/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/000628.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Wednesday, June 28, 2000, Vol. 3, No. 125 Headlines * A U S T R A L I A * EDGE GROUP: Liquidation likely next week FARNELL & THOMAS: Stock drops 80% after insolvency warning * C H I N A & H O N G K O N G * CENTURY CITY: Looks at debt-reduction options * I N D O N E S I A * PT BANK OF BALI: Recapitalization plan delayed PT DHARMALA SAKTI: Seeks to annul bankruptcy status * J A P A N * TOKYO SOWA BANK: To be sold to Ross-led fund * K O R E A * DAEWOO HEAVY INDUSTRIES: S'holders okay split plan DAEWOO MOTORS: Draws bidding trio DAEWOO MOTORS: DaimlerChrysler only interest in parts HYUNDAI MOTOR: Founder maneuvers to slow/stop spin-off SEOUL BANK: Revamping ahead of sale * M A L A Y S I A * NALURI BHD: Signs rehab pact, awaits gov't approval NALURI BHD: Not planning to sell MAS stake PAN PACIFIC ASIA: Provides RM330M for doubtful debts PUNCAK VISTA SDN: Still in default on loan TRANS CAPITAL HLDGS: Rehab agreement finalized TRANS CAPITAL SDN: Rehab agreement finalized * P H I L I P P I N E S * URBAN BANK: DoJ to fast-track charges vs. officials VICTORIAS MILLING CORP.: Needs new partner, capital * S I N G A P O R E * CLOB: EffCap offer acceptors to get personalized trade data JURONG CEMENT: Plunges into red THAKRAL CORP.: Reaches standstill pact with banks * T H A I L A N D * ADVANCE PAINT &CHEMICAL: Reports debt rehab progress to SET ALFA APPAREL: Court approves rehab plan ALFA SPINNING CO.: Court approves rehab plan ALFA PROCESSING CO.: Court approves rehab plan ALFA TEXT INDUSTRIES: Court approves rehab plan HI-PETCH EQUIPMENT CO.: Court approves rehab plan MODERN HOME DEVELOPMENT: HKR Group to take stake TANAYONG: Posts Bt3B net loss TCJ MOTOR: To propose debt restructuring scheme THAI ABS CO.: Court approves rehab plan THAI PACKAGING INDUSTRY: Court approves rehab plan TPI OIL CO.: Court approves rehab plan ================= A U S T R A L I A ================= EDGE GROUP: Liquidation likely next week ---------------------------------------- The Edge Group, a highly lauded computer empire built by failed Internet entrepreneur Mr Jen-Tse (Johnson) Wang, is likely to be put into liquidation next week. Edge was teetering on oblivion two years ago even though it was pulling in almost $400 million in annual sales. It earned a profit of only $1.3 million from revenue of $389.5 million in the 1997-98 financial year, according to a preliminary report issued last night by its voluntary administrator, Armstrong Wily & Co. In 1999 Edge was Australia's biggest personal computer assembly business, shipping 10,000 units per month under a variety of brand names, most notably KTX. In June last year Mr Wang was described as "Australia's most successful computing entrepreneur." In a national newspaper he was described as a quiet achiever who "focused not on building a high profile but on the distribution channel to quietly make the bucks at the bottom line." In fact, when this article was published, Edge had taken a steep dive into the red. Its stunning drop in revenue remains baffling, even taking into account a continuing fall in margins across the PC industry. Revenue slumped 45 per cent to $213.6 million in 1998-99 and the companies made a loss of about $3 million. Armstrong's report shows the Edge Group was at that time already unable to pay its debts. In May an unnamed creditor had cut its relationship with Edge, after unsuccessfully trying to recover $4 million in debt. Three months later Microsoft Australia launched legal action against Edge, seeking $12.9 million. (Edge's books show a liability of $10.5 million, believed to be unpaid licensing fees for Microsoft software.) At this time Edge was owed about $37 million from its related companies, most of which were based overseas, but it was unable to obtain these funds. Edge had up to 40 related companies around the world - most of which have now ceased trading - but their accounts have not yet been recovered. Desperate for money, Mr Wang was preparing to spin off Edge's three-year-old Internet service provider, eisa. Eisa, which also subsequently collapsed, successfully raised $57 million. Mr Wang beseeched the eisa board to invest in Edge Group, according to an eisa insider. But the board refused to make a significant investment. Mr Wang placed the Australian operation into voluntary administration two weeks ago and subsequently left the country. Edge's Australian operations have only $2.4 million in realisable assets, compared to $36.5 million in debt, which Mr Wang - and another director, Ms Siu Ho Delphia Lai - may be personally liable for. The two directors also owe $2.9 million in loans from two of the Edge companies. Both are believed to be overseas, making recovery of any debts difficult. "I believe the director, Jen-Tse Wang, is not in Australia and I doubt that he will return," said Armstrong partner Mr Allan Topp in the report. As of last night, Mr Wang's lawyer, Mr Alex Law of AJ Law & Co, had not received any instructions from Mr Wang. Mr Law declined to reveal Mr Wang's whereabouts. "Liquidation is the only option you've got," Mr Topp said last night. "There are probably not too many collapses like this in Australia in the recent past." Edge's creditors will meet on July 4. (Sydney Morning Herald 27-Jun-2000) FARNELL & THOMAS: Stock drops 80% after insolvency warning ---------------------------------------------------------- Shares in light engineering group Farnell & Thomas Ltd plummeted 80 percent today, after the company warned in its annual report it was facing insolvency. Farnell & Thomas shares were suspended in early May after the company failed to lodge its annual report with the Australian Stock Exchange. In the report, which was released yesterday, directors said the company may have to seel assets to meet its debt. Executive chairman Bill Jeffrey said cash resrves had been depleted and support from banks was needed for the company to continue. The company will hold it annual general meeting in Brisbane tomorrow. The shares were reinstated today and at 1323 AEST Farnell & Thomas shares were 44 cents lower at 11 cents. (Australian Financial Review 27- Jun-2000) ============================== C H I N A & H O N G K O N G ============================== CENTURY CITY: Looks at debt-reduction options --------------------------------------------- Debt-ridden Century City wants to reduce its debts by HK$2 billion through asset disposal and share-capital enlargement, according to group chairman Lo Yuk-sui. He said the group, which includes ultimate parent Century City International, property arm Paliburg Holdings and hotel arm Regal Hotels International, had net borrowings of HK$9.6 billion excluding contingent liabilities. Various options for debt reduction were under consideration, he said. Century City holds a 60 per cent stake in Paliburg which holds 74 per cent in Regal. Mr Lo said Century City had HK$700 million of debts to repay in October and talks with banks were under way. He said Century City was also looking to acquire his personal interests in mainland fibre-optic network operator Century Digital Enterprise, probably by issuing new shares. Some foreign corporations were in talks to acquire stakes in the fibre-optics venture through vendor financing and equipment provision arrangements, he said. The venture needed billions of dollars in the next several years, said Mr Lo, but it was not the right time to consider a listing. Mr Lo said Paliburg's plans to raise cash through a mortgage-backed securitisation scheme were under way. The company was also bidding to secure finance for its luxury residential project in Stanley. Paliburg is proposing a mortgage-backed securitisation of its Paliburg Plaza in Causeway Bay and Kowloon City Plaza. (South China Morning Post 27-Jun-2000) ================= I N D O N E S I A ================= PT BANK OF BALI: Recapitalization plan delayed ---------------------------------------------- The House of Representatives refused to approve on Monday the government's proposal to recapitalize publicly listed Bank Bali until a legal dispute with the bank's former owner has been settled. Head of House Commission IX Sukowalujo Mintorahardjo expected the court to immediately settle the legal dispute so that a decision on the fate of Bank Bali could be taken. "We can't approve the proposal to recapitalize Bank Bali until a legal certainty on the bank has been obtained," Sukowalujo said in conclusion of a hearing with Minister of Finance Bambang Sudibyo and chairman of the Indonesian Bank Restructuring Agency (IBRA) Cacuk Sudarijanto late on Monday. He also appealed to both Rudy Ramli, the former owner and CEO of Bank Bali, on one side and IBRA and Bank Indonesia on the other to seek an out of court settlement. The government is seeking approval to recapitalize Bank Bali at a cost of Rp 4.99 trillion (US$580.23 million), which will be financed by issuing bonds. The recapitalization is expected to take place in August after a shareholders meeting scheduled for the end of this month. But there have been fears that Rudy will in the end win the legal battle over Bank Bali, leaving the state with huge losses for having recapitalized the bank. Bank Indonesia and IBRA decided in July last year to nationalize Bank Bali after the Ramli family failed to come up with the necessary cash requirement to recapitalize the bank. Rudy filed a lawsuit against the decision, and the Jakarta Administrative Court surprisingly ruled that the nationalization of his bank was illegal. Bank Indonesia and IBRA have since launched an appeal, which is still being processed. The government said that if a decision on the recapitalization of Bank Bali was not reached by the end of this month, the recapitalization program would take place in September in order to wait until a June financial report on the bank. Bambang said that the delay into September would increase the recapitalization cost to Rp 5.2 trillion. But Bambang also said at the hearing session that the option to liquidate the bank or merge it with other banks was still open. He admitted, however, that liquidating the bank would be costlier as the government would have to provide more than Rp 6.8 trillion in cash to guarantee the time deposits kept in the bank. He also pointed out that the bank's 6,000 employees would loose their jobs and that could potentially create a new social problem. Bambang also expected that the government would be able to reach an out of court settlement with the Ramli family before recapitalizing the bank. The recapitalization of Bank Bali has been delayed several times. The government was supposed to have recapitalized the bank last year but the program was delayed after the bank was hit by a high profile scandal dubbed "Baligate" which centered on the illegal transfer of some $80 million from the bank to a private firm linked to the then ruling Golkar Party ahead of the 1999 general election. Bank Indonesia Governor Sjahril Sabirin is currently being detained at the Attorney General's Office over his alleged involvement in the scandal. The government missed another deadline in May after Rudy filed a lawsuit. Bank Bali is one of three banks which have not yet been recapitalized by the government. The other two are state Bank Rakyat Indonesia (BRI) and Bank Tabungan Negara (BTN). The government's bank recapitalization program is aimed at bringing the capital adequacy ratio (CAR) of the banks to the minimum 4 percent level. CAR is the ratio between capital and risk weighted assets. The higher a bank's CAR, the better it is. The capital condition of the country's banking sector deteriorated following the economic crisis that started in the middle of 1997. The government initially targeted the CAR of the country's banking industry to reach the minimum 4 percent by the end of this month, and 8 percent by the end of 2001. Cacuk said that Bank Bali was one of the country's "best" banks because it had not violated the legal lending limit ruling, and had not been aided by Bank Indonesia liquidity support. He said that Bank Bali's CAR level last year was minus 69.9 percent. The bank, with 280 branches and total assets of Rp 6.43 trillion, suffered a financial loss of Rp 2.09 trillion last year. (Jakarta Post 27-June-2000) PT DHARMALA SAKTI: Seeks to annul bankruptcy status --------------------------------------------------- Publicly listed PT Dharmala Sakti Sejahtera has asked the Supreme Court to annul its bankruptcy status, claiming that the verdict is legally flawed. Dharmala Sakti's lawyer Jimmy Chandra Maschur said on Monday that the verdict issued by the Jakarta Commercia Court in early June breached standard procedures. "There were irregularities during court procedures by which Dharmala Sakti was declared bankrupt," Jimmy said, adding the company had filed an appeal to protest the decision. The majority creditors of Dharmala Sakti voted in early June to bankrupt the listed company after they turned down the latter's debt restructuring proposal. A day after the vote, the Commercial Court, on behalf of the creditors, officially declared Dharmala Sakti bankrupt. According to an existing law, a company which is declared bankrupt due to a vote by creditors can not make an appeal. Jimmy said the voting was held prematurely, adding that the Jakarta Commercial Court should have given Dharmala Sakti time to revise its debt restructuring proposal to persuade the voting creditors. "Depriving Dharmala Sakti of its rights has sent the company into bankruptcy," Jimmy said. He also criticized that the weighting of the vote of each creditor was based on a wrong rupiah to U.S. dollar exchange rate. Dharmala Sakti owes debts in both rupiah and dollars to various creditors. "The result of the voting was invalid as it was not using the appropriate rupiah to dollar exchange rate as published by Bank Indonesia," Jimmy said. Joint venture creditor PT Hanil Bakrie Finance Corporation filed a bankruptcy suit in mid-February against Dharmala Sakti for the latter's failure to repay a US$2.4 million matured debt. Dharmala Sakti then asked the court to hold off issuing a verdict in the bankruptcy suit, which was filed in order to allow the holding company to negotiate its debt restructuring with the creditors. In the 1998 Bankruptcy Law the request is possible as stipulated in its suspension of payment section, which says that a company facing a bankruptcy suit can temporarily halt the action by filing a suspension of payment request to the court. Under the suspension of payment procedure, the fate of the company would be decided by the creditors' majority vote instead of court ruling. Among the largest creditors of Dharmala Sakti who participated in the voting process were the Indonesian Bank Restructuring Agency (IBRA), Hong Kong-based Peregrine Fixed Income, currently in liquidation, the Singapore branch of the Canadian Imperial Bank of Commerce (CIBC), joint venture PT AB Sinar Mas Finance and the Jakarta branch of the Standard Chartered Bank. Dharmala Sakti is a holding company of the Dharmala Group, owned by the Gondokusumo family. There are five companies affiliated with the Dharmala Group which have been declared bankrupt: PT Dharmala Agrifood, PT Putra Surya Multidana, PT Deemte Sakti Indo, PT Putra Sejahtera Persada and foreign affiliate Detron Ltd. of Singapore. (Jakarta Post 27-Jun-2000) ========= J A P A N ========= TOKYO SOWA BANK: To be sold to Ross-led fund -------------------------------------------- The failed Tokyo Sowa Bank Ltd. said Tuesday it was to be sold to a US investment fund led by financier Wilbur Ross in the fund's second takeover of a Japanese lender. The government's Financial Reconstruction Commission (FRC) had selected Ross' Asia Recovery Fund as the buyer for Tokyo Sowa, which was declared insolvent and placed under state control in June last year, the bank said. "We have signed a basic accord on our bank's transfer of operations to Asia Recovery Fund Ltd.," said Tokyo Sowa in a statement. "We will proceed with discussions between the two parties for a final transfer of operations." The agreement marks only the third outright takeover of a Japanese bank by foreigners, including the FRC's decision last month to hand over the failed Kofuku Bank Ltd. to the Asia Recovery Fund. The Long-Term Credit Bank of Japan Ltd. (LTCB) became the first Japanese bank to fall outright into foreign hands in February, when a syndicate led by Ripplewood Holdings LLC of the United States won the right to buy it. LTCB was relaunched as Shinsei Bank this month. Shinsei, along with travel agent HIS Co., was also in the running to take over Tokyo Sowa Bank, which was established in 1950. The FRC had chosen the Ross fund because its proposal called for the government to pump less public money into the insolvent bank than the Shinsei and HIS proposals, Kyodo News reported. Ross, 62, who owns US investment firm WL Ross and Co., is a famed figure in US financial circles who until March was executive managing director of Rothschild and Co. Ross is seeking to create a holding company under which to put both Osaka-based Kofuku and Tokyo Sowa, Kyodo quoted FRC sources as saying. The Tokyo-based bank filed a bankruptcy application with the FRC, set up in 1998 to shore up Japan's crumbling financial industry, for public protection last year. Its capital-to-asset ratio was 2.4 percent just before it collapsed, far below the four percent required by Japan's Financial Supervisory Agency for banks operating domestically. The Tokyo-based bank, strangled by bad loans, collapsed with a huge capital deficit of 102.2 billion yen (971 million dollars). (Agence France Presse 27-Jun-2000) ========= K O R E A ========= DAEWOO HEAVY INDUSTRIES: S'holders okay split plan -------------------------------------------------- Shareholders of Daewoo Heavy Industries yesterday approved a plan to split the company into two units, a shipbuilding company and a general machinery company. The division of the company will take effect Aug. 1 and the two new firms will be separately listed on the Korea Stock Exchange Sept. 1, said a company official. The two new units will also be completely separated from their parent Daewoo Group. The shipbuilding company will have a debt-to- equity ratio of 245 percent, while the ratio for the machinery company will be 239 percent. (The Korea Herald 28-Jun-2000) DAEWOO MOTORS: Draws bidding trio --------------------------------- The bidding war for the bankrupt Daewoo Motor Co. shifted into high gear Monday, with three offers submitted for the company, the most conspicuous victim of the economic crisis that nearly plunged South Korea into bankruptcy in 1997. Two alliances of two companies each made proposals, and Ford Motor Co. bid alone. As expected, Hyundai Motor Co., which already controls more than 70 percent of the South Korean market, and DaimlerChrysler AG of Germany announced a strategic alliance that executives from both companies vowed would endure even if they failed in their joint bid for Daewoo Motor. General Motors Corp. and Fiat SpA, 10 percent owned by GM, submitted a joint proposal for creating a company that would take over the domestic assets of Daewoo Motor as well as most of its foreign entities. "Today is a day of partnership," said David Snyder, executive director of Ford's Asian-Pacific new business investment, after filing the bid for Ford. "Our preferred partner is Daewoo." All of the contenders stressed their desire to rebuild Daewoo as a powerful motor vehicle manufacturer, but none would reveal how much they were willing to pay to get it. A foreign financial adviser to Hyundai Motor Co., insisting that his name not be used, said he believed that $5 billion was the most that any of the bidders would offer. It was not clear, however, the extent to which the bidders were willing to take over Daewoo Motor's liabilities, estimated at around $15 billion "The investment community is going to get very uneasy about any bid over $5 billion," said the adviser. "You would see the value of their stocks going down." The battle could help tip the balance in a contest not just for a significant portion of the Korean market but also for sales of motor vehicles throughout Asia. The first round of the battle could be decided as early as Friday, when the creditor banks that have taken over Daewoo Motor are scheduled to decide on two "finalists." An official of the committee overseeing Daewoo's restructuring said, however, that that number had been set after all five companies indicated they would submit separate bids. With only three bids emerging, motor vehicle industry officials said, the committee might decide all three were "finalists" - and then spend the summer comparing their offers. Each of the bidders was eager to convince the creditors - and Koreans avidly following a process in which national interests are seen as a factor - that its bid was the best not only for Daewoo but also for the country. "This agreement provides the best possibility for Daewoo," John Smith Jr., chairman of General Motors, said in a statement released at a press conference at which GM's two top regional executives outlined the advantages of the GM bid. Mr. Smith cited what he called "significant synergies" for "Daewoo, the Korean automotive industry, the Korean supplier base and the overall Korean economy." GM's arguments for taking over Daewoo were much the same as the ones it advanced last year when it sought to acquire the company without an auction after the company was taken over by its creditors, led by the government-owned Korea Development Bank. GM executives have long called GM the logical choice to buy Daewoo Motor. GM owned 50 percent of the company from 1978 to 1992 but sold the stake back to Daewoo after strong disagreements with Kim Woo Choong, the founding chairman of the Daewoo group, over an expansion program that they believed was reckless. GM's decision to present a joint bid with Fiat, however, came as a surprise. A statement issued by the two companies said that GM would be the largest shareholder in a new company that would be formed if its bid were successful. Fiat SpA would own as much as 20 percent, and the balance would be divided among "the creditors and other constituents of Daewoo," the statement said. But GM now faces strong competition for Daewoo from the combined Hyundai-DaimlerChrysler bid. Hyundai's alliance with DaimlerChrysler resolved one of its biggest problems - a shortage of the cash needed to take over another motor vehicle company. Under the deal, DaimlerChrysler will acquire 10 percent of Hyundai Motor for $428 million and a 50 percent interest in a joint commercial vehicle venture. The companies plan to jointly develop and produce a small "world car" in collaboration with Mitsubishi Motor Co. The agreement on co-production of a small car relieved Hyundai Motor of a major embarrassment created when Hyundai's president, Lee Kye Ahn, revealed the plan last month. Spokesmen for both DaimlerChrysler and Mitsubishi at the time disavowed any knowledge of the plan. (The International Herald Tribune 27-Jun-2000) DAEWOO MOTORS: DaimlerChrysler only interest in parts ----------------------------------------------------- DaimlerChrysler is launching a joint bid with South Korean group Hyundai for Daewoo because it wants to pick out the choicest parts of the bankrupt car maker, not because it is interested in a full takeover, the head of the German-US group said on Tuesday. In an interview published in the daily Frankfurter Allgemeine Zeitung, DaimlerChrysler chairman Juergen Schrempp said: "Our interest in Korea is solely in Hyundai. Daewoo, on the other hand, is a difficult case. I've said in the past that a takeover of Daewoo is not an option for us. We're only taking part in the bidding process to possibly identify single attractive parts." The group's partnership with Hyundai Motor, announced on Monday, would give DaimlerChrysler the excellent position in Korea that it was looking for, Schrempp said. DaimlerChrysler on Monday forged a strategic alliance with Hyundai Motor to bolster its presence in the fast-growing Asian markets. Under the agreement, DaimlerChrysler is to acquire 10 percent of Hyundai Motor for 480 billion won (428 million dollars, 460 million euros). And the German-US giant has the option of increasing its stake to 15 percent after three years. The deal with Hyundai marked the second alliance in Asia by DaimlerChrysler in recent months, following its acquisition in March of 34 percent of Japanese Mitsubishi Motors Corp. (Agence France Presse 27-Jun-2000) HYUNDAI MOTOR: Founder maneuvers to slow/stop spin-off ------------------------------------------------------ Hyundai founder Chung Ju-yung raised his equity holdings of Hyundai Motor from 6.9% to 9.09% by purchasing a 2.19% stake from Hyundai Engineering & Construction (HEC) Monday. His son, Hyundai Motor chair Chung Mong-koo, has been trying to spin the firm off from the Hyundai group, but according to the Korea Fair Trade Commission (KFTC), the group and its major owners, which includes the elder Chung, must lower their shareholdings in the auto unit to below 3% for the spin off to take place. Observers say the amassing of shares by the Hyundai founder is a clear attempt to prevent the spin off, which had been planned for the end of June, and will undermine investor trust in the group. It also flies in the face of the KFTC's wishes, as the watchdog agency supports the spin off. Hyundai group's restructuring coordination committee said Monday that HEC sold off 4.86 million shares of Hyundai Motor, which amounts to a 2.19% stake in the firm, from its 2.8% shareholdings, to Chung Ju-yung at share markets Monday. Committee head Kim Jae-soo said Chung Ju-yung had no intention of taking over Hyundai Motor, but had increased his stake in the firm to help the spin off move forward. Kim went on to say that the Hyundai business group would go ahead and apply to the KFTC for the spin off of Hyundai Motor around Thursday, June 29. Meanwhile, the KFTC reaffirmed its position that it would not approve the spin off unless Chung Ju-yung lowers his stake to below the 3% maximum. One high-ranking KFTC official said the elder Chung's move represents flat-out defiance of the KFTC's request, adding that he seems to be trying to provoke a fight with the watchdog agency. (Digital Chosun 26-Jun-2000) SEOUL BANK: Revamping ahead of sale ----------------------------------- Seoul Bank, one of Korea's top three lenders, is shaking up its management team in preparation for a sale, most likely to an international bank, by the end of 2001. The Korean bank's new president, a former Deutsche Bank executive, said he's bringing in a former Citibank manager and a Korea Development Bank official to help reorganise the state-run bank so that the lender will be ready for sale next year. "It's like trying to turn a tube radio into a very good transistor radio," 50-year-old Kang Chung Won said in an interview. "The circuits and control system need to change. The hierarchy has to be fixed. I don't think Korean banks have done a very good job with this so far." Seoul Bank was one of the first banks to be bailed out and taken over by the Korean government in 1998 following the nation's financial crisis. The government regards its sale as a key ingredient in its bid to regain international confidence in Korean banking. Two to three potential buyers, including a US bank, have already approached the commercial lender, but Seoul Bank hasn't yet started negotiations with any of them, Mr Kang said. For the moment, the bank is focusing on putting in place a new operational and management structure. To replenish its capital resources, Seoul Bank plans to issue US$30 million (HK$234 million) in global depositary receipts in Europe and the United States early next year, Mr Kang said. Much of the advice on Seoul Bank's reorganisation will come from Deutsche Bank, which the government retained in April as an adviser after a two-year search to find a buyer failed. Deutsche Bank, Europe's largest, will help upgrade Seoul Bank's operations and management and is now reviewing its finances, Mr Kang said. "Implementing international standards and credit management, this is where Deutsche Bank's expertise will come in," he said. Next month, three Deutsche Bank executives will join Seoul Bank for one year. They will head the retail, small to mid- size companies and corporate credit risk management divisions, and will train Seoul Bank employees in international risk management operations. Korean banks' indiscriminate lending practices were one reason the government was forced to request a record US$57 billion bailout from the International Monetary Fund in late 1997. Other management changes include the appointment of H D Chang, a former Citibank manager, as chief operating officer. David Warner, a director at state-controlled Korea Development Bank, will join as the chief financial officer. Mr Warner was a contender to become Seoul Bank's president in May. A new chief credit officer will join from Seoul Securities. (Hong Kong I-Mail 28-Jun-2000) =============== M A L A Y S I A =============== NALURI BHD: Signs rehab pact, awaits gov't approval --------------------------------------------------- Naluri Bhd has signed an agreement with its creditors to restructure its RM950 million debt and is waiting for the regulatory authorities' approval. The company's executive chairman Tan Sri Tajudin Ramli says the plan, brokered by the Corporate Debt Restructuring Committee (CDRC) and signed on May 14, was sent to regulatory authorities on June 14. "The plan allows us until 2002 to do some of the things we agreed (under the plan)," Tajudin tells reporters after the company's annual general meeting today. Under the restructuring plan, Naluri has two years to settle its debts. It is expected to divest some of its land and assets to do so. However, Tajudin says the divestment might not be necessary if the group has enough revenue inflow over the next two years. He adds that Naluri has not identified any buyers for its assets. He also quashed persistent market talk that one of the assets Naluri could be divesting is a portion of its 29.1 per cent stake in Malaysia Airlines (MAS). He says Naluri was not involved in any discussions with airport operator Malaysia Airports Bhd (MAB) whereby the latter would take a stake in the national carrier. On Naluri's e-commerce plans involving its dot.com start-up Trifiniti Networks Sdn Bhd, Tajudin says the Finance Ministry has given its approval for MAS to inject some of its assets into Trifiniti. MAS' management has to seek approval from the Finance Ministry, which holds a golden share in the airline, on major management decisions. However, Naluri and MAS have yet to identify the assets to be injected into Trifiniti. The latter is a subsidiary of Naluri but is expected to divest its shares to telecommunications group Technology Resources Industries Bhd and MAS. It is also looking for foreign partners. Tajudin says plans are on course for the group to set up Naluri's planned Subang International Aviation Park (SIAP) as the government has given the green light for the project to go on. "We are now talking to the Land Office and relevant authorities," he says. He expects a mutually-beneficial partnership between SIAP and the National Exhibition and Convention Centre (NECC), which will be built on the site of the old international airport in Subang by MAB. Speculation had been rife that the SIAP project might not take off as the land that had been earmarked for it was given to MAB to develop the RM1 billion NECC. However, Prime Minister Datuk Seri Dr Mahathir Mohamad said last month Naluri could have another piece of land near the old airport for the aviation park project. Commenting on the airline alliance, which MAS is looking into, Tajudin says: "We are in discussion with the three groups. at a detailed level." The three global groupings include the Wings Group led by Dutch national carrier KLM, the Swissair-led Qualiflyer Group and the American-British One World alliance. Tajudin declines to reveal the name of the airline alliance MAS wants to join. (The Edge 27-Jun-2000) NALURI BHD: Not planning to sell MAS stake ------------------------------------------ Although selling a part of its stake in Malaysia Airlines (MAS) is an option in Naluri Bhd's debt restructuring exercise, such a sale may not necessarily happen, said its chairman Tan Sri Tajudin Ramli. Tajudin told a press conference after Naluri's AGM in Kuala Lumpur yesterday that there were other assets within the group which could be sold to pay off its debts by mid-2002. Of the group's total debts of RM1bil being considered under its debt restructuring plan, RM890mil is owed by Naluri and the rest by its subsidiaries. At this juncture, Naluri has not decided which asset to dispose of as agreed under an agreement reached with its creditors to settle amounts due by mid-2002. The agreement was signed on May 15. On plans by MAS to join a global alliance, Tajudin, who is also the national carrier's chairman, said there was no deadline to abide by but he wanted it to happen as soon as possible in order to plan the airline's operations. Tajudin holds a 47.41% interest in Naluri, which owns a 29.09% stake in MAS. (The Star Online 27-Jun-2000) PAN PACIFIC ASIA: Provides RM330M for doubtful debts ---------------------------------------------------- When Pan Pacific Asia Bhd (PPAB) provided a whopping RM330 million for doubtful debts in its timber operations that wiped out the group's accumulated profits of RM277 million, it jolted the shareholders and investors. Frederick Ting, its newly appointed chief executive officer, attributes the disappointing performance to poor management and inadequate credit controls in its timber- logging units. Ting says that the bulk of the provision was made for the chunky debts of "less than 12" main parties. The group has begun legal proceedings to recover from "all the doubtful debtors without exception". He declined to comment on the chances of recovery. "At the operating level, losses from our timber business was only RM9 million. But the management has voluntarily chosen to clean up the balance sheet and start afresh. We have to move on and we can't do that if we are encumbered by so much debt." The group is also in discussions with its creditors to iron out a scheme in order to reduce its borrowings. The scheme will likely entail the "usual instruments" of capital restructuring, adds Ting. The way forward for the group is a re-focus of its activities. Ting, who has already embarked on a "rationalization and cost-cutting exercise" for the group's timber division plans to further downsize and disengage from timber activities. "We will be divesting our timber operations although that may be easier said than done. It takes time to find buyers, so in the meantime we will maintain our interests but scale down operations. The outlook for timber is still not attractive. Fortunately, we have a stockbroking unit and this is where the new focus of the group will be." He believes that the path to the group's revival rests in its ability to maximize resources and returns from its "crown jewels", and that is its Johor-based stockbroking unit, Peninsula Securities Sdn Bhd. Ting says that Peninsula Securities is well poised to take the group on a recovery path. The stockbroking company enjoys a "one to two" per cent market share in Johor and has been "profitable even during the recent financial crisis." "Our stockbroking unit has been very successfully managed with clearly defined operational and credit control policies. It does not have significant doubtful debts." Last month, PPAB created a minor stir when it rescinded its earlier agreement to sell the wholly-owned stockbroking unit to OSK Holdings Bhd for RM225 million or around 1.8 times net tangible asset value of Peninsula Securities. "Our agreement with OSK was mutually terminated. We had to do withdraw as the pricing cap set under the first round of consolidation rules was 1.5 times net tangible asset. This meant that OSK would not be able to pay us RM225 million as that would be above the official cap." Although the Securities Commission had recently removed the cap on pricing, PPAB has already entered into a merger plan with Kumpulan Fima Bhd. Under the merger plan, Peninsula Securities and Fima Securities Sdn Bhd will be injected into a new company. "We consider ourselves lucky to find a merger partner in Fima Securities. Since the merger will not involve cash, it will not be a strain on us. A new company, which we propose to name Peninsula Fima Securities Group Bhd, will be formed. PPAB will hold 65 per cent and Kumpulan Fima 35 per cent." Ting says that the merger will enable both parties to tap into synergies to build up a formidable team. "Our niche is in Johor while Fima Securities has secured a good market base in Kuala Lumpur, which is the main catchment area for the securities business. Furthermore, Fima Securities has undergone its own debt restructuring scheme and will be entering the merger with a cleaned-up book." Ting also welcomes recent moves by the authorities to relax the conditions for merger exercises in the stock broking industry. "The removal of the year-end deadline gives us more time to look for suitable partners. There are no concrete plans yet but we are looking to add one more stock broking firm to our newco. Easing of chain listing requirements also enables us to consider listing our stockbroking unit, if conditions are favourable." Ting, who has an 18-month turnaround plan for PPAB, says that his mission is to re-strategise and re-energise the group's business activities. "At the end of the day, what I want to turn the group around into a viable concern and regain the confidence of shareholders by building back value into their investment." (The Edge 27-Jun-2000) PUNCAK VISTA SDN: Still in default on loan ------------------------------------------ United Engineers Malaysia Bhd said its associate company Puncak Vista Sdn Bhd is still in default for principal and interest payments on its 363.0 mln rgt syndicated term loan and convertible bank guarantee facility, and on its 30.0 mln rgt revolving credit facility. Puncak Vista has fully utilised its term loan facility and a total of 6.115 mln rgt of its revolving credit facility as of end-May, United Engineers said in a statement to the Kuala Lumpur Stock Exchange. The principal and interest due and payable for the term loan as of end-May were 363.0 mln rgt and 110.017 mln rgt, respectively, while the principal and interest due and payable for the revolving credit facility as of end-April were 6.115 mln rgt and 1.699 mln rgt, respectively. Both loan facilities are secured against Puncak Vista's 32.3 acres of land in Kuala Lumpur and a debenture over all its assets. The debenture empowers the agent bank for the facilities to appoint a receiver in the event of default, but no such notice has been received so far, United Engineers said. (AFX News Limited 27-Jun-2000) TRANS CAPITAL HLDGS: Rehab agreement finalized TRANS CAPITAL SDN: Rehab agreement finalized ---------------------------------------------- The Corporate Debt Restructuring Committee (CDRC) has successfully assisted Trans Capital Holdings Bhd (TCHB) and its wholly-owned subsidiary Trans Capital Sdn Bhd (TCSB) to finalise a debt restructuring agreement with their lenders involving an outstanding debt of RM185.6mil. The CDRC said TCHB had submitted an application on the restructuring to the Securities Commission (SC) on May 25. The revamp aims to restructure the total principal debts and accrued interests owed by TCSB into term loans and unlisted redeemable convertible cumulative preference shares (RCCPS) convertible into new TCHB ordinary shares of RM1 each. Under the agreement, the lenders have two options: The first will see 50% of the principal amounts of the existing debts to be convertible into 5-year term loans, repayable by eight equal semi-annual installments. The balance will be satisfied by the issue of RCCPS "A," RCCPS "B" or RCCPS "C". Under the second option, 100% of the debts shall be satisfied by the issue of RCCPS "B'' to the lenders. (The Star Online 27-Jun-2000) ===================== P H I L I P P I N E S ===================== URBAN BANK: DoJ to fast-track charges vs. officials --------------------------------------------------- The Department of Justice (DoJ) said Monday it will fast- track the financial fraud charges filed against five officials of the debt-ridden Urban Banking Corporation (Urban Bank) by the Bangko Sentral ng Pilipinas (BSP) and Philippine Deposit Insurance Corporation (PDIC). This after BSP-PDIC probers found out that Urban Bank chief executive officer Teodoro Borlongan, senior vice president Nida Santos, vice president Cecilia Magugat, assistant vice president Rene Colin Gray and bank teller Marie Cecille Lopez have initiated the "unauthorized pre-termination and eventual encashment" of an fixed-earning account which was suppose to mature in February 2004. The BSP-PDIC probers said the five officials unlawfully took P5 million from the time deposit account of former San Miguel Corporation president Francisco Eizmendi, Jr. and his wife Aurora before the bank declared a bank holiday. Justice Secretary Artemio Tuquero said the formation of DoJ's 10-man Task Force on Financial Fraud headed by Chief State Prosecutor Leonardo Guiyab, Jr. is expected to expedite the investigation. Tuquero further explained that the Justice department will include more Urban Bank officials as the BSP-PDIC preliminary assessment indicates that some transactions were unscrupulously done. "There were previous transactions that are considered unsound and unsafe banking practice that may warrant the prosecution of its (Urban) officials for fraud," Tuquero said. Meanwhile, the Justice department said they will pursue the case on all bank officials, including former Philippine president and Urban Bank chairman emeritus Fidel V. Ramos, if evidence shows that they have violated banking regulations. "No, we are not bound by the complaint (that has yet to be) filed by the BSP. We go by the book, by the evidence. They can charge this person, but we can clear him if there is no evidence. And we can criminally charge even those whose names were not mentioned in the complaint," Guiyab said. Earlier, it was reported that Ramos withdrew a money from the Ramos Peace and Development Foundation before or after the Holy Week which was alleged to have partly caused the bank holiday. However, the former president denied the allegation, saying that, "the insinuations that I drew a big amount of money is all rumor and speculation. I think you got it all wrong. I'm not an official of the bank in the sense that I help manage and operate the bank," Ramos said. The DoJ issued a hold-departure order early last month against Urban Bank chairman Arsenio Bartolome III , Teodoro Borlongan, Corazon Bihasa and Renato Claravall. The BSP ordered Urban Bank's closure on April 26 in the wake of heavy cash withdrawals by depositors. The bank was placed under the receivership of the government's Philippine Deposit Insurance Corporation (PDIC). (ABS/CBN News Channel 26-Jun-2000) VICTORIAS MILLING CORP.: Needs new partner, capital --------------------------------------------------- Cash-strapped Victorias Milling Co. Inc (VMC) said Monday it needs a P300-million capital infusion from a new investor to help the company revive its operations. This after Government Service Insurance System (GSIS), a creditor of VMC, filed a motion before the Securities and Exchange Commission (SEC) to allow Victorias' management committee to submit an alternative rehabilitation plan following a failed bid to sell 53.5% of VMC's outstanding capital stock. According to the new rehabilitation plan, VMC needs a new investor that would infuse some P300 million to the sugar miller. However, VMC president Manuel Ma�alac offered his own rehabilitation plan to the SEC which would convert P3.91 billion of debts into equity and the restructuring of P1.229 billion debts over the next 15 years. Ma�alac's plan, which is being opposed by VMC's management committee, also calls for the conversion of accrued interest amounting to P1.01 billion into bonds. Ma�alac said the alternative plan is the "logical rehabilitation plan to put back Victorias in a financially, healthy, operating condition and to resume its leading role in the sugar industry." He said that in developing the plan, the management took into consideration the present condition of the country's sugar industry and the development in the international sugar market. But VMC's mancom said its new plan to revive the sugar miller will overrule Ma�alac's plan since it is the only body authorized by the SEC to draft a rehabilitation plan. The mancom said the SEC should reject the plan submitted by Victorias' since this is being opposed by majority of VMC's creditors. Under the SEC Rules of Procedure on Corporate Recovery, no modification or alteration of an approved rehabilitation plan shall be allowed if such modification is opposed by a majority of a class of creditors. The mancom said Ma�alac's proposal for a P400-million loan at 10% interest rate payable in three years is futile, if no creditors would grant the loan. The cash-strapped sugar miller's debt has grown to P6.5 billion from P5.18 billion after the company failed to pay interest dues to creditors. Early this year, VMC failed to auction off a controlling 53.35-percent stake from interested parties such as JG Summit Holdings Inc., Central Azucarera de Don Pedro, and Central Azucarera de Tarlac. VMC's financial woes started in 1997 after the company defaulted on more than P3.4 billion owed to 32 banks due to higher operating cost and weak sugar prices. (ABS/CBN News Channel 26-Jun-2000) ================= S I N G A P O R E ================= CLOB: EffCap offer acceptors to get personalized trade data ----------------------------------------------------------- CLOB investors who accepted Malaysian firm Effective Capital's staggered release proposal will soon get personalised schedules for trading their shares on the Kuala Lumpur Stock Exchange (KLSE). According to a statement from Effective yesterday, the schedules were posted on June 26 and Clob investors should receive them soon. It said Clob investors should, upon receipt, confirm with their stockbrokers or other advisers that their release schedules are in order. According to Effective's timetable, shares will be released weekly in equal batches over 56 weeks, starting from July 3. Non-shares such as warrants will be released over a 16- week period. The release of all shares and non-shares to a Clob investor is subject to a minimum of 50 units per week. Effective said those who had not received their schedules by July 10, or found their schedules incorrect, should contact the company in Malaysia via email at ira@effectivecapital.com.my or by fax at (603) 457-6800. Investors with any other questions on Effective's proposal can call its Singapore hotline at 236-9388 or fax queries in at 236-9428. Effective added yesterday that Clob investors will receive a certificate which exempts them from the exit levy imposed on repatriation of funds from Malaysia arising from sale of shares. Clob investors must produce this certificate to their repatriating bank in order to qualify for the exemption, it added. Confirming that all the shares belonging to the 93.8 per cent of Clob investors who had accepted its offer had been migrated into investors' Central Depository System accounts, Effective said the shares are ""placed under suspense'' and will be released for trading from July 3. The company also advised Clob investors to check with their stockbrokers that their shares are available for trading first, before entering into any trades. Meanwhile, Clob investors who want to trade odd lots of less than 1,000 shares can still do so, said Malaysian brokers interviewed by The Straits Times yesterday. But such investors would have to be prepared to accept lower prices than those posted for the standard lots, they said. According to brokers, there is a separate board on the KLSE for the trading of such lots. It covers all listed shares on the KLSE and operates on a willing-buyer, willing-seller basis. Clob investors who want to trade odd-lots need only call their Malaysian brokers and state how many shares they want to buy or sell, brokers added. They will then be quoted the best price available on the odd-lot market -- which is ""traditionally 6 to 8 per cent" lower than the price of standard lots because of the relative ""illiquidity of the market." (Straits Times 28-Jun- 2000) JURONG CEMENT: Plunges into red ------------------------------- Jurong Cement has plunged into the red with losses of S$5.8mil, compared with a S$7.2mil profit last year, and it expects another testing time this year, according to a Singapore Business Times report. For the 12 months ended March 31, 2000, the company's turnover sank 21% to S$77.5mil. As a result of intense competition, operating profit was more than halved to S$5.1mil, compared with S$14.2mil in the previous year. The operating performance of associated companies showed an improvement. But profit margins did not improve correspondingly due to unrealised exchange losses and an increase in provisions for long-outstanding doubtful debts arising mainly from associated companies operating in China, the company said. (The Star Online 27-Jun-2000) THAKRAL CORP.: Reaches standstill pact with banks ------------------------------------------------- Thakral Corporation, which has been struggling under a mountain of debt, has entered a standstill agreement with most of its creditor banks to restructure its loans. Under the agreement, the banks will not demand, declare a default or bring forward the maturity dates of the loans owing for a period of six months from June 15. The consumer electronics distributor said in a statement yesterday that all loan facilities would be maintained to ensure that Thakral could continue its business operations uninterrupted. However, as part of the agreement, Thakral is required to repay at least US$30 million (S$52 million) to the banks by July 31. During the six months moratorium, Thakral has to also develop a plan to restructure its bank facilities that includes a recapitalisation of the company. Thakral has close to $495 million of debt on its books, most of it owed to the creditor banks. The agreement announced yesterday covers more than three- quarters of those bank loans. The company, which does 95 per cent of its business in China and Hongkong, said in January that its financial adviser Arthur Andersen Associates had helped it to put together an action plan to restructure its debts. The plan would see the company trimming its debt by disposing of non-core assets and reduce its working capital needs through more efficient management of inventories and receivables. It said yesterday that it had $84 million in cash as at June 15 and sufficient working capital to continue operations. Thakral's woes first came to light in June last year when it revealed that it had suffered a massive $218 million loss for the year ended March 31, 1999. The loss was due mainly to its hedging activities for its yen- denominated purchases as well as losses from its trading operations. About $160.3 million was lost on its "over- hedged" position against the yen after the Japanese unit rose unexpectedly against the US dollar in January last year. (Straits Times 28-Jun-2000) =============== T H A I L A N D =============== ADVANCE PAINT &CHEMICAL: Reports debt rehab progress to SET ----------------------------------------------------------- Advance Paint & Chemical Public Company Limited (APC) director Narumol Punnakitikashem has reported the progress of the company's debt restructuring to the Stock Exchange of Thailand. After submission of the proposed plan to all creditors, the company could not obtain all creditors' approval in the second vote. The company is now in the process of negotiating with foreign investors who are interested in this business and with each of company's creditors accordingly. The company expects to take at least another 6 to 12 months to resolve the company's debt. (Stock Exchange of Thailand 26-Jun- 2000) ALFA APPAREL: Court approves rehab plan ALFA SPINNING CO.: Court approves rehab plan ALFA PROCESSING CO.: Court approves rehab plan ALFA TEXT INDUSTRIES: Court approves rehab plan HI-PETCH EQUIPMENT CO.: Court approves rehab plan THAI ABS CO.: Court approves rehab plan THAI PACKAGING INDUSTRY: Court approves rehab plan TPI OIL CO.: Court approves rehab plan -------------------------------------------------- The Central Bankruptcy Court yesterday approved business rehabilitation plans of eight companies, including two TPI Group subsidiaries, with combined debts of 25.4 billion baht. The approvals represented a single-day record for the year- old court, reflecting good advance preparation and improved co-operation between debtors and creditors, officials said. The two subsidiaries of the Thai Petrochemical Industry group are TPI Oil Co and Thai ABS Co. Their requests were jointly filed by Thai Petrochemical Industry Plc, their parent firm, and Effective Planner Co, the planner of TPI's business rehabilitation plan. TPI Oil Co owes 5.95 billion baht to 185 creditors. Of the amount, 3.13 billion baht was lent by its parent company. Thai ABS Co owes 162 creditors a total of 11.03 billion baht, of which 2.35 billion was lent by the parent firm. The court appointed Effective Planner Co to manage the two companies' rehabilitation procedures. Also winning court approval yesterday was Thai Packaging Industry Plc, which owes 40 creditors a total of 2.02 billion baht. Earlier, two of its creditors-Ruam Sap Charoen (1997) Co and Ruam Sap Phaiboon (1997) Co-had objected to the plan. However, they withdrew their objections yesterday. The court appointed NSP Logistics Consultant Co as the planner. Hi-Petch Equipment Co, which had on its own initiative requested a plan to restructure 2.44 billion baht owed to 130 creditors, also won court approval. Thai Mui and Associate Co was the approved planner. The four other companies winning court approval were textile firms under the umbrella of the Alfa Group. They are Alfa Apparel, owing a total of 239 million baht to 10 creditors; Alfa Spinning Co, owing 1.71 billion baht to 19 creditors; Alfa Processing Co, owing 950 million baht to 36 creditors, and Alfa Text Industries, owing 1.1 billion baht to 23 creditors. The court appointed Alfa Planner Co to handle the rehabilitation of the four companies. The court also took up the case of Petch Phraya Hospital Co, which owes 363 million baht to 138 creditors. Four of its creditors had objected to the plan. However, no representatives of the four creditors showed up in court yesterday, so the hearing was adjourned until Thursday. (Bangkok Post 27-Jun-2000) MODERN HOME DEVELOPMENT: HKR Group to take stake ------------------------------------------------ HKR International, owner of the Discovery Bay development near Hong Kong's planned Walt Disney theme park, has won a bid to buy a large stake in ailing Thai property developer Modern Home Development. The group's HKR Asia Pacific unit signed a non-binding agreement with Modern Home on Friday, the Thai company told the local stock exchange. It didn't say how much of the company HKR plans to buy. HKR agreed to pay more than 300 million baht for its stake, newspapers reported last Thursday, citing an unidentified person among the bidders. Modern Home, which is behind on 5.6 billion baht of debt, will also ask creditors to convert part of the debt into a quarter stake in the company. The developer's founding Angkanawatana family will see its stake diluted to 2 percent from 40 percent, a local publication reported. The company will hold a shareholders' meeting on Friday to seek approval for the HKR investment and the debt restructuring plan. Modern Home's flagship project is the 225-acre Talad Thai wholesale food market north of Bangkok International Airport. The company reported a net loss of 2.51 billion baht last year as sales plunged 91 percent to 91 million baht. Since the property market slumped in 1997 following the devaluation of the baht and a subsequent recession, a few US companies have bought major stakes in Thai developers, including Lehman Brothers Holdings, Starwood Capital Group LP and funds controlled by financier George Soros. (Business Day 27-Jun-2000) TANAYONG: Posts Bt3B net loss ----------------------------- Tanayong said its board had resolved on June 23 to suspend dividend payments for 1999; to re-elect Sudha Liptawat and Anat Arbhabhirama as directors; and to set the shareholders' meeting for July 27. It reported audited net losses of 3bn bt for the year ending March 31 compared with losses of 4.3bn bt for the previous year. Increased revenues from sales of condominium projects, forex gains, higher income from rentals, service fees and interest income had contributed to improved performance. (Bangkok Post 27-Jun-2000) TCJ MOTOR: To propose debt restructuring scheme ----------------------------------------------- TCJ Motor will hold an extraordinary shareholders' meeting on July 28 at which it will propose to issue convertible debentures worth 385m bt to restructure the debt; to increase registered capital by 385m bt by issuing 38.5 m new shares (10-bt par), bringing registered capital to 635 mn bt. The convertible debentures will be offered to its creditors: DBS Thai Danu Bank, Siam Commercial Bank, Siam City Bank, and Krung Thai Bank. 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