MEITU (01357) reached a strategic cooperation with Alibaba (09988), planning to issue 250 million US dollars of convertible bonds to it.

MEITU (01357) announced that on May 20, 2025, the company entered into a subscription agreement with Alibaba Network China Limited (Subscriber) (an indirect wholly-owned subsidiary of Alibaba Group Holding Limited) to issue convertible bonds with a principal amount of $250 million. The bonds have an annual interest rate of 1%, with an initial conversion price of HK$6.00 per share (based on the agreed exchange rate). In addition, Alibaba Network China Limited and the company plan to enter into a business cooperation agreement for potential business collaborations (including the following core terms): A. Domestic and international e-commerce cooperation: The Subscriber (or its designated affiliates) will prioritize promoting the company's AI e-commerce tools on its global e-commerce platforms to help develop new tools and/or functionalities driven by data for e-commerce image and video production, aiming to improve the marketing and operational efficiency of the Subscriber's (or its designated affiliates) e-commerce platform merchants. B. AI models and technology: The Subscriber (or its designated affiliates) will collaborate with the company to jointly develop various basic models and vertical sectoral large language models, including video generation models, image generation models, multimodal models, and speech models. C. Computing and cloud services: The company commits to purchasing cloud services from the Subscriber (or its designated affiliates), with a total amount reaching RMB 560 million within 36 months from the signing of the business cooperation agreement. D. Other innovative projects: The Subscriber (or its designated affiliates) and the company will explore innovative initiatives together to create differentiated experiences and opportunities for participants on both platforms. The announcement stated that issuing convertible bonds will allow the company to optimize its capital structure, increase cash reserves for general operating purposes, and enhance flexibility in acquiring and developing AI-driven image and design-related businesses. Additionally, if the conversion rights attached to the convertible bonds are exercised, the issuance will not only expand and strengthen the capital base of the company but also introduce reputable investors, thereby broadening the shareholder base. The total proceeds from the issuance of convertible bonds are $250 million, with net proceeds (after deducting related expenses) of approximately $249.6 million. Based on the initial conversion price, the net issuance price is approximately HK$5.82 per converted share. The net proceeds are intended for general business purposes. The directors believe that the subscription reflects the Subscriber's confidence in the group's business fundamentals and growth potential. The company and the Subscriber will establish a long-term strategic partnership through the business cooperation agreement, achieving mutual growth through complementary advantages. This collaboration will create synergies in multiple areas, including promoting global e-commerce cooperation, developing AI models and technology, computing power and cloud services, and other innovative projects.