China Markets

China's Suning shares jump 10% after restructuring eases debt concerns  

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Key Points
  • Shares in China's Suning.com jumped by a maximum 10% after the retailer announced a restructuring plan that will see a state-backed fund become a major shareholder, easing investors' liquidity concerns.
  • Suning.com's chairman and biggest shareholder, Zhang Jindong, along with several other major shareholders, will sell a combined 17% stake to a local government-led fund.
  • Suning.com said that the new fund, led by the local governments will actively support its stable and healthy development.

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An employee transports boxes inside a warehouse of retailer Suning.com during 11.11 Global Shopping Festival on November 12, 2018 in Hangzhou, Zhejiang Province of China.
VCG | Visual China Group | Getty Images

Shares in China's Suning.com jumped by a maximum 10% on Tuesday after the loss-making online retailer announced a restructuring plan that will see a state-backed fund become a major shareholder, easing investors' liquidity concerns.

Suning.com's chairman and biggest shareholder, Zhang Jindong, along with several other major shareholders, will sell a combined 17% stake to a local government-led fund that counts Alibaba Group and Xiaomi as investors, according to an exchange filing.

The 8.8 billion yuan ($1.36 billion) deal, which the company said will leave it without a controlling shareholder, comes amid concerns over cash flow at Suning.com and its parent company, Suning Group.

Suning.com, which forecast a net loss of up to 3.2 billion yuan in the first half, needs to repay 15.8 billion worth of bonds this year.

The company's shares dropped to a decade low on June 15 when trading was halted pending announcement of a restructuring. The stock jumped the maximum 10% after trading resumed on Tuesday.

Suning.com said on Tuesday that the new fund, led by the government of Jiangsu Province and the city of Nanjing, will actively support its stable and healthy development. It said the local governments will provide emergency credit support as necessary.

Alibaba, which already owns roughly 20% of Suning.com through its Taobao unit, is an investor in the fund, as are major electronics makers Haier, Midea, TCL and Xiaomi.