Midea Group (00300) has announced the signing of a subscription agreement on May 6, 2026 (after trading hours) involving the company, the issuer (its wholly-owned subsidiary Midea Investment Development Limited), and the placing agents. Under the terms of the agreement, the placing agents have agreed, individually and not jointly, to subscribe for and pay, or procure subscribers to subscribe for and pay, two series of bonds to be issued by the issuer: one with a total principal amount of HK$8.624 billion due in 2027, and another with a total principal amount of HK$8.624 billion due in 2033. In each case, Midea Group will provide an unconditional and irrevocable guarantee for the timely payment of all amounts payable by the issuer under the bonds, the trust deed, and the guarantee deed.

The 2027 bonds are convertible into H shares under conditions specified in their terms, with an initial conversion price set at HK$96.82 per H share, subject to adjustment. This initial conversion price represents a premium of approximately 10.4% over the last closing price of HK$87.70 per H share on the Hong Kong Stock Exchange on May 6, 2026, the trading day the subscription agreement was signed. Assuming full conversion of the 2027 bonds at the initial price, they would be convertible into approximately 89.0725 million H shares. This would represent about 13.7% of the existing issued H shares and 1.2% of the total issued shares as of the announcement date. After full conversion, the new H shares would account for approximately 12.0% of the enlarged number of issued H shares and 1.2% of the total issued share capital. The shares issued upon conversion of the 2027 bonds will be fully paid and rank equally in all respects with the existing H shares on the relevant record date.

The 2033 bonds are convertible into H shares under their specified terms, with an initial conversion price set at HK$115.76 per H share, subject to adjustment. This initial price represents a premium of approximately 32.0% over the last closing price of HK$87.70 per H share on May 6, 2026. Assuming full conversion of the 2033 bonds at the initial price, they would be convertible into approximately 74.499 million H shares. This would represent about 11.4% of the existing issued H shares and 1.0% of the total issued shares as of the announcement date. After full conversion, the new H shares would account for approximately 10.3% of the enlarged number of issued H shares and 1.0% of the total issued share capital. The shares issued upon conversion of the 2033 bonds will be fully paid and rank equally in all respects with the existing H shares.

Upon completion of the bond issuance, the net proceeds, after deducting commissions to the placing agents (assuming full payment of their discretionary fees) and other estimated expenses related to the offering, are expected to be approximately HK$17.174 billion. The company intends to allocate the proceeds as follows: approximately 60% will be used for international expansion and enhancing overseas liquidity, and approximately 40% will be allocated for general corporate purposes.