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UPDATE 2-Chinese delivery firm ZTO Express raises $870 mln in convertible bonds

(Adds SEC comment, updates shares)

By Scott Murdoch and Xie Yu

HONG KONG, Aug 25 (Reuters) - ZTO Express (Cayman) Inc raised $870 million by issuing convertible bonds that the Chinese delivery firm plans to use to bolster its logistics operations, regulatory filings showed on Thursday.

The deal came less than a day after ZTO said in a Hong Kong stock exchange announcement that it had no intention to carry out fresh fundraising after a proposed transaction was flagged in its unaudited first-half results filed to the U.S. regulators.

In its Hong Kong filing on Wednesday, ZTO said its U.S. filings "contained erroneous references to a proposed offering" and that it "would like to clarify that it currently has no intention to conduct any offering of its securities."

The bond offering was launched later in the day during the U.S. trading session. ZTO is listed in both the United States and Hong Kong. Its New York shares were up about 2% at $24.8 in premarket trading on Thursday after closing down over 9% in the previous session.

ZTO's Hong Kong stock closed down 7.3% on Thursday, in a trading session shortened by a typhoon.

"Market generally dislikes convertible bond due to its potential dilution impact on the existing shareholders. To make things worse, ZTO messed up the communications completely," Bernstein analysts wrote in a research report.

"The contradictory messages not only created confusion to investors, but has also taken a toll to the company's credibility. Investors attempted to read between the lines, and questioned the use of funding stated in the announcement."

ZTO said the proceeds would be used to enhance logistics operations and for working capital purposes, among other things.

The company did not immediately respond to Reuters' request for comment. Goldman Sachs, which advised the company on the deal, declined to comment.

A U.S. Securities and Exchange Commission spokesperson said the regulator does not comment on the existence or nonexistence of a possible investigation. The Hong Kong Stock Exchange and the Securities and Futures Commission declined to comment.

ZTO's convertible bonds are priced at a coupon of 1.5% and carry a conversion premium of 30%, according to the company's filings. The company estimates net proceeds from this offering will be around $855 million.

The notes are due in 2027, but holders will have the right to require ZTO to repurchase for cash all or part of their notes in 2025, according to the term sheet.

The deal carries a greenshoe option, which allows buyers to purchase up to an additional $130 million in aggregate principal amount of the notes. (Reporting by Scott Murdoch and Xie Yu; Editing by Sumeet Chatterjee and Subhranshu Sahu)