Chinese electric vehicle (EV) manufacturer NIO Inc. has successfully concluded a $1 billion offering of convertible notes, as announced earlier this month. The company confirmed the closing of this offering, comprising $500 million aggregate principal amount of convertible senior notes due in 2029 and another $500 million of convertible senior notes due in 2030, in a recent statement.
NIO disclosed that these notes were exclusively sold to qualified institutional buyers. Additionally, the company granted the initial purchasers of the note offering an option, exercisable within 30 days of the note issuance date, to acquire up to an additional $75 million aggregate principal amount of the 2029 notes and an additional up to $75 million of the 2030 notes.
As previously announced on September 19, the 2029 notes are set to mature on October 15, 2029, while the 2030 notes will mature on October 15, 2030. The pricing details, disclosed on September 20, indicate that $500 million of the 2029 notes will bear interest at 3.875 percent per annum, and the remaining $500 million of the 2030 notes will bear interest at 4.625 percent per annum.
Shortly following the pricing of these notes, NIO, through one of the initial purchasers and its affiliates, executed separate privately negotiated transactions to acquire approximately $256 million aggregate principal amount of the company's outstanding 0.00 percent convertible senior notes due in 2026 and about $244 million aggregate principal amount of the company's outstanding 0.50 percent convertible senior notes due in 2027.
The company has outlined its intent to utilize the remaining net proceeds from the notes offering primarily to bolster its balance sheet and support general corporate initiatives, as stated in the release.
Notably, holders of these convertible notes retain the option to convert them before the maturity date. Upon conversion, NIO will facilitate payment or delivery in the form of cash, the company's American Depositary Shares (ADSs), or a combination of both. Each ADS of NIO currently represents one class A ordinary share of the company.
The initial conversion rate for each of the 2029 and 2030 notes stands at 89.9685 ADSs per $1,000 principal amount, equating to an initial conversion price of approximately $11.12 per ADS. This conversion price reflects a premium of about 30 percent compared to NIO's closing price of $8.55 on September 19.