SEA to offer $400m convertible notes after losses tripled in Q1

Tencent will buy up to USD50 million worth of the notes.

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SEA to offer $400m convertible notes after losses tripled in Q1

NYSE-listed gaming and e-commerce firm SEA announced a plan to offer convertible notes which are worth USD400 million to fuel business expansion and support general corporate operations. The company’s largest shareholder Tencent will buy up to USD50 million worth of the notes.

In Q1 2018, SEA’s net loss tripled to USD 215.6 million compared with USD73.1 million a year earlier, despite a 65% YOY growth of the company’s total revenue.

The losses come as the Singapore-headquartered company has been spending heavily to expand beyond gaming to e-commerce and payment where it is facing brutal competition with Alibaba-backed Lazada. The sales and marketing expenses in its e-commerce platform Shopee increased by 177.1% to USD 127.2 million in Q1 2018 from the same period of 2017.

SEA said in May it may raise funds to strengthen its balance sheet.

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.

A convertible note is a debt security which can be converted to a predetermined amount of the underlying company’s equity.

Founded in 2009, SEA was formerly known as Garena and rebranded itself as Sea Limited in April 2017. The company listed on NYSE in October last year. It engages in digital entertainment with its gaming platform Garena, e-commerce with online marketplace Shopee, and digital financial service with AirPay mobile payment businesses.

 

Editor: Jason Zheng