Hisense mulls over Kelon purchase
By Hu Yuanyuan (China Daily)
Updated: 2005-08-03 05:54

The local government has promised to create a favourable environment for Kelon's restructuring. Local banks and courts have also indicated they will help. Shanghai Securites News reported that local banks would not press Kelon to return its loans. Meanwhile, the people's court in Shunde has also postponed dealing with lawsuits against Kelon.

But according to a top manager with Midea, also a powerful potential buyer, the restructuring of Kelon will not be easy.

"Currently, Kelon's major assets are its production lines, which are not so valuable in acquisition terms," he was quoted by China Business News as saying. "Moreover, after a series of blows, Kelon's brand name and social prestige have shrunk."

The China Securities Regulatory Commission launched an investigation into Kelon in April, with the focus on capital embezzlement and inflated balance sheets.

The team finished its investigation late last month, but the results have not yet been made public.

"I don't think Midea will take over Kelon at a time when things are not that clear," the insider said.

What makes the situation even worse, five top Kelon managers, including Chairman Gu Chujun, have been detained by the police, according to a Kelon statement yesterday.

Meanwhile, other firms owned by Greencool, and linked to Kelon Chairman Gu Chujun, are also suffering.

Gu set up the Greencool empire through a series of acquisitions from 2001. It consists of some 30 enterprises, of which four are listed, and its businesses range from electronic appliances to cars. The takeover of Kelon was Gu's first major expansion move.

The other three listed companies under the control of Greencool are currently trying to turn themselves around.

And Shenzhen Intermediate People's Court, in South China, has frozen Greencool's 115 million shares in Yaxing Bus, according a company statement yesterday. Greencool is the largest shareholder of Yaxing Bus, with a 60.67 per cent stake.

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