What Happened: Nio announced a debt offering to the tune of $650 million in convertible senior notes due 2026 and another $650 million in convertible senior notes due 2027.
The company also offered the option for initial purchasers of the notes to buy up to an additional $100 million of 2026 notes and another $100 million of 2027 notes.
Not counting the cumulative $200 million worth of options, the offering is likely to raise gross proceeds of $1.3 billion.
Upon conversion, the company will pay or deliver cash or its ADSs, each currently representing one Class A ordinary shares, or a combination of cash and ADSs, at its election.
The interest rate, initial conversion rate and other terms of the notes will be determined at the time of pricing of the notes, Nio said.
The company intends to use the net proceeds from the offering mainly for general corporate purposes and to further strengthen its cash and balance sheet positions.
Why It’s Important: Nio‘s corporate plan envisages the introduction of several innovations and product pipeline expansion. The company is also eyeing global expansion, with reports suggesting Norway may be the first stop in its international foray.
After being on the brink in the middle of 2019, Nio has slowly and steadily shored up its cash reserves through a series of debt and equity offerings.
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With Nio‘s stock beginning to climb in 2020, the company raised about .6 billion in three follow-on equity offerings.
The cash could come in handy, as the company pursues an all-round, aggressive strategy to make the most of the opportunity presented by the surging demand for green energy vehicles, both in China and overseas.
After rising 6.42% to $62.70 in Monday’s regular session, the stock was down 0.64% to $62.30 in the after-hours session.
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