China’s Meituan is raising up to $10 billion in a share sale and convertible bond deal to help fund the research and development of autonomous delivery vehicles and drone delivery, according to a term sheet seen by Reuters.
Meituan will raise $7 billion in the share sale and sell $3 billion in convertible bonds.
The company declined to comment to Reuters.
The top up equity placement will be priced between HK$265 and $HK274 per share, which is a 5.3% to 8.4% discount compared to its closing price Monday of $289.20.
In that range, with 187 million shares sold $6.4 to $6.6 billion will be raised.
Meituan‘s biggest shareholder Tencent has agreed to subscribe for a further $400 million worth of stock to take the total size of the equity portion of the deal to up to $7 billion.
The convertible bond has a zero coupon rate, which means investors buy the bonds for the prospect of securing future equity gains when the instruments convert into stock. They would also have their principal repaid at maturity if the option to convert into shares is not exercised.
In the term sheet, Meituan said the cash raised would be spent on technology innvoation, including the research and development of autonomous delivery vehicles and drones.
The final price of the shares is expected to be finalised overnight and the stock will start trading in Hong Kong on Tuesday, the term sheet said.