Chinese search firm Baidu is planning a $1 billion note offering to repay existing debts and fund general operations, the company said on Wednesday.
Why it matters: Baidu had a rough 2019 and expects flagging revenue in the first quarter of this year after the fallout from Covid-19, which has infected more than 940,000 people around the world.
- The company is reportedly eyeing a secondary listing in Hong Kong after completing an internal assessment earlier this year. Listings in the city during the first few months of 2020 dropped off dramatically compared to the same time last year.
Details: The offering consists of $600 million of 3.075% notes due in 2025 and $400 million of 3.425% notes due in 2030. They are expected to be listed on the Singapore stock exchange, Baidu said.
- The proceeds should reach $990 million, after deducting underwriting discounts and commissions, as well as offering expenses, according to the company.
- Goldman Sachs Asia and Bank of America Securities are joint bookrunners for the offering.
- Baidu has had a difficult first quarter and expects revenues to drop by up to 13% year on year after the novel coronavirus outbreak.
- “The Coronavirus situation in China is evolving, and business visibility is very limited,” the company said of its guidance in its fourth-quarter financial report.
Context: China is attempting to reach a semblance of normalcy after the country’s took unprecedented measures to control the spread of Covid-19.
- Companies around the country are now suffering from the fallout. Several of China’s biggest tech firms were reportedly seeking loans to soften the impact of the virus.
- Lifestyle services giant Meituan Dianping, ride-hailing platform Didi, smartphone maker Xiaomi, and cybersecurity firm Qihoo 360 are just some of the more than 300 companies seeking loans, Reuters reported.
- These companies were looking for between RMB 50 million ($7 million) and RMB 5 billion to deal with the effects of the virus.