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/raid1/www/Hosts/bankrupt/TCRAP_Public/010220.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, February 20, 2001, Vol. 4, No. 35 Headlines A U S T R A L I A GAMES `R' US: Goes Into Administration WOODLAWN: Fails to Pay A$6.5M in Entitlements C H I N A & H O N G K O N G GUANDONG INVESTMENTS: Sells GD Building for HK$31.48M WAH LEE: Fails to Pay HK$55M Bonds I N D O N E S I A PT PERMADANI: Restructures US$161M Debt PT TEXMACO JAYA: Merges with Sister Company PT VOKSEL ELECTRIC: FSPC Approves Debt Restructuring SALIM GROUP: Palm Oil Plantation Sales Cancelled J A P A N CHIYODA LIFE: Sells HQ for 10B Yen FREEASIA MACROSS: Debt Waiver Status Uncertain K O R E A DAEHAN FIRE: FSS Due Diligence Audit Nears Completion DONG-AH: Accused of Tampering with Records M A L A Y S I A MALAYSIAN AIR LINES: Expects RM569.1M Net Loss P H I L I P P I N E S EXTELCOM: Resumes Talks with Creditors NAPOCOR: Fuel Tax Exemption Revoked S I N G A P O R E CAPITALAND Ltd.: Sells Stake in Hospital T H A I L A N D NAKORNTHAI: Rejects Restructuring Plan THAI PETROCHEMICAL: Planner Proceeds Shares Issuance ================= A U S T R A L I A ================= GAMES `R' US: Goes Into Administration --------------------------------------- Games `R' Us, a software and computer games retailer, was placed under administration on February 13 after it failed in its United States joint venture, leaving A$2 million of debt owed to its creditors, the West Australian reported on Wednesday. The company's shares were suspended from trading on January 15. John Lord, of Lord & Brown, and Mark Reilly, of Featherby Reilly, were appointed administrators of the firm. The firm's 12 stores and seven franchised stores are uncertain of their future. Mathew Edwards, the company's founder and chief executive, has been replaced by John McGurck, a former Bank of Western Australia director. WOODLAWN: Fails to Pay A$6.5M in Entitlements ---------------------------------------------- The retrenched workers of Woodlawn, an Australian mining company, can only expect to receive A$3 million in entitlements this year after creditors decided on February 13 not to close the firm, the Canberra Times reported on Wednesday. Nick Brooke, the PricewaterhouseCoopers appointed administrator, said the firm has a total debt of A$27 million -- A$12.3 million to secured creditors and A$6.5 million to the employees. Peter Hook, an ex-Woodlawn employee, said the more than 160 retrenched employees are glad that the company has not wound-up operations even though they won't receive the full amount that they have demanded in outstanding employee entitlements. Woodlawn's Goulburn mine was being pursued by Collex Waste Management for a 50-year lease and a 500,000 tonnage limit annually. The request was reduced to a 20-year lease and 400,000 annual tonnage limit with a decrease of 10 percent during the succeeding five years. ============================== C H I N A & H O N G K O N G ============================== GUANDONG INVESTMENTS: Sells GD Building for HK$31.48M ------------------------------------------------------ Guandong Investments (GDI), an infrastructure and investment company, will sell its share in GD Building for HK$3 billion in line with its plan to reduce its gearing ratio, according to the Friday issue of the South China Morning Post. The buyer is Hi Sun, a British Virgin Island company owned by Kui Man-chun and Li Wenjin. Li Wenyue, Guandong Investments managing director, said the sale represents a 57.16 percent share in the building, which is one of the 20 loss-making and non-core businesses scheduled to be unloaded in the next five years. He said GDI hoped to raise HK$3 billion from the sale of non-core assets to help repay debt. A condition of the sale includes the waiver of intra-group indebtedness of about HK$209 million owed to GDI by GD Building. Last year, GD Building registered a net loss of HK$56.35 million with HK$316.36 million in debts. WAH LEE: Fails to Pay HK$55M Bonds ----------------------------------- Wah Lee Resources Holdings Ltd., an investment holding company, failed to pay Way Forward Consultants Ltd. the principal of its series B HK$55 million guaranteed secured zero coupon convertible bonds on January 29, Quamnet News Service reported on Friday. Yeung Ming-kwong, chief executive of Wah Lee Resources Holdings Ltd., said they are negotiating with the bondholders for restructuring the repayment terms as it is at present searching for new investors. Wah Lee shares, suspended since Feb. 5, will remain suspended pending further announcements. They last traded at 2.8 HK cents. ================= I N D O N E S I A ================= PT PERMADANI: Restructures US$161M Debt ---------------------------------------- PT Permadani Khatulistiwa Nusantara (PKN), a hotel developer, will restructure its US$161.5 million debt owed to the Indonesian Bank Restructuring Agency (IBRA), the Jakarta Post reported on Saturday. PT Permadani owns Regent Hotel, a Jakarta five-star hotel. The Financial Sector Policy Committee (FSPC), which approved the debt restructuring, said IBRA would be given control of a 51 percent stake in the firm. In return, its debts will be paid in three tranches including cash payment, debt-to-equity arrangement, and secured convertible bonds mechanism. PKN initially owed debts to local banks that were then turned over to IBRA. PT TEXMACO JAYA: Merges with Sister Company -------------------------------------------- PT Texmaco Jaya, a textile producer, plans to merge with a sister company in the Texmaco group, Polysindo Eka Perkasa. PT Texmaco Jaya will then combine and restructure debt by securing its bonds and debt-to-equity swap as proposed by Financial Sector Policy Committee (FSPC) and Jakarta Initiative Task Force (JITF). The exact amount of debt is still not known but the FSPC said it had agreed in principle with secured creditors to restructure $1.3 billion in debt, the Jakarta Post reported on Saturday. The JITF is a government-sponsored agency formed in 1998 to help accelerate the debt restructuring of the country's private sector by playing a mediator role, while the FSPC is a group of several senior economic ministers that oversees the country's major bank to help manage corporate restructuring programs. PT VOKSEL ELECTRIC: FSPC Approves Debt Restructuring ----------------------------------------------------- The Financial Sector Policy Committee (FSPC) approved the debt restructuring Plan of PT Voksel Electric on February 9, as proposed by the Jakarta Initiative Task Force (JITF). FSPC said debt payments for PT Voksel would be divided into two installments on its US$8.6 million debt. The first installment of US$4.3 million will be paid up to 2008. The second will involve the issuance of convertible and straight bonds, according to the Saturday edition of the Jakarta Post. The JITF is a government-sponsored agency formed in 1998 to help accelerate the debt restructuring of the country's private sector by playing a mediator role. "These restructurings mediated by the JITF represent a significant contribution to meeting the government's restructuring targets for 2001," the FSPC said. SALIM GROUP: Palm Oil Plantation Sales Cancelled ------------------------------------------------- The sale of a 250,000-hectare palm oil plantation on Sumatra seized by the Indonesia Bank Restructuring Agency (IBRA) from the Salim Group to Kumpulan Gunthrie Bhd. for US$350 million was cancelled because of objections from Parliament. Prijadi Praptosuhardojo, Indonesian Finance Minister, said they are still considering the issues before making a final decision, Bloomberg reported on Thursday. The palm oil plantation was surrendered to IBRA in exchange for a 53 trillion rupiah loan belonging to PT Bank Central Asia, part of the Salim group. Residents of Sumatra want the government to scrap the land sale to a foreign company because it is illegal. Members of Parliament, meanwhile, are pushing the government to find a better solution and not proceed with the sale. This is in contrast with the position taken by Economics Minister Rizal Ramli and IBRA's head of asset management division, Dasa Sutantio, in favor of the sale since there was already a signing of a purchase agreement in December. The local concerns will however be taken into account. ========= J A P A N ========= CHIYODA LIFE: Sells HQ for 10B Yen ----------------------------------- Chiyoda Mutal Life Insurance Co. plans to sell its headquarters in Meguro Ward, Tokyo for 10 billion yen, according to Wednesday's Jiji Press English News Service. The proceeds will be used to settle the failed insurance company's debt of 500 billion yen. The local government of Meguro Ward has an interest in bidding on the building to transform it into a new town hall. If the deal is not realized, the administrator will again look for an interested buyer. FREEASIA MACROSS: Debt Waiver Status Uncertain ----------------------------------------------- Freesia Macross Corp., a plastic extruding machinery manufacturer, has not received a reply from its major creditors about its debt waiver application, according to Wednesday's Jiji Press English News Service. A Wright Investors' Service report says at the end of 2000, Freesia Macross had negative working capital, as current liabilities were 10.87 billion yen while total current assets were only 2.86 billion yen. The company has reported losses before extraordinary items for each of the past three years. 1998 was the last year the company reported profits from ordinary operations, when it reported 67.25 million yen in earnings. The Tokyo Stock Exchange is threatening to delist the company if it fails to improve its financial standing by the end of March 2001. ========= K O R E A ========= DAEHAN FIRE: FSS Due Diligence Audit Nears Completion ------------------------------------------------------ The Financial Supervisory Service (FSS) says it is nearly finished with a due-diligence audit of Daehan Fire & Marine Insurance Co., the Korea Herald reported on Thursday. The FSS has threatened to categorize Daehan Fire as a poorly managed financial institution if the results of the due diligence point to such a recommendation. If liabilities exceed assets, Daehan will be declared insolvent and ordered to submit final management rationalization plans to the financial watchdog. DONG-AH: Accused of Tampering with Records ------------------------------------------- The Financial Supervisory Service (FSS) is investigating Dong-Ah Construction of trying to inflate its assets by 700 billion won by tampering with its financial reports from 1988 to 1997, according to the Thursday issue of the Digital Chosun. Four partners are also threatening to take over its work in the consortium handling the North Korean light-water nuclear reactor construction project, Asia Pulse reported on Thursday. The FSS meanwhile did not find any tampering in the financial statement for 1994. Investigation is now centering on the year 1997. The Korea Electric Power Corp. (KEPCO), the party that ordered the project, said the three remaining firms should agree among themselves how to divide the tasks for the nuclear reactor project. Hyundai Cosntruction's share will increase from 50 to 62.5 percent. Daewoo Construction's work will increase from 15 to 18.25 percent and Hanjung from 15 to 18.5 percent. Dong-Ah Construction's share will remain at 20 percent. The total construction cost will be 934 billion won (US$746 million.) =============== M A L A Y S I A =============== MALAYSIAN AIR LINES: Expects RM569.1M Net Loss ----------------------------------------------- Malaysian Airlines (MAS) is expecting a net loss of RM569.1 million for the first quarter of this year and is not expected to turn a profit until 2003, the Business Times reported on Friday. This is the fourth consecutive year of losses, with debt amounting to US$2.6 billion. MAS is reportedly in talks with a foreign operator that insists the company reduce its 21,000 workforce and rationalize its operations. Negotiations are also underway with Petronas to help pay employee salaries. MAS depends upon Petronas for its fuel requirement accounting for 28 percent. The government is asking Petronas a 10 percent discount on jet fuel which accounts for 16 percent of its total operating costs. Azizan Zainul Abidin has succeeded Tajudin Ramli as MAS non- executive chairman. Tajudin has sold his 29 percent stake to the government for RM1.79 billion. ===================== P H I L I P P I N E S ===================== EXTELCOM: Resumes Talks with Creditors --------------------------------------- Express Telecommunications Philippines Inc. (Extelcom), a telecommunications company, is looking to restart negotiations with creditors on its P2 billion debt, according to the Friday issue of the Philippine Daily Inquirer. Advinculo Quiblat, Extelcom president, said negotiations stopped last year because of the country's volatile political situation, fluctuating interest rates and devaluation of the peso. Bayan Telecommunications Inc. (BayanTel) will sell its 40 percent share in Extelcom after it finalizes a deal with creditors because it is also undergoing a debt-restructuring process. Quiblat said the company would use new investments to convert the firm to digital operations in place of the older analog system. It has a subscriber base of 200,000. NAPOCOR: Fuel Tax Exemption Revoked ------------------------------------ The Bureau of Internal Revenue (BIR) has suspended bidding on P10.9 billion worth of fuel supply contracts for state-run National Power Corp. (Napocor) after its tax-exemption privilege was revoked, the Philippine Daily Inquirer reported on Friday. The new Macapagal wants to remove Napocor's tax-exemption privilege to cope with a deficit of P200 billion. Napocor would save P300 million to P600 million annually with these exemptions. The deregulation law states that "as long as Napocor enjoys exemptions from taxes and duties on petroleum products purchased for power generation, the exemption shall apply to purchases through a local refiner and to the importation of fuel oil and diesel." The government has slapped a 3-percent tariff equivalent to 29 to 30 centavos a liter on imported crude and refined petroleum. It also imposes a specific tax of about 63 centavos a liter for every liter of diesel sold. ================= S I N G A P O R E ================= CAPITALAND Ltd.: Sells Stake in Hospital ---------------------------------------- CapitaLand Ltd., Southeast Asia's largest developer, will sell its 16.7 percent stake in hospital operator Parkway Holdings Ltd. worth S$180 million to concentrate on its property-related business. It wrote off S$190 million in losses for Parkway last year, Bloomberg reported on Friday. Julie Ong, deputy director of corporate communications at CapitaLand, said Salomon Smith Barney was appointed as adviser for the sale. It is hoped that the appointment of an adviser will reinforce the company's plan to dispose of its healthcare-related business. The developer reported a 43 percent profit decline in 2000 to S$105.7 million. CapitaLand expects to report a 20 to 25 percent increase in earnings before tax and interest for this year, which will be helped by the divestment of S$500 million to S$1 billion in assets. =============== T H A I L A N D =============== NAKORNTHAI: Rejects Restructuring Plan --------------------------------------- The planner for Nakornthai Strip Mill will submit a revised restructuring plan after being rejected by creditors on February 20, AFX reported on Wednesday. Ramkhamhaeng Planner refused to accept the three revisions proposed by Bay Harbour, representing bondholders. Under the Bankruptcy Law, the new planner must submit a restructuring plan to creditors within 45 days of being appointed, with an extension of up to 30 days. Nakornthai Strip Mill's total debt amounts to Bt35 billion, with Bt32 billion owed to financial institutions. Nakornthai owes the Industrial Finance Corporation of Thailand Bt5 billion. THAI PETROCHEMICAL: Planner Proceeds Shares Issuance ----------------------------------------------------- Thai Petrochemical Industry (TPI) can proceed with the issuance of new shares to more than 100 creditors for US$3.8 billion in defaulted loans, after the Central Bankruptcy Court approved a takeover by creditors, according to Thursday's Business Day Thailand. A spokesman for Effective Planners said the debt-for-equity swap would advance the plan to take control of 75 percent of the company. Meanwhile, Bangkok Bank, International Finance Corp., Kreditanstalt Fuer Wiederaufbau and other creditors are still contesting at least nine suits filed by Prachai Leophairatana, the founder and former chief executive of the company. He says the court ruling has dealt him a setback, reducing his holding from 60 to 15 percent after the implementation of the swap. 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. Lexy Mueller, Managing Editor, James Philip P. Jover and Maria Vyrna Nineza, Editors. Copyright 2000. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***