GUANGZHOU -
Shenzhen-listed Kelon Electrical Holding Co Ltd
received orders valued at 3.6 billion yuan
(US$445.5 million) from distributors on October
17, enabling it to resume full production. The
company also launched a series of new products for
2006 on the same day.
Kelon, a major
refrigerator and air-conditioner maker based in
south China's Guangdong province, has effectively
been taken over by another Chinese main home
electric appliance maker, Hisense Group, after a
series of troubles earlier in 2005. At the
order-signing ceremony on October 17, the new
management of Kelon, led by president Tang Yeguo,
was collectively present. Tang declared that Kelon
projected sales of 4.5 million refrigerators and 3
million air-conditioners next year. Speaking at
the ceremony, Tang said
Kelon's operations have fully returned to normal.
Ten leading Chinese distributors including
Gome, Suning, Yongle, Wuhan Industry and Trade,
Shandong Sanlian, and Dalian Dashang were present
at the order-signing ceremony. The companies
placed 3 billion yuan worth of orders altogether.
Kelon also said it had resumed export sales, with
HIGroup plc of Britain ordering $75 million worth
of refrigerators and air conditioners.
Kelon also said that it has won the
confidence of financial organizations; for
example, the Foshan branch of China Merchants Bank
has granted a credit line of 130 million yuan to
the company.
Kelon's board appointed Tang
Yeguo as its president to replace Liu Congmeng on
September 22, as Hisense Group began to take over
the management of Kelon. Tang Yeguo is currently
vice-chairman of Qingdao Hisense Air-Conditioner
Co Ltd and director of the Shanghai-listed Hisense
Electric Co Ltd. Also entering the management of
Kelon from Hisense are Xiao Jianlin, who serves as
vice-president in charge of financial affairs; Su
Yutao, who serves as vice-president in charge of
production and technology, and Shi Yongchang, who
serves as vice-president in charge of domestic
marketing.
Hisense Group announced on
September 12 that it would acquire 26.43% of Kelon
for 500-900 million yuan to become its No 1
shareholder, and the two sides signed an agreement
accordingly. The September 12 announcement
stipulated that if the total net capital of Kelon
exceeds 1.8 billion yuan, Hisense will acquire the
shares for 900 million yuan. Otherwise, it will
pay 26.43% of the estimated amount, with a maximum
value of 477 million yuan. Hisense would first pay
500 million yuan, and return the overcharge or
demand payment for the shortage according to the
result of the company's assessed value. Lastly,
Hisense agreed to operate Kelon by trusteeship
temporarily.
Kelon plunged into a crisis
in April after allegations of financial
malfeasance surfaced, and its former senior
officials including chairman Gu Chujun were
arrested by the police.
Hisense, based in
the coastal city of Qingdao, is a leading home
electrical appliance maker in China. Its main
products include color TV sets, air-conditioners
and refrigerators. It has a Shanghai-listed arm
Hisense Electric Co Ltd. Hisense Group's offer to
acquire Kelon was intended to take advantage of
Kelon's well-established brands, management,
technology and marketing networks. It will make
the acquisition via its 93%-owned Hisense
Air-Conditioner Co Ltd so as to avoid competition
in the same industry. Hisense has expressed
confidence in its ability to rejuvenate Kelon.
