ZTE seeks $10.7 billion credit line

hong kong — Chinese telecommunications giant ZTE Corp has proposed a $10.7 billion financing plan and nominated eight board members in a drastic management overhaul, as it seeks to rebuild a business crippled by a US supplier ban.

The news, announced late on Wednesday, indicates China’s No.2 telecom equipment maker is working towards meeting conditions laid out by the United States so it could resume business with American suppliers, who provide about 25-30 per cent of the components used in ZTE’s equipment.

Investors cheered the development, driving up ZTE’s Hong Kong-listed shares as much as 3.7 per cent on Thursday morning.

A day earlier, embattled ZTE’s shares plunged a record 41 per cent in Hong Kong and 10 per cent in Shenzhen, wiping almost $3 billion off its market value, as it resumed trading after being suspended for almost two months due to the US ban. The United States imposed the seven-year supplier ban on ZTE in April after it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.

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

ZTE was also ordered to radically overhaul its management and hire a US-appointed special compliance coordinator. As part of its deal with the United States, ZTE needs to replace its 14-person board and fire all leadership members at or above the senior vice president level, along with any executives or officers tied to the wrongdoing.