By Sheri Kasprzak
Atlanta, March 30 - Lenovo Group Ltd. said it has completed a private placement of preferred stock for HK$2.73 billion in order to acquire IBM Corp.'s personal computer business.
The company sold a total of 2.73 million series A cumulative convertible preferred shares at HK$1,000 each to Texas Pacific Group, General Atlantic LLC and Newbridge Capital LLC.
The preferreds pay annual dividends of 4.5% and are convertible into a total of 1,001,834,862 common shares at HK$2.725 each. The conversion price is a 16.7% premium to the company's average closing price of HK$2.335 each for 30 consecutive days up to and including March 24.
The preferreds are redeemable at the holders' option any time after the seventh anniversary of closing.
The investors will also receive warrants for 237,417,474 shares, exercisable at HK$2.725 each for five years.
For the acquisition, IBM will receive US$800 million in cash and common shares of Lenovo totaling US$450 million.
Upon the closing of the private placement and the acquisition, IBM will hold 13.4% ownership in Lenovo, assuming full conversion of the preferreds.
Lenovo, based in Hong Kong, manufactures and sells desktop computers, notebook computers, mobile handsets, servers and peripherals in China. The proceeds from the offering not used for the acquisition will be used for working capital and general corporate purposes.
| Issuer: | Lenovo Group Ltd.
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| Issue: | Series A cumulative convertible preferred stock
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| Amount: | HK$2.73 billion
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| Shares: | 2.73 million
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| Price: | HK$1,000
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| Dividends: | 4.5%
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| Conversion price: | HK$2.725
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| Conversion ratio: | Into 1,001,834,862 common shares
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| Warrants: | For 237,417,474 shares
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| Warrant expiration: | Five years
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| Warrant strike price: | HK$2.725
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| Investors: | Texas Pacific Group, General Atlantic LLC and Newbridge Capital LLC
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| Announcement date: | March 30
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| Stock price: | HK$2.55 at close March 30
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