Suning Appliance Co will sell 200 million non-public shares to boost cash flow as well as speed up expansion of its branches.
The country's second-largest home appliance retailer said in a statement to the Shenzhen Stock Exchange over the weekend that it will raise around 2.8 billion yuan (US$410 million) in the private placement.
A total of 1.4 billion yuan will be spent on setting up 250 stores and another 1 billion yuan will go into building logistics bases in Chengdu, Wuxi, Chongqing, Tianjin and Xuzhou cities as well as the second phase of its logistics center in Beijing. The remaining 400 million yuan will be used to boost liquidity.
The shares will be sold to brokerages, insurers, qualified foreign institutional investors and other institutional or individual investors.
The private shares will be issued at not lower than 15 yuan each and Zhang Jindong, chairman of Suning, will also buy them for 250 million yuan to 350 million yuan.
"The macroeconomic situation and industry environment have provided a good opportunity for Suning to expand and we'll make use of the capital raised to boost our competitiveness," said Sun Weimin, president of Suning.
The opening of the new stores in Beijing and Shanghai as well as second and third-tier cities is likely to be done within 18 months and the retailer has forecast an annual sales increase of 18.1 billion yuan, the statement said.
Suning expects the home appliance market to grow, helped by government measures to stimulate domestic demand as well as the recovery of the economic situation in China, the statement said.
(Shanghai Daily June 22, 2009)
