CP SEVEN ELEVEN restructures Chinese business

CP Seven Eleven has announced the disposal of its Lotus stores in China to Hong Kong's Chia Tai (CTEI) for HKD891.2 million (USD114 million). The deal involves the 22 underperforming Shanghai Lotus Supermarket Chain Store outlets in China owned directly by CP Seven Eleven or through its subsidiary Lotus Distribution Investment. The sale of the loss-making Lotus stores should help CP Seven Eleven's profitability. As well as the 22 non-performing stores, CTEI will also acquire 18 performing stores in Shanghai and one store in Jiangsu province, the PRC. At the same time, CTEI will divest itself of 11 non-performing stores. A statement to the Bangkok Stock Exchange stated: " CTEI will be able to extend its presence in Shanghai and Jiangsu province in addition to its significant operations in Guangdong province, Beijing, Qingdao, Xian and Zhengzhou, and will operate performing 40 stores with a total sales area of approximately 609,901 square metres. As a result of the restructuring, the CTEI Group will become one of the major hypermarket chains with coverage in Northern, Eastern and Southern regions of the PRC." CP Seven Eleven believes that the investment in convertible bonds of CTEI post restructuring will allow the company to invest, with potential upside, in a company that could potentially be one of the leading large scale hypermarket businesses in the PRC.