(Yicai Global) Jan. 3 — A creditor of Gome Retail Holdings plans to convert the HKD416 million (USD53.3 million) the struggling Chinese home appliances retailer owes it into a 10.2 percent stake in the company.
Global Financing has subscribed for nearly 4.1 billion new Gome shares priced at 10 Hong Kong cents (1 US cent) each, the retailer said yesterday. The deal, which needs approval from the Hong Kong Stock Exchange, will be terminated if the debt capitalization conditions are not fulfilled by the end of the month, it added.
The transaction would make Global Financing Gome’s second-largest shareholder after founder Huang Guangyu and persons acting in concert, whose combined stake would drop to 19.3 percent from 21.5 percent, Gome added.
The move will enable cash-strapped Gome to conserve funds for other purposes, the Beijing-based company added.
Gome said on Dec. 30 that Huang would grant the company an interest-free, unsecured loan of HKD130 million through its unit Gome Management to further ease funding and debt pressures. Huang had already extended three such loans worth HKD500 million to Gome last month.
On Dec. 29, Gome said a group of suppliers had filed bankruptcy petitions against its unit Gome Appliances, claiming the subsidiary owes them CNY4.7 million (USD682,941). No legal documents exist to support the claim, it added.
Gome’s shares [HKG: 0493] gained 2.7 percent today to close at 11 Hong Kong cents apiece, after jumping by as much as 6.4 percent in the morning. The stock fell about 83 percent last year.
Editor: Martin Kadiev
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