Alibaba Group Raises $4.5B Through Convertible Senior Notes

Alibaba Group announced it will issue $4.5 billion worth of seven-year notes to fund concurrent share repurchasing activity, part of management’s commitment to delivering value to shareholders.

Initial purchasers of the convertible senior notes, with a coupon of 0.5% and a conversion premium of approximately 30%, will also be given the option to purchase up to an additional $500 million worth of notes.

The company intends to repurchase around 14.8 million American Depository Shares (ADSs) with the proceeds.

In conjunction with the bond issuance, Alibaba also put in place capped call transactions to take effect when the price of its ADS crosses $161.1, raising the conversion premium from 30% to 100%. Doing so minimizes potential share dilution.

Alibaba expects the offering to close on May 29.