Trip.com to Raise $1.3 Billion via Convertible Bonds to Pare Debt

By P.R. Venkat

Trip.com Group plans to raise $1.3 billion by issuing exchangeable bonds, the latest joining a growing cohort of Chinese technology companies pursuing similar offerings.

The travel-services provider will pay 0.75% coupon on the convertible bonds maturing in 2029, Trip.com said Wednesday. The deal size could reach $1.5 billion if the option to purchase additional notes is fully exercised.

Proceeds from the offering will be used by Trip.com to pare down debt, expand overseas business as well as meet working capital needs.

With this issuance, Trip.com will join the likes of Alibaba Group, JD.com and Lenovo Group, which have tapped the convertible bond market to raise funds in order to increase shareholder returns through share repurchases or cut down debt.

Trip.com's notes can be exchanged for shares at an initial conversion price of about $66.46 per American depositary share, a 32.5% premium over Tuesday's closing price of $50.16.

Concurrently, the company is also planning to repurchase 6 million ADS for about $300 million in off-market, privately negotiated transactions. The repurchase price will be Trip.com's Tuesday's closing price.

The repurchase will be funded by cash on hand, the company said, adding that the move is expected to offset some of the potential dilution of shares caused due to conversion of the notes.

"After this deal, we expect financing cost likely to be reduced with repayment of existing borrowings, and dilution impact could be mitigated by the cash-par settlement upon conversion," Citigroup analyst Brian Gong said in a note.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

June 04, 2024 21:55 ET (01:55 GMT)

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