FAST NEWS: Gome Gets HK$200 Million Loan From Founder
The Latest: Struggling electronics retailer Gome Retail Holdings Ltd. (0493.HK) said on Wednesday it has signed an agreement to borrow HK$200 million ($26 million) from a company owned by Gome founder Huang Guangyu.
Looking Up: The loan is interest free and has a term of six months, and can be extended afterwards. The same Huang-controlled company made another HK$150 million loan to Gome last week with similar terms.
Take Note: Gome owed 22.9 billion yuan ($3.3 billion) to banks by the end of June this year, and previously said its plunging revenue has caused it to become delinquent on some of those.
Digging Deeper: Gome was founded in the early years of China’s reform era, and rose to become one of the nation’s most successful retailers in the 1990s, making Huang the country’s richest man at one point. But Huang was arrested for insider trading in 2010, and the company has struggled since then after failing to make the transition to e-commerce. The company and other traditional retailers have also taken a big hit this year due to China’s strict Covid control measures that forced stores to frequently close and people to stay at home. As a result, Gome warned in October that its revenue fell 55% to 60% in the first three quarters of this year.
Market Reaction: Gome shares initially jumped as much as 6% in early trade on Thursday, before giving back most of the gains to close up slightly by the midday break at HK$0.151. The stock has lost about three-quarters of its value this year.
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Reporting by Doug Young
