(Yicai Global) Dec. 16 -- Chinese video website operator iQiyi will issue USD800 million convertible senior notes and 40 million American depository shares, the firm owned by Chinese search giant Baidu announced after the US market closed today, sending its stock into freefall in after-hours trading.

The issues will dilute Beijing-based iQiyi's current stock rights, so its shares [NASDAQ:IQ] plunged 8.2 percent in after-hours trading to USD20.48, after its stock had closed down 1.28 percent at USD22.31 yesterday, paring the firm’s market value to around USD16.37 billion.

The notes will mature on Dec. 15, 2026, according to a statement on iQiyi's website. The company also intends to grant underwriters a 30-day option to buy up to an additional USD100 million in aggregate principal amount of the bonds.

iQiyi is also offering a cumulative 40 million ADSs, subject to market conditions, concurrently with the notes, each representing seven Class A ordinary shares. The firm plans to extend to underwriters a 30-day option to purchase up to a total of 6 million additional ADSs.

The company will use the net proceeds from the offerings to expand and enhance its content, strengthen its technologies, and for working capital and other general corporate purposes, the statement added.

iQiyi is one of China’s leading video websites but has never profited on an annual basis in the 10 years since it formed because of high content costs. The firm reported a 14 percent uptick in operating revenue to USD4.2 billion last year, but also a rise of 12 percent in net losses to USD1.5 billion.

Editor: Ben Armour, Xiao Yi