2010-09-28 16:10

HONG KONG - The power struggle in GOME, China's largest home appliance retailer, came to a climax at the company's special shareholders' general meeting held on Tuesday in Hong Kong.

Shareholders attending the meeting, held in the Regal Hong Kong Hotel at Causeway Bay, the downtown area, would vote on eight proposals, among which five raised by Huang Guangyu, the jailed founder of GOME and the company's largest single shareholder.

Huang had proposed to remove current chairman of the board Chen Xiao, and install his sister and lawyer on the board. He had also asked to cancel the general mandate permitting the company's directors to issue GOME shares.

The proposal to appoint two new representatives was "a reasonable request of the Founding Shareholders to be represented on the company's board", said Huang in a statement issued on Sunday.

The statement also accused Chen Xiao of not acting and speaking "in the best interests of the company and its shareholders".

Huang and his wife hold about 32.47 percent of the company's share. They would lose their right to veto important company proposals if more GOME shares are issued.

The results of the vote would not be announced until the early Tuesday evening, said a spokesman of GOME.

Chen, who has about 1.25 percent of the shares, and Huang have been struggling to control the company since Huang was first jailed in 2008. Huang is now serving a 14-year jail term for bribery and insider trading.

Besides, Bain Capital LLC, a US-based private-equity firm, announced on September 15 that it had boosted its stake in GOME to 9.98 percent by converting bonds into equity, which was regarded as support for chairman Chen.

The battle for corporate control has triggered heated discussions in China. Some experts justify Chen's taking over as a sign of progress in China's corporate system, while most Internet users and some businessmen say Chen betrayed his boss to steal the company.

However, analysts said that, since neither Huang or Chen could assure the 50 percent of the shareholder base plus one vote needed to claim victory, it would remains a puzzle until the result of the vote announced.
GOME's stock, closing at HK$2.38 per share on Monday, has dropped over 20 percent this year.