Tag Archives: governments

China’s Suning.com gets bailout from local governments and Alibaba

HONG KONG — Troubled Chinese retailer Suning.com has secured a $1.4 billion bailout, backed by local government funds, suppliers and Alibaba Group Holding, as Beijing seeks to calm jittery debt markets that could undermine economic momentum.

Suning.com, a leading seller of home appliances and consumer electronics, said in a filing Tuesday that billionaire founder Zhang Jindong, his trust and two of his Suning holding companies had agreed to yield their controlling interest in the retailer, with a 16.96% stake to pass to a consortium led by the government of Jiangsu Province and the state asset management committee of Nanjing, the provincial capital where Suning.com is based.

Alibaba, home appliance makers Haier Group and Midea Group, electronics manufacturer TCL Technology and smartphone maker Xiaomi are also part of the rescue consortium, according to the filing. Through its unit Taobao China, Alibaba already held a 19.99% stake in Suning.com, which it acquired in 2015.

Under the deal, Zhang’s stake would fall to 17.62% while his Suning Appliance company would retain a 2.73% interest.

Suning.com shares surged by the maximum 10% allowed to 6.15 yuan on Tuesday on the Shenzhen Stock Exchange, recovering from an eight-year low as they resumed trading for the first time since their suspension on June 16, pending the deal’s announcement. The share sale was priced at 5.59 yuan a share, the last traded price before the halt.

Alibaba shares were up 1.2% at HK$208.40 by late afternoon in Hong Kong. 

Suning, which traces its origins to an air conditioning shop set up by Zhang in 1990, now has 4,000 stores, according to its website.

After establishing a dominant position in online shopping, Alibaba has invested heavily in recent years in physical retail, both by buying stakes in existing chains and building its own.

Last year, Alibaba doubled its stake in Hong Kong-listed hypermarket chain Sun Art Retail Group to over 70%, after earlier buying into department store group Intime Retail and Lianhua Supermarket Holdings. It also has its own supermarket chain, Freshippo, also known as Hema. In consumer electronics, it has often lagged behind rival JD.com.

According to Tuesday’s bailout agreement, all parties agreed that the share sale proceeds would be used primarily to clear debt.


Suning.com used Carrefour’s brand for a new line of appliance stores after buying the French group’s Chinese operations in 2019. 

  © AP

Investor fears over Suning.com’s finances began to boil when Zhang last year gave up rights to demand repayment of 20 billion yuan ($3.09 billion) from developer China Evergrande Group after it failed to list a unit on a domestic exchange as promised when it borrowed the funds. Suning.com has $7 billion of debts due within a year.

A Beijing court last month ordered a freeze on more than a quarter of founder Zhang’s stake in Suning.com for reasons the company has not disclosed. Also in June, creditors agreed to extend the maturity on a 2.89 billion yuan bond by two years. The two events helped send the company’s stock and bonds tumbling.

The conclusion of the bailout will provide Suning.com some stability as its sales have yet to recover from the effects of the coronavirus pandemic against its expanded debt burdens from deals to buy French retailer Carrefour’s China operations and the department store arm of Dalian Wanda Group, among others.

The company said in a separate filing on Tuesday that it expects to report a net loss of between 2.5 billion yuan and 3.2 billion yuan for the first half of the year, after sales dropped by nearly a third. In the same period last year, it recorded a loss of 166.59 million yuan.

“The diversified investor portfolio helps push Suning.com to further improve the governance, operations and business transformation,” the company said about the share sale deal. “The [consortium] will actively support Suning to grow healthily and stably.”

The deal comes as Shenzhen International Holdings and Shenzhen Kunpeng Equity Investment Management separately said a March agreement to acquire 23% of Suning.com for $2.3 billion will not proceed.

Zhang is perhaps best known for a $319 deal to take a controlling stake in Italian pro soccer club Inter Milan in 2016. Soccer also has been an investment area for other acquisitive Chinese conglomerates now struggling with excessive debt, including Evergrande and Wanda Group.

China’s total nonfinancial corporate debt climbed to 164.7% of gross domestic product in the last quarter of 2020 from 149.4% a year earlier, according to the Institute of International Finance. The ratio is the world’s second-highest behind Hong Kong.



Read original article here

Legal questions linger as governments and companies keep pushing into space

The Perseverance rover’s landing on Mars is still fresh in people’s memories, privately-owned companies are ferrying people and supplies into orbit, and NASA continues to work on “the most powerful rocket” it has ever built. But as world governments and private enterprises continue to eye the skies for opportunities, a SXSW panel called “Who on Earth should govern Space” makes clear that the laws dealing with space aren’t evolving as fast as the technology that gets us there.

“People like to think of space as the Wild Wild West — nothing out there, there’s open frontier, we can do whatever we want,” said Michelle Hanlon, president of For All Moonkind, a non-profit devoted to preserving mankind’s cultural heritage in space. “Unfortunately or fortunately, that’s not true at all.”

Hanlon was referring to the Outer Space Treaty, which was developed in 1966 and ratified by over 60 countries in early 1967. Considering the treaty was put into effect a full two years before mankind landed on the moon, it’s little surprise that the document is heavy on broad principles, but light on specifics. Among its greatest hits: outer space shall be free for exploration and use by all States, States should avoid harmful contamination of space, celestial bodies shall only be used for peaceful purposes, and perhaps most importantly, the assertion that outer space isn’t subject to claims of sovereignty by Earth-bound governments.

The treaty went a long way in enshrining a set of lofty values dictating how we approach and use outer space, but things have changed dramatically in the last 54 years. “We’re looking at this moment in human history where we’re thinking ‘Oh, well we want to do so much in space, but we can’t own anything,’” Hanlon said. “So we really need to think about how we’re going to conceive of property in space, mining rights in space.”

The idea of mining asteroids and other celestial bodies for their resources seemed to peak in the mid-2010s, when companies like Deep Space Industries and Planetary Resources regularly made headlines. (By 2016, the latter had managed to raise a cool $50 million in funding for their space mining efforts, including investments from former Google CEO Larry Page and former Alphabet/Google executive chairman Eric Schmidt.) These days, enthusiasm has waned somewhat, though Dr. John Junkins, interim president of Texas A&M University, said on the panel that mining “and material processing in space will happen someday” and that a legal framework to allow for those activities was necessary.

“The moon is a tremendous resource, and it will be mined before the asteroids are, most likely,” he added.

Defining those property rights and frameworks is one thing, and it will be some time before they can be fully fleshed out. Enforcing those rights — and rights defined by the Outer Space Treaty — is a separate question, and one that hasn’t been fully addressed despite incidents that should warrant it.

Junkins reminded viewers of a day in 2007 when China destroyed one of its defunct weather satellites with a missile, which left behind a hazardous cloud of debris with difficult-to-track orbits. A deliberate act like this seems to run afoul of the OST’s stance on “contamination” of outer space, but China never faced serious repercussions for what Junkins referred to as a “monumental environmental space crime.”

Strictly speaking, China isn’t alone though: the United States and Russia have left their share of debris floating in earth orbit, with Dr. Junkins suggesting that 40 percent of space junk by mass belonged to the now-defunct Soviet Union. That leads to a tricky question of liability, which Caryn Schenewerk, VP of Regulatory and Government Affairs at Relativity Space, doesn’t think will be addressed until some catalyzing moment forces the issue.

“By launching something into space, you do not give up ownership of it,” she said. “And when you leave it behind in space, when you abandon it, you do not give up ownership of it. So it’s an interesting issue… you maintain the liability aspect of it which, by the way, in space is not strict liability; it’s only strict liability on Earth. So in space you actually have to prove who’s at fault and then fight it out amongst yourselves. And good luck proving really who’s at fault in space! We’ll get better at that, I guess if we have to, but we really need an impetus for this.”

There have been efforts to more fully codify a set of rules to govern the way we approach space, including most recently the Artemis Accords signed by the United States, Australia, Brazil, Canada, Japan, Luxembourg, Italy, Ukraine, the United Kingdom, and the United Arab Emirates in 2020. Ten countries are a start, but a slew of significant space-faring states — including China, India, and Russia — have not bought into the largely US-designed accord. It’s hard to say exactly what (if anything) it will take for the international community to agree to a comprehensive set of guidelines for the use of outer space. But one thing is clear: With the technology to get us and keep us in space growing more advanced by the day, these are issues we can’t afford to keep punting.

Read original article here