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Bain enlarges stake in Gome amid power fight
By Pan Xiaoyi |
September 16, 2010, Thursday
|
Online Edition
Online Edition
BAIN Capital LLC is to convert all its Gome bonds into shares to boost its stake in Gome Electrical Appliances Holding to 9.98 percent, becoming the second largest shareholder after the disgraced former chairman Huang Guangyu.
The timely conversion will help Bain, which backs the current chairman Chen Xiao, gain votes at a special shareholder meeting on September 28.
Gome, in the midst of internal tussle over the control of the company, received a notice from Bain yesterday to convert the 1.59 billion yuan (US$236 million) worth convertible bonds at a price of HK$1.108 each. The 1.63 billion new shares will be issued on September 22, Gome said in a filing to Hong Kong Stock Exchange late yesterday.
The issuance will also dilute Huang's shares to 31.6 percent from 35.98 percent as the capital base will be enlarged.
It is Gome's latest efforts to gain more say in the battle as its imprisoned founder Huang is trying to unseat Chen Xiao and three directors from Bain and to overturn its authorization to issue up to 20 percent in new shares.
Gome and Huang have both released a series of letters to seek support from smaller shareholders ahead of the meeting.
Reuters reported that SS Proxy Advisory Services and Glass Lewis & Co, two firms hired to advise Gome stockholders, have suggested rejecting the proposal to oust Chen and voting against the election of Huang's sister Huang Yanhong and his lawyer Zou Xiaochun.
Glass Lewis said Gome has performed well under the current management team, and recommended the re-election of the three directors from Bain Capital.
In a separate statement late yesterday, Gome declined a request from its largest shareholder, Shining Crown, owned by Huang, seeking 21 days notice on plans to issue new shares under its standing authorization.
Gome said Bain's investment was in the best interests of the company and the company needed the general mandate to issue 20 percent shares.
"Gome needs large amount of capital expenditure to bolster the goal of opening 700 stores by the end of 2014. The mandate is the best choice as Huang's behavior has narrowed fund-raising channels by keeping potential investors away due to uncertainties in the company," said the statement.
The timely conversion will help Bain, which backs the current chairman Chen Xiao, gain votes at a special shareholder meeting on September 28.
Gome, in the midst of internal tussle over the control of the company, received a notice from Bain yesterday to convert the 1.59 billion yuan (US$236 million) worth convertible bonds at a price of HK$1.108 each. The 1.63 billion new shares will be issued on September 22, Gome said in a filing to Hong Kong Stock Exchange late yesterday.
The issuance will also dilute Huang's shares to 31.6 percent from 35.98 percent as the capital base will be enlarged.
It is Gome's latest efforts to gain more say in the battle as its imprisoned founder Huang is trying to unseat Chen Xiao and three directors from Bain and to overturn its authorization to issue up to 20 percent in new shares.
Gome and Huang have both released a series of letters to seek support from smaller shareholders ahead of the meeting.
Reuters reported that SS Proxy Advisory Services and Glass Lewis & Co, two firms hired to advise Gome stockholders, have suggested rejecting the proposal to oust Chen and voting against the election of Huang's sister Huang Yanhong and his lawyer Zou Xiaochun.
Glass Lewis said Gome has performed well under the current management team, and recommended the re-election of the three directors from Bain Capital.
In a separate statement late yesterday, Gome declined a request from its largest shareholder, Shining Crown, owned by Huang, seeking 21 days notice on plans to issue new shares under its standing authorization.
Gome said Bain's investment was in the best interests of the company and the company needed the general mandate to issue 20 percent shares.
"Gome needs large amount of capital expenditure to bolster the goal of opening 700 stores by the end of 2014. The mandate is the best choice as Huang's behavior has narrowed fund-raising channels by keeping potential investors away due to uncertainties in the company," said the statement.
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