Jolla has been definitely making headlines around the media for the past year. First, they were very secretive about what Jolla is all about, had no website and basically built up a lot of hype around their company. When we had our first interview with Jussi Hurmola, then the CEO of Jolla, there was not much to talk about except their plans to take on Apple and Samsung with a phone of their own.
Within a year, they launched Sailfish, their own OS that supports true multi-tasking and multiple chipset technologies. Up until now, however not much was known about their finances, except the fact that they have raised around €10 million in funding. Kauppalehti was the first to report on the deal whereby Jolla agreed to sell 6.25% of their shares in a convertible bond agreement to China Fortune Holdings Ltd.
This makes perfect sense for Jolla and China Fortune Holdings Ltd, as we have earlier reported that Jolla’s major strategy was to enter the Chinese market and they had already made deals with the main retailer there – D.Phone.
This is further confirmed by the text of the announcement, that gives reasons for the acquisition:
“With a view to diversifying the business of the Group, the Group has been actively looking for opportunities which will further enhance the shareholders’ value. Since the Group has been in the related mobile phone industry for decades, and the potential for mobile phone related business development is surely enormous and sustainable, mobile phone operating system and mobile internet are the major key business areas the Group is interested in. Although Jolla Oy is a newly established company in Finland, its team consists of well-experienced programmers and developers of mobile phone operating system. Jolla Oy’s coming innovative and brand new mobile phone operating system is expected to bring new impact and opportunity to the market.”
The total subscription price of the bonds was €200,062 at €67 EUR a share with an option to subscribe a maximum of 11,944 shares at that price. Of which 5,972 shares by 22nd of February 2013 and the rest by 8th of March 2013. In total, 14,930 new shares will be acquired at a price of €1 000 310.
The announcement also sheds some light onto the overall valuation of Jolla and their financial position. Given the terms of the deal we can valuate Jolla at around €16 million EUR. There is some additional information on Jolla in the announcement as well, such as the fact that they have a total of €927 000 of reported losses for 2012.
This is not something to be ashamed or afraid of, however. They have a very large team that is trying to build something new and they still have not started with their sales in China, so this is not really a loss but an investment. It will be exciting to see what the numbers will be like at the end of next year, as Jolla has clearly stated that their own flagship device will be launched in the beginning of 2013, definitely before summer.