GOME leadership struggle heats up
By Wang Xiang |
August 19, 2010, Thursday
|
Print Edition
Print Edition
THE internal tussle for control of giant electronics retailer GOME escalated as the company's imprisoned founder, Huang Guangyu, sent out a letter to all company employees, seeking help in ousting company Chairman Chen Xiao.
In the public letter, Huang, once the richest man on the mainland, lambasted the company's current Chairman Chen Xiao for allegedly stealing GOME and trying to sell it to United States-based Bain Capital.
Huang, 41, is serving a 14-year jail term for insider trading, illegal business dealings and bribery.
Huang said in the letter that Chen, a long-time rival, "stole the control of the company while his former boss was facing the biggest frustration in life."
The duel between Huang and Chen can be traced back to 2009, when Chen took over as GOME chairman shortly after Huang's arrest.
Huang accused Chen of inviting US company Bain Capital behind his back to invest in the company. He also accused Chen of issuing new shares and offering option rights to high-ranking company officials without "considering the interest of other shareholders."
After Huang was arrested, GOME signed a deal with Bain in August 2009 to sell HK$2.95 billion (US$380 million) worth of new shares and convertible bonds to the private-equity firm and give it three non-executive seats on GOME's 11-member board.
The company also offered share options to 105 high-ranking executives.
These moves by Chen were all interpreted as diluting Huang's shareholdings. Huang now owns 31.6 percent of GOME's shares.
But the company's management explained that inviting Bain was to bolster investors' confidence after Huang's arrest. And offering share options was an incentive for the company's officials.
The power struggle soon escalated, when the five highest-ranking company executives said they supported Chen and threatened to quit if Chen were ousted.
Chen has led GOME to sue the former boss, claiming Huang's acts have damaged the company's reputation.
GOME has more than 700 stores, making it China's biggest home appliance retailer.
In the public letter, Huang, once the richest man on the mainland, lambasted the company's current Chairman Chen Xiao for allegedly stealing GOME and trying to sell it to United States-based Bain Capital.
Huang, 41, is serving a 14-year jail term for insider trading, illegal business dealings and bribery.
Huang said in the letter that Chen, a long-time rival, "stole the control of the company while his former boss was facing the biggest frustration in life."
The duel between Huang and Chen can be traced back to 2009, when Chen took over as GOME chairman shortly after Huang's arrest.
Huang accused Chen of inviting US company Bain Capital behind his back to invest in the company. He also accused Chen of issuing new shares and offering option rights to high-ranking company officials without "considering the interest of other shareholders."
After Huang was arrested, GOME signed a deal with Bain in August 2009 to sell HK$2.95 billion (US$380 million) worth of new shares and convertible bonds to the private-equity firm and give it three non-executive seats on GOME's 11-member board.
The company also offered share options to 105 high-ranking executives.
These moves by Chen were all interpreted as diluting Huang's shareholdings. Huang now owns 31.6 percent of GOME's shares.
But the company's management explained that inviting Bain was to bolster investors' confidence after Huang's arrest. And offering share options was an incentive for the company's officials.
The power struggle soon escalated, when the five highest-ranking company executives said they supported Chen and threatened to quit if Chen were ousted.
Chen has led GOME to sue the former boss, claiming Huang's acts have damaged the company's reputation.
GOME has more than 700 stores, making it China's biggest home appliance retailer.
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