TOKYO -- Japanese app developer Line will issue about 148 billion yen ($1.33 billion) in zero-coupon convertible euroyen bonds overseas under plans announced on Tuesday, aiming to invest in its mobile payment service and smart-speaker tech.
Line will spend 100 billion yen of the proceeds on financial technology and 48 billion yen on artificial intelligence, areas it is targeting for growth, over the three years through 2021. It will invest a total of 30 billion yen in the fields this fiscal year.
The company's first-ever convertible bonds will be issued on Sept. 20 in two tranches of five-year bonds and two tranches of seven-year bonds, for a total of four. Two tranches equivalent to half the amount will go to South Korean parent Naver so that its 70%-plus stake falls only slightly.
Line set conversion prices of 7,467 yen for the five-year bonds and 7,518 yen for the seven-year bonds on Tuesday night. Its shares closed at 5,080 yen earlier that day. The company will prevent dilution in earnings per share should the stock rise less than 30% in a certain period by including conditions that discourage holders from converting the bonds.
Exchanging all the bonds for stock would increase the number of Line's outstanding shares by 8% based on the conversion price.
The company plans to use the money to expand the functionality of the Line Pay mobile payment service and bring more stores into the fold. The funds will also help provide three years of free service for small and midsize businesses that use a dedicated payment app.
Money will also be spent on services that combine messaging apps with finance. Line is working on investment services with Nomura Holdings and online asset management platform Folio. It is also considering whether to sell leisure insurance from Sompo Japan Nipponkoa Insurance. Raised funds will be used to build systems and secure talent for these businesses.
In AI, Line is finding new uses for its Clova smart speakers. Toyota Motor will introduce the technology for certain Japanese models this coming winter. Drivers can play music and receive messages via voice command. The technology's specifications will also be released to outside companies for joint development of new offerings.