iQIYI Announces Proposed Offering of US$500 Million Convertible Senior Notes
28 Novembre 2018 - 10:01PM
iQIYI, Inc. (NASDAQ: IQ) (“iQIYI” or the “Company”), an innovative
market-leading online entertainment service in China, today
announced the proposed offering (the “Notes Offering”) of US$500
million in aggregate principal amount of convertible senior notes
due 2023 (the “Notes”), subject to market and other conditions. The
Company intends to grant the initial purchasers in the Notes
Offering a 13-day option to purchase up to an additional US$75
million in principal amount of the Notes. The Company plans to use
part of the net proceeds from the Notes Offering to pay the cost of
the capped call transactions described below, and use the remainder
of the proceeds to expand and enhance its content offerings, to
strengthen its technologies, and for working capital and other
general corporate purposes.
The Notes will be senior, unsecured obligations
of iQIYI. The Notes will mature on December 1, 2023, unless
repurchased, redeemed or converted in accordance with their terms
prior to such date. The Company may not redeem the Notes prior to
maturity, unless certain tax-related events occur. Holders of the
Notes may require the Company to repurchase all or part of their
Notes in cash on December 1, 2021 or in the event of certain
fundamental changes. Prior to June 1, 2023, the Notes will be
convertible at the option of the holders only upon satisfaction of
certain conditions and during certain periods. Thereafter, the
Notes will be convertible at the option of the holders at any time
until the close of business on the second scheduled trading day
immediately preceding the maturity date. Upon conversion, the
Company will pay or deliver to such converting holders, as the case
may be, cash, the Company’s American Depositary Shares (“ADSs”), or
a combination of cash and ADSs, at its election. The interest rate,
initial conversion rate and other terms of the Notes will be
determined at the time of pricing of the Notes.
The Notes will be offered in the United States
to qualified institutional buyers pursuant to Rule 144A and to
non-U.S. persons outside the United States in reliance on
Regulation S under the Securities Act of 1933, as amended (the
“Securities Act”). The Notes, the ADSs deliverable upon conversion
of the Notes and the Class A ordinary shares represented thereby
have not been and will not be registered under the Securities Act
or the securities laws of any other place, and may not be offered
or sold in the United States absent registration or an applicable
exemption from registration requirements.
In connection with the Notes Offering, the
Company intends to enter into capped call transactions with one or
more of the initial purchasers and/or their respective affiliates
and/or other financial institutions (the “Option Counterparties”).
The capped call transactions are expected to reduce potential
dilution to existing holders of the ordinary shares and ADSs of the
Company upon conversion of the Notes and/or offset any potential
cash payments that the Company is required to make in excess of the
principal amount of any converted notes, as the case may be, with
such reduction and/or offset subject to a cap. If the initial
purchasers exercise their option to purchase additional Notes, the
Company may enter into additional capped call transactions.
As part of establishing their initial hedges of the capped call
transactions, the Option Counterparties or their respective
affiliates expect to trade the ADSs and/or enter into various
derivative transactions with respect to the Company’s ADSs
concurrently with, or shortly after, the pricing of the Notes. This
activity could increase (or reduce the size of any decrease in) the
market price of the ADSs or the Notes at that time. If any such
capped call transactions fails to become effective, whether or not
the Notes Offering is completed, the Option Counterparties may
unwind their hedge positions with respect to the ADSs, which could
adversely affect the value of the ADSs and, if the Notes have been
issued, the value of the Notes.
In addition, the Option Counterparties or their
respective affiliates may modify their hedge positions by entering
into or unwinding various derivative transactions with respect to
the ADSs or other securities of the Company in secondary market
transactions following the pricing of the Notes and prior to the
maturity of the Notes. The Option Counterparties may engage in such
activity during any observation period relating to a conversion of
the Notes. This activity could also cause or avoid an increase or a
decrease in the market price of the ADSs or the Notes, which could
affect noteholders’ ability to convert the Notes and, to the extent
the activity occurs during any observation period related to a
conversion of the Notes, could affect the amount and value of the
consideration that noteholders will receive upon conversion of such
Notes.
This press release shall not constitute an offer
to sell or a solicitation of an offer to purchase any securities,
nor shall there be a sale of the securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful.
This press release contains information about
the pending offerings of the Notes, and there can be no assurance
that any of the offerings will be completed.
About iQIYI, Inc.
iQIYI, Inc. is an innovative market-leading
online entertainment service in China. Its corporate DNA combines
creative talent with technology, fostering an environment for
continuous innovation and the production of blockbuster content.
iQIYI’s platform features highly popular original content, as well
as a comprehensive library of other professionally-produced
content, partner-generated content and user-generated content. The
Company distinguishes itself in the online entertainment industry
by its leading technology platform powered by advanced AI, big data
analytics and other core proprietary technologies. iQIYI attracts a
massive user base with tremendous user engagement, and has
developed a diversified monetization model including membership
services, online advertising services, content distribution, live
broadcasting, online games, IP licensing, online literature and
e-commerce etc.
Safe Harbor Statement
This announcement contains forward-looking
statements. These statements are made under the “safe harbor”
provisions of the U.S. Private Securities Litigation Reform Act of
1995. These forward-looking statements can be identified by
terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates,” “confident” and
similar statements. Among other things, the Financial Guidance and
quotations from management in this announcement, as well as iQIYI’s
strategic and operational plans, contain forward-looking
statements. iQIYI may also make written or oral forward-looking
statements in its periodic reports to the U.S. Securities and
Exchange Commission, in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements
that are not historical facts, including but not limited to
statements about iQIYI’s beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: iQIYI’s strategies; iQIYI’s future business development,
financial condition and results of operations; iQIYI’s ability to
retain and increase the number of users, members and advertising
customers, and expand its service offerings; competition in the
online entertainment industry; changes in iQIYI’s revenues, costs
or expenditures; Chinese governmental policies and regulations
relating to the online entertainment industry, general economic and
business conditions globally and in China and assumptions
underlying or related to any of the foregoing. Further information
regarding these and other risks is included in the Company’s
filings with the Securities and Exchange Commission. All
information provided in this press release and in the attachments
is as of the date of the press release, and iQIYI undertakes no
duty to update such information, except as required under
applicable law.
For more information, please contact:
Investor Relations iQIYI, Inc. + 86 10 8264 6585
ir@qiyi.com
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