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

NIO revealed in an SEC submitting it plans to concern 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 practically $2 billion in money and equivalents.

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

Stanley Qu, senior vice chairman of finance, responded, “I feel because the supply quantity ramp-up from Q3 this 12 months, our working money move shall be considerably improved” in comparison with the primary half of the 12 months.

Qu additionally defined that “each our US greenback and likewise RMB financing channels stay open.” He added, “And relating to the financing – refinancing plan, we’ll disclose our plan accordingly if there’s 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 growth 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 develop the model, together with the new ES6, launched in late Might, and the ET5 Touring electrical station wagon in June. It additionally launched the 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.

Trying 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.