Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988 (HKD
Counter) and 89988 (RMB Counter), “Alibaba,” “Alibaba Group” or the
“Company”) today announced a proposed offering (the “Notes
Offering”), subject to market and other conditions, of US$4,500
million aggregate principal amount of Convertible Senior Notes due
2031 (the “Notes”) in a private offering to persons reasonably
believed to be qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”)
and to certain non-U.S. persons in offshore transaction in reliance
on Regulation S under the Securities Act. The Company expects to
grant the initial purchasers in the Notes Offering an option to
purchase up to an additional US$500 million aggregate principal
amount of the Notes, exercisable for settlement within a 13-day
period, beginning on, and including, the first date on which the
Notes are issued.
Alibaba Group intends to use the net proceeds from the Notes
Offering to (i) repurchase a number of its American depositary
shares (“ADSs”), each currently representing eight ordinary shares
pursuant to its existing share repurchase program, concurrently
with the pricing of the Notes Offering in privately negotiated
transactions effected through one or more of the initial purchasers
or their affiliates, as its agent, as described below (the
“Concurrent Repurchase”); (ii) fund further share repurchases, from
time to time, under the Company’s existing share repurchase
program; and (iii) fund the costs of entering into the capped call
transactions described below.
When issued, the Notes will be general senior unsecured
obligations of Alibaba Group. The Notes will mature on June 1,
2031, unless earlier redeemed, repurchased or converted in
accordance with their terms prior to such date.
Holders may convert all or any portion of the Notes, in integral
multiples of US$1,000 principal amount, at their option at any time
prior to the close of business on the third trading day immediately
preceding the maturity date. Upon conversion, the Company will pay
or deliver, as the case may be, cash, ADSs, or a combination of
cash and ADSs, at its election. Holders may also elect to receive
ordinary shares in lieu of any ADSs deliverable upon conversion.
The interest rate, initial conversion rate and other terms of the
Notes will be determined at the time of pricing of the Notes.
Capped Call Transactions
In connection with the pricing of the Notes, the Company expects
to enter into capped call transactions with one or more of the
initial purchasers and/or their affiliates and/or other financial
institutions (the “Option Counterparties”). The capped call
transactions are generally expected to reduce potential dilution to
the ADSs and the ordinary shares of the Company represented thereby
upon any conversion of the Notes and/or offset any cash payments
that the Company will be then required to make in excess of the
principal amount of the converted Notes, with such reduction and/or
offset subject to a cap expected to be 100% over the last reported
sale price of the ADSs on the day the Notes Offering is priced, and
subject to the Company’s ability to elect, subject to certain
conditions, to settle the capped call transactions in cash, in
whole or in part (in which case the Company would not receive any
ADSs from the Option Counterparties to the extent of the cash
settlement of the capped call transactions). If the initial
purchasers exercise their option to purchase additional Notes, the
Company expects to use a portion of the net proceeds from the sale
of the additional Notes to enter into additional capped call
transactions with the Option Counterparties and the remainder to
fund further share repurchases, from time to time, under the
Company’s existing share repurchase program.
In connection with establishing their initial hedges of the
capped call transactions, the Option Counterparties or their
respective affiliates expect to purchase the ADSs and/or ordinary
shares and/or enter into various derivative transactions with
respect to the ADSs and/or ordinary shares 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 and/or ordinary shares, other securities of the Company
or the price of the Notes at that time. The effect, if any, of this
activity, including the direction or magnitude, on the market price
of the ADSs and/or ordinary shares or the price of the Notes will
depend on a variety of factors, including market conditions, and
cannot be ascertained at this time.
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,
ordinary shares, the Notes or other securities of the Company
and/or purchasing or selling the ADSs, the ordinary shares, the
Notes or other securities of the Company in secondary market
transactions following the pricing of the Notes and prior to the
maturity of the Notes (and are likely to do so following any
conversion of the Notes, repurchase of the Notes by the Company on
any fundamental change repurchase date or otherwise, in each case,
if the Company opts to unwind the relevant portion of the capped
call transactions early). The effect, if any, of this activity on
the market price of the ADSs and/or the ordinary shares, or the
price of the Notes will depend on a variety of factors, including
market conditions, and cannot be ascertained at this time. Any of
this activity could, however, also cause or avoid an increase or a
decrease in the market price of the ADSs and/or the ordinary
shares, other securities of the Company or the price of the Notes,
which could affect whether the holders convert the Notes and value
of the consideration that the holders will receive upon conversion
of the Notes. In addition, any of the Option Counterparties may
choose to engage in, or to discontinue engaging in, any of these
transactions and activities with or without notice at any time, and
their decisions will be in their sole discretion and not within the
Company’s control.
Concurrent and Future Repurchases
The Concurrent Repurchase is expected to facilitate the initial
hedges by investors who desire to hedge their investments in the
Notes, as the Company intends to repurchase the entire expected
initial delta of the transaction, after taking into account
purchases made by Option Counterparties in connection with
establishing their initial hedges of the capped call transactions.
The Company expects the purchase price in the Concurrent Repurchase
to be the last reported sale price per ADS on the New York Stock
Exchange on May 23, 2024. In addition to the Concurrent Repurchase,
the Company may also repurchase additional ADSs and/or ordinary
shares on the open market after the pricing of the Notes and from
time to time. The Concurrent Repurchase and future repurchases
pursuant to the Company’s share repurchase program will be funded
by the net proceeds of the Notes Offering and other cash on hand,
and, in the aggregate, are generally expected to offset potential
dilution to the holders of the Company’s ADSs (or ordinary shares)
upon conversion of the Notes. Our repurchase activities, whether
concurrently with the pricing of the Notes or otherwise pursuant to
our existing share repurchase program, could increase, or reduce
the magnitude of any decrease in, the market price of the ADSs
and/or ordinary shares and/or the price of the Notes.
The Notes, the ADSs deliverable upon conversion of the Notes, if
any, and the ordinary shares represented thereby or deliverable
upon conversion of the Notes in lieu thereof, have not been and
will not be registered under the Securities Act or any state
securities laws, and are being offered and sold in the United
States only to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act
and to certain non-U.S. persons in offshore transaction in reliance
on Regulation S under the Securities Act.
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 Notes
Offering, and there can be no assurance that the Notes Offering
and/or the Company’s share repurchase program (or any portion
thereof) will be completed.
About Alibaba Group
Alibaba Group’s mission is to make it easy to do business
anywhere. The Company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a good company that lasts for 102
years.
Safe Harbor Statement
This press release 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
“may,” “will,” “expect,” “anticipate,” “future,” “aim,” “estimate,”
“intend,” “seek,” “plan,” “believe,” “potential,” “continue,”
“ongoing,” “target,” “guidance,” “is/are likely to” and similar
statements. In addition, statements that are not historical facts,
including statements about the intended use of proceeds, the terms
of the Notes, the anticipated terms of, and the effects of entering
into, the capped call transactions and the actions of the Option
Counterparties and their respective affiliates and whether the
Company will complete the Notes Offering, are or contain
forward-looking statements. Alibaba may also make forward-looking
statements in its periodic reports to the U.S. Securities and
Exchange Commission (the “SEC”), in announcements made on the
website of The Stock Exchange of Hong Kong Limited (the “Hong Kong
Stock Exchange”), in press releases and other written materials and
in oral statements made by its officers, directors or employees to
third parties. 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. Further information regarding these risks is included in
Alibaba’s filings with the SEC and announcements on the website of
the Hong Kong Stock Exchange. All information provided in this
press release is as of the date of this press release and are based
on assumptions that we believe to be reasonable as of this date,
and Alibaba does not undertake any obligation to update any
forward-looking statement, except as required under applicable
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240523125145/en/
Investor Relations Contact Rob Lin Head of Investor
Relations Alibaba Group Holding Limited
investor@alibaba-inc.com
Media Contacts Justine Chao
justinechao@alibaba-inc.com
Ivy Ke ivy.ke@alibaba-inc.com
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