Bilibili said it plans to raise up to US$1.6 billion by issuing convertible debt, as the video-streaming and mobile gaming company navigates a challenging regulatory environment against the backdrop of Beijing’s crackdown on the technology sector.
The Shanghai-based firm said it plans to sell US$1.4 billion of the convertible senior notes, which are set to mature on December 1, 2026, subject to market conditions and other factors, the company said in a stock exchange filing. Initial purchasers of the notes would have a 30-day option to buy an additional US$200 million of the notes, the company said.
Bilibili plans to use the net proceeds to enrich its content offerings, for research and development, and for general corporate purposes. The company also plans to use an equivalent amount of the net proceeds from the offering to finance or refinance its debt.
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The notes can be converted to cash, American depositary shares (ADSs) or a combination of ADSs and cash ahead of their maturity. Holders also have the option to take Class Z ordinary shares in lieu of ADSs.
Trading of Bilibili’s shares was suspended in Hong Kong on Friday morning in anticipation of the announcement. Bilibili’s shares fell almost 11 per cent on Thursday.
Bilibili’s return to the capital market came eight months after pricing its secondary listing in Hong Kong in March, where the company raised US$2.6 billion, 7 per cent less than its initial target.
The note sale was announced a day after Bilibili’s better-than-expected third-quarter financial report. The company’s net loss more than doubled to 2.7 billion yuan, even as revenue grew 61 per cent to 5.2 billion yuan (US$814 million) at a faster pace than analysts were expecting.
China’s video-streaming and mobile gaming companies such as Bilibili, Tencent Holdings and NetEase have been caught up in a broad regulatory crackdown on the technology sector, which has unnerved investors globally.
In August, Chinese authorities released draft regulation that limits items that can be sold during live streaming broadcasts, including sex toys, spy devices, foreign newspapers and medicine.
Live streaming is an important contributor to Bilibili’s bottom line, with the company’s revenue from value-added services, including live streaming, increasing 95 per cent in the third quarter.
Beijing also placed restrictions this summer on how much time minors can spend gaming, limiting people under 18 to playing between 8pm and 9pm on Fridays, Saturdays and Sundays and during statutory holidays.
Bilibili introduced a record number of new games this year despite the heightened regulatory scrutiny and saw its revenue from mobile gaming increase 9 per cent in the third quarter.
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