GOME sees shares fall by 12%
By Pan Xiaoyi |
August 7, 2010, Saturday
|
Print Edition
Print Edition
SHARES in GOME Electrical Appliances Holding ended 12 percent lower yesterday after a dispute between the management team and the disgraced Huang Guangyu, its founder and former chairman, escalated.
The company said on Thursday that it was to file a lawsuit against Huang seeking compensation in connection with his breach of duties relating to repurchases of the company's shares in 2008.
The company also said that following the decision to sue Huang, it received a letter from Shining Crown Holdings, Huang's wholly owned company, demanding a number of changes to the management team.
However, Shining Crown said yesterday that the company had not been aware of the lawsuit before sending the letter. "The statement critically deviated from truth and cheated investors," Shining Crown said.
It sent representatives to discuss reshuffling the board of directors on July 19. Talks continued until August 4 without reaching agreement and Shining Crown decided to send the letter, it said.
"We did not expect the dispute between Huang and the management to escalate to the current status. That will surely lay pressure on the stock performance in the short term," said Julie Ke, an analyst at Guotai Junan Securities (Hong Kong).
Huang, who remains the biggest shareholder with 34 percent of GOME shares, called for investors' support to rearrange the management team. However, analysts expect more shareholders will vote in favor of the current team.
Huang, once the richest man on the Chinese mainland, was jailed for 14 years this year for bribery and insider trading. He has taken several actions in the hope of keeping control over the company, including attempts to keep Bain Capital from investing and to oppose the assignment of three non-executive directors from Bain.
"As long as the results are in line with our expectation, we believe the dispute to settle in a way benefiting all shareholders," said Ke of Guotai Junan.
The company said on Thursday that it was to file a lawsuit against Huang seeking compensation in connection with his breach of duties relating to repurchases of the company's shares in 2008.
The company also said that following the decision to sue Huang, it received a letter from Shining Crown Holdings, Huang's wholly owned company, demanding a number of changes to the management team.
However, Shining Crown said yesterday that the company had not been aware of the lawsuit before sending the letter. "The statement critically deviated from truth and cheated investors," Shining Crown said.
It sent representatives to discuss reshuffling the board of directors on July 19. Talks continued until August 4 without reaching agreement and Shining Crown decided to send the letter, it said.
"We did not expect the dispute between Huang and the management to escalate to the current status. That will surely lay pressure on the stock performance in the short term," said Julie Ke, an analyst at Guotai Junan Securities (Hong Kong).
Huang, who remains the biggest shareholder with 34 percent of GOME shares, called for investors' support to rearrange the management team. However, analysts expect more shareholders will vote in favor of the current team.
Huang, once the richest man on the Chinese mainland, was jailed for 14 years this year for bribery and insider trading. He has taken several actions in the hope of keeping control over the company, including attempts to keep Bain Capital from investing and to oppose the assignment of three non-executive directors from Bain.
"As long as the results are in line with our expectation, we believe the dispute to settle in a way benefiting all shareholders," said Ke of Guotai Junan.
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