人间还有不义，上帝不会旁观！ In SEC, We trust!
SEC, please investigate and stop the ultra-low-price tender offer from management in attempt to buy out Jumei International Holding Ltd (NYSE: JMEI ), a Chinese company listed on the NYSE, to protect the legitimate interests of the minority shareholders
I am an investor from China who are particularly interested in investing US-listed stocks. I have many shares in a Chinese Internet company called Jumei International Holding Ltd (JMEI) which is currently listed on the New York Stock Exchange. Now most of individual shareholders who invested in this company are currently in a desperate situation. Our legitimate investment will be severely harmed in a long-planned robbery of an ultra-low-price for privatization of the company.
On January 12, 2020, Mr. Chen Ou, CEO of JMEI, sent out a non-binding $ 20 per share tender offer to privatize JMEI. As individual investors, we were stunned and couldn't believe it!
Let me briefly introduce the current situation of JMEI:
1. According to JMEI's last-filed financial report (2018 annual report), JMEI's net assets (book value of equity) per share now exceed $40.
2. JMEI invested in the power bank rental (for users to charge their cellphones with a fee) company called "JIEDIAN" in 2017. The investment achieved a net profit of more than 10 million US dollars in 2018, and it has taken 40% of the market share for the whole power bank rental market in China, and it has 200 million membership users. In December 2019, another company of equivalent size as JIEDIAN, just completed Series C financing, and they successfully financed 70 million US dollars, which gives them a valuation of more than 500 million US dollars. JMEI has not disclosed JIEDIAN's 2019 operating profile, but a reasonable valuation will not be less than 500 million US dollars. JMEI holds nearly 100% of JIEDIAN's shares.
3. JMEI also invested in a short-form mobile videos company (like TikTok) "SHUABAO" around April 2019. The total downloads of the APP in China exceeded 300 million. The specific valuation is unclear and it may likely exceed hundreds of millions of dollars. SHUABAO operates under the name of an independent company, but the investment comes from JMEI. CEO Mr. Chen Ou has confirmed at the latest shareholders' meeting.
Therefore, the total value of the company is more than 1 billion USD, an equivalent to more than $100 per share. Mr. Chen Ou is trying to privatize it at $20 per share! I don't think this is an act for the benefits of the shareholders, and I think this is a pure robbery!
In addition, what is even more unacceptable is that Mr. Chen Ou might commit fraud during the privatization process:
1. On January 10, 2020, JMEI completed the 10-to-1 reverse split . The original price was $ 2 per share, which became $ 20 after the merger of shares. The company’s statement is to help small shareholders save expenses and cost due to holding the shares, but according to what we see It is reported that he is manipulating the public opinion, because JMEI went public on the New York Stock Exchange on May 16, 2014, and the IPO price was $ 22 per share. Now the medias report that the offer is at $ 20 per share, and the small shareholders do not suffer from too much loss.
2. On December 25, 2019, he held a Christmas shareholders meeting, verbally promised shareholders not to privatize the company, but instead to work hard to increase the company's actual stock price.
3. JMEI did not release quarterly, semi-annual and full-year reports for FY 2019, and there was no formal communication with the shareholders, resulting in the fall of stock price all the way down to about $2.
4. Mr. Chen Ou initiated the first privatization attempt in February 2016. The price of the privatization was US $ 70 per share (at that time $7 per share), but because the offer was too low, the privatization failed. Since then, JMEI no longer provided quarterly, semi-annual reports. There is a reason to believe that Mr. Chen Ou is intentionally manipulating the stock price, to get it lower.
JMEI is a company registered in the Cayman Islands. I later learned that companies in the Cayman Islands are extremely beneficial to majority shareholders. They have almost unlimited powers. I would like to know from the SEC regulators’ opinion, whether Mr. Chen Ou of JMEI can have the following power:
1. If JMEI can privatize a company at half the price of its net assets, can he theoretically privatize a company for just $1 dollar or even less?
2. Are the above behaviors taken by Mr. Chen Ou during the privatization process suspected of misleading investors?
If Mr. Chen Ou has the above powers and ability, does it conflict with the "sacred and inviolable personal legal property" stipulated in U.S. law? If Mr. Chen Ou can still exercise his power in spite of the conflict, will he break any U.S. laws and regulations?
Although neither JMEI is a U.S. company nor am I a U.S. citizen, the stock is listed on NYSE, which is technically U.S. territory. Based on the "fairness and justice" principle shared by human civilization, can the SEC express its concern based on morality and legality? Imagine if Mr. Chen Ou completed the robbery, will there be more Cayman Islands companies to follow suit, then how many U.S. stock investors will suffer, and will the stock market in U.S. also become a jungle world?
Mr. Chen Ou has always appeared in the Chinese media as an "inspirational leader" and an "idol of young people". He graduated from Stanford and is a true elite. He has personally endorsed the company’s advertising campaigns and has 40 million followers on social media . Mr. Chen Ou is also the youngest CEO of all listed companies in NYSE history. As individual shareholders from China, we believe that Mr. Chen Ou is a reputable and capable CEO, and we actively promote his excellent experience in major financial medias, hoping that he will lead JMEI to be more successful.
The US stock market is strictly managed and the system is nearly perfect. In my opinion, this is one of the fairest and most equitable stock markets in the world.
Based on the above two reasons, I and other individual shareholders chose to invest in JMEI's stock. But the privatization has completely destroyed our hope. As individual shareholders, we are currently in despair. Mr. Chen Ou and JMEI has by far outpowered us in terms of money, power and resources, (when I wrote this letter, I felt great fear, because the complaint letter may cause Mr. Chen Ou to threaten small shareholders in terms of personal safety), I feel like a child wearing boxing gloves and being forced to compete with the world boxing champion Mike Tyson, and I hope SEC can stop this unfair game.
We are making our humble requests to SEC Regulators to take two actions:
1. To send a letter to JMEI within the rules and express concerns that the JMEI privatization process will be suspended until it is properly negotiated by both parties; and continue to pay attention to a series of actions that Mr. Chen Ou may take to lower the stock price if JMEI's privatization fails;
2. The vast majority of JMEI minority shareholders invest in JMEI with hard-working savings, hoping to pay back children ’s milk powders or their children ’s college tuitions, or mortgages, or pensions. We can accept the loss caused by JMEI's inability to develop into a better company in spite of Mr. Chen Ou's hard work, but we cannot accept that Mr. Chen Ou robbed the legitimate rights and interests of individual shareholders by illegal means when JMEI is about to achieve great success.
Fairness and justice are God ’s gifts to the world, but Mr. Chen Ou destroyed this precious gifts. Mr. Chen Ou ’s privatization offer has been issued for more than 48 hours, but I have never dared to tell my wife because she is also a fan of Mr. Chen Ou, I'm afraid to see the sadness in her eyes!
The Chinese have a saying: People are doing things, and God is watching. How I wish it is, Mr. Chen Ou is doing something, and the SEC is watching!
I can only speak simple English, so I wrote this letter in Chinese and asked a friend to translate it into English. I hope that the translation can accurately express itself.
If there is injustice on earth, I believe God will not turn a blind eye to it! In SEC, We trust!
In SEC, We trust! 这句话，让我笑翻了