Alibaba Group Holding (OTCPK:BABAF) announced on Thursday the pricing of ~$3.2B zero coupon convertible senior notes offering due 2032.
The initial conversion rate will be 5.1773 ADS per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of $193.15 per ADS.
The redemption price for the notes is expected to be equal to 100% of the principal amount of the notes.
The notes offering is expected to close on September 16.
Net proceeds, estimated at ~$3.13B, will be used for general corporate purposes, with a strategic focus on cloud infrastructure capabilities and international commerce business operations.
To reduce any potential dilutive effect, the company entered into derivatives transactions. Alibaba purchased capped call options that effectively increase the conversion price of the notes to the “cap price.”
The cap price will initially be $235.46 per American Depositary Share. The cost of the capped call options was ~$183.74M.
The notes are expected to mature on September 15, 2032.