Although Pinduoduo gave full sincerity at a premium of 66.4%, pride, like Huang Guangyu, was not necessarily willing to dilute his shares.
Editor’s note: This article is from the micro-channel public number “retail boss Reference” (ID: lslb168) , Author: Xie Kangyu. Original title “Pin Duoduo Wants to Invest in Gome”
Pin Duoduo and Gome are about to board a boat, but they have to “try marriage” for three years.
Pinduoduo subscribes to Gome ’s “convertible bonds”. As soon as the news came out, Gome ’s stock price rose by 30%. When he was released early.
On the evening of April 19, Pinduoduo announced that it would subscribe for US $ 200 million of convertible bonds issued by Gome Retail, with a term of three years, a coupon rate of 5%, and a preliminary conversion price of HK $ 1.215 per share.
This price is 66.4% higher than Gome ’s closing price of HK $ 0.73 on Friday. It can be said that Pinduoduo has given Gome a face, and investors are also happy to see its success, as can be seen from the rise in stock prices.
One of the key points in this cooperation is that if Ruo Duoduo eventually exercises all the conversion rights, he will be allocated up to 1.28 billion GOME new shares, accounting for about 5.62% of Gome ’s enlarged share capital after the conversion.
The so-called “convertible bonds” are things that are now bonds and can be converted into equity later. Pinduoduo can collect the principal and interest after the three-year bond expires; it can also convert the bond into stock at the above-mentioned predetermined conversion price.
The simple understanding is that Pinduoduo and Gome first tied the business together by borrowing money. However, in the end, whether it can be successfully tied up by way of shareholding, the two sides will make a decision after three years of “trial marriage”.
1, Why is convertible debt
For 5.62% of the equity, many people may not have a concept. Do n’t look at this small 5%. It has already made Pinduoduo the third largest shareholder of Gome outside the Huang family.
In last year ’s Gome ’s annual report, Gome disclosed the company ’s equity information.
As you can see from the screenshots of the above financial report, the top eight shareholders of the company, in addition to the clearly written top two shareholders Huang Guangyu and Du Juan, the actual controllers from the third to the eighth are still the Huang couple.
If Pinduoduo succeeds in acquiring shares, Gome ’s total share capital will become 22.842 billion shares, and Huang ’s couple ’s shareholding will be diluted accordingly. For example, Huang Guangyu ’s share as the largest shareholder will be diluted to 47.5%, while Pinduoduo will Become the “only two” major shareholder except Ark Trust, and rank as the third largest shareholder of Gome.
However, although Pinduoduo gave full sincerity at a premium of 66.4%, pride like Huang Guangyu is not necessarily willing to dilute his shares. As the actual Gome in power now, the cuckoo who has been guarding Huang Guangyu’s family business should and should hope to return a complete Gome to Huang Guangyu who is about to be released from prison.
This is also a form of “borrowing money” that convertible bonds will be used by both parties to complete the deep binding of both parties first.
However, the current Gome is facing severe challenges both in terms of cash flow and business level. Only in the form of convertible bonds can we solve the business dilemma of cash flow and weak sales in one fell swoop.
As of 2019, Gome has a debt of 63.7 billion yuan, and net current liabilities are as high as 13.069 billion yuan (3.396 billion in the same period last year), while Gome ’s cash and cash equivalents at the end of 2019 are 8.187 billion yuan, which means Gome Already in a state of insolvency.
According to Gome’s statement in the financial report, the company believes that it has sufficient funds to enable it to continue its operations. First, it is bank financing, and second, it is the realization of some investments or properties. It is not possible to conduct equity or debt financing. For now, Gome has to go beyond planA and planB, the ultimate option-debt financing.
In addition, we can see from the financial reports of the past years that Gome ’s liquidity has not been very good in the past two years and is in continuous deterioration. As you can see from the chart below, Gome ’s current ratio and quick ratio have been declining in recent years.
At the end of February, the international rating agency S & P listed Gome Retail as a negative rating watch. Standard & Poor’s believes that Gome Retail’s operating performance has been under pressure, coupled with the impact of the epidemic, its financial buffer may not be sufficient, and may face liquidity risks.
In 2019, Gome Retail ’s sales revenue was 59.438 billion yuan, with a loss of 2.59 billion yuan. Compared with former rival Suning of the past, the revenue for the same period was 270.315 billion yuan and the net profit