(Yicai Global) Jan. 10 -- Chinese private retailer Better Life Commercial Chain Share has revealed that Better Life Investment Group, its controlling shareholder, plans to transfer its stake and entrust its voting rights to a local government financing vehicle.

The shares and voting rights represent 29 percent of Better Life Commercial Chain Share’s total share capital, the Hunan province-based company said. Trading of its shares was suspended yesterday for up to two days, it added.

Better Life Commercial Chain Share [SHE: 002251] closed at CNY6.66 (USD0.97) before the trading halt, with a market capitalization of almost CNY5.8 billion (USD856.4 million).

Better Life Investment still faces financial difficulties despite receiving CNY2 billion (USd295 million) in support from state-owned enterprise last year.

Better Life Commercial Chain Share said uncertainties surround the transaction, without disclosing information about the local government financing vehicle.

Data shows that at the end of last September, Better Life Commercial Chain Share was 34.99 percent owned by Better Life Investment and its founder and actual controller was Wang Tian.

Wang’s wife Zhang Haixia directly owns 6.01 percent stake in Better Life Commercial Chain Share, and Tencent Holdings’ affiliate Linzhi Tencent Technology is its third biggest shareholder with 5 percent.

If the transfer is successful, the unnamed LGFV will become Better Life Commercial Chain Share’s biggest shareholder.

Founded in 1995, Better Life Investment is involved in retail trade, e-commerce, commercial property, and other businesses. It had revenue of CNY41.5 billion (USD6.1 billion) in 2019.

Due to successive investment in the construction of large shopping malls, Better Life Investment faced a liquidity crunch in 2020. As of last September, the company had total assets of CNY30.3 billion, of which current assets were only CNY3 billion, while its liabilities were as high as CNY16 billion in the same period.

The group was the subject of bankruptcy rumors in June. As a result, customers with Better Life’s prepaid cards flocked to its bricks-and-mortar stores to use them.

Hunan Xingxiang Investment Holding Group and Hunan Luvalley Development Group, two government-backed firms, provided CNY2 billion of liquidity to the group in June, making them co-second-largest shareholder with a 17.88 percent stake, with Wang and his wife’s holding down to 72.27 percent from 88 percent.

Editor: Peter Thomas