Lenovo to Issue $2.0 Billion Convertible Bonds to Saudi Sovereign Wealth Fund

By P.R. Venkat

Lenovo Group is raising US$2.0 billion by issuing convertible bonds to a unit of Saudi Arabia's sovereign wealth fund, which could result in the investor owning a stake in the world's largest PC maker.

Alat, a wholly owned subsidiary of Saudi Arabia's Public Investment Fund, will subscribe to the zero-coupon bonds, whose proceeds will be used by the PC maker to repay its existing debt and meet working capital needs, Lenovo said Wednesday.

The zero-coupon bonds can be exchanged for Lenovo shares at an initial conversion price of 10.42 Hong Kong dollars (US$1.33) each, a 13.5% discount to the HK$12.04 a share quoted on May 27.

The bonds, if converted, would translate into 1.499 billion shares, representing around 12.1% of issued shares of Lenovo.

Separately, the PC maker has also entered into a strategic collaboration agreement with Alat for business cooperation, allowing Lenovo to grow its business in the Middle East and Africa.

Lenovo will establish a new regional headquarters including an R&D center for the MEA region in Riyadh.

"The capital injection under the bond issue will enable the company to address its existing debt obligations as well as to position itself for future business growth opportunities," Lenovo said.

Alat has been set up to create a global business in electronics and advanced industrials with an investment budget of US$100 billion.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

May 28, 2024 20:48 ET (00:48 GMT)

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