Alibaba completes $3.2 billion convertible notes offering

Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988) completed its offering of approximately $3.2 billion in zero coupon convertible senior notes due 2032, according to a company statement.

The notes were sold to non-U.S. persons in offshore transactions under Regulation S of the Securities Act. The company stated it will use the proceeds for general corporate purposes, with a focus on strengthening cloud infrastructure capabilities and international commerce business operations.

The notes carry an initial conversion rate of 5.1773 American Depositary Shares per $1,000 principal amount, equivalent to a conversion price of $193.15 per ADS. This conversion price represents a premium of 31.25% over the closing price of ordinary shares on the Hong Kong Stock Exchange on the pricing date, converted to U.S. dollars at HK$7.7901 to $1 and adjusted for the eight-to-one ordinary share to ADS ratio.

To reduce potential dilution, Alibaba purchased capped call options from initial purchasers that effectively increase the conversion price to a "cap price" of $235.46 per ADS. This cap price represents a 60% premium to the reference share price and is subject to customary adjustments.

The conversion rate may be adjusted based on certain events, and the company may increase the conversion rate for holders who elect to convert their notes in connection with specific corporate events or redemption notices.

The notes and related securities were not registered under the Securities Act or U.S. state securities laws and cannot be offered or sold in the United States without registration or an applicable exemption.

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