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 basis, regardless of share class,” based on a letter that TechCrunch has considered.
Hou can also be suing TuSimple and his former co-founder Mo Chen, the corporate’s chief producer and director, to verify {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 a web 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 way of liquidation, TuSimple shareholders “can immediately realize this 700%+ premium to current market price.”
The letter, lawsuit, and marketing campaign are the newest flareups in an ongoing combat between TuSimple and a few of its shareholders, which incorporates Hou, over the corporate’s makes an attempt to ship its remaining property 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 right this moment would have come from buyers.
Hou and different shareholders have accused TuSimple’s leaders of diverting property in direction of 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 stunned many by unveiling a brand new AI-generated animation and gaming unit.
Earlier this month, Hou urged a California district courtroom to concern a short lived restraining order on TuSimple to cease the corporate from transferring U.S. property to China as a part of an present shareholder lawsuit. Hou mentioned 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 towards 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 building TuSimple Holdings Inc. and its largest shareholder, it has been disappointing to watch shareholders’ collective investment value plummet by over 91% in less than two years under the leadership of Mo Chen…and Chairman and CEO Cheng Lu,” Hou wrote within the letter which he despatched to the board on Monday.
Hou filed go well with towards TuSimple and Chen final week within the Delaware Chancery Courtroom, which is thought to be pleasant to shareholder rights. Within the submitting, he additionally requested the courtroom to postpone TuSimple’s upcoming annual shareholder assembly, which is presently scheduled for December 20, to “prevent the implementation of proposed significant governance changes before the voting rights dispute is resolved.”
Sources acquainted with the matter say Hou desires time to solicit proxies to get extra buyers on aspect.
Except for 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 big 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 buyers 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 International Funding in the USA led TuSimple to disclose that its staff spent paid hours in 2021 working for Hydron – Chen’s hydrogen trucking startup based mostly in China – and shared confidential info with the corporate. Because of this, 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 completed with out simply trigger.
He and Chen had been involved that the board was engaged in an influence seize that wasn’t in TuSimple’s greatest curiosity, so that they mentioned combining their voting powers to reinstate Chen on the board and convey Hou again as CTO after an inner investigation concerning the Hydron allegations. (Hou by no means obtained his CTO publish again.)
On November 9, Hou signed an settlement with Chen that will give the latter “irrevocable proxy and power of attorney” over Hou’s shares in TuSimple: Round 13.4 million shares of Class A standard inventory, and 12 million shares of Class B frequent inventory. Put collectively, Hou’s shares would account for 29.7% of TuSimple’s whole 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 agreement, and the voting arrangement thereunder, remain in full force and effect.” 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 did not file quarterly updates, that are required for a corporation that’s nonetheless registered with the SEC. TuSimple can also be trying to deregister from the SEC.)
TuSimple included related language across the take care of Hou in its proxy assertion to shareholders forward of the upcoming annual assembly, throughout which they may vote on renewing the six present administrators and whether or not to create a labeled 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 had been to go, it will forestall shareholders from changing all the board in a single vote and it may entrench management with Chen, who would successfully be making certain his most well-liked 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.
