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/raid1/www/Hosts/bankrupt/TCRAP_Public/000811.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Friday, August 11, 2000, Vol. 3, No. 156 Headlines * A U S T R A L I A * CHANNEL E: Expecting $2.62M annual loss MUSEUM OF CONTEMPORARY ART: $59M offer resolves brawl SATELLITE GROUP: Another exec abandons ship * C H I N A & H O N G K O N G * CHINA BICYCLE (HLDGS)CO: Gov't to bail out CHINADOTCOM: Operating loss widens 27pc in quarter ICG ASIAWORKS: Extraordinary charge causes net loss SHENZHEN LIONDA HLDGS.CO.: Gov't to bail out SHENZHEN PETROCHEMICAL HLDGS.CO: Gov't to bail out SHENZHEN TEXTILE HLDGS.CO.: Gov't to bail out * I N D O N E S I A * PT SIERAD PRODUCE: To convert US$210M debt into equity PT TEXMACO: Sinivasan ready to release stake for rehab PT TRI POLYTA INDONESIA: Posts Rp357.6B loss SALIM GROUP: Plan to revise deal with bank owners * J A P A N * HAZAMA CORP.: Shinsei, 3 other banks to OK loan waivers HAZAMA CORP: To cut staff by 13%, seek debt swaps JALECO LTD: CyberWorks to acquire 81% of lossmaker NIPPON CREDIT BANK: Gov't to sell NCB on Sept. 1 * K O R E A * DAEWOO HEAVY INDUSTRIES: Stake sale to stay afloat mulled HYUNDAI ENG'G & CONST: Bankruptcy appears inevitable SEOUL GUARANTEE INSUR.: KDIC to inject W700B TONG YANG MOOL SAN: Released from debt management program * M A L A Y S I A * ESSO MALAYSIA: Records RM1.6M pre-tax, first-half loss KIMANIS BAY TIMBERS SDN: Strikes rehab deal LION GROUP BHD: Seeking CDRC assistance for rehab? MGR CORPORATION BHD: Strikes rehab deal OLYMPIA INDUSTRIES BHD: Signs rehab, standstill pact PARAKAYA PLYWOOD SDN: Strikes rehab deal TAJO: Winding up petition served on it * P H I L I P P I N E S * CAPITOL WIRELESS: Secures 8-day payment extension PEPSI COLA PRODUCTS PHIL.: L.Tan mulling purchasing PHLIPPINE NAT.BANK: Posts 6-mo. loss, expects more POCKETBELL: No sale plans, looking at expanding services TOTAL PETROLEUM PHIL.CORP.: Posts P125M first-half loss * S I N G A P O R E * IPC CORP: To sell building as part of rehab plan * T H A I L A N D * SEMICONDUCTOR VENTURE: Reduces capital as part of rehab SUBMICRON TECHNOLOGY: More time to review plan wanted ================= A U S T R A L I A ================= CHANNEL E: Expecting $2.62M annual loss --------------------------------------- On-line business and financial news and information provider Channel E reports that it expects to post a loss for the year just ended. Channel E said it was anticipating unaudited losses for the year to June 30 of about $A4.5 million ($US2.62 million) on revenues of about $A3.8 million ($US2.21 million). It attribtes the loss to costs of restructuring, including the write-down of product development costs and additional amortisation of goodwill and depreciation expenses not recognized before. In June, Channel E announced unaudited losses of $A2.9 million ($US1.69 million) for the 11 months to May 31. MUSEUM OF CONTEMPORARY ART: $59M offer resolves brawl ----------------------------------------------------- Sydney's Lord Mayor, Mr Frank Sartor, has won control of the Museum of Contemporary Art after a series of backdowns in what was shaping as one of the Australian arts community's biggest brawls. The City Council's $59 million takeover offer for the troubled museum made it over the last hurdles with several sweeteners yesterday. The City of Sydney will provide a one-off $30 million cash payment to the MCA plus $1.5 million a year for 10 years in recurrent funding. The balance of capital - to fund major extensions - would be sought through fundraising once the concept plan was developed. The City has also guaranteed to stump up $1 million in penalty payments to the MCA should negotiations founder. A consensus on the make-up of the MCA board was also one of the key factors which brought the warring parties to the table. The plan won the imprimatur of the MCA's leaseholder, Sydney University, through its powerful senate on Monday night. Both the city and the university said they would agree to extend the council's lease from 39 to 99 years. Up to six international architects and one or two local practices would be invited to prepare the plans for the extensions, which are expected to include a large commercial space that may be leased to Channel Seven. Also envisaged is an increase in the amount gallery space, along with a moving images centre and a revamp of the MCA's retail outlets, which straddle a bed of historically significant dry docks. Previous attempts to redevelop the MCA were stymied by concerns about fate of the dry docks, but a Council spokesman said yesterday they would be preserved. Mr Sartor said he had "no intention of selecting exhibitions", adding that the Museum's director, Ms Elizabeth Ann Macgregor, "will not have to worry about paying the bills." The MCA has struggled because of poor attendances and lack of funding for several years. (Australian Financial Review 10-Aug-2000) SATELLITE GROUP: Another exec abandons ship ------------------------------------------- The world's first gay and lesbian public float was thrown into further turmoil yesterday with the resignation of the Satellite Group's chairwoman, Dr Kerryn Phelps. Her departure followed a board meeting where Dr Phelps failed to persuade fellow directors to appoint an administrator. Mr George Markos, chief executive officer, operations, has been appointed to the board as interim chairman. Dr Phelps, who is president of the Australian Medical Association, lost 3-2 the vote to have an administrator appointed. "I have formed the view that the directors have no choice but to appoint an administrator," she said. At Tuesday night's board meeting she had proposed a resolution to appoint an administrator. "The other directors did not share my view and voted against the resolution. I feel this now makes my position untenable." Her resignation came two days after the founder and former managing director, Mr Greg Fisher, exercised his right as a 17 per cent shareholder to call an investor meeting to vote to dismiss Dr Phelps. Mr Fisher left the company last month and is now the subject of a court hearing in the Supreme Court bought by the Australian Securities and Investment Commission. The ASIC case has been widened to include the former general manager Mr Jonathon Broster. The Satellite Group has joined the case as another party. The ASIC hearing covers an investigation into Mr Fisher, Mr Broster, the prospectus for the Satellite float and other dealings at the company. Shares in Satellite, which were 50c when the group was floated last September, have been suspended since early last month. They last traded at 15c. Dr Phelps said Mr Fisher's decision to seek a meeting of shareholders was "an inappropriate and expensive distraction from the problems facing the company." In response, Mr Fisher said that Dr Phelps's departure "will greatly assist in resolving the issues of board and management division and clear the way for the appointment of a new, experienced chairperson to help guide the future of the company." "Far from requiring a voluntary administrator, the company is in a sound cash position with extremely valuable assets, particularly its media business and planned portal operation." Mr Fisher said that he intended to work with other shareholders to support the management to get the company trading again as soon as possible and to have confidence restored in the management and the company's operations. (Sydney Morning Herald 10-Aug-2000) ============================== C H I N A & H O N G K O N G ============================== CHINA BICYCLE (HLDGS)CO: Gov't to bail out SHENZHEN LIONDA HLDGS.CO.: Gov't to bail out SHENZHEN PETROCHEMICAL HLDGS.CO: Gov't to bail out SHENZHEN TEXTILE HLDGS.CO.: Gov't to bail out -------------------------------------------------- Several Shenzhen-listed companies said they expect the Shenzhen municipal government to use its own funds to limit the damage from a chain of bank loan guarantees which exposes some local listed firms to the risk of insolvency. Company officials said the local government has in recent years arranged for companies controlled by Shenzhen Asset Investment Management Co Ltd to guarantee bank loans to each other and to other local government-controlled firms. The risk of bankruptcies may soon force the local government to take ultimate responsibility for some of these guarantees, they said. The companies involved include B-share firms Shenzhen Textile (Holdings) Co Ltd, Shenzhen Petrochemical (Holdings) Co Ltd, Shenzhen Lionda Holdings Co Ltd and China Bicycle (Holdings) Co Ltd. Shenzhen Lionda's outstanding loan guarantees cover 1.2 bln yuan in bank loans to China Bicyle. Shenzhen Textile has guaranteed a 94.45 mln yuan loan to Shenzhen Lionda, while Shenzhen Petrochemical's guarantees also cover 334 mln yuan in loans to Shenzhen Lionda. A spokesman for Shenzhen Lionda said the company is facing "great difficulties" this year and is very short of funds while being unable to raise capital via bank borrowing. Shenzhen Lionda last week announced that its stakes in six companies have been frozen by court order as part of a settlement in a debt case, with another holding to be auctioned, while the company is also required to pay 3.82 mln usd as a settlement on an arbitration ruling and 15 mln yuan to cover loans guaranteed by the firm. The company also said it expects to report a net loss for the six months to June. The Shenzhen Lionda spokesman attributed the company's funding difficulties to a guarantee it gave several years ago on a 2.0 bln yuan loan to China Bicycle, in which the company has a 23.3 pct stake. Last year's restructuring of China Bicycle's debt, which required foreign creditors to write off more than 60 mln usd in loans to the company, reduced Lionda's outstanding guarantees on loans to China Bicycle to 1.2 bln yuan, the spokesman said. However, the company does not expect this to deliver a significant improvement to its financial position. "When a company loses its ability to raise bank loans, it becomes very difficult to improve its operations," the spokesman said. Shenzhen Textile company secretary Cao Jin said the Bank of China has not yet taken action to recover the 94.45 mln yuan loan to Shenzhen Lionda guaranteed by Shenzhen Textile but added that the company is expecting to be required to honour the debt guarantee in the second half of the year. "It now looks like the company will be held responsible for these guarantees. On the basis of Lionda's current operations and financial situation, it is unrealistic to hope the company will be able to repay the loans by itself." Once the court has frozen and auctioned assets belonging to Shenzhen Lionda, it is "very possible" that the court will also seek to freeze assets belonging to Shenzhen Textile, Cao Jin said. However, the Shenzhen government should take action to limit the damage to local listed firms, she said. "This chain of guarantees was arranged by Shenzhen Asset Investment. Now that there are problems the government has a responsibility to help Lionda solve them," she said. She added that although Shenzhen Asset Investment has already allocated tens of millions of yuan to cover Shenzhen Lionda's bank interest payments, this remains insufficient to solve the problem. "You cannot put out a fire with a cup of water," she said. A spokesman for Shenzhen Petrochemical said the company is not concerned that banks may seek repayment of the 334 mln yuan loan to Shenzhen Lionda guaranteed by the company since it expects Shenzhen Asset Investment to take ultimate responsibility for the guarantee. "Of course there is a risk (that the company will be required to honour the guarantee) but we are not too worried because all of the companies (involved in the guarantee of debt) belong to Shenzhen Asset Investment," he said. He said that when Shenzhen Asset Investment first arranged for the company to guarantee loans to Shenzhen Lionda, the arrangement was for Shenzhen Lionda, in turn, to guarantee loans of the same value to Shenzhen Petrochemical. However, banks would not accept the guarantee offered by Shenzhen Lionda, and Shenzhen Asset Investment eventually guaranteed the loan to Shenzhen Petrochemical. The company expects Shenzhen Asset Investment to honour this guarantee if Shenzhen Petrochemical is required to honour its guarantee to Shenzhen Lionda, he said. In its interim report published over the weekend, Shenzhen Petrochemical said that by end-June the company had issued guarantees covering loans worth a total of 2.55 bln yuan. The company's gross assets at end-June amounted to 2.5 bln yuan, while the value of its liabilities was equal to 73.1 pct of its gross assets. The company's total accounts receivable at end-June amounted to 1.5 bln yuan. (AFX 08- Aug-2000) CHINADOTCOM: Operating loss widens 27pc in quarter -------------------------------------------------- Operating losses at Nasdaq-listed Internet company Chinadotcom widened 27.8 per cent in the second quarter from the first quarter to US$23.13 million. The company also reported that its cash operating loss, which excludes depreciation, amortisation and non-recurring items, rose to US$10.6 million during the period, compared with US$8.7 million cash in the first quarter. Chinadotcom, which had claimed to return to profit in the first quarter, said its net loss was US$14.58 million in the three months to June 30. The Internet portal reported a net profit of US$108.5 million in the first quarter. It managed to turn into the black in the first quarter mainly because of an exceptional gain of about US$120 million from the spin-off of Hongkong.com for a listing on the Growth Enterprise Market. Its 82 per cent controlled subsidiary, Hongkong.com, announced on Monday for the first time a quarterly net profit of HK$2.62 million. But the net profit was boosted by a HK$20.12 million interest income generated from the HK$1.2 billion net cash on hand that the company raised from its initial public offering. Chinadotcom chief executive Peter Yip said: "We continue to stride towards profitability." The company said it would leverage on the economic scale of its operations infrastructure across the 10 most lucrative Asia-Pacific Internet markets to accelerate growth. Turnover surged 51.6 per cent in the second quarter to US$30.34 million compared with US$20 million in the first quarter. Most of the revenue growth was attributed to increases in electronic business solutions provision and advertising revenues. Gross margin improved to US$11.33 million in the second quarter from US$6.96 million in the first quarter. Sitting on cash reserves of about US$515.82 million, Chinadotcom booked an interest income of US$8.39 million in the second quarter. Mr Yip said the company was well positioned to take advantage of the Internet industry consolidation. Shares in Chinadotcom rose in early trading on Nasdaq yesterday to US$17.25 from Tuesday's close of US$16.93. (South China Morning Post 10-Aug-2000) ICG ASIAWORKS: Extraordinary charge causes net loss --------------------------------------------------- Internet investment group ICG AsiaWorks has reported that while it earned a gross profit of HK$33.47 million (US$4.24 million) in the first half of 2000, a HK$1.02 billion (US$129.1 million) non-cash charge against the value of its toy and property operations pushed the company into the red for the year. ICG AsiaWorks said the non-cash charge caused it to report a net loss of HK$1.01 billion (US$135.8 million) versus a year-ago net profit of HK$26.38 million (US$3.38 million). The company, formerly known as Harbour Ring International Holdings, was taken over earlier this year by US-based Internet Capital Group and Hutchison Whampoa. ================= I N D O N E S I A ================= PT SIERAD PRODUCE: To convert US$210M debt into equity ------------------------------------------------------ PT Sierad Produce said it will convert US$210 million of debt into company shares as part of its US$316 million debt restructuring program. Company director F.X. Awi Tantra reported the debt conversion, as well as news that the company will soon merge with its three sister companies PT Anwar Sierad, PT Sierad Feedmill and PT Sierad Grains, as a further part of the debt restructuring scheme. After the debt conversion, he explained, the creditors will own a combined 83 pct stake in Sierad Produce, with the balance owned by the founding shareholders and public investors. PT TEXMACO: Sinivasan ready to release stake for rehab ------------------------------------------------------ The majority shareholder of the giant Texmaco Group, Marimutu Sinivasan, said on Wednesday that he was ready to release his controlling stake in four of its publicly listed subsidiaries to help restructure their total debts of US$2.291 billion. Sinivasan said that the transfer of his majority ownership in the four subsidiaries was one of several debt settlement alternatives proposed to creditors. He said that negotiations on the debt restructuring proposals were underway and he hoped that agreement could be achieved by September of this year. The four companies are engineering company PT Texmaco Perkasa Engineering, automotive manufacturer PT Wahana Jaya Perkasa, and textile companies PT Polysindo Eka Perkasa and PT Texmaco Jaya. "Many owners of foreign companies now hold minority stakes, it's very common, and I think we should follow this course," he told reporters at a public presentation in the Jakarta Stock Exchange. The public expose followed the disclaimer opinion by public accountants on all four subsidiaries' financial performances. However, Sinivasan added that a debt to equity swap was only one of many options during negotiations with creditors. "A haircut is quite possible and maybe we'll find a strategic investor," he explained. He claimed that an oil and gas company from Saudi Arabia had already expressed interest in investing in Wahana and was waiting for the outcome of the company's debt restructuring talks. The business group was at a center of a loan scandal in late 1999 involving $754 million and Rp 1.9 trillion ($220 million) in preshipment export facilities. Texmaco obtained the loan facilities between November 1997 and February 1998 from Bank Indonesia through state owned Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI), thanks to alleged intervention by the then president Soeharto. Sinivasan was named a suspect but the Attorney General's Office later halted the case because of a lack of evidence. IBRA has appointed Deloitte & Touche Tohmatsu, Jakarta, to conduct due diligence on the four companies as part of the debt restructuring program. Some $868.8 million of the four companies' $2.2 billion debts is owed to the Indonesian Bank Restructuring Agency (IBRA), which took over the loans from local banks. Texmaco's largest indebted subsidiary is Polysindo, with debts amounting to $1.52 billion, of which $684 million are in the form of secured Yankee Bonds and $456 million in unsecured commercial paper. Texmaco Perkasa ranks second with debts totaling $496 million, of which $355 million is being restructured by IBRA. Sinivasan declined to further elaborate on the debt restructuring process, saying that it would affect current negotiations. But he expressed confidence that he could pay off his debts given the value of his companies' assets. He claimed that the assets of Polysindo and Texmaco Jaya alone were worth over $1.8 billion according to foreign appraisals. Texmaco further asserted that business prospects for its four subsidiaries were promising due to forecasted improvements in their respective markets. (The Jakarta Post 10- Aug-2000) PT TRI POLYTA INDONESIA: Posts Rp357.6B loss -------------------------------------------- PT Tri Polyta Indonesia Tbk (TPIA) recorded Rp229 billion in net losses in the second quarter of this year, after posting Rp128.6bn net losses in the first. This total first-half net loss for 2000 was Rp357.6bn. The loss was due to oversupply of polypropylene to international markets, followed by a foreign exchange loss as a result of rupiah depreciation, according to company management. During the period May-June, the rupiah fluctuated at a level of Rp8,735 per US dollar from Rp7,590 in the period January-March 2000. In the second quarter 2000, TPIA succeeded in increasing net sales to Rp384.7bn from a previous Rp332.8bn. However, the increase has not had any effect on the company's net profit, since it still has a Rp49.9bn interest rate and foreign exchange losses of Rp233.2bn. Total sales volume for the second quarter 2000 amounted to 72,048 metric tons, with the classification as follows: 68,926 metric tons for the domestic market - 3,122 metric tons for the export market. Average sales were Rp5.3m per metric tons, from Rp4.6m the previous year. During the first semester 2000, TPIA posted Rp717.5bn in net sales, up 49% from Rp481.6bn. Within the first six months of this year, the sales volume had risen by 33.5%, 145,349 metric tons, from a previous 108,913. In the meantime, operating profits increased to Rp9.4bn, from Rp53.3bn. During the first quarter 2000, TPIA suffered Rp357.6bn in net loss from Rp191.1bn in the corresponding period the previous year. This was due to foreign exchange losses of Rp342.3bn, whereas in the first semester `99, the company recorded a foreign exchange gain of Rp218.9bn. (Indonesia Exchange News 10- August-2000) SALIM GROUP: Plan to revise deal with bank owners ------------------------------------------------- The government and parliament yesterday agreed in principle to revise controversial terms under which some owners of troubled banks were able to repay billions of dollars in debt. The government has been pressing to revise the deal which it says limits the obligations of the debtors and leaves the government out of pocket. "There is a need to revise the terms . . . but the final details are still being worked out," speaker of parliament Akbar Tandjung said after meeting senior economic ministers. Finance Minister Bambang Sudibyo demanded the terms be changed, saying they benefited debtors at the government's expense. Under the Master Settlement and Acquisition Agreement (MSAA) - reached during the rule of former president B.J. Habibie - bank owners pledged assets to repay debts to the state. However, the value of those assets has subsequently fallen sharply leaving the state saddled with the difference. The deal was made with close associates of disgraced former president Suharto who were former owners of banks taken over by the government in the aftermath of the country's financial crisis in the late 1990s. During that crisis the central bank handed over huge amounts of cheap loans in what turned out to be a failed attempt to prop up the sinking banking sector. Earlier this month, the state audit agency calculated that misuse of these so-called liquidity credits had left the state exposed to losses of about US$16 billion. One of the government's main concerns is to avoid possible legal action against it over assets the state has already sold, co-ordinating Minister of Economy, Finance & Industry Kwik Kian Gie said. The biggest company involved is the Salim Group. Parliamentary speaker Mr Tandjung said the Salim Group had about 52 trillion rupiah (HK$47 billion) in debts to the government, but its pledged assets were only worth 20 trillion rupiah. (South China Morning Post, Reuters 10- Aug-2000) ========= J A P A N ========= HAZAMA CORP.: Shinsei, 3 other banks to OK loan waivers ------------------------------------------------------- Hazama Corp.'s four major creditor banks are nearing agreement on the company's request for waiver of some of its outstanding loans, according to an industry source. Per the settlement, Shinsei Bank will not insist that the government buy back the loan claims it has in Hazama. The action is calculated to avoid more controversy, similar to the public reaction generated over a like situation involving the Sogo Co. department store chain, the source reported. Hazama had asked Dai-Ichi Kangyo Bank, Shinsei and two other banks to relinquish their claims for an aggregate 105 billion yen in loans to help its restructuring program. Per conditions agreed with the government on the taking over of the failed Long-Term Credit Bank of Japan, Shinsei Bank can demand that the government buy back loan claims if their value decreases by 20 percent or more. To avoid that situation, Dai-Ichi Kangyo, the main bank for Hazama, has agreed to buy Shinsei Bank's loan claims in Hazama. Financial institutions whose outstanding loans to the company rank lower than fifth in size will be requested by Hazama to buy about 8 billion yen worth of new shares, which the company will allocate. Final negotiations on the plan are still being conducted, according to the source. They had been stalled by Shinsei Bank's position, becaue it feared the case would turn inot the same as in Sogo. Is is now likely that the banks will agree to waive a total of about 99 billion yen of loans. A remaining 6 billion yen in loans that Hazama requested the nationalized Nippon Credit Bank to forebear on remains unresolved due to the government's postponement until September of the bank's sale to a consortium led by Softbank Corp. Shinsei Bank has claims totaling near 43 billion yen, of which Hazama requested a waiver of about 15 billion yen of them. Shinsei Bank has decided not to exercise its right to make the government buy back its loan claims in Hazama. Dai-Ichi Kangyo and Shinsei Bank are continuing their negotiations over the terms of Dai-Ichi Kangyo's takeover of the latter's loan claims. Possibly, Shinsei Bank will not accept a loan waiver at all and Dai-Ichi Kangyo Bank will have to buy all the loan claims. Another possible scenario is that Shinsei Bank will accept the requested amount of the loan waiver and Dai-Ichi Kangyo Bank will buy up the remaining loan claims. With regard to creditor banks not involved with the loan waiver request, including Asahi, Sakura and Sanwa banks, Hazama plans to ask them all to agree to accept the share allocation plan. HAZAMA CORP: To cut staff by 13%, seek debt swaps ------------------------------------------------- Financially struggling Japanese construction company Hazama Corp. is reporting plans to cut about 13 percent of the staff at its parent company this year and to ask some of its creditors to accept debt-for-equity swaps. In moves to stay in business, the company plans to cut 500 employees by the end of March via firings and early retirements. Employees at Hazama's parent company are all administrative ones, totaling 3,870 employees. The group has a total of 4,694 employees. The staff cuts are part of the Hazama's restructuring plan unveiled in May, which included cutting 720 staff from its parent company by March 2005. The construction company also said it would ask some banks to exchange 8.2 billion yen ($75.6 million) in debt for new shares in the company. The company reduced its capital by the same amount this week, a move that shifts funds on its balance sheet and may give it more flexibility to set the value of new shares. The swap request is in addition to 105 billion yen in debt forgiveness that Hazama is seeking from its four main banks. JALECO LTD: CyberWorks to acquire 81% of lossmaker -------------------------------------------------- Asia's No. 2 Internet investment company Pacific Century CyberWorks Ltd. has agreed to pay HK$1.95 billion ($250 million) for Jaleco Ltd., an loss-making Japanese arcade gamemaker. The purchase will give CyberWorks a listing in Japan and help the company introduce its Network of the World interactive Internet and television services in the nation. Under the agreement, CyberWorks will acquire an 81 percent stake in Jaleco, paying the purchase price in two installments and a tender agreement. The first installment will acquire 14.8 million new Jaleco shares for the price of 4.85 billion yen ($45 million), or 328 yen per share. That payment is due by September 5. The second installment for 60.7 million new shares will cost 19.9 billion yen and is due November 6. Additionally, CyberWorks will make a 2.3 billion yen tender offer to all Jaleco shareholders at a share price of 379 yen. Cyberworks said it may issue a zero coupon exchangeable note to institutional investors to finance part of the second subscription shares. A decision on that is still outstanding, however. Otherwise, funding for the acquisition will come from internal sources, CyberWorks reveals in a statement. The company intends to nominate directors for election to the Jaleco board, assume management control and change the Jaleco name to Pacific Century CyberWorks Japan Ltd. Meanwhile, Jaleco shares were suspended from trading on Japan's OTC market this morning. The company posted a 1 billion yen operating loss for the year ended March 31. Jaleco shares rose 1.9 percent to 632 yen yesterday before the suspension. NIPPON CREDIT BANK: Gov't to sell NCB on Sept. 1 ------------------------------------------------ The Japanese government plans to sell the nationalized Nippon Credit Bank (NCB) Sept. 1 to a consortium led by Softbank Corp. The terms of the original sales contract will remain intact, government sources confirmed. Talks with the consortium on finalizing NCB's handover will begin soon by the government, the sources added. ========= K O R E A ========= DAEWOO HEAVY INDUSTRIES: Stake sale to stay afloat mulled --------------------------------------------------------- Daewoo Heavy Industries, the world's second largest shipbuilder, is in talks to sell 30 percent of its shipbuilding unit to New castle Heavy Industry of Australia. The move is to help keep the shipbuilding unit afloat. A spokeman for Daewoo Heavy had confirmed the Australian company's interest. Daewoo, which has been heavily in debt, is currently undergoing a restructuring program. Daewoo Heavy itself is splitting into three companies. In its place will be a ship-builder, a heavy machinery manufacturer, and a company holding bad assets and debts. Although talks with the Australian company are still in its initial stage, analysts say the purchase is crucial for the shipbuilding to remain viable and for Daewoo creditors to recoup their loses. (Channel News Asia 10-Aug-2000) HYUNDAI ENG'G & CONST: Bankruptcy appears inevitable ---------------------------------------------------- Bankruptcy appears inevitable for the ailing Hyundai companies, as the conglomerate remains stubbornly defiant to reform demands from the government and creditors, analysts warned yesterday. New economic policymakers and creditors issued an ultimatum, asking Hyundai to accept all of their three- point reform demands - swift separation of Hyundai Motor, debt cuts and sales of select assets and dismissal of problematic executives - by the end of this week. Reiterating their hard-line stance, creditors said in a letter to Hyundai Tuesday that the group's failure to heed the reform demands would lead to the suspension of fresh credit to the most troubled Hyundai Engineering & Construction. In response, the Hyundai management pledged to remove obstacle to the delayed separation of Hyundai Motor by lowering founder Chung Ju-yung's stake in the automaker below the legally permissible 3 percent. But it clearly refused to accept the two other demands, heightening the possibility of a head-on collision with the government and creditors. A possible credit-line cut means that Hyundai's flagship contractor unit saddled with more than 6 trillion won ($5.4 billion) in debts, bigger than its annual turnover of 5 trillion won, will be put under a debt workout program or court receivership. "The reform-shy Hyundai management should be stopped from continuing to hurt the local financial market," said a ranking official at the Financial Supervisory Commission. "Despite the worsening liquidity crisis, Hyundai's actual owner Chung Mong-hun left for North Korea to donate cattle, the very next day after he returned from a month-long overseas stay, in an utter disregard for the market. Such arrogant attitudes must be punished." He noted that the FSC has already worked out contingency plans in preparations for the bankruptcy of Hyundai Engineering. A vernacular paper also said in its editorial that Hyundai should not mistake its restructuring for a subject of battle with the government. "Even if Hyundai manages to win in its fight with the government, the market will not forgive," it said. In their letter to Hyundai, the creditors abstained from mentioning the problematic executives, but Korea Exchange Bank sources said that Hyundai Securities Chairman Lee Ik- chi and Hyundai Engineering & Construction president Kim Yoon-kyu must go. Earlier on Tuesday, Lee, who went along with Chung on his North Korean visit, made clear his intention to stay in his post. Even worse, the Chung family still remains reluctant to sell their shareholdings in key Hyundai companies. Following President Kim Dae-jung's stern warning about Hyundai's protracted crisis, new economic policymakers and creditor banks shifted to a hard-line stance and asked the group to submit "satisfactory" reform package by this weekend. Minister of Finance and Economy Jin Nyum warned that Hyundai would not survive if it continues to "deceive" the market, hinting at the government's intent to let the most troubled Hyundai Engineering & Construction go bankrupt. Analysts forecast that a possible bankruptcy procedure for Hyundai Engineering, though temporarily painful for creditors and the entire economy, will rather accelerate the group's restructuring in the long run, as it will lead to forced retirement of the Chung family and the dismantling of the group. "In the event of a debt workout program entailing creditors' debt-for-equity swaps, the Chung family will forfeit their management control," said an analyst. "In addition, the program will prevent the spread of the contractor unit's insolvency crisis to other Hyundai companies, paving the ground for early dismantling of the top chaebol." Hyundai Engineering is the nation's largest contractor in terms of the volume of orders. The company has acted as the group's holding company, as it holds 12.6 percent of Hyundai Merchant, 7.85 percent of Hyundai Heavy, 2.76 percent of Hyundai Motor, 30 percent of Hyundai Energy, 20 percent of Hyundai Asan and 11.63 percent of Hyundai Petrochemicals, among others. (Korea Times 10-Aug-2000) SEOUL GUARANTEE INSUR.: KDIC to inject W700B -------------------------------------------- Korea Deposit Insurance Corp. (KDIC) said yesterday it will inject another 700 billion won in cash into Seoul Guarantee Insurance Corp. (SGIC). KDIC provided 700 billion won in March as part of the government's plan to inject a total of 3.4 trillion won into SGIC this year and another 2.6 trillion won next year. The massive injection of public funds into SGIC is designed to enable it to fulfil its obligations to holders of Daewoo Group debts. Formerly a Daewoo subsidiary, SGIC provided insurance to guarantees offered by financial institutions to Daewoo debts. But with its capital entirely eroded, SGIC has been unable to meet claims from insurance subscribers. (Korea Herald 10-Aug-2000) TONG YANG MOOL SAN: Released from debt management program --------------------------------------------------------- Creditors of Tong Yang Mool San, a manufacturer of farm machinery, agreed to released the company from a "debt management program", an official of Hanvit Bank said yesterday. The official said the 13 creditors accepted the early release proposal in recognition of the company's intensive self-help efforts and a sharp improvement in its business performance. A subsidiary of the Byuksan Group, Tong Yang Mool San fell into trouble due to its excessive debt guarantees for other group firms. Creditors relieved it of a significant portion of the guarantee burden. The company will be officially released upon approval of the Corporate Restructuring Coordination Committee. (Korea Herald 10-Aug-2000) =============== M A L A Y S I A =============== ESSO MALAYSIA: Records RM1.6M pre-tax, first-half loss ------------------------------------------------------ Esso Malaysia Bhd (Esso) has recorded a pre-tax loss of RM 1.6 million for the first six months ended June 30, 2000 compared with RM1.5 million profit for the same period last year, it was announced Wednesday. The loss after tax was RM1.1 million versus the RM9.4 million profit last year due to the tax waiver in 1999. Esso chairman Datuk Dr Philip J. Dingle in announcing the results in a statement said that the weak refining margins were further squeezed in the first half of this year with the cost of crude rising faster than the increase in product prices. Marketing margins were also affected by the government's reduction of product cost recovery for liquified petroleum gas (LPG) from third quarter of last year, he added. Turnover for the period on the other hand, was RM1.751 million, an increase of 76 percent over the prior period. The production at the Port Dickson refinery also increased by 8.0 percent to 64,000 barrels per day over the first half of last year. Meanwhile, capital and lease expenditures amounting to RM18.0 million were lower compared with the first half of 1999. However, this is expected to increase, upon completion of Esso's RM120.0 million investment for the acquisition of a 20 percent ownership in the Multi-Product Pipeline, Klang Valley Distribution Terminal and the associated facilities jointly owned by Petronas Dagangan Bhd and Shell Malaysia Trading Sdn Bhd. Dingle said with the loss recorded and its priority to focus on reducing debt and strengthening its financial position, the company has decided not to declare any interim dividend for the year 2000. (Malaysian News Agency 10- August-2000) KIMANIS BAY TIMBERS SDN: Strikes rehab deal MGR CORPORATION BHD: Strikes rehab deal PARAKAYA PLYWOOD SDN: Strikes rehab deal ------------------------------------------- MGR and units reach accord on debt revamp with creditors MGR Corporation Bhd and its wholly-owned subsidiaries Parakaya Plywood Sdn Bhd and Kimanis Bay Timbers Sdn Bhd, along with MGR's major shareholder and managing director Loi Lung Kiong, have entered into an agreement with financial institutional lenders to restructure the outstanding bank borrowings of the companies. The company said in a statement to the KLSE yesterday that the proposed debt restructuring would involve: The novation from Kimanis to MGR of RM3.04mil outstanding bank borrowings of Kimanis with Pacific Bank Bhd; the novation from Parakaya to MGR of RM20.33mil outstanding bank borrowings of Parakaya with RHB Bank Bhd; the restructuring of the remaining RM44.68mil bank borrowings of Parakaya with RHB Bank into a six-year term loan; the settlement of RM179.96mil outstanding borrowings of MGR, including amounts novated from Kimanis and Parakaya, partly by cash of RM26.99mil and partly by the issuance of RM125.97mil nominal value of five-year, 6% redeemable convertible secured loan stocks. The balance would be settled by the issuance of RM26.99mil nominal value of five-year, 4% irredeemable convertible unsecured loan stocks. In conjunction with the debt- structuring exercise, MGR proposes to make a renounceable rights issue of up to 50.25 million new shares on the basis of one rights share with one warrant for every one existing share held in the company, and increase its authorised share capital from RM100mil to RM500mil. Concurrent with the proposed debt restructuring scheme, MGR also plans to undertake a scheme to recover certain debts owed to Parakaya amounting to RM70.31mil through the assumption by MGR of the rights under three development projects in Kota Kinabalu, the statement added. (The Edge 10-Aug-2000) LION GROUP BHD: Seeking CDRC assistance for rehab? -------------------------------------------------- Lion Group Bhd maintains that it is not seeking the assistance of the Corporate Debt Restructuring Committee (CDRC) in its group-wide restructuring scheme with creditors, initiated by its subsidiary Amsteel Corp Bhd. Lion made the statement in a recent reply to a KLSE query. In it, the company denied that the CRDC assistance was sought after difficulties arose with "disgruntled creditors, mainly non-financial institutions, the company said." The company has been reported to be seeking CDRC assistance in an article in The Edge, also by Bloomberg. OLYMPIA INDUSTRIES BHD: Signs rehab, standstill pact ---------------------------------------------------- Olympia Industries Bhd has signed a restructuring and standstill agreement with Johor Ventures Sdn Bhd, an unsecured creditor of its subsidiary company Jupiter Capital Sdn Bhd. In a statement, Olympia said the agreement was conditional upon the restructuring and standstill agreement between the company and its financial institution creditors announced recently and a number of other things. TAJO: Winding up petition served on it -------------------------------------- The trading of shares of Tajo were suspended Aug. 9 after a creditor served a winding up petition on the company, with further details not being available. Tajo closed 1.9% higher at MYR1.05 yesterday. ===================== P H I L I P P I N E S ===================== CAPITOL WIRELESS: Secures 8-day payment extension ------------------------------------------------- Capitol Wireless Inc. yesterday clinched an eight-day extension of the temporary debt relief obtained from the Securities and Exchange Commission (SEC) last Aug. 2. Makati Regional Trial Court executive judge Josefina G. Salonga spared the ailing gateway facility operator from having to pay past due obligations until Aug. 17, when the petition for suspension of payments is expected to have already been assigned to a trial judge for hearing. In a single-page order, Judge Salonga said the brief extension will benefit both the Santiago-owned firm and its creditors. "In order not to jeopardize (Capwire's) day-to- day operations, the order of the hearing panel of the Securities and Exchange Commission dated Aug. 2...is hereby extended to Aug. 17," she said. The Aug. 2 order suspended all actions for claims against Capwire, whether they are pending or still to be filed before any court, tribunal, office, board, body and or commission. The judge issued the order in compliance with the Supreme Court resolution on Tuesday compelling her to decide whether she will extend Capwire's one-week suspension of payment before assigning the case to one of the Makati judges. The Santiago-controlled international gateway operator is saddled with debts totaling PhP909 million ($20.3 million), with Land Bank of the Philippines as its biggest creditor. The bank has receivables reaching P300 million. (Business World 10- August-2000) PEPSI COLA PRODUCTS PHIL.: L.Tan mulling purchasing --------------------------------------------------- Lucio Tan, the Philippine airline and tobacco tycoon, is considering buying the loss-making Pepsi Cola Products Philippines Inc., the local bottler of PepsiCo Inc., the Philippine Star reported, citing an unidentified person. Tan, who completed a takeover of Philippine National Bank last month, was interested in Pepsi Philippines as early as in the 1980s, when the group of San Miguel Chairman Eduardo Cojuangco sold its stake in the bottler. Pepsi Philippines, which has 11 plants, has been losing money. The Guoco group, which has pared its stake in the bottler to 62 percent from 94 percent, wants to sell more shares, it said. Pepsi Philippines, the third-largest local soft drinks maker with a fifth of the market, will complement Tan's Asia Brewery Inc., the country's second-largest beer maker, and Tanduay Holdings Inc., its largest rum maker. (Bloomberg 10-Aug-2000) PHLIPPINE NAT.BANK: Posts 6-mo. loss, expects more -------------------------------------------------- Philippine National Bank on Wednesday reported a net loss of 1.4bn pesos ($31.4m) in the first half of 2000. The losses are expected to continue until next year despite the government's recent approval of the sale of its 30 per cent stake in the country's fourth biggest bank to tycoon Lucio Tan, analysts say. PNB posted a net profit of 7.3m pesos in the same period last year. Analysts reckon it will only turn round by 2002 at the earliest if it is able to re-capitalise and implement efficiency measures. Audie Pantillano, an analyst with brokerage firm Securities 2000, said he expects the bank to register a full-year net loss of 2.4bn pesos, assuming it receives 20bn pesos fresh capital. Leni de la Rosa, an analyst with G.K. Goh Securities Philippines, forecast a net loss of 3.8bn pesos. (Financial Times 10-Aug-2000) POCKETBELL: No sale plans, looking at expanding services -------------------------------------------------------- It looks like the Santiago group of companies is not giving up on its ailing paging arm Philippine Wireless, Inc. -- the firm that runs the Pocketbell 125 brand -- as new business ventures such as the Internet are being explored. Maureen V. Santiago,executive vice-president and chief operating officer of Capitol Wireless, Inc. (Capwire), Pocketbell's sister firm, said despite the now-limited market for the paging business, the family has no plans of letting it go. Pocketbell pioneered the paging services in the country. "We have no plans of selling it... In fact, we are even looking at some other businesses," said Ms. Santiago. She added the move will be similar to that of what leading paging firm EasyCall Communications Philippines, Inc. did when it ventured into the Internet business. Paging companies have started divesting the service due to severe competition from the popular text messaging service of GSM mobile phones. Also, as mobile phone handsets are becoming much cheaper, paging subscribers have started to switch. Ms. Santiago said Pocketbell has yet to start negotiations with creditors on the planned restructuring of its PhP2-billion debt ($44.6 million at PhP44.819=$1). "From what I know, nothing formal has happened yet, just informal talks with creditors," said Ms. Santiago. (Business World 10-Aug-2000 TOTAL PETROLEUM PHIL.CORP.: Posts P125M first-half loss ------------------------------------------------------- Leading new oil player Total Petroleum Philippines Corp. (TPPC) registered losses totalling P125 million for the first half this year, just P13 million short of its P138- million loss for the whole of 1999. "All we can do now is to limit our losses for the entire year 2000," said TPPC president and managing director Jean Jacques Jung. TPPC executive said they have invested nearly $100 million since TPPC started operations in the country more than three years ago. Jung calls the situation "catastrophic" as world crude prices rose nearly 200 percent since March last year but their local prices have been suppressed, with increases totalling just a little over 50 percent. "The margins this year are catastrophic compared to last year's. The market in general has not propped up, and all the conditions promised by the deregulated environment has not produced positive development," he lamented. Hardest hit in TPPC's operations is the retail and industrial business, which comprises over 85 percent of its entire earnings. The remaining 15 percent comes from lubricants and liquified petroleum gas (LPG). "Our LPG and lubricants operations practically broke even but the retail and industrial registered huge losses," Jung said. Nevertheless, TPPC will continue with all its projects for the rest of the year despite some minor scaling down. TPPC has a current market share of 2.5 percent of the entire oil industry from a mere 0.8 percent last year. For this year, TPPC has set a capital expenditures budget of $30 million (P1.2 billion), $20 million of which has been earmarked for expansion, acquisitions and upgrading of its facilities. Jung said TPPC will go on with its planned projects like the jetty in the company's Bataan LPG depot which should be formally launched in October. (Philippine Star 10- August- 2000) ================= S I N G A P O R E ================= IPC CORP: To sell building as part of rehab plan --------------==-------------------------------- Computer maker IPC Corp. says it will sell office building to Davoa Trading, unit of Global Switch Sarl, for S$33.5 million as part of its debt-restructuring plan. Proceeds will be used to repay mortgage of S$9.45 million on building; remaining S$24 million will go to special account with Arthur Andersen, IPC's restructuring scheme administrator. Shares suspended pending this announcement and will resume trading at 1515. Shares of IPC last traded up 2.6% at 20 Singapore cents. (Dow Jones 08-Aug-2000) =============== T H A I L A N D =============== SEMICONDUCTOR VENTURE: Reduces capital as part of rehab ------------------------------------------------------- Semiconductor Venture International has reduced its registered capital from Bt1.32 billion to Bt1.21 billion as part of its plan to issue new ordinary shares to creditors in accordance with a debt-restructuring agreement. The move will be followed by a capital increase of Bt331.36 million to Bt1.54 billion with the issuance of 33,135,857 new shares, of which 13,135,857 shares will be allocated to the company's creditors in accordance with the restructuring agreement dated May 4, 1998. The remaining 20,000,000 shares will be offered via a private placement, the company said in a filing to the SET. (The Nation 10- Aug-2000) SUBMICRON TECHNOLOGY: More time to review plan wanted ----------------------------------------------------- Creditors of Submicron Technology plan to hold their first formal meeting today since the Central Bankruptcy Court ordered assets of the firm and its founder Charn Usawachoke placed in receivership six months ago. Negotiations to restructure the defunct wafer-fabrication company have been continuing for months, with Mr Charn and creditors alike involved in efforts to attract new investors to revive the firm. The court order placing the company and Mr Charn in receivership was initiated by Siam City Bank which filed bankruptcy suits against Submicron and Mr Charn. The company owed 1.2 billion baht to the bank. Bangkok Bank is also a major creditor, accounting for about 60% of total credit lines approved for the company, some of which were not used. Other major creditors include Krung Thai Bank and BankThai. Sources said several creditors would probably ask for more time before a vote on whether to accept Mr Charn's restructuring plan or whether Submicron should be closed. An additional delay was needed pending the outcome of negotiations with prospective new partners. Under court procedures, approval by creditors holding more than half of the debt is required to delay a vote. Earlier, the Legal Execution Department allowed creditors of the company to submit their repayment applications, the result of which showed that Submicron owed almost 80 billion baht to the creditors. However, most applicants sought repayments from liquidation of Mr Charn's assets. The repayment applications were not yet considered final as there were objections, he said. As a result, the department would need a month to examine evidence to establish correct debt amounts. Mr Charn said that, at this stage, the creditors would have to decide the future of Submicron. Whatever decision they made would have to be accepted. "On the part of debtors, we have tried our best. In particular, we have tried to protect the company's assets from further depreciation in value," Mr Charn said. If the creditors allowed the debt to be restructured, assets in the remaining plant meant the company could still proceed with production. "If the creditors want the company and myself to go bankrupt, we have to accept their decision. But if I go bankrupt, I will not have a lot of assets left. Many people might have misunderstood this." Mr Charn has been negotiating with many foreign investors, some of whom expressed interest in making investments in Submicron. However, he said it was difficult for them to sign a formal joint-venture agreement as Submicron was in receivership. As a result, agreements remained verbal. But if the creditors backed debt restructuring it should not be difficult to find strategic partners. In its debt restructuring plan, Submicron said that it would repay 75% of unsecured debt within three years, with the first year as a grace period. It would repay 75% of secured debt within seven years, with the first two years as a grace period. Mr Charn, in his debt restructuring plan, said he intended to repay 60% of his debts within 14 years, with the first four years as a grace period. A source close to the Submicron case said that the restructuring plan submitted to the department was only preliminary. The plan submitted separately by Submicron to its creditors offered more details including equity participation by a group of investors who specialised in wafer fabrication. If the creditors were favourable toward the plan, there would be further negotiations with other investors. Kraisorn Baramee-auychai, chief judge of the Central Bankruptcy Court, said that there was some delay in determining the actual assets of Submicron. This gave rise to concern as the case also involved placement of an individual's assets in receivership. The prolonged delay could lead to a problem as the law dictated that an individual-in this case Mr Charn-would be bankrupt for only three years, from the date the court declared him bankrupt. If the delay in finding assets, liquidating them and distributing the proceeds gained from the liquidation to creditors took longer than the bankruptcy period, any assets remaining would have to be returned to the debtor. (Bangkok Post 10-Aug-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 Maria Vyrna Ni�eza, 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 ***