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Nio Offers $650 Million Convertible Senior Notes

Part of the net proceeds from this offering would be used to pay the costs of research and development of products, services, and technology.

Shirley Tian
    Jan 29, 2019 5:54 PM  PT
Nio Offers $650 Million Convertible Senior Notes

One of China's leading electric car makers, Nio Inc., announced today that it plans to offer $650 million convertible senior unsecured notes that will be due on Feb. 1, 2024. 

The company said Tencent Holdings Ltd., one of the company's principal shareholders, and an entity affiliated with Hillhouse Capital Management Ltd., another  principal shareholder, were expected to purchase up to $30 million and $10 million of the note offering, respectively.

Part of the net proceeds would be used to pay the costs of research and development of products, services and technology, development of manufacturing facilities, and the roll-out of supply chain, sales and marketing, and other working capital needs.

Last Thursday, the company, sometimes referred to as the Tesla of China, said its founder William Li transferred an aggregate amount of 50 million ordinary shares to the newly established Nio User Trust. Under the trust deed, Li will retain the voting rights of the transferred shares, and Nio users will have the opportunity to discuss and propose the use of the economic benefits from the transferred shares. 

"By letting our users determine how best to allocate the economic benefits from these shares, I firmly believe that the Trust embodies our core values and will benefit our users, shareholders, employees and partners in the long run," said William Li. "A key competitive edge of NIO is our unique, user-centric business model, which creates strong relationships with the NIO community. Looking ahead, we will continue to develop premium, high-quality electric vehicles while consistently delivering holistic user experiences to become the best user enterprise."

Nio began deliveries of the ES8, a 7-seater high-performance premium electric SUV in China from June 2018 and officially launched the ES6, a 5-seater high-performance premium electric SUV, in December 2018.

Shares in Nio (NYSE: NIO) closed today at $6.94, up 27 cents per share. The company raised just above $1 billion in New York in September, selling 160 million shares at $6.26 per share.