Up-and-coming Chinese language EV maker NIO’s inventory is falling after saying a proposed complete of $1 billion in convertible senior notes on Monday.

NIO revealed in an SEC submitting it plans to difficulty two batches of $500 million notes, convertible to American depository shares (ADS) with long-dated maturities in 2029 and 2030.

The EV maker plans to make use of the funds to “additional strengthen its stability sheet in addition to for normal functions.” NIO ended the second quarter with almost $2 billion in money and equivalents.

On NIO’s second-quarter earnings name in late August, Citi analyst Jeff Chung inquired in regards to the firm’s refinancing plan and money circulate projection going ahead.

Stanley Qu, senior vice chairman of finance, responded, “I believe because the supply quantity ramp-up from Q3 this yr, our working money circulate will probably be considerably improved” in comparison with the primary half of the yr.

Qu additionally defined that “each our US greenback and in addition RMB financing channels stay open.” He added, “And concerning the financing – refinancing plan, we are going to disclose our plan accordingly if there may be any capital market-related updates.”

NIO inventory falls following proposed fundraising

The fundraising comes shortly after NIO acquired a $1.1 billion funding from CYVN Holdings in June, an funding agency backed by the Abu Dhabi authorities. Following the transaction, CYVN owns round 7% of excellent NIO shares.

NIO’s second-quarter earnings confirmed falling automobile deliveries, income, and margins because it revamps its lineup to higher place itself to compete sooner or later.

Whereas automobile deliveries fell 24% (23,520) from the primary quarter (31,041), losses swelled by over 119% YOY to $835 million.

Following the fundraising announcement, NIO inventory fell 17% in Tuesday’s buying and selling session. The drop comes after NIO’s shares peaked at $16.18 in early August following a two-month run.

CEO William Li stated, “Attributed to the product transition based mostly on the NT2.0 Platform, coupled with the enlargement of our energy community and the strengthening of our gross sales capabilities, we count on a stable progress in automobile deliveries within the second half of 2023.”

NIO launched a number of new fashions this previous quarter anticipated to assist drive gross sales and broaden the model, together with the brand new ES6, launched in late Could, and the ET5 Touring electrical station wagon in June. It additionally launched the brand new EC6 SUV final week.

The brand new fashions helped push NIO’s deliveries up 103% YOY in July, as cumulative deliveries reached 364,579.

Wanting forward, NIO plans to ship between 55,000 and 57,000 automobiles between July and September, representing a rise of round 74% to 80% YOY.