iQiyi closes offering of $350M convertible senior notes

iQIYI (IQ) announced the closing of its offering of $350 million in aggregate principal amount of 4.625% convertible senior notes due 2030. The Notes bear interest at a rate of 4.625% per year, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2025. The Notes will mature on March 15, 2030, unless repurchased, redeemed or converted in accordance with the terms of the Notes prior to such date. The net proceeds of the Notes Offering amounted to approximately $344.8 million. The Company intends to use the net proceeds from the Notes Offering for the repayment and/or repurchase of existing debt securities as described below and for general corporate purposes. The Notes will rank effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. Holders of the Notes may not convert the Notes at any time on or prior to the 40th day following the last date of original issuance of the Notes. After the Compliance Period End Date and prior to the close of business on the business day immediately preceding September 15, 2029, the Notes will be convertible only if certain conditions are met. On or after September 15, 2029 until the close of business on the second scheduled trading day immediately preceding the maturity date, the Notes will be convertible at any time. Upon conversion, holders will receive cash, the American Depositary Shares, each representing seven Class A ordinary shares, with par value of $0.00001 per share, of the Company or a combination of cash and ADSs, at the election of the Company. The Notes will initially be convertible at a conversion rate of 64,819 ADSs per $200,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $3.0855 per ADS and represents a conversion premium of approximately 27.5% above the Nasdaq closing price of the Company’s ADSs on February 19, 2025, which was $2.42 per ADS. The initial conversion rate is subject to adjustment upon the occurrence of certain events. On March 15, 2028 or in the event of certain fundamental changes, the holders of the Notes will have the right to require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. Shortly after the pricing of the Notes, the Company entered into separate and individually privately negotiated agreements with certain holders of the Company’s existing convertible senior notes to repurchase approximately $300 million principal amount of the convertible senior notes in cash. The terms of each Repurchase Transaction have been individually negotiated with each holder of the convertible senior notes.