Alibaba Group Announces Proposed Offering of Senior Unsecured Notes

Rhea-AI Summary

Alibaba Group (NYSE: BABA) has announced plans to offer both U.S. dollar-denominated and RMB-denominated senior unsecured notes. The offerings are not inter-conditional, and final terms including principal amounts, interest rates, and maturity dates will be determined during pricing. The proceeds will be used for general corporate purposes, including offshore debt repayment and share repurchases. The USD Notes will be offered to qualified institutional buyers in the U.S. under Rule 144A and to non-U.S. persons under Regulation S, while the RMB Notes will be offered exclusively to non-U.S. persons under Regulation S.

Positive

• Company plans to repurchase shares, potentially supporting stock price
• Debt refinancing initiative could improve financial structure
• Dual-currency offering provides funding flexibility

Negative

• Increased debt load could impact financial leverage
• Additional interest expenses will affect profitability

Insights

Financial Analyst

This debt offering marks a significant financial move for Alibaba, combining both USD and RMB-denominated notes in a dual-currency strategy. The flexibility to use proceeds for debt repayment and share repurchases suggests a balanced approach to capital structure optimization and shareholder returns. The registration rights agreement for USD notes provides future liquidity options for institutional buyers.

The timing aligns with global market conditions where companies are securing financing before potential rate changes. Notably, this offering to qualified institutional buyers under Rule 144A indicates strong institutional interest. The dual-currency approach also helps diversify Alibaba's funding sources and potentially reduces currency exposure risks.

Market Research Analyst

This offering demonstrates Alibaba's strategic positioning in both domestic and international capital markets. The dual-currency structure caters to different investor bases and reflects the company's global-local balance. The share repurchase component is particularly significant, potentially supporting stock price stability during the ongoing tech sector volatility.

The choice to offer RMB-denominated notes alongside USD notes shows confidence in the Chinese market while maintaining international investor access. This balanced approach could help mitigate geopolitical risks and currency fluctuations.

HANGZHOU, China--(BUSINESS WIRE)--

Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988 (HKD Counter) and 89988 (RMB Counter), “Alibaba,” “Alibaba Group” or the “Company”) today announced that it proposes to concurrently offer U.S. dollar-denominated senior unsecured notes (“the USD Notes”) and RMB-denominated senior unsecured notes (the “RMB Notes,” and together with the USD Notes, the “Notes”), subject to market and other conditions. The offering of the USD Notes and the offering of the RMB Notes are not inter-conditional with each other. The principal amount, interest rates, maturity dates and other terms of the Notes will be determined at the time of pricing of the offering.

Alibaba intends to use the net proceeds from the offering of the Notes for general corporate purposes, including repayment of offshore debt and share repurchases.

The Notes have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws. The USD Notes are being offered and sold in the United States only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act and to certain non-U.S. persons in offshore transaction in reliance on Regulation S under the U.S. Securities Act. Alibaba intends to enter into a registration rights agreement in connection with the offering of the USD Notes, under which it will agree to use commercially reasonable efforts to file an exchange offer registration statement to exchange the USD Notes for a new issue of substantially identical debt securities registered under the Securities Act or, under specified circumstances, a shelf registration statement to cover resale of the USD Notes.

The RMB Notes are being offered and sold only to certain non-U.S. persons in offshore transaction in reliance on Regulation S under the U.S. Securities Act.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any securities, in the United States or elsewhere, and shall not constitute an offer, solicitation or sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. Any offering of securities will be made by means of one or more offering documents, which will contain detailed material information about the Company and its management and financial statements.

This press release contains information about the pending offering of the Notes, and there can be no assurance that the offering will be completed.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “aim,” “estimate,” “intend,” “seek,” “plan,” “believe,” “potential,” “continue,” “ongoing,” “target,” “guidance,” “is/are likely to” and similar statements. In addition, statements that are not historical facts, including statements about the intended use of proceeds, the terms of the Notes, the intention of the Company to enter into a registration rights agreement in connection with the offering of the USD Notes and the terms of such agreement, and whether the Company will complete the offering of the Notes, are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to: financial community and rating agency perceptions of the company and its business, financial condition and the industries in which it operates, market conditions, and the satisfaction of customary closing conditions related to the proposed offering. Further information regarding these and other risks is included in Alibaba’s filings with the U.S. Securities and Exchange Commission and announcements on the website of The Stock Exchange of Hong Kong Limited. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and Alibaba does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241117554853/en/

Investor Relations Contact

Lydia Liu

Investor Relations

Alibaba Group Holding Limited

investor@alibaba-inc.com

Media Contacts

Cathy Yan

cathy.yan@alibaba-inc.com

Ivy Ke

ivy.ke@alibaba-inc.com

Source: Alibaba Group Holding Limited

FAQ

What is the purpose of Alibaba's (BABA) new notes offering?

Alibaba plans to use the proceeds for general corporate purposes, including repayment of offshore debt and share repurchases.

What types of notes is Alibaba (BABA) offering in 2024?

Alibaba is offering both U.S. dollar-denominated and RMB-denominated senior unsecured notes, with the offerings being independent of each other.

Who can purchase Alibaba's (BABA) USD Notes?

The USD Notes are being offered to qualified institutional buyers in the U.S. under Rule 144A and to certain non-U.S. persons in offshore transactions under Regulation S.

Will Alibaba's (BABA) new notes be registered under the U.S. Securities Act?

Initially no, but Alibaba plans to file an exchange offer registration statement to exchange the USD Notes for registered securities or file a shelf registration statement.