Suning plans to raise up to 8b yuan through bond issue

Suning Appliance Co Ltd, China's biggest operator of a chain of appliance stores, said it plans to issue as much as 8 billion yuan ($1.26 billion) worth of corporate bonds to replenish its working capital and adjust its debt liabilities.

In a statement submitted to the Shenzhen Stock Exchange on Tuesday, Suning said part of the new capital will be used to improve its shipping and storage, research and development, and procurement systems.

"To better execute our 10-year development plan, support structural change and maintain sustainable development, we came up with this debt plan after conducting a thoughtful analysis of Suning's capital demands, assets and debt structure, means of fundraising and industry conditions," Suning said in the statement.

According to the plan released in 2011, the company will open an average of 200 stores in China a year in the next 10 years. Sales through its online platform, Suning.com, is expected to increase at a compound annual rate of 50 percent by 2020.

Suning's share price decreased by 7.11 percent on Tuesday to close at 5.88 yuan.

Suning said the corporate bonds may be issued as a single type having only one maturity date or as mixed types that have varying maturity dates, some of them ranging up to 10 years. They will be issued directly to the public without being offered to shareholders first.

Industry insiders said Suning must adopt a detailed plan that will govern how the money to be raised can be used. They said they expect a large portion of it to be spent on developing the company's online platform.

"Compared with other operators of online stores, Suning is a relative latecomer to the e-commerce industry," said Chen Shousong, an analyst from the research firm Analysys International.

"So it has to invest heavily to build up its retailing and marketing network. I think Suning's massive fundraising is just the beginning."

This is the second time the company has raised money in the past two months.

In July, Suning raised 4.7 billion yuan by issuing 387 million shares through private placements. Suning said the capital raised from the private placement would be used to make its physical stores stronger competitors, improve its information system and develop its shipping and storage system.

Liu Qiangdong, chief executive officer of the online electronic products and home appliance trading platform 360buy.com, said on his micro blog on Tuesday that 360buy will soon adopt new pricing policies that will have all of its large household appliances being sold for 10 percent less than in Suning's physical stores.

Suning posted a profit of 1.74 billion yuan in the first half of 2012, down 30 percent year-on-year.

tangzhihao@chinadaily.com.cn