THE management of China Shanshui Cement Group Ltd.’s operating unit was ousted two days after executives of its parent were dismissed, in a move analysts said underscores efforts by the company’s biggest shareholder Tianrui Group Co. to solidify control.

    Shandong Shanshui Cement Group Ltd. founder Zhang Caikui, chairman Zhang Bin and chief financial officer Henry Li were among key managers whose positions were terminated effective Dec. 3, according to a filing by Shanshui on Friday. Tianrui’s vice chairman Li Heping has succeeded Zhang Bin to become chairman of the unit.

    China Shanshui became the latest defaulter in the onshore bond market in November after a shareholder fight hurt financing, which triggered a cross-default on the company’s US$500 million offshore notes due 2020.

    The firm said in the same filing that it’s given instructions to legal adviser Wilkinson & Grist to initiate legal actions against Zhang Bin and Zhang Caikui in relation to alleged illegal conduct and breach of fiduciary duties.

    “The removal of Shandong Shanshui’s top management will allow Tianrui to gain more control on Shanshui from the operation and shareholder level going forward,” said Ross Lee, a credit analyst at Bank of China Hong Kong Ltd. “This is positive for Shanshui’s dollar bondholders as it shows Tianrui’s commitment to Shanshui is growing.”

    China Shanshui’s US$500 million in 7.5 percent 2020 notes have been on a roller-coaster ride in recent months, having plunged to as low as 63 U.S. cents Nov. 12. The debentures were down 0.2 cent to 89.8 U.S. cents Friday.

    The volatility has prompted some bondholders to sell the notes amid the intensifying shareholder fight. Tianrui said in a Nov. 17 filing it would lend China Shanshui funds if its proposed restructure of the cement company’s board occurs and triggers early repayment of the 2020 securities. Tianrui succeeded in removing the board including chairman Zhang Bin in an extraordinary general meeting Tuesday. (SD-Agencies)