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Xiaodi Hu, co-founder and former CEO of self-driving truck startup TuSimple, is demanding that the board immediately liquidate the company and return all remaining funds — nearly $450 million — to shareholders “on a pure pro rata basis, regardless of class share.” , according to a message seen by TechCrunch.
Hou is also suing TuSimple and his former co-founder Mo Chen, the company’s chief producer and director, to assert that the 2022 voting agreement giving Chen control of TuSimple expired in November 2024, which Hou says would return voting rights to him.
He even created a website, SaveTuSimple.comto raise awareness of his campaign to divest TuSimple and return cash to shareholders – including Traton Group, Blackrock, and Vanguard. The site states that as of November 26, TuSimple stock is trading at $0.24 per share, while it has $1.93 per share in cash alone. It announces that through the liquidation, TuSimple shareholders can “realize this 700%+ premium over the current market price immediately.”
The letter, lawsuit and campaign are the latest confrontations in the ongoing battle between TuSimple and some of its shareholders, including Hou, over the company’s attempts to send its remaining assets to China. Before closing its US operations and delisting from the stock market earlier this year, TuSimple was a pre-revenue company, so any cash it has today would have come from investors.
He and other shareholders accused TuSimple leaders of shifting assets toward Chen-related animation and gaming businesses, positioning them as a business hub. After shareholders raised concerns about self-dealing in a letter to the board in August, TuSimple surprised many by unveiling a new animation and gaming unit generated by artificial intelligence.
Earlier this month, Hu urged a California district court to issue a temporary restraining order on TuSimple to prevent the company from moving US assets to China as part of an existing shareholder lawsuit. Hu said he jumped into action after noticing filings that he says indicated TuSimple was preparing to transfer large sums of money to China.
TuSimple has fought back against Hou, filing its own lawsuit alleging trade secret theft after Hou launched his autonomous trucking startup, Bot Auto, in Texas last month.
“As a founder who invested seven years in building TuSimple Holdings Inc. and its largest shareholder, it was disappointing to see the value of shareholders’ collective investment decline by more than 91% in less than two years under the leadership of Mo Chen… Chairman and CEO Cheng If,” he wrote in the letter he sent to the board on Monday.
Hu filed a lawsuit against TuSimple and Chen last week in Delaware Chancery Court, which is known for being sensitive to shareholder rights. In the lawsuit, he also asked the court to postpone TuSimple’s upcoming annual shareholder meeting, currently scheduled for December 20, “to prevent implementation of proposed significant governance changes before the voting rights dispute is resolved.”
Sources familiar with the matter say that he wants time to attract agents to attract more investors.
Aside from Hu and Chen, TuSimple’s largest shareholder with an 11.8% stake is Sun Dream, a subsidiary of Chinese conglomerate Sina Corporation, an investment that brought Audit by federal regulatory agencies.
The remaining major shareholders are: logistics giant Traton (7.6% stake); Vanguard Group (6.1% stake); BlackRock (5.6% stake); and Camac Partners (5.5% stake). Camac also wrote to urge the board to keep TuSimple’s funds in the US. The other three investors did not respond in time to TechCrunch for comment.
But before Ho can convince shareholders to back him, he will need to gain control of his shares, which are the subject of his lawsuit.
It is a voting agreement
In the fall of 2022, a Committee on Foreign Investment in the United States investigation led TuSimple to disclose that its employees spent paid hours in 2021 working for Hydron — the China-based hydrogen trucking startup Chain — and shared confidential information with the company. As a result, he was fired from his positions as CEO, president, and CTO, and from his position as chairman of the board, although he retained a seat on the board. He stressed that the shooting was carried out without just cause.
He and Chen were concerned that the board was engaging in a power grab that was not in TuSimple’s best interest, so they discussed combining their voting powers to return Chen to the board and reinstate Hu as CTO after conducting an internal investigation into Hydron’s allegations. . (He never regained his position as CTO.)
On November 9, Hu signed an agreement with Chen that would grant the latter an “irrevocable power of attorney and power of attorney” over Hu’s shares in TuSimple: approximately 13.4 million shares of Class A common stock and 12 million shares of Class B common stock. Combined, Hou’s shares will account for 29.7% of TuSimple’s total voting power.
The agreement, seen by TechCrunch, expired after two years. This means the shares should return to him, he says. But Chen has other ideas.
At the Securities and Exchange Commission Deposit On November 9, 2024, Chen reiterated his claim to Hu’s shares, stating that he controlled 57.9% of the voting power of the company. The filing also states that even though the irrevocable proxy has already expired, “the Voting Agreement and the voting arrangements thereunder shall remain in full force and effect.” In other words, while Hu may be in possession of the shares, he still needs to vote as directed by Chen.
(It’s worth noting that since its voluntary delisting from the stock market in January, TuSimple has failed to file quarterly updates, which are required for a company still registered with the SEC. TuSimple is also trying to deregister from the SEC.)
TuSimple included similar language about the deal with Hou in its proxy statement to shareholders ahead of the upcoming annual meeting, at which they will vote on the renewal of the six current directors and whether to create a confidential board or a tiered board.
Half of the current board composition is TuSimple executives: Chen, TuSimple CEO Cheng Lu, and TuSimple COO Jiannan Hao. The other three – James Lu, Chen Tao, and Albert Schultz – are supposed to be independent directors.
If the second proposal passes, it would prevent shareholders from replacing the entire board in a single vote, and could cement control with Chen, who would effectively ensure that his preferred directors remain in their positions over the long term.
A hearing is scheduled to expedite review of Hou’s complaint and make a decision on his request to postpone TuSimple’s annual meeting on December 2.
TuSimple did not respond to TechCrunch’s request for comment.
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