Li Auto Inc. (LI) Prices Offering of $750 Million Convertible Senior Notes

April 8, 2021 6:27 AM EDT

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Li Auto Inc. (Nasdaq: LI) (“Li Auto” or the “Company”), an innovator in China’s new energy vehicle market, today announced the pricing of US$750 million in aggregate principal amount of convertible senior notes due 2028 (the “Notes”) (the “Notes Offering”). The Notes have been offered to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from the registration requirement provided by Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. In addition, the Company has granted the initial purchasers in the Notes Offering a 13-day option to purchase up to an additional US$112.5 million aggregate principal amount of the Notes.

When issued, the Notes will be senior unsecured obligations of the Company. The Notes will bear interest at a rate of 0.25% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2021. The Notes will mature on May 1, 2028, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. Prior to the close of business on the business day immediately preceding November 1, 2027, the Notes will be convertible at the option of the holders only upon satisfaction of certain conditions and during certain periods. Holders may convert any or all of their Notes at their option at any time on or after November 1, 2027, 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”), each currently representing two Class A ordinary shares of the Company, or a combination of cash and ADSs, at the Company’s election.

The initial conversion rate of the Notes is 35.2818 ADSs per US$1,000 principal amount of such Notes (which is equivalent to an initial conversion price of approximately US$28.34 per ADS and represents a conversion premium of approximately 27.5% above the closing price of the Company’s ADSs on April 7, 2021, which was US$22.23 per ADS). The conversion rate for the Notes is subject to adjustment upon the occurrence of certain events.

Holders of the Notes may require the Company to repurchase all or part of their Notes for cash on May 1, 2024 and on May 1, 2026, in each case, at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In addition, if the Company undergoes a fundamental change, holders may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, the Company may redeem all but not part of the Notes in the event of certain changes in the tax laws, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the tax redemption date, including any additional amounts with respect to such redemption price.

The Company estimates that the net proceeds from the Notes Offering will be approximately US$733.9 million (or approximately US$844.2 million if the initial purchasers in the Notes Offering exercise their option to purchase additional Notes in full), after deducting the initial purchasers’ discounts and estimated offering expenses payable by the Company. The Company plans to use the net proceeds from the Notes Offering for (i) research and development of new vehicle models, including BEV models, (ii) research and development of leading technologies, and (iii) working capital and other general corporate purposes.

The Notes, the ADSs deliverable upon conversion of the Notes, if any, and the Class A ordinary shares represented thereby have not been and will not be registered under the Securities Act or any state securities laws. They may not be offered or sold within the United States or to U.S. persons, except to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

The Company expects to close the Notes Offering on or about April 12, 2021, subject to the satisfaction of customary closing conditions.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any of these 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 Notes Offering, and there can be no assurance that the Notes Offering will be completed.



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