On September 5, NIO announced that it had signed a convertible bond subscription agreement with Li Bin, NIO’s chairman and CEO and a subsidiary of Tencent Holdings Co., Ltd. (hereinafter referred to as “investors”)
According to the agreement, NIO will issue and sell convertible bonds with a total principal amount of US$200 million to investors in a non-public offering, the completion of the bond placement needs to meet the customary closing conditions and is expected to be finished before the end of September.
Tencent and Li Bin will each subscribe for a principal of $100 million in convertible bonds, the bonds they subscribe for will be split into two equal periods. The bonds issued in the first period will expire after 360 days, with 0 interest, the company will pay a 2% premium on the principal at maturity. The bonds issued in the second period will expire in three years, with 0 interest, the company will pay a premium of 6% of the principal at maturity. From the 15th day prior to expiration, the 360-day bond can be converted into NIO’s Class A common share (or ADS) at a price of $2.98 per share, depending on the holder’s choice.
From the year following the issue date, the 3-year bond can be converted to NIO’s Class A common share (or ADS) at price of $3.12 per share, depending on the holder’s choice. Holders of 3-year bonds have the right to require the company to redeem all bonds or any part thereof in cash on February 1, 2022.
As the two largest shareholders of NIO, Tencent and Li Bin each subscribed for a convertible bond of US$100 million, and supported NIO with practical actions, demonstrating their confidence in NIO’s future development. This is a completely separate transaction from a potential government financing project.
In addition, NIO also announced that the company will release its second quarter earnings report for the 2019 fiscal year before the US stock market opens on September 24, 2019.