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/raid1/www/Hosts/bankrupt/TCRAP_Public/000223.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 Wednesday, February 23, 2000, Vol. 3, No. 37 Headlines * C H I N A & H O N G K O N G * CHEUNG KONG: Focus moves to Internet from construction CHIEFUND ENTERPRISES (GROUP)LTD: Facing winding up petition CHIT LEE MARBLE & MINERALS CO.: Facing winding up petition COLLECTION INTERIOR LTD: Facing winding up petition HENDERSON WHAMPOA:Focus moves to Internet from construction LEADING SPIRIT HIGH-TECH: To bid on Fujian cable-TV firm MALAYSIA ELECTRIC CORP.(HK)LTD: Facing winding up petition ROCKWAY TRADING LTD: Facing winding up petition SINO LAND: Focus moves to Internet from construction STRONG HAPPY DEVELOPMENT LTD: Facing winding up petition SUN HUNG KAI: Focus moves to Internet from construction WHARF PROPS.: Focus moves to Internet from construction * I N D O N E S I A * PT BAKRIE FINANCE CORP.: Bankruptcy filed against it * J A P A N * MYCAL CORP.: To liquidate 13 subsidiaries in rehab NIPPON CREDIT BANK: Softbank appears likely buyer TORAY INDUSTRIES: Lowers FY99 group forecast, sees net loss * K O R E A * DAEWOO GROUP: Some motor bidders interested in other firms DAEWOO MOTOR: 5 bids expected to be received SAMSUNG MOTOR: Renault done with due diligence * M A L A Y S I A * PUNCAK VISTA SDN: In default on loan TENGGARA CAPITAL: To refine its core business TIME ENGINEERING BHD: Names debt revamp advisers * P H I L I P P I N E S * BACNOTAN CEMENT CORP.: SEC approves merger BW RESOURCES CORP.: Scandal sparks sell-off of RP stocks DAVAO UNION CEMENT CORP.: SEC approves merger HI-CEMENT CORP.: SEC approves merger HI CEMENT CORP.: Shares to resume trading INT'L CONTAINER TERMINAL SVCS.: Sets $40M writeoff MONDRAGON INT'L PHILIPPINES: Still awaits bridge financing NEW FRONTIER SUGAR CORP.: Another Sia firm has debt woes PHILIPPINE GLOBAL COMMOS.: Asks creditors for 60-day review PIEDRAS PETROLEUM CO.: Court lifts auction suspension order SOUTHEAST ASIA SUGAR MILL: Another Sia firm has debt woes SOUTH PACIFIC SUGAR CORP.: Another Sia firm has debt woes UNIWIDE GROUP: Creditors 'open' to debt payment proposal * S I N G A P O R E * CLOB INT'L: SC okays Bintang Melewar proposal * T H A I L A N D * JASMINE INT'L: Debt postponement approved KUANG PEI SAN FOOD PRODUCTS: Reports rehab progress to SET NAKORNTHAI STRIP MILL: Notifies SET of debt restructuring SIAM SYNTECH CONSTRUCTION: Reports rehab plan vote to SET THAI MILITARY BANK: Struggles with capital raising WIRELESS COMMO.SERVICE CO: TAC has four buyers for it ============================== C H I N A & H O N G K O N G ============================== CHEUNG KONG: Focus moves to Internet from construction HENDERSON WHAMPOA:Focus moves to Internet from construction SINO LAND: Focus moves to Internet from construction SUN HUNG KAI: Focus moves to Internet from construction WHARF PROPS.: Focus moves to Internet from construction ----------------------------------------------------------- A shift in focus by several major developers to the high- flying Internet sector at the expense of new housing projects is causing alarm in the local construction industry. Major property developers such as Cheung Kong, Sun Hung Kai Properties, Sino Land, Wharf Properties and Henderson Land are now devoting much of their attention to Internet ventures. Construction consultants warned an increasing amount of construction companies were falling into the red after being starved of new projects as developers are injecting less cash into property ventures. The public frenzy for shares of tom.com, a company controlled by Cheung Kong and Hutchison Whampoa, will further encourage other property companies to shift funding to the Internet sector, analysts say. The property downturn of the past two years had already hit the construction industry. Expenditure in the private property sector, estimated to account for half of the construction total in Hong Kong, dived by roughly 40 per cent in two years. The lack of new projects, coupled with declining market prices, was likely to force many companies into liquidation, they warned. "There are many construction companies in Hong Kong that are not trading profitably at the moment," said Chris Morgan, managing director of Cannonway Consultants. While it is widely believed the property market had bottomed out, the construction industry still complains of an inadequate workload. "I don't see (developers) spending more money and also I don't see them begin to commit to new projects," Mr Morgan said. "That is normal, they want to put their money where they can get a return. At the moment they are not seeing such a good return from property investments." "There is no incentive in the property and retail markets at the moment. If people are not buying, private developers will not build and that is going to slow down the recovery,'' he added. "The (increase) in workloads and improvement in the industry may not be happening as quickly as we first thought." The construction industry in Hong Kong has faced a difficult time since the completion of major infrastructure projects such as the new airport, and this coincided with the Asian economic crisis. Currently the market has construction work worth between $100 billion and $120 billion per quarter, mainly supported by public housing assignments and a few infrastructure projects from the KCRC and MTRC. Contributions from the private property sector have been contracting. The government has long been a major developer but its recent expenditure on building projects had been also flat, Mr Morgan said. As a result, the few major contracts had been keenly contested and had almost forced some contractors out of the market. "The problem is that the engineering of these projects is highly risky. There are so many unforseen factors which make the contractors unsure of what the job will actually cost them," Mr Morgan said. "With the highly competitive offer being made by the construction companies there is almost no scope in the price to accommodate these difficulties on major engineering projects, which makes the constructors' situation even worse. Last year saw a number of companies go into liquidation and I suspect that will carry on. Many of them have probably been living with that situation for a while and they are now very careful about how to sustain the business." "Some companies are even thinking not to contend for the KCRC West Rail project because of the high risk and low price," he added. "They think it is safer not to take on the project." He also pointed out that not only the physical terrain had become more demanding, but also the nature of the contracting business had changed. "The stringent contract requirements of the new airport substantially altered the standard of contracts in Hong Kong and constructors need to upgrade themselves to accommodate that change." Above all, he said companies should pursue good management both in operations and finances to maintain some sort of profit. Mr Morgan believes there is room for improvement for most of Hong Kong's construction companies and that they should seek to run their business in a more effective, flexible and innovative way. (Hong Kong Standard 21-Feb- 2000) CHIEFUND ENTERPRISES (GROUP)LTD: Facing winding up petition ----------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for March 15 on the petition of Yue Xiu Metals & Minerals (Company)Limited for the winding up of Chiefund Enterprises (Group) Limited. A notice of legal appearance must be filed on or before March 14. CHIT LEE MARBLE & MINERALS CO.: Facing winding up petition ---------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for March 1 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Chit Lee Marble & Minerals Co. Ltd. A notice of legal appearance must be filed on or before February 29. COLLECTION INTERIOR LTD: Facing winding up petition --------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for March 22 on the petition of Yue Po Engineering Company Limited for the winding up of Collection Interior Limited. A notice of legal appearance must be filed on or before March 21. LEADING SPIRIT HIGH-TECH: To bid on Fujian cable-TV firm -------------------------------------------------------- Mainland Internet and cable-TV investment plans have thrown a lifeline to yet another ailing Hong Kong listed company with a highly controversial history. Following on its February 9 announcement that it planned to take a controlling stake in a proposed Beijing-based Internet service provider, loss-making TV and washing machine manufacturer Leading Spirit High-Tech on Friday said it was making a bid for a 30 per cent stake in a proposed Fujian cable-TV operation. The announcement came after shares in Leading Spirit were suspended in the afternoon, but not before they had soared 35 per cent, or 21 cents, to 81 cents - ranking the counter in the top 10 market gainers. Leading Spirit said it would be granted an option to buy the stake in the mainland cable operator when "such a purchase is permissible". Presently the central Government bars foreign firms owning stakes in mainland cable operators and there is no impending change in the policy expected. At 2.32 billion, the volume of Leading Spirit shares traded before its suspension was the second-highest on the market on Friday, and about 21 times average daily volumes in December last year. The last time shares in Leading Spirit were traded in such huge volumes, the Securities and Futures Commission sought the assistance of the China Securities Regulatory Commission in investigating the activity, since the company's chairman, Wong Shi-ling, lived in the mainland. At that time, the SFC said there were signs that the trading was conducted by a small group of people among themselves. Earlier this month, Leading Spirit shares were again suspended after the Hong Kong stock exchange queried abnormal movements in its share price, and having ended at 32 cents on February 1, resumed trading on February 10 to close at 53 cents. That jump was prompted by news that Mr Wong's Leading Spirit proposed paying the equivalent of $162.4 million - $32.89 million in cash and the rest in shares - for a 55 per cent stake in SinoOnline Network which provides technical support to Han Tong Communication Network. Han Tong, a Beijing-based Internet service provider, is yet to begin operating or generating any revenues but was reported by Leading Spirit to have rights to provide a satellite-based broadband network. Following Friday's suspension, Leading Spirit said it would be granted an option to take a 30 per cent stake in a company which was also yet to begin operating, but planned to provide technical support to a cable TV network yet to begin operating in Fujian. Mr Wong's bankers are likely to welcome the massive gains prompted by this talk. In November last year, bankers struck a $1.04 billion debt restructuring agreement with Mr Wong, who lost a fortune speculating on red-chip companies with loans secured against his shares in Leading Spirit. As part of the agreement, Mr Wong's bankers agreed to restructure a large proportion of his debt into five-year redeemable exchange notes. (South China Morning Post 21- Feb-2000) MALAYSIA ELECTRIC CORP.(HK)LTD: Facing winding up petition ---------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for April 5 on the petition of Wong Ka Fai for the winding up of Malaysia Electric Corporation (HK) Limited. A notice of legal appearance must be filed on or before April 4. ROCKWAY TRADING LTD: Facing winding up petition ----------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for March 8 on the petition of Ho Wai Hung for the winding up of Rockway Trading Limited. A notice of legal appearance must be filed on or before March 7. STRONG HAPPY DEVELOPMENT LTD: Facing winding up petition -------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for March 15 on the petition of Newmode Investments Limited for the winding up of Strong Happy Development Limited. A notice of legal appearance must be filed on or before March 14. ================= I N D O N E S I A ================= PT BAKRIE FINANCE CORP.: Bankruptcy filed against it ---------------------------------------------------- Four creditors from Hongkong have filed a bankruptcy suit against PT Bakrie Finance Corp. (JSX:MTFN) for failure to repay a debt of US$ 11 million. The four companies AB Capital Market Ltd (with credits US$ 3 million), Cho Hung Leasing and Finance Ltd (US$ 3 million), Harimi Leasing and Finance Ltd (US$ 3 million), and KEB Leasing and Finance (US$ 2 million) filed the lawsuit at the Jakarta Commercial Court, sources at the Bakrie Group told the newspaper Neraca. The management of PT Bakrie Finance confirmed the move taken by the four creditors, the paper said. The company told the Surabaya Stock Exchange (SSX) that the debts, due in May 1999, to the four companies constituted only 4% of its total debts. The court is expected to start hearing about the case on February 24. The Bakrie Group, one of the largest bad debtors listed by the Indonesian Bank Restructuring Agency, has already restructured a large part of its debts, making the Bakrie family a minority shareholder of the holding company. (Asia Pulse 21-Feb-2000) ========= J A P A N ========= MYCAL CORP.: To liquidate 13 subsidiaries in rehab -------------------------------------------------- Supermarket chain operator Mycal Corp. (8269) unveiled on Monday a restructuring plan centered on liquidating 13 subsidiaries whose accumulated liabilities have exceeded their assets. The company will book an extraordinary charge of 57 billion yen in conjunction with moves for the fiscal year through Feb. 29, but it will offset that by selling stakes in group firms to generate an extraordinary gain of 57 billion yen. The plan calls for closing a supermarket subsidiary expected to have an accumulated deficit of 15 billion yen by the end of fiscal 1999. Mycal will shift some of the subsidiary's operations to another unit and will relaunch the firm as a convenience store on March 1. A sporting goods specialty shop whose accumulated deficit is projected to hit 8.2 billion yen at fiscal year-end will be closed. Its product line will be slimmed down and transferred to another subsidiary. Meanwhile, Mycal's consumer electronics division will take over business from a boutique that sold such goods but is seen having an accumulated deficit of 12 billion yen by the close of the fiscal year. Mycal also lowered its fiscal 1999 consolidated earnings projections. It now anticipates a group pretax profit of 100 million yen, down from the previously forecast of 20 billion yen, and is also eyeing a 6 billion yen group net loss despite earlier expectations of 300 million yen in profit. (Nikkei 22-Feb-2000) NIPPON CREDIT BANK: Softbank appears likely buyer ------------------------------------------------- The Japanese government will this week choose a group of companies led by Internet financier Softbank Corp. as the best candidate to buy nationalized Nippon Credit Bank Ltd., a move that reflects the country's attempt to switch from an "old economy" model to a "new economy," according to people familiar with the situation. The Financial Reconstruction Commission, a government- appointed committee charged with selling Nippon Credit, will will as early as Thursday give deal-negotiating rights to Softbank, along with partners Tokio Marine & Fire Insurance Co. and Ori Corp., according to people close to the negotiations. The comission chose the Softbank group over rival bidder, Cerberus Capital Management of the U.S., because they liked its vision for the future of the bank, the people said. The decision to sell Nippon Credit to the Softbank group puts one of Japan's biggest and most traditional lenders into the hands of some of the country's most dynamic companies - all of them newcomers to banking. Nippon Credit, which collapsed in 1997 under the weight of trillions of yen in bad loans, funded much of the real- estate development and construction boom that accompanied Japan's growth during most of the late 1900s. Softbank, on the other hand, is one of Japan's most aggressive sponsors of online business, and is pioneering infrastructure in Japan to deliver banking and other financial services over the Internet. Orix, the biggest leasing company in Japan, is also one of the country's most innovative investors and an outspoken advocate of managerial reform. Tokio Marine, the biggest casualty insurer in Japan, has managed to keep healthy during a time of decline for much of the country's financial industry, and boasts one of the highest credit ratings in the country. The newly incarnated Nippon Credit will be led by Tadayo Homma, a former director of Japan's central bank, the Bank of Japan, said a person familiar with the deal. (The Asian Wall Street Journal 21-Feb-2000) TORAY INDUSTRIES: Lowers FY99 group forecast, sees net loss ----------------------------------------------------------- Toray Industries Inc. (3402) said Monday it expects to post a net loss of 65 billion yen for the year ending March 31, compared with an earlier forecast of 12 billion yen in net profit. The change was attributed to a 105 billion yen write-off of unfunded pension obligations and 12 billion yen in appraisal loss on real estate holdings for sale. The slumping market for the company's mainstay chemicals and fiber also forced it to trim group pretax profit estimates to 24 billion yen, 10 billion yen less than the initial projection and down 42% from a year earlier. Despite the decline, however, the company will maintain its annual dividend at 7 yen. Japan's top producer of synthetic fiber is facing 325 billion yen in retirement allowance and pension obligations, while its pension scheme holds only 180 billion yen in assets and 40 billion yen in reserves set aside for future severance pay. The appraisal loss on property holdings for sale was incurred by a construction subsidiary, which reassessed its land and condominiums for sale at market value, in line with new accounting standards. At book value, the properties are worth 20 billion yen. Group operating profit is seen falling 33% to 32 billion yen. The chemicals division expects a 50% drop in operating profit to 9 billion yen and fiber operations see profit staying flat at around 16 billion yen. The housing/engineering division will remain in the red, forecasting an operating loss of some 1 billion yen. For the year through March 2001, the company expects group pretax profit to surpass 34 billion yen, up 42%. (Nikkei 21-Feb-2000) ========= K O R E A ========= DAEWOO GROUP: Some motor bidders interested in other firms ---------------------------------------------------------- Ford Motor Co. and Fiat SpA, companies already showing strong interest in acquiring Daewoo Motor and Ssangyong Motor, are reportedly interested in acquiring other Daewoo affiliates, including Daewoo Motor Sales, Daewoo Capital and Daewoo Telecom's automotive transmission plant, industry sources and creditor bank official said yesterday. The Daewoo Corporate Restructuring Committee has put up for sale the conglomerate's domestic and overseas production facilities, Ssangyong Motor and the additional subsidiaries. The committee is reportedly willing to allow partial sales of the conglomerates assets. The restructuring committee sent out invitations for bids last week and plans to receive applications by Tuesday, taking international time differences into consideration. In interviews with foreign media, Ford and Fiat recently announced their intentions to take part in the bid for Daewoo Motor. The participants in the bid will receive financial data on Daewoo Motor from the restructuring committee by the end of this month, before conducting due diligence on the carmaker. (Korea Herald 21-Feb-2000) DAEWOO MOTOR: 5 bids expected to be received -------------------------------------------- With the deadline for submitting letters of intent to participate in the bid for Daewoo Motor set for Monday, the ailing auto firm and its creditors expect to receive proposals from five out of the six auto firms invited to participate. According to Daewoo Motor, Ford and Fiat have already contacted overseas broker Morgan Stanley to indicate interest in taking over not only the passenger car division of Daewoo Motor, but also affiliates Ssangyong Motor, Daewoo Capital, Daewoo Motor Sales and Daewoo Telecom's transmission division. GM has also already stated it would be interested in making a similar package takeover. Officials at Hyundai Motor say Korea's number one automaker is also ready to participate in the Daewoo Motor bid, disclosing that they have been in contact with various local and overseas firms in the hope of striking up a partnership for the takeover. In addition, Cho Hung Bank, Ssangyong Motor's major creditor bank, said it has been in contact with DaimlerChrysler, suggesting that the local bank also is interested in making a takeover bid. (Digital ChosunIlbo 20-Feb-2000) SAMSUNG MOTOR: Renault done with due diligence ---------------------------------------------- Renault, a French car manufacturer, has completed its inspection into the assets and debts of Samsung prior to negotiating the purchase of the bankrupt auto maker. Samsung sources said yesterday that Renault's inspectors returned home last week after checking the financial sheet of Samsung in Seoul and and its plant in Pusan. Based on the outcome of the inspection, Renault is expected to present more details of its takeover plan during negotiations with Samsung and its creditors, the sources said. A Samsung official said the negotiations over the price of the takeover will start late this month or early next month. But it will take time to reach an agreement as Renault is expected to slash the price Samsung offers, said the official, refusing to elaborate. (Korea Times 20-Feb- 2000) =============== M A L A Y S I A =============== PUNCAK VISTA SDN: In default on loan ------------------------------------ Puncak Vista Sdn Bhd (PVSB), a 30%-owned associated company of United Engineers (M) Bhd is still in default in its payment of principal and interest on its RM363mil syndicated term loan and convertible bank guarantee facility and RM30mil revolving credit facility. Both securities are secured against PVSB's 12.92-ha land held under various land titles, all in Kuala Lumpur and a debenture over all the assets of PVSB. The debenture empowers the agent bank for the facilities to appoint a receiver and/or manager in the event of default but to- date, no such notice had been received by PVSB. (Star Online 21-Feb-2000) TENGGARA CAPITAL: To refine its core business --------------------------------------------- Tenggara Capital Bhd's fortunes are set to change for the better with the recent entry of a new substantial shareholder and the transformation of its core business into petroleum and petroleum based products. The low profile cement and timber outfit will also undergo a name change to Tenggara Oil Bhd to better reflect its new status as an independent petroleum-based company. Analysts have recommended a buy for Tenggara's shares as the change in its core business is seen as a positive move by the group, which will completely cease its cement operation. This move could create speculative interest among investors as Tenggara's ratings are considered as undemanding at 1.77 times in view of its new found business, said the analyst. Technically, Tenggara's share price has successfully breached its major resistance of RM1.92 and a target of RM2.90 to RM3.00 is seen as within reach. On Feb 11, Tenggara executive chairman Datuk Dr Kamal Salih announced that he was selling 19% of his total 54% stake in Tenggara to Datuk Paduka LMN Affendi Long Ibrahim of the Petmal Group at RM2.50 per share. There is also an option for Affendi to raise the stake by another 21% within six months. If he were to take up the option, Affendi will ultimately become the new substantial shareholder with a 40% stake in Tenggara. OCBC Securities (Melaka) Sdn Bhd head of research Franklin Tan said Tenggara would definitely in for some exciting times. Tan expects Tenggara to announce more ventures, particularly in oil and gas exploration, which can be lucrative. On Feb 10, Tenggara entered into an agreement with Petmal Oil (M) Sdn Bhd to form a 51:49 joint venture company incorporated in Labuan known as Tenggara International Petroleum Corp Ltd (Tipco). Tipco, which has an authorised capital of US$10mil and paid-up capital of US$1mil, will be mainly involved in the trading of oil and gas for the international market. Following the announcement, Tenggara signed a letter of intent to purchase three subsidiaries of Petmal Group which are engaged in the manufacture and marketing of petroleum products, including lubricants and bitumen. Tan said these new business ventures would provide a steady earnings stream for Tenggara. Total turnover for Petmal is about RM100mil with annual profits between RM4mil and RM5mil. Affendi said recently that Petmal controlled a market share of 12% and 15% in the petroleum and bitumen products market. Tan said these new business ventures were expected to contribute about 3.5 sen to Tenggara's net earnings per share. He said that group earnings would also be further enhanced by the lower interest expense after the full repayment of bank borrowings of RM87.5mil. Tan also commended Tenggara for making major adjustments by "de-gearing" its balance sheet through the sale of major assets since the economic crisis. Tenggara has been pursuing the sale of assets such as Prestige Sdn Bhd in Dec 1998 for RM7.5mil, its 70% stake in Tenggara Cement Manufacturing Sdn Bhd (January 1999 for RM112mil), disposal of 229.6 acres in Rawang (October 1999 for RM54mil) and a 30% stake in Tenggara Cement Manufacturing (January 2000 for RM48mil). Tan said the total asset sales, which are expected to be fully completed by end of this month, will see total sales proceeds estimated at RM221.5mil. By then, he said, Tenggara would revert to a net cash position from its current borrowings of RM87.5mil. Tan said Tenggara had also successfully repaid its RM50mil bond, which matured in February last year, which is rare for a small capital company especially after the recent crisis. He attributed this to Datuk Kamal's influence and connections. Kamal was formerly the head of the country's corporate think-tank, Malaysian Institute of Economic Research. An analyst with a local stockbroking firm said the new substantial shareholder, Datuk Paduka Affendi, would give Tenggara a a new lease of life, especially since Tenggara is now left with no business activity following the sale of its main asset, the cement plant. He said Affendi's 21 years' experience in the manufacture and marketing of petroleum products including lubricants and bitumen is essential for the new Tenggara. The Petmal Group, which has 12 subsidiaries, also has a RM17mil petroleum-based plant in Malacca catering both to the domestic and international markets. The analyst expects the proposed acquisition of Petmal's three subsidiaries by Tenggara to also lead to further expansion into the petroleum industry. Among the areas highlighted were the manufacture and sale of lubricants/transformer oil in the domestic and international markets, expansion of Petmal's existing marketing and distribution of fuels, lubricants and bitumen from the peninsula into Sabah and Sarawak as well as provision of bulk services for the chemical and petroleum industries. (Star Online 21-Feb-2000) TIME ENGINEERING BHD: Names debt revamp advisers ------------------------------------------------ Malaysia telecommunications firm Time Engineering Bhd yesterday named its advisers in its debt restructuring plan. They are Credit Suisse First Boston (Singapore) Ltd, Arthur D Little (Malaysia) Sdn Bhd, NM Rothschild and Sons (Singapore) Ltd, Commerce International Merchant Bankers Bhd and three law firms. Time said it plans to make a submission to market regulator the Securities Commission by April 22 on the debt restructuring proposal. Under a plan to restructure 4.79 bil lion ringgit worth of debt, Time said in January it would group all its telecommunications assets under one subsidiary, Time dotCom, which it would then list with an initial public offer of 150 million shares at RM3 each. Credit Suisse will review the business, network, operations and financial position of Time dotCom, Time said. It will also advise on Time dotCom's business strategy and refine its existing business plan. Arthur D Little will act as independent feasibility consultants for Time En gineering and Time dotCom and carry out a professional due diligence of Time Engineering's business strategy. Rothschild will be the independent financial adviser to Time's creditors. The merchant bank will perform an independent valuation of Time dotCom for the creditors. Rothschild had earlier recommended that Time accepted a bid by Sin gapore Technologies Telemedia Pte Ltd for Time's telecoms assets for RM1.8 billion, the highest of three bids. Time re jected the offer, saying it fell far short of its expectations. (Singapore Business Times 22-Feb-2000) ===================== P H I L I P P I N E S ===================== BACNOTAN CEMENT CORP.: SEC approves merger DAVAO UNION CEMENT CORP.: SEC approves merger HI-CEMENT CORP.: SEC approves merger --------------------------------------------- The cement sector gets a big boost after the Securities and Exchange Commission (SEC) approved the merger of three publicly-listed cement subsidiaries of Bacnotan Consolidated Industries, Inc. thus making it one of the biggest conglomerates in the country today. The newly merged cement companies are Bacnotan Cement Corporation, Davao Union Cement Corporation and Hi-Cement Corporation, a statement sent to the local bourses said. The merger was unanimously approved by the shareholders of the three cement companies, although the surviving entity remains to be Hi-Cement, which is now renamed Union Cement Corporation (UCC). The UCC statement added that the merger now brings a total cement capacity volume of 5.7 million metric tons per year, to be sourced out from its four plants in La Union, two in Bulacan, and one in Davao. "The merger is expected to increase operating synergies, such as in sourcing products from different plants to serve different market areas," UCC said. Consequently, the marriage of the three cement firms prompted it to issue new UCC shares in exchange for shares of Bacnotan Cement and Davao Union by multiplying the two companies stock certificates by 3.815 and 0.571, respectively, in exchange for new UCc shares. The swap deal was in accordance with the exchange ratiomn stated in the merger plan approved by the boards of directors, shareholders and the SEC. But the Philippine Stock Exchange (PSE) tasked the Bacnotan Cement and Davao Union to hold and trade their Bacnotan Cement and Davao Union shares without exchanging their shares with the new UCC shares. However, after a lapse of 30-day period, the shares of the two cement firms can no longer be traded on the PSE as UCc shares unless the shares are first exchanged for new UCC shares. Moreover, the UCC explained that the shares of Bacnotan and Davao Union can be swapped for new UCC shares uding the above ratios at any time by surrendering the stock certificates to UCC's stock transfer agent in Makati City. One thing good about the merger is that UCC has committed to assume all outstanding debts of Bacnotan Cement and Davao Union, including the convertible notes the two cement firms issued in the first half of last year. (Balita News 19-Feb-2000) BW RESOURCES CORP.: Scandal sparks sell-off of RP stocks -------------------------------------------------------- "Programmed selling," a trader at a foreign brokerage said. And nothing, it seems, can convince foreign investors right now to get back into the local stock market. Massive foreign selling triggered by charges of stock manipulation and insider trading in gambling firm BW Resources Corp. and the sharp decline on Wall Street dragged share prices at the Philippine Stock Exchange to a new 14-month low. A governor of the Philippine Stock Exchange said it was not the probe of BW itself that was hurting the market but the concerns it has raised over a return of cronyism. The 30- share composite index dropped 50.44 points to close at a new 14-month low of 1,833.84 points, its lowest close since Dec. 15, 1998. A total of 7.020 billion shares worth P2.75 billion changed hands from Friday's 6.259 billion shares worth P1.7 billion. The index has already lost 10.4 percent since Feb. 10 when it began an almost daily decline. It rose 0.8 percent Friday on a technical rebound. The broader All Shares Index fell 15.44 points to 631.31. Losers overwhelmed gainers 79 to 33, with 39 issues unchanged. "It was programmed selling," said a trader at one of the foreign brokerage houses that sold down Manila Electric Co. Meralco's widely traded B shares led the market's retreat on foreign selling. The B shares, open to both foreign and local investors, plunged P12, or 12 percent, to close P86. Analysts said foreign investors sold more stock than they bought last week. They were in fact net sellers of P245.6 million worth of stocks each day last week. Traders said foreign investors' waning confidence in the Philippine market as a result of the BW investigation sparked the sell-down. BW fell 45 centavos to P3.15. Traders said investors continued to exercise caution following the release of PSE report implicating BW owner Dante Tan and at least 11 brokerage houses in stock manipulation and insider trading in BW shares. Tan is a friend of President Estrada. "It's not BW per se, but the notion that some presidential friends are getting some special deals," said Joey Roxas, PSE governor and president of Eagle Securities. He was referring to allegations by Securities and Exchange Commission Chair Perfecto Yasay that Mr. Estrada had called him up several times last year to ask him to terminate the probe on BW and clear Tan of wrongdoing. The charges were denied by Mr. Estrada whose administration has been besieged by criticism of its alleged inefficiency and of giving favored treatment to friends and relatives. "This is really bad not just for the stock market but for investments in general because friends or cronies, or whatever you might call them, might be getting special deals that other people . . . might not be able to get," Roxas said. Cilette Liboro, head of research at Orion Squire-Capital, traced the sell-down to "internal concerns on BW Resources as well as concerns of another round of (interest) rate hikes in the US that weighed on the Dow. She added that the 295.05-point drop in the Dow Jones on Friday aggravated the situation. Liboro said some investors may selectively nibble on shares whose prices have dropped to bargain lows this week, but noted that further losses are expected. "Definitely the market is still on its way down to test a certain bottom at 1,800," Liboro said. The PSE report has been submitted to Yasay who said a "charge sheet" on Tan would be out this week to determine whether a criminal case could be built against him. Even so, there were also concerns on the outcome of the case. "There are fears that the closure (of the case) will not yield satisfactory results as far as investors are concerned," Liboro said. Yasay admitted no one had yet been successfully prosecuted for insider trading or price manipulation since the SEC was established in 1936. Ruben Ladia, director of the SEC prosecution and enforcement department tasked to validate and verify the PSE report, said that it would take "years for a thorough and complete investigation." Ladia admitted his department would not be able to wrap up the investigation by March 25 when Yasay is expected to step down as SEC chair. "They (PSE investigators) only made mention of a few persons there. If we have to conduct a thorough investigation, we have to widen the scope," he said. PSE president Jose Luis Yulo said he was confident that the SEC investigation and other separate inquiries by other agencies would confirm the findings of the PSE report. The BW fiasco is also being investigated by the Senate committee on banks and financial institutions, Department of Finance, Bureau of Internal Revenue and Bangko Sentral ng Pilipinas. BSP Governor Rafael Buenaventura said the BW fiasco had also made a negative impact on the peso. "I am sure there was an outflow because of the usual knee- jerk nervousness of currency investors who are watching closely what the government would do on BW," Buenaventura said. The peso yesterday closed slightly lower against the dollar in active trading. The dollar closed at P40.680 on the Philippine Dealing System, up slightly from Friday's close of P40.670. Over the weekend, Socioeconomic Planning Secretary Felipe Medalla admitted that the government was far from restoring confidence in the stock market, despite assurances from Mr. Estrada. "I think the (government's) statements are very important, but clearly, knowing how these investors behave, they will wait and see until they see more concrete follow-up statements from the President," Medalla said. (Philippine Daily Inquirer 22-Feb-2000) HI CEMENT CORP.: Shares to resume trading ----------------------------------------- Trading in Hi Cement Corp. shares will resume on Feb 22 after the Philippine Stock Exchange approved its request to list more shares to cover its merger with Davao Union Cement Corp and Bacnotan Cement Corp, the PSE said in a statement. Hi Cement, the surviving entity, will be renamed Union Cement Corp. Union Cement will issue an additional 2.82 billion shares more to accommodate the share swap among the three companies. Trading in the three cement companies was suspended on Feb 10. (Manila Bulletin 22-Feb-2000) INT'L CONTAINER TERMINAL SVCS.: Sets $40M writeoff -------------------------------------------------- International Container Terminal Services Inc. unit ICTSI International Holdings Corp. has set a provision of $40 million for the write off of its port project in Santa Fe province in Argentina, ICTSI chief finance officer Roberto Jayme said. "An ICTSI subsidiary, ICTSI International Holdings Corp, is making a provision of $40 million to write off the Port of Rosario project," Jayme said. Jayme said ICTSI expects the write off to translate to a loss of P600 million for 1999. "The P600 million loss is a rough, unaudited, unofficial estimate of the effect of writing off the Rosario Port project on ICTSI at the parent level," he said. (Manila Bulletin 21-Feb-2000) MONDRAGON INT'L PHILIPPINES: Still awaits bridge financing ---------------------------------------------------------- Listed leisure firm Mondragon International Philippines, Inc. (MIPI) has postponed for the third time its annual stockholders meeting after the company failed to raise the money needed to regain control of the 215-hectare Mimosa Leisure Estate in Clarkfield, Pampanga. MIPI is supposed to hold the meeting today. Acting corporate secretary Pierre Paul S. Buhay said the meeting will have to be deferred by another two months to May 22 as it will "facilitate and expedite" the release of funds from a US trust company. MIPI has been in negotiations with California-based First National for an P8-billion refinancing package. Mr. Buhay said the first tranche of the bridge financing -- amounting to $14 million -- is expected within 30 days. A portion of the amount may be used to pay 325-million-peso (US$8 million at PhP40.684:US$1) rental obligations to Clark Development Corp. The firm said the two-month period will "enable the management to fully realize a possible solution to the Mimosa problem brought about by recent developments." President Joseph Estrada recently appointed a new president for Clark Development Corp. (CDC) in the person of Sergio Naguiat to replace Rufo Colayco whose resignation was accepted by the President. The new CDC management has reportedly expressed willingness to negotiate with MIPI and will reportedly allow the listed firm to operate Mimosa once it is able to settle its obligations. MIPI said the two-month period will allow them to pursue a "win-win solution" being proposed to the Estrada government. Earlier, MIPI president Jose Antonio Gonzalez proposed the opening of the Mimosa Regency Casino and split its net earnings into half with the government taking the majority share. However, the Philippine Amusement and Gaming Corporation has consistently denied this petition, demanding MIPI to pay PhP120 million ($2.9 million) in obligations. It likewise advised MIPI to apply for a new gaming license as its previous one has allegedly been revoked. MIPI's major creditor banks are planning to start the acquisition of the estate's major assets as payment for the company's PhP6-billion ($147.5 million) loan obligations. CDC has received an offer from the Bank of Commerce for the purchase of the 36-hole golf course within the leisure estate. However, Mr. Gonzalez said its creditors could not possibly take over Mimosa, saying the case is still being litigated and that "the decision (on CDC's takeover) is not yet final." Twenty creditor banks have grouped together to sue any party that will attempt to lease any portion of the Mimosa Estate in order to protect their interests. MIPI's 1998 annual stockholders meeting was supposed to be held in September of last year. However, this has to be reset to November and later on to May in a bid to raise fresh capital. (Business World 22-Feb-2000) NEW FRONTIER SUGAR CORP.: Another Sia firm has debt woes SOUTHEAST ASIA SUGAR MILL: Another Sia firm has debt woes SOUTH PACIFIC SUGAR CORP.: Another Sia firm has debt woes --------------------------------------------------------- Another big sugar conglomerate based in Bacolod has raised the distress flag--the group of controversial trader Margarita Sia, allegedly the head of a cartel that corners all sugar imports into the country. Inquirer sources disclosed that New Frontier Sugar Corp., South Pacific Sugar Corp. and Southeast Asia Sugar Mill Corp., three sugar mills and trading companies owned by Sia, would convene all their creditor-banks within the next few days to seek some relief on some P3.5 billion worth of debts. The sources said the cash flow of Sia's companies was adversely affected by heavy trading losses as well as the continuing slump in sugar prices. The group's biggest creditor-bank is United Coconut Planters Bank, which has an exposure estimated at P1 billion. State-controlled Land Bank of the Philippines, on the other hand, has about P700 million in outstanding loans to the group. Sia made her fortune in flour and sugar milling/trading as she used to distribute flour milled by the Gokongwei group. Her family once owned the Khong Guan Biscuit Co. She has been controversial for the past few years for allegedly smuggling sugar and heading a cartel that cornered sugar imports. In 1998, out of the 45,000 metric tons of sugar placed under the minimum access volume (MAV), which was levied a preferential tariff rate of 50 percent, Sia's New Frontier got the bulk of the MAV allocation. Sia acquired Iloilo-based New Frontier with the financial support of Henry Gokongwei, a family friend, from the Lupingco sugar clan, while South Pacific and Southeast Asia were bought from the Asset Privatization Trust as these were once owned by Nasurefco. Her father owns a Pasig-based sugar trading firm called Gerry Commercial Inc., named after her brother. New Frontier has a capacity of milling 3,500 tons of canes a day, and South Asia, 4,000 tons per day. Southeast Asia Sugar Mill is located in North Cotabato while South Pacific is in Iloilo. Sia is better known as a sugar trader than a miller. Other sources said Sia's group would convene a creditors' meeting and request for some loan restructuring. Instead of going straight to the Securities and Exchange Commission to file for a petition for a suspension of debt payments like what Victorias Milling Corp. did, the group is expected to explore amicable arrangements with the creditor-banks. Without a restructuring of debts and a viable rehabilitation plan, the sources said the sugar group would be forced to default on its obligations. Other options to reduce debt would include asset-swap agreements or dacion en pago or fresh equity infusion from a new investor. In the case of Victorias, the country's biggest sugar mill, the firm ran to the SEC in early 1997, saying its operations were impaired by the country's over-importation of cheap sugar. This was aggravated by the difficult economic environment brought by the currency crisis. Sia's three sugar firms have been controversial because at one point, they cornered half of the total 300,000 metric tons of the country's sugar trade, despite assurances by the government that the sugar bidding process would not encourage a monopoly in the sugar trade. Sia has had some brushes with the Bureau of Customs. There was an instance that the Sugar Regulatory Authority refused to grant an import license to her companies because they could not pay in full the P158-million sugar levy slapped on some 30,000 MT of raw sugar imports. Sia insisted on bringing in her imports through the Iloilo port, forcing the BOC to seize the imports. (Philippine Daily Inquirer 21-Feb-2000) PHILIPPINE GLOBAL COMMOS.: Asks creditors for 60-day review ----------------------------------------------------------- The new management team of telecommunications firm Philippine Global Communications, Inc. (Philcom) is asking its creditor banks for a 60-day period to study the company's operations and financial status. The international gateway facility operator recently changed its management team after its president, Alex Villamar, and chief financial officer, Roberto Valdez, resigned from their posts early this year. Newly installed by majority owner APC Group are Evelyn Singson as president and Vicente J. Jayme as chief financial officer. APC is a subsidiary of listed gaming firm Belle Corp. In an interview with BusinessWorld, Mr. Jayme said the new team is planning to review the company's current status before deciding on restructuring its more than one-billion- peso (US$24.6 million) loan with creditor banks. "We're talking with all the banks now and we're asking them to give us a period to review our operations which includes our financials then go back to them later and see if we can continue And if there's a need, then we're open to restructuring the loans," he said. The official said creditor banks amenable to the 60-day study period include Solid Banking Corp. which leads the syndicate group for Philcom's $2-million loan. (Business World 22-Feb-2000) PIEDRAS PETROLEUM CO.: Court lifts auction suspension order ----------------------------------------------------------- The Sandiganbayan, the country's anti-graft court, yesterday said the auction for 145 million shares in a Bataan-based oil exploration company sequestered by the government will resume after it was suspended a month ago. A Sandiganbayan resolution released yesterday lifted the suspension for the auction of shares owned by businessman Rodolfo T. Arambulo in Piedras Petroleum Co., Inc. "The resolution of this court promulgated on January 27, 2000 is hereby reconsidered and set aside, and the public auction sale or sale of execution held in abeyance by the resolution of this court is hereby allowed and ordered to proceed in accordance with law," the Sandiganbayan resolution said. Piedras is one of the companies allegedly owned by Marcos associate Roberto S. Benedicto. The company was sequestered by the Presidential Commission on Good Government in 1987 along with other Benedicto-owned assets. Mr. Arambulo's shares, 14% stake in Piedras, were originally set to be auctioned at the ground floor of the Sandiganbayan on January 28. This was to implement a writ of execution issued by then Sandiganbayan Justice Harriet O. Demetriou in 1998, ordering the auction of Mr. Arambulo's shares in the company after the Sandiganbayan established Mr. Arambulo's ownership of the shares. But before the auction could take place last month, the Office of the Solicitor General questioned before the Supreme Court the legality of the auction. This led the Sandiganbayan to indefinitely suspend the auction "in deference to the Supreme Court." (Business World 22-Feb-2000) UNIWIDE GROUP: Creditors 'open' to debt payment proposal -------------------------------------------------------- Creditor banks of the Uniwide Group of Companies are said to be "open" to the proposed debt payment plan to pave the way for the entry of Casino Guichard-Perrachon SA, France's second-largest retail chain. The Uniwide group and its financial adviser, Buenaventura, Filamor and Echauz (BFE), last Thursday presented the proposed restructuring plan to creditor banks. Uniwide has 11.1 billion Philippine pesos (US$272.8 million at PhP40.684:US$1) in loans, of which PhP6.95 billion ($170.8 million) are owed to 13 creditor banks. Under the proposal, cash payments to creditor banks will be 20% less than the amount due while cash payments to suppliers and traders will be discounted 50%. "Interest will be paid, penalties will be waived... The approach is good. We will give it some consideration," a source from one of the creditor banks said. Another source said the proposal is "one-sided" as it will benefit only the Uniwide group. The source added creditor banks are "under pressure" to agree to the plan as it is crucial to Casino's entry. "Out of all the creditor banks, if one does not agree, the rehabilitation plan will not push through," the source said. Aside from cash payments, the Uniwide group will also service its debts through a dacion en pago or debt-for- asset swap arrangement. The sources said the pricing of the properties will be based on the average valuation of four independent appraisers, which include Cuervo Appraisal and Asian Appraisal. Uniwide will also get a 20% discount on payments through dacion en pago. "The terms and conditions will be uniform for all banks... The average appraisal, compared with the more conservative in-house valuation of the bank, is still higher. Some banks will end up releasing some of the collateral. If you are fully secured, why agree to that?" one of the sources said. The other source said Uniwide and the creditors must come to an agreement by June this year. Casino has earlier agreed to put in PhP3.57 billion ($87.7 million) into the cash-trapped group of companies, enabling it to own more than 80% of the group. It's investment will be used to pay off obligations not settled through debt- asset swap, allowing repayment of all obligations of listed Uniwide Holdings, Inc. (UHI), Uniwide Sales Warehouse Club, Inc. (USWCI) and Uniwide Sales Realty & Resources Corp. (USRRC). "The corporate restructuring folds the retail operations of USWCI into UHI, transforming UHI from a mere property developer and franchisor of the Uniwide brand name into a retailer with the potential to be a leading retailer in the country," Uniwide said. From Casino's investment, it is projected that over 4,000 direct jobs will be saved, more than 2,000 suppliers will resume business stalled by the temporary halt in Uniwide's business operations, while more than 200,000 workers of suppliers will regain employment. In its report to the Securities and Exchange Commission, Uniwide said negotiations with its creditor-banks now centered on valuation issues but it expected to sign a memorandum of agreement with Asian Bank Corp. and Metropolitan Bank & Trust Co. within the next two weeks. Uniwide has an outstanding obligation of P251.93 million with AsianBank and P62.74 million with taipan George Ty's Metrobank. Uniwide said there were discrepancies in the valuation provided by the appraisers of the properties chosen by the banks and the bank's own internal valuation. Despite the difference, Uniwide said negotiations were still ongoing and that the banks had even offered ways resolving the matter. Based on the appraisal commissioned by the creditor-banks, the total appraised values of the properties available for dacion as of end-September stood at P6.09 billion. With Uniwide bent on concentrating on core business, only non- operating assets shall be offered for dacion. An exception to this principle, however, is the Metromall for which a special purpose company will be created and shares distributed to the respective creditor-banks as payment for the loan. (Business World 22-Feb-2000, Manila Times 21- Feb-2000) ================= S I N G A P O R E ================= CLOB INT'L: SC okays Bintang Melewar proposal --------------------------------------------- Bintang Melewar Sdn Bhd says it has received written confirmation from the Securities Commission (SC) that it has no objection to the firm's proposal to resolve the Central Limit Order Book (Clob) shares impasse. According to a statement from Bintang Melewar, one of the private companies which have offered to buy the frozen Malaysian securities previously traded on Singapore's Clob over-the-counter market, the SC had in a letter dated Feb 17, 2000, said it had no objection to the company's proposal provided it obtains the approval or clearance of the KLSE. With the SC advice and pending clearance from the KLSE, Bintang Melewar said it was happy that Clob investors were being given choices to resolve the Clob impasse. (Star Online 22-Feb-2000) =============== T H A I L A N D =============== JASMINE INT'L: Debt postponement approved ----------------------------------------- Jasmine International, Thailand's largest operator of undersea communications cables, received approval from its creditors to postpone payments on $325 million debt by five years. Like many large Thai companies, Jasmine suffered from devaluation of the baht in 1997, which made foreign debt harder to repay. Though current on its debt, Jasmine can't maintain several financial ratios required on its borrowings, ING Baring International said in a report published yesterday. Payments on the debt will be delayed to 2006 from an earlier schedule of 2001, said Songrit Kusomrosananan, managing director of Jasmine. Bangkok Bank was the biggest creditor with 17 percent of the debt. Jasmine in August revamped another 2.64 billion baht ($70 million) debt by postponing payments by about five years. Completion of the debt restructuring will clear the way for Jasmine to benefit from Internet development in Thailand. The company has the potential to integrate the business with its submarine cable and satellite-related infrastructure, ING Baring International said in its report. Songrit has reported the restructure to the Stock Exchange of Thailand. (Business Day 22-Feb-2000) KUANG PEI SAN FOOD PRODUCTS: Reports rehab progress to SET ---------------------------------------------------------- Kuang Pei San Food Products Public Company Limited, through Mr.Salil Tohtubtiang, Managing Director, reports to the SET on its Debt Restructuring Process with the Corporate Debt Restructuring Advisory Committee (CDRAC), The Bank of Thailand. At present the Debt Restructuring Plan of the company has been accepted by the major creditors (calculated 76.57% of total debt 1,004,000,0000.- Baht) since February 16,2000. So we have informed the main conclusion of the Debt Restructuring Plan accordingly. 1. Debt 762.8 million baht will repay to the creditors in seven years. 2. Debt 55 million baht will be swop to the shared capital. 3. Debt 281 million baht will be conversed to the convertible debenture (buy back condition in seven years). This process has made Debt Restructuring of the company is absolutely and is able to sign the contract in sixty days after this. (Stock Exchange of Thailand 22-Feb-2000) NAKORNTHAI STRIP MILL: Notifies SET of debt restructuring --------------------------------------------------------- Nakornthai Strip Mill Public Company Limited (the Company), through Mr. Sawasdi Horrungruang, Chairman, reports on the progress of the company's restructuring process. On February 18, 2000, there was a vote on the Companys debt restructuring plan (the Plan) at the Bank of Thailand. The Company obtained a vote from the CDRAC creditors financial institutions (the Banks) in the amount of 88.41% of the total debt of the Company owed to those Banks in favor of the Plan, which is deemed that the Plan was approved by the Banks for 100%. In addition, the Company also obtained a vote in favor of the Plan from the major holders of the Notes issued by the Companys subsidiaries (the Notes), with the Company, as a guarantor, being liable under such Notes as its subsidiaries were in default of the Notes. Details of the Plan may be summarized as follows: 1. Debts under the Plan -- Debts under the Plan were debts of the Company owed to the Banks and to holders of the Notes. 2. Principal amount of debts -- Principal amount of debts was consisted of (i) debts owed to the Thai Banks in the amount of US$ 354.1 million and(ii) debts owed to holders of the Notes in the amount of US$ 459.2 million. Therefore, the total amount of debts under (i) and (ii) above was US$ 813.3 million. In terms of debts under the Notes, the Company partially paid US$ 85.6 million from its accounts opened outside of Thailand, resulting in its debts under the Notes being reduced to US$ 373.6 million.After its debt restructuring, the Company would hold restructured debt claims of US$ 200.0 million, comprising of US$ 103.895 million of the Thai Banks debt and US$ 96.105 million of the Notes. The repayment period of the principal amount of debts would be ten year maturity. The Company agreed to repay US$40.0 million per year in years six through to ten. The Banks and holders of the Notes may convert their US$ 200 million debts into the Companys equity within 18 months from the closing date (the date on which all conditions precedent as mentioned in clause 8 below have been fulfilled) at the conversion rate of Baht 2.92 or the cost per share to be paid by new equity investor(s), whichever is lower. 3. Interest -- The Company agreed to pay interest as follows: 3.1 interest at MLR for Thai Baht debts and one-year LIBOR for US Dollars debts; 3.2 the Company would pay interest for year 1 through to year 3 at the rate of 1%, year 4 at the rate of 3%, year 5 at the rate of 5%, and year 6 through year 10 at MLR or one-year LIBOR, as the case may be. For difference between the required payment amount and the exact payment amount in year 1 through to year 5 shall be paid in full without interest thereon within 10 years from the closing date ; 3.3 accrued interest for the period from December 1, 1998 through December 31, 1999, which will be calculated at the interest rate of 12% per annum, will be deferred without any interest. Any past interest accrued other than the period as mentioned in the previous sentence and those of Tranche C Notes shall be written off. 4. Debt to equity conversion of creditors 4.1 The Banks and holders of the Notes would convert their debts (other than the US$ 200 million amount of debts after debt restructuring as mentioned in clause 2 above) into equity at the conversion price of Baht 2.92 per share; 4.2 For the past accrued interest as mentioned in 3.3 above, the creditors may convert such interest into the Companys equity prior to the 6th anniversary following the closing date at the par value. Such interest may also be converted at the end of the 10th anniversary following the closing date at the price equal to the average of the trading price of the Companys shares over the period of 6 months prior to the conversion date minus 20%. Such conversion shall be exercised within 12 months following the 10th anniversary after the closing date. If not, such past accrued interest shall be written off. In the conversion of debts into equity, the creditors would become holders of 90% shares whereas existing shareholders shareholding would be diluted to 10%. 5. Issuance of warrants to existing shareholders In order to provide the opportunity to existing shareholders whose shareholding were diluted to 10 % at the closing date to be able to increase their shareholding in the future, the Company would issue warrants to existing shareholders. The terms of warrants shall be 8 years from the issue date, with the exercise price to be equal to the conversion price of the debts into equity at the first time plus 10%. 6. Buyback rights over shares held by creditors Certain major existing shareholders and top management will be given a buyback right of up to 30% of the shares issued to the Banks and holders of the Notes as a result of the conversion of their debts at a buyback price of Baht 2.92 plus MLR. Such right shall be exercised within 3 years following the closing date. 7. Share transfer restriction Certain major shareholders of the Company, the Banks and certain holders of the Notes who converted their debts into equity shall be restricted the rights to transfer shares derived from such conversion. They would be able to transfer shares in the amount of 50% in the first year, 30% in the second year and 20% in the third year, unless the excess amount was due to the buyback rights under clause 6 above. 8. The entering into the debt restructuring agreement and rehabilitation process -- The Company shall seek protection under Thai bankruptcy and rehabilitation proceeding from the bankruptcy court within 30 days from the date the Plan has been approved under CDRAC procedures (from February 18, 2000). Also, the Company shall enter into the restructuring agreement with the creditors within 60 days from the closing date. 9. Conditions precedent to the debt restructuring -- The debt restructuring shall be subject to the conditions precedent, which may be summarized as follows: 9.1 debts other than those under this Plan (including contingent liabilities) shall be dealt with by the Company separately with the approval of the major creditors (being the Banks and holders of the Notes); 9.2 the Company shall have receive a commitment from one or more sources to provide permanent capital and working capital facilities to provide sufficient funding for its projected needs; 9.3 the Plan has been supported from creditors (being the Banks and holders of the Notes) who held a majority of debts under a rehabilitation proceedings. The conditions precedent, unless waived or extended otherwise by the majority of the creditors, must be fulfilled by May 31, 2000. (Stock Exchange of Thailand 22-Feb-2000) SIAM SYNTECH CONSTRUCTION: Reports rehab plan vote to SET --------------------------------------------------------- Sawang Mankongcharoen, C.E.O. of Siam Syntech Construction Public Company Limited (Syntech), which is in the progress of debt restructuring plan, reports on the progress of its negotiations with financial lenders. Under the CDRAC's procedure, Syntech had submitted the restructuring plan to the financial lenders for their consideration. And on February 15, 2000, the financial lenders had voted on the Restructuring plan, details below; 1. A total number of 23 financial lenders had attended the vote, with amount of debt THB 4,412 mn. 2. 10 financial lenders accepted the plan with amount of THB 2,379 mn. equal to 53.91% of the financial lenders which have the right and voted 3. 13 financial lenders did not accept the plan with amount of THB 2,033 mn. equal to 46.09% of the financial lenders whic have the right and voted In conclusion, the restructuring plan of Syntech has an approval from financial lenders less than 75% in total amount ofdebt which the financial lenders have the right and voted but still has approval over than 50%. Then the financial lenders will submit new plan to the CDRAC and set up the Executive Decisin Panel within 10 days, and have appointed Bangkok Bank Public Co.,Ltd. to be the co- ordinator. (Stock Exchange of Thailand 22-Feb-2000) THAI MILITARY BANK: Struggles with capital raising -------------------------------------------------- Thai Military Bank (TMB) is looking for ways to raise capital to offset the fall of banking shares amid continued selling pressure from investors who have unloaded banking stock. TMB last October cancelled plans to sell 2 billion shares to raise 30 billion baht because offers were too low. The bank was looking to get 12-14 baht a share while investors proposed 10-13 baht. TMB's Thanong Bidaya said the bank has retained financial advisor Solomon Smith and Barney to help prepare for a roadshow and also work on soliciting documents. The bank expects to be finished by the first quarter. Thanong added that the stock market's faltering has cast doubt on the roadshow's starting date. "We want very much to raise capital by conventional methods, that is by selling shares and obtaining assistance under Tier 1 capital, but the situation is not favorable right now," said Thanong. With the current 10 percent BIS ratio and 70 percent loan provision, he said the TMB did not need to rush into selling shares while banking stocks were tumbling. Thanong also voiced concern over the Thai banking system's non-performing loans (NPLs), warning that foreign investors not only look at the specific bank they want to invest in but also consider the whole banking industry's NPLs. Financial institutions, he said, must differentiate between NPLs before and after they are transferred to Asset Management Company (AMC), as those are the situations which foreign investors are most concerned with. He suggested that the total NPLs of under 35 percent would benefit TMF's shares sales. "In my view, Thai shares plunged because of foreign investors' lack of confidence in the Thai economy and confusion between how AMC would manage NPLs," he said. Thanong also revealed that TMB was under business re- engineering to meet tough competition, adding that the bank has hired Boston Consulting Group to oversee its loans department in addition to AT Kearney which in charge of risk management. Meanwhile, Capital Nomura Securities Research Department Kavee Chukitkasem said he would not recommend TMB to rush into shares selling right now as the bank's financial standing allows it to wait until the second on even third quarter. (Business Day 22-Feb-2000) WIRELESS COMMO.SERVICE CO: TAC has four buyers for it ----------------------------------------------------- Thailand's second-largest mobile phone operator, Total Access Communication Plc (TAC), is negotiating with four potential buyers of its dormant mobile phone business, Wireless Communication Service Co (WCS). Although WCS is inactive, it still owns the 1800 MHz frequency, a valuable asset for any company seeking to invest in the mobile phone business. The negotiations are expected to be completed by the end of this month. A source close to the deal said that Chareon Pokphand Group (CP), parent company of a metropolitan fixed-line carrier TelecomAsia Corporation Plc (TA), is taking part in the negotiations. TA could be a potential buyer since it aims to set up its own mobile phone service to bolster its fixed line business. Before the economic crisis, it set up Asia Mobile Communication to seek a mobile phone concession. But the company was dissolved after failing to win a concession. TA president Supachai Cheravanont had said earlier this month that TA is studying a plan to invest in mobile phone services and ask for a frequency concession. However, Vallobp Vimolvanich, executive director of TA, strongly denied that the company was negotiating for WCS. "I can assure you that TA has no plan to buy WCS. But if you ask whether CP is negotiating to buy the company, I cannot give you an answer because it is beyond my knowledge and authority," Vallobp said. He added that it was impossible for TA to consider buying WCS at this stage. "TA's spending is limited by its creditors, according to the debt-restructuring conditions," Vallobp said. Somvong Pongsathaporn, marketing director of TAC and managing director of WCS, said that WCS is in talks with four local and foreign companies for a take-over deal. He declined to name the companies, saying only that one of them is a Thai telecom company. WCS was founded in 1996 by International Engineering Company (IEC), a small telecom company, and bought the 1800 MHz frequency from TAC for providing mobile phone services. It later underwent a management and financial crisis, resulting in a shutdown of its operations. To help it out of its debt, WCS' creditors appointed TAC and US investment bank Goldman Sachs to find a buyer for the company. WCS currently has three major shareholders - TAC, Goldman Sachs and Korea's SK Telecom, after IEC stepped out of the pact. WCS owes Bt1.7 billion to TAC for the frequency fee and network fee, Bt5 billion to Nortel for equipment, Bt183 million to the Communication Authority of Thailand for the licence fee and Bt90.85 million to the Telephone Organisation of Thailand for the network connection fee. "The shareholders and the creditors of WCS agreed that the buyer will have to buy all stakes in WCS, including its total debt," Somvong said. However, the deal excludes 70,000 subscribers of WCS, who have already been transferred to TAC's service. TAC planned to sell WCS after its shutdown to unload the debt burden and make a profit before WCS' unused 1800Mhz frequency is reclaimed by the regulatory body due to be set up this October. According to the telecom regulatory body law, the unused frequency must be returned to the regulatory body for re- allocation to provide the maximum benefit to the public. The sale of WCS is likely to bring one more mobile phone company into the market and take some share from Shin Corporations Plc, the biggest telecom operator in Thailand. Shin Corps recently completed its Bt4.1 billion takeover of Digital Phone Company (DPC), operator of the Hello 1800 mobile phone service of Samart Corporation Plc. Both WCS and DPC bought the 1800 frequency bands from TAC. TAC had to allocate its frequency bands to others to avert accusation of monopolising the frequency. Meanwhile, TAC itself is discussing a strategic partnership deal with several foreign telecom companies, including Telstra from Australia and Telenor from Norway. (The Nation 22-Feb-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. 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