NIO Inc. Announces Repurchase Right Notification for 0.00% Convertible Senior Notes due 2026

Rhea-AI Summary

NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) announces repurchase of its 0.00% Convertible Senior Notes due 2026. The Repurchase Right expires on January 31, 2024, allowing holders to require the company to repurchase all or a portion of the Notes. The repurchase price will be equal to 100% of the principal amount of the Notes, plus any accrued and unpaid additional interest, if any, to, but excluding, February 1, 2024, subject to the terms and conditions of the Indenture and the Notes. As of January 2, 2024, there was US$301,448,000.00 in aggregate principal amount of the Notes outstanding.

Insights

Financial Analyst

The announcement by NIO Inc. regarding the repurchase option for its 0.00% Convertible Senior Notes due 2026 is a significant financial event that warrants close scrutiny by investors and market analysts. The repurchase option, often included in the terms of convertible notes, provides investors with a mechanism to sell back their debt holdings to the issuer at a predetermined price. The principal amount involved, US$301,448,000, is substantial and could impact the company's cash reserves.

From a financial perspective, the decision of note holders to exercise the repurchase option will depend on various factors including their assessment of the company's performance, the prevailing interest rate environment and alternative investment opportunities. If a significant portion of the note holders opt to exercise the repurchase right, NIO Inc. might see a considerable outflow of cash, which could affect its liquidity and financial flexibility in the short term. However, retiring the debt could also reduce future interest expenses and potential dilution from conversion, which might be favorable for long-term financial health and earnings per share.

Investors will also be observing the company's choice to pay additional interest as a remedy for any reporting obligation failures, although such failures have not occurred to date. This clause indicates NIO Inc.'s commitment to maintaining transparency and adhering to its reporting obligations, which is reassuring for investors and could influence their decision on whether to exercise the repurchase right.

Market Research Analyst

The electric vehicle (EV) industry, where NIO Inc. operates, is highly competitive and capital-intensive. The announcement of the repurchase option is not only a financial maneuver but also sends signals to the market regarding the company's strategic priorities and confidence in its future cash flows. The fact that the notes carry a 0.00% interest rate suggests that investors had a strong belief in NIO's growth prospects at the time of issuance, as they were willing to forgo periodic interest payments in exchange for the potential upside of conversion into equity.

Market sentiment towards the EV sector and NIO's position within it will be influenced by the outcome of this repurchase event. If the market perceives that a large number of investors are exiting their positions through the repurchase, it may raise concerns about NIO's outlook or the sector's prospects. On the other hand, if the repurchase right is not widely exercised, it could be interpreted as a sign of investor confidence in the company's future valuation.

Furthermore, the repurchase event may affect the supply and demand dynamics for NIO's securities. A reduction in outstanding debt could potentially make the remaining notes more scarce and thus, more valuable, while also impacting the liquidity and volatility of NIO's stock.

Legal Expert

The legal framework governing the repurchase option is critical for both the company and the note holders. The Indenture, which stipulates the terms of the notes, provides a structured process for exercising the repurchase right, including the timeline and the procedural steps required. It is imperative that NIO Inc. adheres strictly to these terms to avoid any legal repercussions or loss of investor trust.

Additionally, the requirement for the company to file a Tender Offer Statement on Schedule TO with the SEC ensures transparency and regulatory compliance, which are essential for maintaining market integrity. The documentation provided to note holders, including the Repurchase Right Notice and related documents, must be clear and comprehensive to prevent any misunderstandings that could lead to disputes or litigation.

As the legal expert, it is also important to highlight that the company's disclaimer of making any recommendation to note holders on the exercise of the repurchase right is a standard practice to avoid potential liability. It underscores the importance of independent decision-making by the note holders based on their individual assessments of the company's performance and market conditions.

SHANGHAI, China, Jan. 03, 2024 (GLOBE NEWSWIRE) -- NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) (“NIO” or the “Company”), a pioneer and a leading company in the premium smart electric vehicle market, today announced that it is notifying holders of its 0.00% Convertible Senior Notes due 2026 (CUSIP No. 62914VAE6) (the “Notes”) that pursuant to the Indenture dated as of January 15, 2021 (the “Indenture”) relating to the Notes by and between the Company and The Deutsche Bank Trust Company Americas, as trustee, each holder has the right, at the option of such holder, to require the Company to repurchase all of such holder’s Notes or any portion thereof that is an integral multiple of US$1,000 principal amount for cash on February 1, 2024 (the “Repurchase Right”). The Repurchase Right expires at 5:00 p.m., New York City time, on Wednesday, January 31, 2024.

As required by rules of the United States Securities and Exchange Commission (the “SEC”), the Company will file a Tender Offer Statement on Schedule TO. In addition, documents specifying the terms, conditions and procedures for exercising the Repurchase Right will be available through the Depository Trust Company and the paying agent, which is The Deutsche Bank Trust Company Americas. None of the Company, its board of directors or its employees has made or is making any representation or recommendation to any holder as to whether to exercise or refrain from exercising the Repurchase Right.

The Repurchase Right entitles each holder of the Notes to require the Company to repurchase all of such holder’s Notes or any portion thereof that is an integral multiple of US$1,000 principal amount. The repurchase price for such Notes will be equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid additional interest, if any, to, but excluding, February 1, 2024, which is the date specified for repurchase in the Indenture (the “Repurchase Date”), subject to the terms and conditions of the Indenture and the Notes. Pursuant to the terms of the Indenture and the Notes, the Company will pay additional interest, if any, at its sole election as the sole remedy relating to certain failure by the Company to comply with its reporting obligations. Such failures have not occurred to date. As of January 2, 2024, there was US$301,448,000.00 in aggregate principal amount of the Notes outstanding. If all outstanding Notes are surrendered for repurchase through exercise of the Repurchase Right, the aggregate cash purchase price will be US$301,448,000.00.

The opportunity for holders of the Notes to exercise the Repurchase Right commences at 9:00 a.m., New York City time today, January 3, 2024, and will terminate at 5:00 p.m., New York City time, on Wednesday, January 31, 2024. In order to exercise the Repurchase Right, a holder must follow the transmittal procedures set forth in the Company’s Repurchase Right Notice to holders (the “Repurchase Right Notice”), which is available through the Depository Trust Company and The Deutsche Bank Trust Company Americas. Holders may withdraw any previously tendered Notes pursuant to the terms of the Repurchase Right at any time prior to 5:00 p.m., New York City time, on Wednesday, January 31, 2024, or as otherwise provided by applicable law.

This press release is for information only and is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of an offer to sell the Notes or any other securities of the Company. The offer to purchase the Notes will be only pursuant to, and the Notes may be tendered only in accordance with, the Company’s Repurchase Right Notice dated January 3, 2024 and related documents.

Holders of the Notes should refer to the Indenture for a complete description of repurchase procedures and direct any questions concerning the mechanics of repurchase to the Trustee by contacting The Deutsche Bank Trust Company Americas. Holders of Notes may request the Company’s Repurchase Right Notice from the paying agent, The Deutsche Bank Trust Company Americas, c/o DB Services Americas Inc., at 5022 Gate Parkway Suite 200, MS JCK01-218, Jacksonville, FL 32256 (email: db.reorg@db.com).

HOLDERS OF NOTES AND OTHER INTERESTED PARTIES ARE URGED TO READ THE COMPANY’S SCHEDULE TO, REPURCHASE RIGHT NOTICE AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NIO INC. AND THE REPURCHASE RIGHT.

Materials filed with the SEC will be available electronically without charge at the SEC’s website, http://www.sec.gov. Documents filed with the SEC may also be obtained without charge at the Company’s website, http://ir.nio.com.

About NIO Inc.

NIO Inc. is a pioneer and a leading company in the premium smart electric vehicle market. Founded in November 2014, NIO’s mission is to shape a joyful lifestyle. NIO aims to build a community starting with smart electric vehicles to share joy and grow together with users. NIO designs, develops, jointly manufactures and sells premium smart electric vehicles, driving innovations in next-generation technologies in autonomous driving, digital technologies, electric powertrains and batteries. NIO differentiates itself through its continuous technological breakthroughs and innovations, such as its industry-leading battery swapping technologies, Battery as a Service, or BaaS, as well as its proprietary autonomous driving technologies and Autonomous Driving as a Service, or ADaaS. NIO’s product portfolio consists of the ES8, a six-seater smart electric flagship SUV, the ES7 (or the EL7), a mid-large five-seater smart electric SUV, the ES6 (or the EL6), a five-seater all-round smart electric SUV, the EC7, a five-seater smart electric flagship coupe SUV, the EC6, a five-seater smart electric coupe SUV, the ET9, a smart electric executive flagship, the ET7, a smart electric flagship sedan, the ET5, a mid-size smart electric sedan, and the ET5T, a smart electric tourer.

For more information, please visit: http://ir.nio.com

Investor Relations
ir@nio.com

Media Relations
global.press@nio.com

FAQ

What is NIO Inc.'s announcement regarding its Convertible Senior Notes?

NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) has announced the repurchase of its 0.00% Convertible Senior Notes due 2026.

When does the Repurchase Right expire for NIO Inc.'s Convertible Senior Notes?

The Repurchase Right expires at 5:00 p.m., New York City time, on Wednesday, January 31, 2024.

What is the repurchase price for NIO Inc.'s Convertible Senior Notes?

The repurchase price will be equal to 100% of the principal amount of the Notes, plus any accrued and unpaid additional interest, if any, to, but excluding, February 1, 2024, subject to the terms and conditions of the Indenture and the Notes.

How much is the aggregate principal amount of the Notes outstanding as of January 2, 2024?

As of January 2, 2024, there was US$301,448,000.00 in aggregate principal amount of the Notes outstanding.

Where can holders of the Notes find more information about the Repurchase Right?

Holders of Notes may request the Company’s Repurchase Right Notice from the paying agent, The Deutsche Bank Trust Company Americas, c/o DB Services Americas Inc., at 5022 Gate Parkway Suite 200, MS JCK01-218, Jacksonville, FL 32256 (email: db.reorg@db.com).