Chinese telecoms giant ZTE Corp is expected to announce a radical management overhaul following a shareholder meeting on Friday, in line with conditions laid out in a $1.4 billion settlement deal to lift a crippling US supplier ban.
Some shareholders attending ZTE’s annual general meeting at its Shenzhen headquarters in southern China expressed dismay at the huge losses they have suffered as a result of the ban that has sent ZTE shares into a tailspin, Reuters reported.
Shares of China’s No.2 telecommunications equipment maker have cratered 60%, wiping out more than $11 billion of the company’s market valuation, since trading resumed earlier this month following a two-month hiatus.
The stock has been hammered by the uncertainty over when ZTE would be able to resume business with American suppliers, who provide almost a third of the components used in its equipment, amid intensifying US-China trade tensions.
The United States in April imposed a seven-year supplier ban on ZTE after it broke an agreement to discipline executives who conspired to evade US sanctions on several countries.
The embattled firm, which ceased major operations after the ban, agreed to pay a $1 billion penalty, put $400 million in an escrow account to resume business with US suppliers, and radically overhaul its management.
Congressional Headwind
However, the US Department of Commerce has still not worked out the details necessary for lifting the ban, a government spokesman said in the US on Thursday.
The deal is facing strong opposition from some US lawmakers.
ZTE shareholders met on Friday to vote on matters including a new board to replace the current 14-person team led by Chairman Yin Yimin.
As part of ZTE’s June 7 agreement with the United States, it must replace its board, fire all leadership members at or above the senior vice president level, along with any executives or officers tied to the wrongdoing, and hire a US-appointed compliance monitor within 30 days.
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