Home appliance maker Guangdong Kelon Electrical Holdings plans to use internal reserves to offset an accumulated loss of 1.38 billion yuan (about HK$1.3 billion) and has revised its corporate rules in an attempt to repair damage done by its former controlling shareholder.
The moves were made at the request of the China Securities Regulatory Commission (CSRC) and Hong Kong Exchanges and Clearing, a company spokesman said.
The company was asked to remedy malpractices related to board and shareholders meetings, information disclosure and accounting.
A CSRC investigation found Kelon had advanced 1.26 billion yuan to former controlling shareholder Rongsheng Group through a series of undisclosed connected transactions involving bank borrowings, the purchase of raw materials, the payment of advertising costs, bank guarantees and debt transfer.
The transactions dragged Kelon into financial trouble.
The company intends to offset the accumulated loss with cash drawn from its statutory common and capital reserves, pending shareholder approval.
