/raid1/www/Hosts/bankrupt/TCRAP_Public/001010.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                               A S I A   P A C I F I C

           Tuesday, October 10, 2000, Vol. 3, No. 197

                                        Headlines


* A U S T R A L I A *

AUSTRALIAN TEA TREE OIL RESEARCH INSTITUTE: In liquidation
EISA: Austar acquisition finally ratified
PACIFIC ASIA MERCHANDISE INT'L.: Banks seek crim.charges
SURF DIVE `n' SKI: Fugitive may owe creditors A$70M


* C H I N A  &  H O N G  K O N G *

AVION PEMAS CO.LTD.: Facing winding up petition
HAINAN INT'L TRUST: Sells stakes in firms
NANJING PANDA: To sell TV business, focus on telecoms


* I N D O N E S I A *

SALIM GROUP: Expected to cough up cash


* J A P A N *

CHIYODA MUTUAL LIFE INSUR.: Files for creditor protection
CRAYFISH CO.: Sued by its U.S. investors
HIKARI TSUCHIN: Sued by Crayfish's U.S. investors
SOFTBANK CORP.: Faces loss on stake sale


* K O R E A *

ANAM GROUP: Fails to meet debt servicing
CENTRAL BANKING CORP.: Seoul to inject public funds
DAEWOO CORP.: Fails to meet debt servicing
DAEWOO ELECTRONICS: Fails to meet debt servicing
DONG-A GROUP: Fails to meet debt servicing
DONGBU GROUP: Fails to meet debt servicing
DONGKUK STEEL: Fails to meet debt servicing
DOOSAN GROUP: Fails to meet debt servicing
HANJIN GROUP: Fails to meet debt servicing
HANSOL GROUP: Fails to meet debt servicing
HANWHA GROUP: Fails to meet debt servicing
HYUNDAI CORP.: Fails to meet debt servicing
HYUNDAI OIL REFINERIES: Fails to meet debt servicing
H & S INVESTMENT BANK: Seoul to inject public funds
KOHAP GROUP: Fails to meet debt servicing
KOLON GROUP: Fails to meet debt servicing
KOREA MERCHANT BANK: Seoul to inject public funds
SAEHAN GROUP: Fails to meet debt servicing
SSANGYONG GROUP: Fails to meet debt servicing
TONGYANG GROUP: Fails to meet debt servicing
YONGPOONG GROUP: Fails to meet debt servicing


* M A L A Y S I A *

SIME DARBY: May sell some businesses in planned revamp
TENAGA NASIONAL: Looking for loan re-fi to cut interest
UNITED ENGINEERS MALAYSIA: Shares plunge to 14-mo.low


* P H I L I P P I N E S *

PHILIPPINE NAT.BANK: Gov't stake sale gets 2-yr.delay
PILIPINO TELEPHONE CORP.: In final debt-rehab talks


* S I N G A P O R E *

CITY-E SOLUTIONS: Shares take freefall


* T H A I L A N D *

SIAM CITY BANK: Finance Ministry rejects rescue plan


=================
A U S T R A L I A
=================

AUSTRALIAN TEA TREE OIL RESEARCH INSTITUTE: In liquidation
----------------------------------------------------------
Australia's largest tax-driven research scheme, the
promotion of tea tree applications for range of consumer
and medical products, Budplans 1 to 7, which attracted an
estimated $600 million from investors over four years, has
suffered a possibly mortal blow following the liquidation
of the research institute carrying out the research work.

The institute, the Australian Tea Tree Oil Research
Institute, started operation in 1996 from Southern Cross
University in Lismore and was placed in liquidation last
June after the Australian Taxation Office issued it with a
$147 million tax bill it could not pay.  It also faces a
$7.6 million claim by the manager of the tea tree research
investment scheme, Business and Research Management (BARM).

Retail investors invested in four Budplans, each of which
dealt with different tea tree oil applications, from acne
and foot problems to dandruff, investing in units of
$24,000, all of which was borrowed and $18,000 of which had
to be repaid only out of profits made from the research
applications. A tax deduction was claimed by investors for
the $24,000 plunged into the scheme, although only $6,000
had to be repaid if profits did not emerge.

There were also three company research plans dealing with
deodorants, haircare and skin care products. According to a
report prepared by the liquidator, Mr Ron Dean-Wilcox, the
institute received $340 million in research fees of which
$256 million was deposited on a non-recourse basis and $84
million deposited on a recourse basis.

The money was lent to investors by a related company,
Project & General Finance Pty Ltd, a subsidiary of Budplan
promoter Mainstair One Holdings Ltd. Of the recourse
component $81.3 million has been recovered in cash and a
further $2.8 million is potentially recoverable from
investors.

The institute paid $34.2 million in administrative fees to
the manager, BARM, over the four-year period and paid
financial planners selling the schemes to retail clients
commissions of $18.5 million. It also spent $41.2 million
on research and $3.6 million on capital.

The tax bill arose when the ATO decided that all income
received by the institute was non-exempt and hence
assessable. However, it allowed deductions of the
expenditure incurred in deriving income. The assessment is
for $98 million in primary tax and penalties and interest
of $49 million.

The institute had lodged an application for registration as
a Registered Research Agency, which was denied by the
Industrial Research & Development Board in 1997. It
appealed to the Administrative Appeal Tribunal which upheld
the IRDB's earlier decision. The liquidator said he was
likely to object to the tax assessment. A separate appeal
in the Federal Court against the AAT decision is also in
train.

BARM is also seeking $1.6 billion in consequential damages
for the closure of the research facility.  A surplus on
liquidation of $3.4 million has been estimated. (Sydney
Morning Herald  09-Oct-2000)

EISA: Austar acquisition finally ratified
-----------------------------------------
Austar United Communications' acquisition of Internet
services provider eisa Limited has been finalized. The $A13
million deal was ratified by the Supreme Court of New South
Wales on Oct. 6.  The sale to Austar was approved by
creditors in September.

PACIFIC ASIA MERCHANDISE INT'L.: Banks seek crim.charges
--------------------------------------------------------
Three investment banks are urging New South Wales
authorities to file criminal charges against Tina Liu, who
has left ABN Amro, Citibank and Standard Chartered facing
losses of nearly $A100 million on the collapse of Liu's
Pacific Asia Merchandise International Sydney-based export
company.

The banks want the NSW Commercial Crime Agency to open a
criminal investigation and augment the hunt for Liu, who
has not been seen in Australia since September 1999. She is
believed to be hiding in Hong Kong or China. PAMI
liquidator Richard Grellman of KPMG said most of the
company's funds appeared to have been fraudulently
obtained.

SURF DIVE `n' SKI: Fugitive may owe creditors $A70M
---------------------------------------------------
A Gold Coast businessman who left Australia in early
October 2000 could owe creditors up to $A70 million. Lakhmi
Daswani owned 15 Surf Dive 'n' Ski stores, La Trump jewelry
boutiques and penthouses in Queensland and Sydney. His
companies also controlled a number of children's wear
stores, including 888, Coco Kidz, Bow Blue, Heaven to Seven
and the Ozmosis clothing chain. Separate administrators
were appointed.

The Australian Securities and Investment Commission (ASIC)
has called for assistance from the United States Federal
Bureau of Investigation in their search for Daswani.
Creditors include Hong Kong Bank, ANZ Bank, Rip Curl and
Quicksilver. (ABIX - Australasian Business Intelligence:
The Courier-Mail  07-Oct-2000)


==============================
C H I N A  &  H O N G  K O N G
==============================

AVION PEMAS CO.LTD.: Facing winding up petition
-----------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing on October 18 on the petition of
Yeung Siu Fufn, Josephine for the winding up of Avion Pemas
Company Limited. A notice of legal appearance must be filed
on or before October 17.

HAINAN INT'L TRUST: Sells stakes in firms
-----------------------------------------
Hainan International Trust & Industrial Corp. (Hitic),
state-owned investment firm of China's southern Hainan
province, is selling stakes in three companies, according
to an advertisement in the China Securities newspaper.

Hitic is offering to auction 97.5 million shares in Hainan
Industrial Development Corp., or nearly 55 percent of the
agricultural and industrial firm, ahead of the firm's
initial public offer, the advertisement said. Hitic also
will auction 216,000 "legal person" shares of Hainan
Airlines Co., which are state-held stocks that cannot be
traded in the open market. Additionally, it will auction
340,000 "legal person" shares in Hainan Airport Co.,
manager of the island province's largest airport.

The auctions come as the cash-strapped investment firm has
had difficulty repaying debt. As of Friday, it hadn't made
an overdue interest payment on outstanding Samurai bonds.
The sales may be the start of a move to wind up Hitic's
businesses.  The auction will be held Oct. 19 in Haikou
city, the capital of Hainan province, Hitic said. Its
officials could not be reached for comment. (Bloomberg  09-
Oct-2000)

NANJING PANDA: To sell TV business, focus on telecoms
-----------------------------------------------------
Nanjing Panda Electronics Co. plans to sell its
unprofitable television businesses to its parent to focus
on money-making telecommunications units.  Panda, which
lost 832.6 million yuan ($100 million) in 1997 and 1998
because of poor television sales, will sell 167 million
yuan of assets -- most television businesses -- to Panda
Electronics Group Co. in exchange for stakes in two
profitable companies, the company said in a statement.

After the sales, Nanjing Panda will own 38 percent of
Shenzhen Jinghua Electronics Co., which makes videophones
and other digital products. It will also own 99 percent of
Nanjing Panda Machinery Equipment Factory.

China's biggest makers of home applicances, including Konka
Group Co. and Haier Group Co., are increasingly investing
in telecommunications ventures to take advantage of the
rapid growth of China's information technology industry.
Nanjing Panda earned a 72.3 million yuan in the first half
of this year. Telecommunications businesses contributed
some 80 percent to the profit, according to the company's
first-half financial statement.

Nanjing Panda's Hong Kong-traded shares fell 29.2 percent
this year, compared with a 4.7 percent drop in the Hang
Seng China Enterprises, which tracks Chinese state
companies. The stock closed at HK$1.38 yesterday, down 10.9
percent. (Bloomberg  10-Oct-2000)


=================
I N D O N E S I A
=================

SALIM GROUP: Expected to cough up cash
--------------------------------------
Under pressure to get tough with bad debtors, Indonesia has
ordered former bank owners including the Salim Group to
cough up cash to help cover billions of dollars in debts to
the state.

The government's Financial Sector Policy Committee, through
committee secretary Syafruddin Temenggung, said the cash
would cover any shortfall between the stated value of
assets the former bank owners had pledged to cover their
debts if the market value of the assets had since fallen.
As a safeguard, the government would now require the former
bank owners to
pledge additional assets as guarantees if some of their
assets already under state control were insufficient to
cover the obligations, he told reporters late on Friday.

Under deals reached during the administration of former
president B. J. Habibie, the former bank owners were
required to pledge assets to repay huge loans given to
shore up their banks during the height of the regional
currency crisis in the late 1990s.  "Payments must be made
in cash and in full," Temenggung said, without giving a
timeframe for the order, which is separate from
controversial major debt restructuring deals with other
firms announced earlier this week.

The decision was made following concerns by some officials
that the value of the pledged assets had fallen
substantially, possibly leaving the state to shoulder heavy
losses. Under the deals reached during Habibie's rule, the
former bank owners were
considered to have repaid their debts in full if the value
of pledged assets, based on recommendations by appointed
advisers, matched the amount of the debts.

But officials discovered earlier this year that there were
indications of mark up in valuations and that if the assets
were sold, the proceeds would be lower than the advisers'
valuations.
Many of the pledged assets under that scheme were of a
financially dubious quality, making it difficult for the
government to raise maximum value from sales, analysts
said.
Temenggung did not say who would decide what shortfall
existed  between the pledged assets and their market value.

The decision to ask for cash was expected to force debtors,
including the conglomerate Salim Group, to pledge
additional assets that would be easier to sell such as
stakes in blue chips including Indofood, Hong Kong-based
First Pacific and Singapore-based bread maker QAF Ltd.
(Asiagateway, Reuters 9-Oct-2000)


=========
J A P A N
=========

CHIYODA MUTUAL LIFE INSUR.: Files for creditor protection
---------------------------------------------------------
In the biggest failure of a Japanese life insurer to date,
Japan's Chiyoda Mutual Life Insurance Co said on Monday it
had filed for court protection from creditors under new
fast-track laws for financial firms.

The failure -- making Chiyoda Mutual the nation's biggest
corporate bankruptcy with 2.94 trillion yen ($26.95
billion) in total debt - should heat up a survival battle
in the hard-hit industry, already reeling from a triple
blow of falling premium income, low investment returns and
weak share prices.  Those still in weak financial health
will be pressed harder to seek mergers or rescue takeovers
amid the increasing competition that has developed since
1998, when deregulation opened the way for international
insurers to enter the domestic market, analysts said.

The Chiyoda move was also likely to hurt sentiment in
Japan's share market when it opened on Tuesday after a
holiday on Monday.  Chiyoda Mutual President Reiji Yoneyama
told a news conference the nation's 12th largest life
insurer had filed for protection with the Tokyo District
Court. That would make the company the fifth life insurer
to fail in Japan's post-war history.

Yoneyama also said he has submitted his resignation to a
court-appointed administrator.  The 96-year-old Chiyoda
Mutual was the first institution to seek court protection
under the new laws, enacted in June with the aim of dealing
with troubled financial institutions.

Left with hefty non-performing assets after Japan's late
1980s assets-price bubble burst, Chiyoda Mutual has been
plagued by persistent worries about its financial health
and hit by a rush of insurance policy cancellations. Its
failure had little sustained impact on the yen in Asian
trading on Monday, but it could weigh on Japanese stocks.

"This isn't news that came as a total surprise, as Chiyoda
has long been thought to be in weak health, but news of its
actual failure could add caution, especially among
foreigners, over potential risks in their Japanese asset
holdings," said Masaaki Higashida, deputy general manager
at Nomura Securities.

Higashida said the benchmark Nikkei average of 225 leading
shares could dip as low as 15,550 this week. The Nikkei
ended down 0.65 percent at 15,994.24 on Friday.

In a move that echoed its past interventionist policies,
Japan's government had urged banks on Friday to press on
with efforts to save the mid-sized Chiyoda after Tokai Bank
clouded its future by toughening conditions for a bailout.
Tokai, which has spearheaded rescue efforts for Chiyoda
Life, told the ailing insurer it must tie up with a foreign
firm to get any financial help.

The bank had toughened its stance while it concentrated on
a planned union next April with Sanwa Bank and Toyo Trust &
Banking. Chiyoda had been in talks with several foreign
firms including Germany's Allianz group (ALV.XET), but none
of the alliance discussions have borne fruit thus far.

"We have tried to form an alliance with several foreign
supporters, but we have judged that such an alliance would
be difficult," said Yoneyama.

Chiyoda expressed hope it would find foreign supporters
after the court filing, saying it had recently held talks
with American International Group (AIG) (AIG) of the United
States to seek its financial help under the court-led
rehabilitation process.  Japan's Financial Services Agency
(FSA) Commissioner Masaharu Hino had confirmed on Friday
that AIG was a possible candidate to help Chiyoda
reconstruct its troubled operations.

Chiyoda asked Tokai in June for a capital infusion after
its solvency margin ratio -- a key gauge of its ability to
meet claims -- fell to 263.1 percent, considered
dangerously near the 200 percent warning level. Analysts
say Chiyoda's balance sheet has only worsened since it
requested help in February and unveiled restructuring plans
that included 800 job cuts and closure of four-fifth of its
branches.

Chiyoda, which held assets of some 3.5 trillion yen as of
the end of March, was expected to have suffered negative
net worth of some 34.3 billion yen as of the end of
September.  FSA's Hino said that no other insurers were in
a financial crisis or faced a negative net worth at the end
of September, but few analysts believe the industry's woes
are already over.

An FSA inspection outcome showed last month that 19 life
insurers held loans with serious recovery risks of 233
billion yen as of March, four times the amount declared by
the firms.  Chiyoda's policyholders will be largely
protected by current reserves at Chiyoda as well as an
existing safety net set up by the industry, but some
insurance payouts could be lower than planned.

With the government having committed to providing 400
billion yen to the safety net, a total 960 billion yen will
be made available in the safety net scheme until March
2003.  Japan's second biggest corporate bankruptcy took
place in September 1998, when Japan Leasing, a unit of
failed Long-Term Credit Bank of Japan, went under with 2.18
trillion yen in debt. (European Investor/Reuter  09-Oct-
2000)

CRAYFISH CO.: Sued by its U.S. investors
HIKARI TSUCHIN: Sued by Crayfish's U.S. investors
-------------------------------------------------
Internet investor Hikari Tsushin Inc. and its business
partner and e-mail service provider Crayfish Co. are now
defendants in a class-action lawsuit filed by Crayfish's
U.S. shareholders, with claims expected to grow to between
5 billion and 8 billion yen.

Investors who purchased common stock in Crayfish Co. from
March 8 through Aug. 22 are being invited to take part in
the class-action suit as plaintiffs. The New York law firm
that represents the investor-plaintiffs, Shalov Stone &
Bonner (SSB), is using its Web site to invite eligible
Crayfish shareholders to join the lawsuit.

The lawsuit was filed Sept. 8 in the United States District
Court for the Southern District of New York. After its
filing, several law firms throughout the country began
searching for possible plaintiffs. To date, at least 10 law
firms have filed similar class-action complaints with the
district court, with the number of plaintiffs potentially
reaching into the hundreds.

In the lawsuit, investor-plaintiffs allege that the
defendant companies violated federal securities laws by,
among other things, misrepresenting Crayfish's business
condition and failing to disclose material facts concerning
the impact of decline in business of its major business
partner, Hikari Tsushin. The suit also asserts that
Crayfish failed to disclose that Hikari Tsushin's declining
financial condition was impacting its business at the time
of Crayfish's initial public offering--March 8 to Aug. 30.

Hikari Tsushin is joined in the suit with Crayfish under
U.S. federal securities law provisions that specify any
entity that affects a defendant's management must also
shoulder responsibility. Established in 1995, Crayfish
provides e-mail and other Internet-related services to
small and medium-sized businesses in Japan. Hikari Tsushin
is the company's largest shareholder.

Crayfish was listed on the U.S. Nasdaq market on March 8,
becoming the first Japanese company to do so. It also
listed on the Tokyo Stock Exchange's Mothers--short for
"market of high-growth and emerging stocks"--later that
month.  While its share price the first day of its IPO
reached a closing price of 126 dollars, days later it had
sank to only 2 dollars.  The class-action suit maintains
that the dive in Crayfish's stock price was caused by the
decline in Hikari Tsushin's business, which was not
properly disclosed by Crayfish.

Hikari Tsushin officially announced its insolvency on March
30 in Japan, some three weeks after Crayfish's IPO in the
United States. According to plaintiffs' lawyer Ralph Stone,
Crayfish failed to disclose that Hikari Tsushin's declining
financial condition was impacting Crayfish's business at
the time of its initial public offering.

Crayfish denies failing to disclose any information and
vows to fight the lawsuit fully. Hikari Tsushin, meanwhile,
maintains it immediately disclosed the information when it
knew its business was failing. The company has not yet
received official notice of the lawsuit.

SOFTBANK CORP.: Faces loss on stake sale
----------------------------------------
Japanese internet investment group Softbank Corp. expects
to record a 19.3 billion yen ($177 million) consolidated
loss on the sale of its stake in Able, an apartment leasing
company.

Neither Softbank nor Able could be reached for comment on
the rationale behind the sale or its impact on the
investment group's financial position. One analyst
suggested it may have been intended to clear the way for
Softbank's entry into the real estate business.

However, the loss - revealed late on Friday evening - is
likely to reinforce investor concerns about the company's
strategy. Softbank's shares have fallen nearly 75 percent
since May as some analysts and investors have stepped up
criticism of the group, particularly its purchase of a 49
percent stake in Nippon Credit Bank, which was nationalized
in 1998.

Shares in Softbank closed down 3.7 per cent or 360 yen at
9,350 yen on Friday before the announcement.  Softbank did
not appear to have held the 33.24 percent stake in Tokyo-
based Able very long, as the leasing company has only been
listed since August 1998 and Softbank was not named
explicitly among principal investors as recently as this
spring. SB K&K, a financial unit not mentioned in company
materials,bought the shares for Softbank and sold them for
about 5 billion yen.

Analysts said the sale was not likely to have a significant
impact on the group's results or cash flow position because
Softbank could sell other holdings in its portfolio of 450
companies to offset the loss. Softbank has been been
selling parts of its stake in Yahoo!, the internet portal,
since February 1999.  The group had net unrealized gains
totaling 2,137.2 billion yen ($19.65 billion), including
1,055.7 billion yen from Yahoo!, at Friday's market prices,
according to the company's website.

However, profits from the sale of any of these holdings
would be lessened by tax charges. Softbank, unlike most
listed Japanese companies, has not disclosed a profits
forecast for the year to March 31 2001. (Financial Times
09-Oct-2000)


=========
K O R E A
=========

ANAM GROUP: Fails to meet debt servicing
DAEWOO CORP.: Fails to meet debt servicing
DAEWOO ELECTRONICS: Fails to meet debt servicing
DONG-A GROUP: Fails to meet debt servicing
DONGBU GROUP: Fails to meet debt servicing
DONGKUK STEEL: Fails to meet debt servicing
DOOSAN GROUP: Fails to meet debt servicing
HANJIN GROUP: Fails to meet debt servicing
HANSOL GROUP: Fails to meet debt servicing
HANWHA GROUP: Fails to meet debt servicing
HYUNDAI CORP.: Fails to meet debt servicing
HYUNDAI OIL REFINERIES: Fails to meet debt servicing
KOHAP GROUP: Fails to meet debt servicing
KOLON GROUP: Fails to meet debt servicing
SAEHAN GROUP: Fails to meet debt servicing
SSANGYONG GROUP: Fails to meet debt servicing
TONGYANG GROUP: Fails to meet debt servicing
YONGPOONG GROUP: Fails to meet debt servicing
-----------------------------------------------------
As many as 18 of Korea's top 30 business groups and their
subsidiaries were unable to cover their debt servicing
obligations with their own business operations last year
according to a Financial Supervisory Service (FSS) report
submitted to the National Assembly Friday.

The debt-servicing ratio, which compares interest paid out
on loans to operating profit, is one of the criteria
included in the government guidelines to used by creditor
banks in evaluating firms to be declared non-viable, which
would then mark them for possible liquidation.

According to the FSS report, the chaebol and firms with
debt service ratios below 1 as of the end of last year were
as follows: Hyundai, with a ratio of 0.77; Hanjin, with
0.86; Daewoo Corp., with -3.14; Hanwha, with 0.75;
Ssangyong, with 0.25; Hansol, with 0.24; Doosan, with 0.77;
Hyundai Oil Refineries, with 0.50; Dong-A, with 0.36;
Dongkuk Steel, with 0.57; Dongbu, with 0.68; Kolon, with -
0.19; Tongyang, with 0.72; Kohap, with -0.34; Daewoo
Electronics, with -0.31; Anam, with 0.42; Saehan, with
0.33; and Yongpoong, with a ratio of 0.76.

Out of these groups and firms, seven have been suffering
from a chronic debt-servicing problem and have been unable
to get their ratios above 1 for the past 3 years. These
seven are as follows: Hanjin, Hansol, Doosan, Dong-A,
Dongkuk Steel, Dongbu and Kohap.
Meanwhile, S-Oil had the highest debt-service ratio of 2.18
last year, with W401.1 billion in operating profits and
W183.9 billion in interest payments, according to the FSS
report. (Digital Chosun  09-Oct-2000)

CENTRAL BANKING CORP.: Seoul to inject public funds
H & S INVESTMENT BANK: Seoul to inject public funds
KOREA MERCHANT BANK: Seoul to inject public funds
---------------------------------------------------
The government will pump public funds into three shaky
merchant banks next month and place them under the Korea
Deposit Insurance Corp. (KDIC), the Financial Supervisory
Commission (FSC) said yesterday.

The three troubled institutions are Korea Merchant Banking
Corp., Central Banking Corp. and H&S Investment Bank, whose
operations have been suspended because of liquidity
problems.  "The government will be able to inject public
funds into them next month," a senior FSC official said.
"The FSC is considering the amount of public funds
and its timing, based on the results of due-diligence
audits into their assets and liabilities."

The official, however, refused to reveal the specific
balance-sheet figures of each merchant bank.  The
government has to take into account the situation in which
a bill to raise additional public funds will pass
parliamentary deliberation, the official said. For the
second-phase financial restructuring, the government
has vowed to secure 40 trillion won in additional public
money.

The FSC had earlier planned to put public funds into the
three embattled merchant banks and put them under the state
deposit guarantee agency within this month.  Before placing
the insolvent merchant banks under the wing of the KDIC,
the government will reduce their capital because the due-
diligence inspections have confirmed their liabilities far
exceed their assets, the official said.

Prior to the public money injection, the three merchant
banks will be declared insolvent this month under a law on
the restructuring of the financial industry, the official
added.  "After placing the three merchant banks under the
KDIC, the government will decide how to deal with them by
the end of this year," he said.

The government will consider pushing for the sale of the
merchant banks separately or converting them into
commercial banks and securities brokerage houses, the
official said. A third option is to merge the trio with
another troubled merchant bank, Yeongnam Merchant Banking
Corp, and place the merged company under an envisioned
financial holding company, he added.

In late August, the financial watchdog suspended the
operations of Korea Merchant Banking Corp. for three
months, while doing the same to Central Banking Corp. Sept.
1. The business of H&S Investment Bank has also been
suspended.  The domestic merchant banking industry has been
hit hardest by the nation's financial crisis. Before the
foreign exchange crisis hit the country in late 1997,
nearly 30 merchant banks were in business, but the number
has been reduced to five. (Korea Herald  09-Oct-2000)


===============
M A L A Y S I A
===============

SIME DARBY: May sell some businesses in planned revamp
------------------------------------------------------
Sime Darby Bhd., Malaysia's oldest diversified company, may
sell some of its smaller operations as part of plans to
reorganize its businesses, the Edge weekly magazine
reported, citing unidentified people.

Sime Darby hasn't said what businesses it would sell,
though it will probably involve its so-called Malaysia
Region operations, the magazine said.  Sime Darby's key
businesses are plantations, property development, heavy
equipment, tire manufacturing, motor assembly and
distribution and power generation.

Its Malaysia Region operations include manufacturing,
travel and tourism, oil and gas and engineering activities.
The company also plans to put its Malaysian motor
businesses, currently controlled by its Tractors Malaysia
Holdings, under its Hong Kong motor division to help
"centralize" those businesses, the magazine said.
As earnings from its palm oil business drops because of
declining prices, Sime Darby is looking to its other
operations to boost profit. (Bloomberg, The Edge  09-Oct-
2000)

TENAGA NASIONAL: Looking for loan re-fi to cut interest
-------------------------------------------------------
Malaysia's Tenaga Nasional Bhd. the dominant power utility,
is looking into refinancing a portion of its ringgit loans
to reduce heavy interest charges, the Business Times
newspaper reported Monday.

According to the report, Tenaga is said to be considering
Islamic debt instruments which are cheaper than its
existing short-term ringgit denominated loans. Tenaga has
total borrowings of about 25 billion ringgit ($1=MYR3.80),
of which 43% is ringgit-denominated. Total interest
payments amount to about MYR1.2 billion per annum.

Tenaga officials were not immediately available to comment
on the report. Debt servicing is Tenaga's third largest
cost component, after capacity payments to independent
power producers and fuel costs.  Company executives said
Tenaga's main objectives this year include managing its
high borrowings and costs.

The report said that Tenaga Chairman Jamaludin Jarjis told
fund managers in London that the management is undertaking
a thorough review of all business units to improve
efficiency.  Non-core activities might be outsourced if it
is cheaper to do so, he said.

Jamaludin also stressed the importance of new income
streams from non-traditional activities to boost revenue.
Among the opportunities that could be tapped immediately
were the 5,000 kilometers of fiber-optic cables embedded in
the company's transmission lines, as well prime land for
development in choice locations, Jamaludin said.

The company is considering joint-ventures with property
companies to develop select sites that it owns. Tenaga is
also venturing into electronic-commerce and will possibly
establish a business-to-business exchange as it already has
about 5,000 business clients in its database. (AsiaGateway
09-Oct-2000)

UNITED ENGINEERS MALAYSIA: Shares plunge to 14-mo.low
-----------------------------------------------------
United Engineers Malaysia Bhd (UEM) shares plunged to a 14-
month low on concern its vice-chairman, Halim Saad, won't
honour an option due in February to buy back more than
US$600 million (S$1 billion) in Renong Bhd stock from UEM.

"It's a billion dollar question; if he doesn't honour it
there will be fallout" in the market, said Loke See Ooi,
research manager at Worldsec Securities Advisor Sdn.

Failure to honour that option is likely to fuel more
concerns that politically connected Malaysian companies
aren't doing enough to protect minority investors.  UEM
shares fell a fourth day, losing 52 sen, or 9.5 per cent,
to RM4.98, its lowest level since Aug 9, 1999.

That's also its biggest one-day drop since April 17. It's
the second-most-active stock with 3.8 million shares
traded, more than double its six month daily average of
1.49 million shares. The stock has tumbled 29 per cent the
past month, making it the third worst performing stock on
the benchmark Composite Index.

In November 1997, UEM incurred the wrath of minority
investors when it bought 32.6 per cent of Renong for RM2.34
billion (S$1.1 billion), or RM3.24 per share, a 12 per cent
premium to Renong's price at that time. UEM shares plunged
38 per cent after the announcement.  (Bloomberg, Business
Times  10-Oct-2000)


=====================
P H I L I P P I N E S
=====================

PHILIPPINE NAT.BANK: Gov't stake sale gets 2-yr.delay
-----------------------------------------------------
In the end, it was a partial victory for both tycoon
Lucio C. Tan and the National Government. The Bangko
Sentral (central bank) last Friday confirmed the tobacco
and beer magnate had deposited 10.2 billion Philippine
pesos ($220 million at PhP46.362=$1) in fresh capital for
the Philippine National Bank (PNB), paving the way
for the approval of its rehabilitation plan.

This saved the National Government from the prospect of
having to raise PhP10 billion to recapitalize the bank had
Mr. Tan walked away from the deal.  But the tycoon also got
a breather from having to buy the government's remaining 62
million shares in PNB -- now diluted to a 16% stake -- by
agreeing to a deal that extends the contract by two years.

"In the event that there are no buyers at the end of two
years, we can impose on Mr. Tan to purchase our shares at
PhP100 ($2.16 apiece)," Finance Sec. Jose T. Pardo told
reporters in a teleconference from Dublin, Ireland.

He said the National Government will enter into another
contract with Mr. Tan that involves a possible put option
"that will give us the right to sell the (PNB) shares."

The timing of the sale, he said, will be determined by the
Committee on Privatization.  While the plan has yet to be
formalized, an "agreement in principle" has already been
reached by both parties.  "He cannot renege on it anymore,
otherwise he will be sued," Mr. Pardo said.

Mr. Tan's PhP600 million ($12.94 million), put up as
deposit for the purchase of the government's stake last
July, has officially been forfeited, Mr. Pardo said. He
said, however, that Mr. Tan could still use the amount as
partial payment if the government decides to compel him to
buy its PNB shares at the end of two years.

The Finance chief admitted that recent developments have
put the government in a bind, but said the new plan "is the
most advantageous to the government" under the
circumstances.  Meanwhile, with the PhP10.2-billion fresh
capital infusion, "PNB is now capitalized at PhP17
billion," Bangko Sentral Deputy Gov. Alberto V. Reyes said.

This hiked PNB's capital adequacy ratio -- its level of
equity against risk assets - to 11% from "below 10%" in the
past, enabling it to comply with the central bank-mandated
10% ratio.  "We will have a monthly review of its capital,"
Mr. Reyes said, to ensure continued compliance with
prudential limits.

He said the fresh capital also remedies all of the former
state bank's single borrower deficiencies, such as the loan
accounts of Philippine Airlines and National Steel Corp.
(Business World  09-Oct-2000)

PILIPINO TELEPHONE CORP.: In final debt-rehab talks
---------------------------------------------------
Cash-strapped firm Pilipino Telephone Corp. (Piltel)
expects to finalize its debt restructuring arrangement with
Marubeni Corp. of Japan by yearend or early 2001.

Napoleon Nazareno, Piltel president and chief executive
officer, said over the weekend that talks between the two
parties are finally going on positively.  "We've been
holding a series of meetings and Marubeni has more or less
displayed an open attitude towards the debt rehabilitation
plan so we are hoping that everything will be completed
within the year or early next year," he said.

Nazareno, however, refused to reveal details of the
negotiations and whether Piltel revised its proposal to
Marubeni which the latter had refused.  Marubeni, Piltel's
major creditor, has been seeking a better deal than what
the cellular firm has offered the banks and bond holders
but which Nazareno earlier said they could not afford to
provide.

Reports said that Marubeni wants cash payment for the $279-
million (P11.2-billion) loan it provided to Piltel to
finance the latter's local exchange network in Mindanao.
"Marubeni has very little choice. Whatever they want, we...
cannot do. The banks have already agreed to our proposal so
we have to sit down with Marubeni and negotiate again to
make them see the terms and conditions set by the banks,"
Nazareno said in an earlier interview.

Piltel's mother company, Philippine Long Distance Telephone
Co. (PLDT) already signed a master restructuring agreement
(MRA) with several creditor banks last June.  The MRA
defines the framework and main parameters for restructuring
of Piltel's bank obligations amounting to P13 billion. It
also contains a letter of support from PLDT to be issued
upon effectivity of the transaction amounting to as much as
$150 million.

According to Nazareno, Piltel is already doing well and has
significantly reduced its losses. Once the debt restruc-
turing program is finished, the company, he said will be
able to recover much faster.  "We are looking at a more
favorable financial situation for Piltel in the next 24
months granting that the debt rehabilitation plan is
completed," he said.

As of end of 1999, Piltel had a total liability of P34
million resulting from its inability to service its
maturing obligations. (Philipine Star  09-Oct-2000)


=================
S I N G A P O R E
=================

CITY-E SOLUTIONS: Shares take freefall
--------------------------------------
Shares of City e-Solutions (Citye) -- the former CDL Hotels
International -- were consolidated yesterday and performed
dismally in the weak market.

The shares closed at HK$0.045 last Friday, and yesterday
were consolidated from 20 to one as part of the company's
complex restructure.  Based on Friday's closing price, the
value of the new shares should have been HK$0.90 -- but
they closed yesterday 14 HK cents or 15 per cent lower at
HK$0.76 on volume of 413,000.

Analysts said the poor performance was due to overall
negative sentiment in the market. The Straits Times Index
(STI) dived almost 4 per cent or 75.79 points to close at
1,887.18.

"When Citye shares were around 5 HK cents last week, they
were also a good target for punters, who bought huge
amounts of the stock. At 90 HK cents, they are much less
attractive," an analyst with a local securities house said.

Another analyst said Citye shares were not a good buy at
present levels because the company's focus had changed
drastically after the restructure. Formerly a hotel
operator, Citye essentially transformed itself into a
dotcom company to hold and manage its parent City
Developments' e-commerce and Internet businesses.

It sold its hotel portfolio, mainly under London-listed
Millennium & Copthorne Hotels, to CityDev for HK$6.1
billion (S$1.37 billion).

"Citye is just a shell now, with no fundamentals, and there
isn't much we can look at yet," the analyst said. "The
recent confusion over the ex-date for entitlement to the
cash payout hasn't helped it either."

Citye last week gave shareholders a special cash payout of
95 HK cents a share through a capital restructuring
exercise. But there was confusion over the different ex-
dates for the shares in Singapore and Hongkong because of
the different settlement dates of the two bourses. As a
result, some Singapore investors lost money on the stock,
which slipped from 95 HK cents to around 5 HK cents last
Tuesday.

In a newspaper advertisement yesterday, Citye said it had
introduced a temporary counter to allow trading of the
consolidated shares in board lots of 100 and this would
continue until Nov 13, when the company's restructure and
capital consolidation exercise will be completed.  The
board lots of 100 shares are meant to allow investors with
odd lots to even out their holdings to the nearest 2,000
board lots.

For example, a shareholder with 1,800 shares can now buy
another 200 to make it 2,000. After Nov 13, Citye shares
can only be traded in multiples of 2,000. The company will
also start to issue counters in board lots of 2,000 from
Oct 23.

"(Citye's) initial focus is on the provision of Internet-
based hospitality business solutions to small and medium-
sized hotels," the company's advertisement said. (Business
Times  10-Oct-2000)


===============
T H A I L A N D
===============

SIAM CITY BANK: Finance Ministry rejects rescue plan
----------------------------------------------------
The Thai Finance Ministry has turned down the Bank of
Thailand's (BOT) proposals regarding the ailing Siam City
Bank (SCIB) and ordered officials of the two authorities to
seek fresh alternatives.

However, Sathit Limpongphan, a board member of the
Financial Institution Development Fund (FIDF), said that a
solution was expected by the end of October. State
authorities have attempted to sell SCIB to foreign
investors since it was nationalised in January 1998 but
have failed to find a suitor.

The Finance Ministry and BOT remain at odds on how to
rescue the bank. Central-bank governor Chatu Mongol Sonakul
says he would like to transfer the SCIB's good assets to
BankThai, another nationalised bank, while its bad assets
should be managed by the bank's own asset-management
company.

However, Finance Minister Tarrin Nimmanahaeminda says he
does not want to see the closure of another commercial
bank. He would like the bad assets transferred to the
state-owned Asset Management Corporation and SCIB to
continue operating.  According to Sathit of the FIDF, an
alternative solution must be found to save SCIB.

He believes that any plan must favour government interests,
adding that the FIDF will not open a new round of auctions
for SCIB. So far the fund has failed to sell the bank since
bidders were only short-term investors.  The government
remains anxious to find a solution before its term of
office ends.

There are fears that the plan could be postponed until the
formation of the next government.  Recently BOT officials
agreed in principal with BankThai's management to the
transfer of SCIB's assets. The Finance Ministry rejected
the proposal, however.

The BOT proposals also faced strong opposition from SCIB's
4,887 employees, who feared losing their jobs if the deal
went ahead. It would almost certainly have resulted in
large lay-offs.  SCIB's total lending as of August totalled
Bt182.86 billion, while its deposits amounted to Bt219.90
billion. The bank's assets were worth Bt257 billion. (The
Nation  10-October-2000)


S U B S C R I P T I O N  I N F O R M A T I O N

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