Egana is investigated

to become largest shareholder in luxury一goods firm


Yvonne Lee AD Lorraine LUK

HONG KONG-EganaGoldpfeil (Holdings) Ltd., which has been un der a trading halt for months after saying it might not be able to col lect HK$2.28 billion (US$291.8 mil lion) in receivables, confirmed Fri day that its past trading operations are being investigated by Hong Kong police.

The maker of luxury goods said the police investigation won't af fect its core branded retail and man- ufacturing businesses. It dithi't give further details about the investiga tion.

Meanwhile, Lifestyle Interna tional Holdings Ltd., Hong Kong's largest listed department-store op erator, said late Friday that it wifi become the largest shareholder in EganaGoldpfeli after the HK$1.2 bil lion acquisition of new shares and convertible bonds.

The price includes HK$217.1 Million for the purchase of 4.3 billion EganaGoldpfeil new shares at five Hong Kong cents each and another HK$988.9 million in convertible bonds due 2010, exchangeable into EganaGoldpfell shares at the initial conversion price of five Hong Kong cents each.

After the new shares are issued, but before full conversion of the convertible bonds, Lifestyle Inter- national will hold about 75% of the enlarged issued share capital of Ega naGoldpfeil, the companies said in a statement filed to the Hong Kong Stock Exchange.

Lifestyle made the offer to buy a majority stake in EganaGoldpfeil in October, and gave the company a bridge loan worth HK$300 million to meet its funding needs.

A person familiar with the matter said Friday that the police probe won't affect the deal.

EganaGoldpfeil distributes 40 brands of watches and jewelry, in- cluding Pierre Cardin and Goldpfeil, in more than 100 coimtries. Life- style is controlled by two families, one including billionaire Cheng Yu tung and the other, businessman Jo- seph Lau.

Hong Kong media on Friday tied EganaGoldpfeil to statements by po ilce that eight people had been ar rested Thursday in connection with a HK$3.55 billion fraud case involv ing two listed companies and 18 banks. Police said a company director and three former senior staff from two llsted companies were among those arrested.

Police didn't disclose the names of the two companies, and EganaGoldpfeil declined to comment on the reports.

EganaGoldpfeil's shares have been suspended from trading since Sept.12, pending a financial restruc turing, after the company said it might not be able to collect receiv ables worth HK$2.28 billion. Its shares were trading at 66 Hong Kong cents each before the suspen Slon.

Trading in the shares of Ega naGoldpfeil will remain suspended until further notice, according to Lifestyle's statement. Lifestyle shares suspended trading June 13 arid will resume trading Monday.

In July, shareholder activist David Webb alleged on his Web site that EganaGoldpfell had used ques tionable accounting policies that had helped prevent it from report- ing a net loss for two years. Ega naGoldpfeil subsequently ap pointed international accounting firm KPMG to review its financial position.

EganaGoldpfeil's former audi- tors, Baker Tilly Hong Kong Ltd., had also questioned HK$1.82 billion in sales revenue recorded on the company's books for the year ended May 31, 2007. The auditor resigned last month, citing "professional risks inherent in the assignment?'

-Chester Yung

contributed to this article.