Lenovo to issue $2 bln bonds to Saudi wealth fund unit; shares slide

Investing.com-- Lenovo Group (HK:0992) entered an agreement with a unit of Saudi Arabia’s sovereign wealth fund to issue $2 billion worth of bonds and establish a bigger precense in the Middle East, although Hong Kong shares of the PC maker still fell sharply from nine-year highs. 

Lenovo said it entered a deal with Alat, a unit of the Saudi Arabian Public Investment fund, under which it will issue $2 billion zero-coupon convertible bonds to the unit. The bonds are interest free and will be repayable in three years. 

The two firms also entered a “strategic collaboration,” under which Lenovo will set up a Middle East headquarters and also establish a manufacturing facility in Saudi Arabia, with assistance from Alat. 

Shares of Lenovo fell as much as 6% after the deal, before recouping some losses to trade down 2.5% at HK$11.52 a share by 22:38 ET (02:38 GMT). 

The stock was among the bigger weights on the Hang Seng index, which fell 1.3% on broader losses in technology stocks. 

Losses in Lenovo’s shares come amid some profit-taking after they surged to a near nine-year high earlier this week. The firm clocked a strong first quarter in 2024, as it recovered from a COVID-driven slump in device sales and revenue. 

The firm recently unveiled two new PCs configured to directly run artificial intelligence- a growing trend among device makers to capitalize on the new industry.