Trip.com Group Limited Announces Completion of Offering of US$1.5 Billion Cash-par Settled Convertible Senior Notes

Rhea-AI Summary

Trip.com Group (Nasdaq: TCOM; HKEX: 9961) has completed its offering of US$1.5 billion in convertible senior notes due 2029. This includes an additional US$200 million from the initial purchasers' option. The notes, aimed at qualified institutional buyers, are unsecured and bear an interest rate of 0.75% per year, payable semiannually. The net proceeds will be used for debt repayment, overseas business expansion, and working capital. The initial conversion rate is 15.0462 ADSs per US$1,000 of the notes, equivalent to a conversion price of US$66.46 per ADS.

Positive

• Completion of $1.5 billion notes offering shows investor confidence.
• Proceeds will be used for strategic purposes: debt repayment, overseas expansion, and working capital.
• The interest rate of 0.75% is relatively low, reducing financial burden.
• Initial conversion rate suggests a favorable conversion price of $66.46 per ADS.

Negative

• Unsecured nature of the notes may pose a higher risk for investors.
• Potential dilution with the initial conversion rate of 15.0462 ADSs per $1,000 principal amount.
• Notes are not registered under the Securities Act, limiting liquidity.

Insights

Financial Analyst

The completion of Trip.com Group's offering of US$1.5 billion in convertible senior notes can be seen largely as a positive move. Raising capital through convertible notes allows the company to access funds at a relatively low interest rate of 0.75% per year, which is quite favorable compared to traditional corporate bonds. This low cost of borrowing could help Trip.com optimize its capital structure and improve financial flexibility.

The use of proceeds includes repayment of existing debt, which can lead to lower overall interest expenses if the interest rates on the repaid debt were higher than the new notes. This could positively impact the company's profitability in both the short and long term. Additionally, the funds earmarked for overseas expansion and working capital imply a strategy to enhance market positioning and operational liquidity.

However, the notes being general unsecured obligations mean that they are not backed by any collateral, which could pose some risk to investors if the company's financial health deteriorates. The conversion rate of 15.0462 ADS per US$1,000 principal amount, equivalent to US$66.46 per ADS, also reflects confidence in the company's future stock performance, considering the potential for dilution if the notes are converted into equity.

For retail investors, this offering signifies a robust move towards strengthening the company's balance sheet while enabling growth initiatives. However, it's essential to weigh the potential dilution factor and the unsecured nature of the notes when assessing future risk.

Market Research Analyst

From a market perspective, Trip.com Group's decision to allocate a portion of the proceeds towards overseas expansion is noteworthy. This indicates the company's intent to bolster its international footprint, which could diversify its revenue streams and reduce dependency on domestic markets. Considering the challenges faced by the global travel industry in recent years, expanding into new regions can help the company tap into recovering and emerging travel markets, potentially increasing its market share.

The allocation of funds towards working capital needs suggests that the company is positioning itself to improve liquidity and manage operational expenses more efficiently. This proactive approach can help mitigate risks associated with cash flow volatility, especially in an industry as dynamic as travel and tourism.

For investors, this strategic deployment of funds could translate into sustainable growth and improved financial stability, enhancing long-term shareholder value. However, the success of these initiatives will largely depend on the company's execution capabilities and the broader macroeconomic environment affecting the travel industry.

Legal Expert

The structure of the convertible senior notes offering adheres to Rule 144A under the Securities Act of 1933, which allows for the sale of securities to qualified institutional buyers without the need for SEC registration. This is a common practice that enables faster access to capital markets while ensuring compliance with regulatory frameworks. For retail investors, it's important to note that these notes are not registered under the Securities Act, meaning they cannot be offered or sold to the general public within the U.S. This restriction underscores the importance of understanding the legal and regulatory landscape when investing in such instruments.

The legal framework also stipulates that the notes are general unsecured obligations, which places them lower in the hierarchy of claims in the event of liquidation. This aspect introduces an element of risk for noteholders, although it is balanced by the potential for conversion into equity at a favorable rate. Retail investors should carefully consider these legal nuances in their investment decisions, particularly the implications of the notes' unsecured status and the regulatory restrictions on resale.

SINGAPORE, June 7, 2024 /PRNewswire/ -- Trip.com Group Limited (Nasdaq: TCOM; HKEX: 9961) ("Trip.com Group" or the "Company"), a leading one-stop travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management, today announced the completion of its offering (the "Notes Offering") of US$1.5 billion in aggregate principal amount of convertible senior notes due 2029 (the "Notes"), including the initial purchasers' full exercise of option to purchase an additional US$200 million in aggregate principal amount of the Notes. The Notes have been offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").

The Company plans to use the net proceeds from the Notes Offering for repayment of existing financial indebtedness, expansion of its overseas business, and working capital needs.

The Notes will be general unsecured obligations of the Company and bear interest at a rate of 0.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024. The Notes will mature on June 15, 2029 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.

The initial conversion rate of the Notes is 15.0462 American depositary shares ("ADSs"), each currently representing one ordinary share of the Company, per US$1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately US$66.46 per ADS.

The Notes, the ADSs deliverable upon conversion of the Notes, if any, and the ordinary shares represented thereby or deliverable upon conversion of the Notes in lieu thereof have not been 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 qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act.

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.

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," "intend," "plan," "believe," "estimate," "is/are likely to," "confident," or other similar statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, severe or prolonged downturn in the global or Chinese economy, general declines or disruptions in the travel industry, volatility in the trading price of Trip.com Group's ADSs or ordinary shares, Trip.com Group's reliance on its relationships and contractual arrangements with travel suppliers and strategic alliances, failure to compete against new and existing competitors, failure to successfully manage current growth and potential future growth, risks associated with any strategic investments or acquisitions, seasonality in the travel industry in the relevant jurisdictions where Trip.com Group operates, failure to successfully develop Trip.com Group's existing or future business lines, damage to or failure of Trip.com Group's infrastructure and technology, loss of services of Trip.com Group's key executives, adverse changes in economic and business conditions in the relevant jurisdictions where Trip.com Group operates, any regulatory developments in laws, regulations, rules, policies, or guidelines applicable to Trip.com Group and other risks outlined in Trip.com Group's filings with the U.S. Securities and Exchange Commission or The Stock Exchange of Hong Kong Limited. All information provided in this press release is as of the date of the issuance, and Trip.com Group does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Trip.com Group Limited

Trip.com Group Limited (Nasdaq: TCOM; HKEX: 9961) is a leading global one-stop travel platform, integrating a comprehensive suite of travel products and services and differentiated travel content. It is the go-to destination for travelers in China, and increasingly for travelers around the world, to explore travel, get inspired, make informed and cost-effective travel bookings, enjoy hassle-free on-the-go support, and share travel experience. Founded in 1999 and listed on Nasdaq in 2003 and HKEX in 2021, the Company currently operates under a portfolio of brands, including Ctrip, Qunar, Trip.com, and Skyscanner, with the mission "to pursue the perfect trip for a better world."

For further information, please contact:

Investor Relations
Trip.com Group Limited
Tel: +86 (21) 3406-4880 × 12229
Email: iremail@trip.com

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SOURCE Trip.com Group Limited

FAQ

What is the amount of Trip.com's convertible senior notes offering?

Trip.com has completed a $1.5 billion convertible senior notes offering.

What will the proceeds from Trip.com's notes offering be used for?

The proceeds will be used for debt repayment, overseas expansion, and working capital.

What is the interest rate of Trip.com's convertible senior notes?

The notes bear an interest rate of 0.75% per year.

When will the interest on Trip.com's notes be paid?

Interest will be paid semiannually on June 15 and December 15, starting December 15, 2024.

What is the initial conversion rate of Trip.com's notes?

The initial conversion rate is 15.0462 ADSs per $1,000 principal amount of the notes.

What is the conversion price for Trip.com's notes?

The initial conversion price is approximately $66.46 per ADS.

Are Trip.com's convertible senior notes secured or unsecured?

The notes are general unsecured obligations of the company.

What is the maturity date for Trip.com's convertible senior notes?

The notes will mature on June 15, 2029.