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Dr. Xiaodi Hou, co-founder and largest shareholder of TuSimple Holdings Inc., has called for the immediate liquidation of the company. In a letter addressed to the Board of Directors, Hou expressed concerns about the company’s recent shift in focus from autonomous driving to Artificial Intelligence Generated Content (AIGC) in China, and highlighted potential related-party transactions that threaten shareholder value. Hou also announced legal actions to protect shareholder interests and indicated his intent to withhold support for all proposals at the upcoming annual meeting.
Key Highlights:
- Significant Change in Company Direction: TuSimple has pivoted from its core mission of autonomous driving to a focus on AIGC without prior shareholder consultation.
- $150 Million Capital Increase to Chinese Subsidiaries: Public records reveal an increase in the capital of TuSimple’s Chinese subsidiaries, raising concerns about transparency and potential related-party transactions.
- Legal Actions Initiated by Hou: Hou has taken legal measures, including filing for a temporary restraining order and injunctive relief, to protect shareholder value.
- Demand for Liquidation: Hou has demanded the complete liquidation of TuSimple and distribution of proceeds to all shareholders on a pro-rata basis.
Dr. Xiaodi Hou emphasized the company’s 91% drop in share value since the leadership shift to Mo Chen and Cheng Lu, stating it has significantly impacted investors and the company’s original mission. He pointed out that TuSimple’s transition to AIGC development in China, specifically the “Three-Body Problem” partnership, was executed without prior communication or a vote from shareholders. This move has raised questions regarding the Board’s priorities and governance.
Hou also highlighted several related-party concerns, specifically noting the undisclosed involvement of Sina Corporation, TuSimple’s second-largest shareholder, in the “Three-Body Problem” partnership. Sina holds control over the intellectual property through a 60% stock pledge, which Hou argued creates a conflict of interest and exposes other shareholders to one-sided risks.
Adding to the concerns, Hou stated that TuSimple’s $450 million in cash reserves are now under threat, given the company’s questionable business pivot and increased registered capital to Chinese subsidiaries. The lack of transparency and the suspected related-party transactions involving Mo Chen’s personal gaming and animation companies have further exacerbated these concerns.
Hou has taken the following legal actions to protect shareholder interests:
- Filed for a temporary restraining order in the Southern District of California to restrict the transfer of financial assets from the U.S. to China.
- Filed for injunctive relief in the Delaware Court of Chancery to address voting rights concerning his 29.7% ownership stake and to postpone the upcoming annual meeting scheduled for December 20, 2024.
Hou intends to vote against all major proposals at the upcoming annual meeting, including the proposed slate of directors and the amendment for staggered Board terms. He demanded the full liquidation of TuSimple, with all proceeds distributed equally among shareholders, regardless of share class. Hou emphasized that he would be willing to forfeit the super voting rights attached to his Class B shares to ensure maximum value for all shareholders.
In his letter, Hou urged the Board to take swift action, noting that the window to act in the best interest of shareholders is narrowing due to the upcoming annual meeting and recent financial decisions involving Chinese subsidiaries.
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