Lenovo raises US$500m from parent Legend and senior management

906 million new shares issued to joint venture created by Legend and senior management, including chairman Yang Yuanqing

PUBLISHED : Tuesday, 03 October, 2017, 12:34pm
UPDATED : Tuesday, 03 October, 2017, 10:57pm

Lenovo Group, the world’s second largest personal computer supplier, is raising a total of HK$3.9 billion (US$499.26 million) by issuing 906 million new shares to a joint venture created by its parent company, Legend Holdings and senior management, including chairman Yang Yuanqing.

Lenovo Group shares jumped 1.4 per cent to HK$4.37 on Tuesday morning, as Hong Kong market reopened following a three-day holiday weekend.

The investment will allow the company to strengthen its working capital position and provide it with the financial flexibility to achieve its strategic objectives to enhance, expand and establish its leading position in the industry, it said in the filing.

Union Star Limited, a joint venture owned by Legion Elite and SHL, will subscribe to 906,136,890 new shares issued by Lenovo for HK$4.31 per share, collecting about HK$3.9 billion, according to an exchange filing over the next week.

These shares will account for 7.54 per cent of Lenovo’s enlarged share capital.

In the meantime, Union Star will subscribe to 90,613,689 units of bonus warrants on the basis of one unit of subscription right for every 10 new shares issued by Lenovo. The initial exercise price for the warrant is HK$5.17. By the end of last week, Union Star had been 49.5 per cent and 50.5 per cent owned, respectively, by Legion Elite and SHL.

Lenovo, meantime, will establish an employee trust for the purpose of providing incentives to 35 senior management members and subscribers for shares in Union Star.

After the deal, the trust will own 47.05 per cent of Union Star, while Legion Elite and SHL will hold 32 per cent and 20.95 per cent separately.

SHL is controlled and owned as to 87.14 per cent by Yang Yuanqing, chairman and chief executive officer of Lenovo.

Legion Elite, wholly owned by Lenovo’s parent group Legend Holdings, has agreed to contribute US$160 million to Union Star for the purpose of acquiring interest in Lenovo, the filing added.