International Entertainment (HKG:1009) said it may face a mandatory takeover after DigiPlus Interactive agreed to subscribe to HK$1.6 billion in convertible notes, according to a Monday Hong Kong filing.

Shares of the hotel operator were up over 3% in Tuesday morning trade.

The company will issue up to 1.6 billion conversion shares at HK$1.00 each under a specific mandate.

Full conversion would give DigiPlus a 53.89% stake, exceeding the 30% trigger for a mandatory general offer unless a whitewash waiver is granted.

DigiPlus will apply for the waiver, but may still choose to proceed with the subscription even if the waiver is not granted or not approved by independent shareholders.

Part of the proceeds will be used to fully repay HK$468 million in promissory notes owed to an existing shareholder, the filing said.