Cheetah Mobile, a mobile internet company, said pre-market Friday that its unit Beijing Kingsoft Internet Security Software has entered into a capital injection agreement with Beijing OrionStar Technology, an artificial intelligence company incorporated in China and controlled by Sheng Fu, the chief executive officer of Cheetah Mobile, Pingtan Dingfu Investment Management, Beijing Kangyuan Heart Management Consulting Center Partnership, and the existing shareholders of Beijing OrionStar. According to agreement, Beijing Security, Pingtan Dingfu, and Kangyuan Heart agreed to subscribe to newly issued equity interest in Beijing OrionStar for $40 million, $0.4 million, and $0.35 million, respectively, payable in cash. Upon completion of the transaction, Beijing Security is expected to hold 29.55% of equity interest in Beijing OrionStar.
Within two years after the completion of the transaction, Beijing Security is entitled to a warrant to subscribe to newly issued equity interest in Beijing OrionStar in the future with an equivalent value of up to $62 million at the same unit subscription price as the current investment. If the warrant is exercised in full, Beijing Security is expected to hold 51.68% of equity interest in Beijing OrionStar, assuming that there will be no other change in the shareholding structure of Beijing OrionStar.