HONG KONG (Reuters) – The board of directors at China electronics retailer GOME (0493.HK) said it had re-appointed three members of Bain Capital to the board after shareholders said to be affiliated with the company’s founder voted against their re-election.
U.S. private equity firm Bain Capital invested $418 million into the company last June, in a deal that followed the arrest of GOME founder and major shareholder Huang Guangyu.
At the company’s annual shareholder meeting on Tuesday, two shareholders representing 31.6 percent of outstanding shares voted against the re-election of three Bain Capital managing directors to the board.
“We strongly believe this outcome does not represent the will of the vast majority of ordinary shareholders,” said a GOME board statement. “It emphatically does not represent the will of the entire executive management team and board.”
According to a source with direct knowledge of the matter, the two shareholders that voted against the Bain directors are affiliated with Huang, who is currently on trial.
The ousting of Bain directors triggered a 2.4 billion yuan ($352 million) liability, according to a board statement. After Tuesday’s meeting, the board held an emergency meeting and re-appointed the Bain directors.
The board statement also says that Bain intends to convert the existing convertible bonds into stock before the next shareholder meeting, given the firm’s strong belief in the company and its management team. (Reporting by Michael Flaherty; Editing by Jacqueline Wong)