Weibo Shares Trade Below 52-Week Lows after ADS Offering
Social media company Weibo's shares were trading below its recent 52-week lows in the after-hours market. This comes after the company announced an offering of American depositary receipts (ADRs), which it plans to loan to an affiliate of the underwriter.
Convertible Senior Notes Offering
In addition to the ADR offering, Weibo is also offering $300 million in convertible senior notes due 2030, as announced on Wednesday.
Share Performance
As of 5:15 p.m. EST, Weibo ADSs were trading 7.2% lower at $10.50 each. Earlier in the day, the shares ended the regular session with a 3.1% loss at $11.32 each. On November 10, the ADSs hit a 52-week low of $11.05 each.
ADS Lending Agreement
According to Weibo, the underwriter's affiliate will sell the borrowed ADSs in a separate offering. While Weibo won't receive any proceeds from the offering, it will receive a nominal lending fee, which will be used to fully pay up the Class A ordinary shares underlying the borrowed ADSs. The sale of borrowed ADSs is contingent upon the closing of the notes offering. If the notes offering doesn't go through, the ADS lending agreement will terminate, and all borrowed ADSs must be returned. Weibo also stated that it believes the borrowed ADSs will not be considered outstanding for the purpose of computing and reporting its earnings per ADS under current U.S. accounting principles. Therefore, no dilution is expected as a result of the borrowed ADSs.
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