SINGAPORE - Trip.com Group Limited (NASDAQ: TCOM; HKEX: 9961), a global travel service provider, has announced the pricing of a $1.3 billion offering of convertible senior notes due in 2029. The notes will be available to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The company also granted an option for the initial purchasers to buy up to an additional $200 million in notes within a 13-day period starting from the issue date.
The net proceeds from the offering will go towards repaying existing financial debts, expanding overseas business, and meeting working capital requirements. The notes, which are set to mature on June 15, 2029, will accrue interest at a rate of 0.75% per annum, with semiannual payments starting from December 15, 2024.
Holders of the notes will have the right to require the company to repurchase their notes on June 15, 2027, or in the event of certain fundamental changes, at a price equal to 100% of the principal amount plus accrued interest. The notes will be convertible into American depositary shares (ADSs) at an initial rate of 15.0462 ADSs per $1,000 principal amount, which equates to an initial conversion price of about $66.46 per ADS, representing a 32.5% premium over the closing price on June 4, 2024.
In a concurrent move, Trip.com plans to repurchase around 6 million ADSs for approximately $300 million, which is expected to offset potential dilution from the notes conversion. The repurchase is part of the company's existing share repurchase plans and will be funded by cash on hand.
The offering is expected to close on or about June 7, 2024, subject to customary closing conditions. Trip.com has stated that the completion of the notes offering is not guaranteed.
InvestingPro Insights
Trip.com Group Limited's recent decision to issue convertible senior notes is a strategic move to strengthen its financial position and fund its expansion plans. In light of this, certain metrics and tips from InvestingPro provide a deeper understanding of the company's current financial health and market standing. Trip.com holds more cash than debt on its balance sheet, which suggests a solid liquidity position that could reassure investors about the company's ability to meet its short-term obligations and finance its operations without relying excessively on external debt.
Additionally, the company has been recognized as a prominent player in the Hotels, Restaurants & Leisure industry, which could indicate resilience and potential for growth within its sector. InvestingPro data reveals a substantial revenue growth of 87.91% over the last twelve months as of Q1 2024, highlighting the company's ability to increase its sales and market share. This is complemented by an impressive gross profit margin of 81.53%, reflecting efficient cost management and a strong pricing strategy.
Moreover, Trip.com's stock has experienced a large price uptick over the last six months, with a 58.22% total return, signaling robust investor confidence and market performance. For those interested in further insights, InvestingPro offers additional tips on Trip.com, which can be accessed at Investing.com/pro/9961. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the 7 other tips available that can help investors make informed decisions.
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