Troubled utility fires chairman in survival bid
H share Northeast Electrical Transmission & Transformation Machinery Manufacturing has changed its management team and accounting firm in a bid to attract investors to keep it from going bankrupt.
The Shenyang municipal government, which controls the power generation equipment maker, terminated the contract of chairman and director Xiang Yongchun at a board meeting on Monday, according to a company statement.
Northeast Electrical Transmission's board of directors appointed Liu Jie as 'provisional convener of the board' until a new chairman could be elected.
Six other executives - three directors, the general manager, the deputy general manager and the chief engineer - resigned.
The company has also appointed Yuehua Certified Public Accountants as its domestic auditor after its former auditor, Hualun Certified Public Accountants, failed to pass an annual exam.
Last month, creditors petitioned a Hong Kong court to liquidate the Shenyang-based state-owned enterprise after it failed to repay by December 6 a US$43 million loan for a hotel project.
The High Court will hear the case on March 20.
If Northeast Electrical Transmission's creditors succeed in their court action, it would become the first Hong Kong-listed mainland company to be forced into liquidation.
Last Thursday, Northeast Electrical Transmission's Hong Kong-listed H shares plunged more than 25 per cent to 24.10 HK cents on news that the Shenyang municipal government would not step in and rescue the firm.
The following day, Northeast Electrical Transmission's shares shot up almost 37 per cent to 30.5 HK cents on news the government would seek strategic investors for a corporate restructuring.
Yesterday, Northeast Electrical Transmission issued a statement to clarify the progress of the restructuring and recent media coverage.
It said: 'A press report that a 'white knight' will help the company is only a matter of speculation by the market.
'It has been very hard to seek strategic investors. There has been no material progress on the restructuring of the company.'
Citing an anonymous company source, Reuters reported yesterday that the Shenyang municipal government was in talks with a domestic Chinese firm about restructuring Northeast Electrical Transmission.
The source also said that Northeast Electrical Transmission was hoping to turn a profit in the first half of this year.
The company has posted losses for two consecutive years. It has already issued a profit warning, saying it expects to lose money for last year, which will mark its third consecutive year of losses.
Northeast Electrical Transmission also has A shares listed on the Shenzhen Stock Exchange.
Under mainland stock exchange rules, companies that post losses for three consecutive years are in danger of being delisted.
Northeast Electrical Transmission's A shares closed at 1.95 yuan.
The company's H shares closed unchanged at 30.5 HK cents.