UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): February 15, 2008
CHINA
AUTOMOTIVE SYSTEMS, INC.
(Exact
name of registrant as specified in its charter)
000-33123
(Commission
File Number)
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Delaware
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33-0885775
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(State
or other jurisdiction
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(I.R.S.
Employer
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of
incorporation)
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Identification
No.)
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No.
1
Henglong Road, Yu Qiao Development Zone
Shashi
District, Jing Zhou City
Hubei
Province
People’s
Republic of China
(Address
of principal executive offices, with zip code)
(86)
27-5981 8527
(Registrant's
telephone number, including area code)
NONE
(Former
name or former address, if changed since last report)
Item
1.01 Entry into a Material Definitive Agreement.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Item
3.02 Unregistered Sales of Equity Securities.
On
February 15, 2008, pursuant to a previously announced Securities Purchase
Agreement dated February 1, 2008, we issued to two institutional investors,
for
$35,000,000, Senior Convertible Notes with an original principal amount of
$35,000,000 and common stock Warrants to purchase 1,317,865 shares of common
stock. We received $17,500,000 cash and the investors deposited another
$17,500,000 cash in escrow to be delivered to us upon the satisfaction or waiver
of certain conditions. Of the $35,000,000, Lehman Brothers provided $30,000,000
and YA
Global
Investments, L.P., which is managed by Yorkville Advisors, LLC, provided
$5,000,000.
The
Senior
Convertible Notes are unsecured and are convertible into common stock at a
conversion price of $8.8527 per share, subject to possible downward adjustments,
including a semiannual reset (but the reset not to be to
below $7.0822 per share) based on our stock price. Subject to earlier
redemption in circumstances that include default, failure to close the
previously announced acquisition of a certain minority interest in our Jingzhou
Henglong Automotive Parts Co. subsidiary, change of control, or extreme stock
price levels, the Senior Convertible Notes will mature five years after the
closing; the investors also have a direct redemption right on the second and
third anniversaries of the closing. The Senior Convertible Notes are convertible
at the holders' option; also, semiannually, we can force conversion of a portion
of the Senior Convertible Notes if our stock price attains certain levels.
The
Senior Convertible Notes will bear interest at an annual rate increasing over
time from 3% to 5%; if the Senior Convertible Notes are repaid or redeemed
rather than being converted we must make an additional make-whole payment
which, together with interest already paid, will equate to gross interest of
up
to 13%.
The
exercise price of the Warrants is $8.8527 per share, subject to possible
downward adjustments based on a weighted-average antidilution formula. The
Warrants will expire one year after the closing.
We
undertook, pursuant to a Registration Rights Agreement entered into at the
closing, to register for resale the Senior Convertible Notes, the Warrants,
and
the shares of common stock underlying the Senior Convertible Notes and
Warrants.
The
issuance of Senior Convertible Notes and Warrants was made pursuant to the
Securities Act Section 4(2) registration exemption.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
February 21,
2008
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China
Automotive
Systems, Inc.
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By: |
/s/ Hanlin
Chen |
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Hanlin
Chen |
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Chairman |