management under its equity incentive plan.

ADVISORS

• EarlyBirdCapital, Inc. is acting as exclusive financial and capital markets advisor to CM Seven Star Acquisition Corporation
• Loeb & Loeb LLP, Addleshaw Goddard (Hong Kong) LLP and King & Wood Mallesons are acting as CMSS’s legal advisors.
• Simpson Thacher & Bartlett LLP and TransAsia Lawyers are acting as legal advisors to Kaixin Auto Group.
• Skadden, Arps, Slate, Meagher & Flom LLP is acting as counsel to Renren Inc.
• Maples & Calder (Hong Kong) LLP is acting as Cayman counsel to Kaixin and Renren.