The total size of the transaction could reach $ 1.2 billion
With one of the largest convertible bond sales ever made by a Chinese company listed in the US, the Chinese video streaming platform iQiyi expects to raise about $ 1.05 billion. The goal of the Chinese company is to financially strengthen the company, which must compete in the crowded online video market.
According to a technical report obtained by Reuters, the new six-year bond will pay a coupon of between 2% and 2.5%. The total size of the transaction could reach $ 1.2 billion, as it also has an over-allocation option of up to $ 150 million.
However, for iQiyi this is the second convertible bond offering. In fact, a year ago, it raised $ 2.4 billion in its public offering on the Nasdaq.
The streaming market is seeing more and more competitors in China
This new offer stems from the need to strengthen and also because IQiyi’s rivals Bytedance and Tencent are gaining an advantage in the burgeoning short film market in China.
In the fourth quarter of 2018, iQiyi recorded a net loss of RMB 3.5 billion (about $ 550 million), increasing by 470% compared to the RMB 612 million losses in the same period last year.
According to CFO Wang Xiaodong, the company spent a lot of time producing original premium content, putting further pressure on its margins.
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