Baidu’s Subsidiary iQIYI Entering into Definitive Agreements for
US$500 Million Private Placement of Convertible Notes
On August 30, 2022, iQiyi, Inc. (“iQIYI”), a controlled
subsidiary of Baidu, Inc. (“Baidu”) listed on the Nasdaq Global
Select Market, has entered into definitive agreements with PAG
Asia, PAG Pegasus and/or their affiliates, a leading investment
firm in Asia (the “Investors”), pursuant to which the Investors
will subscribe for convertible notes in an aggregate principal
amount of US$500 million to be issued by iQIYI. In addition,
the Investors have an option, exercisable no later than two months
from the closing date of the transaction, to subscribe for
additional notes in an aggregate principal amount of up to
US$50 million, on the same terms and conditions.
The convertible notes will bear an interest rate of 6% per annum
and will mature on the fifth anniversary of the issuance date. The
notes may be convertible at the holder’s option into iQIYI’s
American depositary shares (“ADSs”), each currently representing
seven Class A ordinary shares of iQIYI, subject to the terms
of the notes at a conversion premium of 20% above the volume
weighted average price of the 20 trading days prior to, and
including, August 29, 2022. Holders of the notes have the
right to require iQIYI to repurchase for cash all or part of their
notes shortly upon the third anniversary of the issuance date at a
repurchase price equal to 120% of the principal amount of the
notes. At the fifth anniversary of the issue date, holders of the
notes will be entitled to a maturity premium equal to 30% of the
principal amount of the notes. Holders also have the right to
require iQIYI to repurchase for cash all or part of their notes in
the event of certain fundamental changes. Upon closing of the
transaction and satisfaction of certain condition, PAG Asia shall
be entitled to appoint one member to the board of directors of
iQIYI.
The transaction is expected to close in the fourth quarter of 2022,
subject to closing conditions. Upon closing and assuming the
convertible notes are fully converted into iQIYI ADSs at the
initial conversion price, Baidu will continue to hold controlling
voting power in iQIYI and consolidate iQIYI’s financial
results.
The issuance of the securities in this transaction is exempt from
registration under the Securities Act of 1933, as amended (the
“Securities Act”) pursuant to Section 4(a)(2) of the
Securities Act regarding transactions not involving a public
offering and Regulation S under the Securities Act regarding
offshore transactions. This announcement does not constitute an
offer to sell or a solicitation of an offer to buy the securities
described herein, nor shall there be any sale of these securities
in any state or jurisdiction in which such offer, solicitation or
sale would be unlawful.
About Baidu
Founded in 2000, Baidu’s mission is to make the complicated world
simpler through technology. Baidu is a leading AI company with
strong Internet foundation, trading on NASDAQ under “BIDU” and HKEX
under “9888”. One Baidu ADS represents eight Class A ordinary
shares.
Safe Harbor Statement
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statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
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about Baidu’s beliefs and expectations, are forward-looking
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and retain users and customers; competition in the Chinese Internet
search and newsfeed market; competition for online marketing
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items as a percentage of its revenues; the outcome of ongoing, or
any future, litigation or arbitration, including those relating to
intellectual property rights; the expected growth of the
Chinese-language Internet search and newsfeed market and the number
of Internet and broadband users in China; Chinese governmental
policies relating to the Internet and Internet search providers,
and general economic conditions in China and elsewhere. Further
information regarding these and other risks is included in Baidu’s
annual report on Form 20-F
and other documents filed with the Securities and Exchange
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the announcement, and Baidu undertakes no duty to update such
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