China Forestry Holdings Co Ltd , backed by US private equity firm Carlyle Group , warned on Wednesday that it is expected to post a loss for the first half of 2011.

The company earlier this year reported accounting irregularities and that had a negative impact on its business operations and financial results, it said in a statement.

China Forestry reported a net profit of 429.3 million yuan ($66.3 million) in the first six months of 2010.

International credit rating agency Standard & Poor's downgraded ratings for China Forestry to "CC" from "B+" in March, saying the firm's financial profile and business sustainability had substantially weakened. The alleged accounting irregularities at the company had also increased information risk, it said.

Trading in shares of China Forestry, which is about 11 percent held by Carlyle, has been suspended since January.

Hong Kong's securities regulator, the Securities and Futures Commission, is sueing Li Hang Chun, the chief executive of China Forestry Holdings, and had obtained an interim injunction to freeze assets worth up to HK$398 million of Li.

The SFC launched investigations after China Forestry announced on Jan 31 that its auditors had identified possible irregularities in the audit process for the financial year ended Dec 31, 2010.