Alibaba (NYSE:BABA) Group Holding Limited (NYSE: BABA) has successfully completed a private offering of convertible senior notes, raising a total of $5 billion. This sum includes the full exercise of an option by initial purchasers to acquire an additional $500 million in notes. The transaction, finalized on Thursday, involved the sale of 0.50% Convertible Senior Notes due in 2031.
The offering attracted qualified institutional buyers in the United States under Rule 144A of the Securities Act and non-U.S. persons in offshore transactions under Regulation S. Alongside the notes offering, Alibaba engaged in capped call transactions costing $63.75 million from the proceeds, aimed at minimizing dilution from the conversion of notes into American Depositary Shares (ADSs).
These transactions potentially raise the conversion premium from 30% to 100% above the ADSs' last reported sale price of $80.80 on the New York Stock Exchange as of May 23, 2024.
The initial conversion rate for the notes is set at 9.5202 ADSs per $1,000 principal amount, which corresponds to an initial conversion price of about $105.04 per ADS, a 30% premium over the May 23 sale price.
While the conversion rate may be adjusted in specific scenarios, it will not change for accrued and unpaid interest. Moreover, in certain corporate events or upon a redemption notice, Alibaba may increase the conversion rate for holders opting to convert their notes in connection with such events.
The securities involved, including the notes, the ADSs, and the ordinary shares represented by or deliverable upon conversion, have not been registered under the Securities Act or any state securities laws. Consequently, they are being offered and sold only to certain investors in transactions exempt from registration.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in jurisdictions where such an offer, solicitation, or sale would be unlawful. The information is based on a press release statement.
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