SHENZHEN/HONG KONG: Chinese telecoms giant ZTE Corp announced a new board on Friday in a radical management shakeup as part of a $1.4 billion deal with the United States, moving it closer towards getting a devastating American supplier ban lifted.
The United States slapped the crippling seven-year supplier ban on ZTE, China’s No. 2 telecommunications equipment maker, in April after it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea. The management overhaul was among the conditions laid out in the settlement deal to have the ban lifted. Li Zixue was elected as the company’s new chairman, ZTE said in exchange filings late on Friday after its annual general meeting.
Of the eight new board members, Li and Gu Junying were elected as executive directors, while non-executive directors include Li Buqing, Zhu Weimin and Fang Rong. The rest were independent non-executive directors, including Cai Manli, Yuming Bao and Gordon Ng. The old board and senior management, headed by Chairman Yin Yimin, have tendered their resignation on June 29, it added. During the annual general meeting, shareholders also vetoed the company’s proposal of profit distribution of paying 1.38 billion yuan ($208.66 million) worth of dividends.
The company, which ceased major operations after the ban, has also agreed to pay a $1 billion penalty and put $400 million in an escrow account as part of the deal to resume business with U.S. suppliers - who provide almost a third of the components used in its equipment.