Alibaba to sell $4.5 billion in convertible debt to fund stock buybacks

By Tomi Kilgore

China-based ecommerce giant's stock falls toward a 4th straight loss, worst weekly performance in 9 months

The U.S.-listed shares of Alibaba Group Holding Ltd. fell again on Thursday, after the China-based ecommerce giant said it planned to sell $4.5 billion worth of debt that can be converted into cash for stock.

The proposed sale of senior notes, due 2031, will be offered privately, to those deemed to be "qualified institutional investors." The notes will be convertible to cash, American depositary shares, or a combination of cash and ADS.

Alibaba's ADS (BABA) dropped 1.4% in morning trading, and has shed 7.9% amid a four-day losing streak. That puts the stock on track to suffer its worst weekly performance since it sank 8% during the week ended Aug. 18, 2023.

The company said it plans to use the proceeds from the convertible notes to repurchase its ADS, and to fund further share repurchases.

The amount of the offering represents 2.3% of Alibaba's current market capitalization of about $198.4 billion.

The stock has gained 5.2% year to date, while the iShares MSCI China ETF (MCHI) has rallied 11.4% and the S&P 500 index has climbed 11.5%.

-Tomi Kilgore

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05-23-24 1018ET

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