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Hard questions raised as Fu Ji Catering goes for soft option

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On Monday morning, mainland firm Fu Ji Food and Catering Services Holdings' Hong Kong-traded shares were worth HK$7.60 each. That afternoon, the company voluntarily placed itself in provisional liquidation, saying it could not afford to repay its convertible bondholders, who are owed just over HK$2 billion.

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If Fu Ji, which fed thousands at last year's Beijing Olympics and was set to serve the noodles and sandwiches at the coming East Asian Games, is wound up, shareholders are likely to see their entire investments wiped out. But investors had no idea the caterer was heading for liquidation. When Fu Ji last released accounts, it looked healthy and solvent.

It has a HK$550 million convertible bond payment due on November 9. So did it pull the plug to avoid its financial commitments?

An official at Fu Ji's Shanghai headquarters told the South China Morning Post on Tuesday: 'We think the game of financing is too complicated for us. We just want to quit it by liquidation.'

Fu Ji has still not published its 2008-09 financial statements. Its shares were suspended in July.

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However, for the six months to September last year, it reported a 272 million yuan (HK$308.69 million) net profit and said its assets were worth more than its liabilities.

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