China's Suning shares jump after restructuring eases debt concerns

July 6, 20217:12 PM UTCUpdated ago

Man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai — A man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song

Companies

BEIJING, July 6 (Reuters) - Shares in China's Suning.com (002024.SZ) 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 (1810.HK) 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 (600690.SS), Midea (000333.SZ), TCL (1070.HK) and Xiaomi (1810.HK).

($1 = 6.4595 Chinese yuan renminbi)

Reporting by Samuel Shen in Shanghai, Sophie Yu and Tony Munroe in Beijing; Editing by Shailesh Kuber