NIO prices $1.3B notes offering

Chinese electric-vehicle maker NIO Ltd. on Jan. 13 priced its $1.3 billion senior convertible notes offering, which will consist of $650 million of convertible notes due 2026 and $650 million of convertible notes due 2027.

The 2026 notes will not bear interest and will mature Feb. 1, 2026, while the 2027 notes will bear an annual interest rate of 0.50% and will mature Feb. 1, 2027.

NIO said the principal amount of the 2026 notes will not accrete, and the 2026 notes will become convertible Aug. 1, 2025, while the 2027 notes will become convertible Aug. 1, 2026.

On conversion, holders may exchange the notes for cash or an equivalent amount of American depositary shares, with each ADS representing one class A ordinary NIO share.

Holders of the 2026 notes can covert $1,000 in principal amount of notes to 10.7458 ADSs, valuing the ADSs at about $93.06 each. The price represents a 50% premium on NIO's closing share price Jan. 12.

Holders of the 2027 notes can convert $1,000 in principal amount of notes to 10.7458 ADSs, valuing the ADSs at about $93.06 each.

Holders of the notes may require NIO to repurchase all or part of their notes for cash Feb. 1, 2024, in the case of the 2026 notes, and Feb. 1, 2025, in the case of the 2027 notes, or in the event of certain fundamental changes.

The automaker expects to enter into one or more separate and individually privately negotiated agreements with one or more holders of its outstanding 4.50% convertible senior notes due 2024 to exchange a portion of the 2024 notes for ADSs.

In December 2020, NIO completed its offering of 68,000,000 ADSs, the proceeds of which it intends to use for research and development of new products and autonomous driving technologies and other purposes.