Q&K Announces Issuance of Notes and Warrants and Initial Payment of Acquisition Price
31 Julio 2020 - 5:00AM
Q&K International Group Limited (“Q&K” or the “Company”)
(NASDAQ: QK) announced today that, in relation to the previously
announced subscription of the Company’s convertible notes, the
Company has issued series 1 and series 2 convertible notes in the
aggregate principal amount of US$30.050 million at par (the
“Notes”) and warrants to purchase 104,871 ADSs (the “Warrants”)
pursuant to convertible note and warrant purchase agreements dated
July 22, 2020 to certain investors. The investors are non-U.S.
persons, and these transactions are offshore transactions exempt
from registration with the U.S. SEC under Regulation S of the
United States Securities Act of 1933, as amended (the “Securities
Act”).
The Notes will be convertible at the conversion
price, at the option of a holder, into the Company’s American
depositary shares (“ADSs”). The conversion price per ADS is
US$11.2508 or, if certain ADS offerings are conducted, 80% of the
issue price of such ADS offerings, subject to adjustments upon the
occurrence of certain specified dilutive events. A holder may
convert its Notes at any time on and after the 41st day after the
issue date and prior to the maturity date of July 29, 2024. A
holder may require the Company to redeem its Note at the specified
fundamental change repurchase price, which includes a premium, upon
the occurrence of a fundamental change, including a change of
control of the Company. The Company may require the holder to
mandatorily convert its Notes upon the occurrence of a mandatory
conversion event. Series 1 of the Notes bear interest of 7.5% per
annum payable in cash annually and another 7.5% per annum payable
in cash on the maturity date or, in the event of a conversion, on
the conversion date in ADSs calculated at the conversion price.
Series 2 of the Notes bear interest of 3.5% per annum payable in
cash annually and another 13.5% per annum payable in cash on the
maturity date or, in the event of a conversion, on the conversion
date in ADSs calculated at the conversion price.
The Warrants expire on July 29, 2025 and have an
exercise price of US$11.4618 per ADS, subject to certain
adjustments upon the occurrence of certain dilutive events.
Under the purchase agreement, the Company has
also granted an investor the option to subscribe to up to US$70
million in aggregate principal amount of additional 4-year series 1
or series 2 Notes at par within 24 months of July 29, 2020. In
addition to the Warrants, the Company will issue to the holder of
the Notes warrants to subscribe to ADSs on each anniversary date of
the Notes based on the principal amount of the Notes outstanding as
of such anniversary date. Each of the warrants expire five years
after its respective issue date and has an exercise price
equivalent to 110% of the VWAP of the ADSs over the 60 trading days
preceding the date of issuance of each warrant, subject to certain
adjustments upon the occurrence of certain dilutive events.
The Notes, the ADSs deliverable upon conversion
of the Notes or exercise of the Warrants and the ordinary shares
represented thereby, have not been registered under the Securities
Act or any state securities laws and are subject to restrictions on
transferability and resale. They may not be transferred or resold
absent registration or an applicable exemption from registration as
permitted under the Securities Act and other applicable securities
laws.
In addition, pursuant to the agreements each
dated July 22, 2020 entered into by the Company and a rental
service company and its affiliates (the “Transferor”) for the
acquisition of certain lease contracts and other related assets
previously announced, the Company paid US$5.8 million to the
Transferor to settle the first installment of the consideration on
July 29, 2020, which is financed by the proceeds of the Notes
issuance. The remaining consideration for the acquisition, which
consists of US$23.2 million in cash and 128.6 million class A
ordinary shares of the Company (the “Acquisition Consideration
Shares”), subject to adjustments based on terms and conditions set
forth in the agreements, will be payable in installments upon
reaching certain milestones linked to the transfer of lease
contracts and other related assets. The Company will also issue in
installments, to a third-party contractor that manages the rental
units as previously announced, up to 111.2 million class A ordinary
shares of the Company, subject to certain performance indicators
and other terms and conditions set forth in the agreement (together
with the Acquisition Consideration Shares, the “Consideration
Shares”). The Consideration Shares are subject to lock-ups for
certain periods.
It is expected that the issuance of the
Consideration Shares will be exempted from registration under the
Securities Act, pursuant to Regulation S under the Securities Act,
and the shares issued may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements.
This press release is not an offer to sell or
purchase nor the solicitation of an offer to sell or purchase
securities and shall not constitute an offer, solicitation or sale.
Any public offering of securities to be made in the United States
will be made by means of a prospectus that may be obtained from the
Company or the selling security holder and that will contain
detailed information about the Company and management, as well as
financial statements.
About Q&K International Group
Limited
Q&K International Group Limited (NASDAQ: QK)
is a leading technology-driven long-term apartment rental platform
in China. The Company offers young, emerging urban residents
conveniently-located, ready-to-move-in, and affordable branded
apartments as well as facilitates a variety of value-added
services. Q&K signs long-term leases with individual landlords
in different locations in relatively inexpensive yet convenient
locations and manages them centrally, leveraging its advanced IT
and mobile technologies. Technology is the core of Q&K’s
business and is applied to every step of its operational process
from apartment sourcing, renovation, and tenant acquisition, to
property management. The focus on technology enables Q&K to
operate a large, dispersed, and fast-growing portfolio of
apartments with high operational efficiency and deliver a superior
user experience.
Safe Harbor Statement
This press release contains forward-looking
statements. These statements constitute “forward-looking”
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and as defined in 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” and similar statements. Among other things, the
quotations from management in this press release and the Company
and its subsidiaries’ (collectively, the “Group”) operations and
business outlook contain forward-looking statements. Such
statements involve certain risks, uncertainties and other factors
that could cause actual results to differ materially from those in
the forward-looking statements. These risks and uncertainties
include, but are not limited to the following: the Group’s ability
to access financing on favorable terms in a timely manner and
maintain and expand its cooperation with financial institutions;
the Group’s ability to expand into new markets; the Group’s ability
to manage its growth; the Group’s ability to integrate strategic
investments, acquisitions and new business initiatives; the Group’s
ability to control the quality of its operations, including the
operation of the rental apartments managed by its own apartment
managers or by third-party contractors; the Group’s ability to
attract and retain tenants and landlords, including tenants and
landlords from its acquired lease contracts; the Group’s ability to
manage its brand and reputation; the Group’s goal and strategies;
the Group’s limited operating history; the Group’s ability to
achieve or maintain profitability or continue as a going concern in
the future; the Group’s ability to compete effectively; and
assumptions underlying or related to any of the foregoing. Further
information regarding these and other risks is included in the
Group’s filings with the U.S. Securities and Exchange Commission.
Except as required by law, the Group does not undertake any
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
For investor and media inquiries, please
contact:
Q&KE-mail: ir@qk365.com
ChristensenIn ChinaMr.
Christian ArnellPhone: +86-10-5900-1548E-mail:
carnell@christensenir.com
In USMs. Linda BergkampPhone:
+1-480-614-3004Email: lbergkamp@christensenir.com
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