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Investors wipe $3 billion off China's ZTE market value after U.S. settlement

Reuters  |  HONG KONG 

By Anne Marie Roantree

HONG KONG (Reuters) - Chinese had about $3 billion wiped off its market value as it resumed trade on Wednesday after agreeing to pay up to $1.4 billion in penalties to the

China's No. 2 was crippled when a seven-year supplier ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with and

The ban, which has prevented ZTE from buying the U.S. components it relies on to make and other devices, will not be lifted until ZTE pays a fine and places $400 million more in an escrow account in a U.S.-approved

The Hong Kong-listed shares of ZTE slid as much as 41 percent to HK$14.98, their lowest in a year, following a two-month trading suspension, while its shares fell by their 10 percent limit after it confirmed details of the agreement publicised by the on Monday.

Hong Kong's benchmark Hang Seng index was down 0.5 percent in early trade.

Confirming details of the deal, ZTE said late on Tuesday it would replace its board of directors and that of its within 30 days of the June 8 order being signed by the

All members of its leadership at or above the would be removed within the 30-day period, with a commitment that they would not be re-hired, along with any executives or officers tied to the wrongdoing, it said.

It also said in filings on Tuesday that it would work to resume operations as soon as possible after the ban gets lifted, and would republish its first-quarter financial results after assessing the impact of the ban and the settlement agreement.

The case has become highly politicised and a key focus of bargaining talks as and look to avert a trade war.

U.S. lawmakers have attacked Washington's agreement with ZTE and plan legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

ZTE, with a market value of around $20 billion before its shares were suspended in April, is the world's fourth-largest after Huawei Technologies, and

(Additional reporting by Donny Kwok; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 08:32 IST
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