JD.com Prices Upsized Offering of US$1.75 Billion Convertible Senior Notes

Core Viewpoint - JD.com has announced the upsizing and pricing of its convertible senior notes offering, totaling US$1.75 billion, due in 2029, aimed at qualified institutional buyers and certain non-U.S. persons [1][12]. Group 1: Notes Offering Details - The Notes Offering consists of convertible senior notes with an aggregate principal amount of US$1.75 billion, maturing on June 1, 2029, and bearing an interest rate of 0.25% per year, payable semiannually [1][3]. - An option has been granted to initial purchasers to buy an additional US$250 million in aggregate principal amount of the Notes within 30 days of the offering [1]. Group 2: Use of Proceeds - The net proceeds from the Notes Offering will be used for several purposes: repurchasing Class A ordinary shares and/or American depositary shares (ADSs), expanding overseas business, improving the supply chain network, and addressing working capital needs [2]. Group 3: Conversion and Repurchase Terms - Holders of the Notes can convert them into cash, ADSs, or a combination thereof at any time before the maturity date, with an initial conversion rate of 21.8830 ADSs per US$1,000 principal amount, equating to a conversion price of approximately US$45.70 per ADS [4][5]. - The company may repurchase the Notes at a price equal to 100% of the principal amount plus accrued interest under certain conditions, including a repurchase option available on June 1, 2027 [6]. Group 4: Concurrent Repurchase - Concurrently with the Notes Offering, JD.com plans to repurchase approximately 14 million ADSs from certain purchasers of the Notes, which is expected to facilitate initial hedging for those investors [7][8]. - The repurchase will be conducted at the closing price of the Class A ordinary shares on the Hong Kong Stock Exchange on May 21, 2024, adjusted for the ADS-to-share ratio [8][9]. Group 5: Market Impact - The repurchase activities may influence the market price of the ADSs and Class A ordinary shares, potentially offsetting dilution from the conversion of the Notes [10][9]. - The company anticipates that potential purchasers of the Notes may engage in convertible arbitrage strategies, which could also affect market prices [11].