Beleaguered retailer Yaohan International Holdings said it might be forced into liquidation if a much-needed financial restructuring failed to materialise.
Its shares, trading yesterday for the first time in six months, plummetted almost 76 per cent, from 61 cents to 14.8 cents.
Yaohan, whose department store arm, Yaohan Hongkong Corp, is in liquidation with debts of $91.5 million, said the company was suffering from 'serious financial difficulties' as a result of a significant erosion in net assets.
The company said it was in preliminary talks with its bankers and creditors over a reorganisation but warned that its financial position was set to deteriorate further and that it might be forced to wind up if no fresh capital was secured.
'So far as the directors are able to ascertain from available corporate records, as at March 26, the group had negligible cash balances and all bank facilities have been fully utilised,' Yaohan said.
The directors are investigating the reasons for the financial difficulties and narrowing assets, it said.
Yaohan said the police were investigating allegations that former staff members used the company's funds and assets inappropriately in 1996 and last year, but no details were available of the allegations.
