Lenovo to Issue $2 Billion of Convertible Bonds to Saudi Arabia Fund - Bloomberg
Lenovo Group Ltd. plans to sell $2 billion worth of zero-coupon convertible bonds to Saudi Arabia’s sovereign wealth fund, part of a broader strategic pact with the tech-hungry kingdom.
Lenovo said it will issue bonds to Alat, an investment firm wholly-owned by the Public Investment Fund, at an initial conversion price of HK$10.42 per share. That’s a roughly 12% discount to Lenovo shares’ closing price the previous day, near a nine-year-high for the stock. Lenovo’s shares were down around 2% Wednesday.
As part of the agreement, the Beijing-based maker of PCs and artificial intelligence servers plans to build a research and development center in Riyadh and expand production capacity in the region. Upon maturity, the converted notes would represent about 12% of Lenovo’s current capital, or near 11% of the enlarged capital when the conversion happens.
Lenovo remains the only major global PC brand that uses in-house production capacity, making it an attractive choice for Alat, said UOB Kay Hian analyst Johnny Yum in a note to investors. At the same time, the CB issuance gives Lenovo strategic investors that can help it extend its footprint in rapidly expanding markets in Middle East and Africa, he said. “The high income Middle Eastern countries are also putting huge investments into the buildout of AI infrastructures,” he said.
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