China’s Lenovo Group plans to raise USD 2 billion through convertible bonds that it will issue after a four-year gap, becoming the latest tech conglomerate to tap debt sales as calmer global markets reopen a window for large issuers.
The tech venture, best known for its computers and laptops, said in a Hong Kong exchange filing on June 18 that the seven-year bonds will pay no regular interest and can later be swapped into Lenovo shares at HKUSD 36.70 (USD 4.68) each, a 47.5% premium to the stock’s June 17 close.
A convertible bond is known for being the debt that investors can later exchange for shares.
Apart from Lenovo, American AI chip giant Nvidia is also tapping debt markets, with the goal of raising USD 25 billion through a bond sale. STMicroelectronics too priced a USD 1.5 billion offering of new convertible bonds.
Lenovo will use the proceeds to refinance debt, including buying back about USD 225 million of its USD 675 million (at an interest rate of 2.50%) convertible bonds due 2029, as well as for share buybacks and general corporate purposes.
The company also plans to buy back its market shares after the bond sale and repurchase-related procedures get completed. The move aims to limit dilution for existing shareholders if the new bonds are converted into shares.
Lenovo’s last sale of convertible bonds happened in August 2022. It also completed a USD 1.25 billion dual-tranche bond offering in July that year, including its first green bond tranche.
In other news, Lenovo has signed a multi-year, multi-technology patent cross-license agreement with Nokia. Announcing the deal, Susanna Martikainen, Chief Licensing Officer at Nokia, said, “Nokia advances connectivity and enables other companies to build on our innovation by licensing the use of our patented technologies.’ “We are pleased to have concluded a cross-licence agreement with Lenovo on an amicable basis. The agreement reflects the strength of Nokia’s patent portfolio and decades-long investments in research and standardisation.”
“Innovation is central to the success of every technology company. At Lenovo, we invest significantly in R&D to develop new products and technologies, while also supporting the broader technology ecosystem through licensing our intellectual property. Effective IP licensing helps companies innovate faster, meet industry standards, and bring new products to customers more efficiently. This cross-licensing agreement reflects industry best practice and supports continued innovation for the benefit of customers,” she stated further.
Taylor Ludlam, VP, Deputy General Counsel, and Chief Intellectual Property Officer at Lenovo, remarked, “Nokia and Lenovo signed their previous agreement in 2021. Both Nokia and Lenovo contribute their inventions to open standards in return for the right to license them on fair, reasonable and non-discriminatory (FRAND) terms. Companies can license and use these technologies without making substantial investments in the standards, fuelling innovation and the development of new products and services for consumers.”