UPDATE — China Lodging Group, Limited Announces Offering of US$425 Million Convertible Senior Notes
October 26 2017 - 9:10AM
China Lodging Group, Limited (Nasdaq:HTHT), a leading and
fast-growing multi-brand hotel group in China (“China Lodging
Group” or the “Company”), today announced the offering (the “Notes
Offering”) of up to US$425 million in aggregate principal amount of
convertible senior notes due 2022 (the “Notes”), subject to market
and other conditions. The Company intends to grant the initial
purchasers in the Notes Offering a 30-day option to purchase up to
an additional US$50 million in principal amount of the Notes. The
Company plans to use the net proceeds from the Notes Offering to
pay the cost of the capped call transactions described below, and
use the remainder of the proceeds to repay all or part of the
principal and interest of the loans that it borrowed from a US$250
million revolving credit facility, to make investments in minority
equity interests in businesses that are in the Company’s industry
or are complementary to its business, and to fund other general
corporate purposes.
The Notes will be convertible into the Company’s American
Depositary Shares (“ADSs”) and will mature on November 1, 2022. The
Company may not redeem the Notes prior to maturity, unless certain
tax-related events occur. It is contemplated that holders of the
Notes may require the Company to repurchase all or part of their
Notes in cash on November 2, 2020 or in the event of certain
fundamental changes. The conversion rate and other terms of the
Notes will be determined at the time of pricing of the Notes
Offering.
In connection with the Notes Offering, the Company intends to
enter into an ADS lending agreement with a financial institution
(the “ADS Borrower”) pursuant to which the Company will lend a
certain number of ADSs to the ADS Borrower, and the ADS Borrower
will be required to return the borrowed ADSs following the maturity
date of the Notes. The ADS lending agreement is intended to allow
some investors in the Notes to hedge their exposure to the Notes.
The borrowed ADSs are not outstanding for purposes of calculating
earnings per share under current GAAP rules and therefore the
Company will not incur share dilution from the borrowed ADSs.
Furthermore, the Company intends to enter into capped call
transactions with one or more of the initial purchasers or their
affiliates (the “Option Counterparties”). The capped call
transactions are expected to reduce the potential dilution to
existing holders of the ordinary shares and ADSs upon conversion of
the Notes. As part of establishing, maintaining and unwinding
their hedges of the capped call transactions, the Option
Counterparties expect to enter into various derivative transactions
with respect to the Company’s ADSs. This activity could affect the
market price of the Company’s ADSs or the Notes otherwise
prevailing at that time. If any such capped call transactions fails
to become effective, whether or not the Notes Offering is
completed, the Option Counterparties may unwind their hedge
positions with respect to the ADSs.
The Notes will be offered in the United States to qualified
institutional buyers pursuant to Rule 144A and to non-U.S. persons
outside the United States in reliance on Regulation S under the
Securities Act of 1933, as amended (the “Securities Act”). The
Notes, the ADSs deliverable upon conversion of the Notes and the
ordinary shares represented thereby have not been and will not be
registered under the Securities Act or the securities laws of any
other place, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
This press release shall not constitute an offer to sell or a
solicitation of an offer to purchase any securities, nor shall
there be a sale of the securities in any state or jurisdiction in
which such an offer, solicitation or sale would
be unlawful.
This press release contains information about the pending
offerings of the Notes and the ADSs, and there can be no assurance
that any of the offerings will be completed.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995: The information in this release contains
forward-looking statements which involve risks and uncertainties,
including statements regarding the Company’s capital needs,
business strategy and expectations. Any statements contained herein
that are not statements of historical fact may be deemed to be
forward-looking statements, which may be identified by terminology
such as “may,” “should,” “will,” “expect,” “plan,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“forecast,” “project,” or “continue,” the negative of such terms or
other comparable terminology. Readers should not rely on
forward-looking statements as predictions of future events or
results. Any or all of the Company’s forward-looking statements may
turn out to be incorrect. They can be affected by inaccurate
assumptions, risks and uncertainties and other factors which could
cause actual events or results to be materially different from
those expressed or implied in the forward-looking statements. In
evaluating these statements, readers should consider various
factors, including the anticipated growth strategies of the
Company, the future results of operations and financial condition
of the Company, the economic conditions of China, the regulatory
environment in China, the Company’s ability to attract customers
and leverage its brands, trends and competition in the lodging
industry, the expected growth of the lodging market in China and
other factors and risks outlined in the Company’s filings with the
Securities and Exchange Commission, including its annual report on
Form 20-F and other filings. These factors may cause the Company’s
actual results to differ materially from any forward-looking
statement. In addition, new factors emerge from time to time and it
is not possible for the Company to predict all factors that may
cause actual results to differ materially from those contained in
any forward-looking statements. Any projections in this release are
based on limited information currently available to the Company,
which is subject to change. This release also contains statements
or projections that are based upon information available to the
public, as well as other information from sources which the Company
believes to be reliable, but it is not guaranteed by the Company to
be accurate, nor does the Company purport it to be complete. The
Company disclaims any obligation to publicly update any
forward-looking statements to reflect events or circumstances after
the date of this document, except as required by applicable
law.
Contact Information Investor Relations Tel: +86 (21) 6195 9561
Email: ir@huazhu.com http://ir.huazhu.com
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