UPDATE 1-Peace Mark shares suspended after CVC offer

(Adds details, background, analyst comments)

By Joseph Chaney and Michael Flaherty

HONG KONG, Aug 18 (Reuters) - Shares in Hong Kong-based watchmaker and retailer Peace Mark (0304.HK) were suspended on Monday after CVC Asia Pacific Ltd made an indicative offer for shares in the company, it said in a statement to Hong Kong's stock exchange.

On Friday, shares in Peace Mark-- which has a market cap of $241 million-- soared 36 percent after a senior executive bought 2.1 million shares.

But those gains followed a 73 percent plunge in the stock last Monday on worries about high gearing.

CVC Asia Pacific Ltd, a unit of CVC Capital Partners, is a London-based private equity firm, which has focused mainly on deals in Europe and Asia.

CVC's current Asian investments in the retail sector include Minit Asia Pacific, a high-end engraving, watch and shoe repair business.

Last week, analysts blamed the steep decline in Peace Mark's share price in part to a lack of clarity in the company's annual report, released at the end of July.

The high gearing of Peace Mark, which sells watches for brands including Rolex, Omega, Rado and Tissot, was a concern among investors that may have put pressure on the stock, fund managers and brokers said.

The company is in the process of raising $200 million through a three-year term loan for refinancing.

Chief Financial Officer Kevin Tsang said the company's debt was now below HK$4 billion ($512.8 million) after it recently paid off HK$200 million, and that Peace Mark would be cash flow positive this year.

Goldman Sachs retains a "buy" on the stock, claiming the "refinancing overhang" is a concern but that the stock is oversold.

"Based on independent checks on alternative financing options, meetings with senior management, and our stress testing on the company's bank covenants, we believe Peace Mark should be able to pull through, albeit at the expense of having to pay a higher interest rate on the refinanced debt," the investment bank said in report on Monday.

Shares in Peace Mark closed at HK$1.50 on Friday.

(Editing by Jonathan Hopfner)