Iqiyi’s “blood tonifying”: another 800 million US dollars of convertible bonds were issued, which once fell by more than 10% after hours

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Wen | AI finance and economics society he Chang
On December 16, iqiyi announced today that it would issue US $800 million convertible senior bonds due in 2026 (hereinafter referred to as “convertible bonds”) depending on market conditions, and grant underwriters a 30 day option to purchase additional US $100 million of bonds. At the same time, iqiyi plans to issue 40 million ADSS, each of which represents seven class a ordinary shares. The underwriters are granted a 30 day option to purchase an additional 6 million ads.
Due to the low coupon rate, convertible bonds are generally considered as a relatively cheap financing channel, which has the advantage of low-cost financing. Bondholders can also convert bonds into corporate stocks at an agreed price in the future. This is the third time iqiyi has issued convertible bonds since its listing. The convertible bond will be issued on the maturity date of 12.75 billion US dollars in 2018. On March 30 last year, iqiyi completed the issuance of US $1.2 billion of convertible bonds, including US $1.05 billion of underlying bonds, and additional subscription of US $150 million by initial subscribers of the bonds, with a coupon rate of 2%, which will mature on April 1, 2025.
Iqiyi said in the announcement that it would use the net income from the issuance of bonds and ads to expand and strengthen content supply, upgrade technology, and use it for working capital and other general enterprise purposes. The intention of enriching blood is obvious, however, affected by the news, iqiyi fell more than 10% after the plate.
This year, iqiyi has renewed its sense of existence with “youth has you 2” and “misty theater”, and the output of high-quality original content has attracted much attention. In 2021, iqiyi plans to lay out six “fashion track” of variety show, launch three major brand theaters and four major salute theme series on the side of the drama series, and continue to reserve content. High quality content helps to drive members to pay and attract advertisers, which is the foundation for iqiyi to finally take an important step in member price increase, but the content needs continuous investment. According to the unaudited financial report of iqiyi in the third quarter of 2020, its cash, cash equivalents and restricted cash are about 3.8 billion yuan, 5.2 billion yuan in the last quarter, and 6.9 billion yuan in the same period of last year, a significant decline compared with the same period of last year. To go further, iqiyi needs sufficient financial support.