China Aerospace International Holdings has become the latest red chip to dismiss worries about its financial health. In a statement issued yesterday at the request of the stock exchange, the company said it was able to meet its debt obligations as they fell due 'in the normal course' of events. It had not received any demands from banks for early repayment of loans. The news sent its share price up 4 per cent to close at 53 HK cents after it fell more than 16 per cent in the past week to end at 51 HK cents on Monday. The firm is one of many mainland corporates afflicted by a credit crunch that followed the collapse of Guangdong International Trust and Investment Corp last October. A source close to the firm said the red chip and its parent China Aerospace Corp were in good financial health. The parent, which holds 42.8 per cent of the listed company, repaid all debts owed to Hong Kong banks last year, he said. He said the listed arm would be able to repay debts that fell due barring any unforeseen circumstances. However, he would not disclose details of the firm's cash balance or assets and liabilities, only saying it had about 50-60 per cent debt to asset ratio. Banking sources said the firm's financial position was not too bad, as it had been able to make partial repayment of a US$55 million syndicated loan due last week. The balance of the two-year loan, arranged by Banca Commerciale Italiana, was extended for three months under an option to extend it for a year. The next key test for the firm would be US$150 million of floating-rate notes due next year. Bankers expected investors would exercise a put option to have the notes repaid in July. The firm would also have to repay another US$14 million in December on a US$70 million loan arranged by Banque Nationale de Paris after repaying US$14 million last December. Company secretary Chan King-chung said the firm had no plans to dispose of its 14.7 per cent interest in APT Satellite Holdings to repay debts. China Aerospace International is the single largest shareholder of APT Satellite. It was not aware of any reasons for the recent decline in the firm's share price. He said the parent had not pledged any of its interest in the listed arm to secure debts for it or to secure guarantees or other support of obligations for it.