On April 3 Richina Pacific shareholders approved the controversial rights issue designed to raise $18 million to buy hides and skins and expand their Shanghai leather operations. They were spared from having to vote on whether to sack dissident director Ming Lu, who resigned ahead of the meeting.

Ming Lu, representing shareholders J P Morgan partners (9.6%), had initially refused to sign off the rights issue prospectus. He said the rights issue was stop-gap measure that did not address the need to change the structure of the company.

Chairman Alastair MacCormick told a special shareholders meeting that the performance of Shanghai Richina Leather, now one of the world’s largest tanneries, was critical to the company’s ongoing results. The leather operation last year generated sales of more than US$100 million and contributed to pre-tax and interest earnings of $13.1 million.

The first two months of this year saw trading in the leather division behind budget but the results for March were expected to bring the first quarter earnings back on target. According to MacCormick, potential demand for leather is currently outstripping the tannery’s ability to supply.