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/raid1/www/Hosts/bankrupt/TCRAP_Public/000421.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, April 21, 2000, Vol. 3, No. 79 Headlines * C H I N A & H O N G K O N G * CHINA AEROSPACE INT'L HOLDINGS: Shuffles execs; to rehab CHONGQING IRON & STEEL: Posts annual loss E-KONG GROUP: Posts wider annual loss FANTA WELLEAD GROUP LTD: Facing winding up petition IMC HOLDINGS: Posts wider annual loss LUCKIBEST INDUSTRIAL LTD: Facing winding up petition RIVERA HOLDINGS: Posts net loss TECHWIN ELECTRONIC LTD: Facing winding up petition * I N D O N E S I A * PT BANK BALI: No gov't guarantee of recapitalization PT GT TIRE: IBRA to sell PT KARANA LINES: IBRA to sell PT POLYSINDO EKA PERKASA: Deutsche Bank sues for $3M PT WASESA LINES: IBRA to sell THE HUMPUSS GROUP: To pay subsidiaries' debts to IBRA * J A P A N * HIKARI TSUSHIN: Facing further extraordinary loss * K O R E A * HYUNDAI GROUP: Gov't tax probe of subsidiaries NARA MERCHANT BANKING CORP.: FSS cancels license NARA MERCHANT BANKING CORP.: Gov't going to close SAMSUNG GROUP: Gov't tax probe of subsidiaries SAMSUNG MOTOR: Creditors head for Paris summit with Renault SAMSUNG MOTORS: Report Renault to buy for US$540-550M * M A L A Y S I A * DIVERSIFIED RESOURCES: Gets okay to rehab subsidiary TIME ENGINEERING: SingTel still negotiating price * P H I L I P P I N E S * A.SORIANO CORP.: Reports P350 million annual loss PHILIPPINE AIRLINES: Tan mulling sale, Gov't to help * T H A I L A N D * ATEC COMPUTER: Ruled guilty of loading illegal software BANGKOK BANK: To stay in red this year CHAROEN POKPHAND FOODS: To merge subsidiaries, pay debts ITALIAN-THAI DEVELOPMENT: Tris downgrades its issue ROBINSON DEPT.STORE: Denying Tesco is eyeing STANDARD CHARTERED NAKORNTHON BANK:30 months to rehab loans STANDARD CHARTERED NAKORNTHON BANK: Half staff to quit THAI PETROCHEM.INDUS.: 73% of creditors tab EffPlanner THAI PETROCHEM.INDUS.: Asks receiver to recount votes ============================== C H I N A & H O N G K O N G ============================== CHINA AEROSPACE INT'L HOLDINGS: Shuffles execs; to rehab -------------------------------------------------------- Red-chip China Aerospace International Holdings Ltd (Casil) has reshuffled its management as part of an ongoing overhaul of its business, and plans to restructure and spin off non-core businesses. Executive director Lu Xiaochun has been appointed chairman, while vice-president Wang Yanguang has been promoted to president. Wang Liheng, president of parent China Aerospace and Technology Corp (CASC), said the changes would enhance the red chip's attempts to turn its research into commercially viable products and services. Mr Wang Liheng said CASC would help Casil boost its efforts to commercialise its research by injecting technology assets into the company. CASC planned to inject a satellite application project and an Internet-related business into Casil by the beginning of next year, he said. The satellite business would focus on telecommunications and global positioning system navigation applications. (South China Morning Post 20-April-2000) CHONGQING IRON & STEEL: Posts annual loss ----------------------------------------- Mainland steelmaker Chongqing Iron & Steel yesterday confirmed that it recorded a loss last year, even though turnover went up. Turnover increased slightly to 2.817 billion yuan (HK$2.650 billion) from 2.812 billion yuan the previous year. However, after tax and provision for minority interests there was a loss of 46.7 million yuan compared with 1998's profit of 43.58 million yuan. This meant a loss per share of 5 fen, compared with a profit of 4 fen in the previous year. The board of directors recommended no final dividend. Last year the final dividend was 1 fen per H share. The poor results had been widely expected after the company issued a statement at the end of February warning that operating profits had been severely affected by the substantial fall in the market price generally. Earlier in the day, the stock exchange issued a statement from the company which had been made at its request. "We have noted the recent increase in the price and the increase in trading volume of the shares of the company and wish to state that we are not aware of any reasons for such increases," said the statement. "We also confirm that there are no negotiations or agreements relating to intended acquisitions or realisations which are disclosable under Paragraph 3 of the Listing Agreement, neither is the board aware of any matter disclosable under the general obligation imposed by Paragraph 2 of the Listing Agreement, which is or may be of a price-sensitive nature." Steel prices were depressed last year due to a glut in the market. At the same time there was a rise in the price of coal and coke. This year, as measures to curb steel production have taken effect, experts have noted some of the biggest price rises in recent years for some steel products. On April 1, nine producers in the north of China announced a price increase for steel used in construction. The price increased on average by 50 to 100 yuan per tonne. Similarly, the price for steel sheet shot up by 300-350 yuan per tonne. (Hong Kong Standard 20-April-2000) E-KONG GROUP: Posts wider annual loss ------------------------------------- E-Kong Group's net loss grew 23.3 per cent to $78.4 million last year after a $65 million exceptional loss on the disposal of interests in its non-performing investments. Turnover fell 16.7 per cent to $45.2 million as a result of a decline in sales of one of its subsidiaries, Colorland Animation Production in Shenzhen. The animation production house has been under pressure of accelerated competition and increasingly challenging market environment, the company said. Loss per share was 11.5 cents, down from last year's 14.3 cents. The company will not pay any final dividend. " The group has been through a period of transition in 1999," chairman Richard Siemens said in a statement. "The group's existing business continued to suffer from sluggish market conditions and adverse economic environment in Asia." To focus on the higher growth Internet-related business, E- Kong has disposed its interest in most of its non- performing investments. It has focused on creating and acquiring industry convergent service portals, establishing partnerships with companies targeting the Asian Internet market and making investments in areas that can complement the group's business. (Hong Kong Standard 20-April-2000) FANTA WELLEAD GROUP LTD: Facing winding up petition --------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 3 on the petition of Tsui King Leung and Chan Mui Yee for the winding up of Fanta Wellead Group Limited. A notice of legal appearance must be filed on or before May 2. IMC HOLDINGS: Posts wider annual loss ------------------------------------- Shipping group IMC Holdings has seen a more than three-fold widening in losses for last year due to a provision for the drop in value of motor vessels. The company yesterday announced a net loss of HK$437.25 million for the year to December 31, despite a slight drop on its vessel running costs and administrative expenses. Losses in the previous year were HK$98.02 million. Turnover shrank 12.09 per cent to HK$332.62 million from HK$378.37 million previously. The loss per share was HK$1.17, up from 26 cents previously. No dividend was recommended for the year. One of the main contributors to the huge loss was a HK$327.6 million provision for diminution in the value of motor vessels. In 1995, IMC increased its fleet size via a series of acquisitions. Last year, the company also took a provision of HK$64.81 million on the drop in value of vessels at associated companies. IMC also recorded a loss of HK$6.27 million on disposal of its motor vessels. In 1998, the firm also recorded an exceptional loss of HK$27.09 million resulting from the disposal of vessels. Since then IMC's share price has plunged from a high of HK$2 to yesterday's close of 62 cents. In January, the company announced that it had provided financial assistance and guarantees for a number of affiliated companies with an aggregate amount of HK$1.02 billion, or 57 per cent of its net assets. (South China Morning Post 20-April-2000) LUCKIBEST INDUSTRIAL LTD: Facing winding up petition ---------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 3 on the petition of Kwong Wing Yuen for the winding up of Luckibest Industrial Limited. A notice of legal appearance must be filed on or before May 2. RIVERA HOLDINGS: Posts net loss ------------------------------- Property investment and development company Rivera (Holdings) saw its final net loss trimmed by 64.4% to $39.6M. Turnover fell 25.9% to $1.7M. Operating loss was reduced 52.7% to $22.2M. Loss per share fell 64.8% to 3.1 cents. No final dividend will be paid. TECHWIN ELECTRONIC LTD: Facing winding up petition -------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 24 on the petition of Panasonic Shun Hing Industrial Sales (Hong Kong) Co. Ltd. for the winding up of Techwin Electronic Limited. A notice of legal appearance must be filed on or before May 23. ================= I N D O N E S I A ================= PT BANK BALI: No gov't guarantee of recapitalization ---------------------------------------------------- The government can provide no guarantee it will recapitalise PT Bank Bali unless the institution's former owner, Rudy Ramli, withdraws a lawsuit against the state, Bank Indonesia (BI) deputy governor Subarjo Joyosumarto told reporters at the National Development Planning Board. Ramli won a lower court decision in March overruling a decision by BI and the Indonesian Bank Restructuring Agency (IBRA) to take over Bank Bali after the discovery of alleged wrongdoings on its books. The government has since appealed to the High Court but Subarjo said if the case drags on for too long, Bank Bali's recapitalisation could become too expensive. Asked what would happen if the appeals process went to the Supreme Court, Subarjo said, "In that case, there is no guarantee the government will recapitalise Bank Bali. If the cost increases, then the decision will depend on the government, based on the finances of the government, whether or not to recapitalise the bank," Subarjo said. (AFX News Limited 20-April-2000) PT GT TIRE: IBRA to sell PT KARANA LINES: IBRA to sell PT WASESA LINES: IBRA to sell ----------------------------- The Indonesian Bank Restructuring Agency (IBRA) said it plans to sell PT GT Tire and two shipping companies formerly owned by businessman Mohamad "Bob" Hasan some time in 2000, The Jakarta Post reported. "We'll try to sell these companies this year," IBRA asset disposal division group head Dasa Sutanto said. GT Tire is the former tire manufacturer of the Gajah Tunggal Group, which was forced to cede assets to the government after its bank PT Bank Dagang Nasional Indonesia collapsed during the financial crisis. The former Hasan-owned companies are PT Karana Lines and PT Wasesa Lines, Sutanto said. (AFX News Limited 20-April-2000) PT POLYSINDO EKA PERKASA: Deutsche Bank sues for $3M ---------------------------------------------------- Deutsche Bank AG unit Deutsche Bank Geneva has filed a suit against PT Polysindo Eka Perkasa ordering it to repay US$3 million in overdue promissory notes. "The promissory notes total more than 2 mln usd with a value varying around one mln usd and a maturity date of February 24, 1998," Deutsche Bank's lawyer, Lies Hasnawati, said. However, Polysindo lawyer Richie Muchrardy said the company did not default on the notes but called a voluntary moratorium on repayments following the collapse of the rupiah two years ago. He said Polysindo is still in debt restructuring negotiations with Deutsche Bank and asked the court to reject the suit on grounds that it is "not legal." The hearing was adjourned until May 4. (AFX News Limited 20-April-2000) THE HUMPUSS GROUP: To pay subsidiaries' debts to IBRA ----------------------------------------------------- The Humpuss Group will reportedly pay debts of its eight subsidiaries worth Rp235 billion and US$ 111.6 million in cash and assets to the Indonesian Bank Restructuring Agency (IBRA). The eight subsidiaries are Humpuss, Humpuss Patragas, Sekar Artha Sentosa, Humpuss Pengolahan Minyak, Gatari Air Service, Humpuss Terminal Petikemas, Humpuss Aromatik and Mabua Intan Express. (Asia Pulse 19-April- 2000) ========= J A P A N ========= HIKARI TSUSHIN: Facing further extraordinary loss ------------------------------------------------- Japanese mobile telephone shop operator Hikari Tsushin Inc. said Thursday it faced a half-year parent extraordinary loss of 2.42 billion yen (22.9 million dollars) after its major sales agent went bust. The extraordinary loss would have "little impact" on the firm's net earnings forecast, said Hikari Tsushin spokesman Koji Shibayama. The sales agent, Global Wave, filed for bankruptcy at the Tokyo District Court last Tuesday with liabilities of 2.36 billion yen. "We had already woven the extraordinary loss into our latest forecast," Shibayama said. "We are currently reviewing our policies for sales agents and sales strategies," added Hikari Tsushin, also a major Internet investor, in a statement. The company said it had total exposure of 2.54 billion yen to Global Wave, equivalent to 1.8 percent of its total assets of 140.5 billion yen at the end of last August. Hikari Tsushin said last month it expected to post a parent operating loss in the first half of the year to February of 13 billion yen (123 million dollars). But that latest forecast, which has contributed to a crash in Hikari Tsushin's share price, does not take account of extraordinary losses. The spokesman no net earnings forecast was available. Hikari Tsushin, whose Internet investment strategy is also getting the thumbs-down from investors, expects to reverse the dire performance to post an operating profit of 21 billion yen in the second half. The stock of Hikari Tsushin closed on the Tokyo Stock Exchange on "sell" indication only at 23,800 yen. (Agence France Presse 20-April-2000) ========= K O R E A ========= HYUNDAI GROUP: Gov't tax probe of subsidiaries SAMSUNG GROUP: Gov't tax probe of subsidiaries ---------------------------------------------- The Fair Trade Commission (FTC) announced Wednesday that Reorganization Headquarters of the Hyundai Group, Hyundai Maritime and Merchant Shipping and Hyundai Heavy Industries have been under investigation for possible illegal internal dealings and the result of the probe will be released by the end of April. The commission said Hyundai is the only group among 30 majors under investigation at the moment, however, a high- ranking official of the Ministry of Finance and Economy (MOFE) said the National Tax Administration (NTA) would start regular corporate tax investigations into subsidiaries of major groups including Hyundai and Samsung. He said the NTA would concentrate its investigations on illegal inheritance transfers at conglomerates. During the tax audits, tax officials will conduct intensive investigations into whether chaebol owners have bequeathed wealth to their children in an irregular manner, the vernacular daily Chosun Ilbo reported yesterday. Industry sources said that the tax investigations on major conglomerates may signal the start of a second-round government push to reform the nation's chaebol in the wake of a recent leadership battle at Hyundai. Although they are conducted regularly at an interval of several years, the projected tax audits can change into special investigations at any time if problems are found, the sources said. The tax agency, however, said that the upcoming tax investigations are part of their ordinary work and not related to chaebol reforms since a certain number of chaebol affiliates are usually subject to regular audits. An official at the Ministry of Finance and Economy also said the NTS doesn't target a specific conglomerate for a tax audit and that the agency can conduct regular tax audits on chaebol affiliates since they have not been gone through them for a long time. Meanwhile, the Fair Trade Commission is investigating possible illegal internal trading among three Hyundai affiliates - Hyundai Group restructuring headquarters, Hyundai Merchant Marine and Hyundai Heavy Industries. The feud between two sons of Hyundai's founder Chung Ju- yung over the group's control has courted criticism from government officials as well as the public that nothing has been changed in the way domestic conglomerates are run. Disregarding Hyundai's shareholders totally, Chung and the group's restructuring headquarters picked the chairman of the nation's largest conglomerate. Chaebol chairmanship is not a legal post in Korea but chairmen wield uncontested control over affiliates despite their small stakes estimated to hover around an average of five percent. (Digital ChosunIlbo 20-April-2000, Korea Herald 21- April-2000) NARA MERCHANT BANKING CORP.: FSS cancels license ------------------------------------------------ The Financial Supervisory Commission yesterday decided to cancel the license of troubled Nara Merchant Banking Corp. but extend its business suspension for an additional month. "Based on the result of a due-diligence audit, the FSC judged that it is impossible for Nara to be able to get back on track because of its huge problem loans," said an FSC official. "Nara's business license will be revoked after a hearing on May 2, with its management and interested parties attending." Nara's liabilities exceed its assets by as much as 1.31 trillion won, mainly because its loans to the failed Daewoo Group have gotten sour, said the official. He added that subsidiaries of the Posung Group, or Nara's controlling shareholders, have also been found unable to pull the merchant bank out of insolvency. The due-diligence inspection showed that Nara's liabilities amounted to 4.16 trillion won, while its assets stood at 2.85 trillion won. Given the time needed for the cancellation of the business license, the operation suspension imposed on Nara will thus be extended an additional month until May 21, said the official. In January of this year, the financial watchdog issued a business suspension order to the debt-ridden merchant bank. Starting mid next month, the Korea Deposit Insurance Corp. will return savings of 3.4 trillion won at Nara to depositors, following a public notice today. The decision to cancel Nara's license came after government negotiations with Yongnam Merchant Banking on the sale of Nara fell apart due to Yongnam's demand for a public fund injection of 1.3 trillion won ($1.17 billion) to supplement Nara's negative capital. (Korea Herald 21-April-2000) NARA MERCHANT BANKING CORP.: Gov't going to close ------------------------------------------------- The government is finally going to order the troubled Nara Banking Corp. to pack it in, according to a high-ranking official at the Financial Supervisory Commission (FSC) Thursday. The official said that with its audit showing that Nara's liabilities exceed its assets by W1.31 trillion, the FSC has decided to revoke Nara's merchant banking license. The FSC suspended Nara's operations for a three-month period back on January 21, and has decided to extend the suspension for another month, until May 21, so it can complete liquidation procedures. (Digital ChosunIlbo 20-April-2000) SAMSUNG MOTOR: Creditors head for Paris summit with Renault ----------------------------------------------------------- Domestic creditors of Samsung Motors left for Paris Wednesday to finalize the deal over selling Samsung Motors with Renault before the Friday deadline on exclusive talks. The development was made after Samsung Corp. agreed Tuesday to accept a court mediation over settling its outstanding loans to Samsung Motors. Creditors and Samsung Corp. had both opposed the court proposal of sharing Samsung Motors' cash assets of 73.3 billion won and Renault's takeover offer of 667.3 billion won, according to their credit stake with creditors receiving 462.1 billion won (416 million U.S. dollars) and Samsung Corp. 205.2 billion won. Samsung Motors owes Samsung Corp. 291.2 billion won for delayed payment on the latter's after-sales service factories and sales outlets. But the two parties decided to accept the court recommendation Tuesday to remove the biggest stumbling block to the delayed sale of Samsung Motors. "We can now resume talks with Renault after having resolved the debt issue with Samsung Corp. to some extent," an official of main creditor Hanvit Bank said. The Paris meeting should produce a final deal since the two sides reached an agreement on sales price in earlier talks in Seoul April 3-4, he added. (Asia Pulse 19-April-2000) SAMSUNG MOTORS: Report Renault to buy for US$540-550M ----------------------------------------------------- Renault will buy Samsung Motors for US$ 540 million to $550 million, paying $100 million dollars in cash, the Korea Economic Daily said Thursday quoting sources close to the situation. Renault will assume Samsung's debts of $ 200 million and pay $ 200 million in an earn-out mechanism with 10-15 percent of profit annually for the next 10 years. The French auto maker will set up a new company to turn out Samsung cars with a capital of $ 335 million, in which it will hold 70 percent, domestic creditors 10 percent after converting debts of $ 40 million into equity investment and Samsung 19.9 percent. The final deal was agreed between creditors and Renault in previous talks in Seoul April 3-4, the report said. The two sides negotiate in final talks in Paris for two days from Thursday. Renault will keep the Samsung (SM) brand name alive for five years. It will turn out a new SM sedan model by June 2002 and take up 10 percent of the local market. It will showcase recreational vehicles by 2003 and luxury sedans by 2005. Samsung Motors will increase its staff to 5,000 from the current 1,200. (Asia Pulse 20-April-2000) =============== M A L A Y S I A =============== DIVERSIFIED RESOURCES: Gets okay to rehab subsidiary ---------------------------------------------------- Diversified Resources Bhd (DRB) said it has obtained the Securities Commission's conditional approval for the restructuring of the DRB-Hicom group. DRB told the KLSE that among the conditions, the company had to disclose the number of DRB warrants exercised and the utilisation of its proceeds in its annual report. DBR proposed a RM6bil share-swap deal to merge with Hicom Holdings Bhd, Gadek Bhd and Gadek Capital Bhd and form a new company, DRB-Hicom Bhd. (Star Online 20-April-2000) TIME ENGINEERING: SingTel still negotiating price ------------------------------------------------- Contrary to market talk that Singapore Telecom is paying too high a price for its acquisition of a stake in Time Engineering because of collapsing share prices, SingTel officials yesterday claried that the purchase price is still being negotiated. "The whole deal is subject to negotiation," a SingTel spokeswoman said. On April 7, SingTel announced that it had entered into a non-binding conditional Heads of Agreement (HOA), which is equivalent to a Memorandum of Understanding, with Time Engineering and its parent Renong group. SingTel said in its announcement then that the HOA contained in-principle understanding of the parties, which would be subject to further negotiation. Among the understanding was that SingTel's subsidiary Singapore Telecom International (STI) would be offered 108.2 million Time shares or a 14.5 per cent stake at RM6 a share. Since then, however, Time shares have plunged to RM4.80, leading some to believe that SingTel would get a raw deal if it were to pay RM6 per share. The SingTel spokeswoman noted that the HOA clearly stated that it "represents the good faith and understanding of the parties to proceed further with the proposals contemplated above but is not intended to have legal or binding effect". Another SingTel spokesman said it would do due diligence investigations of the Time companies following the HOA. "It was not possible to have done adequate due diligence given the constraint of access before the announcement. You can't have STI people crawling all over the Time premises and not arouse suspicion... These are big investments and require a fairly thorough process," he said. Both parties agree to endeavour to execute definitive written agreements within 30 days from the date of the HOA, or such other date as may be agreed between the parties. The HOA also stated that the proposed acquisition by STI of the shares in Time, Time dotCom and the Time ISP Company is conditional upon, among other things: the completion of satisfactory due diligence investigations of the Time companies by STI; the terms and conditions of the Debt Restructuring Scheme and the proposed listing of Time dotCom being acceptable to STI; the successful completion of the proposed listing; and the obtaining of all necessary governmental and regulatory approvals. (Business Times 20-April-2000) ===================== P H I L I P P I N E S ===================== A.SORIANO CORP.: Reports P350 million annual loss ------------------------------------------------- "You had the courage to admit you are losing...but don't lose hope." -- This was the word of wisdom thrown by a female stockholder to executives of A. Soriano Corp. (Anscor) during the company's annual meeting held at the Manila Peninsula Hotel yesterday. Anscor reported a staggering loss of 349.98 million Philippine pesos (US$8.5 million at PhP41.218:US$1) last year from PhP126.6 million ($3.07 million), almost triple the losses it sustained the previous year. Putting a seal in its plan to veer away from the financial sector, Anscor's board of directors yesterday approved the sale of its 41% stake in investment house AB Capital and Investment Corp. in light of its earlier divestment in its bank unit. Last December, Anscor, which held 41% by Asian Banking Corp., sold its interest in the bank to Global Business Bank of the Metro Bank Group. Anscor chairman and chief executive officer Andres Soriano III said the company will sell its stake in AB Capital to the Philippine Investment- Management Consultants, Inc. (Phinma) although the details of the sale have yet to be finalized. In exchange for Anscor's shares in AB Capital, Phinma is set to receive a 3.33% interest in Seven Seas Resorts and Leisure, Inc., operator of Amanpulo Resort in Palawan, as well as Anscor shares and "some cash." "Your company's active involvement in this venture is not feasible and your company is not prepared to make additional capital infusion to this company if the case arose," Mr. Soriano told stockholders. Anscor is also looking to lightening its holdings in manufacturing unit AFC Fertilizer and Chemicals, Inc.(AFCFCI). As an exit proposal, Anscor will give up its 37% stake in AFCFCI and pay PhP75 million ($1.8 million) to Japanese trading company Nissho Iwai which will take full control of the operations of the firm. "Anscor decided it would not be prudent to put further capital (in AFCFCI) ... this will eliminate Anscor's exposure to further losses," Mr. Soriano said. "(The) decision of Nissho Iwai to continue (its investments here) is an example of a Japanese company wishing to maintain a presence in (the) potent old economy. You need the manufacturing element here to create jobs," he added. Dragging the company's consolidated income, among others, was management's move to write off PhP1.6 billion ($38.8 million) in investments to port operator International Container Terminal Services Inc. (ICTSI) in a beleaguered Argentinian port. The port sustained losses due to labor strikes. ICTSI recently disclosed that it has won the bidding to manage and operate the Tanzania port although sources at the company said it has yet to perform the requirements to sign and finalize the concession agreements. Mr. Soriano said the company is looking to conserve its resources this year although it is aware of the global trend to shift to information technology. Mr. Soriano said at the moment the company is not looking at any particular venture into IT. An analyst from a local brokerage firm said the company needed to define its business focus. "The write-off (from ICTSI) should not be reflected in the company's earnings this year. (But) They don't have any idea what they want ... there is no single core competency but you can't blame them because the business environment is difficult," the analyst said. Aside from its core port operations, Anscor has interests in wires and cable services, resorts and leisure, property development, airlines, insurance, power generation and printing services. (Business World 20-April-2000) PHILIPPINE AIRLINES: Tan mulling sale, Gov't to help ---------------------------------------------------- The Estrada administration is helping taipan Lucio Tan find a buyer for his Philippine Airlines (PAL), well-placed sources at the Department of Finance (DOF) revealed yesterday. Investors reportedly being wooed by the government include the China Airlines, Hong Kong's Cathay Pacific Airways Ltd., and the EVA Air of Taiwan. However, Tan is not keen on striking a deal with the two airlines. He is presently negotiating with one major European airline, probably German carrier Lufthansa, for a possible sale, said the sources. "Finance Secretary (Jose) Pardo offered EVA Air and China Airlines but Mr. Tan said he is not interested with the two. Cathay might not be a good idea anymore because it is no longer interested with PAL," a source said. "Mr. Tan is serious about selling PAL and he said that he is talking with an airline from Europe. The sale would cover all of PAL's assets," he added. Pardo earlier confirmed that Tan, the tycoon who built his fortunes on tobacco and beer, had plans of disposing PAL to end allegations that the latter is a crony of President Estrada. "He is already fed up (by) these cronyism issues that he wants to give up PAL just to put an end (to all) these. He said his relationship with the President (has been) strongly affected by these issues," said Pardo. The DOF chief refused to comment on the report that the government is scouting for prospective investors for PAL. It could be recalled that Lufthansa and Cathay Pacific were previously planning to invest in PAL, in the immediate aftermath of the strike of PAL's workers last year. But this did not flourish because of contentious issues. The massive work stoppage worsened the financial woes of PAL, fueling further the need for a strategic investment partner. Fortunately, Tan infused $260 million in fresh capital that alleviated the financial problems. Tan is also set to sell his 46-percent stake to the Philippine National Bank (PNB) next month. His equity has been merged with the national government's 30 percent to attract a high premium considering the prevailing slump in the value of the PNB shares traded at the Philippine Stock Exchange. But in case the bidding fails, Pardo and Bangko Sentral ng Pilipinas Governor Rafael B. Buenaventura said, each of the selling parties would "go his own way" with Tan selling his 46 percent to another investor. The two officials said that Tan has been talking to an unidentified investor who is willing to buy his PNB stake. (Manila Times 20-April-2000) =============== T H A I L A N D =============== ATEC COMPUTER: Ruled guilty of loading illegal software ------------------------------------------------------- The Criminal Court has found ATEC Computer, a well-known computer-system manufacturer, guilty of loading its machines with illegal software. The case is considered as the first instance where the world's largest software developer, Microsoft, has gone after a local computer manufacturer demanding severe penalties. The Criminal Court fined ATEC Computer Bt400,000 for copyright violation. A company director received an additional one-year suspended jail sentence and a fine of Bt200,000. The salesman responsible for selling the computer installed with the unlicensed Microsoft software was punished with a nine-month suspended jail sentence and a fine of Bt150,000. The total fines amounted to Bt750,000. Microsoft law and corporate affairs legal officer Kenny Cheung said that the stiff penalties were needed to deter software infringement in Thailand. "This is a very large fine imposed by the court involving computer software. It will leave no doubt in the minds of illegal software dealers that they will face stiff penalties for copyright violations in Thailand," Cheung said. ATEC Computer was caught loading unauthorised copies of Microsoft software on computers and selling them to the consumers without the appropriate documentation, license agreements, original disks or manuals. Nithiphat Limwanichart, general manager of ATEC Computer said that the announcement from Microsoft at this time has had a negative effect on the company's reputation because it is in the process of appealing to the US Supreme Court. So, it is not acceptable to speak about the case in public. "I think that any announcement should be withheld until after the Supreme Court makes the final judgement," Nithiphat said. According to Cheung, not only were consumers cheated out of the genuine software, but also honest dealers, trying to develop a successful business legally, ended up shouldering higher costs because of dealers selling illegal software. "Unless decisive action is taken against illegal software dealers, they will continue to sell unauthorised software and make it very difficult for local developers and dealers of genuine software to compete in the Thai market. "Strict protection and respect for copyright is a critical factor in the healthy development of the Thai software industry," he said. Cheung believes that copyright owners and local distributors have seen some positive developments in the information technology sector in Thailand recently, which will have positive effects for the economy in the long- term. "While there is an unacceptably high piracy rate of over 80 per cent, we have seen increased efforts by Thai enforcement agencies to crack down on piracy," he said. "As illustrated in this case, there has been greater efficiency in processing cases coming before the courts in Thailand and an increase in the level of fines imposed against copyright offenders." This is the second significant court ruling against ATEC Computer and follows two years of comprehensive investigation and legal action. The case resulted from the Dealer Test Purchase Program (DTPP) conducted in February 1997, after which Microsoft filed two private criminal actions against ATEC Computer. The second case has already been concluded in the Central Intellectual Property and International Trade Court where ATEC Computer and a director were fined in excess of Bt1 million in May 1999. (The Nation 20-April-2000) BANGKOK BANK: To stay in red this year -------------------------------------- Bangkok Bank chairman Chatri Sophonpanich said yesterday the bank will not return to profitability this year, but operating performance is encouraging and the bank should break even by the end of the year. His comments came a day after Thai Farmers Bank (TFB) president Banthoon Lamsam said he is confident his bank will return to profit this year. Chatri said BBL would increase its provisioning to cover all of its non- performing loans (NPLs) later this year in line with central bank requirements. "The bank cannot avoid losses this year because of non- performing loans, which are a major burden for the bank in terms of loan-loss provisions. But the number of non- performing loans are falling due to the significant progress being made in debt-restructuring and write-offs," he said. According to a recent filing to the Stock Exchange of Thailand, BBL's net losses last year totalled Bt60.1 billion against losses of Bt49.5 billion the year before. Fitch IBCA, the London-based rating agency, predicted that TFB will be the only Thai bank to show a net profit this year, while others continue to suffer the need to build reserves against problem loans. "In our view, it (TFB) has been the most proactive in dealing with the crisis," said Vincent Milton, Fitch associate director responsible for risk assessment of the Thai banking sector. "All the others will report net losses." Milton painted bright future prospects for the bank, noting that it has already met full provisioning requirements after raising almost Bt100 billion in fresh capital, but the other seven big banks need a total of US$3.5 billion (Bt129.5 billion) to deal with bad loans from the Asian financial crisis. As of the end of last year, problem loans in the Thai banking system stood at Bt1.98 trillion or 38.2 per cent of total credits. Milton is now in Thailand to meet bank executives ahead of a ratings review in March. "TFB stands out. It is fully provisioned in line with our projected loan losses so its capital adequacy should be OK. It is the only large bank in such a position and the only one we see reporting a net profit for this year," he added. Milton also praised TFB's decision to ask Goldman Sachs and GE Capital to help run an asset management company to manage its non-performing loans (NPLs), an innovation that he said would be watched closely by other banks. Fitch IBCA put TFB on "Rating Alert Positive" this week, giving notice that it was likely to raise its individual rating for TFB from its current level of D/E in the next few months. Milton said the two other biggest Thai commercial banks, BBL and Siam Commercial Bank (SCB), had also made progress towards re-capitalisation but both needed to set aside further huge sums to cover non-performing loans. Milton said BBL needed to set aside at least Bt26 to Bt30 billion more in provisions. "We would be surprised if its earnings can get anywhere close to that figure, so it will report a net loss for this year." For SCB, he said he had "some concerns" about the level of the bank's proactive debt restructuring. "There is some downside risk for SCB. We would expect another net loss for this year," he added. The other two large Thai banks, Thai Military Bank (TMB) and Bank of Ayudhya (BAY), had made less progress with re- capitalisation and managing their bad loan portfolios and both needed to set aside further provisions against bad loans. (The Nation 20-April-2000) CHAROEN POKPHAND FOODS: To merge subsidiaries, pay debts -------------------------------------------------------- Charoen Pokphand Foods (CPF), Southeast Asia's largest animal feed producer, yesterday said it is thinking of merging three of its subsidiaries to create synergy and cost efficiency. The company hired Jardine Fleming Thanakom Securities to study the cost and benefit and to advise on the merger. Adirek Sripitak, CPF Senior Vice President, said the company plans to buy the three food companies now controlled by its main shareholder, the Cheravanont family. Additional funds for buying those companies could come from warrants attached to the new shares, he said. The warrants, if fully applied, could raise about 5.7 billion baht. The three food companies are Japan-based dairy products producer CP Maiji; Five Stars, which produces roasted chicken; and CP Inter Foods, a sausage producer. CPF also said it would pay off its $100 million debt in form of floating rate notes which is due in August. After paying this debt, the company would be free of foreign debt. Its local debts, however, still remain at 16 billion baht. Two days earlier, CPF announced a plan, which needs shareholders' approval, to raise equity by offering right issue at 10 baht for each share owned as of March 4. The new stock issue will also include two-year warrants with an option to buy more shares at 60 baht. The company expects to receive about 7.7 billion baht from the exercise. The proceeds from the rights and warrant sales would be used to buy the three food subsidiaries mentioned earlier. Also, four billion baht will be set aside to expand pork and poultry production plants with the remaining funds to be invested to boost aquaculture and animal feed production. (Business Day 20-April-2000) ITALIAN-THAI DEVELOPMENT: Tris downgrades its issue --------------------------------------------------- Thai Rating and Information Services downgraded ratings for Italian-Thai Development's 3.5 billion baht in senior debentures due in 2005 from 'BBB' from 'BBB-'. Tris said the downgrade was based on the company's weak financial profile, under which profits have been squeezed while leverage ratios remained high at 70% debt-to- capitalisation. The ratings agency said it was also concerned about the ability of Italian-Thai to meet financial covenants of its loan agreements. The company's ability to meet debt obligations relies on its ability to dispose of assets and raise capital as specified in debt-restructuring agreements, Tris said. (Bangkok Post 19-April-2000) ROBINSON DEPT.STORE: Denying Tesco is eyeing -------------------------------------------- Robinson Department Store Plc has denied reports in local newspapers that it has been approached by Tesco, the giant UK wholesaler. "The company did not receive any contact from Tesco or the Hong Kong Shanghai Bank about joint-venture or acquisition," the company said in a filing with the Stock Exchange of Thailand. The rumoured deal has done wonders of Robinson's share prices over the last several weeks, causing it to surge more than 100 per cent from Bt3.40 on Jan 11 to Bt6.90 at the close of market yesterday. Robinson's filing with the SET also said its creditors steering committee has agreed in principal with its debt restructuring plan, and the plan will be forwarded to all creditors. (The Nation 20-April-2000) STANDARD CHARTERED NAKORNTHON BANK:30 months to rehab loans ----------------------------------------------------------- Standard Chartered Nakornthon Bank plans to complete the restructuring of 36 billion baht of problem loans within 30 months. The loans represent 66% of its total portfolio as at the end of last September. David Moir, SCNB chairman, said that over the past six months, the bank had managed to restructure loans worth about four billion baht, representing about 12% of its non-performing loan as of September 1999. He added that the bank did not expect any profit in the near term as it needed to make additional investments to improve its technology and branch layout, as well as to implement an early retirement scheme. It was expected that 932 out of its 1,932 employees would join the scheme. UK-based Standard Chartered acquired a 75% stake in Nakornthon Bank six months ago from the central bank's Financial Institutions Development Fund. Under the deal, the fund would split profits or losses with Standard Chartered for the bad loans after five years. The bank posted losses of 1.92 billion baht for its 1999 operation, compared with losses of almost 4 billion baht baht for the operation in the year earlier. The annual shareholders' meeting yesterday elected Banphot Hongthong, former director of the Export Promotion Department, as a new independent director. It appointed Vichan Amorojanavong, a director of the FIDF, as a new SCNB director. Outgoing directors were Kitisakdi Thamparipattra from the FIDF and Phairoj Hengsakul from the central bank. (Bangkok Post 19-April-2000) STANDARD CHARTERED NAKORNTHON BANK: Half staff to quit ------------------------------------------------------ Half the staff at Standard Chartered Nakornthon Bank have accepted lump-sum payments and incentives to quit. Thailand's second-smallest bank said 991 workers out of 1,942 took early retirement payments, which ranged from 12 to 44 months of current salary. The offer was available throughout last month. The cost to the bank would be about 500 million baht (about HK$102.55 million), said the bank's chief executive Dru Narwani. Standard Chartered last year paid 12.4 billion baht for 75 per cent of Nakornthon. The government, which seized then insolvent Nakornthon in July, owns the rest. Nakornthon had 67 branches at the end of last year, and plans to close those "which are unprofitable", said Mr Narwani. Nakornthon last year lost 1.92 billion baht, about half what it lost in 1998. Nakornthon also said its non- performing loans fell by four billion baht from the end of September last year to 32 billion baht at the end of March. (South China Morning Post 19-April-2000) THAI PETROCHEM.INDUS.: 73% of creditors tab EffPlanner ------------------------------------------------------ Creditors of Thai Petrochemical Industry yesterday voted in favour of Effective Planner to oversee the industrial giant's $3.5-billion debt restructuring. Overall, 79 creditors holding debt of 97.4 billion baht, or 73%, voted in favour of Effective Planner, a subsidiary of the Australian consulting firm Ferrier Hodgson. Under the bankruptcy law, a two-thirds majority was needed for Effective to win. Some 287 creditors holding debt of 35.98 billion baht voted for TPI Planner, a company to be controlled by senior TPI management and the accounting firm Ernst and Young. A total of 418 creditors, holding debt of 133.4 billion baht, attended yesterday's 10-hour meeting at the Queen Sirikit National Convention Centre. Eighteen creditors abstained. Prachai Leopairatana, TPI chief executive, blasted Finance Minister Tarrin Nimmanahaeminda for allegedly ordering state banks to vote in favour of Effective Planner. "It's absolutely unfair that the finance minister has done this," Mr Prachai said. "If this was his intention [to allow creditors to take over the firm], then Mr Tarrin should have just ordered it from the beginning, saving everyone time." Mr Tarrin, currently in Washington attending the annual World Bank/IMF meetings, was unavailable for comment. Finance Ministry officials denied that the government had intervened. Supachai Pisitvanich, finance permanent secretary, said state-owned Krung Thai Bank had decided independently last week that it would back Effective Planner. Krung Thai Bank is owed 5.7 billion baht by TPI, while Siam City Bank is owed 10.28 billion. The meeting yesterday began with presentations from both Effective Planner and TPI Planner on their rehabilitation strategies. Numerous questions were launched at Effective Planner executives by creditors within the TPI Group itself, focused on whether assets would be sold off or staff laid off. Anthony Norman, managing director of Ferrier Hodgson, said Effective Planner was dedicated to rehabilitating TPI. Employees would be retained, and assets divested only if absolutely necessary, he said. Mr Norman said he would invite Mr Prachai to take part in the discussions over the rehabilitation plan. Mr Prachai said he would ask Effective Planner to maintain the existing 20,000 staff and not sell off key assets. "If Effective sells off any assets which we believe is not in the company's best interests or is dishonest, we will lodge objections," he said. Much of the delay in resolving the vote stemmed from challenges to some creditors on the actual debt owed by TPI. Challenges by both TPI and other creditors were lodged against 48 creditors representing debt of 92 billion baht. Officials of the bankruptcy court were responsible for verifying documentation and ruling on the amount of debt accepted for each creditor. BankThai, for instance, reported debt of 3.47 billion baht, but was allowed 2.1 billion. Bangkok Bank, the largest creditor, reported debt of 36.8 billion baht but was permitted 36.6 billion. Wachirapunthu Promprasert, TPI chief financial officer, said a formal recount and check would be held at the bankruptcy court this morning. The Central Bankruptcy Court in March ruled TPI insolvent after major creditors submitted a petition for business rehabilitation following the breakdown of two years of negotiations. Many analysts feared that a positive ruling for TPI Planner would be a setback for investor confidence in the effectiveness of the country's bankruptcy regime. Both TPI Planner and Effective Planner waged a highly public battle for creditor support. Several creditors, such as DBS Thai Danu, reversed their stance only over the past several days. DBS Thai Danu originally planned to vote for TPI Planner, but reversed their position on Tuesday. "The bank sees that in the end, there will have to be new negotiations. So we felt that it was best to vote in favour with the majority here, as the best compromise to the situation," one bank executive said. One German trade creditor, owed about 186 million baht by TPI, said he voted for Effective Planner as the best choice to ensure payment of his debt. Creditors supporting TPI Planner said they were unconvinced about Effective Planner's future strategy, particularly if conflicts arose in the future with company management. "I voted for TPI Planner because our firm felt that the losses weren't really the fault of management, but came due to the crisis," said one executive of a Korean creditor owed 2.4 billion baht by TPI. Shares of TPI on the Stock Exchange of Thailand closed yesterday at 11 baht, up 0.75, on turnover worth 160.85 million baht. (AFX News Limited 19-April-2000, Bangkok Post 20-April-2000) THAI PETROCHEM.INDUS.: Asks receiver to recount votes ----------------------------------------------------- Thai Petrochemical Industry Plc has asked the official receiver to re-count yesterday's vote by creditors on a planner to take charge of TPI's rehabilitation, an official with the Central Bankruptcy Court said. The official said the re-count is currently in progress and the court will issue a ruling on this afternoon. According to a count issued after the meeting late yesterday, 73.03 percent of creditors voted in favour of appointing Ferrier Hodgson unit Effective Planner as the rehabilitator of the company, with 26.97 percent voting in favour of TPI Planner, proposed by TPI and Ernst & Young. (AFX News Limited 20-April-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, James Philip P. Jover 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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