Indebted retailer Suning secures $ 500 million bailout from state



Chinese retail giant Sun will receive a temporary 3.2 billion yuan ($ 500.6 million) bailout from a state-controlled fund as owner of main football club Inter Milan struggles to emerge from cash crunch .

On Wednesday, Suning.com Co. Ltd., based in Jiangsu Province (002024.SZ) said 5.59% of its shares would be transferred as part of the bailout to a fund launched by four state-owned companies that are ultimately controlled by the provincial government.

The shares are controlled by a subsidiary of Zhang Jindong, the chairman of Suning.com, who currently owns 19.7% of the total shares, according to a company deposit (link in Chinese). The sale price will be 6.12 yuan per share, or 90% of the closing price on Tuesday.

The transfer plan is another attempt by Suning to attract investment to address liquidity issues that began to worsen late last year.

As the offline retail giant struggled to carve out a niche in e-commerce, it has come under increasing financial pressure from a wide range of initiatives that have yielded poor results.

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In February, Suning.com ad a sale of $ 2.3 billion shares of nearly a quarter of the company to state-controlled entities in the economic center of southern Shenzhen, as part of a bailout package for the State.

The last transfer of shares will be temporary, as Zhang has promised a repurchase in 10 months at a price not lower than the sale price, plus interest at the benchmark annual lending rate of 3.85%.

Last month, two Jiangsu province-based branches of the government body that oversees major state-owned assets agreed to set up a 20 billion yuan funds with the parent company of Suning.com. The fund would be used to invest in its best performing assets and businesses, a move that should give the company more breathing space from its heavy debt loads.

Once a retail pioneer, Zhang was keen to make Suning a Walmart-plus-Amazon entity in China and undertook aggressive expansion between 2015 and 2019, investing in real estate, telecommunications, sports streaming and clubs. of football.

But the shopping spree and the losses of its core retail business have dragged Suning into the current liquidity crunch.

Last year, Suning.com reported (link in Chinese) 4.3 billion yuan in net loss attributable to shareholders, a reversal from net profit of 9.8 billion yuan in 2019.

Contact reporter Guo Yingzhe ([email protected]) and editor Flynn Murphy ([email protected])

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