ZTO Express proposes $1.5 billion convertible notes offering

ZTO Express (Cayman) Inc. (NYSE: ZTO) announced a proposed offering of $1.5 billion in convertible senior notes due 2031 to non-U.S. qualified institutional buyers in offshore transactions.

The Chinese express delivery company plans to use proceeds to refinance share repurchases, fund concurrent share buybacks, pay premiums for capped call transactions, and support general corporate purposes. The notes will mature March 1, 2031, unless redeemed, repurchased or converted earlier.

Holders cannot convert the notes until 40 days after issuance. After that period, conversion is permitted until five trading days before maturity. ZTO can pay cash, Class A ordinary shares, or a combination upon conversion.

The company may redeem all notes for cash under specific conditions: when less than 10% of the original principal remains outstanding, due to tax law changes, or after March 6, 2029 if shares trade at least 130% of the conversion price for 20 days during any 30-day period.

Noteholders can require ZTO to repurchase notes during a "fundamental change" or on March 1, 2029, at 100% of principal plus accrued interest.

ZTO expects to enter capped call transactions with initial purchasers to reduce potential dilution upon note conversion. These counterparties may purchase hedges or enter derivative transactions, potentially affecting share prices.

The company plans concurrent share repurchases from note buyers through privately negotiated transactions to facilitate initial hedging. The repurchase price is expected to equal the Hong Kong Stock Exchange closing price on February 4, 2026.

The notes and underlying shares are not registered under U.S. securities laws and cannot be offered in the United States except under exemptions.

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