Renren (RENN) to Spinoff Newly-Formed Subsidiary

September 30, 2016 6:37 AM EDT
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Renren Inc. (NYSE: RENN) announced that it intends to spin off a newly formed subsidiary ("SpinCo") that will hold the Company's social video platform and most of the Company's investments in minority stakes in privately held companies.

The spin-off is being undertaken to minimize the risk that the Company could be deemed to be an "investment company" under the Investment Company Act of 1940 by reducing the aggregate amount of investments in unconsolidated subsidiaries on the Company's balance sheet and to unlock potential in the Company's social video business by separating it from the Company's social networking and internet financing businesses.

The Company plans to distribute rights, exercisable for shares in SpinCo, to the Company's shareholders on a pro rata basis. The rights will not be transferable and may only be exercised by shareholders who are both "qualified purchasers" under the Investment Company Act of 1940 and "accredited investors" under the Securities Exchange Act of 1934. The Company will distribute cash in lieu of fractional rights and cash to holders of rights who cannot exercise or who choose not to exercise their rights.

The Company plans to distribute no less than 80% of the shares of SpinCo to shareholders that exercise rights and intends for such distribution to qualify, for U.S. tax purposes, as a tax-free distribution to the Company's U.S. shareholders who receive shares of SpinCo in the distribution.

Following the spin-off, SpinCo will be a privately held company not subject to public company reporting requirements under the Securities Exchange Act of 1934 and not listed on any stock exchange. The Company intends to remain a public company listed on the New York Stock Exchange.

The Company will announce further details at a later date, including the record date for the rights distribution, the ratio of shares of the Company to rights, the distribution date for the rights distribution, the deadline for the exercise of the rights, and the date on which shares of SpinCo and/or cash will be distributed to holders of rights.

The spin-off is subject to the approval of SB Pan Pacific Corporation, a shareholder of the Company and an affiliate of SoftBank Group Corp., pursuant to the Company's Amended and Restated Articles of Association.

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