(Yicai Global) March 1 -- Gome Retail’s shares fell after the cash-strapped Chinese home appliances retailer said it had outstanding overdue loans of about CNY6.9 billion (USD1 billion) as of Feb. 3 and the equity of a number of its subsidiaries, including Gome Supply Chain Technology, has been frozen.

Gome Retail’s shares [HKG: 0493] closed down 1.9 percent at 16 Hong Kong cents (2 US cents) each today.

The Beijing-based company is actively negotiating with lenders on refinancing or extending repayment periods, it said late yesterday.

According to data previously released by Gome Retail, overdue loans as of Sept. 30, 2022 tallied about CNY3 billion, an amount that has doubled in less than half a year.

Gome Retail also said that the units with frozen equity were non-material subsidiaries, and it currently retains full control and ownership of them. The frozen equity of these companies will not affect Gome Retail’s financial status or operations, it said.

On Feb. 10, at a meeting with suppliers, Gome executives admitted that because of a cash flow problem in the sales department, the company had defaulted on payments due to them. 

Gome will find a way to solve this problem as soon as production resumes, they said after a number of suppliers filed for bankruptcy liquidation applications against Gome in court due to the payment arrears.

In addition, amid a gradual reduction in its shareholding since September 2021, Beijing Centergate Technologies, an affiliate of Gome Retail, announced on Feb. 3 that Gome founder Huang Guangyu is no longer the controlling shareholder of Gome Retail, leaving the retailer with no controlling shareholder.

Editor: Peter Thomas