LONDON (Alliance News) - Sorbic International PLC Wednesday said it has removed Wang Yan Ting as chief executive of the group following ongoing problems with the company receiving funds from its Chinese subsidiary.
The food preservative sorbate producer has been chasing funds owed to the company by its Chinese subsidary, Linyi Van Science and Technique, of which Wang was chief executive, since August 2014.
In August 2014, Sorbic said it had extended the repayment deadline for GBP3.6 million in outstanding loan stock owed to the company from its Chinese operating subsidiary to the end of 2014. The balance remains unpaid and in default and Sorbic visited China to expedite the redemption of the outstanding loan stock and discussions were held between Sorbic and Wang concerning the problem.
The funds constrained in China are now much higher than the original GBP3.8 million, due to interest, a redemption premium, and compensation to cover Sorbic's expenses.
However, on Wednesday, Sorbic said it sought advice from its lawyers and advisers in China, and said Wang has now "been removed (as group chief executive) from office, both at the board level and in respect of the operating subsidiary in China".
Sorbic added that Wang has also been removed from his role as Legal Representative in China and replaced by Cai Lun, the managing director of Beijing law firm Guolan. As part of the change, the remaining two directors of the Chinese subsidiary also have been removed.
Prior to Wang's removal, Sorbic appointed eCFO, a Chinese business consultancy company, to try to recover the funds. The new board of the Chinese subsidiary will consist of the legal representative Lun, and two directors of eCFO, Jay Boyle and Matt Winter.
"Following these changes, the new team will focus on releasing the funds held within China of approximately GBP7.8 million as of March 31, 2015, and improving the financial performance of Linyi Van Science and Technique operations in China," said Sorbic in a statement.
"The above changes represent a first step in returning the group to a more centralised corporate governance structure, and the board will provide further details as appropriate," the company added.
Sorbic shares dropped 7.4% to 2.20 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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