CHAIFA Holdings, garment manufacturers for brand names Playboy and Garfield, has issued a convertible note to raise cash to expand its Shantou plant. Hong Kong-listed China Everbright Holdings - a wholly owned subsidiary of China Everbright-IHD Pacific (China EB-IHD) agreed yesterday to subscribe to the $32.6 million note. Chaifa chairman John Chan Chun-tung said yesterday that the money raised from the note would help double the company's rented premises in Shantou and increase its retail outlets from 160 to 300 next year. The note can be converted after April 30, 1995 to 40.8 million new shares at a conversion price of 80 cents, a 3.9 per cent premium on the share closing price on December 1. The note, representing 20 per cent of Chaifa's existing issued share capital must be converted before April 30, 1996. Mr Chan will continue to be the company's largest shareholder, even after conversion of the note, holding over 35 per cent from his present 39.95 per cent stake. Further co-operation could boost the company's profits with China EB-IHD's wide distribution network on the mainland and its 40 chain stores and supermarkets in Singapore and Malaysia. China EB-IHD vice-chairman Wong Yake said his company could act as a sponsor for Chaifa in obtaining finances from mainland banks and lending it factory premises. The company's interim profits attributable to shareholders rose 41 per cent to $16.2 million and turnover increased 32 per cent to $94.9 million over the first half of last year. Earnings per share were 7.93 cents. The company declared a two cent interim dividend. Mr Chan hopes to set up an industrial building in Shantou which will not require high investment costs. Existing equipment would defray costs. He expects the mainland to continue to account for 75 per cent of turnover next year. In 1996, he expects that figure to drop to 60 per cent with the remaining 40 per cent coming from Hong Kong, Singapore and Malaysia. The company is negotiating for two more manufacturing licences and expects to finalise the deals soon.