UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
E-Commerce China Dangdang Inc.
(Name of Issuer)
Common Shares
(Title of Class of Securities)
26833A105
(CUSIP Number)
|
Peggy Yu Yu c/o 21/F, Jing An Center No. 8 North Third Ring Road East Chaoyang District, Beijing 100028 People’s Republic of China |
Guoqing Li Kewen Holding Co. Limited Science & Culture International Limited c/o 21/F, Jing An Center No. 8 North Third Ring Road East Chaoyang District, Beijing 100028 People’s Republic of China |
With copies to:
|
Z. Julie Gao, Esq. Haiping Li, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen’s Road Central Hong Kong +852 3740-4700 |
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 17, 2016
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. x
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* This statement on Schedule 13D (the “Schedule 13D”) constitutes Amendment No. 1 to the Schedule 13D filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 20, 2015 (the “Original Filing”) by Peggy Yu Yu (“Ms. Yu”), Guoqing Li (“Mr. Li”), Kewen Holding Co. Limited (“Kewen”) and Science & Culture International Limited (“SC International”), with respect to the common shares (“Common Shares”), comprising Class A common shares, par value $0.0001 per share (“Class A Common Shares”, including Class A Common Shares represented by the Company’s American depositary shares (“ADSs”), each ADS representing five Class A Common Shares), and Class B common shares, par value $0.0001 per share (“Class B Common Shares”), of E-Commerce China Dangdang Inc., a Cayman Islands company (the “Company”). Except as amended hereby, the Original Filing remains in full force and effect. Capitalized terms used but not defined in this Schedule 13D have the meanings ascribed to them in the Original Filing.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. |
26833A105 |
| 1 |
NAMES OF REPORTING PERSONS
Peggy Yu Yu | ||
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) ¨ | ||
| 3 |
SEC USE ONLY
| ||
| 4 |
SOURCE OF FUNDS (See Instructions)
PF, OO | ||
| 5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
The People’s Republic of China | ||
|
NUMBER OF
|
7 |
SOLE VOTING POWER
16,490,0051 | |
| 8 |
SHARED VOTING POWER
0 | ||
| 9 |
SOLE DISPOSITIVE POWER
16,490,0051 | ||
| 10 |
SHARED DISPOSITIVE POWER
0 | ||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,490,0051 | ||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.0%2. The voting power of the shares beneficially owned represents 8.4% of the total outstanding voting power. | ||
| 14 |
TYPE OF REPORTING PERSON (See Instructions)
IN | ||
| 1 | Consists of 3,490,005 Class A Common Shares, including 354,165 Class A Common Shares issuable to Ms. Yu upon exercise of options within 60 days after May 17, 2016, and 13,000,000 Class B Common Shares held by Ms. Yu. Each Class B Common Share is convertible at the option of the holder into one Class A Common Share. The rights of the holders of Class A Common Shares and Class B Common Shares are identical, except with respect to conversion rights (noted above) and voting rights. Each Class B Common Share is entitled to ten votes per share, whereas each Class A Common Share is entitled to one vote per share. |
| 2 | See Item 5. |
2
CUSIP No. |
26833A105 |
| 1 |
NAMES OF REPORTING PERSONS
Guoqing Li | ||
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) ¨ | ||
| 3 |
SEC USE ONLY
| ||
| 4 |
SOURCE OF FUNDS (See Instructions)
PF, OO | ||
| 5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
The People’s Republic of China | ||
|
NUMBER OF
|
7 |
SOLE VOTING POWER
131,934,0953 | |
| 8 |
SHARED VOTING POWER
0 | ||
| 9 |
SOLE DISPOSITIVE POWER
131,934,0953 | ||
| 10 |
SHARED DISPOSITIVE POWER
0 | ||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
131,934,0953 | ||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.1%4. The voting power of the shares beneficially owned represent 75.2% of the total outstanding voting power. | ||
| 14 |
TYPE OF REPORTING PERSON (See Instructions)
IN | ||
| 3 | Represents (i) 1,416,665 Class A Common Shares issuable to Mr. Li upon exercise of options within 60 days after May 17, 2016; (ii) 3,111,320 Class A Common Shares issuable to Dyna-Best Corp. upon exercise of options within 60 days after May 17, 2016; (iii) 7,344,450 Class A Common Shares issuable to Kewen upon exercise of options within 60 days after May 17, 2016; (iv) 237,000 ADSs representing 1,185,000 Class A Common Shares held by SC International; (v) 21,876,660 Class B Common Shares held by Kewen; and (vi) 97,000,000 Class B Common Shares held by SC International. Dyna-Best Corp is a British Virgin Islands company wholly owned by Mr. Li. Mr. Li is the sole director and beneficial owner of Kewen, which holds 60% of the shares in SC International. Mr. Li disclaims beneficial ownership with respect to the shares held by SC International except to the extent of his pecuniary interest therein. |
| 4 | See Item 5. |
3
CUSIP No. |
26833A105 |
| 1 |
NAMES OF REPORTING PERSONS
Kewen Holding Co. Limited | ||
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) ¨ | ||
| 3 |
SEC USE ONLY
| ||
| 4 |
SOURCE OF FUNDS (See Instructions)
WC, OO | ||
| 5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands | ||
|
NUMBER OF
|
7 |
SOLE VOTING POWER
127,406,1105 | |
| 8 |
SHARED VOTING POWER
0 | ||
| 9 |
SOLE DISPOSITIVE POWER
127,406,1105 | ||
| 10 |
SHARED DISPOSITIVE POWER
0 | ||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
127,406,1105 | ||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.4%6. The voting power of the shares beneficially owned represent 74.9% of the total outstanding voting power. | ||
| 14 |
TYPE OF REPORTING PERSON (See Instructions)
CO | ||
| 5 | Consists of (i) 237,000 ADSs held by SC International representing 1,185,000 Class A Common Shares; (ii) 7,344,450 Class A Common Shares issuable to Kewen upon its exercise of options within 60 days after May 17, 2016; (iii) 21,876,660 Class B Common Shares held by Kewen; and (iv) 97,000,000 Class B Common Shares held by SC International. |
| 6 | See Item 5. |
4
CUSIP No. |
26833A105 |
| 1 |
NAMES OF REPORTING PERSONS
Science & Culture International Limited | ||
| 2 |
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) ¨ | ||
| 3 |
SEC USE ONLY
| ||
| 4 |
SOURCE OF FUNDS (See Instructions)
WC, OO | ||
| 5 |
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ | ||
| 6 |
CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands | ||
|
NUMBER OF
|
7 |
SOLE VOTING POWER
98,185,0007 | |
| 8 |
SHARED VOTING POWER
0 | ||
| 9 |
SOLE DISPOSITIVE POWER
98,185,0007 | ||
| 10 |
SHARED DISPOSITIVE POWER
0 | ||
| 11 |
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
98,185,0007 | ||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ¨ | ||
| 13 |
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.9%8. The voting power of the shares beneficially owned represent 60.8% of the total outstanding voting power. | ||
| 14 |
TYPE OF REPORTING PERSON (See Instructions)
CO | ||
| 7 | Consists of 237,000 ADSs representing 1,185,000 Class A Common Shares and 97,000,000 Class B Common Shares held by SC International. |
| 8 | See Item 5. |
5
| Item 4. | Purpose of Transaction. |
Item 4 of the Schedule 13D is hereby amended and supplemented as follows:
On May 17, 2016, the Buyer Group submitted a revised non-binding proposal (the “Revised Proposal”) to the Company’s board of directors. In the Revised Proposal, the Buyer Group revised their offer price for the Proposed Transaction to US$6.50 per ADS or US$1.30 per Common Share in cash from the offer price of US$7.812 per ADS or US$1.5624 per Common Share set forth in the Proposal dated July 9, 2015. The Buyer Group revised the offer price due to a number of developments since the submission of the Proposal, including that the Company has experienced weaker than expected operating and financial performance; the global financial markets have experienced significant volatility recently, including substantial volatility in equity securities markets, which has been reflected in the performance of the Company’s ADSs; and the recent economic slowdown in China and challenges to the macroeconomic environment, including the depreciation of Renminbi against the US dollars, are expected to be sustained.
The description of the Revised Proposal set forth above in this Item 4 does not purport to be complete and is qualified in its entirety by reference to the full text of the Revised Proposal, which has been filed as Exhibit C, and is incorporated herein by this reference.
| Item 5. | Interest in Securities of the Issuer. |
Item 5(a)–(b) of the Schedule 13D is hereby amended and restated as follows:
(a)–(b) The responses of each Reporting Person to Rows (11) through (13) of the cover pages of this Schedule 13D are hereby incorporated by reference in this Item 5. The percentage of the class of securities identified pursuant to Item 1 beneficially owned by each Reporting Person is based on 411,434,410 outstanding Common Shares as a single class, being the sum of 279,557,750 Class A Common Shares and 131,876,660 Class B Common Shares outstanding as of February 29, 2016, as disclosed in the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2015 filed with the Commission on April 29, 2016, assuming conversion of all Class B Common Shares into Class A Common Shares.
Holders of Class A Common Share and Class B Common Share have the same rights except for voting and conversion rights. Each Class B Common Share is convertible into one Class A Common Share at any time by the holder thereof. Each Class B Common Share is entitled to ten votes per share, whereas each Class A Common Share is entitled to one vote per share.
By virtue of their actions in respect of the Proposed Transaction as described herein, the Reporting Persons, and members of the Buyer Group that are not Reporting Persons, may be deemed to constitute a “group” within the meaning of Rule 13d-5(b) under the Act. As a member of a group, each of the Reporting Persons may be deemed to beneficially own the Common Shares beneficially owned by the members of the group as a whole; thus, each Reporting Person may be deemed to beneficially own an aggregate of 148,424,100 outstanding Common Shares (including an aggregate of 12,226,600 Class A Common Shares issuable upon the exercise of options held by Reporting Persons that are exercisable within 60 days after May 17, 2016), which represents approximately 36.1% of the total outstanding Common Shares and approximately 83.5% of the voting power of the total outstanding Common Shares. Except as otherwise stated herein, each Reporting Person expressly disclaims any beneficial ownership of the Common Shares held by each other Reporting Person or by any member of the Buyer Group that is not a Reporting Person.
Except as disclosed in this Schedule 13D, none of the Reporting Persons nor, to the best of their knowledge, any of the persons listed in Schedule A hereto, beneficially owns any Common Shares or has the right to acquire any Common Shares.
6
Except as disclosed in this Schedule 13D, none of the Reporting Persons nor, to the best of their knowledge, any of the persons listed in Schedule A hereto, presently has the power to vote or to direct the vote or to dispose or direct the disposition of any of the Common Shares which it may be deemed to beneficially own.
| Item 7. | Material to be Filed as Exhibits. |
| Exhibit No. | Description |
| A* | Joint Filing Agreement dated July 20, 2015 by and among the Reporting Persons. |
| B* | Proposal Letter dated July 9, 2015 from the Buyer Group to the board of directors of the Company. |
| C | Revised Proposal dated May 17, 2016 from the Buyer Group to the board of directors of the Company. |
* Previously filed.
7
SIGNATURE
After reasonable inquiry and to the best
of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: May 18, 2016
| /s/ Peggy Yu Yu | ||||
| Peggy Yu Yu | ||||
| /s/ Guoqing Li | ||||
| Guoqing Li | ||||
| Kewen Holding Co. Limited | ||||
| By: | /s/ Guoqing Li | |||
| Name: | Guoqing Li | |||
| Title: | Director | |||
| Science & Culture International Limited | ||||
| By: | /s/ Guoqing Li | |||
| Name: | Guoqing Li | |||
| Title: | Authorized Person | |||
Exhibit C
May 17, 2016
The Board of Directors
E-Commerce China Dangdang Inc.
21/F, Jing An Center
No. 8 North Third Ring Road East
Chaoyang District, Beijing 100028
People’s Republic of China
Dear Directors:
Reference is made to the non-binding preliminary proposal, dated July 9, 2015 (the “Original Proposal”), made by Ms. Peggy Yu Yu, Chairwoman of the Board of Directors of E-Commerce China Dangdang Inc. (the “Company”), and her spouse, Mr. Guoqing Li, Chief Executive Officer and director of the Company (together, the “Buyer Group”) to acquire all outstanding common shares (the “Shares”), including shares represented by American depositary shares (“ADSs”, each representing five Class A Shares), of the Company not beneficially owned by the Buyer Group in a going-private transaction (the “Acquisition”).
We very much appreciate the time spent and efforts made by the special committee (the “Special Committee”) of the Company’s board of directors and its advisors so far to facilitate our due diligence and negotiate the definitive agreements providing for the Acquisition. We are submitting this revised non-binding proposal to reaffirm our interests in the Acquisition and to revise our offer price (the “Offer Price”) to US$6.50 in cash per ADS, or US$1.30 in cash per Share.
Our decision to revise the Offer Price has been a difficult one to make but is necessitated by the tougher than expected market conditions facing the Company and the global economy. In particular:
| · | Changes in the market for e-commerce companies in China have adversely affected the operating and financial performance of the Company. With accelerating industry consolidation, further centralization of internet traffic to large players and stronger market competitors, e-commerce companies like the Company are facing more significant challenges in terms of their growth potential. The Company’s market share has been further eroded by the outperforming growth of certain large competitors in China in book sales in 2015. The growth rate of the Company’s total net revenues in 2015 was the lowest over the past three fiscal years, and the growth rate of the Company’s revenues from sales of books and other media products declined for three consecutive fiscal years from 2013 to 2015. The Company’s other revenue including revenue from third-party merchants participating in the marketplace program declined by 7% year-over-year in 2015. The Company’s gross margin declined by 2.4% year-over-year in 2015. We believe that the recent operating and financial performance of the Company has had a negative impact on its value. |
| · | The global financial markets have experienced significant volatility recently, including substantial volatility in equity securities markets, which has been reflected in the performance of the Company’s ADSs. In particular, the closing price of the Company’s ADSs has decreased to US$5.34 (May 16, 2016). We believe that a prolonged timeline for negotiating the Acquisition may create substantial uncertainties to the price of the Company’s ADSs, and the Acquisition would allow the Company’s shareholders to immediately realize a certain value for all of their Shares and/or ADSs. |
| · | The recent economic slowdown in China and challenges to the macroeconomic environment are expected to be sustained, with the RMB under strong depreciation pressure. China’s GDP growth in the fourth quarter of 2015 has decreased to a six-year low of 6.8% and may further decrease to 6.3% in 2016, according to IMF’s forecast. Since the announcement of the Original Proposal on July 9, 2015, RMB has depreciated against U.S. dollar from RMB6.2086 per USD (July 9, 2015) to RMB6.5285 per USD (May 13, 2016), a 5.2% drop in approximately ten months, according to the exchange rates issued by the Federal Reserve Board. The depreciation trend of RMB is expected to continue, resulting in a negative impact on the valuation of the Company in USD terms. Furthermore, our cost of funding associated with the financing for the Acquisition rises with a stronger U.S. dollar. |
In closing, we continue to be fully committed to close the Acquisition and believe that the Acquisition provides full value to the Company’s shareholders. We hope that the Special Committee will give prompt consideration to our proposal, and we are prepared to execute definitive agreements on an expedited basis and work together with the Special Committee to bring this Acquisition to a successful and timely conclusion.
Should you have any questions regarding this proposal, please do not hesitate to contact the undersigned.
/s/ Peggy Yu Yu
Peggy Yu Yu
/s/ Guoqing Li
Guoqing Li
2