Financially troubled toy manufacturer Hung Fung Group Holdings has unveiled a restructuring proposal involving cash repayment and issues of new shares and convertible bonds.
The proposal came after the company failed to repay creditor bank loans of HK$99.7 million.
Hung Fung has been in financial difficulty since a former chairman was investigated by the Independent Commission Against Corruption (ICAC) in late 2000 for allegedly offering advantages to a former bank executive for granting credit to a group subsidiary.
The company said in an announcement yesterday that creditor banks and product suppliers had cut credit lines to the company since the investigation and some had asked it to repay loans.
Its financial position was further undermined by tough competition in the toy market and its trading business.
In the first six months to September 30 last year, the company's attributable losses were HK$25.1 million.
Hung Fung said some creditors had even applied for court-backed liquidation of the firm.