Tencent raises $ 3 billion on Sea share exchange terms sheet

A Tencent logo is seen on its booth at the China International Trade in Services Fair (CIFTIS) 2020 in Beijing, China on September 4, 2020. REUTERS / Tingshu Wang

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SINGAPORE, Jan.5 (Reuters) – Chinese games and social media company Tencent Holdings Ltd (0700.HK) has sold 14.5 million shares of Singapore-based games and e-commerce company Sea Ltd (SE .N) to $ 208 each to raise $ 3 billion, according to a terms sheet seen by Reuters on Wednesday.

Tencent sold the stock at the lower end of the $ 208.00 to $ 212.00 per share range when the trade started on Tuesday.

Tencent and Sea declined to comment on the sale of shares.

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The price set was a 6.8% discount from Sea’s last closing Monday price of $ 223.31 per share.

Sea shares fell 11.4% on Tuesday in New York to $ 197.84 following the announcement of the divestments.

The sale of 14.5 million shares reduces Tencent’s stake in Sea to 18.7% from 21.3%. The company has said it intends to retain the substantial majority of its stake in Sea for the long term.

“The sale of shares unlocks part of the value of Tencent’s investment in Sea, which has seen significant growth and expansion in its global business operations. The divestiture provides Tencent with resources to fund further investments and social initiatives, ”the company said in a statement. .

Tencent will be subject to a lock-up period which restricts the future sale of Sea shares by Tencent over the next six months.

U.S.-listed shares of Sea fell about 8% to $ 205.5 early in trading, and Tencent’s shares closed down 0.8% at HK $ 450.

Tencent’s move comes just days after the company said it would divest $ 16.4 billion of its stake in JD.com (9618.HK), weakening ties with the e-commerce company, under pressure Beijing’s broad regulatory crackdown on tech companies.

Sea said Tencent and its affiliates have given irrevocable notice to convert all of their Class B common shares.

Upon conversion, all outstanding Class B shares of Sea will be owned by Forrest Li, Founder, Chairman and CEO of Sea, whose market value of $ 124 billion makes it Southeast Asia’s most valued company. East.

Tencent also agreed to terminate his tenure with Li after the conversion.

Sea proposes to increase the voting power of each Class B ordinary share to 15 votes to three.

“The board believes that, as Sea has grown significantly to become a leading global consumer internet company, it is in the best interests of the company to continue with its long-term growth strategies to clarify further its capital structure through the changes envisaged “, he added. noted.

Sea said the changes are subject to approval by its shareholders at its annual general meeting scheduled for February 14.

He said that once the changes are made, the outstanding Class B ordinary shares held by Li are expected to represent around 57% of the voting power, compared to around 52%.

Separately, Li owns about 54% of the total voting rights related to the size and composition of Sea’s board of directors.

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Reporting by Anshuman Daga in Singapore, Kane Wu and Scott Murdoch in Hong Kong and Nivedita Balu in Bengaluru; Editing by Krishna Chandra Eluri and Stephen Coates

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