NIO Announces Terms Of Convertible Note Issuance; Notes Dilute Existing Holders By 6% Above Market Price
Portfolio Pulse from Daniel Harrison
Chinese luxury EV maker NIO Inc. has detailed the terms and pricing of its previously-announced $1 billion in new convertible debt. The debt will be issued in two $500 million tranches of 2029 and 2030 notes with interest rates of 3.875% and 4.625%, respectively. The notes will convert at $11.12, which is approximately 25% higher than Tuesday’s closing price. The refinancing upon conversion will add another 103,463,775 shares to the total 1.8 billion shares in issue, representing dilution for shareholders of 5.8%. The announcement of the new debt financing sent the stock price of NIO diving around 20%.
September 20, 2023 | 6:15 pm
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NIO's announcement of its new convertible debt terms caused a 20% drop in its stock price. The debt will be issued in two tranches with interest rates of 3.875% and 4.625%. The notes will convert at $11.12, 25% higher than Tuesday’s closing price, causing a dilution for shareholders of 5.8%.
The announcement of the new debt financing and the terms of the convertible notes, which include a conversion price higher than the current market price, have created uncertainty among investors, leading to a significant drop in NIO's stock price. The dilution of shares due to the conversion of the notes also negatively impacts existing shareholders.
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