GLONGHUI May 31 | Lenovo Holdings (03396.HK) announced that on May 28, 2024 (after the trading period), Lenovo Group signed a strategic cooperation framework agreement with Alat (a wholly-owned subsidiary of Saudi Arabia's sovereign wealth fund Public Investment Fund). It is expected that the strategic cooperation will enable Lenovo Group to accelerate the ongoing global strategic transformation, enhance global influence, improve diversification of production layout, and make full use of the huge future growth potential of the information technology and business services industry in the MEA region.

In addition to the strategic cooperation framework agreement, Lenovo Group and Alat also signed a bond subscription agreement. Under the agreement, Lenovo Group will issue $2 billion zero-interest convertible bonds to Alat. The net proceeds will be used to repay Lenovo Group's existing debts and supplement operating capital and general corporate purposes. Convertible bonds are interest-free and expire 3 years after issuance (can be extended for 3 months according to CB terms and conditions). At maturity, they can be converted into Lenovo Group shares in accordance with CB terms and conditions.

Through its strategic partnership with Alat, Lenovo Group expects greater financial flexibility to implement its effective strategies and further drive its transformation into a solution and service provider. According to the strategic cooperation, Lenovo Group will establish an MEA regional headquarters and new production facility in the Kingdom of Saudi Arabia, and Alat will provide support and assistance to Lenovo Group to ensure the smooth implementation of the strategic cooperation. The production facility will expand Lenovo Group's existing global business and production layout (it currently has more than 30 manufacturing sites around the world). As Lenovo Group consolidates its business in the MEA region, it can not only enhance the resilience and flexibility of its global supply chain, but also serve customers in the region more agile.

In addition, this strategic cooperation is a great recognition of Lenovo Group's transformation strategy, strong execution, excellent operational capabilities, commitment to sustainable development, and continuous investment and innovation.

The issuance of Lenovo Group bonds must be approved by the regulatory authorities before completion and other conditions are met before it can be realized. When the zero-coupon convertible bonds expire, assuming that the convertible bonds are converted at an initial conversion price of HK$10.42 per Lenovo Group share, the convertible bonds will be converted to approximately 1,499 billion Lenovo Group shares, which is equivalent to approximately 12.09% of the number of shares issued by Lenovo Group on the date of this announcement, and approximately 10.78% of the number of shares issued by Lenovo Group, which has expanded through the issuance of converted shares (assuming that the total number of shares issued by Lenovo Group will not change from the date of this announcement until the conversion of convertible bonds). The converted shares will be issued under a special authorization from the Lenovo Group.