MEITU has reached a strategic cooperation with Alibaba to issue $250 million in convertible bonds to it

According to the Zhitong Finance APP, MEITU (01357) announced that on May 20, 2025, the company entered into a subscription agreement with Alibaba Network China Co., Ltd. (the subscriber) (a wholly-owned subsidiary of Alibaba Group Holding Limited) to issue convertible bonds with a principal amount of USD 250 million, with an annual interest rate of 1% and an initial conversion price of HKD 6.00 per share (at the agreed exchange rate). In addition, Alibaba Network China Co., Ltd. and the company plan to enter into a business cooperation agreement regarding potential commercial cooperation (including the following core main terms): A. Domestic and international e-commerce cooperation: The subscriber (or its designated affiliates) will prioritize promoting the company's AI e-commerce tools on its global e-commerce platform, assisting the company in developing new tools and/or new features for data-driven e-commerce live images and videos to enhance the marketing and operational efficiency of merchants on the subscriber's (or its designated affiliates') e-commerce platform. B. AI models and technology: The subscriber (or its designated affiliates) will collaborate with the company to jointly develop various foundational models and large language models in vertical fields, including video generation models, image generation models, multimodal models, and speech models. C. Computing and cloud services: The company commits to procuring cloud services from the subscriber (or its designated affiliates) with a total amount reaching RMB 560 million within 36 months from the signing of the business cooperation agreement. D. Other innovative projects: The subscriber (or its designated affiliates) and the company will jointly explore innovative initiatives to create differentiated experiences and opportunities for participants on both platforms. The announcement stated that the issuance of convertible bonds allows the company to optimize its capital structure, increase its cash reserves for general working capital purposes, and enhance flexibility for acquisitions related to AI-driven imaging and design products. Furthermore, if the conversion rights attached to the convertible bonds are exercised, the issuance will enable the company to expand and strengthen its capital base while attracting reputable investors, thereby broadening its shareholder base. The total proceeds from the issuance of convertible bonds amount to USD 250 million, with net proceeds (after deducting related expenses) of approximately USD 249.6 million, resulting in a net issuance price of approximately HKD 5.82 per share based on the initial conversion price. The net proceeds are intended for general business purposes. The board believes that the subscription reflects the subscriber's confidence in the group's business fundamentals and growth potential. The company and the subscriber will establish a long-term strategic partnership through the business cooperation agreement, achieving mutual growth through complementary advantages. This cooperation will create synergies in multiple areas, including promoting global e-commerce cooperation, developing AI models and technology, computing and cloud services, and other innovative projects