The company's shares had also kept falling before suspension. Gome shares closed at HK$1.12 on Nov 21, from a high of HK$21 a year ago.
Since late last year, Gome had hinted about the possibility of a share sale to help access capital, and more importantly, to break out of the shadow of Huang who is still in police custody.
But the proceeds Gome is raising this time seem to be far from enough. According to the corporate announcement, the company must repay 4.6 billion yuan worth in convertible bonds in May next year. And more than that, Gome said early this year that it would spend huge amounts on store transformation projects to increase its corporate profitability.
He Yangqing, Gome's spokesperson, told China Daily that, the deal would help the company win quite a lot of confidence from investors, suppliers and commercial banks. "The confidence means cash, so we should not worry too much about it," he said.
During the past two decades, Bain Capital has been focusing on investing in four specific areas, including retail sector. "The rich experience we have will certainly help Gome sharpen its competitiveness in management and governance," said Zhu Jia, manager director of Bain Capital.
Since late last year, Suning, which had 850 stores by the end of 2008, has been stepping up efforts to expand its network and enhance its capability, in a bid to dethrone Gome. In 2007, Gome had a 40 percent share, while Suning held around 7 percent.
In 2008, Suning, for the first time, surpassed Gome in both profit and sales.
(China Daily June 23, 2009)
