/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/001212.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, December 11, 2000, Vol. 3, No. 240 Headlines * A U S T R A L I A * BHP: State offers aid for HBI plant EVANS DEAKIN INDUSTRIES: Takeover bid pushed to s'holders HOLDEN: Strike threatens to halt car assembly KGRIND: Ferrier Hodgson appointed administrator LIBERTYONE LTD.: Administrator appointed PMP LTD.: Debt, masthead issues loom PMP LTD.: Shares hit new low as takeover speculation rises PRESLITE AUSTRALIA: Placed in administration SURF DIVE `SKI: Unsecured creditors to get nil * C H I N A & H O N G K O N G * FAR EAST HOTELS: Posts HK$5.96M 1H net loss UDL HOLDINGS: Court foils creditor attempt to derail plan * I N D O N E S I A * MANULIFE INDONESIA: Pays US$0.7M to avoid bankruptcy PT CHANDRA ASRI: Asset surrender deadline missed PT SEMEN BATURAJA: Pays debts to IBRA PT SURYA CITRA TELEVISI: Signs loan-rehab pact with IBRA PT TAPAK INDAH: Signs MoU with IBRA PT TEXMACO GROUP: IBRA seeks proceeds from sale of 2 firms * J A P A N * MAZDA MOTOR CORP: Nears restructuring deal with staff SOGO CO: Executives ordered to pay 6 billion yen * K O R E A * DAEWOO MOTOR: CEO hints a GM deal fall through HYUNDAI ENGIN.& CONST.: To sell property stake for cash MIJU STEEL MFG.CO.: Creditors force three top execs out SAMSUNG GROUP: FSS auditing four of its financial units * M A L A Y S I A * COSWAY CORP.: Posts half-year loss INTRIA BHD: UEM completes second stage of acquisition RHB: Revamp plan meets opposition from MRCB SISTEM TELEVISYEN MALAYSIA: Bernas' Ibrahim Nor takeover? * P H I L I P P I N E S * MONDRAGON LEISURE: New bidding ahead for debt-ridden co. PETRON CORP.: In the red by P2B this year * T H A I L A N D * ADVANCE AGRO PLC: Signs debt-restructuring agreement CIRCUIT ELECTRONIC INDUS.: Drafts debt-rehab agreement FRIENDS & DOCTOR CLINIC CO.: Takes shares for debt payment SIAM STEEL INT'L: Reports progress on rehab plan to SET THAI PETROCHEM.INDUS.: Hints at interest-payment default ================= A U S T R A L I A ================= BHP: State offers aid for HBI plant ----------------------------------- The West Australian Government has offered BHP a "modest" financial relief package in a bid to help keep the $2.6 billion hot briquetted iron plant at Port Hedland from closing. The Resources Development Minister, Mr Barnett, would not reveal the size of the package but said it would include some tax and royalty assistance. He hoped BHP would also be able to get some relief in terms of its multi-million- dollar gas supply contracts with the North-West Shelf. BHP is set to announce next week the fate of the HBI plant. Managing director Mr Paul Anderson is scheduled to be in Port Hedland on Thursday, and union leaders have been told in briefings with senior BHP officials that an announcement will be made then. BHP said this week that there would be an announcement as soon as a decision was made. Mr Barnett and the WA Premier, Mr Court, had held meetings with Mr Anderson about the future of HBI. Mr Barnett said BHP had not formally accepted the relief package or given any indication that it would save the troubled plant from closing. "I think the technical people and the senior management are doing everything they can to see this plant survive," he said. "And I think it's actually fair to assist the project to get up to full commissioning." Mr Barnett said the State Government would offer some relief on royalties on iron ore that was used in the HBI plant. BHP would also be given the flexibility to allow a joint venture partner to come into the project. "This plant came out of BHP's obligation to further process its iron ore, so there is a longer term policy issue," he said. "While this plant itself has cost BHP a lot of money ... it will turn into a very profitable business for BHP as the market develops. And also I think we need to bear in mind BHP does extremely well out of its iron ore opera- tions." (Sydney Morning Herald 09-Dec-2000) EVANS DEAKIN INDUSTRIES: Takeover bid pushed to s'holders --------------------------------------------------------- Struggling heavy engineering group Evans Deakin Industries Ltd (EDI) has bowed to a fresh takeover bid from Hong Kong- backed predator Downer Group Ltd, recommending the offer to shareholders in the absence of a higher bid. The new cash and scrip bid, with a full scrip alternative, was pitched about 12% above Downer's previous offer and valued Queensland-based EDI at A$250mil to A$260mil, or A$2.65-A$2.76 a share. EDI's board gave its backing to the bid yesterday, saying shareholders would gain a premium of at least 51% to the recent average share price. Downer managing director Stephen Gillies said a successful takeover would give the merged group greater clout to win lucrative power, rail and telecommunications maintenance contracts. He said Downer, which is 80 percent owned by strategic foreign shareholders including Hong Kong's Paul Y-ITC Construction Holdings Ltd and ports and telecoms conglomerate Hutchison Whampoa Ltd, had been looking to expand its Asian operations into Australia. "We argue that Downer already has substantial infrastruc- ture in maintaining telco systems and roads," Gillies saids. "EDI's business will enable us to pitch for additional work in power, rail and telecommunications maintenance contracts in New Zealand and Australia, where considerable privatisation is under way." (Star Online, Reuters 08-Dec-2000) HOLDEN: Strike threatens to halt car assembly --------------------------------------------- About 120 striking workers in Victoria are threatening to close down production at Holden's Elizabeth plant on Monday. If the dispute is not resolved by the end of next week Mitsubishi Motors could also be affected. Preslite Australia, a components company that produces windscreen wiper motors for all four Australian car makers, has been hit by industrial problems since Tuesday. The company is in the hands of an administrator, PricewaterhouseCoopers, which has refused to guarantee workers $4 million worth of entitlements. Workers claim they have been told they will not be paid annual leave over the Christmas break and their jobs have not been guaran- teed. A Holden spokesman said the Elizabeth plant would run out of the motors tonight. Mitsubishi Motors head Tom Phillips said the company could continue production but only until next weekend. (ABC News Online 08-Dec-2000) KGRIND: Ferrier Hodgson appointed administrator ----------------------------------------------- Fast developing a reputation as the dot-com undertaker, Ferrier Hodgson has taken on its fourth financially stricken Internet client, appointed at the close of business on Wednesday to administer the assets of Internet publisher Kgrind. The switchboard at Ferriers was running hot yesterday as the firm prepared to release its final report on the demise of Eisa, while Kgrind staff sought some indication of their chances of being paid their salaries. Ferrier partner Mr Steve Sherman said negotiations over the potential sale of Kgrind's publishing technology to New Tel are continuing. But one of Mr Sherman's first jobs was to meet representa- tives of the 50-odd staff booted out of Kgrind's Surry Hills office last Friday without pay cheques. Kgrind's final collapse was precipitated by listed property developer Metroland's decision not to proceed with a $5 million rescue deal, announced to shareholders at its annual general meeting last week. The move was mirrored yesterday with the jilting of LibertyOne by Hong Kong investment firm iReality, forcing Australia's first listed dot com into voluntary administration. Venture capital firms AMWIN and Macquarie Technology sit ahead of the young staff in the Kgrind creditors queue, having lodged charges over the company in June in return for a $2.3 million bridging loan. At the time of the loan Kgrind had already chewed through $10 million in venture capital from the firms. Mr Sherman confirmed that the VCs were secured creditors. Mr Sherman said it was too early to determine what assets remained and the level of debts. But the administrator remained "optimistic" that a sale to New Tel could still be achieved. Kgrind staff who left the company at the time of its original sale to Metroland claim Austar, which offered less cash but a commitment to broadband content, had been an alternate buyer at that time. Kgrind chief executive Mr David Keane has already accepted a position with Quadtel. (Sydney Morning Herald 08-Dec-2000) LIBERTYONE LTD.: Administrator appointed ---------------------------------------- The future of troubled Internet media group LibertyOne Ltd is now in the hands of an administrator following the collapse of its recapitalisation deal last week. Ernst & Young's John Gibbons was appointed administrator last Thursday following LibertyOne's request for a suspension of its shares before the sharemarket opened. Hong Kong-based iReality announced at a board meeting late yesterday of their decision to pull out of the deal, which had been signaled as restoring the company's financial future. It forced the independent directors to place the company in voluntary administration. IReality has already paid $ A2.368 million ($ US1.27 million) in shares, or 8.96 per cent of LibertyOne, as the first tranche of an agreement. The agreement involved a cash injection totalling $ A6 million ($ US3.23 million) in subscription for LibertyOne shares by year end and options to acquire further shares providing additional funding of $ A28 million ($ US15.06 million). Chief executive officer Marcelle Anderson today declined to comment on the future of LibertyOne assets but denied reports that she had tendered her resignation. "I am CEO of the company and I remain CEO of the company, I'll speak to the administrator on how he wishes to proceed and whether there's a continuing role for me," she said. "It depends what is required, if I can continue to play a useful role then obviously I'll do that." Ms Anderson said she was to hold discussions with the administrator today. LibertyOne's independent directors, co-chairman Nicholas Whitlam and Kerri-Anne Kennerley were unavailable for comment. However, Mr Whitlam indicated in the information memorandum of the recapitalisation proposal sent to shareholders on November 21 that he would resign from the LibertyOne board after the extraordinary general meeting scheduled for December 21. Both Mr Whitlam and Ms Kennerley are required to stay on as directors during the administration process. The collapse of the iReality deal has capped a troubled year for the LibertyOne board and senior management with a massive rationalisation strategy resulting in the sale of most of its investments, a $ A40 million ($ US21.51 million) writedown of investments and assets and a reduction of its workforce from 45 to 12. LibertyOne posted a $ A58 million ($ US31.19 million) net loss for the six months to June 30, 2000. The company has retained its web integration business Zivo which employs more than 200 staff in its Australian, New Zealand and Hong Kong offices. LibertyOne also holds a 50 per cent stake in Satellite Music Australia and 49 per cent of healthcare network provider Monet Asia Pacific Pty Ltd. "It's quite challenging for the liquidator to determine the priority of creditors, for shareholders at this stage it looks very bleak," a Sydney analyst, who declined to be named, said. "It's quite disappointing for the investment community particularly because it really was the flagship at the start of the technology boom." LibertyOne listed on the Australian Stock Exchange in December 1998 as Australia's first publicly listed internet company. Its fortunes this year have been battered by the dive in global technology stocks, a failed takeover attempt by CyberSentry Inc, and a succession of senior management and board departures including founder and former CEO Graham Bristow. (Asia Pulse 07-Dec-2000) PMP LTD.: Debt, masthead issues loom ------------------------------------ Two dilemmas loom large at PMP these days, the most obvious being debt. PMP's acquisitions of digital media group Shomega and Gordon & Gotch, coupled with the habit of dipping into retained earnings to fund dividend payments, has generated net debts of about $570 million. That effectively means PMP's $300 million market capitalisation is the tip of a large purchase iceberg: the company would actually cost any acquirer almost $900 million. The less obvious problem is masthead values. PMP ascribes a value of about $650 million to its publishing rights, about 30 times estimated earnings before interest and tax for Pacific Publications this financial year. By comparison, Kerry Packer's Australian Consolidated Press values its titles at $1.17 billion but will this year earn about $100 million, a multiple of 11. Analysts believe a writedown of about $400 million is likely. If that comes to pass, PMP's already bad year could get significantly worse. (Australian Financial Review 08-Dec-2000) PMP LTD.: Shares hit new low as takeover speculation rises ---------------------------------------------------------- Investors punished PMP Ltd for the second successive day today, sending the company's shares to new lows and forcing analysts to downgrade their recommendations on the stock. PMP's battered share price also heightened speculation it would become a takeover target, with analysts tipping Rupert Murdoch's News Ltd as the most likely suitor. PMP's shares closed down another six cents, or five percent, today to a new record closing low of $1.14 today. The stock hit an all-time low of $1.09 in intraday trade. Today's losses followed yesterday's 27 percent fall in the share price after the company cut its full year net profit forecast to $45 million - 25 percent below last year's profit. Analysts had been expecting a profit of around $64 million. Chief executive Robert Muscat blamed the downgrade on continuing circulation softness in its magazines, particularly in the company's biggest sellers New Idea, That's Life and TV Week. PMP responded to its magazine woes today by changing two of its titles - Elle Cuisine and Women's Health - from monthly publications to quarterlies. Shaw Stockbroking said it has changed its recommendation on the stock from a buy to a hold. "Our hold recommendation is on the assumption that the price can't go too much further than what the price is now," Shaw Stockbroking research director Scott Marshall said. Analysts said they were keen to see the results of a review of the company to be undertaken by global bank ABN AMRO, which should be completed by February. This is one of a number of reviews the company has undertaken in the last year. "PMP has spent the last 12 months doing significant reviews. It is a little bit disappointing they, after 12 months, are still going through a significant review process," Mr Marshall said. But analysts said they believed PMP's shares might have been oversold. "I think it has been a bit oversold. PMP has been one of these stocks that has been really cheap for quite some time and as it turns out it has become cheaper," the analyst said. PMP shares in January were worth around $2.46 and in October 1993 were at record highs of around $4.50. The analyst tipped News Ltd as the most prominent takeover predator, considering the Rupert Murdoch's decision last year to create a new magazine division in Australia. News Ltd has a previous association with PMP. PMP was formed in 1992 when News Ltd spun-off its Australian magazine assets into a separate company. In 1997 News disposed of its remaining 40 percent stake in PMP. "News have put their toe back into the water in terms of the magazine market with a couple of titles to date. So at this stage they are the most logical candidate," the analyst said. Although Publishing & Broadcasting Ltd - which owns Australia's leading magazine company Australian Consolidated Press - would be interested in some PMP magazine titles, analysts said PBL could be deterred from making a bid by competition problems. (AAP 07-Dec- 2000) PRESLITE AUSTRALIA: Placed in administration -------------------------------------------- Australian automobile parts manufacturer Preslite Australia, based in Victoria and owned by Malaysian shareholders, has been placed in to administration. PricewaterhouseCoopers administrator Nick Brooke said on Dec. 8 he had decided to stand down Preslite's 120 workers. Production at automobile manufacturing plants in Australia now could halt due to the closure of the Preslite plant. SURF DIVE `SKI: Unsecured creditors to get nil ---------------------------------------------- Ferrier Hodgson, administrators for the Surf Dive n' Ski businesses formerly owned by Gold Coast businessman Lux Daswani, released its first creditors report. Based on it, the administrators said ANZ Banking Group Ltd will receive a return of less than half of its $11.8 million commercial loan, while it is unlikely any of the 150 unsecured creditors -- owed at least $3.9 million -- would receive any return. Surfing company Rip Curl bought the 13 Surf Dive n' Ski stores in Victoria, Queensland and Western Australia in late October for an undisclosed amount. ============================== C H I N A & H O N G K O N G ============================== FAR EAST HOTELS: Posts HK$5.96M 1H net loss ------------------------------------------- Hong Kong-based Far East Hotels & Entertainment Ltd. recorded a net loss of HK$5.96 million for the six-month period ended Sept. 30, up from HK$453,858 for the same period the year before. Loss per share was 1.22 HK cents compared with a loss of 0.09 HK cent per share for the same period the previous year. Revenues fell 31.9 percent to HK$15.5 million for the respective periods. No interim dividend was proposed. UDL HOLDINGS: Court foils creditor attempt to derail plan --------------------------------------------------------- Insolvent UDL Holdings was saved from the brink after the appeal court refused to allow a minority group of creditors to veto a scheme dubbed "infinitely preferable" to liquidation. A clear message was sent out that any viable rescue would be favoured over a liquidation amid the "uncertainties and wastefulness" of the process. "I remain wholly unconvinced that liquidation . . . can be more speedy than the realisation of assets of a company deemed to be viable which needs to reassert itself in the trading world . . ." Mr Justice Conrad Seagroatt ruled. UDL and its 24 subsidiaries have "the impetus to do so", he explained. "Another factor, never to be underestimated in Hong Kong, is the liquidator's costs," he added, noting that the court was unaware of any calculations made in the UDL case. The construction and engineering company had been given the green light for a scheme of arrangement to discharge debts of about HK$1.7 billion by former companies judge Mrs Justice Doreen Le Pichon. However, an eleventh-hour attempt was made to derail the rescue process amid claims of vanished assets and audit discrepancies. Japanese firm Nishimatsu Construction claimed new evidence showed discrepancies between the audited account of the company, and the management's account. Nishimatsu is a disputed creditor whose claim against two UDL subsidiaries is currently subject to arbitration. The judge refused to allow the new evidence to be admitted, and sanctioned the scheme. The Court of Appeal upheld this yesterday, also rejecting claims that a small group of creditors should have been able to cast their vote for the scheme as a separate class. If they voted against the scheme, it could have reduced the statutory support necessary to approve it. Creditors to the value of 75.87 per cent of the overall debt voted to sanction the scheme, just enough to meet the legal requirement. "Such a scheme, if it can be devised, accepted and approved by the court, is often the lifeline when there is a discernible general benefit in keeping the company afloat," Mr Justice Seagroatt stressed. The appeal judges also rejected arguments that a scheme of arrangement would delay payments to employees or former employees of UDL and its subsidiaries. Although a liquidation would satisfy their entitlement more quickly, Mr Justice Seagroatt disagreed. "On a liquidation, the gathering in of assets is likely to be more uncertain and time-consuming whatever the present calculations may be of the net assets of any of the companies on a liquidation," said the justice. According to the judge, the scheme provided "a fair recognition of the rights [and interests] of all creditors" and "is infinitely preferable to the uncertainties and wastefulness of a series of liquidations." (South China Morning Post 08-Dec-2000) ================= I N D O N E S I A ================= MANULIFE INDONESIA: Pays US$0.7M to avoid bankruptcy ---------------------------------------------------- Manulife Indonesia has paid almost US$700,000 to avoid the threat of bankruptcy in a bizarre case observers believe is linked to the company's share dispute with an unknown Virgin Islands firm. PT Asuransi Jiwa Manulife Indonesia, a subsidiary of Manufacturers Life Insurance Co. of Canada, said it had agreed to pay US$680,000 in an out-of-court settlement to the family of a man who died in 1994. "In one of the most bizarre business scenarios you can imagine, Manulife Indonesia, with assets of over [US$10- billion] and 350,000 shareholders, somehow found itself vulnerable to bankruptcy in a Jakarta bankruptcy court," said Phillip Hampden-Smith, Manulife Indonesia's president director. "We were placed in an absolutely untenable position and made the most logical business decision available -- that is, to avoid the possibility of bankruptcy completely and settle out of court." Mr. Hampden-Smith said the case, previously rejected by two Jakarta courts, "further demonstrates the determined efforts currently underway to undermine this company's reputation." The lawyer for the family who brought the case to bankruptcy court held the position of kurator several months ago for the assets of insolvent Indonesian firm PT Dharmala Sakti Sejahtera, according to a source. A kurator is similar to a receiver. But the courts removed the lawyer as kurator before a government-run October share auction in which Manulife bought Dharmala's 40 percent stake in Manulife Indonesia for US$17 million. That purchase boosted Manulife's stake in Manulife Indonesia to 91 percent. The remaining 9 percent is held by International Finance Corp., an affiliate of the World Bank. The share auction proceeded despite a surprise attempt to halt it by Syamsul Arif, a representative of Virgin Islands company Roman Gold Assets, who produced share certificates and said he had already bought Dharmala's stake. Roman's defeat at the auction prompted it to lay a complaint of forgery with Indonesian police, who held Manulife Indonesia's vice-president, Adi Purnomo, for three weeks without charge. He has since been released but the police investigation continues. Dharmala, one of Indonesia's largest conglomerates during the reign of former president, Suharto, is one of several corporate giants whose assets are now pledged to the Indonesian Bank Restructuring Agency. (National Post 08- Dec-2000) PT CHANDRA ASRI: Asset surrender deadline missed ------------------------------------------------ Prajogo Pangesto -- founding shareholder of Indonesia's largest and heavily indebted petrochemical company PT Chandra Asri -- missed the Wednesday deadline to surrender some assets to the government, Coordinating Minister for Economic Affairs Rizal Ramli said Thursday. "We will send a letter to him and ask him to surrender his assets," Rizal told journalists. The government last Friday ordered Prajogo to surrender more assets by Wednesday, in addition to PT Tri Polyta Indonesia that has been pledged earlier, as part of restructuring of Chandra Asri's $723 million debt. Under the debt restructuring deal, Prajogo Pangestu will have a 49 percent stake in Chandra Asri through a newly established holding company named as PT Inter Pretindo Inti Citra (IPIC). The Indonesian Bank Restructuring Agency will take a 31 percent stake in the petrochemical company. IBRA took over millions of dollars of loans made by local banks to Chandra Asri following the collapse of the financial system in 1997. Japan's Marubeni Corp. will take a 20 percent stake in Chandra Asri, the statement said. Marubeni represents the largest overseas creditor of Chandra Asri. Prajogo will also repay $638.6m of Chandra Asri's debt, and a further Rp120 billion owed by property company PT Puri Asri through an issue of 12-year convertible bonds to IBRA. The bonds will carry a fixed interest rate of 6 percent. The convertible bonds will be backed by Prajogo's Chandra Asri shares and other assets including petrochemical company PT Tri Polyta Indonesia and property firm PT Panca Puri. In the event of a default on the bonds, Prajogo would lose control of his shares in Chandra Asri. Prajogo may also surrender additional assets as guarantee for the convert- ible bonds. The committee has also asked Prajogo to hand over shares in PT Barito Pacific Timber and forestry concern PT Tanjung Enim Lestari. The new deal follows a debt pact earlier this year which drew flack for favoring Marubeni by forcing IBRA to write off its debt and shoulder a large 80 percent stake in Chandra Asri. (Indoexchange News 08-Dec-2000) PT SEMEN BATURAJA: Pays debts to IBRA ------------------------------------- Indonesian Banking Restructuring Agency (IBRA) has received a cash settlement from PT. Semen Baturaja (Persero) as a part of the company's restructuring process. PT Semen Baturaja paid a total of Rp212,074,599,499 and $8,085,565. On Oct. 18, IBRA received a cash settlement amounting to Rp32.891,516,165, while on Nov. 29, another cash settlement worth Rp 179.183.083.334 and $8,058,565 was received. That made a total of Rp 212,074,599,499 and $8,058,565 that IBRA received from PT Semen this year. PT SURYA CITRA TELEVISI: Signs loan-rehab pact with IBRA -------------------------------------------------------- The Indonesian Banking Restructuring Agency (IBRA) and PT Surya Citra Televisi (SCTV) signed a principal loan restructuring agreement on Nov. 30 preliminary to signing a Memorandum of Understanding (MoU). At this stage, creditors and debtors are bound by law to follow the agreement. The obligation by PT SCTV to IBRA totals Rp305 billion, to be paid with a cash payment of of as much as Rp130 billion and a term loan of as much as Rp175 billion. IBRA has received interest payments from SCTV amounting to Rp13.3 billion. SCTV is a debtor under the Napan Group, with the majority of its shares belonging to the Hendry Pribady Family. Of 17 subsidiaries, only PT Turangga Wisesa managed to pay debts, which amounted to Rp20bn. (Indoexchange News 08-Dec-2000) PT TAPAK INDAH: Signs MoU with IBRA ----------------------------------- The Indonesian Banking Restructuring Agency (IBRA) and a stakeholder for PT Tapak Tiara Indah (under obligor Rimba Group) signed a Memorandum of Understanding (MoU) Nov. 30 to restructure loans. Obligations of PT Tapak Tiara Indah total as much as $27,493,787 and Rp7.820.106.686, to be restructured through a settlement pattern of: Part A: Term Loan of as much as $22,554,927 with 9 years tenor and a grace period of 1 year; Part B: Convertible bonds of as much as $4 million with a maximum 5 years tenor; Part C: Cash settlement of as much as $938,860; and Part D: Cash settlement of as much as Rp7.820.106.686. This restructuring is one of the attempts made by IBRA to accelerate the entire debt restructuring process. Based on the Letter of Intent (LoI) agreed upon by the government and International Monetary Fund (IMF) in September, IBRA is to have completed all debt restructuring for its 21 top debtors by the end of December this year. (Indoexchange News 08-Dec-2000) PT TEXMACO GROUP: IBRA seeks proceeds from sale of 2 firms ---------------------------------------------------------- Indonesia's bank rescue agency (IBRA) will demand that Texmaco Group, the country's largest debtor, hand over proceeds from the sale of two companies that it had pledged to repay other creditors. Texmaco owes US$2.7 billion (S$4.7 billion) to the Indonesian Bank Restructuring Agency (Ibra). It sold controlling stakes in UK garment maker S R Gent plc and South African textile firm Coastal Group Ltd to repay a loan to Credit Suisse First Boston (CSFB) at the same time that it pledged all of its assets as collateral to Ibra, the Asian Wall Street Journal reported earlier. "If the proceeds are not used to pay down the debt owed to us, we will make a consideration on that," said Bambang Soedibjo, who heads an Ibra group dealing with loan workouts and collections, confirming the report. Ibra is consulting its legal team to determine what action it will take if it does not get the sale proceeds. They plan to meet Texmaco executives to find a resolution to the dispute by Monday, he said. Confirming that CSFB foreclosed on the assets, Tom Grimmer, Hongkong-based spokesman for the company, said the collateral was pledged to secure the debt of another Texmaco company, Baleine Investments, in October 1999. "That debt should be considered senior to any pledges that have taken place since that time," said Mr Grimmer. (Business Times 08-Dec-2000) ========= J A P A N ========= MAZDA MOTOR CORP: Nears restructuring deal with staff ----------------------------------------------------- Loss-making Mazda Motor Corp. is close to agreement with its staff on a major restructuring which envisions 1,800 job losses and a plant closure, a senior executive said Thursday. The plan unveiled last month was part of an ongoing brand revival which seeks to reposition Ford-controlled Mazda as a carmaker for "the young at heart," chief financial officer Robert Shanks told AFP in an interview. The five- year plan includes an early retirement programme which "is very attractive to those who choose to take it," he said. "We're confident, once we get agreement with our union, there will be an appropriate number of people who are interested in the programme, certainly enough to satisfy the target that we've set, which is 1,800 people. "People aren't fearing for their jobs because it's a voluntary programme." Mazda workers understood the need for change after Japan's fifth-biggest carmaker last month posted its first interim losses for two years. "I think the union's just been great about all of this," Shanks said, adding an agreement with management could be announced "sometime later this month." About half of Mazda's 20,000 workers have attended two-day training programmes to learn about management's intentions for the future, and all directors have held sessions with president Mark Fields. The consultation process has "been like going back to school," said Shanks. "Clearly, the company is a Japanese company run in a Japanese way and in a Japanese environment," he said, explaining that he, Fields and other US officials brought in from Ford were respectful of the cultural differences. For now, the company is unlikely to post a profit again until 2002, the executive said, and in the meantime Mazda faces a lean 2001 when there will be no new vehicle launches. "Next year's going to be tough in Japan," acknowledged the 47-year-old executive. "This year and next year are clearly both transition years for us." Mazda, the only Japanese carmaker to lack significant overseas plant, has been badly hurt by the euro's enduring weakness, which has depressed yen revenues at a time of falling sales. The company has responded by deciding to shut one of its plants at its sprawling Hiroshima base in western Japan, and to increase joint production in Thailand and the United States with Ford. In October Mazda rolled out the inaugural Japanese version of its new Tribute sports utility vehicle, the first fruit of its joint production drive with Ford. Shanks said Mazda was also planning to revamp its line-up with 16 model changes in Japan over the next five years, 11 in North America and nine in Europe. The targeted consumers "are basically people who are young at heart, not necessarily young. They're enthusiasts. They love to drive," he said. "We don't want to attract everybody, because if we do that we won't attract anybody. The company will benefit from Ford's global sales reach, but Mazda's relationship with its US parent is also "a two- way street," Shanks added. Ford benefited from Mazda's "world-class" engineering expertise, he said. "Mazda is an indispensable part of the Ford group. It's not a relationship centred on Asia, which is what people presume. It's a global relationship." (AFP 07-Dec-2000) SOGO CO: Executives ordered to pay 6 billion yen ------------------------------------------------ The Tokyo District Court has ordered ex-Sogo Co. Chairman Hiroo Mizushima and 16 other former executives to pay about 6 billion yen to the department store chain for mismanagement in a series of shady and allegedly illegal business deals. Now undergoing court-mandated rehabilitation, Sogo had demanded that the 88-year-old Mizushima and 18 other former executives pay 11.25 billion yen in damages for losses incurred from transactions; the court ruled two of the 18 not liable. Mizushima's lawyers assert that Friday's ruling was predictable, but unacceptable. They will seek to nullify the decision by filing a countersuit. Tther former board members -- who have denied any legal liability for the losses -- are expected to follow. The suit focuses on three claims: * 2.69 billion yen in losses from allegedly fictitious contracts with Sogo affiliate Cho-ompa Co.; * 6.76 billion yen in losses from a Sogo plan to build a department store in Turkey; * 1.8 billion yen in losses through illegal dividend payments. The court ruled that the former executives must pay about 2.6 billion yen over the Cho-ompa deals, some 1.6 billion yen over the Turkey project and nearly 1.8 billion yen over the dividend payments. Judge Takashi Sonoo said the 17 "failed to implement their duties as board members, via fictitious contracts and the Turkey project." Sonoo also said the former executives illegally paid dividends when the company was not making money. Regarding the two former executives excluded from the ruling, Sonoo concluded they likely did not know Sogo's financial situation. Mizushima, who led Sogo for 38 years after becoming president in 1962, has denied in court charges of sloppy management or that he had done anything illegal. Mizushima has also contended in court he was not involved in board decisions on the Cho-ompa contracts. In addition, he has countered that the soured Turkey project was approved by Sogo's main bank and that the dividends in question were paid after the firm's books were certified by auditors. Current Sogo management, which is seeking to restructure the company under court supervision, filed the lawsuit under the Civil Rehabilitation Law, which allows the court to assess damages claims under an expedited procedure. Under the Civil Rehabilitation Law, the defendant is entitled to file an appeal within one month and ask for a regular trial. (Japan Times Online 09-Dec-2000) ========= K O R E A ========= DAEWOO MOTOR: CEO hints a GM deal fall through ---------------------------------------------- General Motors, the sole negotiating party in sales of Daewoo Motor, may give up its effort to acquire the bankrupt Korean automaker, as Ford Motor did in September, Daewoo's top executive said yesterday. Lee Jong-dae, the court-appointed chairman of Daewoo Motor, said that he and other top managers will work out contingency plans to fully prepare for GM's possible withdrawal from acquisition talks. "Talks with GM have failed to produce progress thus far. The U.S. carmaker is deeply concerned about labor disputes," said Lee in a press conference, hinting that bilateral negotiations have been troubled by pricing and other differences. He refused to reveal details, out of respect for the bilateral confidentiality agreement. GM is suspected of clinging to a foot-dragging strategy as part of its attempt to buy Daewoo's most modern car plant in Kunsan, about 300 km south of Seoul, and other strategic assets for a sharply discounted price. Further compounding the outlook, meanwhile, Daewoo's main car plant in Pupyong, west of Seoul, came to a halt again yesterday, just three days after it ended a month-long suspension. The Kunsan plant was also forced to suspend operations, as Delphi Korea, a supplier of key car components, stopped its supplies and demanded cash payments. "Delphi Korea suspended parts supplies, due to cash payment disputes," said company president Lee Young-kook, explaining that large-scale parts suppliers, like Delphi, have been excluded from creditors' financial supports. "But Delphi is expected to soon resume supplies." Daewoo Motor currently owes Delphi about 290 billion won ($241 million). In regard to Daewoo's overseas plants, Chairman Lee said that one or two plants could be immediately sold off, while the fate of others will be determined after sweeping restructuring. He also said that Daewoo is willing to talk to Hyundai Motor on the sales of some overseas businesses. Lee denied recent press reports that the management will push for layoffs of 7,000 workers, saying that management will launch a joint restructuring committee with the labor union next week to discuss other self-rescue measures. The government recently revealed its intent to turn around Daewoo to the court, but the car maker is likely to plunge back into labor disputes over layoffs in coming weeks. Asked about affiliate Ssangyong Motor's bid to sever marketing ties with Daewoo Motor Sale, Lee said that Daewoo Motor has already lost equity control over the sports utility vehicle maker. Daewoo Motor Sale yesterday filed a complaint with the Fair Trade Commission against Ssangyong Motor, charging that Ssangyong's abrupt suspension of vehicle supplies is a breach of bilateral contract. (Korea Herald 08-Dec-2000) HYUNDAI ENGIN.& CONST.: To sell property stake for cash ------------------------------------------------------- According to a report in the Business Times, Hyundai Engineering & Construction Co. may sell its stake in a S$200 million ($115 million) Singapore property project to City Developments Ltd., its partner in the project. Having had problems repaying debts since May, Hyundai soon will sell its 40 percent stake in Sunshine Plaza, located in Singapore's business district, the paper said. Sunshine Plaza has four 12-story blocks and three residential blocks sited on a 6,300-square-meter piece of land. Others eyeing the stake include Hong Kong's Property Development Enterprises, the paper reported. Korea's largest contractor has to repay 500 billion won (419 million) of debt by the end of this month. The company has 4.8 trillion won of debt. Creditors have threatened the builder with bankruptcy should it default on another debt payment. (Bloomberg, Business Times 08-Dec-2000) MIJU STEEL MFG.CO.: Creditors force three top execs out ------------------------------------------------------- Creditors of Miju Steel Manufacturing Co. decided Thursday to force the company's top three executives - including company chairman Park Sang-hee - to step down. The decision was made at a creditors meeting at Seoul Bank headquarters. However, the 22 creditors were not able to reach a consensus on rolling over the steelmaker's debts until 2003 and cutting interest rates for their loans to the company (by 2-3 percent from their current rates of 9.5-9.7 percent per annum). Another issue left pending is whether to issue convertible bonds on creditors' lending amounting to 21.7 billion won to the troubled company. The creditors will meet again before next Friday to put these two issues to a vote. SAMSUNG GROUP: FSS auditing four of its financial units ------------------------------------------------------- The Financial Supervisory Service is conducting a comprehensive audit of four financial subsidiaries - Samsung Securities, Samsung Investment Trust and Management, Samsung Capital and Samsung Card. "After completing inspections of Samsung Life Insurance and Samsung Fire & Marine Insurance, FSS investigators are now looking into any wrongdoing by the four financial subsidiaries," said an FSS official. "The inspections will continue till Dec. 23." Results of the regular inspections will be announced around February next year at the earliest, the official said. He also said that the watchdog has completed its regular audit into Hyundai Group's financial units, the results of which should be available in late January or early February next year. (Korea Herald 08-Dec-2000) =============== M A L A Y S I A =============== COSWAY CORP.: Posts half-year loss ---------------------------------- Direct-seller Cosway Corp Bhd registered a net loss of RM705,000 for the half year ended Oct 31, down from a net profit of RM5.14 million for the same period last year. Turnover was RM742.32 million, up slightly compared with the RM722.41 million for the same period last year. For the six months, Cosway registered a loss of 0.21 sen per share, compared with an earnings per share of 1.51 sen previously. INTRIA BHD: UEM completes second stage of acquisition ----------------------------------------------------- United Engineers (M) Bhd has completed the second stage of its plan to assume control of Intria Berhad by acquiring another 24.66 per cent of the debt-laden Penang Bridge operator's share capital for RM205 million cash. The acquisition, via an options bid, would bring UEM's holding in Intria to 44.65 percent or 347.49 million shares. The shares were being held by Mekar Idaman Sdn Bhd, a 45- percent associate of UEM and currently under receivership. (The Daily Edge 08-Dec-2000) RHB: Revamp plan meets opposition from MRCB ------------------------------------------- Rashid Hussain Bhd is set to meet the year-end deadline to create an anchor bank but it may have to redraw its plan to segregate the banking and stockbroking businesses to placate substantial shareholder Malaysian Resources Corporation Berhad. "MRCB urges the board of RHB to look at alternative proposals which will benefit all the shareholders of RHB," MRCB said in a statement. But tycoon Rashid Hussain, who owns 23.9 per cent of RHB, has said he will push ahead with his plan to segregate RHB's banking and stockbroking businesses despite dissent from MRCB -- the second largest shareholder of RHB with 22.7 percent. On Wednesday, Mr Rashid aborted RHB Capital's proposed rights issue and replaced it with a RM650-million (S$297 million) bond issue instead to please MRCB. But MRCB is still unhappy. The MRCB statement alleged that RHB has failed to observe proper corporate governance in the restructuring scheme first unveiled in September this year. It said RHB had failed to disclose that its board had not approved the earlier proposed scheme, and that RHB also did not disclose that a director had objected to its earlier rights issue. Furthermore, MRCB charged that RHB did not disclose that RHB Capital -- the 70-per cent parent of RHB Bank -- would cease to be RHB's subsidiary upon completion of the entire restructuring exercise. MRCB said its two representatives on the RHB board -- Zahari Omar and Jamil Bidin -- had acted out of concern for all shareholders of RHB and not just MRCB. Its statement, however, did not comment on RHB Capital's revised fund-raising exercise. The Kuala Lumpur Stock Exchange and minority shareholders will now play a crucial role to decide if there is a need for a fresh revamp as RHB has sought the KLSE's permission to vote on the restructuring plan. If RHB failed to get the regulatory nod, the fate of the restructuring exercise will rest on MRCB and other minority shareholders. (Business Times 08-Dec-2000) SISTEM TELEVISYEN MALAYSIA: Bernas' Ibrahim Nor takeover? --------------------------------------------------------- Padiberas Nasional Bhd (Bernas) group managing director Mohd Ibrahim Mohd Nor could be the new major shareholder in financially ailing Sistem Televisyen Malaysia Bhd (TV3). Sources say Ibrahim has been mentioned as the likely candidate to buy a stake in the country's first private television station from the debt-laden Malaysian Resources Corporation Bhd, which controls 49.65 per cent of TV3. Saddled with RM1 billion debts, MRCB is looking for buyers for its non-core assets. Meanwhile, TV3 had sought help from the Corporate Debt Restructuring Committee (CDRC) to resolve its RM500 million debts. According to the sources, Ibrahim is believed to have submitted a proposal to the CDRC to express his interest in acquiring a stake in TV3 and to be part of its restructuring exercise. However, parties close to the deal said the stake up for sale is in the region of 30 per cent, as MRCB is not expected to sell its entire interest in TV3. As far as MRCB is concerned, the sources said, the group wants to recover its investment and not sell the TV3 shares cheaply. Ibrahim is an old hand in the media business having been a senior executive of The New Straits Time Press (M) Bhd. It will not be his first encounter with TV3 as he has previously served as a director with the company. Ibrahim, who had also served on the MRCB board, resigned from his post in both companies on June 1. In July, TV3 was reported to be trying to reduce its debts to a level where it would "no longer be crippled" by them. Although TV3 has the lion's share of some 47 per cent of television advertising expenditure, the company's other subsidiaries have largely remained unprofitable. TV3, which began operations in 1984, reported a net loss of RM144.04 million for the financial year ended Aug 31, on the back of RM222.45 million in turnover. Last year it posted a net loss of RM268.25 million. According to research forecasts, television advertising in Malaysia will hit an all time high of more than RM840 million this year, RM930 million next year and RM1.2 billion in 2002. (The Edge Daily 08-Dec-2000) ===================== P H I L I P P I N E S ===================== MONDRAGON LEISURE: New bidding ahead for debt-ridden co. -------------------------------------------------------- Clark Development Corp. will begin negotiations with creditor banks of Mondragon Leisure and Resorts Corp. to find a new operator for Mimosa. CDC said it is considering to open up the operations of Mimosa via public bidding since they have no plans of allowing MLRC Chair Jose Antonio Gonzalez to run the company. Analysts said a new operator would help Mimosa normalize its operations and provide the cash to service Mondragon's debts. Mondragon continues to carry interest- bearing debt of PHP6.5bn. Based on its 1998 annual report long-term debt to major creditors like Metropolitan Bank and Trust Co. at that time already stood at P816 billion; United Coconut Planters Bank at P496 million; Far East Bank, which has now merged with the Bank of the Philippine Island, at P294 million and Asian Bank, now merged with Global Bank, at P294 million. Total long-term debt was at PHP2bn. The move by CDC to look for investors follows a decision by Pentacapital Investment Corp. to terminate its financial advisory service with Mondragon International Phils. Inc The company's shares have been suspended from trading since August 4. Earlier, PentaCapital said it could no longer continue with the relationship since Gonzalez and his lawyer Atty. Ernesto B. Francisco, Jr. made "untruthful statements" that the firm acted on behalf of government-controlled Clark Development Corporation, which seized Mimosa Leisure and Resorts Corporation early this year, after Mondragon failed to pay P325 million in unpaid rental dues. "(PentaCapital) is acting only as the financial adviser of Mondragon and thus, any proposal submitted to the government is for the account and sole benefit of Mondragon," PentaCapital said. "Any contract or compromise agreement with the government or any of its agencies will have to be signed by Gonzalez as Chairman and CEO (Chief Executive Officer) of MIPI and MLRC." PentaCapital also explained the rehabilitation plan involving a loan of P650 million to MLRC and payable over a two-year period "does not involve any investment by any investor. The bulk of the loan was to be sourced from existing bank creditors, who would also benefit from a rehabilitated MLRC," the investment firm said. PentaCapital said Gonzalez lied when it said that "various groups" were going to get ownership in Mondragon without shelling out a single centavo. It explained that future investors interested in Mimosa shares would have to pay for their stakes. "The plan was to offer an option to the prospective lenders to subscribe at par to 20 percent of the equity of the rehabilitated MLRC. Further, the existing creditors will still have to agree to convert part of their exposure in MLRC into equity for about 55% of the rehabilitated firm," PentaCapital said. Last week, Gonzalez accused PentaCapital of drafting a proposal that would allow President Joseph Estrada and his allies to gain control of Mimosa and to give preference to a competitor allegedly owned by the chief executive. Gonzalez said cabinet secretary for flagship projects Roberto Aventajado is a PentaCapital shareholder and is ready to take stake in Mimosa once the deal pushes through. Aventajado said the allegations made by Gonzalez are politically motivated, prompting the former to file a libel suit against the latter seeking P22.5 million in damage. (ABS/CBN News Channel 09-Dec-2000) PETRON CORP.: In the red by P2B this year ----------------------------------------- Industry leader Petron Corp. is in the red by P2 billion and its losses are still mounting due to its inability to raise its prices, Energy Secretary Mario V. Tiaoqui said yesterday. In a radio interview, Tiaoqui pointed out that the prices of Dubai crude have increased by more than 200 percent since March 1999 while local oil companies were able to raise their pump prices by just a little over 60 percent over the same period. In a recent report, Petron said it lost P1.5 billion in the first nine months and another P200 million in October alone. Petron, which is owned 40 percent by the government, reported a net earnings of P2.4 billion. In 1999, one of its lowest. This year, it did not declare a stock nor cash divided due to the continued losses it registered. The oil companies including Petron last increased their prices on Oct. 1. Since that time, the prices of crude oil increased by a little over $2 per barrel while the peso deteriorated to new record lows. Tiaoqui said government understands the predicament of the oil companies, but government also needed to keep prices at present levels to avoid complicating the already confusing political environment. He explained that government had tried to make "things easier" for the industry by lowering the three-percent import tariffs on crude oil and refined petroleum products for a period of three months. Congress is working on a legislative proposal that would lower specific taxes on petroleum products likewise in a bid to keep prices depressed. (Philipine Star 09-Dec-2000) =============== T H A I L A N D =============== ADVANCE AGRO PLC: Signs debt-restructuring agreement ---------------------------------------------------- Advance Agro Public Company Limited and its subsidiaries, Advance Paper Company Limited and AA Pulp Mill2 Company Limited, signed a 6.48 million baht debt restructuring agreement with three creditors -- Bangkok Bank Plc, Krung Thai Bank Plc and Thai Farmers Bank Plc. The agreement was signed Dec. 7 after negotiations the bank trio were completed. The agreement provides, among other provisions, for no principal or interest reduction, a one-year grace period, repayment of all debt within 2008 and for all other nonrestructured debt to be repaid as is customary. CIRCUIT ELECTRONIC INDUS.: Drafts debt-rehab agreement ------------------------------------------------------ Circuit Electronic Industries is drafting a debt- restructuring agreement with Thai Lao Lignite Co Ltd (TLL), for completion by Dec 31. The company then will submit the plan to TTL's creditors for approval. FRIENDS & DOCTOR CLINIC CO.: Takes shares for debt payment ---------------------------------------------------------- Siam Commercial Bank has bought 11,289 ordinary shares in Friends & Doctor Clinic Co Ltd, valued at Bt232,884.07 (or Bt 20.63 apiece) as debt repayment. Friends & Doctor has registered capital of Bt1 million. After this transaction, the bank will hold 11.29 percent of the company. SIAM STEEL INT'L: Reports progress on rehab plan to SET ------------------------------------------------------- In reporting to the Stock Exchange of Thailand on the progress of its rehabilitation plan for the third quarter of the year, Siam Steel International Public Company confirmed that the second interest payment and first repayment of principal to Financial Institution Creditors was made Sept. 29 and amounted to 43.71 million baht. Additionally, Letters of Guarantee amounting to 0.45 million baht were returned to Thai Military Bank. At a meeting of creditors, Arab Banking Corporation, Bank of America, National Association, The Hongkong and Shanghai Banking Corporation, Ltd. and The Industrial Finance Corporation of Thailand were selected to be members of Steering Committee. Siam Steel further indicated that the efficacy of a debt-to-equity conversion is in the process of being determed by the Steering Committee. THAI PETROCHEM.INDUS.: Hints at interest-payment default -------------------------------------------------------- Thai Petrochemical Industry (TPI) has claimed it may be forced to default on a 600 million baht interest payment due in January if its creditors endorse the debt plan. The Central Bankruptcy Court has set December 12 as the date on which it will rule on TPI's appeal against the debt retructuring plan. Vachirapan Plomprasert, TPI's vice president, said the plan, drwn up by Effective Planner, called for a two-thirds cut back on crude, a move that will reduce refining capacity from 215,000 barrels a day to 75,000 barrels. Vachirapan said if Effective Planner's debt plan is endorsed, the company stands to lose 350 million baht a day as a result of lost production, which will force the firm to default on the 600 million baht interest payment. If Effective Planner does not revise its plan, the company will be forced to default on the interest payment, and forced bankruptcy and asset liquidation may ensue, Vachirapan concluded. To make matters worse, he said, TPI has been forced to halt refinery production since December 1 because of a shortage in crude stock, and expects delivery only on December 11. The company said the delivery will be enough for another 10-14 days, after which it will have to halt operations again. "Intermittent operation reduces efficiency because we can run the factory at only 70 percent of total capacity," Vachirapan said. In response to TPI's comments, Effective Planner's managing director, Anthony Norman, insisted that TPI will be able to service the interest payment because revenue from down- stream products such as plastic and polymer will compensate for losses from the refinery. In addition, TPI is still loaded with overstock products from its non-core businesses that may be sold for supplemental revenue, Norman said. Norman told reporters that if the debt plan continues to meet with resistance from TPI management, it may become necessary to remove them to clear the way for debt-restructuring. Creditors of TPI, the country's largest corporate debtor, voted on November 26 in favor of the plan to restructure the company's $3.7-billion debt. But founder Prachai Leophairatana appealed in court that the debt plan favored the creditors. Consequently, the court scheduled a hearing for December 12. TPI was ruled insolvent by the Central Bankruptcy Court in March but its management was allowed to remain in control until creditors agreed on a rehabilitation plan. The creditors rejected attempts by Prachai to continue to oversee TPI's recovery and voted to appoint a professional rehabilitation planner to sort through the petrochemical firm's debt. Prachai has been vehemently opposed to the restructuring plan, which will see his stake in TPI reduced to about 14 percent as creditors swap interest owed for equity. The case, seen as a test of Thailand's amended bankruptcy laws, has dragged on for three years. TPI suffered massive financial losses when the government's failed defense of the baht left the company struggling to cope with ballooning foreign currency-denominated debts. (Business Day 08-Dec-2000) S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Darryl Henning, Managing Editor, James Philip P. Jover and Maria Vyrna Ni�eza, Editors. Copyright 2000. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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