UPDATE 1-Investors back GOME ahead of key vote -spokesman

* Institutions with 42 pct of GOME back management -spokesman

* Shares underperforming, down 22 percent this year
(Add details)

HONG KONG, Sept 10 (BestGrowthStock) – A large portion of
institutional investors support the existing management of
China’s GOME and will back top executives ahead of a key
shareholder meeting, the company said on Friday, as the company
tries to wrest control from its jailed founder.

GOME Electrical Appliances Holding Ltd (0493.HK: ) has called a
special general meeting for Sept. 28 to discuss measures proposed
by founder, ex-chairman and largest shareholder Wong Kwong Yu,
regarding the removal of the current chairman and other board
members. Wong is known on the mainland as Huang Guangyu.

The meeting will also vote on Huang’s measure to cancel a
mandate empowering the board of directors to issue additional
shares representing up to 20 percent of the company.

“We have spoken with institutions representing 42 percent of
GOME shares and we have yet to talk with a single fund manager
who will be supporting Mr. Huang’s nominees to replace our
existing board directors,” a GOME spokesman said.

The spokesman declined to be identified because of the
sensitivity of the matter.

Bain Capital, which agreed to invest in the company earlier
this year, has said it will exercise its right to convert its
bond holding into about 10 percent of GOME shares before the
Sept. 28 meeting. The bond conversion would dilute Huang’s
interest in the company to 32.5 percent from 36 percent.

Among the largest institutional shareholders in GOME are JF
Asset Management, with 4.79 percent, and Fidelity with 3.61
percent, according to regulatory documents. Other institutions
involved are Morgan Stanley (MS.N: ) (Read more about the money market today. ) and BlackRock Inc (BLK.N: ).

GOME’s management needs a simple majority of more than 50
percent of votes in their favor for the eight measures on the
ballot. Three of the measures are to re-elect Bain Capital
executives to the board — executives Huang briefly overthrew
before the board of directors stepped in.

There are also four measures pertaining to Huang-influenced
removals and appointments of other directors, and one to cancel
the equity-raising mandate that will dilute the founder’s


With the management at odds with the top shareholder, both
sides are reaching out to investors for support at the special

Lobbying institutions was also part of Huang’s agenda, said a
representative from his shareholding group, Shinning Crown.

Huang has sought to terminate several agreements with the
Chinese home appliance retailer if the proposed resolutions by
his wholly-owned Shinning Crown are voted down in the upcoming
special general meeting. [ID:nTOE67S021]

Huang, once China’s richest man, was sentenced to 14 years in
jail this year by a Chinese court for bribery and insider
trading. He has appealed his sentence. [ID:nTOE64R02Z]

Zou Xiao Chun, proposed by Huang for appointment as a
director, said he and his team had been in touch with
institutions since Aug. 4 to explain the reason for the meeting,
and had gained their understanding and support, according to a
report by Chinese newspaper the 21st Century Business Herald.

Zou said he would try to meet as many institutions as
possible, including Morgan Stanley and JP Morgan (JPM.N: ), before
the shareholder meeting, and senior management of Bain Capital to
discuss corporate governance and the future development of GOME.

GOME has taken legal action against Huang seeking
compensation for alleged breaches of fiduciary duties, while
Huang is seeking to raise his stake to increase his voting power
and demand a number of management and strategy changes. Huang has
proposed throwing three Bain executives off the board, a measure
that briefly succeeded until the board re-appointed them.

Competing with Suning Appliance Co Ltd (002024.SZ: ), GOME aims
to open 700 new stores and generate as much as HK$77 billion
($9.9 billion) additional revenue in a five year business plan.

Hong Kong-listed shares of GOME have fallen 22 percent so far
this year, against a 3.3 percent fall in the Hang Seng Index
(.HSI: ). By midday Friday, GOME was down 1.35 percent compared
with a 0.04 percent fall in the HSI.
(Reporting by Donny Kwok and Michelle Chen; Editing by Chris

UPDATE 1-Investors back GOME ahead of key vote -spokesman