NIO Inc. Announces Repurchase Right Notification for 0.50% Convertible Senior Notes due 2027

Rhea-AI Summary

NIO has announced a repurchase right notification for its 0.50% Convertible Senior Notes due 2027. Holders can require NIO to repurchase their Notes at 100% of the principal amount plus accrued interest on February 1, 2025. The repurchase right window opens on December 30, 2024, and closes on January 30, 2025.

Currently, there are US$378,525,000 in outstanding Notes. If all Notes are surrendered for repurchase, the total cash purchase price will be US$378,525,000. The repurchase price includes unpaid interest through January 31, 2025, payable to holders of record as of January 15, 2025.

Positive

• Offering noteholders flexibility to exit their investment at par value
• Company has clear terms and timeline for the repurchase process

Negative

• Potential cash outflow of US$378.5 million if all notes are surrendered
• Could significantly impact company's cash position and liquidity

Insights

Fixed Income Analyst

This repurchase offer for NIO's convertible notes represents a $378.5M liability maturity event. The 0.50% coupon notes due 2027 are being offered repurchase at par value (100 cents on the dollar), giving bondholders an early exit option. The timing aligns with growing concerns about Chinese EV makers' financial stability amid intense competition and margin pressures. The relatively low coupon rate suggests these notes were issued during more favorable market conditions. Most noteholders may exercise this repurchase right given current market yields are significantly higher and NIO's credit profile has weakened since issuance. This could strain NIO's liquidity position, as the company must maintain sufficient cash reserves to honor potential repurchases. The mandatory repurchase offer is a standard protective covenant, but its timing is challenging given NIO's recent cash burn and competitive market conditions.

Financial Risk Analyst

The repurchase obligation presents significant near-term liquidity implications for NIO. With a current market cap of $9.66B, the potential $378.5M cash outlay represents about 4% of the company's market value. NIO's ability to manage this liability is important given the challenging macro environment for Chinese EV manufacturers. The repurchase right's exercise period, starting December 30, 2024, could accelerate cash outflows at a time when the company needs capital for operations and market expansion. This event may trigger increased scrutiny of NIO's balance sheet strength and working capital management. The mandatory nature of this repurchase right, combined with current market conditions, suggests high likelihood of significant noteholder participation, potentially pressuring NIO's liquidity position in early 2025.

SHANGHAI, Dec. 26, 2024 (GLOBE NEWSWIRE) -- NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) (“NIO” or the “Company”), a pioneer and a leading company in the global smart electric vehicle market, today announced that it is notifying holders of its 0.50% Convertible Senior Notes due 2027 (CUSIP No. 62914VAF3) (the “Notes”) that pursuant to the Indenture dated as of January 15, 2021 (the “Indenture”) relating to the Notes by and between the Company and The Deutsche Bank Trust Company Americas, as trustee, each holder has the right, at the option of such holder, to require the Company to repurchase all of such holder’s Notes or any portion thereof that is an integral multiple of US$1,000 principal amount for cash on February 1, 2025 (the “Repurchase Right”). The Repurchase Right expires at 5:00 p.m., New York City time, on Thursday, January 30, 2025.

As required by rules of the United States Securities and Exchange Commission (the “SEC”), the Company will file a Tender Offer Statement on Schedule TO. In addition, documents specifying the terms, conditions and procedures for exercising the Repurchase Right will be available through the Depository Trust Company and the paying agent, which is The Deutsche Bank Trust Company Americas. None of the Company, its board of directors or its employees has made or is making any representation or recommendation to any holder as to whether to exercise or refrain from exercising the Repurchase Right.

The Repurchase Right entitles each holder of the Notes to require the Company to repurchase all of such holder's Notes or any portion thereof that is an integral multiple of US$1,000 principal amount. The repurchase price for such Notes will be equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid additional interest, if any, to, but excluding, February 1, 2025, which is the date specified for repurchase in the Indenture (the “Repurchase Date”), subject to the terms and conditions of the Indenture and the Notes. The Repurchase Date is an interest payment date under the terms of the Indenture and the Notes. As February 1, 2025 is a Saturday, pursuant to the Indenture and the Notes, on Monday, February 3, 2025, which is the next succeeding business day, the Company will pay accrued and unpaid interest on all of the Notes through January 31, 2025 to all holders who were holders of record as of close of business on Wednesday, January 15, 2025. As of December 25, 2024, there was US$378,525,000.00 in aggregate principal amount of the Notes outstanding. If all outstanding Notes are surrendered for repurchase through exercise of the Repurchase Right, the aggregate cash purchase price will be US$378,525,000.00.

The opportunity for holders of the Notes to exercise the Repurchase Right commences at 9:00 a.m., New York City time on Monday, December 30, 2024, and will terminate at 5:00 p.m., New York City time, on Thursday, January 30, 2025. In order to exercise the Repurchase Right, a holder must follow the transmittal procedures set forth in the Company’s Repurchase Right Notice to holders (the “Repurchase Right Notice”), which is available through the Depository Trust Company and The Deutsche Bank Trust Company Americas. Holders may withdraw any previously tendered Notes pursuant to the terms of the Repurchase Right at any time prior to 5:00 p.m., New York City time, on Thursday, January 30, 2025, or as otherwise provided by applicable law.

This press release is for information only and is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of an offer to sell the Notes or any other securities of the Company. The offer to purchase the Notes will be only pursuant to, and the Notes may be tendered only in accordance with, the Company’s Repurchase Right Notice dated December 26, 2024 and related documents.

Holders of the Notes should refer to the Indenture for a complete description of repurchase procedures and direct any questions concerning the mechanics of repurchase to the Trustee by contacting The Deutsche Bank Trust Company Americas. Holders of Notes may request the Company’s Repurchase Right Notice from the paying agent, The Deutsche Bank Trust Company Americas, c/o DB Services Americas Inc., at 5022 Gate Parkway Suite 200, MS JCK01-218, Jacksonville, FL 32256 (email: db.reorg@db.com).

HOLDERS OF NOTES AND OTHER INTERESTED PARTIES ARE URGED TO READ THE COMPANY’S SCHEDULE TO, REPURCHASE RIGHT NOTICE AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NIO INC. AND THE REPURCHASE RIGHT.

Materials filed with the SEC will be available electronically without charge at the SEC’s website, http://www.sec.gov. Documents filed with the SEC may also be obtained without charge at the Company’s website, http://ir.nio.com.

About NIO Inc.

NIO Inc. is a pioneer and a leading company in the global smart electric vehicle market. Founded in November 2014, NIO aspires to shape a sustainable and brighter future with the mission of “Blue Sky Coming”. NIO envisions itself as a user enterprise where innovative technology meets experience excellence. NIO designs, develops, manufactures and sells smart electric vehicles, driving innovations in next-generation core technologies. NIO distinguishes itself through continuous technological breakthroughs and innovations, exceptional products and services, and a community for shared growth. NIO provides premium smart electric vehicles under the NIO brand, family-oriented smart electric vehicles through the ONVO brand, and small smart high-end electric cars with the FIREFLY brand.

For more information, please visit: http://ir.nio.com

Investor Relations
ir@nio.com

Media Relations
global.press@nio.com

FAQ

What is the total value of NIO's convertible notes eligible for repurchase?

The total value of NIO's convertible notes eligible for repurchase is US$378,525,000.

When is the deadline for NIO noteholders to exercise their repurchase right?

The deadline for noteholders to exercise their repurchase right is 5:00 p.m., New York City time, on January 30, 2025.

What is the repurchase price for NIO's convertible notes?

The repurchase price is 100% of the principal amount plus any accrued and unpaid interest through January 31, 2025.

What is the interest rate on NIO's convertible notes due 2027?

The interest rate on NIO's convertible notes due 2027 is 0.50%.

When will NIO pay the accrued interest to noteholders?

NIO will pay the accrued interest on Monday, February 3, 2025, to holders of record as of January 15, 2025.