SHANGHAI: Chinese electronics retailer Gome Retail Holding on Sunday (Apr 19) said it would raise US$200 million through a convertible bond issue that will be entirely taken up by e-commerce platform Pinduoduo.
The deal comes as the COVID-19 pandemic, which first emerged in China last December, has sent a shudder through the global retail industry.
Pinduoduo also earlier this month raised US$1.1 billion in a private share placement and the deal will mark its first investment in another company since the e-commerce platform was founded in 2015.
The bonds will carry a coupon of five per cent per annum and a tenure of three years, which Pinduoduo can opt to extend by two years, Pinduoduo said in a separate statement.
They are convertible at HKUS$1.215 per share, 66.4 per cent higher than the electronics retailer's closing share price of HKUS$0.73 on Friday, and 1.28 billion Gome shares or about 5.6per cent of its existing issued share capital, will be allotted, they said.
"Gome wins because they can broaden their access to our 585.2 million users and PDD wins because we enhance our foothold in household appliances and electronics," Pinduoduo's Vice President of Strategy David Liu said.
Gome said "the subscription offers a good opportunity to raise additional funds to strengthen the financial position and broaden the capital base of the group so as to facilitate its future development".
The two companies on Mar 31 jointly held a promotion to give away 500 million yuan worth of discounts and consumption subsidies on more than 6,000 items, joining other firms such as Suning.com and Alibaba Group Holdings' Alipay that have rolled out similar campaigns to try and stimulate consumption during the virus outbreak.