ZTE seeks US$10.7b to re­build oper­a­tions

New Straits Times - - BUSINESS / WORLD -

HONG KONG: Chi­nese telecom­mu­ni­ca­tions gi­ant ZTE Corp has pro­posed a US$10.7 bil­lion (RM42.61 bil­lion) fi­nanc­ing plan and nom­i­nated eight board mem­bers in a dras­tic man­age­ment over­haul, as it seeks to re­build a busi­ness crip­pled by a United States sup­plier ban.

The news in­di­cates the tele­com equip­ment maker is work­ing to­wards meet­ing the con­di­tions laid out by the US so it could re­sume busi­ness with Amer­i­can sup­pli­ers, who pro­vide be­tween 25 and 30 per cent of the com­po­nents used in its equip­ment.

In­vestors cheered the devel­op­ment, driv­ing up ZTE’s Hong Kong-listed shares as much as 3.7 per cent yes­ter­day morn­ing, out­per­form­ing the Hang Seng In­dex that dipped slightly.

A day ear­lier, its shares plunged a record 41 per cent in Hong Kong and 10 per cent in Shen­zhen, wip­ing out al­most US$3 bil­lion off ZTE’s mar­ket value, as it re­sumed trad­ing af­ter be­ing sus­pended for al­most twom­onths due to the US ban.

The US im­posed the seven-year sup­plier ban on the telecom­mu­ni­ca­tions equip­ment maker in April af­ter it broke a pact to dis­ci­pline ex­ec­u­tives who con­spired to evade US sanc­tions on Iran and North Korea.

ZTE last week agreed to pay a US$1 bil­lion fine to the US gov­ern­ment. The ban will not be lifted un­til ZTE places an­other US$400 mil­lion in an es­crow ac­count in a US-ap­proved bank for 10 years.

ZTE was also or­dered to rad­i­cally over­haul its man­age­ment and hire a US-ap­pointed spe­cial com­pli­ance co­or­di­na­tor.

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