HONG KONG, China — Suning.com, a troubled Chinese retailer, has received a $1.4 billion bailout from local government funds, suppliers, and Alibaba Group Holding, as Beijing strives to calm nervous debt markets that threaten economic growth. Suning.com, a leading retailer of home appliances and consumer electronics, announced in a filing Tuesday that billionaire founder Zhang Jindong, his trust, and two of his Suning holding companies had agreed to sell their controlling interest in the retailer, with a 16.96 percent stake going to a consortium led by Jiangsu Province’s government and Nanjing’s state asset management committee, according to the filing. According to the filing, Alibaba, home appliance makers Haier Group and Midea Group, electronics company TCL Technology, and smartphone maker Xiaomi are all members of the rescue coalition. Alibaba previously owned a 19.99 percent stake in Suning.com, which it bought in 2015 through its subsidiary Taobao China. Zhang’s share in the company would be reduced to 17.62 percent, while his Suning Appliance company would keep a 2.73 percent stake. Suning.com shares soared to 6.15 yuan on the Shenzhen Stock Exchange on Tuesday, recovering from an eight-year low as they resumed trading for the first time since they were suspended on June 16 pending the deal’s announcement. The stock was sold for 5.59 yuan a share, which was the last traded price before the halt. By late afternoon in Hong Kong, Alibaba’s stock had risen 1.2 percent to HK$208.40. According to Suning’s website, the company began as an air conditioning shop founded by Zhang in 1990 and today has 4,000 locations. Alibaba has invested extensively in physical retail in recent years, both by buying holdings in existing chains and by constructing its own, after establishing a strong position in online shopping. After previously purchasing department store company Intime Retail and Lianhua Supermarket Holdings, Alibaba increased its investment in Hong Kong-listed hypermarket chain Sun Art Retail Group to over 70% last year. Freshippo, commonly known as Hema, is the company’s own supermarket chain. It has frequently lagged behind rival JD.com in the consumer electronics market. According to the rescue agreement signed on Tuesday, all parties agreed that the revenues from the share sale would be used primarily to pay down debt.
After purchasing Carrefour’s Chinese operations in 2019, Suning.com repurposed the Carrefour brand for a new line of appliance outlets. Associated Press
Investors’ concerns about Suning.com’s finances boiled over last year, when Zhang relinquished his right to demand repayment of 20 billion yuan ($3.09 billion) from developer China Evergrande Group after the latter failed to list a unit on a domestic exchange as promised when the funds were borrowed. Suning.com has $7 billion in obligations that are due in the next year. For reasons the firm has not disclosed, a Beijing court put a freeze on more than a quarter of founder Zhang’s interest in Suning.com last month. In June, creditors agreed to extend a 2.89 billion yuan bond’s maturity by two years. The two events contributed to the company’s stock and bond prices plummeting. Suning.com’s sales have yet to recover from the consequences of the coronavirus pandemic, and the company’s financial burdens have grown as a result of arrangements to buy French retailer Carrefour’s China operations and Dalian Wanda Group’s department store arm, among other things. In a separate filing on Tuesday, the firm said it expects to lose between 2.5 billion and 3.2 billion yuan in the first half of the year, after revenues fell by about a third. It lost 166.59 million yuan in the same period the previous year. Suning.com said concerning the share sale deal, “The varied investor portfolio helps push Suning.com to further strengthen governance, operations, and business transformation.” “The [consortium] will actively assist Suning in achieving healthy and stable growth.” Shenzhen International Holdings and Shenzhen Kunpeng Equity Investment Management both said in March that a $2.3 billion plan to buy 23 percent of Suning.com would not go through. Zhang is most known for acquiring a controlling stake in Inter Milan, an Italian professional soccer club, for $319 million in 2016. Soccer has also been a source of investment for other acquisitive Chinese businesses, including as Evergrande and Wanda Group, which are now saddled with excessive debt. According to the Institute of International Finance, China’s total nonfinancial corporate debt increased to 164.7 percent of GDP in the fourth quarter of 2020, up from 149.4 percent a year earlier. After Hong Kong, this is the world’s second-highest ratio./n
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