Debt pressure forces Suning to file for trading halt
Shenzhen-listed Suning filed for a trading halt today, citing a major business announcement to be made in the near future, as debt pressure continues after shares slid the daily limit of 10 percent on Tuesday.
The Beijing Second Intermediate Court froze 540.2 million of Suning's shares owned by controlling shareholder Zhang Jindong, or 5.8 percent of the company's total.
One of its creditors, Guizhou Yingming Yuansheng Investment Company, has filed for legal enforcement, but the share-freezing won't change the actual controlling person or affect business operations, Suning added in the stock exchange filing.
Suning has tried to relieve debt pressure since the second half of 2020. In February, it received 14.8 billion yuan (US$2.3 billion) in funding from state-backed investors – a 23 percent stake – to relieve its short-term debt load.
In May, it signed a framework agreement for the establishment of a new retail development fund with Jiangsu Province and Nanjing state-owned assets.
In an effort to ease liquidity pressure, the company also placed its warehousing and logistics assets into a new joint venture with Singaporean warehousing giant Global Logistic Properties.
Last year, Suning reported a net loss of 4.27 billion yuan after its retail footfall dropped amid the pandemic.
In recent years, it has been adding product offerings and expanding new retail formats, as well as fueling online retail operations and other cultural and entertainment initiatives.
However, its debt pressure increased with growing competition in the online shopping space, along with new players and online grocery-delivery service providers vying for a slice of the market.
Another major shareholder, Suning Appliances Company, sold 10 million shares due to a pledge-style repo transaction, and it may sell 383 million more shares in the next six months, according to a separate filing.