GOME’s Jailed Founder Seeks To Throw 3 Bain Capital Executives Off The Board

(Reuters) – Chinese retailer GOME Electrical Appliances Holding Ltd (0493.HK) said it had received a letter from a firm owned by its jailed founder and biggest shareholder, seeking to terminate several agreements with the company.
In a statement to the Hong Kong stock exchange, GOME said on Monday that Beijing GOME, a company owned by its ex-chairman, Wong Kwong Yu — also known on the mainland as Huang Guangyu — had sent the firm a letter on Aug 27.
It “stated its intention to terminate the intra-group agreements between the listed group and the unlisted group regarding certain procurement and management arrangements,” if the proposed resolutions by Shinning Crown, Wong’s wholly owned company, are voted down in the firm’s upcoming special general meeting on Sept 28.
The announcement is the latest twist in a long-running battle between Wong and GOME, and comes after GOME said last week that it had set up a special meeting date to address controversial measures proposed by Wong. [ID:nTOE67M082].
“However, the board believes that termination of the intra-Group Agreements will not in any event have any significant adverse effects on the listed group, and indeed is expected to have a number of benefits to the listed group in the future,” GOME said.
The board recommended that shareholders vote in support of the current management team.
The company’s top executives and U.S. private equity firm Bain Capital have been locked in a battle with Wong, once China’s richest man who was sentenced to 14 years in jail this year by a Chinese court for bribery and insider trading. He has appealed his sentence. [ID:nTOE64R02Z]
GOME said earlier this month that it was taking legal action against Wong to seek compensation for alleged breaches of fiduciary duties, while Wong planned to raise his stake in the company to increase his voting power and demand a number of management and strategy changes.
Wong, who owned 34 percent of the company as of the end of 2009, has also proposed throwing three Bain executives off the board, a measure that briefly succeeded until the board re-appointed them.
(Reporting by Sui-Lee Wee, Editing by Ken Wills)