Lenovo Group (992) Status Update summary

Strategic collaboration and capital raise

• Completed $2 billion investment from Alat, a PIF-owned entity, via a three-year zero-coupon convertible bond (CB), and raised $211 million through warrant issuance.

• Warrants saw strong demand, with 57% subscribed by independent investors, exceeding the original allocation.

• Strategic agreement finalized with Alat for a manufacturing plant and sales/distribution partnership in Saudi Arabia, with groundbreaking planned this quarter and production starting in 2026.

• Regulatory approvals were obtained in all major jurisdictions, causing a longer transaction timeline.

Convertible bond and warrant terms

• CB conversion price adjusted from HKD 10.42 to HKD 10.02 due to dividend adjustments, following standard market practice.

• Warrants are three-year instruments, with Legend Holdings given right of first refusal; effective cost for exercise is HKD 13.74, reflecting a positive long-term view.

• Annual conversion limit for warrants is about 26% of each investor's shareholding, or 2% of total shares per year.

• High subscription by independent investors and senior management signals confidence in future share price performance.

Manufacturing facility and regional strategy

• Groundbreaking for the Saudi manufacturing plant is planned this quarter, with completion in 2025 and production ramping up in 2026-2027.

• Initial production will focus on PCs and servers, including AI servers, to serve both the local KSA and broader MEA region.

• The facility is expected to benefit from Saudi government incentives for local players, supporting a global-local strategy and cost advantages.

• Estimated investment for the plant is $250–$300 million, with potential for further expansion based on demand.