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Published on 8/24/2022 in the Prospect News Convertibles Daily.

New Issue: ZTO prices $870 million of 1.5% five-year convertible notes, up 30%

Chicago, Aug. 24 – ZTO Express priced an $870 million offering of 1.5% convertible senior notes with a five-year tenor on Wednesday after the market close, according to a press release.

There is a 13-day greenshoe for an additional $130 million of notes.

The initial conversion premium priced as 30%. A market source said price talk was for a coupon of 1% to 1.5% and an initial conversion premium of 30% to 35%.

Goldman Sachs & Co. LLC is the bookrunner for the Rule 144A offering.

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. The price of the capped call transactions is initially $36.48 per ADS.

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.

Issuer:ZTO Express
Amount:$870 million
Greenshoe:$130 million
Issue:Convertible senior notes
Maturity:Sept. 1, 2027
Bookrunners:Goldman Sachs & Co. LLC
Coupon:1.5%
Price:Par
Yield:1.5%
Conversion premium:30%
Conversion price:$31.62
Conversion rate:31.6296
Call:Non-callable
Change of control:At par
Trade date:Aug. 24
Settlement date:Aug. 29
Distribution:Rule 144A
Price talk:1% to 1.5%; initial conversion premium of 30% to 35%
Stock symbol:NYSE: ZTO and SEHK: 2057
Stock price:$24.32 per ADS on Aug. 24
Market capitalization:$20.68 billion

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