Lenovo Group (992) Status Update summary

Strategic collaboration and capital raise update

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

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

• Strategic agreement with Alat includes 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 timeline for completion.

Convertible bond and warrant terms

• Convertible bond 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 and a total effective cost of HKD 13.74 per share.

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

• High subscription rate reflects investor confidence in share price appreciation above the warrant cost.

Manufacturing facility and regional strategy

• Manufacturing plant in Saudi Arabia targets completion in 2025 and production by 2026, ramping up in 2027.

• Initial production will focus on PCs and servers, with plans to expand into mobile and AI server products.

• Facility will serve Saudi Arabia and the broader MEA region, with potential for global exports in the future.

• Estimated investment for the plant is $250–$300 million, with additional spend on regional HQ, marketing, and R&D.

• Local manufacturing enables cost advantages and access to government incentives, supporting the Global-Local strategy.