TCL and Sony officially announce the latest cooperation progress

On May 11, TCL Electronics Holdings Co., Ltd. announced a revised cooperation agreement with Sony, placing a high price tag on Sony's "right of concession". The two parties agreed that when Sony exercises its put options on the joint venture company in batches in the future, the total put price that TCL needs to pay will not exceed 100 billion yen (approximately HK$4.9 billion) under any circumstances. This means that TCL has determined its maximum cash cost for controlling and potentially fully accepting the operating rights of Sony's home entertainment business by locking in a cap of approximately HK$4.9 billion.

According to the announcement, setting a total exercise price cap is a typical financial risk control arrangement in large-scale joint venture projects. It aims to determine the maximum amount that TTE Corporation, a wholly-owned company of TCL Electronics, must pay based on the Sony put option, thereby minimizing financial exposure and ensuring the stability of cash flow.

In order to balance Sony's interests, a key clause was hidden in the announcement: If the put price exceeds the upper limit of 100 billion yen due to extreme circumstances in the future, T.C.L. Industrial Holdings (Hong Kong) (the controlling shareholder of TCL Electronics) promises to make up the difference out of its own pocket.

Except for the changes made in the Amendment Agreement, the terms of the Transaction Framework Agreement and the Joint Venture Agreement remain unchanged.

On March 31 this year, TCL Electronics announced the establishment of a joint venture with Sony for approximately HK$3.78 billion in cash and the acquisition of Sony's Malaysian subsidiary SOEM to undertake Sony's home entertainment business, which mainly focuses on the development, manufacturing and sales of television products.

According to the agreement, the new company will hold 51% of the shares of TCL Electronics and 49% of the shares of Sony. The new company's products will continue to use the "Sony" and "BRAVIA" brands. It is expected that the new company will officially start operations in April 2027.