Gome defends steps in letter
By Pan Xiaoyi |
August 21, 2010, Saturday
|
Print Edition
Print Edition
GOME Electrical Appliances Holding Ltd's board yesterday published an open letter as it fought back against accusations by its jailed founder, Huang Guangyu, as both sides sought support in the battle for the control of the company.
The letter defended Gome's decisions to introduce Bain Capital and close underperforming outlets and said it did so as a last resort following Huang's 14-year imprisonment this year for insider trading, illegal business dealings and bribery.
The decisions solved the problem of capital shortage that Gome faced and lifted profitability and investor confidence in the company, the board said.
Huang had slammed current Chairman Chen Xiao earlier this week for closing several outlets and causing Gome to lose market share to rival Suning Appliance Co and also for turning the domestic brand name into a foreign company by securing investment from Bain Capital.
Huang, once the Chinese mainland's richest man and former chairman of Gome, had also suggested holding a shareholder meeting to oust Chen as chairman.
Gome said it was forced to close some outlets as suppliers were reluctant to sell products and banks tightened credit due to Huang's jailing.
The board also noted that Huang has benefited to the tune of more than 10 billion yuan in profit when he cut his holdings from 75 percent to 34 percent since Gome listed on the Hong Kong exchange in 2004.
The letter also said it was Huang who introduced foreign capital as most of the shares were sold to overseas investors such as Warburg Pincus.
The board also said Bain Capital's strategic investment helped boost Gome shares by 68.8 percent and raised its market value to 27 billion yuan from 16 billion yuan.
"The groundless slanders and attacks toward Chairman Chen Xiao and high-ranking officials severely impaired the company's images and operations," the letter said.
The letter defended Gome's decisions to introduce Bain Capital and close underperforming outlets and said it did so as a last resort following Huang's 14-year imprisonment this year for insider trading, illegal business dealings and bribery.
The decisions solved the problem of capital shortage that Gome faced and lifted profitability and investor confidence in the company, the board said.
Huang had slammed current Chairman Chen Xiao earlier this week for closing several outlets and causing Gome to lose market share to rival Suning Appliance Co and also for turning the domestic brand name into a foreign company by securing investment from Bain Capital.
Huang, once the Chinese mainland's richest man and former chairman of Gome, had also suggested holding a shareholder meeting to oust Chen as chairman.
Gome said it was forced to close some outlets as suppliers were reluctant to sell products and banks tightened credit due to Huang's jailing.
The board also noted that Huang has benefited to the tune of more than 10 billion yuan in profit when he cut his holdings from 75 percent to 34 percent since Gome listed on the Hong Kong exchange in 2004.
The letter also said it was Huang who introduced foreign capital as most of the shares were sold to overseas investors such as Warburg Pincus.
The board also said Bain Capital's strategic investment helped boost Gome shares by 68.8 percent and raised its market value to 27 billion yuan from 16 billion yuan.
"The groundless slanders and attacks toward Chairman Chen Xiao and high-ranking officials severely impaired the company's images and operations," the letter said.
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