In its ongoing efforts to return to some trading normality and meet US demands, Chinese vendor ZTE has appointed a new board comprising eight directors.
The company, still in limbo awaiting the outcome of political tussles in the US, is doing what it can to avoid complete collapse and become an operational company again after it ceased trading in May. ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) had been banned from sourcing US components by the US Dept. of Commerce in April after it was found to have breached penalties imposed for sanctions violations. (See ZTE in Existential Crisis as It Slams 'Unfair' US Ban, Considers 'Judicial Measures', ZTE Ceases Business Operations After US Ban and ZTE Fined Another $1B in Rescue Deal With US.)
As part of a survival deal struck with US authorities in June -- which included a fine of US$1 billion and which might yet be rejected by lawmakers -- the Chinese vendor agreed to replace its board and senior management. (See ZTE Seeks $11B in Credit, Nominates New Board Members – Report and ZTE Tumbles Again as US Senate Rejects Rescue Deal.)
Now, at its Annual General Meeting, it announced the resignation of its former board and senior management and the appointment of a new executive chairman, Li Zixue: He is deputy head of Xi'an Microelectronics Technology Research Institute, a shareholder in holding company Zhongxingxin, which is ZTE's principal owner with a 30% stake. The other executive director is Gu Junying, a director of Shenzhen Aerospace Guangyu Industrial Co. Ltd., which is also a shareholder in Zhongxingxin.
The rest of the board comprises three non-executive directors -- Li Buqing, Zhu Weimin and Fang Rong -- and three independent non-executive directors -- Cai Manli, Yuming Bao and Gordon Ng.
Now the new board needs to try to rebuild the company's top management team and try to get the company back into some kind of normal operating mode.
But quite what impact the appointment of a new board will have is unclear, other than to show ZTE's willingness to toe the line currently. Its share price on the Hong Kong exchange stands at HK$11.92, compared with HK$26.55 before the US components ban was announced, and its future is still very much in the balance. Now the company, and its suppliers such as Acacia and Oclaro, wait to see if the "rescue" deal will be ratified and give it a second chance. (See Acacia Hit Worst by ZTE Components Ban.)
— Ray Le Maistre, Editor-in-Chief, Light Reading