Companies
Gome to bring back Bain officials
By Wing-Gar Cheng (China Daily)
Updated: 2010-05-13 13:12
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HONG KONG - Gome Electrical Appliances Holdings Ltd, whose founder Huang Guangyu faces bribery charges, reappointed three officials of bondholder Bain Capital LLC to its board after shareholders voted them out, avoiding a penalty payment to Bain.
Zhu Jia, Ian Andrew Reynolds and Wang Li Hong, all non-executive directors since August, were reappointed because they helped bring about increased transparency in decision-making, enhanced corporate governance and more consideration for shareholders' interests, Gome said in a filing to Hong Kong's stock exchange on Wednesday.
None of the three are entitled to any remuneration, it said.
Gome, China's second-biggest electronics retailer by market value, paid down debt after securing $431 million of financing last year as Huang, the largest shareholder with 34 percent, was detained for "economic crimes".
Bain bought 1.59 billion yuan ($233 million) of convertible bonds in June 2009 as Gome raised money from both debt and equity, selling HK$1.66 billion ($213 million) in shares.
Bain has the right to nominate three directors. If the private equity fund didn't have representatives on the board, Gome would owe Bain 2.4 billion yuan immediately as compensation, the board said in a statement.
The company said two shareholders, affiliated with each other, voted their 31.6 percent stake against the Bain candidates at Tuesday's annual shareholders' meeting, even as remaining stockholders who voted mainly chose to reelect them.
"We strongly believe this outcome does not represent the will of the vast majority of ordinary shareholders," the statement said.
"It emphatically does not represent the will of the entire executive management team and board."
Bain will seek to convert its convertible bonds to Gome stock before the next shareholder meeting, Gome said, without giving a timeframe.
Gome fell 2.1 percent to HK$2.29 in Hong Kong at noon. The stock has fallen 18.8 percent this year, compared with an 8.4 percent decline on the benchmark Hang Seng Index.
The company forecasts sales growth will accelerate even as China moves to curb speculation in the housing market, Chairman Chen Xiao said on May 10.
Gome has also seen revenue unaffected by financial market turmoil in Europe and the US, Chen said. Gome is still benefiting as China increases subsidies for rural home-appliance spending and for urban residents to replace old units with new products, he said.
Chen replaced Huang as Gome's chairman in January 2009. Huang's trial in Beijing ended last month.
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