Chinese Conglomerate Suning.com Says Shareholders Will Sell Stake in Retailer

(Bloomberg) -- Suning.com Co. said shareholders plan to sell a 20% to 25% stake in the retailer to unidentified buyers, in the latest sign that parent Suning Appliance Group Co. is working through liquidity issues.

The unit of the Chinese retail and e-commerce conglomerate didn’t give a price, but a 25% stake would be valued at as much as 16 billion yuan ($2.5 billion), based on Suning.com’s latest stock price. Suning.com said the shares would be sold to buyers in sectors including infrastructure, according to a statement to the Shenzhen stock exchange.

REDD reported earlier that Suning Appliance was in talks to sell all or part of its stake to a conglomerate of state-owned companies, and Suning.com shares were halted Thursday pending news. Suning.com’s yuan bond due 2023 rose 2%, the biggest gain in one month, as of 12:15 p.m. local time, after gaining as much as 5.7% in the morning.

Suning Appliance holds a 19.88% stake in Suning.com, while the biggest shareholder is billionaire founder Zhang Jindong, with a 20.96% stake. Alibaba Group Holding Ltd. has a 19.99% share, after the two companies formed a strategic alliance announced in 2015.

Concerns about Suning Appliance’s financial health have been raised since last year, when online chatter of a cash crunch pressured bonds issued by the key listed unit. Suning Appliance dispelled the talk as a “rumor” at that time.

Suning Appliance Offers Bond Swap in Sign of Liquidity Pressure

Both Suning.com and its parent face high near-term repayment pressure, according to China Chengxin International Rating Co. A combined 15.8 billion yuan of bonds will be payable this year for the two firms when they are confronting refinancing difficulties, the rating firm said in a report earlier this month.

In a recent sign of liquidity strain, Suning Appliance conducted a swap offer for a yuan bond due Feb. 2. A majority of the holders agreed to exchange the 7.3% note for a new two-year bond carrying the same coupon.

In January, Suning Appliance said it pledged 376.5 million shares, or a 4.04% stake, in Suning.com to China Minsheng Banking Corp. to raise funds.

Suning Appliance’s debt risk has now come under focus after it helped China Evergrande Group avoid a cash crunch by deciding not to demand repayment of a 20 billion yuan strategic investment in the indebted developer. Suning is an Evergrande supplier, so a collapse could have had ripple effects on its business as well.

Nanjing-based Suning.com is one of the largest retailers of appliances, electronics and other consumer goods in China. The company closed about 1,000 self-owned shops in the first nine months of last year, bringing the total to 2,697, including the China operations of French supermarket Carrefour SA which it acquired a majority stake in last year. It also has 6,588 franchised stores, according to its third-quarter financial report.

The company reported a 93% drop in net income for the third quarter, after a net loss in the first six months amid weak demand and temporary store closures during the pandemic.

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With assistance from Bloomberg