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Ultrasonic CEO resurfaces in China, denies taking off with cash

The missing chief executive of embattled German-listed Chinese shoe maker Ultrasonic has resurfaced in China to deny absconding with millions of dollars of company money, telling local media he had been travelling and lost his phone.

CEO Wu Qingyong, who was dismissed last week after his abrupt disappearance, separately told an Ultrasonic executive he would return to the company and give back any funds, the firm said in a statement on Monday. It added, however, that its supervisory board had been unable to contact Wu directly.

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In a video interview with Chinese news outlet Sina, posted late on Sunday, Wu said the whole matter was a misunderstanding and that he had simply been on holiday with his grandson and had lost his mobile phone.

"Rumors say that I took more than a billion (yuan). This is pure rumor. No such thing has happened. The company's financial situation remains normal," Wu said.

The Sina video said the interview had taken place in the southern city of Quanzhou, where the firm is based.

Ultrasonic shoe company showroom.
Source: Ultrasonic
Ultrasonic shoe company showroom.

The company statement said Wu had contacted the firm's chief financial officer (CFO), Clifford Chan, and a German broker by phone over the weekend, saying that "he would return to the company and that he would also return the funds".

An official in the company's human resources department, who gave only his family name Pi, told Reuters that senior executives had met on Sunday to discuss the reappearance of Wu, who he said was planning to visit the firm's facilities.

Wu Qingyong held just over 52 percent of the company's shares on Aug. 15 this year, according to its first half financial report. The management board includes the elder Wu, his son Wu Minghong and CFO Clifford Chan.

Attempts by Reuters to contact Wu Qingyong were unsuccessful. A man who picked up a phone number linked to Wu said it was a wrong number. Wu's assistant at Ultrasonic was not immediately available for comment.

Cash reserves vanished

Ultrasonic said last Tuesday that Wu Qingyong and his son, Chief Operating Officer Wu Minghong, had been missing since the weekend, and most of the company's cash reserves in China and Hong Kong had vanished. On Thursday, the company said the pair had withdrawn the cash in two tranches.

Read MoreUnsecured loan, missing CEO add red flags to China lending

In the seven-minute Sina interview, in which Wu appeared with another son, Wu Mingjun, the elder Wu added that he intended to investigate and track down those responsible for publishing the "announcement" as well as spreading the rumors.

Wu Mingjun said his brother had been very affected by the experience and was recovering, but gave no details of his whereabouts.

Ultrasonic's shares more than doubled to around 2.30 euros in Frankfurt on Monday, but were still more than 60 percent down from where they began last week.

The elder Wu's comments appear to conflict with the supervisory board of Ultrasonic, which formally dismissed him last Thursday, saying he and his son had drawn down a $60 million credit facility in August and transferred money to China from Hong Kong before disappearing.

Cathay United Bank, one of seven lenders behind loans to Ultrasonic, filed a police report on the matter in Hong Kong last Friday, according to a person familiar with the case from one of the lending banks. That came after an unsuccessful attempt a day earlier to file a report in mainland China.

Representatives of Cathay United, a subsidiary of Taiwan's Cathay Financial Holdings, also visited Ultrasonic's facility in Xiamen last week, but found that the plant was shut, the person said.

Credit lines

In the video interview with Sina, Wu said he had been out of contact in recent days because he was in Hong Kong on vacation and in the Philippines for a medical check.

He added he had returned to China as quickly as possible after finding out about the rumours.

"I did not run away. Rumours around society and on the web are saying that I took the money and ran," Wu told Sina. "My reputation and that of the company have suffered great damage, and I retain my right to prosecute those who spread the rumor."

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Nomura Holdings and co-lenders had given the Frankfurt-listed shoemaker the $60 million unsecured credit facility to fund an expansion drive. Ultrasonic said last week that it had defaulted on the facility, and was in talks with creditors to try to avoid insolvency.

"The whole thing is one surprise after the next," said a source close to the lenders behind the Nomura-arranged loan, in response to Wu's reappearance. "They have seen the report and are thinking about what should be their next step."

Two sources on Monday said that China Construction Bank had also made loans to Ultrasonic. A spokesman at the bank said he was not aware of the matter.

Officials at the local government and public security bureau in Quanzhou declined to comment on the case.

By Reuters