Hong Kong's largest department-store operator posted its largest gain in more than two months yesterday behind an agreement to buy 75 percent of EganaGoldpfeil (Holdings) for HK$1.2 billion.

It was a 5.9 percent jump for Lifestyle International Holdings, making it the largest gain since April 11 and raising the shares to HK$14.12.

But it's been a rough stretch for the operator's stock, which has plummeted 33 percent in value. That's compared with a 17 percent drop in the benchmark Hang Seng Index.

Lifestyle - the operator of two SOGO stores in Hong Kong - agreed to bail out EganaGoldpfeil in October after the luxury goods maker said it wasn't sure whether it would be able to get enough credit to fund operations.

A KPMG LLP review said the Hong Kong-based supplier for brands such as Pierre Cardin may not recover HK$2.28 billion it's owed.

"The announcement has helped clear uncertainties about the acquisition," said Keith Li, an analyst at CIMB-GK Securities (HK) Ltd EganaGoldpfeil, a supplier for brands including Pierre Cardin. He said the failure of EganaGoldpfeil provided Lifestyle an opportunity to buy the company, which owns some good brands and has exposure in Europe.

Lifestyle will buy 4.3 billion new shares in EganaGoldpfeil at HK$0.05 each, both companies said in a statement on June 13. Lifestyle will also receive HK$989 million worth of bonds due in 2010, exchangeable into EganaGoldpfeil stock at HK$0.05 each.

Police had arrested and charged an EganaGoldpfeil executive director in connection with an investigation into trading irregularities, which resulted in a raid on the company's office, according to a separate company statement issued on June 13.EganaGoldpfeil stock remains suspended from trading. It closed at HK$0.66 on Sept 12, its last day of trading.

Bloomberg

(China Daily 06/17/2008 page2)