Remedy and Tencent sign a $17m agreement for a loan that could result in it owning more of the Alan Wake developer

Alan Wake and Control developer Remedy have entered into a convertible-loan agreement with Chinese conglomerate Tencent in the amount of EUR15,000,000/$16.761,075. This unsecured loan may be converted to Remedy shares at the third anniversary of its drawdown "under certain conditions".

The deal is still pending approval and will be discussed at Remedy's Extraordinary General Meeting, which takes place on October 24.

Tero Virtala, Remedy CEO said in a release that part of Remedy’s long-term plan was to strengthen its position in the value chains, to have greater control over the way our games are commercialized and to increase our share of value these games could create. This financing will help us to fully realize the potential of the games that we are developing, and successfully carry out the commercial activities for our next self published games. Tencent's investment shows strong confidence in Remedy’s long-term strategy and vision."

If approved, the loan can be converted to a maximum of 811,100 Remedy Shares, which is around 5.98% all Remedy Shares. Tencent has already acquired a stake in this Finnish developer. In '21 it bought 3.8% of Remedy shares, which was increased to 14% earlier this year.

Remedy also developed a free-to play co-op with Tencent. The game was originally codenamed Vanguard. Remedy re-started the project in 2023 as a premium title codenamed Kestrel. However, it was cancelled this May so that Remedy can "focus more on other games in their portfolio".

Remedy's decision to return to Tencent and ask for more financial support makes sense. The games aren't cheap and don't sell in enough numbers to allow Remedy a quick return on their investment. Alan Wake 2 still wasn't profitable by May of this year. It also spent a lot of money on buying back Control 2. It was only a little more than the loan that Tencent is giving it.