Nio talks $650 million five-year convertible notes to yield 3.5%-4%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Jan. 29 – Nio Inc. plans to price $650 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 3.5% to 4% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities, Credit Suisse Securities, Goldman Sachs & Co. and Morgan Stanley are the bookrunners for the Rule 144A and Regulation S deal, which carries a greenshoe of $100 million.

The notes are non-callable except upon a tax-event. They are putable on Feb. 1, 2022.

An entity affiliated with principal shareholder Tencent Holdings Ltd. plans to purchase $30 million and an entity affiliated with principal shareholder Hillhouse Capital Management Ltd. plans to purchase $10 million of the notes, according to a company news release.

The notes will be settled in American Depositary Shares with cash used to settle any fractional shares.

In connection with the pricing, Nio will enter into capped call transactions and zero-strike call option transactions.

The zero-strike call option transactions are intended to facilitate hedging, the company said in the news release.

Nio is a Shanghai-based electric car manufacturer.

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