iQIYI Announces Proposed Offering of US$1.05 billion Convertible Senior Notes
25 Marzo 2019 - 3:03PM
iQIYI, Inc. (Nasdaq: IQ) (“iQIYI” or the “Company”), an innovative
market-leading online entertainment service in China, today
announced the proposed offering (the “Notes Offering”) of US$1.05
billion in aggregate principal amount of convertible senior notes
due 2025 (the “Notes”), subject to market and other conditions. The
Company intends to grant the initial purchasers in the Notes
Offering a 13-day option to purchase up to an additional US$150
million in principal amount of the Notes. The Company plans to use
part of the net proceeds from the Notes Offering to pay the costs
of the capped call transactions described below, and use the
remainder of the proceeds to expand and enhance its content
offerings, to strengthen its technologies, and for working capital
and other general corporate purposes.
The Notes will be senior, unsecured obligations of iQIYI. The
Notes will mature on April 1, 2025, unless repurchased, redeemed or
converted in accordance with their terms prior to such date. The
Company may not redeem the Notes prior to maturity, unless certain
tax-related events occur. Holders of the Notes may require the
Company to repurchase all or part of their Notes in cash on April
1, 2023 or in the event of certain fundamental changes. Prior to
October 1, 2024, the Notes will be convertible at the option of the
holders only upon satisfaction of certain conditions and during
certain periods. Holders may convert their Notes at their option at
any time on or after October 1, 2024 until the close of business on
the second scheduled trading day immediately preceding the maturity
date. Upon conversion, the Company will pay or deliver to such
converting holders, as the case may be, cash, the Company’s
American Depositary Shares (“ADSs”), or a combination of cash and
ADSs, at its election. The interest rate, initial conversion rate
and other terms of the Notes will be determined at the time of
pricing of the Notes.
The Notes will be offered in the United States to qualified
institutional buyers pursuant to Rule 144A and to non-U.S. persons
outside the United States in reliance on Regulation S under the
Securities Act of 1933, as amended (the “Securities Act”). The
Notes, the ADSs deliverable upon conversion of the Notes and the
Class A ordinary shares represented thereby have not been and
will not be registered under the Securities Act or the securities
laws of any other place, and may not be offered or sold in the
United States absent registration or an applicable exemption from
registration requirements.
In connection with the Notes Offering, the Company intends to
enter into capped call transactions with one or more of the initial
purchasers and/or their respective affiliates (the “Option
Counterparties”). The capped call transactions are expected
generally to reduce the potential dilution to existing holders of
the ordinary shares and ADSs of the Company upon conversion of the
Notes and/or offset any cash payments that the Company is required
to make in excess of the principal amount of the converted notes,
as the case may be, with such reduction and/or offset subject to a
cap. If the initial purchasers exercise their option to purchase
additional Notes, the Company may enter into additional capped call
transactions. The Option Counterparties advised the Company that,
as part of establishing their initial hedges of the capped call
transactions, the Option Counterparties or their respective
affiliates expect to purchase the ADSs and/or enter into various
derivative transactions with respect to the Company’s ADSs
concurrently with, or shortly after, the pricing of the Notes. This
activity could increase (or reduce the size of any decrease in) the
market price of the ADSs or the Notes at that time. If any such
capped call transaction fails to become effective, whether or not
the Notes Offering is completed, the Option Counterparty party
thereto may unwind its hedge positions with respect to the ADSs,
which could adversely affect the value of the ADSs and, if the
Notes have been issued, the value of the Notes.
In addition, the Option Counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivative transactions with respect to the ADSs
and/or by purchasing or selling the ADSs or other securities of the
Company in secondary market transactions following the pricing of
the Notes and prior to the maturity of the Notes. The Option
Counterparties may engage in such activity during any observation
period relating to a conversion of the Notes. This activity
could also cause or avoid an increase or a decrease in the market
price of the ADSs or the Notes, which could affect noteholders’
ability to convert the Notes and, to the extent the activity occurs
during any observation period related to a conversion of the Notes,
it could affect the number of ADSs and the value of the
consideration that noteholders will receive upon conversion of such
Notes.
This press release shall not constitute an offer to sell or a
solicitation of an offer to purchase any securities, nor shall
there be a sale of the securities in any state or jurisdiction in
which such an offer, solicitation or sale would be unlawful.
This press release contains information about the pending
offerings of the Notes, and there can be no assurance that any of
the offerings will be completed.
About iQIYI, Inc.
iQIYI, Inc. is an innovative market-leading online entertainment
service in China. Its corporate DNA combines creative talent with
technology, fostering an environment for continuous innovation and
the production of blockbuster content. iQIYI’s platform features
highly popular original content, as well as a comprehensive library
of other professionally-produced content, partner-generated content
and user-generated content. The Company distinguishes itself in the
online entertainment industry by its leading technology platform
powered by advanced AI, big data analytics and other core
proprietary technologies. iQIYI attracts a massive user base with
tremendous user engagement, and has developed a diversified
monetization model including membership services, online
advertising services, content distribution, live broadcasting,
online games, IP licensing, online literature and e-commerce
etc.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “confident” and similar statements. Among
other things, the Financial Guidance and quotations from management
in this announcement, as well as iQIYI’s strategic and operational
plans, contain forward-looking statements. iQIYI may also make
written or oral forward-looking statements in its periodic reports
to the U.S. Securities and Exchange Commission, in its annual
report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Statements that are not historical
facts, including but not limited to statements about iQIYI’s
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: iQIYI’s
strategies; iQIYI’s future business development, financial
condition and results of operations; iQIYI’s ability to retain and
increase the number of users, members and advertising customers,
and expand its service offerings; competition in the online
entertainment industry; changes in iQIYI’s revenues, costs or
expenditures; Chinese governmental policies and regulations
relating to the online entertainment industry, general economic and
business conditions globally and in China and assumptions
underlying or related to any of the foregoing. Further information
regarding these and other risks is included in the Company’s
filings with the Securities and Exchange Commission. All
information provided in this press release and in the attachments
is as of the date of the press release, and iQIYI undertakes no
duty to update such information, except as required under
applicable law.
For more information, please contact:
Investor Relations iQIYI, Inc. + 86 10 8264 6585
ir@qiyi.com
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