U.S.-listed top Chinese online travel agent Trip.com Group has announced plans to raise up to $500 million through the sale of convertible senior notes outside the U.S., as the Covid-19 pandemic continues to take a toll on the tourism industry.
The notes will mature in 2027, and can be converted into cash, American depositary shares (ADSs) of Chinese hotel operator Huazhu Group Ltd., where Trip.com holds a stake, or a combination of both, Trip.com, formerly known as Ctrip.com, said in a statement Monday.
The Shanghai-based company intends to use the proceeds for general corporate purposes including repaying debts, according to the statement.
The announcement comes just weeks after China reported gloomy figures for the tourism industry during this year’s Dragon Boat Festival holiday that fell on June 25-27.
During the three-day holiday, domestic travel generated about 1.23 billion yuan ($177 million) nationwide, down 69% from the holiday period in 2019, according to statistics provided by the Ministry of Culture and Tourism. Domestic trips also saw a year-on-year drop of 49% to 48.8 million over the holiday, as most scenic spots limited the number of daily visitors to control crowds.
In the first quarter of 2020 when the coronavirus pandemic wreaked havoc across China and began spreading to other parts of the world, Trip.com’s net revenue plunged 42% year-on-year to 4.7 billion yuan largely due to the virus-induced cancellations of ticket and hotel bookings. It also suffered a net loss of 5.4 billion yuan, compared with a net profit of 4.6 billion yuan during the same period last year.
Contact reporter Ding Yi (firstname.lastname@example.org)