(Yicai) July 4 -- Chinese e-commerce giant Alibaba Group Holding plans to issue convertible bonds worth a total of HKD12 billion (USD1.5 billion) to support the development of its cloud infrastructure and international commerce businesses.

The interest-free convertible bonds will mature on July 9, 2032, the Hangzhou-based firm announced yesterday. Bondholders can exchange all or any portion of the bonds for Alibaba Health Information Technology shares at any time on or after the 41st day following the issue date to and including the close of business on the fifth scheduled trading day preceding the maturity date.

Alibaba Health is a subsidiary of Alibaba that is engaged in pharmaceutical e-commerce and medical digitalization. The conversion ratio for the convertible bonds is set at 160,513.6 shares of Alibaba Health for every HKD1 million (USD127,400) in principal, which equals to HKD6.23 (80 US cents) per share.

Alibaba Health’s stock [HKG: 0241] plunged 6.6 percent to HKD4.22 (54 US cents) in Hong Kong today.

Alibaba owns about 64 percent of Alibaba Health’s outstanding shares. If the convertible bonds are fully exchanged, its shareholding ratio will drop to 52 percent, which would still ensure Alibaba control over its subsidiary.

In February, Alibaba announced it would invest over CNY380 billion (USD53 billion) in cloud computing and artificial intelligence infrastructure over the next three years. In May, its Chief Executive Officer Eddie Wu said the company was accelerating the promotion and application of its AI products, including large language model Tongyi Qianwen, in overseas markets.

Alibaba [HKG: 9988] closed 1 percent down at HKD105.10 (USD13.39) today. The stock has gained around 30 percent so far this year.

Editor: Futura Costaglione