#China #Shanghai #Convertible Notes #ZTO Express #China Delivery

ZTO Express Plans Major Convertible Notes Offering

ZTO Express (Cayman) Inc., a prominent express delivery service provider from China, has unveiled its intent to raise $1.5 billion through a proposed offering of convertible senior notes. This offering is aimed at institutional buyers outside the U.S., in compliance with specific U.S. securities regulations, and is characterized as a strategic move to enhance the company’s liquidity and focus on growth opportunities.

Purpose of the Notes Offering

The proceeds from this offering will be principally allocated towards several uses, which include:

1. Share Repurchases: The company plans to use part of the funds to finance immediate repurchases of Class A ordinary shares or American depositary shares as part of its existing share repurchase program. These efforts are contingent upon market conditions and regulatory frameworks.
2. Concurrent Share Repurchase: ZTO will also execute a Concurrent Share Repurchase, aiming to facilitate hedging by initial purchasers of the notes, thus increasing financial stability.
3. Corporate Purposes: Beyond share repurchase strategies, the funds will also support various corporate activities that may arise.

Key Features of the Notes

The convertible senior notes, set to mature in 2031, will be unsecured general obligations of ZTO. Notably, investors are restricted from converting the notes during the first 40 days following the original issuance date, which simplifies the company's initial capital management.

Holdings of the notes can be converted into cash or shares at ZTO's discretion, but only after the compliance period ends. The specific terms and interest rates will be established once the notes are priced, ensuring competitive positioning in the market.

Redemption and Repurchase Rights

ZTO retains several rights concerning the notes:

• - The company may redeem all or a portion of the notes under specific conditions, such as when less than 10% of the original amount remains outstanding. Additionally, a tax redemption may occur in the event of significant tax law changes.
• - Holders of the notes have the right to request a buyback of their holdings should a fundamental change arise, ensuring that investor interests are protected throughout the investment period.

Impact on ZTO's Share Price

The initiation of this offering is expected to influence ZTO's Class A ordinary shares positively. The capped call transactions associated with the notes are designed to minimize potential dilution upon conversion, thus potentially enhancing shareholder value in the long run.

Investors might see fluctuations in the company's share price not just from the notes offering itself but also from strategic moves by the option counterparties engaged in related financial transactions.

Looking Ahead

ZTO Express continues to enhance its operational scale and market presence amidst the growing competition in the delivery sector, fueled by the booming e-commerce market in China. This offering marks a significant step towards maintaining the company's competitive edge and adaptability in a rapidly evolving landscape.

In conclusion, the strategic move to offer convertible senior notes opens avenues for ZTO to not only address immediate financial needs through repurchases but also strengthens their position for sustainable growth. Investors and market analysts alike will be closely monitoring this offering's outcome, as it could significantly impact ZTO's trajectory in the ever-evolving logistics and express delivery space.

About ZTO Express

Founded to provide robust express delivery solutions, ZTO Express has established a nationwide logistics network in China, which has been pivotal in supporting the significant growth in e-commerce demand. Its operational model leverages partnerships to ensure efficiency and service quality, positioning ZTO as a leader in the logistics arena.

For further information, visit ZTO Investors.