Nio’s Shares Fall on Plans to Raise US$1 Billion through Convertible Bonds

By Jiahui Huang

Nio’s Hong Kong shares fell in early Asia buying and selling on Wednesday, following an in a single day drop in U.S.-listed depository shares after the Chinese electric-vehicle maker mentioned it could increase US$1 billion through an issuance of convertible bonds.
Shares traded in Hong Kong and Singapore have been down 13% and 11%, respectively. ADSs closed 17% decrease Tuesday in U.S. commerce.

Nio is elevating $500 million through the issuance of convertible senior notes due 2029 and $500 million through one other tranche due 2030. It mentioned early Wednesday that it could pay coupons of three.875% and 4.625%, respectively.
That is a better price than what Nio has paid on some previous issuance. It plans to make use of a part of the proceeds to purchase and cancel $500 million in 2026 convertible notes on which it pays coupons of 0.00% and 0.50%.
The firm plans to make use of the remaining proceeds largely for normal company wants and to strengthen its stability sheet.
The drop in share value partly displays the truth that the bonds might be transformed into shares, probably diluting the holdings of current shareholders. Nio mentioned the preliminary conversion price of the brand new notes represents a premium of about 30% to the final closing value of its ADSs.
Write to Jiahui Huang at jiahui.huang@wsj.com)