This morning, Remedy disclosed that it is getting a €15 million convertible loan from a Tencent affiliate. The loan is subject to approval by the Remedy board during the Extraordinary General Meeting, which is slated for October 24.
The loan includes an 8% annual non-cash interest and has a fixed conversion rate of EUR 27.2 per share, a 63.86% premium over the closing price for Remedy’s shares on Nasdaq Helsinki as of yesterday’s closing. The conversion part means Tencent can choose to get Remedy shares instead, up to 811K of them, which would amount to nearly 6% of total shares. Five months ago, Tencent had already raised its stake in the Finnish game development studio to 14%; should they choose to convert the aforementioned loan, they’d go up to around 20% of the shares.
Remedy CEO Tero Virtala explained why the company needed this loan:
Part of Remedy’s long-term strategy has been to strengthen our position in the value chain, to have more control over how our games are commercialized, and to grow our share of the value these games can create. As we move towards self-publishing, this financing will support us in developing and fully realizing the potential of the games we have in development and successfully carrying out the commercial activities of our next self-published games. Tencent’s investment demonstrates strong confidence in Remedy’s long-term vision and strategy.
Tencent previously had an agreement with the Finnish studio to co-finance and publish their first free-to-play cooperative game, codenamed Vanguard. However, the project had several issues that led first to a business model change to premium and ultimately to its cancellation.
The Finnish studio recently signed a deal with Annapurna Interactive, which will co-finance with an even split the development of Control 2. Annapurna will also work on adapting the Alan Wake and Control IPs to the film and TV formats.
