ZTE confirmed the appointment of a new chairman as part of an expected board overhaul, as the Chinese vendor looks to put a recent US import ban – which crippled its business – behind it.
In a statement, the company confirmed it appointed eight new board members, including Li Zixue as its chairman, after making nominations in mid-June.
The former board, which consisted of 14 members, resigned, making way for the downsized board. The move complies with terms set by the US following a settlement with ZTE to lift a seven year ban on US companies selling equipment to the vendor.
Following the ban, implemented in April, ZTE was forced to suspend its operations. Along with committing to changes to its management and compliance procedures, ZTE also agreed to pay a fine of $1 billion and place an additional $400 million in escrow.
The new board consists of five non-independent directors: Li Zixue; Li Buqing; Gu Junying; Zhu Weimin and Fang Rong. Three independent directors have also been appointed: Cai Manli, Yuming Bao and Gordon Ng. Bloomberg pointed out Li Zixue is the deputy director of Xi’an Microelectronics Technology Institute, a research unit of the China Aerospace Science and Technology Corporation and a key technology provider to the nation’s space and defence programmes. It was also an early investor in ZTE.
As part of the revamp, ZTE also confirmed it was applying for financing of around $10.5 billion to rebuild its business, which had also been widely reported.
ZTE is seeking $6 billion in credit from the Shenzhen branch of the China Development Bank and an additional CNY30 billion ($4.5 billion) from the Bank of China.
The new leadership will be tasked wth rebuilding ZTE following the US fracas, as well as ensuring the company remains compliant with terms set by the country. ZTE lost at least $3 billion after suspending its operations, Bloomberg reported, and around $11 billion in market value since resuming trading on 13 June.
Although ZTE is taking steps to comply with US terms, there is still a threat the settlement could yet be derailed. The US Senate last month approved an amendment to a defence spending bill which could overturn the Department of Commerce’s agreement to lift trade sanctions against ZTE.