Nov 29, 2018 (China Knowledge) - China's internet giant Baidu's video streaming arm, iQIYI, has announced, earlier today, that the company is planning to issue convertible preferred bonds worth USD 500 million. The proposed bonds are convertible preferred unsecured bonds. The initial subscribers of the bonds have a 13-day option and can buy up to USD 75 million worth of bonds.
According to the announcement, iQIYI plans to raise funds to cover the cost of capped options trading, expand and upgrade the content base, strengthen technology research and development, and use them in the daily operations of the company.
It is worth noting that the bond issue period is five years and will expire on December 1, 2023. However, in five years, it is still unknown whether iQIYI will be able to profit from the video industry or not. Even though the company's CEO Gong Yu had once said that the company's profitability was a strategic issue, at this stage, IQIYI will not relax its heavy investment contents. Relatively speaking, USD 500 million does not seem to be too much.
According to the latest Q3 earnings report, the company's content cost increased 73% to RMB 6.7 billion, and its total revenue in this period was RMB 6.9 billion. "We are going through a transition period, focusing on building and optimizing a healthier content ecosystem to prepare for our future." Earlier, Wang Xiaodong, CFO of iQIYI, had said that it would invest more in quality content, especially in self-made original content, at least in the next few years.
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