Xiaodi Hou, co-founder and former CEO of self-driving truck startup TuSimple, said the board will immediately liquidate the company and return the remaining funds (approximately $450 million) to shareholders on a “purely pro rata basis. “Do” is required. It's a “shared class,” according to the letter seen by TechCrunch.
Mr. Hou also filed a lawsuit against TuSimple and its former co-founder Mo Chen seeking confirmation that the 2022 voting rights agreement that gave Mr. Chen control over TuSimple expires in November 2024. Mr. Hou claims that this will result in Mr. Chen's voting rights being returned to him.
Hou even created a website, SaveTuSimple.com, to raise awareness about his campaign to liquidate TuSimple and return cash to shareholders including Traton Group, BlackRock, and Vanguard. As of November 26, TuSimple's stock was trading at $0.24 per share, and the company had $1.93 per share in cash alone, according to the site. It touts that TuSimple shareholders could “immediately realize a premium of more than 700% over current market price” through the liquidation.
The letter, lawsuit and campaign are the latest escalation in an ongoing dispute between TuSimple and some of its shareholders, including Mr. Hou, over the company's efforts to send its remaining assets to China. Before closing its U.S. operations and delisting from the stock market earlier this year, TuSimple was still an unprofitable company, so any cash it currently has would likely come from investors.
Mr. Hou and other shareholders have accused TuSimple's management of diverting assets to animation and gaming businesses connected to Mr. Chen and making them the core of the company's business. After shareholders raised concerns about self-dealing in a letter to the board in August, TuSimple surprised many by announcing a new AI-generated animation and gaming division.
Earlier this month, Hou asked a California district court to issue a temporary restraining order against TuSimple to prevent the company from transferring U.S. assets to China as part of an existing shareholder lawsuit. Hou said he was prompted to take action after finding documents suggesting TwoSimple was preparing to transfer large sums of money to China.
TuSimple is hitting back at Hou with its own lawsuit alleging theft of trade secrets after he launched Bot Auto, a self-driving trucking startup in Texas last month.
“As the founder and largest shareholder who invested seven years in building TuSimple Holdings Inc., under the leadership of Mo Chen and Chairman and CEO, we have seen the value of our shareholders' total investment plummet by more than 91% in less than two years. It was disappointing to see “Chen Lu,'' Hou wrote in a letter to the board on Monday.
Mr. Hou filed a lawsuit against Mr. TuSimple and Mr. Chen last week in Delaware Court of Chancery, a court known for being friendly to shareholder rights. TuSimple's annual general meeting, currently scheduled for Dec. 20, will be postponed to “prevent the implementation of significant proposed governance changes before the voting disputes are resolved,” he wrote in the filing. asked the court to do so.
Sources said Hou wanted time to seek proxies to bring more investors to his side.
Aside from Mr. Hou and Mr. Chen, TuSimple's largest shareholder with an 11.8% stake is Sun Dream, an affiliate of Chinese conglomerate Sina, an investment that has drawn scrutiny from federal regulators.
The remaining major shareholder is major logistics company Trayton (7.6% stock). Vanguard Group (6.1% stake). BlackRock (5.6% stake). Camac Partners (5.5% stock). Cammack also wrote a letter to the board asking that TuSimple's funds remain in the United States. The other three investors did not respond to TechCrunch for comment.
But before Mr. Hou can gain support from shareholders, he needs to gain control of the company's shares, which are the subject of a lawsuit.
Mr. Hou's voting rights agreement
Image credit: TuSimple
In fall 2022, a Committee on Foreign Investment in the United States investigation revealed that TuSimple employees spent paid time in 2021 at Hydron, Chen's China-based hydrogen trucking startup, and shared confidential information with the company. It became clear that he had done so. As a result, Mr. Hou was removed from the positions of CEO, president, and CTO, and was also removed from the position of chairman of the board, although he retained his seat on the board. Hou maintains that the dismissal was without just cause.
He and Cheng are concerned that the board is engaged in a power grab that is not in TuSimple's best interests, and as a result of an internal investigation into the Hydron scandal, they reinstated Cheng on the board and replaced Hou with the top position. We discussed merging voting rights in order to bring him back as Chief Technology Officer (CTO). . (Hou never regained the CTO post.)
On November 9, Mr. Hou signed with Mr. Chen an “irrevocable power of attorney and power of attorney” with respect to Mr. Hou's shares in TuSimple (approximately 13.4 million shares of Class A common stock and 12 million shares of Class B common stock). signed a contract to give. In total, Mr. Hou's shares represent 29.7% of TuSimple's total voting power.
The deal, seen by TechCrunch, expired after two years. Mr Hou says this means giving the stock back to him. But Chen has other ideas.
In a filing with the Securities and Exchange Commission dated November 9, 2024, Mr. Chen reaffirmed his claim to Mr. Hou's shares, stating that he controls 57.9% of the company's voting rights. said. The filing also states that although the irrevocable proxy has indeed been terminated, “the Proxy Voting Agreement and the voting arrangements thereunder remain in full force and effect.” In other words, Mr. Hou may own the shares, but he still needs to vote according to Mr. Chen's instructions.
(Notably, since TuSimple voluntarily delisted from the stock market in January, it has failed to file quarterly updates required for companies still registered with the SEC.) )
TuSimple included similar language regarding the agreement with Mr. Hou in its proxy statement sent to shareholders ahead of its next annual meeting. The shareholders' meeting is expected to vote on renewing the six current directors and whether to establish a confidential or staggered board.
Half of the current board composition is TuSimple executives. TuSimple CEO Chen Lu and TuSimple Chief Operating Officer Jianan Hao. The remaining three directors, James Lu, Zhen Tao and Albert Schultz, will be independent directors.
If passed, the second proposal could entrench Mr. Chen's control by removing the ability for shareholders to replace the entire board with a single vote, effectively ensuring that Mr. He will remain in office.
A hearing to expedite the review of Mr. Hou's complaint and to determine a request to postpone TuSimple's annual general meeting is scheduled for December 2nd.
TuSimple did not respond to TechCrunch's request for comment.