This USD 100 million round is similar to the one it raised recently, with two unaffiliated Asia-based investment funds to which NIO will issue and sell convertibles. The document from the firm stated that the closing of both placements is subject to satisfaction of customary closing conditions and closure of each is expected to occur on or before February 19, 2020.
Shares of the NASDAQ-listed company slumped – just like they did last week when it announced the issuing of convertible notes via which is expected to raise USD 100 million. This time it started off at USD 4.02 and fell 6.45% to USD 3.77. Although NIO has raised a total of USD 200 million within a week through convertible bonds, we think that this sum is still not sufficient to address its capital needs.
Regarding the major strategic financing expected by the industry, NIO responded that “other financing projects are still underway and positive progress has been made."
This is already the second round of financing announced by NIO this month. Just on February 6, the firm said that it had completed a total of approximately USD 100 million in convertible debt financing. The investors were two Asian investment funds that had no affiliation with them, amounting to USD 70 million and approximately USD 30 million, respectively.
Taking into account the recent financing transaction, the total amount of convertible bonds issued by NIO announced through targeted issuance this year reached USD 200 million. The interest on convertible bonds issued by the firm is zero and will expire on February 4, 2021. From 6 months after the issue date to maturity, bondholders have the right to convert part or all of their bonds to NIO Class A common stock or American Depositary Shares at a price of USD 3.07 per American Depositary Share.
According to Bloomberg, NIO has accumulated about USD 6 billion in losses since it was founded by William Li in 2014. Its deficit in the quarter that ended in September was USD 324.9 million. The company ended the period with USD 274.3 million in cash and equivalents and said it didn’t have enough money to continue operating another 12 months.
This counts as the fourth convertible bond offering by NIO since getting listed in the US in August 2018. It raised USD 650 million by selling a five-year convertible note to investors, including Tencent and Hillhouse Capital, last January. Then nine months later a financing program of USD 200 million from main backer Tencent and NIO founder William Li Bin took place. Just over a week ago NIO announced that the company had signed a final transaction document with non-affiliated Asian investment funds.
In addition, PC auto (太平洋汽车网) reported that on February 15, according to documents submitted by Hillhouse Capital (高瓴资本) to the US Securities and Exchange Commission (SEC), as of December 31, 2019, the investment firm had no longer held NIO shares.
The former was the third-largest shareholder of NIO. At the time of the firm's IPO, its shareholding reached 7.5%. With a sluggish stock price last year it fell to only USD 1.19. Hillhouse Capital began to reduce its holdings in the EV firm to 13.3689 million shares in the third quarter, which was a reduction of 68.12%.