SHANGHAI -- The owners of Suning.com plan to sell more shares held in the debt-ridden Chinese retail group, it was announced Wednesday, a sale that puts founder and Chairman Zhang Jindong's control over the company into question.
Zhang and entities under his control will sell a portion of their shares in Suning. The buyers and the percentage stake involved have not been disclosed.
This move comes after Zhang and other shareholders decided in March to sell a 23% stake in Suning to a group of state-owned investors for 14.8 billion yuan ($2.28 billion at current rates). Suning's finances suffered after an acquisition spree, and earnings deteriorated further during the pandemic.
Zhang and his group companies held a 40% stake in Suning prior to the deal announced in March, and he was able to maintain control over the retailer's management after that stock sale. Zhang's grip on the group following this new transfer of shares remains unclear.
Suning has flatly dismissed as false the reports in Chinese media that the company will be sold to domestic e-commerce leader Alibaba Group Holding, which already holds a roughly 20% stake.
Suning began as a home appliance chain, then expanded to become one of China's most recognized names, with an empire covering department and convenience stores.
Revenue in the first quarter shrank 6.6% on the year to 54 billion yuan. Net profit rebounded to 450 million yuan from a loss of 550 million yuan a year earlier, but that recovery stems from investment returns that mask the lackluster results of the main businesses.
Part of Suning's financial crunch can be traced to its 2017 investment of 20 billion yuan in a unit of China Evergrande Group, the world's most indebted property developer.
That investment was part of 130 billion yuan in fundraising by Evergrande. Terms of the deal let Suning and other investors reclaim the money if the Evergrande subsidiary failed to list on Shenzhen's stock exchange by early 2021.
About 90% of these investors including Zhang, who is a friend of Evergrande Chairman Xu Jiayin, waived their right to claim the money late last year, and Evergrande scrapped plans to list the unit in November.
Concerns about Evergrande's health have resurfaced in recent weeks, and Fitch Ratings downgraded the developer on Tuesday. The company's shares and bonds have slumped since the end of May, with media reports saying banks are cutting their exposure to Evergrande.
Suning's financial challenges continue to cast a pall over Inter Milan, the Italian Serie A soccer powerhouse bought by the group in 2016. Suning said this year it would shut down Jiangsu Football Club, the defending champions of China's premier Super League.
