Close on heels of reporting strong deliveries for December, $NIO Inc(NIO.US)$ announced Monday plans to buy back debt that is maturing in 2024.
What Happened: Nio said it is notifying holders of its 4.5% convertible senior notes due 2024 that they have the right to require the company to repurchase all of, or portion of the notes, for cash on Feb. 1, 2022.
The repurchase price for such notes will be equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid interest.
The repurchase rights can be exercised from 9 a.m. Eastern Time on Monday and will expire at 5 p.m. on Jan. 28, 2022, according to Nio.
In line with the rules of the SEC, the company said it will file a tender offer statement on Schedule TO. Documents specifying the terms, conditions and procedures of exercising the repurchase right will be made available through The Bank of New York Mellon Corporation (NYSE:BK), which is the Depository Trust company and the paying agent.
Why It's Important: Senior convertible note is a debt instrument that carries with it an option to be converted into a predefined amount of the issuer's shares. It offers investors the advantage of getting interest payments that will accrue. The amount the company owes to subscribers of the notes increase over time.
The early redemption, therefore, could have been initiated with the objective of reducing interest expenses.
As of Dec. 30, 2021, the aggregate principal amount of notes outstanding was $165.291 million, Nio said in a filing.