Wellington, May 26 NZPA - Chinese appliance company Haier is being widely tipped to take up a sizeable shareholding in Auckland-based whiteware maker Fisher & Paykel Appliances.

F&P Appliances was expected to announce tomorrow it intended to raise new equity and Haier would take a 20 percent stake in the company.

It was understood investment bank First NZ Capital was yesterday talking to key institutions about underwriting the capital raising, thought to be up to $200 million, The New Zealand Herald said.

A source expected Haier to take around $40m of that, with about $160m needing to be underwritten by institutions before being offered to existing shareholders through a rights issue.

The Dominion Post said Haier was expected to take a cornerstone stake, with some investors suggesting a 20 percent stake and possible board representation.

Speculation was also rife in the investment community that F&P could be about to come clean with details of a $200m rights issue, the newspaper reported.

F&P was yesterday granted a trading halt on its shares, with the company saying capital management initiatives "in their totality" were incomplete and it was not yet in a position to announce them.

The company was expected to reveal tomorrow both how it has been travelling in the global economic slowdown in its full-year profit and how it is going to sort out its balance sheet.

The appliance manufacturer's debt has swelled to $570m to finance a shift of manufacturing to lower cost countries and because a lower NZ dollar increased the size of foreign debt.

In March, F&P brokered a deal with its banks to take up an $80m loan facility which is due to be refinanced by Friday. The company's shares last traded at 66c.

NZPA