CP Seven Eleven Plc has been released from a contractual obligation to purchase additional shares in Yangtze Supermarket Investment Co Ltd, a major shareholder in loss-making Shanghai Lotus Supermarket Chain Store Co Ltd.

CP Seven Eleven had teamed up with the China Retail Fund to invest in Yangtze Supermarket Investment, and under the agreement, the China Retail Fund had the right to sell all of its shares in Yangtze Supermarket Investment to CP Seven Eleven before this past Tuesday.

"The China Retail Fund has elected not to exercise its right. Therefore, the company will be released from the obligation under the 'put option'," CP Seven Eleven told the Stock Exchange of Thailand yesterday.

CP Seven Eleven's stock jumped almost 6 per cent yesterday in response to the report, closing at Bt6.20.

Kim Eng Securities (Thailand) Plc commented the move would be positive for CP Seven Eleven, because it would no longer face an additional burden from the loss-making supermarket chain.

CP Seven Eleven now holds a 29.7-per-cent stake in the supermarket chain, which posted net losses of almost Bt1.2 billion last year and nearly Bt800 million in this year's second quarter.

The chain store operates 43 supercentres in China including Super Brand Mall: 20 in Shanghai and the rest elsewhere.

The hefty losses have been attributed to strong competition in China's retail business.

The broker estimated that CP Seven Eleven's net profit for this year would rise 8 per cent on year to Bt1.64 billion. However, it has placed a "sell" recommendation on the stock, because its share price exceeds the target price of Bt5.90 apiece.

Despite the company's release from the share-purchase obligation, the CP Seven Eleven board has decided to provide US$30 million (Bt1.13 billion) in financial assistance to Shanghai Lotus Supermarket Chain Store, in order to fund its operations this year and next year.

The support will be provided on a pro rata basis.

CP Seven Eleven said the Charoen Pokphand Group intends to offer another $70 million in financial assistance to Shanghai Lotus Supermarket Chain Store Co on behalf of an indirect shareholder who holds a 46-per-cent stake in the chain through Chia Tai Distribution Investment.

Meanwhile, the CP Seven Eleven chain of 7-Eleven convenience stores has agreed to stop building new

stores for 30 days, an official said yesterday.

The company is one of nine giant retailers, mostly foreign and Thai joint ventures, to come under attack from small store-owners who said their rapid expansions were ruining their livelihoods.

The small stores accuse the big supermarkets, including Tesco-Lotus and France's Carrefour, of driving them out of business, prompting the Commerce Ministry to threaten them with punitive measures unless they temporarily halted expansion.

The ministry, now under control of Thailand's junta, which ousted prime minister Thaksin Shinawatra in a bloodless coup on September 19, declined to give details of punitive measures against big retailers.

CP Seven Eleven, which initially planned to open some 150 shops by the end of December, said the company would halt its expansion for 30 days to cooperate with the ministry.