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Battle for Gome heats up as Huang boosts stake
By Winny Wang |
August 27, 2010, Friday
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Online Edition
Online Edition
THE battle for Gome is turning intensified after its jailed founder Huang Guangyu reportedly increased his stake in the home appliance giant to contend against its board of directors.
Huang, former chairman of Gome, reportedly bought 120 million shares, or 0.8 percent, in the company at HK$2.42 (31 US cents) apiece to increase its stake to 34.78 percent, Sina.com said today.
He will continue to increase its ownership of Gome by as much as two percent, which is permitted by the Hong Kong stock exchange, to prevent his holding from being diluted by potential new share sales, the website quoted unnamed sources as saying.
Meanwhile, Chen Xiao, current chairman of Gome, was said to seek supports from institutional investors, including JP Morgan, FIL Ltd and The Northern Trust Co, to consolidate his position in the troubled appliance retailer.
Huang, once the richest man on the Chinese mainland, was sentenced to 14 years in jail this year on bribery and insider trading charges.
In a letter, Huang accused Chen of attempting to steal Gome from its founder while the former boss is battling the biggest crisis of his business life. Huang also lambasted Chen for trying to sell Gome out to United States-based Bain Capital and for losing market share to Suning.
Huang has demanded the ouster of Chen and has sought to overturn authorization for the board to issue up to 20 percent in new shares, which would dilute his holding.
Both are appealing for support from smaller shareholders ahead of a special meeting of shareholders scheduled on September 28.
In the showdown to come, Chen holds 1.47 percent of Gome shares, while Bain Capital, which backs Chen, owns Gome convertible bonds that represent about 9 percent of shares. Bain is expected to convert the bonds into shares before the meeting.
By the end of June, Gome had 740 stores nationwide, after closing more than 150 under-performing outlets since last year. At the same time, Suning added 149 outlets this year to boost its number to 1,075. Just three years ago, Gome outlets outnumbered Suning's by 726 to 632.
Huang, former chairman of Gome, reportedly bought 120 million shares, or 0.8 percent, in the company at HK$2.42 (31 US cents) apiece to increase its stake to 34.78 percent, Sina.com said today.
He will continue to increase its ownership of Gome by as much as two percent, which is permitted by the Hong Kong stock exchange, to prevent his holding from being diluted by potential new share sales, the website quoted unnamed sources as saying.
Meanwhile, Chen Xiao, current chairman of Gome, was said to seek supports from institutional investors, including JP Morgan, FIL Ltd and The Northern Trust Co, to consolidate his position in the troubled appliance retailer.
Huang, once the richest man on the Chinese mainland, was sentenced to 14 years in jail this year on bribery and insider trading charges.
In a letter, Huang accused Chen of attempting to steal Gome from its founder while the former boss is battling the biggest crisis of his business life. Huang also lambasted Chen for trying to sell Gome out to United States-based Bain Capital and for losing market share to Suning.
Huang has demanded the ouster of Chen and has sought to overturn authorization for the board to issue up to 20 percent in new shares, which would dilute his holding.
Both are appealing for support from smaller shareholders ahead of a special meeting of shareholders scheduled on September 28.
In the showdown to come, Chen holds 1.47 percent of Gome shares, while Bain Capital, which backs Chen, owns Gome convertible bonds that represent about 9 percent of shares. Bain is expected to convert the bonds into shares before the meeting.
By the end of June, Gome had 740 stores nationwide, after closing more than 150 under-performing outlets since last year. At the same time, Suning added 149 outlets this year to boost its number to 1,075. Just three years ago, Gome outlets outnumbered Suning's by 726 to 632.
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