BABA Proposes CB Offering to Raise Up to US$5B for Buybacks

BABA announced a proposal to offer US$4.5 billion in 0.50% Convertible Senior Notes due 2031, with an option for an additional US$500 million. The offering is expected to close on 29 May 2024.

Net proceeds are estimated at US$4.436 billion (up to US$4.93 billion if the option is fully exercised). BABA plans to use the proceeds to repurchase about 14.8 million ADSs at US$80.80 each, fund further share repurchases, and cover the US$573.75 million cost of capped call transactions to reduce potential dilution.

The Notes will mature on 1 June 2031 and bear 0.50% interest, payable semi-annually. The initial conversion rate is 9.5202 ADSs per US$1,000, equivalent to a conversion price of US$105.04 per ADS, a 30% premium over the last sale price of US$80.80 on 23 May 2024.