Caixin
Aug 23, 2010 05:51 PM

Gome Chair: Gome Doesn't Belong to Huang

(Beijing) - The titanic clash for control at Gome has pitted the company's imprisoned founder, Huang Guangyu, against members of the company's current board and the company's chairman, Chen Xiao. But now questions have arisen over the recent investment by the American private-equity firm, Bain Capital. How did Bain Capital come to appear center stage in the Gome saga and how large of a role did Chen have in the private equity firm's entrance?


On August 20, Chen had an exclusive interview with Caixin to answer various questions about the future of Gome's control.

Caixin: Is this a difficult time to be at Gome? How would you describe the pressures placed on you, as chairman?

Chen: Some in the media describe this as a conflict between him (Huang) and me to control the company, but as a minority shareholder, how can Gome become my company? The question is moot as the company doesn't belong to anyone.

Caixin: Since Huang was detained in November 2008, how did the company's management gradually change its roles from "executor" to "decision-maker?"

Chen: The crisis didn't come about suddenly, there were signs that led us to this point.

After Huang was detained, I was appointed as acting chairman of the board. At the time, the company was facing great risks as the incident could trigger an early redemption of a total of HK$ 5.2 billion in convertible bonds, but the company almost had no cash in hand.

Nearly all the banks had suspended lending to the company and some required us to repay in advance. Many accounts were frozen. Suppliers also demanded that we shorten our payment period, while some even asked us to pay immediately.

Those were very difficult days and the company was in a very precarious situation. It became clear that the management had to take charge.

We worked day and night to communicate with banks and suppliers, making it clear that Huang's case was not related to the company. We didn't dare make long-term plans, and only sought to address the crisis at hand.

It was a long process, from late November 2008 to March 2009. I personally offered guarantees for the company's mortgage loans, topping two billion yuan. But now, all of these actions have been misconstrued as some form of plotting on my part.

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