/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/000925.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 Monday, September 25, 2000, Vol. 3, No. 186 Headlines * A U S T R A L I A * COMMONWEALTH BANK: Closes more branches EISA: Shareholders get nothing as company sinks MARKET HOLDINGS PTY.LTD.: Liquidator requested NEGUBO PTY.LTD.: Liquidator to be requested * C H I N A & H O N G K O N G * COSMOPOLITAN INT'L: Posts 1H net loss E-LIFE INT'L: Posts annual net loss GUANGDONG TANNERY: Posts 1H net loss GUANGNAN (HOLDINGS)LTD.: Posts 1H net loss JITONG TELECOMS: Posts wider loss for first part of year HK CONSTRUCTION: Posts 1H net loss PALIBUG HOLDINGS LTD.: Posts 1H net loss SOUTH EAST ASIA WOOD: Posts 1H net loss SUNeVISION HOLDINGS LTD.: Posts wider annual loss VICTORY GROUP LTD.: Posts 1H group net loss * I N D O N E S I A * PT INDOLAND JAYA: Declared bankrupt PT KREASI SUPRADINAMIKA: Declared bankrupt PT METROTAMA DUNIA: Declared bankrupt PT SUMBER KERAMIK KHARISMA: Declared bankrupt PT UNITED TRACTORS: Lossmaker to restructure debt PT WIDIAMULIA PRIMA MULTICOPORATA: Declared bankrupt * J A P A N * HAZAMA CORP: NCB, Shinsei to waive loans HAZAMA CORP.: To take 35.2B yen loss on property sales NIPPON CREDIT BANK: Death of boss a blow to reconstruction NTT EAST: To shed more employees NTT WEST: To shed more employees RENOWN INC.: Records 12B yen 1H net loss SNOW BRAND MILK PRODUCTS: To post first op-loss in 50 yrs. * K O R E A * CENTRAL BANKING CORP.: To be merged with 3 others DAEWOO GROUP: Banks extend 4.29T won in fresh funds DAEWOO MOTOR: Bidding interest wanes for full package HANS MERCHANT BANK: To be merged with 3 others INCHON INT'L AIRPORT: Seeks Gov't subsidies to ease debts KOREA INVESTMENT TRUST CO.: To be merged with 3 others SSANGYONG CEMENT: Takes on Japanese investor to cut debts YEUNGNAM MERCHANT BANKING CORP: To be merged with 3 others * M A L A Y S I A * GENERAL SECURITIES INVESTMENTS: Proposes to liquidate IPOH LTD: Selling Aussie properties to reduce debt MBf HOLDINGS: Stake in MBf Capital reduced to pay down debt TIME ENGINEERING: Sells Renong warrants to pay down debt WING TIEK HOLDING: SC rejects debt-rehab proposal * P H I L I P P I N E S * PETRON CORP : Projecting wider losses in second half UNIWIDE GROUP: Casino taps local group to help revive * S I N G A P O R E * GENERAL SECURITIES INVEST.: Proposing voluntary liquidation * T H A I L A N D * BANKTHAI: To sell Bt9B worth of assets SIAM CITY BANK: Transfer of good assets likely plan THAI-GERMAN PRODUCTS: Completes debt-equity swap ================= A U S T R A L I A ================= COMMONWEALTH BANK: Closes more branches --------------------------------------- The Commonwealth Bank shut another of its branches Friday, Eastlakes, with four more branches due to close next month. Iincluded in the next four is the bank's historic building in Barrack Street, Sydney. The entire list of closures shows Commonwealth Bank will have closed a total of 138 branches in New South Wales and the Australian Capital Territory since 1995. The Finance Sector union's Peter Presdee says the closures are continuing to hurt communities. The bank expects to close several more branches once it establishes a common system with recently acquired Colonial Bank. Those are not expected to occur until next year. EISA: Shareholders get nothing as company sinks ----------------------------------------------- eisa shareholders will get nothing and the Internet service provider still ends up in the hands of rejected takeover suitor Austar United Communications after eisa was placed under administration yesterday. With only enough cash to last another week, eisa brought in a voluntary administrator who accepted Austar's $13 million offer to buy the business. Austar had bid $24.4 million for eisa three months ago but it failed to attract a conditional 90 per cent in acceptances by the expiry of the offer last Friday. Austar's current stake amounts to 19.9 per cent. However, the regional pay TV provider will now only have to pay around $6.5 million to secure the ISP, once the $7.5 million it is already owed by eisa is subtracted from the equation. Administrator Andrew Love of Ferrier Hodgson said eisa's creditors should receive between 50 cents and 70 cents in the dollar, compared to nothing if the company had been placed into liquidation. Until a week ago, Austar shareholders could have received 20 cents each for their shares in a company which was once worth as much as $3.18 a share. Those dot-com investors who stuck with eisa, even after its $325 million bid for OzEmail failed, will now miss out completely. The 87 per cent of shareholders' interests who accepted Austar's takeover bid effectively get nothing because another 3 per cent decided not to take up the offer before it closed last Friday. "That's the cold, hard reality," Love told journalists. "Shareholders will receive no return. The imperative very simply is that if a decision hadn't been taken of the nature that I had taken, the business would have run out of money in a very short space of time - and I'm talking a week or so." One shareholder with a 3 per cent stake could have allowed Austar to meet its 90 per cent minimum acceptance conditions. Love added that in the end 13 per cent of shareholders decided not to go with Austar. Love said eisa was left with less than $1 million in the bank. Eisa last week reported a $41.72 million net loss for the six months to June 30, 2000, after a $24.42 million abnormal loss largely relating to the cost of its failed OzEmail bid. Eisa began with high hopes of becoming one of Australia's largest ISPs with its offer for OzEmail's consumer net business - even beating Australia's biggest company, Telstra, to the prize. But the dream began to unravel in May, when media group John Fairfax Holdings backed out of a deal - signed just days before the April 17 high-tech sector crash - to invest in eisa. With other potential investors including ANZ Banking Group and Hastings Funds Management following suit, OzEmail's American parent UUNet Technologies pulled the plug. UUNet, a subsidiary of MCI WorldCom, held on to eisa's $20 million deposit. Austar stepped in with a friendly rescue bid for a company that was worth $190 million in mid- February, but the failure of the offer last week sealed eisa's fate. Austar is now owed the $7.5 million - plus interest - it lent eisa to continue operating, with creditors owed around $6.6 million. Austar has also agreed to inject further funding into the company during the administration phase, which could be would up in as little as a couple of weeks. Love said telecommunications companies including Telstra, Cable & Wireless Optus, Primus Telecom and New Skies, were owed $4.5 million. Austar has agreed to take on 98 per cent of eisa's 100 or so employees. Love said he would look at eisa's current litigation matters, including recovering the $20 million from UUNet and proceedings involving eisa's former chief executive officer Damien Brady. He said he would also discuss claims between eisa and The Edge Group, headed by eisa's one-time largest shareholder Johnson Wang, with Edge's liquidator. Asked about the possibility of eisa shareholders taking action against the eisa's directors, Love said investors were entitled to take whatever action they saw fit. The proposal to sell the business to Austar has to be approved by eisa's creditors, who will meet for the first time next Wednesday. Apart from the Austar offer, Love said eisa directors had received some peripheral approaches but nothing more. Austar chief executive John Porter said Austar was happy that the outcome would ensure eisa's 80,000 subscribers continued to receive their service. (Fairfax I.T. 22-Sept-2000) MARKET HOLDINGS PTY.LTD.: Liquidator requested NEGUBO PTY.LTD.: Liquidator to be requested ---------------------------------------------- Creditors of John Maconochie's Market Holdings Pty Ltd have applied to have a liquidator appointed, while Maconochie's family company, Negubo Pty Ltd, was to approach the Supreme Court of New South Wales on 22 September 2000 to confirm John Sheahan of Sheahan Coote Locke as its liquidator. The strategic moves are being taken as part the $A52 billion AUSMAQ case against National Australia Bank Limited, in which Maconochie is a plaintiff. ============================== C H I N A & H O N G K O N G ============================== COSMOPOLITAN INT'L: Posts 1H net loss ------------------------------------- Cosmopolitan International Holdings Ltd. fell into the red for the first half of the year, posting a net loss of HK$42.2 million for the six-month period ended June 30. By comparison, the company recorded a HK$11.5 million net loss for the same period the year prior. Revenue rose to HK$19.1 million from HK$5.7 million the first semester the previous year. No interim dividend was proposed. E-LIFE INT'L: Posts annual net loss ----------------------------------- E-Life International Ltd., an air and sea freight forwarder, recorded a HK$86 million net loss for the year ended March 31, over triple its HK$26.7 million net loss for the prior year. Loss per share was 14.5 HK cents compared with 6.2 HK cents a year before. Company revenue fell 22.5 percent to HK$188 million and no final dividend was proposed. GUANGDONG TANNERY: Posts 1H net loss ------------------------------------ Guangdong Tannery Ltd. recorded a HK$4.81 million net loss for the six-month period ended June 30. By comparison, the company posted a wider loss of HK$28.88 million the same period a year earlier. Loss per share was 0.9 HK cent compared with 5.5 HK cents a year earlier. Revenue rose 50 percent to HK$338.79 million, but no interim dividend was proposed. GUANGNAN (HOLDINGS)LTD.: Posts 1H net loss ------------------------------------------ Guangnan (Holdings) Ltd., a food distributor controlled by the southern Guangdong provincial government, recorded a HK$312.2 million net loss for the six-month period ended June 30, up from its net loss of HK$276.8 million for the same period a year earlier. Loss per share was 34.33 HK cents, also up from 30.43 HK cents the year before. Revenue fell 10.1 percent to HK$1.4 billion, and no interim dividend was proposed. Guangnan's downward profitability was due in large part to extraordinary expenses and provisions, including one for HK$15.5 million made for diminution in value of investment securities and another for HK$69.4 million made for diminution in value of properties as a result of a change of usage from self-occupied to investment purposes. The company also made a provision of HK$35.1 million for compensation to a claim received. Meanwhile, Guangnan wrote off HK$54.8 million in assets and registered a loss of HK$16.5 million on liquidation of a subsidiary. HK CONSTRUCTION: Posts 1H net loss ---------------------------------- Hong Kong Construction Holdings Ltd., winner of the HK$3.98 billion Disney theme park reclamation project in Hong Kong, has recorded a HK$72.9 million net loss for the six-month period ended June 30. That was down from a HK$367.4 million net loss for the same period a year earlier. Loss per share was 14.4 HK cents compared with 72.8 HK cents the previous year. Revenue inched up 0.9 percent to HK$1.04 billion. No interim dividend will be distributed. The company attributed the loss primarily to losses from its associate companies, which totaled HK$61.8 million for the period. JITONG TELECOMS: Posts wider loss for first part of year -------------------------------------------------------- Jitong Telecoms, one of China's four fixed-line phone operators, recorded a net loss of 11 million yuan for the first five months of this year, up from 9 million yuan for the full year 1999. Jitong Telecoms still plans to raise up to HK$2.68 billion through a Hong Kong listing, and projects that its revenue will double to 400 million yuan in full-year 2000, according to the Hong Kong Economic Journal. Jitong expects to sell 67 million shares, or 25 percent of its share capital, at HK$36 to HK$40 per share, after it is listed on the Growth Enterprise Market on Nov. 3. PALIBUG HOLDINGS LTD.: Posts 1H net loss ---------------------------------------- Paliburg Holdings Ltd., holder of 62.58 percent in Century City International Holdings, recorded a HK$279 million net loss for the six-month period ended June 30. By comparison, the company recorded a narrower net loss of HK$114 million for the same period a year ago. Loss per share also widened to 12 HK cents from 4.9 HK cents. The company attributed the loss mainly to a HK$180 million provision for interest on a piece of land reserved for developing luxury houses. Company revenue, meanwhile, declined 59.8 percent to HK$874.6 billion. No interim dividend will be distributed. SOUTH EAST ASIA WOOD: Posts 1H net loss --------------------------------------- South East Asia Wood Industries Holdings, a plywood and particle board maker, recorded a HK$13.12 million net loss for the six-month period ended June 30, down from HK$36.58 million for the same period the year prior. Loss per share likewise narrowed to 2.2 HK cents from 6.1 HK cents. Company revenue fell 84 percent to HK$32.06 million. No interim dividend will be distributed. SUNeVISION HOLDINGS LTD.: Posts wider annual loss ------------------------------------------------- SUNeVision Holdings Ltd., Internet arm of Sun Hung Kai Properties Ltd., posted a net loss of HK$46.54 million for the year ended June 30, swelling greately from the HK$720,000 net loss the prior year. The loss per share widened to 2.59 HK cents from 0.04 HK cents. The loss actually was smaller than expected primarily because some of the company's investment units are on track to post revenue or profits earlier than expected, said Chairman Raymond Kwok. The company's revenue increased 40.9 percent to HK$67.07 million. No interim dividend will be distributed. SUNeVision's burn rate is about HK$9 million per month, said Kwok. Its cash reserve stands at HK$2.7 billion to HK$2.8 billion after it raised HK$3.38 billion from its listing on the Growth Enterprise Market, the city's second board, in March. Asked if SUNeVision would invest in Sinopec, Kwok said the company will focus on technology- related investments, but he doesn't rule out the possibility that parent SHKP will invest in the listing vehicle of China's No. 2 oil company. Sinopec is seeking to raise about US$3 billion in a global share offer. Super-Office.net, a subsidiary which provides application software and other services to commercial tenants, recorded HK$15 million revenue in its first month of operations since being launched in August, Kwok said. The consolidation in technology stocks offers SUNeVision a good opportunity to expand through acquisitions and investments, Kwok said. Kwok said the recent market debacle shouldn't last long since Hong Kong has a low debt level and the economy is heading for a recovery. He urged investors to look on SmarTone Telecommunications Holdings Ltd. (0315), in which Sun Hung Kai Properties Ltd. (0016) holds a stake, as a bargain at today's record low of HK$11.10. The stock, hurting from the overall market plunge, intense mobile phone market competition and uncertainty surrounding the tendering mechanism for third-generation licenses, is unlikely to fall further, Kwok said. (Quamnet News 23- Sept-2000) VICTORY GROUP LTD.: Posts 1H group net loss ------------------------------------------- Victory Group Ltd., a left hand drive motor vehicles distributor, recorded a HK$5.53 million net loss for the six-month period ended June 30. By comparison, the company posted a wider HK$7.47 million net loss for the same period a year earlier. Loss per share narrowed to 0.47 HK cents compared with 0.65 HK cents the first semester last year. Revenue fell 34.6 percent to HK$14.25 million. No interim dividend will be distributed. ================= I N D O N E S I A ================= PT INDOLAND JAYA: Declared bankrupt PT KREASI SUPRADINAMIKA: Declared bankrupt PT METROTAMA DUNIA: Declared bankrupt PT SUMBER KERAMIK KHARISMA: Declared bankrupt PT WIDIAMULIA PRIMA MULTICOPORATA: Declared bankrupt ---------------------------------------------------- The Jakarta Commercial Court has declared five Ongko Group units bankrupt after they failed to settle a total of US$100 million in matured debts, according to Judge Mahdi Soroinda Nasution said. The five companies are PT Metrotama Dunia, PT Indoland Jaya, PT Sumber Keramik Kharisma, PT Kreasi Supradinamika Multicorpora and PT Widiamulia Prima Multicorpora. Creditors based in the Commonwealth of the Bahamas filed bankruptcy suits against the Ongko units in late August. The Indonesian Bank Restructuring Agency (IBRA), another major Ongko creditor, previously said it plans to conduct a special audit on units of the Ongko Group that are brought to commercial court by foreign creditors, adding the audit is needed to clarify the validity of the creditors' debt claims. PT UNITED TRACTORS: Lossmaker to restructure debt ------------------------------------------------- PT United Tractors reported Rp57.53 billion in net losses for the first semester of this year or Rp109.70 per share, swinging from a Rp437.79bn net income or Rp1,586.18 earnings per share for the same period a year ago. The publicly listed heavy equipment producer has not been able to improve its poor performance since the second half of 1999, during which period it posted a Rp434.48bn net loss. The company only managed to book Rp3.31bn in net profits for full-year 1999. United Tractors is 50%-owned by Astra International, while Norbax Incorporation HSBC holds 10.86% shares and the remainder 39.14% owned by the investing public. PT United Tractors has reached an agreement to restructure debts worth some $278.5m and Rp147bn owed to 28 creditors. Twenty-six of them are from overseas while the other 2 are from Indonesia, said its Director Buntoro Muljono on Sept. 20. Sales revenue of this company reached Rp2,321.75bn in the first semester of this year, reflecting a 31.15% surge year-on-year compared with Rp1,770.28bn in the same period a year ago. But, the sales growth was outpaced by a 40.51% jump in the cost of goods sold, making the gross profit only rose 10.79% to Rp617.62bn. Even so, the firm still managed to book a 12.90% rise in its operating profit to Rp490.13bn, partly because the operating expenses only grew marginally, by 3.40% compared to its level in the first half of 1999. Certainly, the big loss in the first semester of this year was due to big non-operating expenses, mainly attributable to large forex loss and net interest expenses. United Tractors reported Rp449.18bn forex losses in the first semester of this year, while the net interest charges were totaling at Rp155.19bn. Thereby, the company has to suffer around Rp449.18bn non-operating losses in January- June this year. Its liabilities were totaling at Rp4,827.41bn at end of June 2000, an equivalent of $552.65m. It shows that the firm's liability has grown by 32.25% from Rp3,650.35bn at end of June 1999. Meanwhile, if gauged in dollar terms, its liabilities grew by 1.83% from $542.72m at end of June 1999. United Tractors's liabilities, however, have been growing at a moving average of 59.55% in rupiah terms during the period between January 1997 up to June 2000. On the other hand, if measured in dollar terms, its liabilities have been increasing at an average rate of 2.50% per year during the same period. The company's capital structure, in this regard, was quite vulnerable, because the amount of its liabilities already was close to 9.6 times of its shareholders' equity at end of June this year. "With completion of the restructuring, in overall the group has successfully restructured debts amounting to $373.73m and Rp149bn," said Buntoro. Under the agreement, United Tractors would not distribute dividends to its shareholders until payments reach 50% of the company's total liabilities. United Tractor's debt repayment is to be carried out in 2 tranches. In the first tranche, debts amounting to $94.30m and Rp49.78bn have until 2002 to be repaid. In the second tranche, it would repay another $184.20m and Rp97.22bn debts that should have been completed by December 15, 2004. In the second tranche, the company may use funds from asset divestments, dividends from subsidiaries or rights issue to repay debt principal. Initial payments amounted to $5m and Rp2.64bn. (Indonesia Exchange News 23-Sept-2000) ========= J A P A N ========= HAZAMA CORP: NCB, Shinsei to waive loans ---------------------------------------- Nippon Credit Bank, now Aozora Bank, has agreed to waive 6.1 billion yen in loans to debt-ridden Hazama Corp. It also will maintain remaining loans worth 12.8 billion yen to the contractor for the time being, according to sources close to the deal. NCB and three other major creditor banks of Hazama previously had agreed to forgive some 105 billion yen in loans extended to the ailing firm, but details of how NCB would deal with the loans had yet to be decided. NCB will not utilize a clause that would have allowed it to request the state buy its loans to Hazama if the value of the loans fell by 20 percent or more. NCB will waive its loans to the contractor within the range of its loan-loss reserves, sources said. The clause had been agreed to by the government and a Softbank Corp.-led consortium when the latter bought NCB. In a related development, Shinsei Bank will forgive 15.3 billion yen in loans to Hazama and will have Dai-Ichi Kangyo Bank and Mitsubishi Trust & Banking Corp. buy Shinsei's other loans extended to the contractor. The move is prompted by fears on Shinsei's part that Hazama could face a management crisis leading to additional losses on its loans. HAZAMA CORP.: To take 35.2B yen loss on property sales ------------------------------------------------------ Embattled construction contractor Hazama Corp. will take a 35.2 billion yen extraordinary loss on sales of real estate assets with a book value of 42.8 billion yen in fiscal 2000. The action is part of the company's restructuring plan announced in May, and already has been reflected in its earnings projections. Hazama will sell two tracts of land in Tokyo's Nishi-Shinjuku district with a combined book value of 14.6 billion yen and another parcel in the Minami- Aoyama district valued at 28.2 billion yen. The company acquired the sites years ago during Japan's boom economic times. It had intended to develop them, but the right opportunities did not present themselves. Hazama will sell the Nishi-Shinjuku site to a real estate affiliate for 1.6 billion yen, the Minami-Aoyama site to Sekisui House Ltd. (1928) for 6 billion yen. NIPPON CREDIT BANK: Death of boss a blow to reconstruction ---------------------------------------------------------- Nippon Credit Bank (NCB), reopened Sept. 4 as a private institution, Aozora Bank, lost a key player in its reconstruction effort with the suicide last week of president Tadayo Honma in Osaka. Before his death, Honma had been trying to reach a balance between the conflicting views of the main shareholders. In addition to three major firms, NCB's current shareholders include 96 local financial institutions, such as regional banks, and six foreign-affiliated financial institutions. Under his leadership, rebuilding of the bank had been started with a strategy that stressed issuing bank debentures to raise funds, expanding traditional deals with large companies and strengthening footholds in new businesses. According to analysts, the strategy was designed to allow the bank time to build up profits from loans to venture firms and foster new businesses utilizing information technology. Several people in the finance sector had observed that NCB's reconstruction would be a very hard task, one that would put Honma under immense pressure. Honma was an essential figure for the NCB because of close ties he had with regional banks and life insurance companies that had extended funds to the bank. It is uncertain whether the NCB will be able to maintain these ties after Honma's death. NTT EAST: To shed more employees NTT WEST: To shed more employees -------------------------------- NTT West and NTT East reports will invite 6,500 more employees to take early retirement, as past of the firms' continuing streamlining amidst increasing competition. Under the plan, 3,500 employees will be approached at NTT West and 3,000 at NTT East. Originally, the firms planned to cut 17 percent of their workforce -- 22,000 of their combined existing 123,000 employees -- by the end of fiscal 2002. Recent developments in the global telecommunications industry, however, have prompted consideration of making further cuts. Behind the decision is the recent agreement between Japan and the United States under which Japan substantially will reduce connection fees, including those paid by U.S. and other foreign firms competing with NTT Corp. Additionally, the firms have come under mounting pressure from domestic competitors to reduce telephone charges. The companies hope to reach an agreement on the cuts with the employees union as soon as next week and discuss early retirement with selected employees over the coming months. NTT West is expected to incur an unconsolidated pretax loss of 30 billion yen in fiscal 2002, substantially higher than the estimated pretax revenue of 22 billion yen. NTT East's unconsolidated pretax revenue over the same period is expected to drop to 54 billion yen from an estimated 109 billion yen. RENOWN INC.: Records 12B yen 1H net loss ---------------------------------------- Apparel manufacturer Renown Inc. recorded a net loss of 12 billion yen for the first half of its fiscal year ended July 31. By comparison, the company posted a net profit of 1.1 billion yen for the same period the previous year. The company booked a 10.2 billion yen extraordinary loss as part of the sale of operations of Renown Enterprise Inc., its struggling U.S. real estate subsidiary. Interim sales came to 47.8 billion yen, a decrease of 12 percent from the same period last year. Sales of women's wear, which account for 40 percent of total revenue, fell by 12 percent, while underwear and hosiery sales also declined by 23 percent. On a pretax basis, the company recorded a loss of 2.3 billion yen, a decline from the first half-year earlier pretax profit of 837 million yen. For the full year ended January 2001, Renown projects sales of 110 billion yen, which would represent a 4 percent decline from fiscal 1999. The company posted a net loss of 12 billion yen that year. SNOW BRAND MILK PRODUCTS: To post first op-loss in 50 yrs. ---------------------------------------------------------- Snow Brand Milk Products Co., still reeling from a food poisoning scandal involving its products this summer, expects to record a consolidated operating loss of 41 billion yen for the year ending March 2001. That would mark the firm's first operating loss since it went public in 1950. To address its deteriorating performance, the company plans to slash more than 1,000 jobs -- one-sixth of the parent company's current work force -- over three years through attrition. It also will close about 10 smaller factories. Snow Brand has suspended operations at its Osaka plant, one of the factories where products tainted with bacterial toxin were found. Net group loss is projected at nearly 40 billion yen, with extraordinary charges mounting on the disposal of recalled products and compensation paid to retailing affiliates. Consolidated sales are expected to drop 11 percent to 1.15 trillion yen. Snow Brand Food Co., a subsidiary selling ham and sausage, likewise expects sales to fall nearly 10 percent over 12 months related to the food-poisoning incidents. Snow Brand Milk Products projects an approximate 30 percent decline in parent-only sales for the year. ========= K O R E A ========= CENTRAL BANKING CORP.: To be merged with 3 others HANS MERCHANT BANK: To be merged with 3 others KOREA INVESTMENT TRUST CO.: To be merged with 3 others YEUNGNAM MERCHANT BANKING CORP: To be merged with 3 others ---------------------------------------------------------- The government plans to merge four ailing merchant banking firms into a single entity in the near future. The four non-viable firms to be merged are Yeungnam Merchant Banking Corp., Central Banking Corp., Korea investment Trust Co., Ltd. and Hans Merchant Bank. A high- ranking official at the Financial Supervisory Service (FSS) said Thursday that considering the current business climate, these four banks do not have the ability to stand on their own and said the FSS is working on a plan to merge the four banks by the end of this year. The FSS is due to make a public announcement next week of measures to deal with non-viable merchant banking firms, including liquidation. The same official said he was against the idea of the four ailing merchant banking firms being merged into a financial holding company. Authorities will allow financial holding firms in Korea for the first time by the end of the year. The FSS official also added that the government watchdog agency would oversee the merger of poorly performing merchant banks into their healthier counterparts. (Digital Chosun 22-Sept- 2000) DAEWOO GROUP: Banks extend 4.29T won in fresh funds --------------------------------------------------- Creditor banks have extended fresh loans of 4.29 trillion won ($3.74 billion) to 12 units of the collapsed Daewoo Group to keep them running since August last year, the Financial Supervisory Commission said yesterday. The amount accounts for 71.7 percent of 5.87 trillion won which the creditor banks have promised to inject into the Daewoo affiliates, the financial watchdog said in a report the National Assembly. In line with their earlier loan commitments, the creditors have yet to provide a fresh loan of 544.4 billion won to Daewoo Motor and 753.1 billion won to Daewoo Corp., the trading and construction arm of the conglomerate, the FSC said. Daewoo Corp. received fresh loans of 1.22 trillion won, or 62 percent of the 1.98 trillion won earmarked for it while Daewoo Motor took out 2.17 trillion won, 80 percent of the promised amount of 2.17 trillion won. Ssangyong Motor got 240.9 billion won (47.2 percent) in new loans and Daewoo Heavy Industries received 83.1 billion won (90.3 percent), the supervisory authority said. The government and Daewoo creditors have agreed to push for the sale of these Daewoo affiliates, including Daewoo Motor, Ssangyong Motor and Daewoo Heavy Industries' shipbuilding unit, despite Ford's decision to retract its bid for Daewoo Motor, the commission said. In late August last year, the government and creditors agreed to place the 12 Daewoo subsidiaries under rehabilitation programs to keep them above water following the insolvency of the group. Citing no specific reasons, the U.S. auto-maker announced Sept. 15 that it would not take over Daewoo Motor. In June, Ford was chosen as the preferred negotiation partner after offering to buy the troubled carmaker for 7.7 trillion won. (Korea Herald 22-Sept-2000) DAEWOO MOTOR: Bidding interest wanes for full package ----------------------------------------------------- Daewoo Motor creditors' plan for a speedy sale of the bankrupt automaker is floundering amid rapidly cooling interest from General Motors and other potential bidders. GM and its Italian partner Fiat, viewed as the only remaining bidder for Daewoo after Ford Motor's abrupt withdrawal last week, has weakened its previous enthusiasm saying that it will not submit a binding offer in the new bidding. GM is also reportedly opposed to making a down payment ahead of fresh negotiations on Daewoo. GM's changed stance is interpreted as a desire to dig deeper into the reasons that led Ford to pull out. DaimlerChrysler meanwhile has expressed interest in parts of Daewoo, but is said to remain unchanged in its position not to pursue a package deal. Hyundai Motor also ruled out a solo bid for Daewoo, saying its reentry into the new bidding is dependent on cooperation from strategic partner DaimlerChrysler. The foot-dragging by the potential bidders stands in contrast to creditors' hasty pledges to receive takeover proposals and complete the sale by Oct. 20, raising fears that the settlement of the Daewoo crisis will be delayed beyond this year. Indeed, any participants in the renewed bidding are expected to ask for intensive due diligence lasting at least six weeks. A possible breakup of Daewoo for separate sales to a number of bidders, suggested by the state-run Korea Development Bank, the main creditor, has further confounded the outlook. Creditors are scheduled to send invitations to the new bidding during next week, as soon as their official bidding policies are determined. In this regard, KDB Gov. Uhm Rak-yong told reporters Thursday that Daewoo Motor assets could be broken up for "partitioned sales" to a number of aspiring buyers. In the event of the split asset sales, Daewoo Motor's passenger-car plant in Poland will likely emerge as the hottest asset, while DaimlerChrysler appears interested in Daewoo's sport utility vehicle-making unit, Ssangyong Motor. If this is the case, all nonviable operations, excluded from the split sale, may face outright liquidation. Ssangyong Motor imported Mercedes engines before the German firm became part of the merged DaimlerChrysler, continues to use crucial components from DaimlerChrysler and has cooperated with it in production and overseas sales. At present, Daewoo Motor, Ssangyong Motor, Daewoo Motor Sales, Daewoo Capital, Daewoo Telecom's auto-parts division and their 36 overseas units are up for international sale. But the KDB denied some news reports forecasting that the individual Daewoo companies will be sold separately. (Korea Herald 23-Sept-2000) INCHON INT'L AIRPORT: Seeks Gov't subsidies to ease debts --------------------------------------------------------- Inchon International Airport is seeking 900 billion won in government subsidies over the next two years to ease its debt burden, an official of the Ministry of Construction and Transportation said yesterday. The official attested to much of what was said in a Board of Audit and Inspection (BAI) report released earlier in the week. The report showed the airport, which is expected to open next March, to be in serious financial difficulty, raising concerns whether normal operations would be possible for a quite a while after its opening. According to the report, Inchon International Airport is expected to earn 535.1 billion won in profit next year. However, the report also indicated that the airport has borrowed close to 4 trillion won as of March, for which it must shoulder 441 billion won in interest annually. The BAI said it has instructed the Inchon International Airport Corp. (IIAC) to take measures to improve its financial structure. The BAI also criticized the Ministry of Construction and Transportation for starting the construction after making only a rough estimate of the cost. Between June, 1992 and November of last year, the IIAC modified the blueprint three times. The total cost of construction, meanwhile, changed five times, snowballing from an initial 3.4 trillion won to 7.9 trillion won last November. The BAI said that IIAC made a major mistake by limiting state subsidies to 40 percent in an attempt to reduce the financial burden. In the case of foreign airports, they commonly obtain subsidies accounting for between 50 and 60 percent of the construction cost. While admitting to the seriousness of the airport's financial state, the official said the ministry has asked the Planning and Budget Committee to add about 400 billion won to next year's budget toward subsidizing the airport. The ministry hopes the government will also supply another 400 to 500 billion won in 2002. "We need about 1. 5 trillion won to clear the heavy debt burden," said Kim Se-ho, head of the ministry's new airport planning division. Kim said that the airport has virtually raised 600 billion won. Kim said four banks whose branches expect to open at the airport - Cho Hung, Hanvit, Shinhan and Foreign Exchange - have pledged to raise the money on the airport's behalf. "Despite the BAI's report, the airport could still run normally without the 1. 5 trillion won but we risk having to continuously revolve loans, like Seoul Subway," Kim said. As for the BAI's accusations of potential problems with the airport's IICS (integrated information control system), Kim noted the BAI inspection was carried out in March and that corrections have been made in the meantime. (Korea Herald 23-Sept-2000) SSANGYONG CEMENT: Takes on Japanese investor to cut debts --------------------------------------------------------- Taiheiyo Cement, Japan's largest cement maker, has agreed to pay US$350 million (S$613.5 million) for a controlling stake in Ssangyong Cement Industrial, which is looking for ways to reduce its debts. The deal is, however, unlikely to make a dent in Ssangyong's debt problems, analysts said. The company is looking this year to reduce 1.9 trillion won (S$2.9 billion) of debt, or about half of its total debt incurred before South Korea's financial crisis in 1997. Ssangyong will issue US$200 million of new common shares and US$150 million of preferred shares to Taiheiyo, giving the Japanese company a 28 percent stake and joint management of Korea's largest cement maker, Ssangyong said. Taiheiyo confirmed the investment and that payment would be made by the end of next month. "Securing the foreign investment will help Ssangyong to better meet its interest payments on its debts, but Ssangyong needs a lot more to cut its debt burden," said Mr Kang Jong Lim, an analyst at Daewoo Securities in Seoul. Ssangyong is also looking to sell real estate and part of its 69 percent stake in affiliate Ssangyong Information and Communications. The cement maker tried to sell off a 20 per cent stake to US-based Texas Industries for US$300 million, but talks collapsed two months ago because Texas Industries wanted Ssangyong's creditors to provide fresh capital to the cement maker first, analysts said. After Taiheiyo's investment, Chohung Bank, Korea Development Bank and other creditors plan either to swap 100 billion won worth of debt into equity or to buy convertible bonds of the same amount, the Korea Economic Daily said. Chohung Bank denied the report, saying "nothing has been decided at this time." (Bloomberg News, Straits Times 22-Sept-2000) =============== M A L A Y S I A =============== GENERAL SECURITIES INVESTMENTS: Proposes to liquidate ----------------------------------------------------- Listed closed-end fund General Securities Investments (GSI) has proposed to liquidate itself in view of the sharp and chronic discount to net asset value that its shares are trading. The proposal is, in the view of many market observers, a long-overdue acknowledgment of the unpopularity of closed- end funds here, and may prompt the other three closed-end funds to do likewise, the Singapore Business Times reported. "The managers of the other three closed-end funds in Singapore will find it difficult not to follow the lead, since their funds do trade at a discount to their net asset value, and have also seen little trading volume on the stock exchange," said Tan Keng Hock, director of Schroder Investments Singapore. DBS Bank, which owns 41.8% of GSI, has been appointed restructuring manager. The exercise involved a voluntary liquidation of GSI, and the return of either cash or units in a proposed open-ended unit trust to its shareholders. Besides GSI, the other closed-end funds listed here are OCBC-backed Harimau Investments, United Overseas Bank- backed United International Securities and Overseas Union Bank-backed Overseas Union Securities. Closed-end funds, which are sometimes called investment trusts, issue a fixed number of shares, and then use their capital to buy shares in other comanies. They are listed on the stock exchange and cannot be redeemed, but investors are paid dividends from investment profits. Open-ended funds or unit trusts issue units, and investors can buy or sell units from the fund managers concerned at the prevailing market value. The four closed-end funds in Singapore invest globally and were formed way back in the 1970s when there were no unit trusts which invested on a worldwide scale. However, with scores of unit trusts being sold in Singapore, closed-end funds have fallen out of favour, and this has been reflected in their low trading liquidity and the steep discount their share prices trade to net asset values. GSI admitted as much in its statement on Wednesday, saying that its planned restructuring was in response to the fact that its share price, like that of most closed-end funds, had persistently been trading at a significant discount to its net asset value. It added that its shares had been trading at an average discount of 28% over the past five years, and their closing price of S$1.01 on Sept 20 before they were suspended for the announcement represented a 37.7% discount to the fund's net asset value per share of S$1.62. AFX, quoting dealers, reported that General Securities Investments Ltd shares were sharply higher in mid-morning trade yesterday on news that the company is proposing to voluntarily liquidate as part of a restructuring programme. (Star Online 23-Sept- 2000) IPOH LTD: Selling Aussie properties to reduce debt -------------------------------------------------- Malaysian-controlled listed retail group Ipoh Ltd is about to sell its three-star Ibis Hotel in the Sydney's CBD for about A$23mil to hotel company Tourism Asset Holdings Ltd (TAHL). Ipoh will soon sign a deal with TAHL on the 167-room hotel, opened only in March last year. Ipoh is the owner of the highly successful retail property Queen Victoria Building, the Strand Arcade on George Street and the new Galeries Victoria shopping centre at 2, Park Street. It is also negotiating to sell the adjoining Civic pub for A$5mil to lessee, the Kospetas brothers. Ipoh managing director Bertie Sen was reported in The Australian as saying Ibis and the Civic pub were non-core properties of the group's asset sales. He said the buildings had a joint value of A$28mil and that Ipoh was close to a deal to sell the hotel and was holding separate discussions with a different party keen to buy the pub. Ipoh recently sold the Manning building in Pitt Street for under A$5mil to a local investor for redevelopment into commercial offices with some retail space. It is also selling a two-level terraced building close to Ibis for A$1.3mil. Money from the sale of Manning building and the impending sale of the Ibis, Civic pub and the terraced building will be used to reduce debt. (Star Online 23-Sept-2000) MBf HOLDINGS: Stake in MBf Capital reduced to pay down debt ----------------------------------------------------------- MBf Holdings Bhd has been gradually reducing its stake in MBf Capital Bhd, selling nearly half -- from 6.38 percent to 3.51 percent -- over the last seven months. In a statement to the Kuala Lumpur Stock Exchange, MBf Holdings reported it had disposed a total of 22.43 million MBf Capital shares in the open market from Feb 16 to Sept 4 for RM20.07 million. Proceeds from the sales were used to reduce bank borrowings of the group. MBf Holdings confirmed the sales should result in a gain of RM5.94 million for the fiscal year ending Dec 31, 2000, as well as an interest savings of about RM2 million per annum to the group. TIME ENGINEERING: Sells Renong warrants to pay down debt -------------------------------------------------------- Time Engineering Bhd has completed the sale of 29.89 million of Renong Bhd warrants, giving 20 million of these warrants free to its US dollar bondholders as part of its debt restructuring. In a statement, the company said net proceeds from the sale of the warrants amounted to RM2.61mil, which would be utilized to reduce the principal on its US$250mil nominal value redeemable secured zero-coupon bonds. WING TIEK HOLDING: SC rejects debt-rehab proposal ------------------------------------------------- The Securities Commission (SC) has rejected Wing Tiek Holdings Bhd's application for its proposed debt restructuring and capital reduction schemes. Wing Tiek said the SC rejected the schemes because the proposals were not comprehensive enough to overcome the company's financial problems, the company said in an announcement to the Kuala Lumpur Stock Exchange today. The SC had said that this was especially in respect to uncertainty about the group's ability to generate enough cash flow to finance its loan and interest obligations. The decision was based on Wing Tiek's cash flow forecast and projections for the five-year period ending Dec 31, 2005, as submitted to the SC indicating that the total net operating cash flow was only enough to fulfill its financial requirements, according to the statement Wing Tiek had proposed a debt restructuring and a four-to- one capital reduction exercise soon after it sought court protection in September 1998 under Section 176 of the Companies Act. The debt-restructuring proposal also included a restricted issue of shares, warrants and loan stocks. Wing Tiek said today its merchant bankers would be submitting an appeal to the SC within one month from the commission's letter "to address the concerns raised in the rejection .. The board of directors of Wing Tiek is confident that the appeal will be given due consideration." (The Edge 21-Sept-2000) ===================== P H I L I P P I N E S ===================== PETRON CORP : Projecting wider losses in second half ---------------------------------------------------- Petron Corp. expects its losses to widen in the second half of this year due to rising crude-oil prices and the depreciation of the Philippine peso against the U.S. dollar. "Our losses are still increasing," said Petron Chairman Jose Syjuco, who made his commnts Thursday after an oil- industry forum. He noted that the benchmark Dubai cude hit a 10-year high last week of $ 31-43 a barrel after averaging $26.18 in July, while the dollar had advanced to ahigh of 46.04 pesos Thursday from an average 44.41 pesos in July. Mr. Syjuco declined to provide an estimate of the Philippine oil refiner's second half loss, but said it will be larger than the first half's consolidated loss of 628 million pesos ($13.7 million). "Unless crude prices stabilize, it will be very difficult for any oil company to make a profit," he added. But sales will be higher as a result of a recent price adjustment, he said. Losses continue to mount because political and competitive pressures are preventing Petron from raising prices to levels needed to recoup aditional costs brought about by higher crude prices and a weaker peso, the chairman said. He estimated that even with the price increase this month. Petron still needs to raise prices by at least 1.43 pesos a liter to recoup additional costs. Meanwhile, the peso's slide against the dollar is also hurting Petron because a large portion of the company's debts are deniminated in U.S. dollars. Petron spokesman Antonio Pelayo said a rise in the U.S.currency of one peso translates to 17 centavoc a liter in addtitional cost for financing oil imports. The company's refinery has a daily run of at least 135,000 barrels. At the end of June, Petron's total liabilitites stood at 40.83 billion pesos. (Asian Wall Street Journal 22-Sept-2000) UNIWIDE GROUP: Casino taps local group to help revive ----------------------------------------------------- French retail giant Casino Guichard-Perrachon SA is tapping a local investor to give a helping hand in saving the debt- stricken Uniwide Group of Companies from financial distress. The Uniwide Group will be seeking shareholders' approval on the entry of a third-party investor in a special stockholders meeting to be held today. BusinessWorld learned yesterday that Uniwide's French white knight is finalizing discussions with a still unidentified local group to own majority interest in Fil-Franco Realty & Resources, Inc. (FFRRI), the Uniwide group's real estate arm. "Casino will still end up the majority owner of Uniwide but they're getting a partner for the property company since under the Constitution, real estate should still be Filipino-owned," Uniwide receivership committee chairman Monico Jacob told BusinessWorld. Mr. Jacob, however, said the receivership committee is not privy to the discussions since Casino is negotiating with the prospective local investor. Fil-Franco, which will be a 60-40 joint venture between the local group and Casino -- will become a subsidiary of listed firm Uniwide Holdings, Inc. which is in charge of the retail-related properties of the Uniwide Group. Meanwhile, Uniwide investor relations manager Jean Javier said the management has decided to include the Coastal Mall along Manila Bay in the list of assets which will be sold to the Casino Group to address any cash shortfall. "To solve the shortfall, we've decided to include the Coastal Mall but we don't have the exact value of the mall yet. Casino is still reviewing the numbers and the potential revenues of the mall," she said. The Casino Group -- France's second-largest retail chain -- has agreed to invest $110 million in the bankrupt retail company which filed for suspension of debt payments after experiencing financial difficulty. Under the agreement, Casino will acquire Uniwide's 10 warehouse-type discount stores (called hypermarkets), one distribution center, and five real-estate projects. These assets are estimated to be worth four billion Philippine pesos ($86.96 million at PhP45.996=$1). Casino also intends to construct and operate five additional warehouse club stores over the next several years in various parts of the country. From Casino's investment, it is projected that over 4,000 direct jobs will be saved, while more than 2,000 suppliers will resume business stalled by the temporary halt in Uniwide's business operations. More than 200,000 workers of the suppliers will regain employment. However, the French firm will only infuse the much-needed investment once Uniwide finalizes its rehabilitation with creditor banks. As of yesterday, only seven banks have signed the memorandum of agreement for the amended recovery plan. These are: United Coconut Planters Bank, East Asia Capital Corp., International Exchange Bank, Global Business Bank, Bank of the Philippine Islands, Rizal Commercial Banking Corp., and Equitable-PCI Bank. Out of the group's PhP11.1-billion ($241.32 million) debt, PhP6.95 billion is owed to 13 creditor banks. Loans from the banks have maturities ranging from 1998 up to 2003. Creditors which have yet to sign the agreement are the Philippine National Bank, Allied Banking Corp., Land Bank of the Philippines and East West Bank. The Uniwide Group filed for rehabilitation last June after failing to meet payment of over PhP11 billion in debts, incurred from its unsuccessful expansion into the property sector. The group is composed of Uniwide Sales, Inc.; Uniwide Holdings, Inc.; Naic Resources & Development Corp.; Uniwide Sales Reality & Resources Corp.; First Paragon Corp.; and Uniwide Sales Warehouse Club, Inc. (Business World 22-Sept-2000) ================= S I N G A P O R E ================= GENERAL SECURITIES INVEST.: Proposing voluntary liquidation ----------------------------------------------------------- General Securities Investments Ltd, a closed-end fund managed by DBS Asset Management, is proposing a voluntary liquidation as part of a restructuring program. "Upon liquidation, General Securities shareholders may elect by a majority to receive either cash or units in a new open-ended unit trust," the company said in a released statement. "This planned restructuring is in response to the fact that General Securities' share price, like that of most closed- end funds, has persistently been trading at a significant discount to net asset value," restructuring manager at Development Bank of Singapore said in the statement. Reinvestment of liquidation proceeds could eliminate negative effects on the share price associated with closed- end funds, DBS said. The restructuring is to be submitted for approval by shareholders at a special meeting expected to be completed by early 2001. =============== T H A I L A N D =============== BANKTHAI: To sell Bt9B worth of assets -------------------------------------- BankThai plans to offer repossessed assets worth nine billion baht for sale as part of capital restructuring and management plans approved by the cabinet earlier this week. The bank will offer discounts to government agencies and regular market prices to private purchasers. Ekachai Tivutanon, BankThai Vice President, said vacant plots of land scattered around provincial areas account for roughly half of the total assets, for which he admitted it would be particularly difficult to find buyers. However, he added that the Bank of Thailand was prepared to grant certain special privileges to encourage offers. BankThai yesterday reported that its non-performing loans (NPLs) to the end of August stood at 67.19 percent of its total 160 billion baht credit, down from 68.9 percent in July. The bank said it expected to recover around 30 percent of the total bad loans' value. This week the cabinet approved BankThai's bid to retain self-management, permitting the bank to look after its own NPLs, rather than transferring them to its parent, the state-run Financial Institutions Development Fund (FIDF). Finance Minister Tarrin Nimmanahaeminda said the planned capital restructuring will return the bank to "good" status with a ratio of capital to risk assets of about 17 percent, double the regulatory minimum of 8.5 percent. BankThai was formed from the merger of a failed private bank and 12 defunct finance companies, and inherited hefty bad debts as a result of the consolidation. Shares in the bank have been suspended since August 13, 1999 and last traded at 2.20 baht. (Business Day 22-Sept-2000) SIAM CITY BANK: Transfer of good assets likely plan --------------------------------------------------- Thai central bank Governor Chatu Mongol Sonakul said late Thursday he will propose to the finance ministry the good assets of the nationalized Siam City Bank PCL (H.SCB) be transferred to the state BankThai PCL (H.BT). Chatu Mongol told reporters BankThai officials have agreed in principle to the transfer of good assets, including performing loans, deposits and selected employees of Siam City Bank. "I think a transfer of good assets to BankThai is the best solution. It's better than taking the risk of managing it by ourselves," he said. The state Financial Institutions Development Fund, or FIDF, will also be freed from the responsibility of injecting more money into Siam City Bank. The finance ministry has already agreed to a plan to transfer Siam City's nonperforming loans to an asset management company wholly- owned by the bank, along with many of the employees. Employees not transferred to BankThai or the asset management company are expected to be compensated in a downsizing and early retirement plan. Chatu Mongol said Siam City Bank has nonperforming loans of about 200 billion baht ($1=THB42.658), for which a recovery rate of 45% is expected. The governor said earlier the good assets of Siam City Bank are worth around THB50 billion. The status of BankThai's assets is similar. The two banks have cut official nonperforming loan levels to about THB150 billion through restructuring and court action. BankThai is a state bank formed two years ago through the merger of a failed bank, a state finance company, and 12 closed finance companies. Siam City Bank was nationalized as a part of the state's financial sector restructuring following the financial crisis of 1997. (AsiaGateway 23-Sept-2000) THAI-GERMAN PRODUCTS: Completes debt-equity swap ------------------------------------------------ Thai-German Products has completed a debt-equity swap as part of its business-rehabilitation plan. Per that plan, 180.14 million shares of the company at a price of Bt7.68 a share were offered to its creditors for the limited time of September 1 to 6. 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