I read an article called: Alibaba Group Prices US$4,500 Million Offering of Convertible Senior Notes
Now the article states that:
The initial conversion rate for the Notes will be 9.5202 ADSs per US$1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately US$105.04 per ADS. The initial conversion price represents a premium of approximately 30% over the last reported sale price of $80.80 per ADS on the NYSE on May 23, 2024.
and
Company will be then required to make in excess of the principal amount of the converted Notes, with such reduction and/or offset subject to a cap that will initially be $161.6000, which represents a premium of 100% over the last reported sale price of $80.80 per ADS on the NYSE on May 23, 2024
So I get that if the stock of the company is trading below 105$ a share at expiration date, the note holder will not convert to stock but get back his principal of 4,5 bn.
Now, I'm confused with the next part.
If the stock is trading at let's say 134$, does it mean the holder of the note gets to convert (4 500 000 000 / 1000) * 9,5 ADR to stocks worth 134$ each?
So 4,5 bn / 1000 = 4,5 milion * 9,5 shares * 134$?
And then if the stock is above 161$, the same thing but even if it's trading at 194, they will get 161$ * (4,5 million * 9,5)?
