Lenovo Partners with Saudi Alat in $2 Billion Bond Deal
As part of the collaboration, a new PC and server manufacturing facility will be established in Saudi Arabia.
Lenovo Group Limited has penned a collaboration framework agreement with Alat, a Public Investment Fund (PIF) company that specializes in investments in transformative technology and sustainable manufacturing.[1]
Lenovo will be able to improve its global presence, diversify its manufacturing footprint geographically, and take advantage of the growth momentum in the IT and business services industry in the Middle East and Africa (MEA) thanks to this collaboration.
Together with a projected $2 billion investment in zero coupon convertible bonds, the collaboration gives Lenovo more financial flexibility to accelerate its global transformation into a services- and solutions-led company.
As part of the collaboration, a new PC and server manufacturing facility will be established in Saudi Arabia. This move would expand Lenovo's global reach, which now consists of over thirty production locations across Argentina, Brazil, China, Germany, Hungary, India, Japan, Mexico, and the USA.
Under the terms of the agreement, Lenovo will establish a regional MEA headquarters in Riyadh, complete with a customer center and an MEA-focused research and development center.
Alat will be able to propose a non-executive director candidate to Lenovo's board, subject to the terms and conditions of the strategic collaboration framework agreement and the standard procedures for director nominations in Hong Kong.
Furthermore, a proposal to issue 1,150,000,000 warrants at $0.18 per has been accepted by the board of Lenovo.
Lenovo's proposed three-year warrant issuance will be offered through a private placement managed by Citigroup Global Markets Asia Limited, following approval at Lenovo's general meeting.
Moreover, the parties have signed a bond subscription agreement wherein Lenovo would issue convertible bonds to Alat for $2 billion. The net proceeds of the bonds will be utilized for general corporate and working capital purposes and the repayment of Lenovo's outstanding debts. The convertible bonds have a three-year maturity date and can be converted into equity for $1.33 per share at the initial conversion price.
Launched in February 2024, Alat is a PIF firm that aims to establish a global hub for sustainable technology production in Saudi Arabia with an emphasis on electronics and sophisticated industries.
