Tencent to Boost Equity Voting Interest in Consortium That Controls Supercell
Tencent, 9/23/19
Chinese internet and mobile services firm Tencent (0700.HK) announced today that it intends to increase its equity voting interest - from 50% to 51.2% - in the consortium that currently indirectly holds an 82.2% interest in Finnish mobile games developer Supercell.
Tencent will achieve the increase in equity voting interest by exercising the option, through its wholly-owned subsidiary, to convert a convertible bond into consortium shares. Following the conversion, the consortium would become a subsidiary of Tencent and the financial results, assets and liabilities of the consortium will be consolidated into Tencent's financial statements.
Tencent is converting the convertible bond, and consolidating the consortium's financial results, in order to optimize the consortium's financing expenses, and given Tencent's confidence in Supercell's growth opportunities.
Tencent intends to indirectly acquire 44,000 consortium shares by converting the entire principal outstanding and relevant interest under the USD 40 mln convertible bond issued by the consortium into consortium shares. The convertible bond was issued to partially finance the Supercell acquisition. Under the terms of the convertible bond, Tencent, through its wholly-owned subsidiary, may convert all or part of the convertible bond into consortium shares at USD 1,000 per consortium share at any time during a period of 10 business days following October 19, 2019.
The consortium is a Luxembourg Société Anonyme formed in June 2016 for the sole purpose of the Supercell acquisition. The consortium currently holds indirectly an 82.2% interest in Supercell on behalf of a consortium comprising Tencent and other co-investors. As of the date of this announcement, Tencent indirectly holds a 50% equity voting interest in the consortium through its wholly-owned subsidiary.
Supercell is a developer of mobile games for both tablets and smartphones on Apple's iOS and Google's Android operating systems. Since its founding in 2010, Supercell has brought five major games to market - Brawl Stars, Clash of Clans, Clash Royale, Boom Beach and Hay Day.
There is no assurance that the Conversion will take place or as to when it may take place.
Editor's Note: To view Tencent's full announcement, please click here. For more background on this topic, including details on the other consortium members, please see Tencent's Partners Inject USD 850 Mln to Fund Supercell Acquisition, MD 10/17/16 issue.
Keywords: wireless Tencent 0700.HK Supercell Finland funding M&A mobile gaming overseas
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