Sea prices US$1b convertible notes at 2.375%

INTERNET company Sea Ltd, which owns e-commerce platform Shopee and game developer Garena, is offering US$1 billion in convertible senior notes due in 2025.

The New York-listed, Singapore-based company has also granted the initial purchaser a 13-day option to buy up to an additional US$150 million in principal amount.

The senior unsecured notes will bear a coupon rate of 2.375 per cent per year, and mature on Dec 1, 2025, Sea announced on Wednesday night.

Meanwhile, the company also plans to exchange some US$150 million in principal amount of its existing 2.25 per cent convertible senior notes due in 2023, for a combination of about US$50 million in cash and 6.9 million American Depositary Shares (ADSs) which each represents one Class A ordinary share of Sea.

It has entered into separate, privately negotiated agreements with holders of the due-2023 notes for this exchange.

A portion of the net proceeds from the offering of new notes will be used to pay the cash component of the notes exchange.

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Part of the proceeds from the offering will also go into business expansion and other general corporate purposes, including potential strategic investments and acquisitions.

Upon conversion, the new due-2025 notes may be settled in ADSs, cash or a combination of cash and ADSs. 

The initial conversion rate is 11.0549 ADSs per US$1,000 principal amount. This is equivalent to an initial conversion price of about US$90.46 per ADS, and represents a conversion premium of 32.5 per cent above the closing price of Sea's ADSs on May 19, 2020.

Sea expects to close the new notes offering on or around May 22, 2020. The closing of the due-2023 notes exchange is subject to the closing of the offering.

On Monday, Sea reported that it narrowed its losses for the first quarter this year as revenue more than doubled. It posted a US$280.8 million net loss for three months to March, after chalking up US$689.6 million of losses in the year-ago period.

The Internet company is also going solo in its bid for a digital full bank licence in Singapore, with a focus on millennials and small and medium-sized enterprises in the Republic.

Shares of Sea on the New York Stock Exchange closed at US$72.40 on Wednesday, up US$4.13 or 6.1 per cent.