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Saturday, 29 November 2008
Gome Reshuffles Amid Probe into Chairman
Gome Electrical Appliances Holding tried to distance itself from embattled chairman Wong Kwong-yu - under investigation on the mainland for economic crimes - by announcing a management reshuffle and efforts to boost investor confidence.
Gome Electrical Appliances Holding tried to distance itself from embattled chairman Wong Kwong-yu - under investigation on the mainland for economic crimes - by announcing a management reshuffle and efforts to boost investor confidence.
Mainland regulators yesterday accused Mr. Wong of being involved in manipulating the shares of Shanghai-listed retailer Sanlian Commerce and Shenzhen-listed property developer Beijing Centergate Technologies (Holding).
The China Securities and Regulatory Commission’s announcement came after Beijing police confirmed on Wednesday that “relevant departments” were investigating Mr. Wong.
Gome said chief financial officer Zhou Yafei was also being investigated by the authorities.
Xinhua said last night Wong Chung-yam, Mr. Wong’s elder brother and president of Beijing-based developer Towercrest Group, was also under police investigation for alleged economic crimes.
Gome chief executive Chen Xiao had been named acting chairman and Fang Wei acting chief financial officer, the mainland’s largest electrical appliance retailer said in a filing with the Hong Kong stock exchange.
“I would like to stress that to the very best of our knowledge, Gome is unconnected to the investigation into Mr. Wong’s personal affairs and the authorities have asked us no questions in connection with this matter,” Mr. Chen said.
The company said it was setting up a special committee to monitor the impact of the investigation. It also said preliminary internal checks revealed there had been no misappropriation of assets or funds.
The CSRC said its investigations found Mr. Wong’s private investment arm had manipulated the stock prices of Sanlian and Centergate. They have passed all related documents to police.
Shares in Sanlian surged in March after Gome bought a 10.69 per cent stake in the firm to become its largest shareholder. The shares continued to rise as the market speculated the deal would pave the way for Gome to take over the company. But the acquisition never materialised.
It was also reported earlier this year that Gome planned to inject property assets into Centergate, driving its share price higher. That plan was halted later.
Trading of Gome shares has been suspended since Monday. Its convertible bonds had slumped 25 per cent since the launch of the investigation and were trading at distressed levels, a source said.
“The company’s whole business is at risk,” said the source. “The problem is that if banks call loans and creditors (suppliers) won’t extend their credit lines, Gome could collapse, even if it is a big company. It’s a very, very dangerous situation now, for both the company and investors.”
Gome is due to repay 4.6 billion yuan (HK$5.22 billion) worth of convertible bonds in May 2010.
Gome had not disclosed what actions its creditors might take, said one analyst.
Researchers from investment banks and brokerages, including Credit Suisse, Citi and Nomura, have all downgraded their ratings on Gome.
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Gome Reshuffles Amid Probe into Chairman
Jasmine Wang
29 November 2008
Gome Electrical Appliances Holding tried to distance itself from embattled chairman Wong Kwong-yu - under investigation on the mainland for economic crimes - by announcing a management reshuffle and efforts to boost investor confidence.
Mainland regulators yesterday accused Mr. Wong of being involved in manipulating the shares of Shanghai-listed retailer Sanlian Commerce and Shenzhen-listed property developer Beijing Centergate Technologies (Holding).
The China Securities and Regulatory Commission’s announcement came after Beijing police confirmed on Wednesday that “relevant departments” were investigating Mr. Wong.
Gome said chief financial officer Zhou Yafei was also being investigated by the authorities.
Xinhua said last night Wong Chung-yam, Mr. Wong’s elder brother and president of Beijing-based developer Towercrest Group, was also under police investigation for alleged economic crimes.
Gome chief executive Chen Xiao had been named acting chairman and Fang Wei acting chief financial officer, the mainland’s largest electrical appliance retailer said in a filing with the Hong Kong stock exchange.
“I would like to stress that to the very best of our knowledge, Gome is unconnected to the investigation into Mr. Wong’s personal affairs and the authorities have asked us no questions in connection with this matter,” Mr. Chen said.
The company said it was setting up a special committee to monitor the impact of the investigation. It also said preliminary internal checks revealed there had been no misappropriation of assets or funds.
The CSRC said its investigations found Mr. Wong’s private investment arm had manipulated the stock prices of Sanlian and Centergate. They have passed all related documents to police.
Shares in Sanlian surged in March after Gome bought a 10.69 per cent stake in the firm to become its largest shareholder. The shares continued to rise as the market speculated the deal would pave the way for Gome to take over the company. But the acquisition never materialised.
It was also reported earlier this year that Gome planned to inject property assets into Centergate, driving its share price higher. That plan was halted later.
Trading of Gome shares has been suspended since Monday. Its convertible bonds had slumped 25 per cent since the launch of the investigation and were trading at distressed levels, a source said.
“The company’s whole business is at risk,” said the source. “The problem is that if banks call loans and creditors (suppliers) won’t extend their credit lines, Gome could collapse, even if it is a big company. It’s a very, very dangerous situation now, for both the company and investors.”
Gome is due to repay 4.6 billion yuan (HK$5.22 billion) worth of convertible bonds in May 2010.
Gome had not disclosed what actions its creditors might take, said one analyst.
Researchers from investment banks and brokerages, including Credit Suisse, Citi and Nomura, have all downgraded their ratings on Gome.
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