/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/000114.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Friday, January 14, 2000, Vol. 3, No. 10 Headlines * C H I N A & H O N G K O N G * CHINA JIALING INDUSTRY: Stock price falls DAIDO CONCRETE HK: Loss widens GUANGDONG ENTERPRISES: Mixed response to debt plan GUANGDONG ENTERPRISES: Bankers face only 21% haircut GUANGDONG ENTERPRISES LTD.: Creditors to meet * I N D O N E S I A * PT PAITON ENERGY: Paiton's Hashim denies graft allegation * J A P A N * UNION ROYAL CO.: Okamoto Industries to aid in rehab * K O R E A * DAEWOO GROUP: No accord reached with foreign banks DAEWOO GROUP: Equity falls by over W32 Tril. DAEWOO MOTOR: GM offers vision of Daewoo takeover * M A L A Y S I A * DIVERSIFIED RESOURCES: May not repay RM704m debt TIME TELECOM: Kejora seeks foreign partners to beef up bid * P H I L I P P I N E S * BW RESOURCES CORP.: Casino license rejection rumors abound EDISON LEE MARKETING: Decision on sugar scam near E.S. MARKETING: Decision on sugar scam near GLADDIE'S FOOD INDUSTRIES: Decision on sugar scam near LA PERLA: Decision on sugar scam near MAKATI AGRO: Decision on sugar scam near METROPOLITAN BANK AND TRUST CO.: Ratings downgraded NEW FRONTIER: Decision on sugar scam near PHILIPPINE NATIONAL BANK: Privatization scheme changing SAGAY SUGAR: Decision on sugar scam near SHANTUNG COMMERCIAL: Decision on sugar scam near SUGAR PHILIPPINES, INC.: Decision on sugar scam near UNIWIDE GROUP: To sell its Metromall VICTORIAS MILLING CO.: Decision on sugar scam near VISION SUGAR: Decision on sugar scam near * S I N G A P O R E * IBC CORP.: To announce debt revamp details today LEWIS & PEAT PTE.LTD.: Placed in receivership * T H A I L A N D * BANKTHAI: Privitazation sales plan gathers fresh impetus EASTERN WIRE PLC: Reports to SET on rehab progress KRUNG THAI BANK: Share price falls with market THAI PETROCHEMICAL INDUS.: Fund-raising viewed as hard sell ============================== C H I N A & H O N G K O N G ============================== CHINA JIALING INDUSTRY: Stock price falls ----------------------------------------- Stock prices declined in what traders termed a technical correction after "irrational" gains over the past two weeks. An eight-day rally in Class A shares fizzled, with those shares, technically reserved for local investors, shedding 4% in both Shanghai and Shenzhen. Class B shares, which technically are reserved for foreign investors, dropped 4% in Shenzhen and 2.7% in Shanghai. China Jialing Industry became China's first company to list former state shares, but a pessimistic view of the industry and of the company's earnings prospects hurt the motorcycle maker, traders said. The company's shares lost 1.9%. (The Asian Wall Street Journal 12-Jan-2000) DAIDO CONCRETE HK: Loss widens ------------------------------ Daido Concrete HK said interim net loss widened 85 per cent to $77.42 million for the first half-year ended Oct. 31, after incurring huge legal fees over group restructuring and for its decision to make provision for receivables. The loss for the same period last year was $41.83M. Turnover rose 18.4 per cent to $110.9 million for the period which ended 31 October, boosted by sales growth of its autoclaved aerated lightweight concrete products (ALC). The loss per share was 52.52 cents against 28.37 cents a year earlier. No interim dividend was declared. The company had recorded losses since 1996, but chairman Pang Tak-chung yesterday said the company could turn around soon. During the period, the group underwent a debt restructuring scheme initiated by construction materials manufacturer Golik Holdings. After a 90% debt reduction in its restructuring, the company had no debt, he said, and about $50M cash. "Following the financial restructuring in the last quarter, the group would consider disposal of its non-contributing business and re-allocate resources in developing high- profit-margin new products," said company chairman Pang Tak-chung. Golik also intended to develop the group into a construction materials supplier in Hong Kong. For the period under review, the group's core business, ALC production, showed steady growth in sales and profits due to increases in demand from Hong Kong Housing Authority projects. Due to increased competition from bored piles in Hong Kong, the group's concrete pile business had been unable to sustain profitability and the group had started to scale down its production of concrete piles. "The demand for concrete piles is diminishing due to the popularity of bored piling in foundation construction and competition from mainland manufacturers," Mr Pang said. He said the group's pipe business was also disappointing, and blamed the stagnant demand for spiral and water pipes on the mainland. "The spiral pipe and water pipe business faced fierce competition in the local market and the competitiors have initiated a cut-throat price battle, " Mr Pang said. Meanwhile, the group was benefiting from large-scale public and private housing projects in Hong Kong and would continue to concentrate on production and sales of ALC products. Looking ahead, the company expected to return to profitability this year. (Hong Kong Standard, South China Morning Post 13-Jan-2000) GUANGDONG ENTERPRISES: Mixed response to debt plan -------------------------------------------------- Creditors of insolvent Guangdong Enterprises (Holdings) (GDE) have indicated they are pleased with the asset-value structure of the company's latest debt-restructuring plan. However, bankers at yesterday's creditors' meeting complained about receiving insufficient details about Dongshen Water Supply, a GDE asset. "The good thing is the package of instruments was valued at the market price," one banker said. "But the bad thing is we were not given many details about Dongshen Water, which makes it difficult to assess the proposal." About 120 creditor banks attended the meeting organised by the steering committee appointed to represent them. During the meeting, bankers were given details of the US$5.59 billion restructuring proposal. Under the plan, the liabilities of GDE, Nam Yue and Guangnan (Holdings) would be restructured so creditors received a package of new debt, cash and equity, such as the 19 per cent interest in the water project. Bankers said that HK$14 billion of new debt issued by Dongshen Water would be received by creditors at the London interbank offered rate plus 8 per cent so they would not incur direct losses. Some bankers said it was difficult to assess the risks involved in the new package and the provision level to be made because so few details about the valuation of the water project were made available. Nonetheless, most bankers said the latest restructuring package was better than previous ones. Under the new plan, they said creditors would have a chance to share the upside potential of assets. Standard Chartered Bank, the liaison bank of the committee, said Dongshen Water - which provides Hong Kong with most of its water supply - would be privatised. "There will be an asset appreciation when the water project is listed," a banker said. "Therefore, banks will benefit." A series of meetings will be arranged with banks by the steering committee to collect additional feedback from them. Analysts said yesterday they expected creditors to eventually accept the latest restructuring plan. (South China Morning Post 13-Jan-2000) GUANGDONG ENTERPRISES: Bankers face only 21% haircut ---------------------------------------------------- The creditors of Guangdong Enterprises (GDE) met yesterday and were converging slowly towards an agreement on the plan for the restructuring of the group, after being told details of the privatisation of the Dongshen Water Supply Company that will see them having to take only a 21 per cent "haircut," losing much less money than they feared. The mood of optimism stimulated rises in the share prices of GDE subsidiaries listed in Hong Kong and also of the creditor banks. "There are still some details to sort out, but broadly speaking, I think this plan will be accepted because it's probably the best deal we can get," a Hong Kong banking source was quoted by Reuters as saying after the meeting yesterday. According to the 100-page document distributed to creditors, their financial adviser PricewaterhouseCoopers (PwC) estimated that GDE creditors would get US$3.4 billion (HK$26.52 billion) in assets compared with the US$4.3 billion in claims of debts. That would be equivalent to a 21 per cent haircut in general. That was a gap of only US$907 million, compared with US$1.74 billion under the previous proposal made in May, PwC said, adding that the new plan was significantly better than liquidation. It asked the creditors to accept the deal. "Dongshen could be publicly listed," said Paul Marriage, regional head of external affairs at Standard Chartered Bank, after the major creditors briefed other creditors in the meeting on the GDE deal that the major creditors endorsed. The Guangdong government can privatise the water company by selling some of the remaining 81 per cent interest, after giving 19 per cent to GDE creditors, said Mr Marriage. Dongshen is wholly owned by the provincial government. Under the proposal by the government, the 126 creditors would hold a combined 19 per cent stake of Dongshen, and Guangdong Investment (GDI), a GDE subsidiary listed on the Stock Exchange of Hong Kong, would hold 81 per cent. At present, the creditors have no ideas on how the government would handle the 81 per cent, according to Mr Marriage. "Central to the restructuring is the privatisation of Dongshen Water Supply Company, which provides Hong Kong with the majority of its annual water consumption, and the subsequent issue of debt and equity instruments," Standard Chartered, the liaison bank to the steering committee on behalf of the creditors, said in a statement. Dongshen supplies Hong Kong with approximately 75 per cent of its annual water consumption, and generates more than HK$2 billion of cash flow a year. The earning prospects of Dongshen seem to be appealing to the 17 major creditors, including Standard Chartered Bank, Bank of East Asia and Bank of China, which signed on 19 December an agreement-in- principle with the Guangdong government for the restructuring of GDE Group. At the signing ceremony were Mervyn Davies, chief executive of Standard Chartered; David Li Kwok-po, chairman and chief executive of the Bank of East Asia; and Liu Jinbao, vice- chairman of the Bank of China. The restructuring is still subject to the agreement of the financial creditor group, due diligence, documentation and all necessary approvals, said Standard Chartered. The smaller creditors collected details of the government's proposal from the leading creditors and were asked to submit their response to the leading creditors at the next meeting, said Mr Marriage. He declined to say the schedule of the next meeting and any time-frame for the whole restructuring negotiation. "This is another step on the long road to resolving this complex issue," E M (Jake) Williams of Standard Chartered Bank, who is chairman of the steering committee, said during the meeting. Along with the repayment package would be new debt, equity issued by GDE-related companies. The repayment would cover roughly 70 per cent of the claims by the creditors, David Li Kwok-po, chairman and chief executive of the Bank of East Asia, said earlier. "The working group of banks believes this proposal is an appropriate one under the circumstances. There will be a financial contribution by the Guangdong provincial government and the proposal heads of terms represent an improvement for financial creditors," said Standard Chartered. GDI shares rose 8.8 per cent and Guangnan Holdings, also a subsidiary of GDE, rose 7.7 per cent as investors expected that the deal is likely to close. Union Bank of Hong Kong rose 7.4 per cent, International Bank of Asia rose 4.4 per cent and Bank of East Asia rose 1 per cent. (Hong Kong Standard 13-Jan-2000) GUANGDONG ENTERPRISES LTD.: Creditors to meet --------------------------------------------- The steering committee of creditors of Guangdong Enterprises Ltd. will brief all creditor banks on details of the debt-laden company's restructuring plan today, a source on the committee said. The financial arrangements of the plan will be discussed in detail with the creditor banks, but no decision on whether to approve the plan is expected to be reached during the meeting, the source said. "It is a step in the process," the source said, adding that the creditors will have the opportunity to express their views after the details are disclosed. He said there is no deadline by which a decision has to be made. In December, creditors of the troubled Guangdong Enterprises Group and the Guangdong Provincial Government reached an agreement in principle on an outline of a plan to restructure the group's $3.5 billion to $4.5 billion in debt. (The Asian Wall Street Journal 12-Jan-2000) ================= I N D O N E S I A ================= PT PAITON ENERGY: Paiton's Hashim denies graft allegation --------------------------------------------------------- A Suharto family member denied that he and a consortium of foreign companies offered bribes and inflated costs in the development of a multibillion-dollar Indonesian power project. Businessman Hashim Djojohadikusumo also said his ties to former President Suharto in no way influenced the price structure of the deal. An Indonesian government audit alleges that PT Paiton Energy, a project company led by units of Edison Mission Energy Corp. and General Electric Co. of the U.S., and Mitsui & Co. of Japan, engaged in such improprieties in the development of its 1,230-megawatt Paiton 1 coal-powered plant in Indonesia. Mr. Hashim, a relative by marriage to Mr. Suharto, holds a 15% stake in Paiton along with the middle daughter of the former president, Asiti Hediati Prabowo. The audit alleges that the consortium paid $22 million in bribes to senior Indonesian government officials to facilitate the development of Paiton. It cites unspecified "development costs" in Paiton's 1994 financial report as proof of malfeasance. Mr. Hashim said in a statement that all of Paiton's development costs were "above board". A detailed accounting of these costs provided by Mr. Hashim cites $24 million in legal fees, $8.7 million in financial advisory costs, and $1.7 million in other advisory fees. Among the companies that advised Paiton, according to Mr. Hashim's statement, were Kissinger & Associates - headed by former U.S. Secretary of State Henry Kissinger - and U.S. law firms Skadden, Arps, Slate, Meagher & Flom and White & Case. Mr. Hashim also discounted the audit's allegation that an exclusive coal-supply contract signed by another of his companies and Paiton inflated the total cost of the project. The audit says Paiton is buying its coal from Mr. Hashim at a price significantly higher than the global average. Mr. Hashim said such a comparison is "irrelevant," as it ignores the transportation and storage costs factored into Paiton's coal-purchase contract. The audit also ignores the fact that environmentally friendly coal is used by the power plant, Mr. Hashim said. Mr. Hashim also denied the audit's assessment that Mr. Suharto intervened to support the development of Paiton 1. Mr. Hashim said he wrote Mr. Suharto in 1993 in relation to the power project, but only to assure the leader that Indonesia would meet its electricity needs. "Had this letter not been written to the President, the project . . . would not have been completed in time," Mr. Hashim said. (The Asian Wall Street Journal 12-Jan-2000) ========= J A P A N ========= UNION ROYAL CO.: Okamoto Industries to aid in rehab --------------------------------------------------- Okamoto Industries Inc. (5122) announced Wednesday that it will aid in the rehabilitation of Union Royal Co. The manufacturer of premium-brand footwear filed for court protection from creditors in December with 11.2 billion yen in liabilities. An Okamoto executive explained that his company has not yet seen the details of Union Royal's financial condition, and its next step will be to enter into a discussion of the concrete terms of assistance. Okamoto has one affiliate that manufactures rubber shoes such as sneakers, but it has virtually no involvement in leather shoes. It will broaden its product line by adding Union Royal's women's and men's shoes. (Nikkei 13-Jan- 2000) ========= K O R E A ========= DAEWOO GROUP: No accord reached with foreign banks -------------------------------------------------- The negotiation between Daewoo Group and its foreign creditor banks in Hong Kong yesterday ended without any agreement on debt rescheduling. A foreign banking source in Seoul told The Korea Times last evening that the two sides had produced no accord at all over the Daewoo's $5 billion foreign debt issue during the marathon meeting at the Conrad Hotel, Hong Kong. Instead, the creditors asked Daewoo's financial advisors to continue dialogue with the Foreign Bank Steering Committee, he said. "I was informed by my colleague in Hong Kong that the meeting ended without any compromise between the two sides," he said during a phone interview. "The creditor banks are believed to have asked the Korean side to resume negotiations with the steering committee instead of meeting on a company by company basis," the foreign banker added. It was an expected outcome, he said, adding that the Daewoo's new approach of calling for individual negotiation is inappropriate. Another meeting is planned today in London's Intercontinental Hotel between Daewoo's financial advisors and foreign creditors of Daewoo Motor, Daewoo Electronics and Daewoo Heavy Industries to discuss debt rescheduling. In a new approach toward rescheduling $5 billion foreign debt, the Korean government and Daewoo's financial advisors called for a meeting with foreign banks excluding those that had been exposed to Daewoo Corporation. In a letter delivered on Jan. 4 to foreign banks, they requested meetings with creditors of Daewoo Motor, Daewoo Heavy Industries and Daewoo Electronics Hong Kong and London. Those heavily exposed to Daewoo Corp., including Steering Committee members, were excluded from the meeting. (Korea Times 12-Jan-2000) DAEWOO GROUP: Equity falls by over W32 Tril. -------------------------------------------- Daewoo Group's total equity now stands at 59.7 trillion won ($52.3 billion), 32.1 trillion won less than the 91.8 trillion won reported by the preliminary due diligence last year, said Lee Yong-keun, vice-chairman of the Financial Supervisory Commission. On the other hand, the total liabilities of Daewoo increased by 11.2 trillion won from 77.7 trillion won to 88.9 trillion won ($78.0 billion), he said during a National Assembly session yesterday. The net equity reduction, thus, comes to 43.3 trillion won ($38.0 billion), 3.6 trillion won more than 39.7 trillion won recorded following the due diligence. Lee briefed members of the National Assembly that the government is serious about placing Daewoo Corp., the group's most heavily-indebted financing unit, under court receivership should the negotiation on foreign debt rescheduling fall apart in the end. Lee said the government would implement all possible measures to minimize the impact of court receivership of Daewoo Corp. once the decision is made. The FSC's deputy head added that the government will make a fair evaluation on the performance of each Daewoo company subject to court receivership and if necessary will shut them down without giving any second thought. Earlier, the government formed a separate task force to deal with the court receivership of Daewoo Corp. The new team was launched to prepare necessary procedures for Daewoo Corp.'s court supervision. In a new approach toward rescheduling $5 billion of foreign debt, the Korean government and Daewoo's financial advisors called for a meeting with foreign banks excluding those with exposures in Daewoo Corp. This strongly indicates that the government had considered more radical options like court supervision for Daewoo Corp., instead of negotiating with foreign creditors. After six months of negotiation, the Korean government offered a cash buyout proposal of 36 percent of Daewoo's overseas debt on Dec. 29, 1999. Foreign creditors until now have not conceded to accept anything less than securing 59 percent of their money in Daewoo, assuming a 41 percent loss. Meanwhile, the overseas banking community said Tuesday that Daewoo's foreign creditors will file lawsuits against all the group's major operations once the government decides to place Daewoo Corp. under court receivership. (Korea Times, Digital Chosun 12-Jan-2000) DAEWOO MOTOR: GM offers vision of Daewoo takeover ------------------------------------------------- Lou Hughes, the vice president of General Motors, said Wednesday that the US auto firm would not produce GM models in place of Daewoo cars immediately after it takes over the ailing Korean firm but will continue to put out Daewoo models for the time being. Speaking from Detroit, Hughes said that upon the proposed takeover, GM will increase the rate of production in order to achieve a double-digit growth rate every year for the next five to ten years. He added that GM will extend its full support to weaker or less competitive parts makers for Daewoo in order to maintain steady supplies. After the proposed takeover, Hughes stated that GM's management of Daewoo will be carried out in a manner that will enable Koreans to maintain the company's identity as a Korean one. He also said that when the operation of Daewoo Motor becomes normalized, it will be listed on the stock market. With regards to the dollar amount involved in the takeover bid, Hughes said the deal could vary according to the methods of GM's takeover and that any reports in the media are pure speculation, but that GM will be pressing on with its initial intention to take more than a 50% stake in Daewoo Motor. (Digital Chosun 12-Jan-2000) =============== M A L A Y S I A =============== DIVERSIFIED RESOURCES: May not repay RM704m debt ------------------------------------------------ Diversified Resources Bhd (DRB), a Malaysian company with investments in automobile manufacturing, said it may not repay 704.3 million Malaysian ringgit (S$309 million) due in March. Kuala Lumpur-based DRB, hurt by rising interest rates in 1998, said it plans to reorganise its debt and sell businesses to raise money. "Cash flows from the existing activities of the group may not be sufficient to meet their financial obligations," the company said in a statement. DRB indirectly owns part of Proton, the country's largest carmaker. DRB's financial troubles emerged after Malaysian interest rates surged to a 10-year high in July 1998, the ringgit depreciated by more than a third against the US dollar and the economy tumbled into the worst recession in Malaysia's 42-year history. The company has total bank debt of RM980.6 million, and two-thirds of it is due for repayment at the end of March, DRB said. DRB's shares were unchanged at RM2.39. The shares have risen 43 per cent in the past 12 months, less than a 47 per cent return on the benchmark Composite Index. (Singapore Business Times 13-Jan-2000) TIME TELECOM: Kejora seeks foreign partners to beef up bid ---------------------------------------------------------- Property group Kejora Harta yesterday said it will team up with foreign partners to better its bid for debt-ridden telecommunications group Time Telekom, further fuelling speculation on the fate of the company. Kejora Harta deputy chairman Samsudin Abu Hassan said it would choose its partners from a shortlist of six foreign parties, two from the US, one from Europe, and three from Asia. The announcement by Kejora Harta comes hot on the heels of press speculation last week that Time Telekom's parent, Time Engineering, is proposing to convert the group's 4.5 billion Malaysian ringgit (S$2 billion) debt to equity and to list Time Telekom on the KL stock exchange. The company has since replied, stating nothing more than that it is currently "exploring various options with the Corporate Debt Restructuring Committee (CDRC)". Time's creditor protection order under Section 176 of the Companies Act expires on Jan 28. In late December, CDRC chairman C Rajandram said he did not discount the possibility of having to seek an extension of the protection, in order to find a solution which would give Time's stakeholders better value. He said then that the problems were taking longer than expected to be sorted out due to developments on the international telecommunication scene which suggest an upward re-rating of telecoms assets is justifiable. CDRC officials said yesterday that Kejora Harta has not informed them of its plans to renew its bid with the aid of foreign shareholders. Other than Kejora Harta, which is seen to have close links with Finance Minister Daim Zainuddin through Mr Samsudin, the other local bidder for Time Telekom is Ananda Krishnan's telecoms unit Maxis. Singapore Technologies' ST Telemedia is the third, and only foreign bidder. All three had submitted their offers for Time last September, and made final offers in December, after conducting due diligence, CDRC said. Time officials said in December that they were unhappy with the level of bids received so far and were open to more overtures. Although international companies MCI WorldCom and Teleglobe are rumoured to be interested, no bids have so far been made. Time Engineering was on the top actives list yesterday, with 13.3 million shares traded to close up by 10 sen to RM1.98, while Kejora Harta was higher by seven sen to RM2.72. Time, whose largest shareholder is Renong Bhd with 46.7 per cent, lost RM2.3 billion in 1998 as a result of the ringgit devaluation and high interest rates. (Singapore Business Times 13-Jan-2000) ===================== P H I L I P P I N E S ===================== BW RESOURCES CORP.: Casino license rejection rumors abound ---------------------------------------------------------- Rumors that the Philippine Amusement and Gaming Corp. (Pagcor) has disapproved BW Resources Corp.'s application to operate a casino inside the floating Jumbo Palace circulated the market yesterday. Still, no amount of bad news prevented the controversial stock from rising 49% to 16.75 Philippine pesos (PhP) per share yesterday, with total value traded at PhP699 million (US$17.2 million at PhP40.627:US$1). This came after its dismal performance last Monday and Tuesday where the stock plummeted by more than 50%. Analysts are divided on yesterday's surge. Some say it was a natural reaction for investors to accumulate after a selldown. Others pointed to the forced resignation of Securities and Exchange Commission commissioner Perfecto Yasay, Jr. -- who has consistently sounded off irregularities in the trading of the stock -- as the good news behind the gaming stock's ascent. President Joseph Estrada, in a statement from Malaca�ang, said Pagcor has issued a permit only for the operation of the restaurant. He stressed Macau gambling mogul Stanley Ho will not be allowed to operate a floating casino in the Philippines. "These are all speculations. The public has my word that I would not allow the operation of a floating casino here," Mr. Estrada said. Meanwhile, BWRC spokesperson Allen Mojica said the leisure firm "never applied" for a casino license. "People keep on forgetting that casinos cannot be operated by private firms except if you're in an economic zone. Also, Mr. Ho's floating casino is in Macau. What we have here right now is the one that came from Hong Kong which is just a floating restaurant," Mr. Mojica told BusinessWorld in a phone interview. He added the firm neither asked Pagcor to handle the operations of the casino inside the restaurant. He explained it would not be viable to maintain two casinos which are very near each other. BWRC's Sheraton Marina -- which will house several casinos -- is being constructed by property developer Megaworld Corp. which has substantial shares in the leisure firm. Mr. Mojica also said the Jumbo Palace is expected to earn some PhP50 million ($1.2 million) every month. "The Jumbo Palace has a capacity of 2,000 people. All logistical requirements point out that a casino would not be sustainable," Mr. Mojica said. Megaworld is presently constructing the Sheraton Marina Complex under a share-for-asset swap with BWRC. The property will have a nine- to 10-story entertainment mall to house a gaming area, corporate offices and a Bingo Central drawing site. The construction of a 320-room deluxe-class hotel which will be managed by hotelier Sheraton Hotel and Resorts is also under way. The 50,000-square meter complex will also be the site for a casino to be operated by Pagcor. An additional 15,000 square meters would also be allocated for Caesar's casino owned by Starwood Sheraton. Another 15,000 square meters of the property will be used for bingo halls given BW's purchase into online bingo operator Best World Gaming and Entertainment Corp. (BWGEC). Completion of the marina complex is expected in 2001. (Business World 13-Jan-2000) EDISON LEE MARKETING: Decision on sugar scam near E.S. MARKETING: Decision on sugar scam near GLADDIE'S FOOD INDUSTRIES: Decision on sugar scam near LA PERLA: Decision on sugar scam near MAKATI AGRO: Decision on sugar scam near NEW FRONTIER: Decision on sugar scam near SAGAY SUGAR: Decision on sugar scam near SHANTUNG COMMERCIAL: Decision on sugar scam near SUGAR PHILIPPINES, INC.: Decision on sugar scam near VICTORIAS MILLING CO.: Decision on sugar scam near VISION SUGAR: Decision on sugar scam near ------------------------------------------------------ After an almost two-year delay in its investigation, the Office of the Ombudsman is just about ready to hand down its verdict on the 1.3-billion Philippine peso (US$ 32 million at PhP40.627=US$1) sugar scam. Agency sources said Ombudsman Aniano A. Desierto met with his ranking officials last week to determine whether or not there is enough evidence to bring to the Sandiganbayan former and incumbent officials and employees of the Sugar Regulatory Authority (SRA) implicated in the anomalous transactions. The official said the Ombudsman is finding ways to "bring to justice" even SRA executives who have left government service after the multibillion-peso anomalous practice of causing an artificial shortage to jack up sugar prices was exposed in 1994. The BusinessWorld source said Mr. Desierto and the investigation team handling the case will likely indict former ranking SRA officials during the Ramos administration and suspend others still with the authority. "They are thinking of temporarily relieving those who are still there and slapping criminal and administrative charges against those who are no longer connected with the SRA," said the source. Sugar mills and their officials, who allegedly conspired with SRA people to actively manipulate sugar prices more than five years ago, may be included in the list of respondents if a case is subsequently filed at the anti- graft court. The complaint was first brought to the Justice department in 1995 by the United Sugar Producers Federation of the Philippines, which claimed that SRA officials help manipulated sugar prices by illegally dumping imported sugar into the local market, resulting in millions of pesos in losses to local sugar traders. Before the investigation could be wrapped up, the National Bureau of Investigation (NBI) also sued officials led by former SRA administrator Rodolfo Gamboa, and 15 sugar millers at the DoJ for economic sabotage. They were accused of conniving to cause an artificial shortage by diverting class "D," or sugar for export to countries other than the United States, to the local market. Former President Ramos relieved Mr. Gamboa in 1996 after the sugar scam was made public. Sugar millers, including the Sugar Philippines, Inc., Vision Sugar, Edison Lee Marketing, Victorias Milling Co., Shantung Commercial, Gladdie's Food Industries, E. S. Marketing, Makati Agro, Sagay Sugar, La Perla and New Frontier, were also cited for graft and falsification of public documents. In its own investigation in 1997, the Senate Blue Ribbon Committee found the alleged cartel among sugar traders made it easier for them to cause artificial shortages to justify sugar price increases. The Ombudsman twice returned the case to the DoJ for reinvestigation. Records of the completed probe were submitted to the Ombudsman in early 1999. Incumbent SRA administrator Nicolas Alonso insisted his agency is powerless to police sugar traders and millers as it has no records of the exact location of warehouses of traders and millers throughout the country. (Business World 13-Jan-2000) METROPOLITAN BANK AND TRUST CO.: Ratings downgraded --------------------------------------------------- Two international credit rating agencies yesterday downgraded Metropolitan Bank and Trust Co. (Metrobank), citing "heightened risk" from its "increasingly aggressive" bid to retain its position as the country's largest bank. The announcement, which hardly surprised local banking analysts, came after the Metrobank Group completed its acquisition of a 51% stake in Solidbank Corp. -- its third since last year. In a statement from its New York office, Moody's Investors Service criticized the acquisitions, saying, "these smaller banks will contribute only marginally to Metrobank's franchise as they have limited business scope and are believed to suffer from poor asset quality". It said it decided to lower its ratings outlook on Metrobank to "negative" from "stable", reflecting Metrobank's "increasingly aggressive efforts to maintain its position as the Philippines' largest bank amidst current banking industry consolidation." In a separate statement from its Melbourne office, Standard and Poor's Corp. said it lowered its public information (pi) rating for Metrobank to a single "bpi" from double "bpi" after the acquisitions. "Recent acquisitions by Metrobank have heightened the risk profile of the bank to the extent that it is no longer congruent with the double- 'B' rating category," S&P said. While Metrobank already enjoys "a preeminent market position in the Filipino-Chinese commercial banking sector", the ratings firm said "the potential value to be gained by Metrobank from recent acquisitions is outweighed by attendant risks during the acquisition process that are considered to be significant." S&P said Metrobank's recent acquisitions of The Philippine Banking Corp. and AsianBank Corp. will only boost its asset base by about one-fifth, "and potentially will exceed one- fifth should it effect the merger with Solidbank" Reacting to the downgrade, Metrobank president Antonio S. Abacan, Jr. justified the purchases, which were done in less than one year, saying the three banks actually provided Metrobank "added value". He said Metrobank's recent moves were not desperate attempts to retain its number one rank. "I think we have to correct that perception. We are buying banks in connection with the directive of the Bangko Sentral (Central Bank of the Phils.) on consolidation and to get added value We are not talking of becoming number one. We just want to be one of the leading banks in the country. We want to be a very strong bank," he said in a telephone interview last night. Mr. Abacan said the acquisition of Solidbank will expand its clientele base and "a very big hold on the Filipino- Chinese market". He likewise said Metrobank had to pay a premium for Solidbank's 51%, but it does not mean the bank will shell out an equivalent amount for the remaining shares. Reacting to Metrobank's ratings downgrade, Jose Antonio Alitagtag, research head of Nomura Securities' local unit, said "any news that there is a possible downgrade is certain to be taken negatively but I don't think the judgement is out yet." Alitagtag noted that investors would probably reserve their final outlook on Metrobank "pending the plans and prospects for consolidation of Solidbank into Metrobank." (Business World, Philippine Daily Inquirer 13-Jan-2000) PHILIPPINE NATIONAL BANK: Privatization scheme changing ------------------------------------------------------- Newly installed Finance Secretary Jose T. Pardo yesterday said his department will come up with a new scheme for the sale of the government's 30% stake in semiprivate Philippine National Bank (PNB). "There are a lot of other schemes I can see," Mr. Pardo said, hinting that he is not in favor of the public bidding or block sale originally planned by his predecessor, Edgardo B. Espiritu, who himself was formerly PNB president. Mr. Pardo said he expects PNB this week to recommend the "best scheme" for the sale. "I have met with (PNB president) Benjie Palma-Gil. He will give me the papers in two days," he said. Mr. Pardo added the timetable for the bank's full privatization "should hold," referring to the scheduled April sale committed to the International Monetary Fund and the World Bank. Bangko Sentral (Central Bank of the Phils.) Gov. Rafael B. Buenaventura, meanwhile, yesterday said he supports Mr. Pardo's decision to first review the privatization scheme to determine its viability. While the market is "hungry" for shares of corporations to be privatized, Mr. Pardo earlier said it will not be receptive to "just any" issuance. A due diligence audit on PNB is now being conducted by PriceWaterhouse Coopers and Lehman Brothers. Mr. Espiritu earlier admitted that preliminary findings on the bank are "not very encouraging". Still, the DoF under Mr. Espiritu has committed to offer to interested buyers the government's remaining 30% stake through a public bidding, although admitting that the prospects for a successful privatization has already been dampened by Lucio Tan's recent entry. The Chinese-Filipino businessman now owns 35% of PNB, controlling four of its 11 board seats. Meanwhile, PNB is only one of five big-ticket items to be privatized this year, Mr. Pardo said in an interview. Other government corporations to be sold are: the Manila Electric Company, the Philippine National Construction Company, the Philippine Phosphate Fertilizers, Inc. and the National Power Corp. "We must maximize the number of assets to be privatized since we have only one year to do so," Mr. Pardo said. The Committee on Privatization, the state's privatization arm, has been given until November this year to finish its projects. (Business World 13-Jan-2000) UNIWIDE GROUP: To sell its Metromall ------------------------------------ Cash-strapped Uniwide Group plans to sell its Metromall in Alabang to a Singaporean group for around P1.5 billion as part of its overall strategy to reduce its debts, well- placed industry sources said yesterday. The sources said the Uniwide group has been negotiating with the Singaporean group, which was affiliated with one of the biggest banks in the city-state, for the sale of this asset. They said Uniwide was asking for about P1.5 billion to P2 billion for the mall, located at the Alabang- Zapote area south of the metropolis, but would likely get a price near the lower end of the range. The asset sale, the sources said, was in line with Uniwide's three-point rehabilitation plan which would pave the way for the entry of a new strategic investor who would infuse fresh equity to the company. Uniwide is presently negotiating with a French company for a possible takeover of its warehouse operations. But the negotiations with the Singaporean group were wrapped up long before the French came into the picture. From the point of view of Uniwide, the sources said the asset sale forms part of the streamlining plan needed to jumpstart its rehabilitation. Earlier, the group's affiliate company, First Paragon Corp., likewise sold its 24-hour convenience store chain to I-Mart International Corp., thereby reducing the franchise fee revenue of the Uniwide group. The group likewise recently gave up its 112.865-square- meter property for its Dreamworld theme park in Naic, Cavite as part of a dacion en pago or asset swap deal with United Coconut Planters Bank, one of its biggest creditors. The deal also covered two other Uniwide properties, one located in Caloocan City and the other in Baclaran. Under the rehabilitation plan, the Uniwide group will have to dispose as much non-core assets as possible to reduce debts. This meant trimming down its investments in land banking. The sources said the mall could be sold exclusive of the land it is occupying as the new owner could simply enter into a lease arrangement with the group that will take over Uniwide's operations. They said the streamlining was likewise aimed at raising funds to free up the personal shares of businessman Jimmy Gow that were pledged when the Uniwide Holdings Inc. shares were on a freefall. The Uniwide group earlier sought relief with the Securities and Exchange Commission for over P10 billion worth of debts to various creditor-banks. Now placed under SEC receivership, a rehab plan was mapped out seeking P1.5 billion in fresh equity infusion to make the company viable again. (Philippine Daily Inquirer 13-Jan- 2000) ================= S I N G A P O R E ================= IBC CORP.: To announce debt revamp details today ------------------------------------------------ Creditors and shareholders of debt-laden IPC Corp may be able to heave a sigh of relief when details of its debt restructuring plan are announced today. Banking sources yesterday said the company and its financial adviser, Andersen Consulting's Nicky Tan, have called a meeting to explain the plan to creditors. IPC yesterday requested a trading suspension for its shares today. While details of the plan are not known, it is likely that it will involve a cash-and-equity repayment plan, a la Goldtron Ltd. IPC had said in July it was talking with creditors to convert part of its $291 million debt into equity. Goldtron's debt restructuring scheme, approved last month, saw creditors being paid in full through a combination of cash and Goldtron shares. With investors bidding up the value of Goldtron shares after creditors approved the restructuring scheme, creditors suddenly found themselves sitting on a large paper profit, when before they faced a major recoverability problem. In June, IPC announced that it had found a white knight -- German IT firm Infomatec AG, which will make a two-stage injection into IPC totalling $130 million. Sources said Infomatec may also bring partners into the rescue deal, which may yield strategic business benefits to IPC. After IPC's restructuring scheme details are announced, the company will apply to the High Court for a date on which creditors will vote on the plan. If approved, the scheme will be submitted to the High Court and shareholders for approval. IPC closed one cent higher at 30 cents yesterday, with 5.6 million shares traded. (Singapore Business Times 13-Jan- 2000) LEWIS & PEAT PTE.LTD.: Placed in receivership --------------------------------------------- The Singapore branch of Ernst & Young took receivership of rubber trading company Lewis & Peat (Singapore) Pte. Ltd.. The receivership, which will be supervised by three partners from Ernst & Young, means that the interim judicial management under with the company was placed has now been rescinded, a partner at Ernst & Young said. Prior to this, Ernst & Yong was Lewis & Peat's interim judicial manager, said Young Yew Huat, a Singapore-based partner of the firm. Lewis & Peat, a leading rubber trading company and division of Indonesian conglomerate Bakrie Group, hasn't traded since late December. The company will remain out of the market for the time being while working out its existing contracts, said Mr. Ong. "We're now working on trying to complete as many, if not all, the existing contracts to make sure they're honored," he added. It is "too early" to say if there is any chance Lewis & Peat will be liquidated, said Mr. Ong, adding that the receivers "would certainly entertain any interested parties.who want to take over a very well-established name." Lewis & Peat's London operation, Lewis & Peat (Rubber) Ltd., was placed under the receivership of Ernst & Young U.K. on Monday, said Mr. Ong, who declined to comment on the factors leading to Lewis & Peat's Singapore operations being placed under interim judicial management. According to market participants, the company's Singapore office was making a profit, in contrast to its London and New York operations. (The Asian Wall Street Journal 12-Jan-2000) =============== T H A I L A N D =============== BANKTHAI: Privitazation sales plan gathers fresh impetus -------------------------------------------------------- State-owned BANK THAI (BT) is looking forward to becoming a private-owned commercial bank in June this year by selling 51 percent shares to private investors and the public, according to BT President Phirasilp Subhapholsiri. BANK THAI has submitted the draft of its privatisation plan to the Bank of Thailand (BOT) for final consideration. If approved, the plan is expected to be implemented within the year. Phirasilp said yesterday that the plan differed from those of other nationalised banks in that the bank did not intend to offer shares to foreign strategic partners. "We don't need strategic partners as we want to keep this bank for Thais. We are confident that we will able to compete against foreign rivals," he said, adding that the bank was likely to receive the BOT's decision within the next two months. According to Phiralsip, under the privatisation plan, the Financial Institutions Development Fund (FIDF) will have to reduce its stake from 100 per cent to 49 per cent with 51 per cent being sold through a public offering. However, Phirasilp noted that the selling method might need to be reconsidered, with the option of either issuing new shares or selling the existing shares to new investors. If the size of the share offering is too large, the bank will probably offer a number of shares to foreign investors. "We need to get approval of our privatisation plan as soon as possible as that will help the bank. If we remain a nationalised bank we will not be able to compete with other banks," he said. Phirasilp said foreign investors will be allowed to buy BT shares, but not in larger proportion than Thai shareholders. After the final stage of privatization, BT will have a status similar to Thai Farmers Bank and the Siam Commercial Bank, he said. Phirasilp said BankThai also planned to merge or reduce its nationwide network of 116 branches to help reduce operating losses. This plan had also been forwarded to the central bank for its consideration. In addition, the bank planned to introduce a voluntary-retirement programme as part of its cost-reduction exercise. According to a statement from the bank, BankThai plans to reduce its non-performing loans (NPLs) to 20-30 per cent of total loans by the end of 2000. By March, the number of NPLs is expected to be below 50 per cent from a peak of 84 per cent at the end of last year. The bank's NPLs now stand at 62 per cent, or Bt100 billion. The bank has so far restructured debt worth Bt60 billion, according to the statement. As a result of the bank's debt-restructuring effort, it is now resuming lending to new clients. In the fourth quarter of 1999, new loans amounted to Bt6.2 billion. Phirasilp commented that in light of the present surplus liquidity in the banking system, the privatization process of BT is not too difficult to implement. BT is looking to cater to large-scale customers, particularly the former clients of the 12 finance companies that had been merged with the bank under the supervision of the Finance Ministry, the Bank of Thailand,and the Financial Institutions Development Fund (FIDF). Concerning the progress of rehabilitation of BT after merging 12 finance companies with the former Union Bank and Krungthai Thanakit, Phirasilp said the bank has total assets of 350 billion baht with 80 percent non-performing loans (NPL) out of the total credits of 260 billion baht. However, BT has managed to restructure debts with 616 borrowers for the amount of 12 billion baht. (The Nation, Business Day 13-Jan-2000) EASTERN WIRE PLC: Reports to SET on rehab progress -------------------------------------------------- Managing director Boonchai Khamboonruang reported for the company on its progress for court supervised rehabilitation. His report made reference to the letter mentioning that Egga Holding Company Ltd., one of the company major lenders, submitted a rehabilitation plan to the Central Bankruptcy Court and requested the Court to approve the plan. The Court accepted the rehabilitation on November 8, 1999 and scheduled the first hearing on December 7, 1999.Consequently, the first hearing on December 7, 1999 can be concluded that the Central Bankruptcy Court informed creditors and debtors that two creditors opposed the rehabilitation and one creditor opposed the proposed planer. Because of misunderstanding of some creditors, the requester was not able to convince the creditors to approve the proposed planner, thus the requester withdrew its petition. After the request of withdrawal had been considered, the Central Bankruptcy Court accepted it on December 7, 1999. On December 9, 1999 the requester announced the withdrawal to the creditors in Siam-Rat newspaper and the Court, then, deleted the case out of the file on December 22, 1999. (Stock Exchange of Thailand 13-Jan-2000) KRUNG THAI BANK: Share price falls with market ---------------------------------------------- Shares of Krung Thai Bank dropped 3.9% while skyrocketing media stocks failed to halt a decline in the overall market as investors sold shares to lock in profits. The SET Index fell 1.5%. Banks and communication stocks declined after fueling the benchmark index's rise over the previous two trading days. (The Asian Wall Street Journal 12-Jan-2000) THAI PETROCHEMICAL INDUS.: Fund-raising viewed as hard sell ----------------------------------------------------------- Debt-ridden Thai Petrochemical Industry's (TPI) plan to raise US$1 billion via a new share issue is unlikely to be as successful as envisaged by the company, according to analysts. "I suspect the company may not be able to raise the money and even if there was a market for it, the [owner's] family would not want to risk too much dilution," said Itpong Saengtubtim, petrochemical analyst at Nava Vickers Ballas Securities. The Leophairatana family holds a 60 per cent stake in TPI, creditors hold 10 per cent and retail investors the rest. TPI, Thailand's biggest debt defaulter, announced the capital-raising plan earlier this month. The company is undergoing a debt-restructuring exercise on its $3.4 billion in debts with 148 creditors and a deal is expected on Monday. The deal has been discussed since August 1997. Foreign creditors include the World Bank's International Finance Corp, Australia and New Zealand Bank, Bank of America, Citibank Standard Chartered Bank and Sanwa Bank. Creditors have objected to the capital-raising saying the company would first have to sign the long-delayed debt- restructuring deal before entering the market to raise funds. TPI has appointed Jardine Fleming Thanakom and Merrill Lynch Phatra Thanakit as financial advisers. Its chief executive officer, Prachai Leophairatana, said recently the advisers had assured him the funds could be raised. "We will sell them [shares] via private placement or whatever means and have appointed Merrill Lynch and Jardine Fleming as our advisers. They have assured us that they can raise the money," Mr Prachai said. But analysts feel that even if the company was able to raise the funds, the dilution impact on current shares would be huge. "From what I have heard, the company may get between $0.70 to $1 per share which is still far too high compared with the current market price," said Soopara Lochanajaroenporn, petrochemical analyst at KGI Securities One. Ms Soopara said if the new shares could fetch $0.70 to $1, TPI would need to issue between one billion to 1.43 billion new shares. "I believe there would be between 33 to 50 per cent dilution on existing shares," she said. "Retail investors would be left with about 10 per cent of the equity from the current 30 per cent, while the Leophairatana family would also lose about a third to half of their current shareholding." Other analysts labelled TPI's share issue a "red herring". "To me it is red herring as the [Leophairatana] family is keen to avoid dilution," said Neil Semple, petrochemical analyst at ABN Amro Asia Securities. "In my view the more likely reasons for the capital-raising are to have approval ready and waiting in order to meet money requirements in case of shortages in future. It could also be for plant expansion in case of a major petrochemical rebound," Mr Semple said. Another foreign analyst said it would be better for the company to go to the market after it had used its cash flow to de-leverage itself. "TPI would be better off de- leveraging itself using its cash flow and then enter the market rather than now. There might be very little appetite for such corporates in the international markets," he said. TPI's balance sheet needed to be fixed first before it went to the international markets to raise capital, he said. (South China Morning Post 13-Jan-2000) S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Darryl Henning, Managing Editor, Feliz Ordona and Cristina Pernites, Editors. Copyright 2000. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***