Singapore’s Sea proposes to raise $400m via convertible senior notes

Photo: Sea website

Singapore-based gaming and e-commerce company Sea Ltd. on Wednesday said it planned to issue $400 million worth of convertible senior notes due 2023.

The interest rate, initial conversion rate, offering price and other terms of the notes have not been finalized and will be determined at the time of pricing of the offering, the New York-listed company said. The funds raised will be used for business expansion and other general corporate purposes, it added.

Initial purchasers will have the option to purchase up to $60 million additional notes within a 13-day period of the initial issuance date.

“Tencent Holdings Limited, one of our principal shareholders, is expected to purchase up to $50 million principal amount of the notes in this offering on the same terms as the other notes being offered,” said Sea in a statement.

Sea, which initially modelled itself after Tencent, has struggled since its IPO in October 2017. Confronted with widening losses, it ended the January-March quarter this year with a net loss of $215.6 million, compared with $73.1 million a year earlier. The tripling of losses was largely on account of rising investments at its mobile-shopping unit Shopee.

The company had then said that it may raise funds to strengthen its balance sheet. “When you look at the longer term, there are many options for us to strengthen our balance sheet and unlock greater value for our shareholders,” Chief Strategy Officer Alan Hellawell had said during a conference call. “These could include raising money at the Shopee level. We remain totally open-minded about fundraising,” he had added.

Founded by chairman and group CEO Forrest Li in 2009, Sea began as an online gaming company named Garena, which was later rebranded to reflect is ambition and diversification. It branched out to digital service Airpay in 2014 and e-commerce Shopee in 2015.

However, its gaming business – Garena – still accounts for more than 70 per cent of Sea’s first quarter total revenue for 2018.

Sea’s stock closed Tuesday in New York at $16.40, up 3.34 per cent.

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