/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/000523.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 Tuesday, May 23, 2000, Vol. 3, No. 100 Headlines * A U S T R A L I A * TELSTRA: Asset sale in sights * C H I N A & H O N G K O N G * CENTURY GOOD DEVELOPMENT LTD: Facing winding up petition DICKSON MASS LAMINATION LTD: Facing winding up petition EDITH GROUP LTD: Facing winding up petition GOLDSPEED INVESTMENT LTD: Facing winding up petition GUANGDONG CHEM.FIBRE.INDUS.&COMM.:Faces winding up petition JAGUAR INDUSTRIAL (HK)CO.LTD: Facing winding up petition J.A.O.DESIGN,ARCHS.& PLANNERS: Facing winding up petition JOYCE BOUTIQUE HOLDINGS: Acquisition by SCG at risk PANDAR DEVELOPMENT LTD: Facing winding up petition REAL CONTACT LTD: Facing winding up petition SUMMERSON EASTERN PUBLISHERS: Facing winding up petition SUN MING KEI HOLDINGS LTD: Facing winding up petition SUN YUET TAI LTD: Facing winding up petition * J A P A N * BANK OF TOKYO MITSUBISHI: To cut pension reserve shortfall CREDIT LYONNAIS SECURITIES: MOF bans from bond auctions DAINIPPON INK & CHEMICALS: Pension charge makes net loss ITOCHU CORP.: Posts annaul loss,cancels dividend MARUBENI CORP.: Posts annaul loss,cancels dividend MITSUBISHI CORP: Reports 118.1B extraordinary loss MORI SEIKI CO.: Reports first loss in 5 years NISSAY GENERAL INSUR.: Revenues up, but still posts loss NISSHO IWAI CORP.: Posts annaul loss,cancels dividend * K O R E A * DAEHAN INVESTMENT TRUST: Public funds injection June 10 KOREA INVESTMENT TRUST: Public funds injection June 10 DAEWOO GROUP: Workout falls far behind, says FSS DAEWOO MOTORS: Final sale not likely till 4th quarter DAEWOO MOTORS: Auditors probe executives SAEHAN GROUP: Owners forced to give up shares * M A L A Y S I A * ANSON PERDANA BHD: Proposes land sale to finance rehab CELCOM : Creditors extend repayment period NALURI CORP.: Creditors given payment extension TIME ENGINEERING: Maxis has no plans for stake * P H I L I P P I N E S * NATIONAL STEEL CORP.: Seeks US$1B injection PHILIPPINE NAT.BANK: Tan may keep shares if auction fails URBAN BANK: Dutch group wants to buy * S I N G A P O R E * APPLIED MAGNETICS: Liquidator to be appointed * T H A I L A N D * ASIA HOTEL: Posts 1st quarter loss BANGKOK STEEL INDUSTRY: Posts 1st quarter loss EASTERN WIRE: Posts 1st quarter loss KULTHORN KIRBY PLC: Reports progress of rehab plan MK REAL ESTATE DEVELOPMENT PCL: Explains operating results NITHI VENTURE CORP.: Posts 1st quarter loss PCM PRECAST FLOORS: Posts 1st quarter loss POWER-P: Posts 1st quarter loss RAMKHAMHAENG HOSPITAL: Posts 1st quarter loss RENOWN LEATHERWEARS: Posts 1st quarter loss SAMITIVEJI: Posts 1st quarter loss SEMICONDUCTOR VENTURES INT'L: Reports rehab progress THAI ELECTRONIC INDUSTRY: Posts 1st quarter loss THAI LUBE BASE: Creditors swap debt for equity THAI TEL.& TEL. COMMO.: Told to rewrite rehab plan TPI POLENE: Posts 1st quarter loss UNION MOSAIC INDUSTRY: Posts 1st quarter loss UNIVERSAL FOOD: Posts 1st quarter loss ================= A U S T R A L I A ================= TELSTRA: Asset sale in sights ----------------------------- Telstra Corp is considering selling its lucrative directories business, possibly through a public float, in a move that would bolster the company's balance sheet by several billion dollars. But the telecommunications giant has shelved plans to spin off other key assets, such as its OnAir mobile division and internet interests, after receiving advice that this would cost hundreds of millions of dollars in capital gains tax and other transaction expenses. A report by investment bank Salomon Smith Barney blames the potential CGT liabilities on the 1997 decision to place all of Telstra's assets into the one corporate vehicle in the lead-up to the company's float. Telstra's board considered detailed plans for a major restructuring, including spinning off some of the fastest-growing and most strategic assets, at last month's "off-site" two-day meeting in regional Victoria. Despite the fact that the company's chief executive, Dr Ziggy Switkowski, talked up such a plan earlier this year, the board voted against any wholesale restructuring. Directors were told Telstra would face punitive financial costs - at least until July next year when the Government's new business tax rules will reduce the CGT burden for companies transferring assets to related entities. Next month's board meeting will consider a report on the future of the Melbourne-based Pacific Access, Telstra's fully owned directories business which includes the White and Yellow Pages directories operations. One plan being discussed would see about 20 per cent of the company floated on the stock exchange. This could raise about $2 billion on present valuations, with the money being used for new acquisitions or to retire debt raised to fund Telstra's 40 per cent holding in Mr Richard Li's Pacific Century CyberWorks. "It's a live option and being looked at very closely," said a well-placed Telstra source, although any float is not likely to take place until next year. While the directories' selldown plan may be financially attractive to Telstra, it would be politically sensitive and almost certain to be questioned by Labor and the Democrats, who oppose any further sale of the Government's 50.1 per cent shareholding in Telstra. The revelations that Telstra faces significant capital gains tax charges comes as the company's management struggles to convince a sceptical market that the telecoms giant is strategically well positioned for the future. Telstra's share price has taken a hammering in recent months, despite a record half-yearly profit of $2.1 billion and recent statements that the company is continuing to record double-digit profit growth. Earlier this year, Dr Switkowski flagged a radical restructuring of Telstra as a means of circumventing the constraints on the company of the Government's majority ownership. The head of Telstra's directories business, Mr Andrew Day, briefed the board at the Red Hill meeting on how the lucrative White Pages and Yellow Pages business operations were performing. A Telstra spokesman declined to comment on any matters before the board. "In terms of the board's deliberations at Red Hill, we don't comment on proposals that are put forward to the board, nor do we comment on the board's deliberations in any matters," he said. In the last half, the directory services business generated revenue for the group of $609 million, primarily from the sale of advertising in the Yellow Pages. According to documents lodged with the Australian Securities and Investments Commission, Pacific Access, which is chaired by Mr Ted Pretty, generated operating revenue of $921 million in the last financial year on gross assets of $473 million. Pacific Access generated a 16.4 per cent increase in net profit to $50.4 million and paid Telstra $43 million in fully franked dividends for the year. The internal arrangement of the directories business means that Pacific Access produces the White and Yellow Pages, accessing the Telstra directories under licence, paying Telstra $531 million for that right in the past financial year. As well as the production of directories, Pacific Access operates the Yellow Pages, White Pages and Alta Vista websites in Australia, which form part of Telstra's core online ventures and are considered the keys to driving e-commerce revenue. Under the present business tax rules, Telstra would face massive costs if it transferred assets to new corporate vehicles. But from July 1 next year, new consolidation rules will allow corporates to transfer assets into other structures without incurring CGT costs. (Australian Financial News 21-May-2000) ============================== C H I N A & H O N G K O N G ============================== CENTURY GOOD DEVELOPMENT LTD: Facing winding up petition -------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 28 on the petition of Hua Chiao Commercial Bank Limited for the winding up of Century Good Development Limited. A notice of legal appearance must be filed on or before June 27. DICKSON MASS LAMINATION LTD: Facing winding up petition ------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Grace Smart Enterprise Limited for the winding up of Dickson Mass Lamination Limited. A notice of legal appearance must be filed on or before May 30. EDITH GROUP LTD: Facing winding up petition ------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 28 on the petition of Chan Nga Wai for the winding up of Edith Group Limited. A notice of legal appearance must be filed on or before June 27. GOLDSPEED INVESTMENT LTD: Facing winding up petition ---------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 28 on the petition of Easy Success Enterprises Limited for the winding up of Goldspeed Investment Limited. A notice of legal appearance must be filed on or before June 27. GUANGDONG CHEM.FIBRE.INDUS.&COMM.:Faces winding up petition ----------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 28 on the petition of Hua Chiao Commercial Bank Limited for the winding up of Guangdong Chemical Fibre Industry & Commerce (HK) Limited. A notice of legal appearance must be filed on or before June 27. JAGUAR INDUSTRIAL (HK)CO.LTD: Facing winding up petition -------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 14 on the petition of Xin- Goyoo Company Limited for the winding up of Jaguar Industrial (Hong Kong) Company Limited. A notice of legal appearance must be filed on or before June 13. J.A.O.DESIGN,ARCHS.& PLANNERS: Facing winding up petition --------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 21 on the petition of Lee Hiu Fung for the winding up of J.A.O. Design, Architects and Planners Limited. A notice of legal appearance must be filed on or before June 20. JOYCE BOUTIQUE HOLDINGS: Acquisition by SCG at risk --------------------------------------------------- Plans by Internet investment company Strategic Capital Group (SCG) to take control of troubled Joyce Boutique Holdings could be about to collapse, according to the upmarket retailer. Joyce said parties to the HK$236 million takeover "are involved in discussions regarding the possible termination of the agreement [on the takeover]." The company early yesterday said it would propose that a special shareholders meeting due to be held later in the day to approve the takeover be "adjourned indefinitely." No reasons were given for the latest turn of events, only that another statement would be made in due course. Joyce shares were suspended from trading on Thursday morning. SCG managing director Eric Solberg could not be reached for comment yesterday. Under the deal announced early last month, SCG was proposing to pay HK$202.8 million in cash in two phases of share subscription for a 51.7 per cent stake. Independent investor Elliott Yuen Wai-kuen also planned to take 10.7 per cent by investing HK$33 million to subscribe for new shares. Since then however, Joyce shares have slumped by more than 60 per cent from 66 HK cents to a close of 24.5 HK cents on Wednesday before their suspension. Analysts speculated that sluggish market sentiment was likely to be behind the possible collapse of the deal, which was aimed at turning Joyce into a "bricks and clicks" retailer. They suggested that SCG, which has not revealed its sources of funding for the deal nor the identity of its shareholders, may have run into problems raising finance. "Market sentiment is extremely bad," said Indosuez WI Carr associate director Alan Wong, pointing to higher interest rates and the downturn in technology stocks in the US. (South China Morning Post 20-May-2000) PANDAR DEVELOPMENT LTD: Facing winding up petition -------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Ramesh Jiwanlal Dargani for the winding up of Pandar Development Limited. A notice of legal appearance must be filed on or before May 30. REAL CONTACT LTD: Facing winding up petition -------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Asia Commercial Bank Limited for the winding up of Real Contact Limited. A notice of legal appearance must be filed on or before May 30. SUMMERSON EASTERN PUBLISHERS: Facing winding up petition -------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Yam Siu Mei also known as Ho Yam Siu Mei for the winding up of Summerson Eastern Publishers Limited. A notice of legal appearance must be filed on or before May 30. SUN MING KEI HOLDINGS LTD: Facing winding up petition ----------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 14 on the petition of Finedale Industries Limited for the winding up of Sun Ming Kei Holdings Limited. A notice of legal appearance must be filed on or before June 13. SUN YUET TAI LTD: Facing winding up petition -------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 7 on the petition of The Kwantung Provincial Bank for the winding up of Sun Yuet Tai Limited. A notice of legal appearance must be filed on or before June 6. ========= J A P A N ========= BANK OF TOKYO MITSUBISHI: To cut pension reserve shortfall ---------------------------------------------------------- Bank of Tokyo-Mitsubishi (8315) will cut a 150 billion yen shortfall in reserves covering retirement and pension obligations by 86 billion yen for the year ended March, bank sources said Thursday. The leading city bank will book the amount as a taxable cost and plans to cover the remaining 64 billion yen within five years. The decision will be officially announced on Friday. The step is unlikely to seriously affect earnings for fiscal 1999 because the bank will use proceeds from sales of securities holdings to cover the cost. The heavy reduction will improve the bank's financial standing and is being made earlier than required under new accounting rules, which apply from the current business year. The new rules force companies to disclose any shortfalls and cover them within 15 years, if the market value of retirement and pension assets is below the amount of obligations. The yield on such assets has been about 4% on average over the past five years, compared with an assumed rate of returns at 5.5%. The bank will now adopt returns of 4%. (Nikkei 19-May-2000) CREDIT LYONNAIS SECURITIES: MOF bans from bond auctions ------------------------------------------------------- The Ministry of Finance has banned Credit Lyonnais Securities (Japan) from participating in government bond auctions and underwriting such bonds from Friday through next Thursday, the ministry announced Thursday. The step follows the decision of the Financial Supervisory Agency to punish the company by partially suspending its operations. The securities company was found to have violated the law governing foreign stockbrokers after an investigation by the Securities and Exchange Surveillance Commission. (Nikkei 18-May-2000) DAINIPPON INK & CHEMICALS: Pension charge makes net loss -------------------------------------------------------- Dainippon Ink & Chemicals Inc. (4631) on Thursday posted a group net loss of 6.3 billion yen for fiscal 1999. The strong yen had a negative impact on its earnings, and Dainippon Ink also wrote off 32.3 billion yen -- more than 70% -- of its unfunded pension liabilities stemming from the introduction of new accounting rules. Dainippon Ink hopes to return to the black this fiscal year, and it is aiming for a net profit of 15 billion yen, even after writing off the rest of its pension obligations at a cost of 11.3 billion yen. The company expects sales to rise 4% from fiscal 1999 to 980 billion yen, aided by continued success in the U.S. and Europe. Last year's acquisition of Coates Lorilleux, a top French ink company, is also expected to help its earnings picture. The company has based its forecast on an assumed foreign exchange rate of 105 yen to the dollar, and even at this level, it sees operating profit growing 21% to 52 billion yen. Pretax profit is expected to increase 44% to 28 billion yen. (Nikkei 19-May-2000) ITOCHU CORP.: Posts annaul loss,cancels dividend MARUBENI CORP.: Posts annaul loss,cancels dividend NISSHO IWAI CORP.: Posts annaul loss,cancels dividend ------------------------------------------------------ Mitsui & Co. and Sumitomo Corp. posted solid profits for the year ended March 31, but the results of three other trading companies were weighed down by bad assets and unprofitable group businesses. Itochu Corp., Marubeni Corp. and Nissho Iwai Corp. each said they will skip a dividend payment for the year because they're undergoing large-scale restructuring plans. Sumitomo posted a group net profit of 35.07 billion yen, compared with a loss of 13.08 billion yen. Its special losses narrowed when compared to a year earlier, when the company was forced to post massive losses related to securities valuation declines and a boost in loan-loss reserves. Sumitomo said its group revenue fell 6.4% to 10.66 trillion yen, due to sagging domestic steel demand and a falloff in revenue from ship and plant machinery exports. Itochu posted a group net loss of 88.27 billion yen, compared with a group net loss of 34.09 billion yen. Itochu blamed the loss on writing off bad loans and shutting down unprofitable businesses -- steps taken under the company's management reform plan -- as well as poor domestic demand and the impact of the yen's appreciation on offshore subsidiaries. Itochu's group revenue declined 12.144 trillion yen, down 13%. Marubeni posted a group net profit of 2.06 billion yen, rebounding from a 117.73 billion yen net loss. However, Marubeni was still pressured by continuing restructuring. Marubeni posted a total of 91.5 billion yen in restructuring-related special losses for the year, including those related to liquidation of affiliated companies, revaluation of real estate holdings and the accumulation of loan loss reserves. Marubeni's group revenue dropped 15% to 10.22 trillion yen, on the back of revenue falls in its domestic trading, exports, imports and overseas trading businesses. This is the first time in 47 years that Marubeni will omit a dividend payment. Nissho Iwai reported a group net profit of 10.22 billion yen, from a net loss of 98.54 billion yen, due to its restructuring efforts. Nissho Iwai's group revenue, however, was down 16% at 7.28 trillion yen, as the company withdrew from less profitable trading in order to focus more on its "core" businesses such as plant projects, steel and energy. Mitsui group net profit grew 20% to 35.68 billion yen but its group revenue fell 5.6% to 13.201 trillion yen. Revenue from machinery, petroleum, gas and food trading activities dropped off, the company said. "We have been focusing on the concept of 'Shrink To Grow,' " Toshikatsu Fukuma, Mitsui's executive vice president and chief financial officer, said. For the year ending in March 2001, all of the Japanese trading houses foresee significantly higher profits, expecting major improvement in exports to Asian countries, more returns from information technology-related business and commodity trading, and further cost-cutting benefits. In addition, the companies nearly finished getting rid of their bad assets last fiscal year, and this is expected to boost their profitability, they said. For this fiscal year, Mitsui predicts a 54% rise in its consolidated net profit to 55 billion yen, while Sumitomo forecasts 34% higher consolidated net profit at 35 billion yen. Itochu predicts a record group net profit of 50 billion yen for this fiscal year, while Marubeni expects its group net profit to jump by nearly tenfold to 20 billion yen. Nissho Iwai foresees consolidated net profit to more than double to 23 billion yen. (The Asian Wall Street Journal 19-May-2000) MITSUBISHI CORP: Reports 118.1B extraordinary loss -------------------------------------------------- Japan's biggest trading house Mitsubishi Corp has reported a 78% plunge in group earnings for the year to March after booking a huge extraordinary loss on retirement payments. Its group net profit fell to 5.6 billion yen (US$51mil) from 25.3 billion yen in the previous fiscal year. Revenue declined 4.2% to 13,109.1 billion yen, and pre-tax profit dropped 17.8% to 118.1 billion yen. Mitsubishi said its total extraordinary losses came to 118.1 billion yen in the fiscal year under review, up from 42.8 billion yen previously. Turnover declined because of a slump in revenue from the information technology and chemical sectors, it said. (The Star 20-May-2000) MORI SEIKI CO.: Reports first loss in 5 years --------------------------------------------- Machine tool maker Mori Seiki Co. (6141) announced Friday that it suffered a group net loss of 2.43 billion yen in fiscal 1999, its first loss in five years. Consolidated sales shrank 28% from a year earlier to 70.87 billion yen. Sales of machining centers and computerized numerical control lathes declined both at home and abroad. It also reported a foreign exchange loss of 4.23 billion yen due to the weaker euro, and its group operating profit of 1.81 billion yen was 87% less than that of the previous fiscal year. In fiscal 2000, Mori Seiki expects group sales of 80 billion yen and a net profit of 1 billion yen, assuming an exchange rate of 106 yen to the dollar and 101.8 yen to the euro. (Nikkei 22-May-2000) NISSAY GENERAL INSUR.: Revenues up, but still posts loss -------------------------------------------------------- Net insurance premium revenues at Nissay General Insurance Co., the casualty arm of Nippon Life Insurance Co., ran to 37 billion yen in fiscal 1999, but Nissay General Insurance's net loss came to 8.4 billion yen. The loss occurred as the result of the company amortizing the portion of initial investments that had yet to be depreciated. The company made the move ahead of its merger with Dowa Fire & Marine Insurance Co. (8759) slated for April next year. All six nonlife insurance subsidiaries of major life insurers posted losses on both a net and pretax basis for the business term ended March, thus extending their red ink results for the fourth consecutive year, according to earnings results released by Friday. Initial startup costs for their business weighed on their bottom lines. Even so, their net insurance premium revenues, equivalent to sales for a nonfinancial company, rose an average of 30%, as they took advantage of the extensive marketing network of their parent companies to expand client bases. (Nikkei 19-May-2000) ========= K O R E A ========= DAEHAN INVESTMENT TRUST: Public funds injection June 10 KOREA INVESTMENT TRUST: Public funds injection June 10 ------------------------------------------------------- The government will take a series of measures to stabilize the local stock markets, including a planned two trillion- won capital injection into two troubled investment trust companies (ITCs) next month, the Ministry of Finance and Economy said yesterday. Recognizing that the restructuring of ITCs is key to supporting the domestic stock markets, the government will recapitalize the two largest trust firms - Korea Investment Trust and Daehan Investment Trust - by around June 10. The government announced May 12 that it would infuse a total of 4.9 trillion won in public funds into the two ailing ITCs in three installments by September. The government plans to provide the first two trillion won for the two asset-management companies late next month after each of them is split into an investment trust company and a securities firm. "In addition, we'll seek ways to inject the remaining amount as soon as possible, depending on the government's financial situation," said a MOFE official. However, industry experts argue the government should recapitalize the ITCs in one fell swoop, instead of using a gradual approach. "It may not be easy to raise sufficient public funds, but the only way to dispel investors' concerns is to make the 4.9 trillion-won cash infusion in one lump," said an executive at a local ITC. The government will also limit the supply of new stocks such as rights and bonus shares to help ease the supply- demand imbalance in the local equity markets. In order to develop an advanced and competitive stock market, the ministry will allow foreign companies to list their shares on the Korea Stock Exchange (KSE) from mid-June. Currently, foreign businesses can be listed on the local bourse only in the form of depositary receipts (DRs). The ministry will also give the green light to overseas companies getting listed on the over-the-counter Kosdaq market. In addition, the ministry plans to establish alternative trading system (ATS) in the second half of this year to allow institutional investors to trade listed shares off board. The KSE will introduce a basket trading system for institutional investors in July. The new trading system is expected to meet heavy trading demands from large institutional players, while reducing the impact of massive trading on the stock markets. (The Korea Herald 22-May- 2000) DAEWOO GROUP: Workout falls far behind, says FSS ------------------------------------------------ The progress of workout programs for 12 units of the failed Daewoo Group falls far short of targets as creditor banks are reluctant to provide fresh loans and covert debts into equities, a top financial regulator said yesterday. In a report to the National Assembly, Lee Chung-jae, deputy chairman of the Financial Supervisory Commission, said that as of May 12, Daewoo creditors extended only 63 percent of their new loan commitments to the Daewoo affiliates, or 3.28 trillion won. Daewoo's creditors also made debt-for- equity swaps worth 228.8 billion won, or a mere 2.7 percent of 8.62 trillion won they have pledged to convert into equities under the workout agreements, Lee said. Out of the 12 Daewoo units, Keangnam Enterprises and Ssangyong Motor were given debt-for-equity conversions worth 70.3 billion won and 116 billion won, respectively, the regulator said. The deputy head of the FSC in charge of the nation's financial and industrial restructuring reported that the watchdog will urge creditor financial institutions to become more active in extending fresh loans to the Daewoo subsidiaries in an effort to put them back on track as early as possible. Some experts cite little progress in the Daewoo rehabilitation programs as the major reason for growing concern that the Korean economy is again heading for another crisis. Taking into consideration such an allegation, the government will push ahead with early sales of four Daewoo units - Daewoo Motor, Daewoo Electronics Components, Keangnam Enterprises and Orion Electric, while inducing creditors provide loans to their suppliers, Lee said. In addition, the government will encourage Daewoo's domestic creditors' to purchase its foreign debts of over $5.5 billion from foreign creditors at discount at least by the end of August this year, he reported. Concerning the sale of Daewoo Motor, Lee said, the FSC will receive non-bonding proposals from would-be buyers around the end of this year and choose one to two priority negotiation partners to start full-fledged talks. Meanwhile, Lee reported that the financial watchdog will push for freeing 14 out of 76 companies now under workout programs from the rehabilitation requirement. (The Korea Herald 20-May-2000) DAEWOO MOTORS: Final sale not likely till 4th quarter ---------------------------------------------------- The two leading companies planning to submit bids to acquire South Korea's Daewoo Motor Co say they now believe a transaction isn't likely before the fourth quarter of this year. That represents further slippage from the September target that South Korean officials have been using - and still maintain they can hit. And it would mean a full year of red ink since the search began for a partner to bail out the troubled auto maker. Daewoo Motor is being sold as part of the liquidation by creditors of the insolvent Daewoo Group. Ford Motor Co and General Motors Corp, the leading contenders to buy Daewoo Motor, said continued delays in sifting out a clear account of the auto maker's finances are still holding up their ability to develop bids. The Corporate Restructuring Committee of Daewoo Companies, which is overseeing the Daewoo Motor auction, earlier this year indicated it would take initial bids this month. But in an interview this week, W Wayne Booker, the Ford vice-chairman who is in charge of his company's bid, said initial proposals probably won't be submitted until June. From the initial bids, he said, the South Korean officials are expected to select as many as three companies to conduct more due diligence and submit revised bids in the fall, with a transaction likely to be wrapped up by the end of the year. "What we don't have nailed down is the financial situation," Booker said. He explained that Daewoo Motor accounts have been hopelessly intermingled with those of the Daewoo Group, and the auto unit's overseas operations involve joint-venture deals with hard-to-decipher financial setups. "None of this is overly documented," Booker observed, adding "We're within a week of getting all [the financial information] we're going to get." According to Jang Sae Chan, spokesman for the Daewoo restructuring committee, Daewoo plans next week to open a new "data room" for the bidders, making more financial information available. Jang said the committee still intends to complete the sale by September. Preferred negotiating partners are to be selected June 30, he said. GM officials still hope the Daewoo Motor sale will be concluded on schedule in September, but "our best guess is that it will end sometime in the fourth quarter," said Rob Leggat, a GM spokesman in Singapore. "It's a tremendously complicated company that you're trying to get detail on." Also expected to participate is No. 1 South Korean auto maker Hyundai Motor Co, even though business and government leaders in South Korea have said they don't want to create a monopoly. Italy's Fiat SpA is still evaluating the situation, a company spokesman in Milan said Thursday. DaimlerChrysler AG initially signaled interest in bidding, but Chairman Juergen Schrempp in March said he wasn't interested. (Indian Express Newspapers Ltd. 20-May-2000) DAEWOO MOTORS: Auditors probe executives ---------------------------------------- South Korean financial regulators said on Thursday disparities in audits done on troubled Daewoo Group firms were under investigation, but no penalties for Daewoo executives had been decided upon. The Financial Supervisory Service (FSS) said in a statement it was investigating disparities between Daewoo audits conducted last June and those done by auditors appointed by creditors who bailed the firms out last July. The FSS denied a local media report that said Daewoo founder Kim Woo-choong and 20 other executives could face punishment if bookkeeping irregularities are discovered. It said no wrongdoing had been determined. At the end of June, 12 Daewoo firms listed their book value assets at 91.9 trillion won ($82 billion) with debts at 77.8 trillion won. A due diligence study by independent auditors appointed by Daewoo's creditors later showed the same firms as of the end of August had assets of 61.2 trillion won and debts of 86.8 trillion won. (Financial Express 19-May-2000) SAEHAN GROUP: Owners forced to give up shares --------------------------------------------- Creditor banks received written pledges from major shareholders of the Saehan Group promising to surrender their shares and management control, as well as notes from unionists agreeing to wage cuts, in return for bailout and debt-rescheduling arrangement. The group's main creditor bank Hanvit said that it secured agreement from Saehan's main shareholder and vice chairman Lee Jae-kwan and his family promising to give up their equity shares. The bank said it plans to take away management control if creditors' losses turn out to be severe after a due diligence is completed. (The Korea Herald 22-May-2000) =============== M A L A Y S I A =============== ANSON PERDANA BHD: Proposes land sale to finance rehab ------------------------------------------------------ Anson Perdana Bhd has proposed to sell four parcels of plantation land in Perak for RM98mil cash to finance its debt restructuring exercise and future investments in plantation. The palm oil estates, totalling 2,833.50ha, were owned by three of Anson Perdana's wholly-owned subsidiaries, namely Changkat Jong Plantations Sdn Bhd, Ladang Sawit Permai Sdn Bhd and Syarikat Tanaman dan Perusahaan Perak Sdn Bhd. In its circular to shareholders, Anson Perdana said the proposed disposals would enable the group to realise cash for its investment in plantation. It said the sales, in line with its restructuring exercise, called for divestment of assets to realise cash to repay bank borrowings. The group was also in need of fresh funds to finance its property development projects, it said. Anson Perdana is currently negotiating with its financier on the quantum from the net disposal proceeds of RM89mil that would be utilised to retire bank borrowings. (The Star 19-May-2000) CELCOM : Creditors extend repayment period ------------------------------------------ Beleaguered tycoon Tajudin Ramli won a reprieve from his creditors. Tajudin - who owns the cellular phone company Celcom and the Naluri aviation firm - said that 60 creditors agreed to extend by two years those firms' repayment period of some $723 million of debt. Tajudin declined to say what he will sell to make payments to the lenders, but circumspectly denied that the ownership of Malaysian Airline System, the national carrier which he also controls, will change. (AsiaWeek 26-May-2000) NALURI CORP.: Creditors given payment extension ----------------------------------------------- Beleaguered tycoon Tajudin Ramli won a reprieve from his creditors. Tajudin - who owns the cellular phone company Celcom and the Naluri aviation firm - said that 60 creditors agreed to extend by two years those firms' repayment period of some $723 million of debt. Tajudin declined to say what he will sell to make payments to the lenders, but circumspectly denied that the ownership of Malaysian Airline System, the national carrier which he also controls, will change. (AsiaWeek 26-May-2000) TIME ENGINEERING: Maxis has no plans for stake ---------------------------------------------- Maxis Communications Bhd, the country's second largest mobile phone operator, has put to rest speculation that it is a leading candidate to buy over debt-ridden Time Engineering Bhd. "We have no plans," chief executive officer Jamaludin Ibrahim said yesterday when asked whether Maxis intended to buy into any telecommunications company. He also sent a reminder to Maxis' competitors on its ambitious plan to have a more substantial share in the local scene with a RM2 billion to RM3 billion capital expediture over the next two to three years. Jamaludin's "no Time plan" remarks indirectly dismissed any notion that Maxis would make a fresh bid for Time after its reported RM1.2 billion offer was rejected by Time shareholders last December. However, Jamaludin admitted that Maxis was closely monitoring developments in the local telecommunications industry. "It is our job to monitor the industry, our competitive environment. It is a regular thing that we do," he told reporters before launching Maxis Net e-Biz website centre in Kuala Lumpur. With its talks with Singapore Telecommunications Ltd failed, Time was speculated to be bought over by one of the country's larger telecoms companies, with Maxis a top candidate. Maxis, controlled by businessman Ananda Krishnan, has about 800,000 mobile phone customers and is said to be most innovative of the five major telecommunications service providers. With 800,000 subscribers, Maxis controls about 30 per cent share of the mobile phone market. It has targeted to increase the share to 40 per cent within five years. With total debts reported at RM4 billion, it is critical for Time to find a partner quickly as interest payments mount. Time's court protection from creditors runs out in July. Analysts had said that Maxis' rapid expansion plans, especially for its fixed line service, would fit neatly with Time's key asset - a 3,600km fibre optic cable network. Other than Maxis and Time, the other telecoms companies are Telekom Malaysia Bhd, DiGi.Com Bhd and Technology Resources Industries Bhd, through wholly-owned Celcom (M) Sdn Bhd. Elaborating on its expansion plan, Jamaludin said the RM2 billion to RM3 billion capital expenditure would be for setting up more infrastructure and improving its customer service centres. The money would be derived from a combination of internal and external funds. He pointed that Maxis had spent more than RM3 billion since its started operations in 1995. The amount excluded the cost of its two Measat satellites, valued at close to RM2 billion. Maxis is expecting good financial results this year, a continuation of its strong performance in 1999 when for the first time in its four-year history, the company made a net profit. "We made our first operating profit in 1998 and first net profit last year since we started operations four years ago," said Jamaludin, who declined to disclose any figure. On its e-Biz Website Centre (www.maxisbiz.net.), he said the website was designed to provide small and medium-scale businesses in the country with easy and risk-free access to the world of e- commerce. It also gives SMEs access to a range of business application and informaton services. E- Biz is part of Maxis strategy to strengthen its position in the Internet sector as well as e-commerce. Maxis aims to have between 300 and 500 e-Biz customers within the first year. Jamaludin said the company had so far invested more than RM100 million in its Internet business. It was forecast that e-commerce transactions in Malaysia would increase rapidly from US$50 million (RM190 million) in 1999 to US$704 million by 2002, he said. (The New Straits Times 17-May-2000) ===================== P H I L I P P I N E S ===================== NATIONAL STEEL CORP.: Seeks US$1B injection ------------------------------------------- Ailing National Steel Corp (NSC) -- in which Halim Saad's Hottick Investments holds a majority stake -- has submitted a plan to the authorities calling for infusion of fresh capital of up to US$1 billion (S$1.72 billion) and debt restructuring to rehabilitate the company. Documents of the rehabilitation plan obtained yesterday said government intervention was also essential to ensure the company does not face unfair competition with cheap imported and dumped steel products. The country's largest steel producer halted operations in November after incurring huge losses and the Securities and Exchange Commission (SEC) has set up an interim committee to take charge of its assets and oversee its operations. In the rehabilitation plan it submitted to the SEC, the steel firm said the entry of a strategic investor, preferably a slab producer, was critical to the success of the plan. "Unless a major slab producer invests into the company, the hot mill cannot be operated...Unless a steady long-term supply of slabs can be guaranteed, it will not be profitable to operate the hot mill," the rehabilitation plan stated. "The type of investor that the company needs at present is one who can infuse US$600 million to US$1 billion in capital. The amount is considered sufficient to bring back financial vigour into the company for the long term." The plan also proposed debt restructuring of 9 billion peso (S$372.6 million) which represents 55 per cent of the company's long-term debt of 16.5 billion peso. It said out of the nine billion peso debt, 7.9 billion peso be converted into 10-year peso amortising bonds with a 12 per cent coupon and 1.1 billion peso into 10-year dollar amortising bonds with a 12 per cent coupon. It said the rest of the debt worth 7.5 billion peso would be converted into equity and creditor banks would be given an 87.8 per cent share of the firm. The unlisted firm said its total assets amounted to 28 billion pesos and, excluding liabilities, its net worth stands at 11 billion peso. Hottick Investments Ltd holds a majority interest of 82.5 per cent in the steel firm while the Philippine government owns 12.5 per cent. Hottick Investments is the private investment vehicle of Abdul Halim Saad, executive chairman of Malaysian conglomerate Renong Bhd. Japan's Marubeni Corp holds five per cent in the firm. NSC's rehabilitation plan said the company suffered liquidity problems because of the contraction of the Philippines economy during the 1997-1998 Asian currency crisis. (Reuters, Business Times 22-May-2000) PHILIPPINE NAT.BANK: Tan may keep shares if auction fails --------------------------------------------------------- Lucio Tan, who currently holds 46 percent of Philippine National Bank (PNB), plans to hold on to his shares if the scheduled bidding of his and the government's combined stake in the bank on June 9 fails, PNB president Feliciano Miranda said. "I don't think it (that possibility) can be taken out," he said in an interview with The STAR. However, he said Tan has told him over and over again that he (Tan) wants to sell his shares in PNB because President Estrada has requested him to join the planned bidding of government's share. The joint sale is expected to command a premium since the new owners will have a controlling stake in PNB. But if the bidding on June 9 fails, then Tan is no longer obliged to dispose of his shares in the bank. He is then free to sell it independently or hold on to it. Miranda, though, said Tan might still opt to sell his PNB shares if the bidding fails because "he is fed up with criticisms of being a Presidential crony." "It's just too much for him (Tan) especially with Philippine Airlines," he said. Analysts have speculated that Tan would merge Allied Bank with PNB. Miranda acknowledged that this is another possibility, although the Filipino-Chinese taipan prefers to run the two banks separately. Tan is the majority owner of Allied Bank. "He (Tan) said he wants to run the bank separately. But anything is possible. To me, considering that the central bank has stopped issuing additional license, he could have sold any of the two banks (Allied and PNB), get the money and invest it in the remaining bank," Miranda said. Merging PNB and Allied Bank will result in the country's third largest bank in terms of assets of P283.1 billion, dislodging Equitable -- PCI Bank with P194.869 billion (based on the published financial condition of the two banks during the first quarter). So far, there are only three interested buyers for the government and Tan's stake in PNB. These are Rizal Commercial Banking Corp. and two unidentified foreign banks. Miranda said Tan wants to sell his shares at P160 per share, the amount set by the government. He said Tan spent a total P9.3 billion when he bought these shares at the secondary market. While it suffered losses since last year up to the last quarter, he said the bank could still operate profitably with the cleaning of its books. Last year, the bank posted a net loss of P9 billion and another P993 million during the first quarter because of higher loan loss provisioning the amount set aside as reserves for bad debts. "The results of cleaning up the books will not show up immediately. But next month, we are confident the bank will be profitable," he said. As of end-April, he said the bank has set aside P21 billion for loan loss provisioning, up from P8 billion in end-1999. (Philippine Star 22-May-2000) URBAN BANK: Dutch group wants to buy ------------------------------------ Dutch financial giant ABN-Amro, the sixth biggest bank in the world, has expressed interest to acquire cash-strapped Urban Bank Corp., well-placed industry sources told the INQUIRER. The sources said the possible acquisition was in line with the Dutch bank's bid to expand its onshore presence, which is limited to a thrift bank subsidiary with 25 branches. Last year, ABN-Amro acquired Great Pacific Savings Bank from the Yuchengco group and renamed it ABN-Amro Savings Bank, which it plans to groom into one of the country's leading universal banks within the next two years. ABN-Amro is a relatively new player in the local banking arena, having established a foothold only in 1994 when it established its offshore banking unit. Other institutions earlier reported to be interested in buying Urban Bank were: Keppel Tatlee of Singapore, Banque Nationale de Paris, and local banks Banco de Oro and Rizal Commercial Banking Corp. In a separate interview on Saturday, Bangko Sentral Governor Rafael Buenaventura said the government still aimed to bid out Urban Bank and its investment house Urbancorp Investment Corp. within the next 30 to 45 days. Based on his discussions with the Philippine Deposit Insurance Corp., the receiver of Urban Bank, Buenaventura said there were seven institutions keen on bidding for the banking group, all of which have signed confidentiality agreements with the government. As such, Buenaventura said the identity of the seven interested parties could not be publicly disclosed yet. The BSP chief said the government was trying to work out a scheme to keep Urban Bank's depositors "whole." He said the Urban case was complicated and was prone to a lot of depositors' lawsuits because it had a different depositor and investor base for the bank and the investment house. "The interested parties will have to see if it makes sense to sell the investment house," Buenaventura said. Urban Bank said it had to service P4 billion in withdrawals before liquidity problems forced it to go on a bank holiday on April 26, the same day it was ordered closed by the Monetary Board, the BSP's policy-making body. Based on a joint investigation by the BSP and the PDIC, the withdrawals came from the investment arm and not from the bank's depositors. Urban Bank officials earlier said news reports about the bank's intention to concentrate on mortgage banking and just become a thrift bank rather than a commercial bank had worked against the bank and made depositors jittery. But Urban Bank is not yet off the hook as far as unsound banking practices are concerned. Urban Bank is 15-percent owned by the group of Arsenio Bartolome III, the bank's chair and founder; 15 percent by the group of bank president Teodoro Borlongan, and 8 percent is owned by the SMC Retirement Fund. Other owners with an 8-percent stake each in the bank are Dizon Copper and Silver Mines, National Life, RBL Fishing and Philippine Transmarine Carriers. Universal Motors Corp. owns 5 percent of the bank while the remaining 20 percent is owned by the public. (Philippine Daily Inquirer 22-May-2000) ================= S I N G A P O R E ================= APPLIED MAGNETICS: Liquidator to be appointed --------------------------------------------- An accounting firm will be appointed to liquidate and dispose of the assets of Applied Magnetics Sdn Bhd, a multinational disk drive manufacturing company which recently closed its doors. The money realised would be used to pay off the company's debts. Economic Planning, Education and Human Development Committee chairman Datuk Dr Toh Kin Woon said part of the money realised would go towards paying off employees' benefits. They were retrenched in January. He was commenting on the formal winding up of the company by the High Court here last Tuesday to liquidate the assets to pay off debts and workers' benefits. This followed an application by BHL Bank Bhd for the company to be wound up, for not paying outstanding debts of RM36 million plus interest. "The value of the assets are not confirmed yet but the employees will be paid off according to the Industrial Relations Act," Toh told reporters after visiting SMJK Jit Sin Bukit Mertajam here today. The school is the venue for table-tennis for the Eighth Malaysia Games (Sukma). The company ceased activities and retrenched 2,100 workers at its factory in the Bayan Lepas Free Trade Zone on Jan 14. The workforce included 400 Indonesians. It closed down in the absence of support from its parent company in the United States and the decline in the demand for products it assembled. Dr Toh said priority would be given to paying off benefits to the eligible employees who were retrenched, while the outstanding debts would be paid according to the law. The amount that can be realised from the liquidation is estimated at between RM9 and RM10 million, based on the value of the assets. On the future of the retrenched workers, Toh said the State Government would give them due consideration in seeking alternative employment elsewhere. "I believe they will not have difficulties in finding jobs in other factories with their experience," he said. (The New Straits Times 19-May-2000) =============== T H A I L A N D =============== ASIA HOTEL: Posts 1st quarter loss ---------------------------------- Asia Hotel reported Q1 consolidated net losses of 26m bt compared with net losses of 30m bt last year. (Bangkok Post 19-May-2000) BANGKOK STEEL INDUSTRY: Posts 1st quarter loss ---------------------------------------------- Bangkok Steel Industry reported Q1 net losses of 493.8m bt compared with net losses of 542.9m bt last year. (Bangkok Post 19-May-2000) EASTERN WIRE: Posts 1st quarter loss ------------------------------------ Eastern Wire reported Q1 consolidated net losses of 131m bt compared with net losses of 86m bt last year. (Bangkok Post 19-May-2000) KULTHORN KIRBY PLC: Reports progress of rehab plan -------------------------------------------------- Pursuant to the announcement of the Stock Exchange of Thailand (SET) that Kulthorn Kirby Plc. has faced possible delisting from SET, the company has prepared the rehabilitation plan according to the SET's regulation and sent that to SET on January 27, 2000. The company would like to report the progress of plan implementation for the 1st quarter of year 2000 under the said rehabilitation plan: Kulthorn Kirby Plc. (KKC) Production Action Plan Target Results Q1/2000: 1. Improve the products to meet the international standard 1.1 Develop AEB compressor for 20% Expect to complete early The prototype was developed energy save 2001 and being in the process of testing. 1.2 Improve AZ compressor to pass JEMA The product was being tested test and expected to pass in Q3/2000 1.3 Decrease production defect 1.4 Decrease the actual defective rate to rate to be less than 0.3% decreased from 0.55% last year 0.40% in this quarter 1.5 Develop products to meet customer 1.6 Decrease the rejection The result would be concluded satisfaction level to be less than 250 after 5-6 months after PPM purchasing, about Q3/2000. Action Plan Target Results Q1/2000: 4. Develop the company and factory to get certificate of production standard as follows: 4.1 UL Expect to be approved in The test result would be Q1/2000 released in Q3/2000. 4.2 ISO 14000 Expect to be approved in The factory was primary Q1/2000 investigated and being in the process of development. The certificate was expected to be approved in Q2/2000. Increase utilization rate - The utilization rate of Q1/2000 was 32.94% compared to 28.18% of average utilization rate of year 1999. Decrease production cost - The unit cost of production to increased by 1.14% compared average unit cost of year 1999 due to increasing raw material price such as steel, casting, a number of labor with higher wage. (Stock Exchange of Thailand 19-May- 2000) MK REAL ESTATE DEVELOPMENT PCL: Explains operating results ---------------------------------------------------------- MK Real Estate Development PCL, through Siriporn Torsukpornsiri, Accounting Manager, has reported loss on net operating results as of March 31,2000 to the Stock Exchange of Thailand. The impact of economic turmoil resulted in decrease of revenue from sales. Meanwhile, some administrative expenses and interest expense are fixed costs. Consequently,the company suffered loss of 44.7 million baht. (Stock Exchange of Thailand 18-May-2000) NITHI VENTURE CORP.: Posts 1st quarter loss ------------------------------------------- Nithi Venture Corp reported Q1 consolidated net losses of 23.2m bt compared with net losses of 20m bt last year. (Bangkok Post 19-May-2000) PCM PRECAST FLOORS: Posts 1st quarter loss ------------------------------------------ PCM Precast Floors reported Q1 consolidated net losses of 10.5m bt compared with net losses of 28.3m bt last year. (Bangkok Post 19-May-2000) POWER-P: Posts 1st quarter loss ------------------------------- Power-P reported Q1 consolidated net losses of 41.6m bt compared with net losses of 58.5m bt last year. (Bangkok Post 19-May-2000) RAMKHAMHAENG HOSPITAL: Posts 1st quarter loss --------------------------------------------- Ramkhamhaeng Hospital reported Q1 net losses of 6m bt compared with net losses of 11m bt last year. (Bangkok Post 19-May-2000) RENOWN LEATHERWEARS: Posts 1st quarter loss ------------------------------------------- Renown Leatherwears reported Q1 consolidated net losses of 173m bt compared with net losses of 378m bt last year. (Bangkok Post 19-May-2000) SAMITIVEJI: Posts 1st quarter loss ---------------------------------- Samitiveji reported Q1 net losses of 101m bt compared with net losses of 108.4m bt last year. (Bangkok Post 19-May- 2000) SEMICONDUCTOR VENTURES INT'L: Reports rehab progress ---------------------------------------------------- Semiconductor Ventures International reports on its progress in the Implementation of Rehabilitation Plan During Q1/2000. 1. In the first quarter of 2000, the Company has continued to focus its manufacturing on the more complexity with high value added products. Accordingly, the Company was able to improve its product profile as planned at the same time this insulated itself from the price competition from China. In Q1/2000, the proportion of Medium Complexity and Higher Complexity Products increased to 95% of the total sales compared to the projection of 86% while the proportion of the Commodity Type Products decreased to 5% of total sales which was below the projection of 14%. 2. The technical and commercial infrastructure built up during 1999, has resulted in superior customer services which was well recognized by the customers. The Company continues to employ its technical expertise to provide services focusing on turnkey box built assembly with in depth hardware and software design support. In addition, the Company strengthened its utility test capability by developing temp cycling and dynamic burn-in capabilities as well as sophisticated failure analysis. This enables the Company to provide perfect production of original prototype products to maximize customer's satisfaction. To expand business network, the Company established alliances with prototype shops on the East and West coasts of USA. Other alliance in Europe is expected to be concluded in July 2000. This will enable the Company to provide localized small batch production service as well as more efficiently after-sales service. 3. The marketing activities in developing customer base continued during the past quarters have resulted in the increasing number of new customers and purchasing orders from customers, particularly in USA and European markets. Sales contribution from USA was 42% over that in the projection resulting in a sharp increase of USA's sales proportion from 7% of total sales as to that in the projection to 12% of total sales. In addition, sales in Europe was 55 % over that in the projection. This shifted the Europe's sales proportion to be 48 % of the total sales compared to that in the projection of 27% of total sales. On the other hand, sales in Scandinavia decreased 53 % from the projection, resulting in the lower than the projected total sales in Q1/2000. However, sales in Q1/2000 were 40% above that of Q4/1999. The increase of sales were partly resulted from the postponement of products delivery to clients from the past quarter to Q1/2000 due to the component shortage during the last quarter. 4. The Company continues to strengthen its oversea marketing effort. At present, the Company employs 3 senior executives in USA, 4 in Europe and 2 in Hong Kong. In order to enhance customers' satisfaction, the Company arranged Program Manager to efficiently provide services support to customers in each business area. The Company also assigned Director of Supply Management to co-ordinate component sourcing in Asia, Europe, and the USA, together with establishing close relationship with local plastic and metal suppliers to ensure the procurement of quality components to meet with customers' demand. In addition, the Company was able to improve the efficiency of its raw material procurement and control of selling and administrative expenses. The Q1/2000 performance can be analyzed as follows: The total sales of Baht 399.21 million in Q1/2000 were approximately 15% below the projected amount of Baht 467.40 million while sales in Q1/2000 rose 38% over Q4/1999. The sales of Commodity Type Products presented a huge drop of 67 % from the projection while sales of Higher Complexity Products decreased by 21 % from the projection. On the other hand, sales of Medium Complexity Products increased 163% over the projected level. As a result, the proportion of Higher Complexity product sales to total sales was 74%, slightly lower than the projection. The percentage sales contribution of Medium Complexity Products to total sales was increased to 21 % of total sales whereas the sales contribution of Commodity Type was dropped to 5 % of the total sales. The causes of changing sales mix from the projection are: 1. The sales of Commodity Products were Baht 45 million lower than projection presenting 67% deviation. The sales reduction was caused by the fact that the Company had focused on more complex products; higher value added products, and reduced the production of Commodity Products which have been subject to price competition. In addition, the existing customer's order of Commodity Products was decreasing due to the severe price competition from China. 2. The sales of Medium Complexity Products increased Baht 51.19 million, or 163% above the projection. The increase of sales was mainly resulted from the increased orders from the existing clients due to the expanded market shares of their products. It is expected demand on Medium Complexity Products still be maintained in the near future. 3. As the Company has focused its manufacturing on more- complex products in order to obtain higher argin, the sales of Higher-Complexity product were 33% greater than that in Q4/1999. However, compared to the projection, the sales of Higher Complexity product were lower by Baht 77 million or 21%. The deviation was derived from the fact that the Company has not yet achieved the market penetration in Scandinavia as planned while orders from existing clients were below the budget. In addition, the lead-time of some of the products is much longer than anticipated. The component shortage also caused the delay in introducing new products, hence, the lower of sales. The actual cost of goods sold in Q1/2000 was Baht 89 million or 20% lower than the budget leading to the improved ratio of cost of goods sold to total sales at 87 % compared to the projected ratio of 94%. As a result, gross profit increased to Baht 51.19 million or 72 % higher than the projected gross profit of Baht 29.80 million. In Q1/2000, the main factors contributed to the decrease in cost of goods sold were: more sales proportion of the higher value added products, lower total sales volume, the improvement of the efficiency of raw material procurement and control of overhead cost. In Q1/2000, raw material costs were 26% lower than the projection leading to the lower-than-budget ratio of raw material to sales, which were 68% compared to the projection of 78%. The raw material cost improvement was attributed from the improved efficiency of raw material sourcing and the change in product mix which resulted in lower than projected raw material cost content. With the improvement of raw material procurement through developing international purchasing offices to source components worldwide, the serious problem caused by component shortage in the industry during the past quarter was alleviated. However the Company will further closely monitor the component shortage situation which is expected to continue for the next 6 months. The direct labor cost was slightly higher than the projection resulting to increasing in the ratio of direct labor cost to total sales to 5% compared to that in the projection of 3%. The Company's Contribution Margin ((sales - raw material cost - direct labor cost) / direct labor cost) was 488 % which is lower than the projected Contribution Margin of 540%. The fact that the Company spent more direct labor utilization on the production prototype and first article sample (pre-production) was the main factor contributing to the increase in direct labor cost and the decline in Contribution Margin compared to the projection. Overhead cost were Baht 0.40 million lower than the budget. However, the ratio of overhead cost to total sales was 14%, slightly higher than the budget of 13% due to the decrease in total sales. In Q1/2000, the gross profit of Baht 51.19 million was better than the projection of Baht 29.80 million. This was resulted from the change in product mix towards more value- added product and the lower cost of goods sold which could offset the lower sales. The selling and administrative expenses in Q1/2000 were Baht 28.83 million, Baht 1.47 million lower than the projected level leading to the ratio of selling and administrative expenses to total sales of 7 % slightly above that of the projection of 6%. The selling expense of Baht 16.96 million was Baht 1.36 million over the projected amount due to higher than projected marketing expense spent to expand its customer base. The administrative expense of Baht 10.15 million were Baht 3.6 million below the budgeted amount due to effective cost control. Other income in Q1/2000 was Baht 2.72 million comprising the foreign exchange gain of Baht 1.69 million and non operating income of Baht 1.03 million. For Q1/2000, the Company generated net profit of Baht 24.28 million, compared to a projected net profit of Baht 0.24 million. The large increase in net profit was mainly due to the increase in gross profit compared to the projection as mentioned before. At the end of Q1/2000, the Company's total assets were Baht 299.84 million or 50% higher than the projection. The increase in total assets was mainly due to the Baht 293.82 million increase in current assets representing 62% growth from that in the projection. However, net fixed assets were approximately Baht 2.38 million lower than the projected amount. The increase in current assets are detailed as follows:- Cash on Hand and at Banks: At the end of March 2000, cash on hand and at banks was higher than the projected amount by Baht 35.95 million. Accounts Receivable: Despite the lower than projected sales, the amount of accounts receivable was higher than the projected level by Baht 151.43 million reflecting the average collection period of 84 days which was longer than the projection of 52 days but in line with that of 86 days in the Q4/1999. Inventory: Inventory was higher than the expected level by Baht 97.95 million. The Company's average inventory turnover was 53 days compared to Q4/1999 and the projected turnover of 28 and 44 days respectively. Other Current assets: The rise in other current assets mainly resulted from claim on value added tax and advance for raw materials. Liabilities: The Company's total liabilities were higher than the projected amount by Baht 123.03 million or by 31%. This was due mainly to the accounts payable of Baht 226.85 million which were Baht 120.11 million higher than that in the projection. The Company's average payment period for Q1/2000 was 57 days, compared to the projected period of 23 days. Shareholders' Equity: At the end of Q1/2000, Shareholder's equity increased to Baht 383.42 million which was Baht 176.81 million over the projected amount of Baht 206.60 million. The increase was resulted from the higher than projected net profit and the capital increase during the past quarter. (Stock Exchange of Thailand 19-May- 2000) THAI ELECTRONIC INDUSTRY: Posts 1st quarter loss ------------------------------------------------ Thai Electronic Industry reported Q1 net losses of 27m bt compared with net losses of 34m bt last year. (Bangkok Post 19-May-2000) THAI LUBE BASE: Creditors swap debt for equity ---------------------------------------------- A total of 14 creditors of Thai Oil affiliate Thai Lube Base are close to becoming the company's third largest shareholders through the conversion of US$67 million (Bt2.62 billion) of its debt into equity. An executive from Thai Lube Base, who declined to be named, said about 95 percent of creditors were believed to have agreed with the company's recently-revised debt restructuring plan at a meeting last week. The plan proposed reduction of the debt amount to be converted to equity from $80 million to $67 million. The proposed $67 million debt-to-equity conversion is the same amount that Thai Lube Base requested from its existing shareholders, led by the Petroleum Authority of Thailand (PTT), to inject as fresh capital into the company. "Through debt conversion, banks intend to acquire 20 per cent in the company while the existing shareholders would see a dilution of their ownership," said the executive. Parent firm Thai Oil, which recently received approval for its own restructuring plan, cannot participate in Thai Lube's capital injection due to a condition it agreed with its creditors which prohibits it from providing financial assistance to its subsidiaries. Debts left over after restructuring will be larger than the previous estimate of about $53 million. Taking into account the capital injection, almost all of which will be used to repay debts, debts left outstanding will eventually be reduced to $66 million. Because of further adjustments to the debt plan, the final vote - to be supervised by the Corporate Debt Restructuring Committee - has been postponed until the end of next month. If the plan is not approved by the committee, Thai Lube's debt settlement will have to go through a lengthy court process. Thai Oil and PTT at present hold 38 percent and 30 percent respectively in Thai Lube. Other major shareholders are Mitsubishi Holdings which has 22 percent and BP Oil (Thailand) which holds a 5-per-cent stake. Apart from capital injection and debt-to-equity conversion, the debt- restructuring plan also requests a grace period for debt principal and interest payment during the first three years of implementation. Debt repayment would be extended seven years from the signing of the plan. Once the plan is approved, Thai Lube Base will concentrate on reorganising its production, finance and marketing to become more efficient. (The Nation 20-May-2000) THAI TEL.& TEL. COMMO.: Told to rewrite rehab plan -------------------------------------------------- The Central Bankruptcy Court ordered up-country fixed-line company Thai Telephone & Telecommunications to rewrite its 44.4 billion baht debt restructuring proposal; but judges turned down a request by the harshly critical Turtlephone Organisation that it be allowed to take over all planning and accounting of TT&T. Instead, the judges allowed TT&T to be its own temporary planner, and to come back to the court with a more workable reorganisation; TT&T is trying to get out from massive and massively overdue charges to the TOT, and is offering equity to creditors who want to swap their debt. (Bangkok Post 17-May-2000) TPI POLENE: Posts 1st quarter loss ---------------------------------- TPI Polene reported Q1 consolidated net losses of 295.6m bt compared with net losses of 818m bt last year. (Bangkok Post 19-May-2000) UNION MOSAIC INDUSTRY: Posts 1st quarter loss --------------------------------------------- Union Mosaic Industry reported Q1 net losses of 63.4m bt compared with net losses of 106.5m bt last year. (Bangkok Post 19-May-2000) UNIVERSAL FOOD: Posts 1st quarter loss -------------------------------------- Universal Food reported Q1 consolidated net losses of 6.3m bt compared with net losses of 10.3m bt last year. (Bangkok Post 19-May-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. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***