Some shareholders attending ZTE’s annual general meeting (AGM) 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.
Shares of China’s No.2 telecommunications equipment maker have cratered 60%, wiping out more than US$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 Iran and North Korea.
The embattled firm, which ceased major operations after the ban, agreed to pay a US$1 billion penalty, put US$400 million in an escrow account to resume business with US suppliers, and radically overhaul its management.
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.
Board nominees
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.
“I am most interested to see how well the new board will manage the company, as well as their technical expertise in telecoms. I don’t know how experienced they are in both these respects,” said a ZTE employee, who declined to be named due to the sensitivity of the issue.
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.
Eight new candidates have been nominated to ZTE’s board by the company’s controlling shareholder Zhongxingxin, a state-owned entity which has a 30.34% stake.
They include five non-independent directors – Li Zixue, Li Buqing, Gu Junying, Zhu Weimin and Fang Rong, all from firms linked with Zhongxingxin. Cai Manli, Yuming Bao and Gordon Ng have been nominated as independent non-executive directors.
Results of the AGM are expected to be announced in filings later in the day.
However, some shareholders complained that at the AGM, the current board members kept repeating how they were trying their best to resolve the limbo over the ban without providing details or admitting fault, as some dismayed investors became emotional.
“No one apologised, no one admitted they were wrong,” said one elderly female investor who declined to give her name.