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Pinduoduo prices $875M senior notes offering

Pinduoduo Inc. on Sept. 25 priced its previously announced offering of $875 million in aggregate principal amount of convertible senior notes due 2024.

The Shanghai-based e-commerce company said the notes will not bear regular interest and will mature Oct. 1, 2024, but it will pay special interest at its sole election if it fails to comply with its reporting obligations.

Pinduoduo also said it can redeem for cash all or part of the notes on or after Oct. 1, 2022 if the last reported sale price of its American depositary shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately prior to the date the company provides notice of redemption; or on the trading day immediately preceding the date the company sends such notice.

After April 1, 2024, the notes will be convertible at the option of the holders until the close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the notes is 23.4680 of the company's ADSs, each currently representing four class A ordinary shares of Pinduoduo, per $1,000 principal amount of notes. This is equivalent to an initial conversion price of about $42.61 per ADS, which represents a conversion premium of approximately 37.5% to the Nasdaq closing price of the ADSs on Sept. 24 of $30.99 per ADS.

The company plans to use the net proceeds from the offering to enhance and expand its business operations, as well as invest in and improve its technology infrastructure. The company also intends to use the proceeds for research and development, working capital and other general corporate purposes.

Pinduoduo has also granted initial buyers a 13-day option to purchase up to an additional $125 million in principal amount of the notes.

The offering is expected to close on or about Sept. 27, subject to customary closing conditions.

The notes are being offered for sale to qualified institutional buyers in offerings exempt from registration pursuant to Rule 144A under the Securities Act and to persons outside the U.S. in compliance with Regulation S under the Securities Act.