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/raid1/www/Hosts/bankrupt/TCRAP_Public/000615.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 Thursday, June 15, 2000, Vol. 3, No. 116 Headlines * A U S T R A L I A * CAPRAL ALUMINUM: Sells smelter for $490M, to cut some debt EDGE GROUP: Fate looks certain to be liquidation EISA: Focus turns from merger to sale NATIONAL AUSTRALIA ASSET MGMT: Suffers $2 million loss WESTRAIL FREIGHT: Privatisation projected to cut debt * C H I N A & H O N G K O N G * GZITIC HUALING HOLDINGS: Financial health questioned NEW WORLD DEVELOPMENT: Davnet apology fails to bolster * I N D O N E S I A * PT ANWAR SIERAD: Creditors approval rehab proposal PT INDUSTRI TELEKOMUNIKASI: Hopes to finish rehab by July * J A P A N * BANK OF TOKYO-MITSUBISHI LTD: To reface $700,000 lawsuit KANSAI NISHINOMIYA SHINKIN BANK: Submits rehab plan to FSA * K O R E A * DAEWOO GROUP: Gov't wants KAMCO to buy its CPs DONGBU GROUP: FSS probing financial arms HYUNDAI ENG.& CONSTR.: Gov't assures financial stability HYUNDAI MOTORS: To apply with FTC for spin-off SSANGYONG GROUP: To sell off real estate to paydown debts * M A L A Y S I A * MEGA PASCAL: Looks for turnaround after 2 loss-years MMC ENGINEERING GROUP: Looking to improve after 2 bad yrs. * P H I L I P P I N E S * EMPIRE EAST LAND HLDGS.: In debt payment talks with PNB PHILIPPINE APPLICANCE CORP.: GE to sell stake PHILIPPINE TEL.& TEL.CORP.: Awaits okay of debt plan RURAL BANK OF SAN MIGUEL: Fraud charges against execs URBAN BANK: Needs P1.6B capital boost URBAN BANK: PDIC urged to consider more rehab plans * S I N G A P O R E * TWINWOOD ENGINEERING: Schroders buys stake in loss-maker * T H A I L A N D * ANGEL AIR: Set to close as losses mount ELECTRICITY GEN.AUTHORITY OF THAILAND: Bonds sell out PREMIER ENTERPRISE PLC: Reports on trial of rehab petition SUNTECH GROUP PCL: Trading suspension to remain TANAYONG BANGKOK SKYTRAIN: Stops paying interest on debt THAI CANE PAPER PLC: Reports to SET on undisclosed debt ================= A U S T R A L I A ================= CAPRAL ALUMINUM: Sells smelter for $490M, to cut some debt ---------------------------------------------------------- Capral Aluminium will make a major capital return to shareholders after yesterday selling its Kurri Kurri aluminium smelter in NSW to Germany's VAW aluminium smelting group for $490 million, with between $50 million and $120 million going to reduce its debt. The finalisation of the long-mooted deal, which involved counter offers from Rio Tinto Ltd, Canada's Alcan group and the French-owned Pechiney, sparked a 5.8 per cent jump in Capral's share price to $2.35. The bulk of the funds from VAW will be distributed through a special dividend and share buyback process yet to be finalised by the board. While not specific on the exact amount to be paid to shareholders, Capral chairman Professor Jeremy Davis said: "There is a very large capital sum to be distributed." Capral will reduce its debt by $50 million to $120 million and pay the transaction costs out of the $490 million with shareholders receiving the remainder, leaving the company with gearing ratio of a 40 per cent. The sale of the 150,000 tonne Kurri Kurri leaves Capral with an aluminium extrusion and distribution business, easily the largest in Australia and a 22,000 tonnes-a-year aluminium recycling and remelting plant. Those businesses generated sales of $538 million and profit of $25 million in fiscal 1999. That leaves the new-look Capral as a possible takeover target sporting profitable business assets, a large and valuable land portfolio at its Granville works, low debt and a wide-open share register. Industry sources last night suggested the remaining value within Capral, after the distribution of the funds received from VAW, would be about $350 million. The sale of Kurri Kurri completes Capral's plan, announced in November last year, to separate its two main businesses, which were the upstream smelting operation and the downstream extrusion and fabricating plants. Professor Davis said the Kurri Kurri sale was excellent for both Capral shareholders and people working at the Kurri Kurri facility. "The sale will enable us to fully realise the value of the smelter for our shareholders after allowing for tax and transaction costs," he said. "We are confident that the smelter has a bright future in the hands of VAW, one of the leaders in the industry," professor Davis said. Kurri Kurri's 580 staff had been retained as a condition of the sale, he said VAW, is an international aluminium group, based in Germany with operations worldwide, producing primary aluminium and downstream products. It owns 12.4 per cent of the 440,000 tonnes-a-year Tomago smelter, also in the Hunter Valley. (Australian Financial Review 14-Jun- 2000) EDGE GROUP: Fate looks certain to be liquidation ------------------------------------------------ Johnson Wang's Edge Group seems bound for liquidation, with creditor debts of about $A40 million. Creditors will meet in Sydney on 14 June 2000 to hear the report of the administrator, Andrew Wily of Armstrong Wily and Company. Two other options, which would allow trading to continue either under the control of directors or an administrator, do not seem appropriate. Edge has about $A6 million in assets, but this value will diminish during any winding up process. The main creditor is Microsoft Corporation, owed $A17 million. Liquidation would be a grim turnaround for Wang, who at his height was a business award winner. (The Australian Financial Review 14-Jun-2000) EISA: Focus turns from merger to sale ------------------------------------- Embattled ISP eisa is up for sale following its disastrous attempt to acquire OzEmail, directors told the company's AGM last week. Eisa shares which last traded earlier this month at $0.24 were suspended on June 6 in the wake of UUNET's announcement that it was pulling out of the OzEmail sale. The shares traded as high as $3 in March, before the dotcom market crash. Chief executive Damien Brady said the 85,000-subscriber company was in discussions with potential purchasers. "The emphasis isn't on the sale, but it's on the realisation that we will need to partner," he said. Mr Brady said eisa was negotiating its sale, and in the meantime had sufficient cash reserves to continue operations. Eisa chairman Evan Rees told shareholders sale was the only option. "As the multi- media market continues to rationalise, only the largest companies will be able to attract the content and e-commerce needed to satisfy customers," he said. "We are now talking to interested parties and expect to make an announcement on eisa's future soon." While Mr Brady and the other directors were re-elected, shareholders voiced discontent outside the meeting. "They made a couple of documented mistakes along the way," said one. "The share price is looking very sad." Major shareholder and Edge Technologies boss Johnson Wang did not put himself forward for re-election. After the meeting Mr Brady used a back door to avoid the media. Journalists and photographers waited for nearly two hours before realising he had eluded them. Mr Brady, who later phoned journalists, said: "We made a decision not to hold a press conference, but to make me available [by phone]." (Australian IT 14-Jun-2000) NATIONAL AUSTRALIA ASSET MGMT: Suffers $2 million loss ------------------------------------------------------ National Australia Bank's investment arm, National Australia Asset Management, has dumped all its shares in the struggling eisa, crystallising a loss of at least $2 million. NAAM told the Australian Stock Exchange yesterday it had sold its 11.7 million eisa shares at prices between 22.5 cents and $3.10 a share. It is believed NAAM sold the bulk of its holding at about $1 a share, offloading the final parcel just before trading in the dot-com was suspended on June 2. Previous notices to the ASX suggest NAAM bought its 7.81 per cent stake in eisa at between 60 cents and $3.18. Shares in eisa reached a high of $3.18 in March, only to crash by more than 90 per cent earlier this month when its much-vaunted deal to buy OzEmail collapsed. eisa's long-term future remains in doubt, with the shares still suspended and concern growing in business circles about its solvency. It also seems eisa will lose the $20 million cash deposit it paid OzEmail's owner, UUnet, for the exclusive negotiating rights. A source close to NAB said NAAM looked to have lost at least $2 million on the eisa trade. She said NAB analysts had valued eisa at $5 a share before the $300 million deal to buy OzEmail disintegrated. "If that (OzEmail) deal had gone through, the stock would be worth much closer to $5 but we started to see the deal crumble, it was taking a long time to close and the price falls in April didn't help matters." NAAM's exposure to eisa was low in the context of the group's total equities portfolio of more than $2.5 billion, she said. It is believed that even after discounting the loss triggered by selling its stake in eisa, NAAM's small- cap fund is on track to deliver a return of 70 per cent this year. "NAAM had decided to sell off some of its Internet and technology stocks earlier this year," she said. "eisa was a part of that and it's fortunate that we were able to sell the entire stake before the trading halt was called." While NAAM held the 11.7 million eisa shares, the registered holders named on the ASX notice were: Sandhurst Trustees (with 8.69 million shares), National Australia Financial Management (2.16 million shares) and National Nominees (851,000 shares). eisa was last traded at 24.5 cents. (The Age 14-Jun-2000) WESTRAIL FREIGHT: Privatisation projected to cut debt ----------------------------------------------------- The Court Government's privatisation of AlintaGas and Westrail's freight division will be completed before going to the polls in the new year - generating at least $1.5 billion to retire debt and fund at least one major election sweetener. The imminent AlintaGas and Westrail sales will effectively complete the Coalition's privatisation of core utilities, which has included BankWest and the $2.4 billion Dampier- to-Bunbury gas pipeline. However, if re-elected, Premier Richard Court has signalled that Western Power's future power generation requirements would be handled by the private sector. The Government's proposed $200 million deepwater port at Oakajee - which remains conditional on Kingstream Steel securing finance for its $1.7 billion steel slab plant - would also be privatised once operating profitably. The sale of the profitable Westrail Freight business is now underway, following a drawn-out passage through State Parliament, finally ending last month. It is expected to generate between $500 million and $1 billion. Factors affecting the final price to government include the requirement that the new owner commit at least $62 million to completing upgrades of the network - and up to a further $100 million if Portman Mining goes ahead with expansion of its Koolyanobbing iron ore mine, placing greater demands on the Koolyanobbing-Kalgoorlie-Esperance line. Court has indicated all or most of the Westrail sale proceeds will be used to retire its $700 million debt. Meanwhile, the $1 billion expected from the sale of AlintaGas will enable the Government to outline details of a major extension to its southern passenger railway service in the build-up to an election, expected in February or March. Despite the anti-privatisation sentiment at the Victorian election, Court says he does not expect privatisation to be a big election issue in WA. "The Labor Party's trying to beat it up as an election issue, but they've got no credibility on that because they themselves as a government have had a privatisation strategy. It would be an election issue if something had been privatised and the service had declined and the price had gone up, but that hasn't been the case." The AlintaGas sale comes as the utility faces full deregulation in July 2002, when its 400,000-plus customers (including about 60 per cent of WA households) will be open to competition from the likes of Boral and AGL. However, under the sale legislation, the State Government's Western Power arm cannot become a rival gas supplier for three years. There are three remaining bidders undertaking final due diligence for a 45 per cent shareholding in AlintaGas - Wesfarmers, AGL and UtiliCorp. The remaining 55 per cent of the utility will be offered in a public float, with individual shareholdings capped at 5 per cent for two years. The final price extracted by the Government for AlintaGas will be affected by two regulatory decisions being considered by WA's independent gas regulator, Dr Ken Michael. The first decision is the amount third-party users will have to pay for access to AlintaGas's distribution network under new national competition guidelines. Michael is not due to decide this until June 30, delaying the sale process for about one month. The steering committee handling the AlintaGas float had been scheduled to announce the winning bidder at the end of this month. A separate decision - of a more politically sensitive nature - relates to the transmission tariffs AlintaGas and other customers of the Dampier-to-Bunbury gas pipeline have to pay to the pipeline's owner, Epic Energy, to source their gas from the State's north-west. Epic paid the Government a premium price of $2.4 billion for the pipeline in 1988, anticipating increased gas use from major proposed resource projects such as Kingstream's $1.7 billion steel plant, yet to get off the ground. Epic's submission is that the transmission tariffs for the next five years should be set at $1 a gigajoule to Perth and $1.08 south of Perth. However, other big customers argue Epic's submission is excessive, penalising customers for the inflated price the company paid for the pipeline. While it has a reputation for being the underbidder, Wesfarmers' existing commercial arrangements with AlintaGas could give the WA conglomerate a commercial edge over the other bidders. Wesfarmers is AlintaGas's biggest customer, accounting for about 20 per cent of the utility's gas sales by volume. Its commercial arrangements with AlintaGas include a confidential and complex revenue-sharing deal relating to liquid petroleum gas (LPG) produced by Wesfarmers at its Kwinana extraction plant. The Westrail sale is considerably more straightforward. The Westrail sales taskforce this week is holding briefings for prospective bidders in North America, the likely origin of the new owner. North American companies which have already bought into Australian rail assets - including Genesee & Wyoming, Wisconsin Central and RailAmerica - have indicated they are likely to be among the bidders. The sale taskforce's project director, Graham Baker, says the sale will be completed by October or November, well before an election is likely to be called. That is likely to ease any uncertainty which might arise from the State Opposition's threat to abandon the process if it wins office before a legally binding contract is signed. Under the terms announced by the Government, the deal will include the outright transfer of Westrail's rolling stock, depots, terminals and existing contracts, plus a 20-year lease over its 5,000km track network in the south of the State, with options for a further 29 years. Reflecting concern over the impact the vertically integrated sale might have over third-party access to the track, the Government has agreed to require the new owner to have separate subsidiary companies controlling the above-rail operations and the standard gauge track. (Australian Financial Review 14-Jun-2000) ============================== C H I N A & H O N G K O N G ============================== GZITIC HUALING HOLDINGS: Financial health questioned ---------------------------------------------------- Home-appliance maker Gzitic Hualing Holdings has defended its soundness despite concerns by the company's auditor about its viability. Chairman Chen Xiaoshi said Hualing had returned to profitability last year, thanks to stringent cost controls and a new marketing strategy. Auditor Arthur Andersen earlier raised concerns about Gzitic Hualing because of the uncertainy over the debt restructuring of its parent, Guangzhou International Trust and Investment Corp. The auditor also cited Hualing's net deficiency in working capital as an uncertainty about the company's ability to continue as a going concern. The company had accumulated losses of HK$138 million by the end of last year, while present liabilities were more than HK$160 million, the auditor said. (South China Morning Post 14-Jun-2000) NEW WORLD DEVELOPMENT: Davnet apology fails to bolster ------------------------------------------------------ Debt concerns continue to hurt sentiment for blue chip New World Development (NWD), and an apology by Australian- listed telecommunications group Davnet over comments it made about NWD's telephone arm failed to help the blue chip's share price yesterday. It closed the day down 35 cents or 3.8 per cent at $8.85 - outstripping the benchmark Hang Seng Index's 2.3 per cent fall. "Davnet recognises that the statements made regarding `rapid depletion of quality employees' staff morale in New World Telephone, declines in its market share in the fixed- line business and significant loss of staff are untrue," Davnet said in a statement. New World Development (NWD) had planned to take legal action against the Davnet statement issued earlier this month. The company's shares hit a nine-year low last month, falling $7.15, on news that Davnet had pulled out of talks with New World Development on buying its unprofitable unit New World Telephone. "In the circumstances we unreservedly retract and withdraw them (the statements) and sincerely apologise to New World Telephone, the New World Group and the Cheng family," Davnet said in the statement. "During the past five months, we have worked very closely with the management of New World Telephone. We have found its management to be sound, talented and extremely motivated. "We have conveyed our regrets and apology in private to the representatives of the New World Group. Davnet and New World Telephone are now prepared to explore any future business alliance for the benefit of both parties," Davnet said in the statement. Davnet said in January it would buy a 74 per cent stake in NWD's fixed-line network unit New World Telephone. The amount of the deal was expected to be about $1.85 billion but the firm did not reveal the details. The termination of the deal, which had involved exclusive rights to negotiate the transfer of assets and licences of New World's fixed telecommunications network services business, is expected to hurt New World Development's plan to cut debt by $3 billion to $5 billion during the first half of the year. NWD's gross debt was expected to be about $32 billion, analysts said. But the firm said it would use other ways to reduce its debt. (Hong Kong iMail 14-Jun-2000) ================= I N D O N E S I A ================= PT ANWAR SIERAD: Creditors approval rehab proposal -------------------------------------------------- Creditors of PT Anwar Sierad voted to approve the company's debt restructuring proposal at a meeting at Jakarta's commercial court, supervisory judge Hasan Basri said. Basri said 40 out of 42 creditors voted in favour of the restructuring proposal, with two disagreeing. Earlier, the court approved the company's request to extend its debt payment suspension for a further 45 days in order to reach an out-of-court agreement or otherwise be declared bankrupt. Basri said the debt would be restructured through a combination of full repayment, a debt-to-equity swap and an issue of convertible bonds. The debt restructuring period is 15 years, with Anwar Sierad's total debt being 1.4 trln rupiah and Indonesian Bank Restructuring Agency the largest debtor. (AFX News Limited 14-Jun-2000) PT INDUSTRI TELEKOMUNIKASI: Hopes to finish rehab by July --------------------------------------------------------- PT Industri Telekomunikasi Indonesia (INTI) said it hoped to finish restructuring a debt of US$ 17 million by the end of this month. The state-owned company, producing telecommunication equipment, said it expected to sign an agreement on 7-year rollover for its debt with its creditor state-owned bank, Bank Negara Indonesia. (Asia Pulse 13- Jun-2000) ========= J A P A N ========= BANK OF TOKYO-MITSUBISHI LTD: To reface $700,000 lawsuit -------------------------------------------------------- After an appeals court overturned a federal judge's dismissal, Brunswick County will get a second chance to sue the Bank of Tokyo-Mitsubishi Ltd. for $700,000, the backing the bank provided for a failed regional waste and recycling project. Brunswick County's suit stems from its contract with BCH Energy, in which the county agreed to build a solid waste transfer station in exchange for payment from BCH. The company arranged for a $ 750,000 line of credit to ensure that the county would be paid. The appeals court's Wednesday decision overturned U.S. District Court Judge James C. Fox's Sept. 29 ruling that the county did not meet conditions in the letter of credit. County Attorney Huey Marshall said the Bank of Tokyo included attachments to the letter of credit that said the county would have to get signatures from BCH officials or an arbitrator before calling in the debt. Mr. Marshall, who was hired after the contract had gone into effect, argued that the attachments to the letter of credit were examples and not binding. "The county was probably told a great deal by BCH," he said. "BCH would have control over their liabilities, if the county took the letter with the contingent clauses. Our contention is a letter of credit is a letter of credit, and we met the requirements of the letter." Launched by VEDCO Energy Corp. in late 1995, BCH Energy was once thought to be the long-term solution to garbage disposal in Brunswick, Cumberland, Hoke, Bladen and Pender counties. The project would convert trash at a Fayetteville plant to energy, which it would sell to DuPont and Carolina Power & Light. At the time, BCH was already burning trash for Brunswick County at a rate of $ 49 a ton. Faulty conveyor systems at its Cumberland and Brunswick plants sank BCH's project in February 1997, and BCH filed for bankruptcy in November of that year. "Everything had already soured by then," said Mr. Marshall. "We'd already made a demand for the money and it was like: 'Who? I'm sorry, he's not in.' " Since then the county has continued to use the transfer station to package solid waste, which Waste Industries hauls to a lined landfill in Sampson County. (Morning Star (Wilmington, NC) 13-Jun-2000) KANSAI NISHINOMIYA SHINKIN BANK: Submits rehab plan to FSA ---------------------------------------------------------- After posting its first-ever net loss, Kansai Nishinomiya Shinkin Bank has filed a restructuring plan with the Financial Supervisory Agency. Under its restructuring plan, Kansai Nishinomiya Shinkin will seek to raise its capital ratio to at least 5% by fiscal 2002. Additionally, the credit association will reduce staff from its current 536 to 400, suspending raises for those who remain. Kansai will also close or merge six branches, primarily in the Osaka-Kobe area, and will seek about 1 billion yen in new capital from borrowers. The company posted its fiscal year 1999 loss after trying to speed up disposal of its nonperforming real estate loans. The action pushed the firm's capital ratio under 4%, the line regulators traditionally deem a minimum for financial soundness. ========= K O R E A ========= DAEWOO GROUP: Gov't wants KAMCO to buy its CPs ---------------------------------------------- The government wants Korea Asset Management Corp to buy 4.0 trln won of secured commercial paper issued by the Daewoo Group from financial institutions at 70-80 pct of book value, the Financial Supervisory Service said. "The government told KAMCO to buy the secured CPs at 70-80 pct of book value from financial institutions," a senior FSS official said. "Still, KAMCO and the financial institutions have yet to determine the final buyout rate." For its part, KAMCO said the 70-80 pct buyout rate is too high given the Daewoo CPs backed by collateral are valued at about 50 pct of book value. KAMCO will continue to negotiate with investment trust companies and other financial institutions and reach an agreement on the buyout rate by the end of this month, a KAMCO official said. (AFX News Limited 14-Jun-2000) DONGBU GROUP: FSS probing financial arms ---------------------------------------- The Financial Supervisory Service (FSS) today begins a special probe into six money-spinning financial arms of the Dongbu Group. Units under investigation are Dongbu Securities, Dongbu Investment Trust, Dongbu Life Insurance, Dongbu Insurance, Dongbu Mutual Savings and Finance and Dongbu Capital. The purpose of the scrutiny is to establish healthy financial practices by checking possible illegal cross-unit transactions through the conglomerate's financial outlets. The watchdog agency will conduct special audits of local giant conglomerates including Samsung, LG, Hyundai, SK and the Tong Yang groups by the year's end. (Korea Herald 15- Jun-2000) HYUNDAI ENG.& CONSTR.: Gov't assures financial stability -------------------------------------------------------- In a moved hoped to rebuild confidence in the ability of Hyundai Engineering & Construction Co. Ltd. to perform contracts, Construction and Transportation Minister Kim Yoon-ki said he has sent letters to the United Arab Emirates, Oman, Kuwait, Hong Kong, Singapore and Thailand to affirm that the Hyundai construction had resolved its cashflow problems. Kim said in the letters that Hyundai Engineering's financial transactions with financial institutions are normal. "The letter signed by the minister is ... to confirm to the six nations that Hyundai Engineering has no problem in carrying out overseas construction orders," a construction ministry spokesman said. The ministry sent the letters at Hyundai Engineering's request and plans to send more to other nations if necessary. At 9:40 a.m., Hyundai Engineering was down 30 won, or 0.61 pct, to 4,900, while the composite index was off 6.93 points at 797.52. (AFX News Limited 14-Jun-2000) HYUNDAI MOTORS: To apply with FTC for spin-off ---------------------------------------------- Hyundai Motor will file with the Fair Trade Commission an application for separation from its parent Hyundai Group, a company official said yesterday. The application is in line with the company's disposition of its 22.7-percent stake in another Hyundai affiliate, Korea Industrial Development. Hyundai Motor sold the stake to Hyundai Heavy Industries. The application will be filed in a couple of days regardless of the 6.9-percent stake held by Hyundai Group founder Chung Ju-yung in the motor unit, according to the source. The source added that Hyundai Motor has fulfilled the conditions required for the spin-off under the fair trade law by disposing of all stakes it held in other Hyundai Group affiliates. But if the Fair Trade Commission sees Chung's stake as part of Hyundai Group's shareholdings in the motor company, the application will not be accepted. Hyundai Engineering & Construction also holds a stake in Hyundai Motor that needs to be disposed of. (The Korea Herald 14- June-2000) SSANGYONG GROUP: To sell off real estate to paydown debts --------------------------------------------------------- The Ssangyong Group, hit by a liquidity crisis, will sell real estate worth 500 billion won ($448.8 million) around next month to pay off short-term debts, creditors said yesterday. Cho Hung Bank, the main creditor of the troubled group, said the conglomerate has reached the final stages of selling the real estate and an announcement will be made soon. Talks have been going on to sell real estate owned by the business group's affiliates, including Ssang-yong Cement, through a joint venture vulture fund involving U.S. and domestic financial firms. Ssangyong announced Wednesday it has commissioned U.S. investment fund Lone Star to oversee the sell-off of its real estate assets, including the land and buildings it owns across the country. Cho Hung sources said Ssangyong will be able to pay off some of its short-term commercial papers upon completion of the deal. (Korea Herald 15-Jun-2000, Digital Chosun 14- Jun-2000) =============== M A L A Y S I A =============== MEGA PASCAL: Looks for turnaround after 2 loss-years ---------------------------------------------------- Ready-mixed concrete producer Mega Pascal Bhd is confident of an improvement in earnings this year in line with the recovery in the economy after two years of posting losses. According to company chairman Datuk John Wong Peng Chong, the group is projecting a turnover of about RM75mil for its financial year ending Dec 31, 2000. Mega Pascal incurred a pre-tax loss of RM18.66mil for the financial year ended Dec 31, 1999. In 1998, it registered a loss of RM19.51mil. Group turnover for 1999 stood at RM50.89mil against RM77.13mil in 1998. "With the economic recovery, we hope to supply as well as secure more ready-mixed concrete contracts," Wong told reporters after the company AGM in Petaling Jaya yesterday. Wong said two contracts the company had secured were to supply ready-mixed concrete to Cyberjaya and the Jaya Jusco shopping complex at Cheras in Kuala Lumpur worth a total of RM35mil. The other projects are the contract to supply its products to the hotel and car park at Genting Highlands, engineering at the Universiti Sains Malaysia campus in Penang, the power station at the Kulim high-tech park and the new North Klang Straits bypass expressway. On the company's diversification plans, Wong said the company would look into businesses which were synergistic as well as non-synergistic to its core operations if the opportunity arose. Mega Pascal is the fourth largest player in the local ready-mixed concrete business. (The Star 14-Jun-2000) MMC ENGINEERING GROUP: Looking to improve after 2 bad yrs. ---------------------------------------------------------- MMC Engineering Group Bhd, which has contracts in hand worth RM420mil, is confident of turning around and registering profits this year, its director Abdul Sukor Shahar said. Sukor said the company, which had a track record in civil and building construction, was also in the process of bidding for contracts worth RM300mil. "MMC Engineering is confident of returning to the black this year. This is based on our strong performance, notably our first quarter financial results," he told reporters after the company's AGM in Kuala Lumpur yesterday. Sukor said the contracts secured would take about two years to complete while the RM300mil in contracts presently being pursued was for 2001. MMC Engineering Group's civil and building construction division has to date undertaken projects including the Kuala Lumpur Middle Ring Road 2 (Package 1). The company has also secured the civil works (Package 2) contract from Petronas under the Kuantan-Kerteh Railway Project. The group is also involved in the design and detailed engineering work for offshore and onshore production facilities under the Peninsular Gas Utilisation (Loop 2) Project. For the financial year ended Jan 31, 2000, the group posted a lower turnover of RM216.794mil compared with RM295.544mil the previous year. It reported a pre-tax loss of M16.021mil against a pre-tax profit of RM1.878mil previously. (The Star 14-Jun-2000) ===================== P H I L I P P I N E S ===================== EMPIRE EAST LAND HLDGS.: In debt payment talks with PNB ------------------------------------------------------- Middle-income housing developer Empire East Land Holdings Inc. (ELI) is in talks with creditor bank Philippine National Bank (PNB) to reschedule its 800-million- Philippine peso (PhP) (US$18.86 million at PhP42.40:US$1) debt due this year. At the sidelights of ELI's annual stockholder's meeting held yesterday, company president Anthony Charlemagne Yu said the company is renegotiating for the payment of the liability. No final agreement has been reached as to the repayment terms. "We are discussing with them the repayment of that loan for the full-year payment...It's (the discussion) amicable. The objective is to pay them up, the whole debt. So it's a matter of negotiations," Mr. Yu said, adding the company has reduced its debt to date by 16% to PhP2.48 billion from PhP2.97 billion ($58.49 million from $70.05 million). "We have reduced our debt by as much as 16% and we hope to reduce it further this year and next year," he continued. "The aim here is to go ahead and borrow money. We're telling them (friends and possible investors what) we've seen in 1997 and we don't think that's prudent so instead of borrowing, we pay up more (of these debts). As to how much, that we have to discuss on the board level...to cut it by a third or half (but) that would always depend on how much funds we need for the projects." Mr. Yu also said. It would be recalled that ELI entered into talks with PNB to convert its 800-million-peso loan into shares in the company. ELI also hammered out a restructuring scheme with other creditors two years ago -- Philippine Commercial Capital Inc., AsianBank Corp., and International Capital Corp. -- by committing to change a portion of the loans worth PhP276 million ($6.50 million) into shares. Meanwhile, what would help fetch a sizable income for the company is the target sale of 3,000 mid-cost housing units, Mr. Yu said. ELI is optimistic it will raise approximately PhP4.5 billion ($106.13 million) from the sale of these units. It expects to complete these projects by 2004. Also expected to contribute to the company's revenue growth is its presold urban housing project Greenhills Garden Square, its residential project Xavier Hills and the California Garden Square. (Business World 14-Jun-2000) PHILIPPINE APPLICANCE CORP.: GE to sell stake --------------------------------------------- Financially troubled Philippine Appliance Corporation (Philacor) said over the weekend its American partner General Electric Co. (GE) is open to the dilution of its 37.9-percent interest in the firm amid several buy-in offers to save the country's largest refrigerator maker. A company insider said GE is willing to sell its stake to other interested parties, as Philacor has hardly received offers from foreign and local groups for a stake in the company. However, both the Santos and Alvendia families, who each own a 33-percent stake in Philacor, want to keep their stake in the company. Philacor is now implementing a restructuring program to improve its cash position, after it signed an asset-swap agreement of its P1-billion long-term commercial papers. Part of the program is the closure of its P1.2-billion world-class plant in Calamba for three months while the revival plan is being implemented. Philacor recently split its marketing and manufacturing operations to boost sales. The marketing group then plans to venture into tolling operations to utilize its idle plant in Calamba. The company will also stretch the repayment of its P700-million short-term loans with eight banks, and is selling more assets to raise P500 million as working capital. Philacor was founded in 1963 with Westinghouse Corporation as its partner. In 1974, GE was allowed to come in as a local partner. (ABS/CBN News Channel 14-Jun-2000) PHILIPPINE TEL.& TEL.CORP.: Awaits okay of debt plan ---------------------------------------------------- The Santiago-owned Philippine Telegraph and Telephone Corp. (PT&T) awaits approval of the majority of its creditor- banks on the indicative terms of its debt restructuring program. After almost two years of debt talks with the banks, the company has yet to restructure its 7-billion-Philippine peso (PhP) (US$165.10 million at PhP42.40:US$1) debt, as the telephone company has yet to gain the nod of most creditors on the debt restructuring proposal. "The ball is already in their (creditors') court. From our end, it is still status quo," said PT&T assistant vice- president for marketing support and public relations Ma. Rosario L. Mu�oz in a telephone interview with BusinessWorld. She added the company's creditor-banks, composed of around 30 local and foreign financial institutions, were supposed to come up with a decision last May. "A number of the creditors have already agreed on the indicative terms but it is not the entire body. We need to get at least 51% of the banks to agree on it," said Ms. Mu�oz. Under the proposal, PT&T asked for a 10-year repayment period with a grace period of three years. The company is likewise negotiating for 15% and 8% interest rates for the peso and dollar-denominated debts, respectively. Based on the 1998 annual report of the company, the bulk of the maturing obligations is dollar-denominated. These include a 1.26-billion-peso ($29.72 million) loan from Chase Manhattan Bank and PhP1.15 billion ($27.12 million) from Bank Leumi-Israel. It also has outstanding obligations from local creditors Development Bank of the Philippines, Land Bank of the Philippines, Philippine National Bank, United Coconut Planters Bank, All AsiaCapital and Trust Corp., and Security Bank. After US telephone equipment supplier Qualcomm, Inc. backed out as the company's potential investor last year, PT&T is not actively searching for a strategic partner. "We are open for a partner but we are not actively looking for one. I do not think anybody would be interested in a company in the throes of debt talks with the banks. It will only give us less bargaining power," said Ms. Mu�oz. The company was negotiating with Qualcomm to be its strategic investor but it failed to proceed after the US company was acquired by Ericsson AB, another telephone manufacturer during the first quarter last year. Qualcomm was supposed to infuse $35 million into the telephone company, of which $10 million will be used for debt payment and the remainder for capital expenditure. (Business World 14-Jun-2000) RURAL BANK OF SAN MIGUEL: Fraud charges against execs ----------------------------------------------------- Two more estafa charges have been lodged against the top officers of closed Rural Bank of San Miguel (RBSM), bringing to six the number of cases the Bangko Sentral (Central Bank of the Philippines) and the Philippine Deposit Insurance Corp. (PDIC) have filed against RBSM management since the rural bank declared a bank holiday last January. In a statement, the Bangko Sentral yesterday said the latest criminal suits were filed against RBSM president Hilario P. Soriano for allegedly pocketing some of the proceeds of the emergency loans the central bank extended to the bank last year. Records show the Bangko Sentral released to RBSM a 12.6-million-Philippine peso (PhP) (US$297,170 at PhP42.40:US$1) emergency loan package last Dec. 30. The central bank cited the sworn testimony of some unnamed RBSM officers which pointed to Mr. Soriano as the beneficiary of the PhP12.6 million in cash delivered at his residence in Valle Verde, Pasig City. "Until now, Mr. Soriano has failed to account for the amount," the central bank said. Since April 1998, the Bangko Sentral has granted 23 emergency loans worth over PhP300 million ($7.07 million) to the rural bank. RBSM declared a bank holiday early this year after experiencing heavy withdrawals. The second criminal complaint was filed against the RBSM president for misappropriating some PhP21 million ($495,283) of the bank's funds. Also named as Mr. Soriano's co-respondent was RBSM consultant Edgardo Macatulad. Based on RBSM records, five manager's checks amounting to PhP10 million ($235,850) were purchased using RBSM funds in favor of Soriano Holdings Corp. (SHC), of which Mr. Soriano was the treasurer-in-trust and chief executive officer. In their testimony, the Bangko Sentral and PDIC witnesses said the transaction was completed upon the instruction of Mr. Soriano. Some PhP11 million ($259,434) in RBSM funds were also found subsequently diverted to SHC, the witnesses claimed. (Business World 14-Jun-2000) URBAN BANK: Needs P1.6B capital boost ------------------------------------- The revival of financially-troubled Urban Bank Inc. entails a capital build-up program involving at least P1.65 billion, Bank of Commerce said Tuesday. In its proposal to the Securities and Exchange Commission (SEC), Bank of Commerce said the rehabilitation of Urban Bank Inc. and its investment arm calls for a merger of the three parties, a capital hike and the divestment of non- performing assets. In documents submitted to the SEC, Bank of Commerce proposed that it will be the surviving entity after the merger. It also said that the revival plan calls for minimum financial aid from the government. Earlier, Bank of Commerce signed a memorandum of agreement (MOA) to acquire Urban Bank which was ordered closed by the Bangko Sentral ng Pilipinas (BSP) on April 26 due to financial difficulties. The bank said it has initiated a capital build-up program to raise at least P1.65 billion to be sourced from its shareholders (P300 million), the Social Security System (P600 million), and the retirement or pension funds of Manila Electric Co., Petron Corp. and San Miguel Corp. (P750 million). Under the rehabilitation plan, the SSS -- which has a 15% stake in Urban Bank -- will subscribe to convertible and redeemable preferred shares in the Bank of Commerce for an amount of P600 million. Bank of Commerce shareholders, for their part, have subscribed and paid for P300 million of additional common shares in the Bank of Commerce. The BSP placed Urban Bank under the receivership of the Philippine Deposit Insurance Corporation (PDIC) immediately after its closure that was triggered by a rash of heavy withdrawals. Depositors trooped to branches of Urban Bank branches after it announced it would downgrade its status as a commercial bank to a thrift bank because it could not meet the BSP's minimum capital requirement. (ABS/CBN News Channel 13-Jun-2000) URBAN BANK: PDIC urged to consider more rehab plans --------------------------------------------------- Central bank Governor Rafael Buenaventura said the Philippine Deposit Insurance Corp, receiver of Urban Bank, should consider accepting more rehabilitation proposals for Urban Bank Inc. PDIC president Norberto Nazareno said yesterday that two banks, Asia United Bank and the Bank of Commerce, met the PDIC's June 13 deadline to submit their rehabilitation proposals. Earlier, Nazareno said there were six banks interested in buying Urban Bank. (AFX News Limited 14- Jun-2000) ================= S I N G A P O R E ================= TWINWOOD ENGINEERING: Schroders buys stake in loss-maker -------------------------------------------------------- Schroder Capital Partners (Asia) Pte Ltd is acquiring a controlling stake in Sesdaq-listed construction group Twinwood Engineering Ltd in a S$52 million deal aimed at turning the latter into an investment vehicle. Thadani said Islandwide chose to buy into Twinwood because of the latter's listed status and the fact that its traditional business had been declining. In the red for the past two financial years, Twinwood chalked up losses of S$1.85mil for its financial year 1999 on the back of a S$6.97mil turnover. According to a Singapore Business Times report, Islandwide Investment Ltd, which is owned by a Schroders fund, has signed a call and put option with Twinwood to buy a 75% stake in the company which will lead to a general offer. The new owner reportedly wants to turn Twinwood into a vehicle to invest in technology and biotech businesses in Asia. Twinwood said the deal was likely to see its existing construction company sold or wound down. Schroder Capital chairman Anil Thadani said that new people with the necessary expertise would be brought in to lead Twinwood's new growth direction. Schroder Capital is the manager of the Schroder Ventures Asia Pacific Fund which owns Islandwide. Under an agreement signed on Monday, Islandwide has a call option to subscribe to 660 million new shares in Twinwood at a subscription price of eight Singapore cents each. If exercised, this would represent a 75.1% stake in Twinwood's enlarged issued capital of 878 million shares. Net proceeds of about S$52.8mil are expected to be raised when the transactions are completed in three months. At eight Singapore cents apiece, the price represents a discount of about 20% to Twinwood's consolidated audited net tangible assets. It is also a mark-down of about 73.8% from the company's last transacted price of 30.5 cents on June 9, which had given it a market value of S$66mil. The company will invest in both listed and private technology businesses in the Asia-Pacific region by the end of the year. (The Star 14-Jun-2000) =============== T H A I L A N D =============== ANGEL AIR: Set to close as losses mount --------------------------------------- Angel Air is considering going out of business after suspending its services for one month, according to a source from the second national carrier. The airline stopped domestic and international flights on June 1. Executives told employees that there were financial problems that needed to be resolved, said an Angel Air flight attendant who asked not to be named. The airline is majority owned by United Communication Industry Plc (Ucom) and run by Somchai Bencharongkul. A company spokeswoman, while confirming the one-month suspension, said it had been imposed in order to reschedule flights and seek new partners. Mr Somchai was not available for comment. The spokeswoman said he had gone abroad to hold discussions with potential partners to help manage marketing and other joint services. Sources in the company said staff were told that airline executives would decide by the end of the month whether to continue operating, and would pay half of the June salaries. Many of the 200-plus employees have already resigned to join Thai Airways International and other carriers because of the uncertainty. Itthi Sirilatthayakorn, the deputy transport and communication minister, said the Aviation Department had informed him of Angel Air's decision. However, the airline is required to renew its operating licence every 15 days. An Aviation Department source said that the airline asked to suspend services because it was not commercially viable. For example, its Bangkok-Udon Thani flight required 108% more than the number of seats availableseat occupancy, more than the number of seats available, to break even. But so far, average occupancy has been 22%. Therefore, the airline sought to raise its fares. The Aviation Department source said Angel Air had sought a halt to services earlier, citing monthly losses of 20 million baht that would drive it out of business if they continued. "The major problem of Angel Air is lack of aviation expertise. As well, it has to lease aircraft from other suppliers," he said. One Angel Air ticket agent said many tickets issued earlier had to be cancelled. However, reservations were still being accepted for some flights such as the Bangkok-Singapore route, although there was no guarantee flights would be offered. "If there are not enough passengers, the airline may cancel the flights and refund the money to the customers," he said. Some help could be on the way in the form of Telenor, the Norwegian telecom company that has agreed to become a strategic partner with Ucom in a $720-million deal. However, it is not clear whether Telenor is interested in the airline business. "But temporarily stopping the service would ruin the airline's image," the agent said. "Customers who have had flights cancelled would lose confidence in the carrier."According to another source from Angel Air, the carrier leases aircraft from a Malaysian supplier. But the two parties could not agree on the rental fee. As well, its flights to China, for which it had high hopes, are not profitable. Angel Air started service last September with an initial investment of more than one billion baht and with three leased aircraft. (Bangkok Post 14-Jun-2000) ELECTRICITY GEN.AUTHORITY OF THAILAND: Bonds sell out ----------------------------------------------------- All six-billion-baht-worth of Electricity Generating Authority of Thailand bonds were sold at auction yesterday, the proceeds from which will be used to repay part of Egat's $323-million foreign debt. Standard Chartered Bank bought a two-billion-baht lot of 10-year bonds with a 6.42% coupon rate and a two-billion- baht lot of 12-year bonds with a 6.76% rate. HSBC and Bangkok Bank each bought 15-year bonds worth one billion baht with a 7.37% rate. (Bangkok Post 14-Jun-2000) PREMIER ENTERPRISE PLC: Reports on trial of rehab petition ---------------------------------------------------------- Premier Enterprise Public Company Limited, through Mr. Vichien Phongsathorn, Managing Director, confirms that it filed a petition for rehabilitation on 12 May 2000, and according to the court orders, the petition was accepted and the trial date of the petition was set on 12 June 2000. The court has now ordered that we can proceed with the rehabilitation process, and Premier Planner Company Limited has been appointed to be the rehabilitation planner. (Stock Exchange of Thailand 13-Jun-2000) SUNTECH GROUP PCL: Trading suspension to remain ----------------------------------------------- The Stock Exchange of Thailand (SET), which had a SP (suspension) sign posted 16 May 2000 against the securities of Suntech Group Public Company Limited (SUNTEC) because SUNTEC had not submitted its quarterly financial statements as of 31 March 2000, remains suspended. The original suspension was at least the third consecutive delay in filing it financial statements, prompting the suspension. Now, even though SUNTEC has submitted its quarterly financial statements, the SET is maintaining the posting on the securities of SUNTEC because SUNTEC is facing possible delisting. (Stock Exchange of Thailand 13- Jun-2000) TANAYONG BANGKOK SKYTRAIN: Stops paying interest on debt -------------------------------------------------------- Creditors of Tanayong, the Bangkok skytrain operator, have said they are still baffled by how to handle the company's 30 billion baht delinquent debt. A source at Bangkok Transit System (BTS), of which Tanayong is the majority stake owner, said BTS had stopped paying interest on its debts since May. Following the moratorium, creditors and BTS management had engaged in several rounds of talks, but had not come up with a specific recipe to resolve the overdue debt situation. The skytrain operator is due to propose a new debt plan to its creditors today, but the source said the proposal is expected to be trite and simplistic, including proposals for debt-to-equity conversion, interest reduction and payment period rescheduling. "Tanayong's problem is that it miscalculated its revenue by projecting daily fare earnings of 13 million baht, when actual earnings averages only three to four million baht a day," said the source. "Its daily revenue doesn't match daily interest payments." The source also reported that the two-year grace period has one year left, meaning Tanayong must start paying the principal sum. Tanayong's problem was compounded when it's proposal to extend the Silom line across the Chao Phraya river was shelved by the Bangkok Metropolitan Authority (BMA). However, the source said "even the expansion materialized, returns would not be worth the investment anyway." In any case, the source concluded, it is assumed that the creditors have no choice, but are destined to absorb the skytrain operator's losses. (Business Day 14-Jun-2000) THAI CANE PAPER PLC: Reports to SET on undisclosed debt ------------------------------------------------------- Reference is made to the notification of Thai Cane Paper Public Company Limited ("Company") on undisclosed debts of the Company, the details of which appeared in the Company's letters dated April 24, 2000 and May 15, 2000 and on discovery of 2 bank accounts opened with Krungthai Bank Public Company Limited, Krung Kasem Branch in the Company's name but did not appear in the Company's books, the details of which was shown in the Company's letter dated May 15, 2000. The Company, through Mr. Virapan Pulges, Managing Director, hereby further notifies the Stock Exchange of Thailand that, although the Company has accelerated the investigation of the undisclosed debts, additional debts of the Company have not been found. Therefore, in order that the facts can be consummated, the Company and the creditors are of the view that filing of an application for the Company's business rehabilitation with the Bankruptcy Court will be beneficial to the Company in respect to maintaining an efficient business operation and future employment and will also result in an absolute finding regarding the Company's undisclosed debts. Thus, the Company and major creditors agree to file an application for the Company's business rehabilitation with the Bankruptcy Court immediately upon completion of the preparation of the application and compiling of relevant documentary evidence. After the filing of the application for the business rehabilitation for appointment of the Planner and the Court has appointed the Planner, all the Company's creditors must file applications for repayment of debt within one month as from the date the Court's order appointing the Planner is published in the Government Gazette. The Planner will subsequently propose the rehabilitation plan to the creditors meeting and the Court respectively. The Company expects the rehabilitation procedure for the Company with the Bankruptcy Court to take approximately 4-6 months in order to ascertain the total amount of debts and creditors, including the undisclosed debts of the Company from such procedure. In addition, the Company is now examining additional evidence regarding the said two bank accounts, which will take approximately two months to obtain complete documents. (Stock Exchange of Thailand 13-Jun-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 ***