Xiaodi Hou, the co-founder and former CEO of self-driving truck startup TuSimple, is demanding that the board instantly liquidate the corporate and return all remaining funds — roughly $450 million — to shareholders “on a pure pro-rata foundation, no matter share class,” in line with a letter that TechCrunch has considered.
Hou can be suing TuSimple and his former co-founder Mo Chen, the corporate’s chief producer and director, to substantiate {that a} 2022 voting settlement granting Chen management over TuSimple expired in November 2024, which Hou says would revert his voting rights again to him.
Hou has even created an internet site, SaveTuSimple.com, to lift consciousness about his marketing campaign to liquidate TuSimple and return money to shareholders — which embody Traton Group, BlackRock, and Vanguard. The positioning states that as of November 26, TuSimple’s inventory trades at $0.24 per share, whereas holding $1.93 per share in money alone. It advertises that by liquidation, TuSimple shareholders “can instantly notice this 700%+ premium to present market worth.”
The letter, lawsuit, and marketing campaign are the newest flare-ups in an ongoing combat between TuSimple and a few of its shareholders, which embody Hou, over the corporate’s makes an attempt to ship its remaining belongings to China. Earlier than shuttering its U.S. operations and delisting from the inventory market earlier this yr, TuSimple was a pre-revenue firm, so any money it has at the moment would have come from traders.
Hou and different shareholders have accused TuSimple’s leaders of diverting belongings towards animation and gaming companies linked to Chen, framing it as a enterprise pivot. After shareholders raised considerations of self-dealing in an August letter to the board, TuSimple shocked many by unveiling a brand new AI-generated animation and gaming unit.
Earlier this month, Hou urged a California district courtroom to concern a brief restraining order on TuSimple to cease the corporate from transferring U.S. belongings to China as a part of an present shareholder lawsuit. Hou stated he was galvanized to motion after noticing filings that he says signaled TuSimple was making ready to switch massive sums of cash to China.
TuSimple has fought again in opposition to Hou, citing its personal litigation alleging commerce secrets and techniques theft after Hou launched his autonomous trucking startup, Bot Auto, in Texas final month.
“As a founder who invested seven years constructing TuSimple Holdings Inc. and its largest shareholder, it has been disappointing to observe shareholders’ collective funding worth plummet by over 91% in lower than two years underneath the management of Mo Chen … and Chairman and CEO Cheng Lu,” Hou wrote within the letter, which he despatched to the board on Monday.
Hou filed swimsuit in opposition to TuSimple and Chen final week within the Delaware Chancery Courtroom, which is understood to be pleasant to shareholder rights. Within the submitting, he additionally requested the courtroom to postpone TuSimple’s upcoming annual shareholder assembly, which is at the moment scheduled for December 20, to “forestall the implementation of proposed vital governance adjustments earlier than the voting rights dispute is resolved.”
Sources accustomed to the matter say Hou desires time to solicit proxies to get extra traders on his aspect.
Apart from Hou and Chen, TuSimple’s largest shareholder, with an 11.8% stake, is Solar Dream, an affiliate of Chinese language conglomerate Sina Company, an funding that introduced scrutiny from federal regulators.
The remaining massive shareholders are Logistics large Traton (7.6% stake); Vanguard Group (6.1% stake); BlackRock (5.6% stake); and Camac Companions (5.5% stake). Camac has additionally written to induce the board to maintain TuSimple’s funds within the U.S. The opposite three traders didn’t reply in time to TechCrunch to remark.
However earlier than Hou can persuade shareholders to again him, he’ll must get management over his personal shares, that are the topic of his lawsuit.
Hou’s voting settlement
Within the fall of 2022, a probe from the Committee on Overseas Funding in the US led TuSimple to disclose that its workers spent paid hours in 2021 working for Hydron — Chen’s hydrogen trucking startup based mostly in China — and shared confidential info with the corporate. In consequence, Hou was ousted from his posts as CEO, president, and CTO, and from his place as chairman of the board, although he retained a seat on the board. Hou has maintained that the firing was executed with out simply trigger.
He and Chen have been involved that the board was engaged in an influence seize that wasn’t in TuSimple’s finest curiosity, in order that they mentioned combining their voting powers to reinstate Chen on the board and produce Hou again as CTO after an inner investigation in regards to the Hydron allegations. (Hou by no means received his CTO publish again.)
On November 9, Hou signed an settlement with Chen that might give the latter “irrevocable proxy and energy of legal professional” over Hou’s shares in TuSimple: Round 13.4 million shares of Class A standard inventory, and 12 million shares of Class B widespread inventory. Put collectively, Hou’s shares would account for 29.7% of TuSimple’s complete voting energy.
The settlement, which TechCrunch has considered, expired after two years. Hou says this implies the shares ought to revert again to him. However Chen has different concepts.
In a Securities and Change Fee submitting dated November 9, 2024, Chen reaffirmed his declare to Hou’s shares, stating that he controls 57.9% of the corporate’s voting energy. The submitting additionally states that whereas the irrevocable proxy certainly terminated, “the voting settlement, and the voting association thereunder, stay in full pressure and impact.” In different phrases, whereas Hou could also be in possession of the shares, he nonetheless must vote as Chen directs.
(It’s value noting that since voluntarily delisting from the inventory market in January, TuSimple has didn’t file quarterly updates, that are required for an organization that’s nonetheless registered with the SEC. TuSimple can be making an attempt to deregister from the SEC.)
TuSimple included comparable language across the cope with Hou in its proxy assertion to shareholders forward of the upcoming annual assembly, throughout which they’ll vote on renewing the six present administrators and whether or not to create a categorised board, or a staggered board.
Half of the board’s present make-up is TuSimple executives: Chen; TuSimple CEO Cheng Lu; and TuSimple COO Jianan Hao. The opposite three — James Lu, Zhen Tao, and Albert Schultz — are supposed to be unbiased administrators.
If the second proposal have been to cross, it might forestall shareholders from changing all the board in a single vote and it might entrench management with Chen, who would successfully be guaranteeing his most popular administrators keep in place for the long run.
A listening to to expedite the overview of Hou’s criticism and to determine on his request to postpone TuSimple’s annual assembly is scheduled for December 2.
TuSimple didn’t reply to TechCrunch’s request for remark.
