ZTO talks $870 million five-year convertible notes to yield 1%-1.5%, up 30%-35%

By Abigail W. Adams

Portland, Me., Aug. 24 – ZTO Express plans to price $870 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 30% to 35%, according to a market source.

Goldman Sachs & Co. LLC is the bookrunner for the Rule 144A offering, which carries a greenshoe of $130 million.

The notes are non-callable but may be redeemed for cash if 10% or less of the principal amount remain outstanding or upon a tax event.

They are putable on Sept. 2, 2025 or upon a change of control or delisting event.

The notes will be settled in American Depositary Shares, cash or both at the company’s option.

Holders may request to receive class A ordinary shares fungible with the class A ordinary shares listed on the Hong Kong Stock Exchange in lieu of ADSs upon conversion.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread, to expand and invest in its logistics ecosystem and for general corporate purposes.

ZTO is a Shanghai-based express delivery company.

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