Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988 (HKD
Counter) and 89988 (RMB Counter), “Alibaba,” “Alibaba Group” or the
“Company”) today announced the pricing of its private offering of
US$4,500 million aggregate principal amount of 0.50% Convertible
Senior Notes due 2031 (the “Notes”) 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 “Notes Offering”). The
Company also granted 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. The Notes Offering is expected to close on
May 29, 2024, subject to customary closing conditions.
Alibaba Group estimates that the net proceeds from the Notes
Offering will be approximately US$4,436 million (or US$4,930
million if the initial purchasers’ option is exercised in full),
after deducting the initial purchasers’ discounts and estimated
expenses payable by the Company.
Alibaba Group intends to use the net proceeds from the Notes
Offering to (i) repurchase approximately 14.8 million 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, at a
price per ADS equal to US$80.80, the last reported sale price per
ADS on the NYSE on May 23, 2024 (the “Concurrent Repurchase”); (ii)
fund further share repurchases, from time to time, under the
Company’s existing share repurchase program; and (iii) fund the
US$573.75 million cost 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. The Notes will bear
interest at a rate of 0.50% per year, payable in arrears on June 1
and December 1, of each year, beginning on December 1, 2024.
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.
Holders who hold the Notes in global form and wish to elect to
receive ordinary shares in lieu of any ADSs deliverable upon
conversion are advised that such election is not exercisable
through the facilities of The Depository Trust Company, and such
holders are advised to apprise themselves in advance of the
requisite procedures to exercise such election and the timing
thereof.
The initial conversion rate for the Notes will be 9.5202 ADSs
per US$1,000 principal amount of the Notes, which is equivalent to
an initial conversion price of approximately US$105.04 per ADS. The
initial conversion price represents a premium of approximately 30%
over the last reported sale price of $80.80 per ADS on the NYSE on
May 23, 2024. The conversion rate will be subject to adjustment in
some events, but will not be adjusted for any accrued and unpaid
interest. In addition, following certain corporate events that
occur prior to the maturity date or following our delivery of a
notice of redemption, we will, in certain circumstances, increase
the conversion rate for a holder who elects to convert its Notes in
connection with such a corporate event or such notice of
redemption, as the case may be, as further described below.
The Company may redeem for cash all but not part of the Notes in
the event of certain tax law changes (the “Tax Redemption”). The
Company may also redeem for cash all but not part of the Notes at
any time if less than 10% of the aggregate principal amount of the
Notes originally issued remains outstanding at such time (the
“Cleanup Redemption”). The Company may not redeem the Notes prior
to June 8, 2029, except in connection with a Tax Redemption or a
Cleanup Redemption. On or after June 8, 2029, the Company may also
redeem for cash all or part of the Notes if the last reported sale
price of the ADSs has been at least 130% of the conversion price
then in effect on (i) each of at least 20 trading days (whether or
not consecutive) during any 30 consecutive trading day period
ending on, and including, the trading day immediately prior to the
date the Company provides notice of redemption and (ii) the trading
day immediately preceding the date the Company sends such notice
(such redemption, an “Optional Redemption”). The redemption price
in the case of a Tax Redemption, a Cleanup Redemption or an
Optional Redemption will equal 100% of the principal amount of the
Notes to be redeemed, plus accrued and unpaid interest, if any, to,
but excluding, the related redemption date.
Holders have the right to require the Company to repurchase for
cash all or part of their Notes on June 1, 2029. In addition,
holders of the Notes have the option, subject to certain
conditions, to require the Company to repurchase any Notes held in
the event of a “fundamental change” (as will be defined in the
indenture for the Notes). The repurchase price, in each case, will
be equal to 100% of the principal amount of the Notes to be
repurchased, plus accrued and unpaid interest, if any, to, but
excluding, the applicable repurchase date.
Capped Call Transactions
In connection with the pricing of the Notes, the Company has
entered 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 that will initially be $161.6000, which
represents a premium of 100% over the last reported sale price of
$80.80 per ADS on the NYSE on May 23, 2024, and is subject to
certain customary adjustments, 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.
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. Our
repurchase activities, whether concurrent 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 terms of, and the anticipated 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/20240523807794/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
Alibaba (NYSE:BABA)
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