Alibaba Faces Challenges after Buyback

(Beijing)– Alibaba Group is likely to fund its stake repurchase from Yahoo Inc. through a convertible bond issuance, a shareholder of the Chinese e-commerce giant says.

A source closed to the transaction said Alibaba would issue bonds based on the US$ 35 billion valuation it agreed to with Yahoo.

The two companies announced on May 21 that Alibaba will buy back a 20 percent stake Yahoo held, marking the biggest repurchase in the world in 2012 so far. Alibaba will pay US$ 6.3 billion in cash and as much as US$ 800 million in newly issued Alibaba preferred stock. The transaction is to be completed within six months.