What’s new: A court has approved a once-top Chinese supermarket chain operator’s debt restructuring plan to raise 2.5 billion yuan ($344 million) by selling new shares to a group of investors.
Xiangtan Intermediate People’s Court in Central China’s Hunan province gave Shenzhen-listed Better Life Commercial Chain Share Co. Ltd. (002251.SZ) and its 14 subsidiaries the go-ahead on Sunday to proceed with the reorganization, the company said in a stock exchange filing dated Tuesday.
Better Life plans to raise the funds by selling about 1.18 billion shares to a group of industrial and financial investors for 1.65 yuan to 2.5 yuan each, according to a separate exchange filing dated Tuesday.
Better Life said that it expects the restructuring plan to “substantially improve” its asset-liability structure and restore its profitability.
The background: A broader depression has been weighing on the country’s supermarket sector, especially for big-box retailers that are fighting rising competition from online shopping platforms and smaller physical stores.
Founded in Xiangtan in 1995, Better Life was once one of China’s top supermarket chain operators. However, the company ran into financial trouble in recent years due to excessive investment in real estate.
Better Life returned to the black in the first quarter of this year, reporting a net profit attributable to shareholders of 20.2 million yuan even as revenue fell 10.2% year-on-year to 928.4 million yuan, according to company data. The return to profitability came after Better Life slashed its marketing and administration expenses.
At the end of 2023, Better Life had an asset-to-liability ratio of 86.76%, up 5.37 percentage points from a year earlier, which the company attributed to a drop in net assets due to losses.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
