Chinese Electric Carmaker Nio Announces $200M Debt Offering

Nio Inc – ADR NIO shares, which have been broadly lower since forming a double top in late July, were seeing some upward momentum since Wednesday.

Nio, often known as China's Tesla Inc TSLA, announced Thursday a private placement of $200 million in convertible notes. The Chinese electric carmaker said it has entered into agreements with its Chairman and CEO Bin Li and TENCENT HOLDING/ADR TCEHY whereby each party will subscribe to the $100 million principal amount worth of convertible notes in two equally split tranches.

The notes issued in the first tranche will mature in 360 days and bear no interest, Nio said. Instead, the company will pay a premium at 2% of the principal amount at maturity.

The notes issued in the second tranche will mature in three years and bear no interest, but are eligible for a 6% premium of the principal amount at maturity.

Nio said it expects the debt offering to close before the end of September.

Citing a battery recall for 4,803 ES8 model vehicles in July and challenging macroeconomic and auto market conditions, Nio reported vehicle deliveries of 837 in July, down 38% from June.

The next catalyst for the stock is likely to be its monthly deliveries numbers for August and the impending second-quarter results due Tuesday, Sept. 24.

Nio shares were trading higher by 6% at $2.92 at the time of publication. 

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Photo courtesy of Nio.