- Bilibili (BILI, Financial) proposes a $500 million convertible senior notes offering, with a $75 million option for initial purchasers.
- The company plans a concurrent $100 million share repurchase of Class Z ordinary shares.
- No new shares will be issued in the Delta Offering, preventing immediate dilution for BILI.
Bilibili Inc. (BILI), a prominent video community platform in China, has unveiled a strategic financial initiative involving the issuance of convertible senior notes and a concurrent share buyback plan. The company has proposed an offering of $500 million in convertible senior notes due 2030, alongside an option for an additional $75 million for initial purchasers.
A key component of this financial maneuver is the "Delta Offering," where Class Z ordinary shares will be borrowed from third parties to assist hedging by investors employing a convertible arbitrage strategy. Importantly, this offering will not lead to new shares being issued, avoiding immediate dilution of existing shares.
In tandem with this, Bilibili has committed to repurchasing up to $100 million of its Class Z ordinary shares, reflecting confidence in its long-term business strategy. The proceeds from the convertible notes offering are earmarked for bolstering Bilibili's content ecosystem, driving user growth, enhancing monetization efficiency, and supporting general corporate objectives.
These dual transactions are interdependent and have been structured to optimize financial flexibility for the company while mitigating market risks associated with open-market shorting. However, potential investors should be mindful of the increased debt burden that comes with the issuance of new convertible notes and its reliance on future growth to service this debt effectively.
