ZTE to announce new board to end the U.S ban
HONG KONG (Agencies): Chinese telecoms giant ZTE Corp is expected to announce a radical management overhaul following a shareholder meeting on Friday, in line with conditions laid out in a $1.4 billion settlement deal to lift a crippling U.S. supplier ban.
Some shareholders attending ZTE’s annual general meeting (AGM) at its Shenzhen headquarters in southern China expressed dismay at the huge losses they have suffered as a result of a plunge in the company’s shares due to the ban.
Shares of China’s No.2 telecommunications equipment maker have cratered 60 percent, wiping out more than $11 billion of the company’s market valuation, since trading resumed earlier this month following a two-month hiatus.
The stock has been hammered by the uncertainty over when ZTE would be able to resume business with American suppliers, who provide almost a third of the components used in its equipment, amid intensifying U.S.-China trade tensions.
The United States in April imposed a seven-year supplier ban on ZTE after it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.
The embattled firm, which ceased major operations after the ban, agreed to pay a $1 billion penalty, put $400 million in an escrow account to resume business with U.S. suppliers, and radically overhaul its management.
However, the U.S. Department of Commerce has still not worked out the details necessary for lifting the ban, a government spokesman said in the U.S. on Thursday.
The deal has met with strong opposition from some U.S. lawmakers.
ZTE shareholders are meeting on Friday to vote on matters including a new board to replace the current 14-person board led by chairman Yin Yimin.
As part of ZTE’s June 7 agreement with the United States, ZTE has to replace its board, fire all leadership members at or above the senior vice president level, along with any executives or officers tied to the wrongdoing, and hire a U.S.-appointed compliance monitor within 30 days.
Eight new candidates were nominated by ZTE’s controlling shareholder Zhongxingxin, a state-owned entity which has a 30.34 percent stake.
They included five non-independent directors – Li Zixue, Li Buqing, Gu Junying, Zhu Weimin and Fang Rong, all from firms linked with Zhongxingxin. Cai Manli, Yuming Bao and Gordon Ng have been nominated as independent non-executive directors.