Lai Fung Holdings, the mainland property arm of Lai Sun Group, is considering arranging a refinancing exercise to redeem HK$600 million in convertible bonds issued to the Bank of China (BOC). Mark Lee Po-on, director of parent company Lai Sun Garment (Int), said the refinancing exercise might be through asset collateral or arranging syndication loans in case BOC decided not to convert the bonds into Lai Fung shares. The convertible bonds, due in mid-2002, were issued to BOC's wholly owned property unit, Sun Chung Estate. Sun Chung would see its shareholding in Lai Fung rise to about 30 per cent if it opted to receive shares instead of cash on full exercise of the bonds. Mr Lee said Lai Fung had been negotiating with Sun Chung as to whether it planned to exercise the bonds conversion. He believed Sun Chung was likely to receive cash. He denied rumours that Lai Fung was in financial crisis. There was speculation that BOC had pushed Lai Fung to repay a HK$660 million loan. On Tuesday, a fax was circulated to the media claiming Lai Fung was on the verge of liquidation if it failed to repay a HK$660 million loan. Mr Lee said Lai Fung had debt of HK$900 million including HK$600 million convertible bonds and HK$300 million project financing. The debt level was low for Lai Fung which had an asset value of HK$5 billion. It should be no problem for Lai Fung to arrange loans with asset collateral as its Hong Kong Plaza in Shanghai alone was worth HK$2 billion, Mr Lee said.