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. Unaudited debts stood at $431 million on September 31 last year, and Yaohan is facing claims in the court for $71 million, the company said. During the six months to September 31, Yaohan suffered a $1.36 billion attributable loss against a $61.24 million attributable profit in the same period in 1996. The loss arose from a $1.16 billion one-off loss largely linked to provisions on doubtful debts. Yaohan said it planned to appoint an international accountant to examine its financial position. Joint managing director Lao Yuan-yi could not be reached for comment yesterday. Mr Lao is also a director of mainland-backed China Venturetech Investment Corp, which holds 3.6 per cent of Yaohan. Property developer Pacific Concord Holdings holds 19.867 per cent of Yoahan and 19.868 per cent is held by Japan-based businessman Kazuo Wada and his brothers. Citic Beijing's off-shore investment arm, Citic Australia (HK), owns a 7.5 per cent stake.