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/raid1/www/Hosts/bankrupt/TCRAP_Public/030721.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, July 21, 2003, Vol. 6, No. 142 Headlines A U S T R A L I A AMP LIMITED: Morningstar Cuts Ratings to Three Stars ATLANTIC 3: Interim Receiver Appointed to Investment Schemes HARRIS SCARFE: Former Chairman Charged With 37 Counts of Fraud POLLOCK GROUP: National Bank Finally Decides to Pursue Pollock QANTAS AIRWAYS: Travel Contracts with Government Legitimate QANTAS AIRWAYS: Regulator Unlikely to Change Opinion on Merger WESTERN METALS: Creditors Spurn Second Debt Deal in a Year C H I N A & H O N G K O N G CYBER ASIANET: Winding Up Hearing Set August 20 EASTERN COMMUNICATIONS: Xinhua Downgrades Rating to B+ NEW GENIUS: High Court to Hear Winding up Petition August 13 SYNERGY SPORT: Receiver's Appointment Hearing Set July 29 WAVERLEY ENTERPRISES: Court to Hear Winding Up Petition I N D O N E S I A KALBE FARMA: Wants Further Delay on US$86 Million Debt Repayment J A P A N HOKKAIDO INT'L: Launches Flights Between Asahikawa, Tokyo MARUBENI CORPORATION: Unit's Ex-Chief Goes to Jail MITSUBISHI MOTORS: JCR Assigns BBB- Rating NIPPON TELEGRAPH: Telecom Firms Sue Government Over NTT Fee Hike * Japan's Non-Life Insurers Still "Under Severe Pressure", S&P K O R E A DAEWOO GROUP: KDIC Disposes of All Confiscated Real Estate HANARO TELECOM: LG May Support Ailing Telecom KOOKMIN BANK: 13 Executives Leave Posts SK GLOBAL: Hong Kong Unit Files Liquidation Petition SK GLOBAL: Creditors Block Stock Market Delisting SK GLOBAL: Local Creditors Strike Deal With Foreign Lenders M A L A Y S I A ACTACORP HOLDINGS: Clarifies "SC Rejects Revamp Plan" Report BERJAYA SPORTS: Purchases 8% Unsecured Loan Stocks JUTAJAYA HOLDING: Posts FY03 Financial Results KIN YIP: Sets Winding Up Hearing September 9 KUALA LUMPUR INDUSTRIES: Issues Capital Reduction Proposal KUMPULAN JAYA: Enters Winding Up Petition SENG HUP: Issues Notice of Book Closure UNITED CHEMICAL: PKNP OK's Corporate Reorganization P H I L I P P I N E S COMMUNITY RURAL: PDIC to Move For Liquidation of Assets ISLAND SAVINGS: PDIC Issues Notice to Creditors MANILA ELECTRIC: ERC Orders Second Phase Refund by September MANILA ELECTRIC: S&P Lowers Rating to 'CC' MANILA ELECTRIC: ERC Issues Refund Notice NATIONAL POWER: ERC Mediates Row With Clark Power PHILIPPINE LONG: Books P700M Loss in Second Quarter S I N G A P O R E BIL INTERNATIONAL: S&P Lowers Rating to B+ CHARTERED SEMICONDUCTOR: Discloses 2Q03 Financial Results CHARTERED SEMICONDUCTOR: Unveils Revenues by Market Segment CHARTERED SEMICONDUCTOR: Issues Recent Highlights and Events T H A I L A N D KRUNG THAI: Reports Unexpected THB624 Million Q2 Net Loss - - - - - - - - ================= A U S T R A L I A ================= AMP LIMITED: Morningstar Cuts Ratings to Three Stars ---------------------------------------------------- After being under pressure for some time, AMP Limited's grade on Morningstar's ratings board slipped to three stars from four, Dow Jones said Friday. "In our opinion, there are significant uncertainties surrounding the restructuring, with potential negative effects on the management of AMP's international equities," Morningstar said in a statement. Morningstar, which rates fund managers, said the benefits of splitting the firm's Australian and U.K. businesses -- the cornerstone of the restructuring -- could not be clearly gauged at this time; thus the downgrade. "In Morningstar's opinion, AMP is discernibly a good quality fund manager, but not a very good quality one," it said. Subsidiaries AMP Henderson Global Investors, AMP Life and AMP Superannuation Ltd. were also downgraded to three stars, Dow Jones said. ATLANTIC 3: Interim Receiver Appointed to Investment Schemes ------------------------------------------------------------ The Australian Securities and Investments Commission (ASIC) on Thursday obtained orders in the Supreme Court of Queensland, Brisbane, for the appointment of an interim receiver to the property of various managed investment schemes operated by Atlantic 3 Financial Pty Ltd (Atlantic 3). Greg Moloney and Peter Geroff of Ferrier Hodgson, Queensland, were appointed interim receivers for the purpose of identifying, securing and or preserving the property in the possession, custody or control of Atlantic 3. ASIC alleges that since 1998, Atlantic 3 has operated and continued to operate a number of unregistered managed investment schemes (in the nature of mortgages) without holding the necessary licenses, in contravention of the Corporations Law and Corporations Act. During Thursday's proceedings, Atlantic 3 and its directors, Dr. Fredrick Acker and Gerilyn Polanski, conceded the schemes were unregistered managed investment schemes under the Corporations Act, and made an application to have the schemes wound up by Atlantic 3. A hearing date of 29 July 2003 has been set to determine the identity of who should carry out the schemes' winding-up. Thursday's orders follow undertakings previously given to the Court on 27 May 2003 by Atlantic 3 and its current directors regarding the operation of the schemes. At that time, Messrs Moloney and Geroff were appointed Investigative Accountants, and ordered to provide a report over the allegedly unregistered managed investment schemes, which was prepared and filed with the Court on 24 June 2003. HARRIS SCARFE: Former Chairman Charged With 37 Counts of Fraud -------------------------------------------------------------- David Knott, Chairman of the Australian Securities and Investments Commission (ASIC) on Friday advised that with the laying of charges against Adam John Trescowthick, ASIC's investigation into the collapse of the Harris Scarfe group has been finalized. Mr. Trescowthick was formerly the Executive Chairman of Harris Scarfe Holdings Limited (receiver and managers appointed, in liquidation) and a director of Harris Scarfe Limited (receivers and managers appointed, in liquidation). Counsel appeared Friday in the Adelaide Magistrates Court on Mr Trescowthick's behalf, in respect of 37 charges arising from ASIC's investigation. "In the absence of further eviance becoming available in the future, [Friday's] charges signify the finalization of the investigation commenced by us shortly after the collapse of Harris Scarfe in April 2001," Mr. Knott said. Mr. Trescowthick, of South Yarra, Victoria, has been charged with: (1) 17 counts of failing to act honestly in the exercise of his powers and the discharge of his duties as an officer of Harris Scarfe Holdings Limited (2) 13 counts of being, as a director of Harris Scarfe Holdings Limited, intentionally dishonest and failing to exercise his powers and discharge his duties in good faith in the best interests of the company and (3) Seven counts of disseminating information that to his knowledge was false in a material particular and likely to induce the purchase of securities by other persons. The matter has been adjourned until September 26, 2003, at which time Mr. Trescowthick is due to appear and answer the charges. The charges are being prosecuted by the Commonwealth Director of Public Prosecutions. POLLOCK GROUP: National Bank Finally Decides to Pursue Pollock -------------------------------------------------------------- In a highly anticipated move last week, the National Australia Bank finally sued former star client Kevin Pollock in hopes of recovering part of its AU$50 million loan to Pollock Group of companies. Mr. Pollock's group collapsed into receivership and administration in March and April this year after the Australian Taxation Office moved to seize assets to recover alleged tax liabilities of about AU$16 million. To protect its interest, the bank appointed receivers and administrators onto 14 Pollock- linked companies. This development confirmed what the bank had feared for since mid-2001 when an internal probe concluded that the bank's internal lending guidelines may have been breached in lending to an array of companies linked to Mr. Pollock, his family and associates. According to The West Australian, the suit against Mr. Pollock wants to recover AU$7.9 million from his personal assets; AU$3.7 million from son Jamie; AU$3.6 million from brother Noel; and AU$562,000 from wife Frances. "It is believed the legal actions have been taken under a series of guarantees held by the banks for lending to companies in Mr. Pollock's group that collapsed into receivership and administration in March and April this year," The West Australian said. The paper said: "The bank's move comes amid eviance that Mr. Pollock has retained links to several thriving companies with land development interests in suburban Perth, including undeveloped and developed land at Canning Vale, Hocking and Gwelup. His daughter Carina and Jamie Pollock are the listed directors of several companies, with Carina sitting on the boards of companies that have land development joint ventures with millionaire business Allen Caratti." A successful legal action against Mr. Pollock personally could allow the bank to put in a bankruptcy trustee if it is not paid under the alleged guarantees. The trustee has the power to examine what assets are owned by a bankrupt individual in his own name and what other assets might be recoverable to the benefit of creditors, the paper said. QANTAS AIRWAYS: Travel Contracts with Government Legitimate ----------------------------------------------------------- There is no truth to allegations that the government has allowed Qantas Airways to monopolize travel contracts with the government, Acting Australian Prime Minister John Anderson says. Mr. Anderson issued the denial while appearing on ABC's Business Breakfast program last Friday, Asia Pulse said. "Qantas business travel did win their position in an open tender process which I am convinced was fair and open and above board," he said. "They have indicated they would welcome any further scrutiny of their activities having won the contract and so we will have a look at it." Mr. Anderson said the ticketing purchases made on behalf of the government were made in the best interest of the Australian taxpayer. "The tickets are being purchased on the basis of the best outcome for the taxpayer." He added he and his colleagues in the public service also travel with regional airlines, such as Regional Express, when possible. "I try to spread my business around... My department does the same. My departmental head does the same. My office does the same." Qantas is expected to report deeper than expected losses for the six months to June 30. Citing The West Australian, TCR-Asia Pacific recently said observers forecast a half-year loss of AU$34 million, contrary to the AU$25 million profit forecast just two months ago. QANTAS AIRWAYS: Regulator Unlikely to Change Opinion on Merger -------------------------------------------------------------- The proposed Qantas-Air New Zealand alliance is doomed. Australian Competition and Consumer Commission Chairman Graeme Samuel said last week there's just no reason why the commission will change its view that the merger would be anti-competitive. The commission in April rejected the AU$500 million proposal, which, if approved, will allow Qantas to acquire 22% in Air New Zealand. The proposal also includes an integration of the services of both airlines. The two have given undertakings to the commission, which they believe should alleviate concerns that the plan is anti-competitive, The Advertiser said. WESTERN METALS: Creditors Spurn Second Debt Deal in a Year ---------------------------------------------------------- Perth-based Western Metals fell into administration last week after failing to get the nod of creditors on another debt and equity restructuring plan, the second in the last 12 months, The West Australian said Friday. According to the paper, prior to the appointment of administrators Martin Jones and Garry Trevor of Ferrier Hodgson, the company vigorously wooed U.S. noteholders into accepting equity for their US$195 million notes, but to know avail. The company said under the circumstances and in the context of ongoing cash flow requirements, it was left with "no prudential alternative" but to appoint voluntary administrators. "The board remains confident of the ongoing prospects for the group's operations, and hopes that the protection afforded by the statutory administration process will give both breathing space, and the opportunity, to facilitate an orderly rationalization of the group's assets and a restructuring of the company's debt and equity base through a deed of company arrangement, in the best interests of all the group's stakeholders," it said. Mr. Jones could not be contacted for comment and it was unclear last night the level of unsecured creditors or the future of the mining operations, the paper said. The company, which owns the Lennard Shelf lead-zinc operations in the Kimberley and the Mt Gordon copper mine in Northern Queensland, blamed continuing depressed base metals prices and the high Australian dollar for the collapse. Just last year it concluded a financial restructuring it hoped would see it through the commodity price downturn. ================================ C H I N A & H O N G K O N G ================================ CYBER ASIANET: Winding Up Hearing Set August 20 ----------------------------------------------- The High Court of Hong Kong will hear on August 20, 2003 at 9:30 in the morning the petition seeking the winding up of Cyber Asianet Limited. Grand Marseille Enterprises Limited whose registered office is located at Top Floor, Chinachem Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon, Hong Kong filed the petition on June 26, 2003. Ford, Kwan & Company represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Ford, Kwan & Company, which holds office Rooms 1202-1206, 12/F., Wheelock House, 20 Pedder Street, Central, Hong Kong. EASTERN COMMUNICATIONS: Xinhua Downgrades Rating to B+ ------------------------------------------------------ Xinhua Far East China Credit Ratings (Xinhua Far East), the pioneering undertaking to rank credit risk among Chinese corporations using international standards, has downgraded on Thursday the BBB (pi) long-term credit rating of Eastern Communications Co. Ltd. (Eastcom, SH A 600776, SH B 900941) to B+ (pi). The rating outlook remains negative. The rating action is prompted by fierce competition in the cellular phone business that makes it challenging for Eastcom to turn around its operating loss and deteriorating financial position. The heightened risks render the Company's operating and financial profiles not commensurate with its original ratings. Eastcom reported its first time loss in 2002 while the Company switched its core business from mobile communication equipment to cellular phones manufacturing. While Xinhua Far East recognized that Eastcom's own brand of cellular phones developed rapidly, the Company is subject to the pressure of declining profit margins amidst intensifying competition and sharp increases in production capacities in China. In Xinhua Far East's opinion, Eastcom's financial performance reflects the difficult market in which it operates: the Company's net operating cash inflow is negative, its cash reserve has fallen substantially, and its gross debt, mainly short-term debt, rose sharply. Thus, its debt repayment ability and financial flexibility face severe challenges. Xinhua Far East predicts the Company's profitability and financial position will not improve significantly in the short term given the intense competition in China's cellular phone market and risks in uncertainties over the Company's transformation. Thus, the rating outlook for Eastcom is negative. Eastcom is a mobile communication equipment manufacturer, whose main products are cellular phones and mobile communication system equipment. Its products also include IC card machines, transmission equipment, ATM machines, telecommunication and electric power equipment. In 2002, its turnover was RMB 8.1 billion Yuan (USD 1 billion), of which cellular phones accounted for 86.5 percent, mobile communication system equipment accounted for 6.6 percent and other products 6.9 percent. That year, it incurred a loss of RMB 170 million yuan (USD 20.99 million). Eastcom is a large cap Company ranking the 160th and the 29th in the Xinhua/FTSE China A 200 Index and Xinhua/FTSE China B 35 Index respectively. As of June 30, 2003, it's total market cap (A plus B share) reached 4.50 billion Yuan (USD 555 million). The investible A-share market cap accounted for RMB 1.13 billion Yuan (USD 140 million) and RMB 729 million Yuan (USD 90 million) for the B share. About Xinhua/FTSE China A 200 and B 35 Indices Xinhua/FTSE China A 200 Index is the large cap index in the Xinhua/FTSE China A Share Index Series and includes the top 200 companies in China by market cap. It is designed as a tradable index and is calculated in real-time every 15 seconds. Xinhua/FTSE China B 35 Index is the large cap index in the Xinhua/FTSE China B Share Index Series and includes the top 35 companies in China by market cap. It is designed as a tradable index and is calculated in real-time every minute. For daily data and further information, see http://www.xinhuaftse.com. About Xinhua Far East China Credit Ratings Xinhua Far East China Credit Ratings (Xinhua Far East) is a pioneering venture in China that aims to rank credit risks among corporations in China. It is engineered by the strategic alliance between Xinhua Financial Network and Shanghai Far East Credit Rating Co., Ltd. Capitalizing on the synergy between XFN and Shanghai Far East, Xinhua Far East's rating methodology and process blend unique local market knowledge with international rating standards. Xinhua Far East is committed to provide investors with independent, objective, timely and forward looking credit opinions on Chinese companies. It aims at helping investors differentiate the credit risks among the corporations in China, thereby, cultivating their awareness and promoting information disclosures and transparency in China market. For more information, see http://www.xfn.com/creditrating. About Xinhua Financial Network Xinhua Financial Network (XFN) is an independent financial service and media Company based in Hong Kong providing financial information and unique access to Chinese and Asian markets. XFN provides real-time coverage of the Chinese and Asian equity markets and the corporate and economic news that moves them, delivering an integrated platform of indices, financial news feeds, credit ratings and investor relations services to global financial institutions and re-distributors via leased line, Internet and satellite technology. Early this year, the Company acquired AFX-Asia Pte Ltd. and became immediately one of the leading financial news services in Asia, providing information from twelve bureaus throughout Asia and Australasia, for the professional investment community and the investing public. Founded in 2000, XFN is backed by a select group of partner investors and is managed by a team of international business professionals recognized for their industry knowledge and proven leadership. The Company is owned by a group of international shareholders including PR Newswire, informa, Xinhua News Agency, Nippon Venture Capital, REFCO and Funai Venture Capital. XFN is a Hong Kong corporation, with offices in Beijing, Shanghai, Shenzhen, Korea, Taiwan, Japan, Singapore and North America. For more information, see http://www.xfn.com. About Shanghai Far East Credit Rating Co., Ltd Shanghai Far East Credit Rating Co., Ltd. is the first and leading professional credit rating Company with comprehensive business coverage in China. It is an independent agency established by the Shanghai Academy of Social Sciences with the mission to develop internationally accepted standards of capital market in China. The Company is a pioneer to conduct bond- rating business in China. For years, it has been recognized by the Shanghai branch of the PBOC to do loan certificate credit rating. Since establishment, it had rated over 1,000 corporate long-term bonds and commercial papers, based on the principles of objectivity, fairness and independence. The Company has also maintained over 50 percent market share in the loan certificate- rating sector in Shanghai for three consecutive years. With its strong local presence and knowledge, it provides investors the most insightful and unique credit opinion. For more information, see http://www.fareast-cr.com. NEW GENIUS: High Court to Hear Winding Up Petition August 13 ------------------------------------------------------------ The petition seeking the winding up of New Genius Investments Limited will be considered by the High Court of Hong Kong on August 13, 2003 at 10:00 in the morning. Wong Yuk of Flat B, 5/F., 14-16 Luen Cheong Street, Fanling, New Territories, Hong Kong filed the petition on June 27, 2003. Tam Lee Po Lin, Nina represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Tam Lee Po Lin, Nina, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong. SYNERGY SPORT: Receiver's Appointment Hearing Set July 29 ---------------------------------------------------------- An application by the Official Receiver and Provisional Liquidator will be heard before Master S. Kwang of the High Court for consideration of the resolutions and determinations of the first meeting of creditors held on 10th April 2003 and the first meeting of contributories and the adjourned first meeting of contributories held on 10th of April 2003 and 17th April 2003 respectively, deciding the differences and making such order of appointments as the court may think fit. Date and Time of Hearing: July 29, 2003 (Tuesday) at 11:00 a.m. Place of Hearing: High Court Building, No. 38 Queensway, Hong Kong Any creditor or contributory of the Company is entitled to attend and be heard at the above hearing. By E.T. O'Connell Official Receiver & Provisional Liquidator WAVERLEY ENTERPRISES: Court to Hear Winding Up Petition ------------------------------------------------------- The High Court of Hong Kong will hear on August 13, 2003 at 10:00 in the morning the petition seeking the winding up of Waverley Enterprises Limited. Cheng Kit Yu Goldine of Room 1814, Heng Tsui House, Fu Heng Estate, Tai Po, New Territories, Hong Kong filed the petition on June 25, 2003. Tam Lee Po Lin, Nina represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Tam Lee Po Lin, Nina, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong. ================= I N D O N E S I A ================= KALBE FARMA: Wants Further Delay on US$86 Million Debt Repayment ---------------------------------------------------------------- Debt-laden local pharmaceutical company, PT Kalbe Farma, will seek yet another due date extension on most of its US$86 million debt, Asia Pulse said Friday. The newswire noted these debts are the same debts that were supposed to mature last year had the company failed to get an extension until 2005. Now, the company wants these debts to be extended further to 2010, the report said. Company Director Vidjongtius told Asia Pulse the company is now negotiating with creditors. He added the company is also seeking the agreement with creditors on its proposed investment fund of Rp400 billion (US$49 million), another component of its debt-restructuring program. These creditors, he said, include Royal Bank of Scotland, ABN Amro Bank, Sumitomo Mitsui, and West LD from Germany. ========= J A P A N ========= HOKKAIDO INT'L: Launches Flights Between Asahikawa, Tokyo --------------------------------------------------------- Hokkaido International Airlines, widely known as Air Do, on Friday began operating flights between Hokkaido's Asahikawa airport and Tokyo's Haneda airport as its second route, reports the Kyodo News. The Sapporo-based airline said it would offer three services a day from June through November and two services a day from December through May. Hokkaido International Airlines Co., widely known Air Do, incurred a pretax loss of 1.63 billion yen (US$13.76 million) in the year that ended March 31, lower than the previous year's loss of 2.91 billion yen, TCR-AP reported recently. The Company narrowed its loss by reducing aircraft leasing fees and teaming up with All Nippon Airways Co. to shrink maintenance costs. MARUBENI CORPORATION: Unit's Ex-Chief Goes to Jail -------------------------------------------------- The Sendai District court have sentenced former Marubeni Chikusan Chief Akihiro Yoshikawa to two years in prison, for defrauding consumers by falsely labeling imported chicken as prime domestic poultry, according to Japan Times. Marubeni Chikusan is a Tokyo-based subsidiary of Marubeni Corporation, a major trading house. The court ordered Marubeni Chikusan to pay 36 million yen in fines and a meatpacking Company in Ishinomaki, Miyagi Prefecture, which repackaged the meat, to pay a fine of 3 million yen. MITSUBISHI MOTORS: JCR Assigns BBB- Rating ------------------------------------------ Japan Credit Rating Agency (JCR) has assigned a preliminary BBB- rating to the shelf registration of Mitsubishi Motors Corporation. Shelf Registration: Maximum: Y250 billion Valid: two years from May 22, 2002 RATIONALE: Mitsubishi Motors Corporation (MMC) implemented cost reduction measures of its Turnaround restructuring plan earlier than the schedules. The pretax profit before extraordinary items for fiscal 2002 ended March 31, 2003 recovered to the amount close to the target under the restructuring plan. MMC has cut the interest- bearing debt to 1 trillion yen, spinning off the division of commercial vehicles. However, the domestic sales were sharply below the planned amount. Introduction of new vehicles in Japan would be made on a larger scale in and after fiscal 2005. MMC needs to reduce the burden of loss hastily via rebuilding of the marketing system during the time before new vehicle introduction scheduled in and after fiscal 2005. Constraint on default risk of auto financing business in North America is beginning to pay off. MMC will have to tackle difficult job of trade-off between the constraint on default risk and the sustaining of sales volume in quantity. NIPPON TELEGRAPH: Telecom Firms Sue Government Over NTT Fee Hike ---------------------------------------------------------------- Five telecommunications carriers will sue the Japan Ministry of Public Management, Home Affairs, Posts and Telecommunications over an access fee increase by Nippon Telegraph and Telephone Corporation (NTT), according to Kyodo News on Thursday. The five involved are KDDI Corp., Japan Telecom Co., Poweredcom Inc., Cable & Wireless IDC Inc. and Fusion Communications Corp. On April 22, the ministry approved a plan to allow NTT East Corporation and NTT West Corporation to raise by an average 5 percent the fees they charge other carriers to access their phone lines, the first increase since the current fee system was introduced in 1994. The ministry decision enraged the five firms, which say it should be nullified and claimed that the calculation of communications costs is inaccurate because NTT's two regional phone units should not be treated equally in view of differences in their cost structures. * Japan's Non-Life Insurers Still "Under Severe Pressure", S&P -------------------------------------------------------------- Standard & Poor's has issued a report on Japan's non-life insurance industry, which concludes that although underwriting performance has improved, they remain "under severe pressure" due to the continued weakness of the world's equity markets. S&P said that the results for the fiscal year 2002 had produced "cuts in operating expenses" and that there had been no "losses caused by large-scale natural disasters." The rating agency observed, however, "Overall profitability remains weakened by a deterioration in investment performance, mainly due to falling stock prices." S&P analyst Runa Ichihari, the author of the report, stated, "A substantial improvement in the business and investment environment is not likely in the short term, and the outlook for the credit quality of the overall industry remains negative. Expense ratios have declined in general, as insurers continue to aggressively reduce costs and reorganize agent networks." She also noted "a drop in profitability from asset investment activities continues to threaten overall profitability." Non- life insurers' capital bases, which had been regarded as relatively solid in the Japanese financial sector, have also shown signs of erosion. Although industry wide consolidation has subsided, a new phase of price competition in auto insurance and other core businesses is likely. "The crucial factor for stable profitability continues to be underwriting based on prudential risk management, in addition to cost reductions," Ichihari concluded. S&P said that the study, "Industry Report Card: Japan's Non-Life Insurers," is available on RatingsDirect, Standard & Poor's Web- based credit analysis system, at www.ratingsdirect.com. ========= K O R E A ========= DAEWOO GROUP: KDIC Disposes of All Confiscated Real Estate ---------------------------------------------------------- Most of the real properties once owned by Kim Woo-choong, the former Chairman of Daewoo Group, have been sold off, JoongAng Daily reported Tuesday, citing the Korea Export Insurance Corporation (KDIC). Kim's farm in Ansan, Gyeonggi province, was sold to a bidder identified only as Mr. Park for 6.7 billion won ($5.7 million). Two earlier bids for the farm had fallen through. In January, Mr. Kim's house in Bangbae-dong, southern Seoul, was also sold for 4.8 billion won. KDIC have now disposed of all the real estate that the agency confiscated from Mr. Kim. The agency holds 201 billion won worth of debts of Daewoo Group. Since vanishing in 1999, as his companies were collapsing under US$65 billion in debt, Kim has been vilified by former employees and branded a criminal by a judge in Seoul, TR-AP reported in January. But in the FORTUNE interviews, Kim reveals that he left Korea not to escape prosecution but at the urging of its highest government officials and tells a tale of political intrigue and management error that led to Daewoo's collapse. In addition, Kim admits to "window dressing" Daewoo's balance sheet and details his travels since his disappearance in October 1999. HANARO TELECOM: LG May Support Ailing Telecom --------------------------------------------- South Korea's Information and Communication Minister Chin Dae-je is asking LG Group to help Hanaro to issue new shares if the takeover bid by LG is approved in the general shareholder's meeting, the Korea Herald said Friday. Minister Chin also said that even if the proposal in favor of LG gets rejected at the shareholder's meeting, LG should take all possible measures to normalize Hanaro's operation. The LG Group, the country's second-largest conglomerate, or "chaebol," earlier proposed it would buy new shares to be issued by Hanaro as part of its bid to take over the broadband carrier. LG currently holds a 13.02-percent stake in Hanaro, but despite being the largest shareholder, it does not have management control. KOOKMIN BANK: 13 Executives Leave Posts --------------------------------------- Kookmin Bank President Kim Jung-tae is not planning to quit his top post after facing a reprimand from the Board of Audit and Inspection (BAI) but would press ahead with a personnel- reshuffling plan, Digital Chosun reported Wednesday. Kookmin's 13 Vice Presidents all resigned on Wednesday, but Kim is likely to accept only the resignations of about three of them. The Financial Supervisory Service (FSS) is investigating a stock option exercised by Kookmin Bank President Kim Jung-tae, TCR-AP reported recently. The probe follows a check up by the Board of Audit and Inspection of Korea (BAI), which criticized Kim for enjoying capital gains from exercising dubious stock options. On July 4, the BAI asked the FSS to reprimand the Kookmin President for reaping 11 billion won from the transaction in 2002. It indicated that Kim used internal information in exercising his stock options. DebtTraders reports that Kookmin Bank Ltd.'s 7550% floating rate note due in 2006, rates between 98 and 99. For real-time bond pricing go to http://www.debttraders.com/price.cfm?dt_sec_ticker=CITN06KRS1 SK GLOBAL: Hong Kong Unit Files Liquidation Petition ---------------------------------------------------- SK Global Hong Kong, a unit of SK Global in Korea, filed a petition for liquidation to avoid any attempt by Credit Lyonnais to recover US$8 million of debt, DebtTraders reports. Credit Lyonnais earlier won an appeal in a Hong Kong court to recover its loans to SK Global Hong Kong. The petition would block Credit Lyonnais and other creditors from seeking preferential treatment ahead of other creditors. SK GLOBAL: Creditors Block Stock Market Delisting ------------------------------------------------- Creditors of SK Global have taken the position that even if they put the firm under court management, they will seek to block its delisting from the Korean stock market. They will take legal measures if necessary. I will object to it if SK Global is delisted because of applying for court receivership, Byun Dong-gul, a judge from Seoul District Court, said. But Kim Jun-heon, from the Korea Stock Exchange (KSE), said that it is necessary to delist a Company that applies for court receivership in order to protect investors. SK GLOBAL: Local Creditors Strike Deal With Foreign Lenders ----------------------------------------------------------- Domestic creditors of SK Global Co. will negotiate with each foreign creditor on a restructuring plan for the Company's foreign debts, according to Asia Pulse on Friday. Domestic creditors have offered to buy foreign creditors' loans to SK Global at 48 percent of the principal. However, domestic creditors plan to purchase SK Global's foreign debts at 21 percent of the principal but foreign creditors have refused their offer, the official said. Should foreign creditors continue to turn down the offer, domestic creditors plan to apply for SK Global's court receivership. The Company's liabilities total 9.5 trillion won (US$8.07 billion)), while its debt to foreign creditors, including obligations owed by the Company's foreign subsidiaries to domestic creditors, amounts to around 2 trillion won. =============== M A L A Y S I A =============== ACTACORP HOLDINGS: Clarifies "SC Rejects Revamp Plan" Report ------------------------------------------------------------ Actacorp Holdings Berhad clarifies an announcement dated December 27 an article appearing in New Straits Times on 17 July 2003 entitled "SC rejects Actacorp revamp plan". As announced on 27 December 2002, the Proposed Restructuring Scheme of Actacorp Holdings Berhad involves, inter-alia, the proposed acquisition of PSC Asset Holdings Sdn Bhd (PSCA) (the owner of Menara PSCI) from PSC Industries Berhad (Proposed Acquisition of PSCA). In connection with Securities Commission (SC)'s evaluation, the Company had furnished to the SC additional construction contracts, which were contemplated by the Board of Directors of Actacorp (Board) for injection into a subsidiary of PSCA, in order to enhance the future profit forecast and projections of Actacorp. The SC had via its letter dated 10 July 2003 informed that the "construction contracts" are not suitable for purpose of the Proposed Restructuring Scheme of Actacorp as there is no certainty that Actacorp can continue to secure such contracts in the future. Alternatively, the SC had indicated that the Company should revise its restructuring scheme to include other quality landed properties, in addition to the Proposed Acquisition of PSCA. On behalf of the Board of Actacorp, PM Securities Sdn Bhd (PM Securities) wishes to clarify that the SC has not "rejected" the revamp plan or Proposed Restructuring Scheme of Actacorp nor the Proposed Acquisition of PSCA. The Board of Actacorp is currently identifying the injection of other quality landed properties, in addition to Menara PSCI. An appropriate announcement for immediate public release to the Kuala Lumpur Stock Exchange will be made in due course. BERJAYA SPORTS: Purchases 8% Unsecured Loan Stocks -------------------------------------------------- The Board of Directors of the Berjaya Sports Toto Berhad (BToto) announced that its wholly owned subsidiary, FEAB Properties Sdn Bhd has purchased ICULS in BToto as follows: 1. Date of Purchase: 17 July 2003 2. Number of ICULS Purchased: 500,700 3. Minimum price paid for each ICULS: RM3.50 4. Maximum price paid for each ICULS: RM3.62 5. Total consideration paid: RM1,794,605.11 6. Total number of ICULS held to-date: 22,500,700 7. Cumulative consideration: RM69,323,316.36 paid to-date The Company has obtained the necessary approvals for the above purchase of ICULS up to an amount not exceeding RM1.2 billion. Details on the ICULS purchase were disclosed in the Company's Circular to Shareholders dated 5th April 2002 and the Abridged Prospectus relating to the Rights Issue of ICULS dated 20th June 2002. JUTAJAYA HOLDING: Posts FY03 Financial Results ---------------------------------------------- Jutajaya Holding Berhad announced its quarterly report on its consolidated results for the financial period ending March 31, 2003. INDIVIDUAL PERIOD CUMULATIVE PERIOD CURRENT YEAR PRECEDING YEAR CURRENT YEAR TO PRECEDING YEAR QUARTER CORRESPONDING DATE CORRESPONDING QUARTER PERIOD 31/03/2003 31/03/2002 31/03/2003 31/03/2002 RM'000 RM'000 RM'000 RM'000 1 Revenue 2,085 2,555 2,085 2,555 2 Profit/(loss) before tax -3,104 -1,880 -3,104 -1,880 3 Profit/(loss) after tax and minority interest -3,185 -1,921 -3,185 -1,921 4 Net profit/(loss) for the period -3,185 -1,921 -3,185 -1,921 5 Basic earnings/(loss) per shares (sen) -9.02 -5.44 -9.02 -5.44 6 Dividend per share (sen) 0.00 0.00 0.00 0.00 AS AT END OF AS AT PRECEDING CURRENT QUARTER FINANCIAL YEAR END 7 Net tangible assets per share (RM) -2.6197 -2.5295 KIN YIP: Sets Winding Up Hearing September 9 -------------------------------------------- Kelanamas Industries Berhad updates the Kuala Lumpur Stock Exchange on the following matter: Kuala Lumpur High Court Winding Up Petition D5-28-372-2002 Kin Yip Wood Industries Sdn Bhd vs Kelanamas Industries Berhad With reference to the above matter which came up for Mention on 11 July 2003. Please be informed that the above matter was not listed in Court. As such, the next date yet to be fixed by Court. Kuala Lumpur High Court Suit No D3-22-113-1996 Lau Mei Yong & Ors vs Kelanamas Industries Berhad Kelanamas refers to the above matter, which came up for hearing on 14 July 2003. Please be informed that the Court has fixed the above matter for further hearing on 09 September 2003. KUALA LUMPUR INDUSTRIES: Issues Capital Reduction Proposal ---------------------------------------------------------- On 24 June 2003, Commerce International Merchant Bankers Berhad (CIMB), on behalf of Kuala Lumpur Industries (KLIH) and Equine Capital Berhad (ECB), had sought the approval from the Kuala Lumpur Stock Exchange (KLSE) on the following in relation to the debt restructuring proposals: (a) Shortening of the Notice of Book Closure Period for the Capital Reduction Shortening the period between the notices of book closure to the book closing date of the capital reduction exercise from 12 clear market days to four (4) clear market days. (b) Listing of and Quotation for ECB Shares on the KLSE after the Completion of the Rights Issue and Offer for Sale Listing of and quotation for the ordinary shares of RM1.00 each in ECB on the KLSE after the completion of the rights issue and offer for sale instead of one (1) market day after the book closure date of the rights issue. (c) Exemption for Provisional Allotment Letters (PAL) to be traded on the KLSE Exemption for the trading of ECB's PAL or the entitlement to the ECB rights shares on the KLSE. (d) Shortening of the Rights Issue Prescribed Period by the KLSE Shortening the period between the notices of book closure to the book closing date from the prescribed 12 clear market days to four (4) clear market days. Shortening the period between the books closing date to the closing date for the acceptances of the rights issue from the prescribed 22 market days to 14 market days. (e) Extension of Time of Six (6) Months to comply with the 25 percent Public Spread Requirement Extension of time of six (6) months to comply with the 25 percent public spread requirement from the date of admission of ECB to the Official List of the KLSE in the event ECB does not have the required 25 percent public spread upon completion of the rights issue and offer for sale. On behalf of KLIH/ECB, CIMB is pleased to announce that the KLSE has via its letter dated 15 July 2003 approved the applications set out in (a) to (d) above. In respect of application set out in (e) above, KLSE has advised that the application will only be considered upon determination by ECB of the actual level of public shareholding spread in ECB after the completion of the rights issue and offer for sale. KUMPULAN JAYA: Enters Winding Up Petition ----------------------------------------- Further to the announcement made by Harrisons Holdings (Malaysia) Berhad on 16 July 2003 in relation to the Winding-up Petition against Kumpulan Jaya Pemasaran Sdn Bhd (KJP), the Company wishes to note: 1) The Petition was presented against KJP on 7 July 2003 and a sealed copy of the Petition was served on KJP on 16 July 2003. 2) The Petition to wind-up KJP was based on advances made to KJP and interest charges on such advances. As at 30 June 2003, the amount due and owing by KJP to the Petitioner, Harrisons Trading (Peninsular) Sdn Bhd (HTP) is RM8,921,392.84. 3) Arising from a Judgment entered against KJP on 12 June 2003, Zaitun Marketing Sdn Bhd had inter-alia garnished KJP's bank account as well as effected a Writ of Seizure and Sale on KJP's goods. With a view to ensure a fair and equitable payment to all the unsecured creditors of KJP (which is a wholly owned subsidiary of HTP) and to avoid preferring one creditor over another, HTP proceeded to present the Petition against KJP. 4) The cost of investment in KJP is RM500,000.00 of which diminution in value of the investment has been fully provided for. 5) The winding-up process would not have a material impact on the financial and operations of the Company and its subsidiaries. 6) There are no further expected losses save for legal costs and other costs related to the winding-up proceedings. 7) KJP has engaged solicitors to represent KJP in the winding-up proceedings. KJP does not intend to oppose the Petition given its insolvency. SENG HUP: Issues Notice of Book Closure --------------------------------------- The closure of book relating to the recall of existing ordinary shares of RM1.00 each in Seng Hup Corporation Berhad (Special Administrators Appointed) (SHCB) and the issuance of new ordinary shares of RM0.50 each in Salcon Berhad (Salcon) to existing shareholders of SHCB to replace their existing SHCB shares on the basis of one (1) new Salcon share for every twenty four (24) SHCB shares held (share exchange). Kindly be advised of the following: 1) The above Company's securities will be traded and quoted [Ex - Offer] as from: [21 July 2003] 2) The last date of lodgment: [23 July 2003] Further to the announcement made on 2 June 2003 by AmMerchant Bank Berhad (AmMerchant Bank) with regards to Seng Hup Corporation Berhad (Special Administrators Appointed)'s plan to regularize its financial condition, AmMerchant Bank, on behalf of the Company, had announced on 24 June 2003 that by way of an exchange of letters, the respective dates for the fulfillment of the conditions precedent under the Principal Agreement dated 27 August 2002, and the corresponding Supplemental Agreements dated 30 September 2002 and 13 December 2002, as well as the Sale and Purchase Agreement dated 30 September 2002 has been extended to 31 October 2003. UNITED CHEMICAL: PKNP OK's Corporate Reorganization --------------------------------------------------- Based on the Corporate Restructuring Agreement of United Chemical Industries Berhad (UCI) dated 18 December 2002 and the Requisite Announcement of UCI on even date, in respect of the Proposed Restructuring of UCI, the approval of the Board of Directors of Perbadanan Kemajuan Negeri Perak (PKNP) is one of the conditions precedents to the Proposed Restructuring. Alliance Merchant Bank Berhad, on behalf of the Board of Directors of UCI, wishes to announce that, PKNP has via its letter dated 18 July 2003 informed UCI that the Board of Directors of PKNP had on 4 July 2003, approved PKNP's corporate reorganization plan which involves the participation of its subsidiaries, namely the Harta Perak Group and Majuperak Group (as defined in the announcement dated 18 December 2002) in the restructuring and reverse take-over of UCI. ===================== P H I L I P P I N E S ===================== COMMUNITY RURAL: PDIC to Move For Liquidation of Assets ------------------------------------------------------- On June 23, 2003 at 9:00 A.M., the Philippine Deposit Insurance Corporation (PDIC), as Liquidator of the closed Community Rural Bank of Dumanjug (Cebu), Inc. will submit the Project of Distribution of the assets of the bank for approval of the Liquidation Court (Regional Trial Court-Branch XV, Cebu City). ISLAND SAVINGS: PDIC Issues Notice to Creditors ----------------------------------------------- The Philippine Deposit Insurance Corporation (PDIC), as Liquidator of the Island Savings Bank will submit on June 23, 2003 at 8:30 A.M. to the Liquidation Court (Regional Trial Court of Pasay City, Branch 112, Sp. Proc. No. 3676-P) the Motion for Approval of Final Project of Distribution of Assets and Termination of the Liquidation Proceedings. MANILA ELECTRIC: ERC Orders Second Phase Refund by September --------------------------------------------------------- The Energy Regulatory Commission (ERC) has ordered Manila Electric Co. (Meralco) to start implementing the second phase of refund by September 1, 2003, according to AFX Asia. The Commission wants the first phase of refund to be completed by the end of August. The second phase, involving consumers using 101-300 kwh per month, will cost Meralco around 4.7 billion pesos. The ERC said phase II should be "completely accomplished" not later than Dec 31. Earlier, Meralco President Jesus Francisco said the Company is prepared to fork out only about 3.3 billion for the refund this year, indicating it may not be able to complete the second phase this year given funding limitations. MANILA ELECTRIC: S&P Lowers Rating to 'CC' ------------------------------------------ Standard & Poor's Ratings Services on Thursday lowered its foreign currency rating on Manila Electric Co. (Meralco), to 'CC' from 'CCC'. The outlook remains negative. "Standard & Poor's is concerned that Meralco might not be able to meet financial obligations totaling upward of Philippine peso (PHP) 11 billion (US$205 million) due between now and the end of 2003," said Erly Witoyo, credit analyst at Standard & Poor's. These obligations include repayment of short-term debts of PHP5.5 billion, the current portion of long-term debts of PHP2.5 billion, and mandated refunds to customers of PHP3 billion. Meralco expects to roll over or extend short-term debt obligations, although its ability to secure a favorable agreement with creditors before maturity remains uncertain. Meralco's cash balance as of May 2003 was about PHP3.5 billion- PHP4.0 billion, while cash flow from operations is expected to be PHP900 million for the second half of 2003. Most urgently of all, the Company needs to address its short- term bank debts of PHP5.5 billion, which will mature on July 21, 2003. Creditors, who have already extended the maturity on this debt by 90 days from April 2003, agreed earlier to term out the debt if Meralco secured a rate increase and could provide security for the refinancing under the Company's mortgage trust indenture (MTI). Despite Meralco's ability to meet these conditions, agreement on the extension has not been reached because Meralco's board of directors required further revisions on a recent long-term extension proposed by arrangers (who were mandated by Melraco). Management has indicated that there is preliminary agreement by the short-term creditors to extend maturity further to provide more time for negotiation on a long- term solution. Nevertheless, such extension is pending formal signing of documentation, which in management's opinion, should be completed before July 21, 2003. Even if Meralco is successful in extending its short-term debts, however, it still needs to find resources to service principal payments on the current portion of long-term debts and to tackle the second phase of customer refunds. The largest repayments on long-term debts will be in September and October, when the Company is scheduled to repay PHP1 billion and PHP1.2 billion, respectively. Under the second phase of mandated customer refunds, in the second half of 2003, Meralco is scheduled to pay about PHP3 billion. Aside from cash balance of PHP3.5 billion- PHP4.0 billion and expected cash flow of less than PHP1 billion until the end of the year; Meralco has not identified specific sources of liquidity with which to service these obligations. "Even with the impending short-term extension, a standstill to restructure debts seems likely unless Meralco can find new sources of financing to satisfy its financial obligations due this year, a task that management is trying to address. A restructuring of debts, if it comes to that, would be considered a default under Standard & Poor's criteria," said Mr. Witoyo. Meralco's liquidity is expected to remain weak over the medium term as PHP28 billion customer refunds mandated in 2003 will require an additional PHP3 billion in cash flow annually for the next nine years. MANILA ELECTRIC: ERC Issues Refund Notice ----------------------------------------- The Energy Regulatory Commission (ERC) said claimants of refunds due to deceased registered customers - if the amount is equal to or less than 2,000 pesos must present the following documents: - Death certificate of the registered customer. - Proof of claimant's relationship with the deceased registered customer. - Claimant's valid identification card. Meralco said phase III will involve residential and general service customers consuming 301 kwh, while phase IV shall cover commercial and industrial customers, as well as government hospitals and streetlights, not included in phases I and III. Meralco also proposed to adopt for phases III and IV the principle of "credit to future billing." NATIONAL POWER: ERC Mediates Row With Clark Power ------------------------------------------------- The Energy Regulatory Commission (ERC) on Wednesday stepped in to settle the dispute between Clark Power Corporation and the National Power Corporation (Napocor) to avoid a possible power interruption in the Clark Special Economic Zone, Business World reports. The commission is conducting "pre-hearing conferences" to settle the dispute. Napocor issued a notice of disconnection to Clark Power for failure to pay bills amounting to 71 million Philippine pesos (US$1.32 million). The amount consisted of contested billings amounting to PhP26 million and uncontested billings amounting to PhP45 million. This prompted Clark Power to ask the commission to prevent Napocor from proceeding with the disconnection. PHILIPPINE LONG: Books P700M Loss in Second Quarter --------------------------------------------------- Philippine Long Distance Telephone (PLDT), jointly owned by Hong Kong's First Pacific and Japan's Nippon Telegraph & Telephone, posted an unexpected second-quarter loss of 700 million pesos compared with a profit of 1.5 billion pesos a year earlier, reports the South China Morning Post. PLDT has fired 1,759 employees this year, costing it 1.3 billion pesos in severance payments. It also booked 3.5 billion pesos in provisions related to investments in a satellite Company and a cable-television operator and uncollected bills. ================= S I N G A P O R E ================= BIL INTERNATIONAL: S&P Lowers Rating to B+ ------------------------------------------ Standard & Poor's Ratings Services has lowered its corporate credit rating on BIL International Ltd. (BIL) to 'B+' from 'BB'. The rating was removed from CreditWatch, where it was placed with negative implications on March 7, 2003, after the Company announced its plans to acquire the remaining shares in its 45.8 percent-owned associate, Thistle Hotels PLC. The outlook is negative. The rating reflects BIL's investment portfolio concentration of 70 percent-80 percent on a single unlisted asset (Thistle), its poor financial profile, and medium-term refinancing risk. "The negative outlook reflects the refinancing risk faced by BIL. The rating on BIL could be further lowered should the Company be unable to raise proceeds to repay the debt outstanding under its revolving facility which matures in June 2005," said Standard & Poor's credit analyst Ee-Lin Tan. Conversely, if BIL manages to liquidate any significant illiquid assets, such as Molokai Properties or Thistle, within the next two years to reduce its debt, that could have a positive impact on BIL's credit profile. Thistle is a midsize hotel Company with a local four-star brand name and 18 hotels concentrated in the highly competitive London market. Standard & Poor's expects proforma consolidation of Thistle into BIL will reflect continued weak financial measures, with EBITDA-to-net debt of about 7x and funds from operations- to-net debt in the single-digit percentage range, consistent with financial medians for the rating category. BIL's upcoming identifiable cash resources should be sufficient to meet interest expenses and overheads at the BIL level, as well as scheduled debt repayments in the next two years. These cash sources include BIL's own cash holdings, net cash from Thistle after deducting the US$554 million acquisition debt, yearly dividends from Thistle, and royalty streams from Weeks Royalty. BIL, however, faces medium-term refinancing risk from its debt due under its United Overseas Bank revolving facility (currently estimated at US$200 million), which will mature in June 2005. BIL's ability to repay this debt will depend highly on meaningful asset sales or bank refinancing over the next two years, which in turn will hinge on favorable market conditions and an available pool of ready buyers for its assets. CHARTERED SEMICONDUCTOR: Discloses 2Q03 Financial Results --------------------------------------------------------- Chartered Semiconductor Manufacturing, one of the world's top three dedicated semiconductor foundries, announced its results for second quarter 2003. "We saw healthy growth in the second quarter as a wide range of customers increased orders, particularly those in the communications and consumer segments of our business," said Chia Song Hwee, president & CEO of Chartered. "Revenues were up both in advanced and mature technologies. In advanced technologies, our 0.13-micron shipments reached 6 percent of our total business base revenues, compared to 1 percent in first quarter 2003. In mature technologies, wafers shipped were up 30 percent sequentially. In line with our strategic objectives, Chartered entered into three mature wafer sourcing engagements this quarter, demonstrating continuing execution to our strategy." Summary of Second Quarter 2003 Performance - Revenues were $127.6 million, up 22.9 percent compared to first quarter 2003. Revenues including Chartered's share of SMP were $163.1 million, up 14.9 percent from $142.0 million in the previous quarter, primarily due to increases in the communications and consumer segments, partially offset by a decrease in the computer segment. Compared to second quarter 2002, revenues were essentially flat. Revenues including Chartered's share of SMP were up 22.5 percent from $133.1 million in the year-ago quarter, driven primarily by an increase in the communications segment, partially offset by a decline in the computer segment. - Gross loss was $32.4 million, or negative 25.4 percent of revenues, an improvement from a loss of $34.6 million, or negative 27.1 percent of revenues in the year-ago quarter, as reduced cost more than offset the impact of a lower average selling price (ASP). - Research and development (R&D) expenses were $30.6 million, an increase of 41.6 percent from the year-ago quarter, primarily due to increased investments to accelerate the Company's technology roadmap which provides customers a breadth of processes, enabling systems-level integration. Beginning in first quarter 2003, R&D expense includes Chartered's share of expenses related to the IBM joint- development agreement, announced in November 2002. - General and administrative (G&A) expenses were $4.4 million, a decrease of 57.2 percent compared to $10.3 million in the year- ago quarter, and a decrease of 55.7 percent compared to $9.9 million in first quarter 2003. The reduction is primarily due to a $4.9 million gain resulting from equipment disposition, which was previously disclosed. - Other operating expenses were $3.8 million, all related to Fab 1 restructuring expense. - Equity in loss of our minority-owned joint-venture fab, SMP (Fab 5), was a loss of $2.2 million compared to a loss of $22.0 million in the year-ago quarter, primarily due to significantly higher revenues. - Other income was $8.6 million, an increase of 27.4 percent from the year-ago quarter, due to the gain of $5.9 million associated with the previously disclosed intellectual property (IP) licensing. - None of the losses in our consolidated joint-venture fab, Chartered Silicon Partners (CSP or Fab 6), were allocated to the minority interest in second quarter, compared to $12.4 million in the year-ago quarter. CSP remained in a negative net worth position in second quarter 2003; therefore Chartered continued to recognize 100 percent of the joint venture's results, which were a loss of $45.8 million in the quarter. At the end of the quarter, CSP's net worth was negative $69.2 million. - Net loss was $90.0 million, or negative 70.5 percent of revenues, compared to a net loss of $90.7 million, or negative 71.1 percent of revenues, in the year-ago quarter. Included in second quarter 2003 net loss was an $8.2 million gain resulting from the previously disclosed gain in IP licensing and equipment disposition, and a $3.8 million expense associated with the previously disclosed phase out of Fab 1. Net loss was also unfavorably impacted by $22.4 million due to the CSP accounting treatment discussed above. - Loss per American Depositary Share (ADS) and loss per share in second quarter 2003 were $0.36 and $0.04 respectively, compared with a loss per ADS and loss per share of $0.57 and $0.06 respectively in second quarter 2002. Average ADS count and ordinary share count increased by 90.8 million and 908.1 million respectively, primarily due to the eight-for-ten rights offering completed in October 2002. Wafer Shipments and Average Selling Prices - Shipments in second quarter 2003 were 140.1 thousand wafers (eight-inch equivalent), an increase of 18.2 percent compared to 118.6 thousand wafers (eight-inch equivalent) in second quarter 2002. Shipments in second quarter 2003 increased by 25.6 percent compared to 111.6 thousand wafers (eight-inch equivalent) shipped in first quarter 2003. - ASP decreased by 2.1 percent from $931 per wafer in first quarter 2003 to $911 per wafer in second quarter 2003, consistent with guidance of down approximately 2 percent to 5 percent sequentially. The reduction was primarily due to customer mix and pricing pressures, partially offset by substantially higher shipments of 0.13-micron product. ASP including Chartered's share of SMP was $978 per wafer, compared to $1,049 per wafer in first quarter 2003. - Capacity utilization in second quarter 2003 was 55 percent compared to 42 percent in the year-ago quarter, and 45 percent in first quarter 2003. Capacity in second quarter 2003 was up 3 percent sequentially. Capacity utilization is based on total shipments and total capacity, both of which include our share of SMP. CHARTERED SEMICONDUCTOR: Unveils Revenues by Market Segment ----------------------------------------------------------- The following business statistics tables provide information on revenues including Chartered Semiconductor's share of SMP by market segment, region and technology. Breakdown by Market Segment Revenues including Chartered's share of SMP Percentage of Total 2Q 2002 3Q 2002 4Q 2002 1Q 2003 2Q 2003 Communications 31% 39% 47% 43% 49% Computer 51% 46% 40% 43% 34% Consumer 15% 12% 9% 10% 14% Other 3% 3% 4% 4% 3% Total 100% 100% 100% 100% 100% Breakdown by Region Revenues including Chartered's share of SMP Percentage of Total 2Q 2002 3Q 2002 4Q 2002 1Q 2003 2Q 2003 Americas 71% 73% 62% 57% 59% Europe 7% 14% 16% 25% 21% Asia-Pacific 11% 8% 15% 13% 15% Japan 11% 5% 7% 5% 5% Total 100% 100% 100% 100% 100% Breakdown by Technology (micron) Revenues including Chartered's share of SMP Percentage of Total 2Q 2002 3Q 2002 4Q 2002 1Q 2003 2Q 2003 0.13 and below 0% 0% 1% 1% 6% Up to 0.15 0% 0% 2% 9% 8% Up to 0.18 24% 40% 36% 33% 22% Up to 0.25 24% 19% 19% 15% 17% Up to 0.35 29% 21% 24% 23% 25% Above 0.35 23% 20% 18% 19% 22% Total 100% 100% 100% 100% 100% 0.18 and below 24% 40% 39% 43% 36% Chartered Semiconductor Manufacturing, one of the world's top three dedicated semiconductor foundries, is forging a customized approach to outsourced semiconductor manufacturing by building lasting and collaborative partnerships with its customers. The Company provides flexible and cost effective manufacturing solutions for customers, enabling the convergence of communications, computing and consumer markets. In Singapore, Chartered operates five fabrication facilities and has a sixth fab, which will be developed as a 300mm facility. CHARTERED SEMICONDUCTOR: Issues Recent Highlights and Events ------------------------------------------------------------ Chartered Semiconductor Manufacturing has entered into three new mature technology-sourcing engagements in recent months: - Toppan of Japan for sole-source volume production of its dual- band radio frequency identification (RFID) chip with integrated antenna. Production utilizing Chartered's baseline 0.35-micron EEPROM process integrated with RF passive components is expected to begin in fourth quarter 2003. - Infineon of Germany for manufacture of power MOSFETs, which are employed in a variety of computer, communications, consumer, industrial and automotive applications, where fast switching of high voltage or high current is required. Production is expected to commence in mid-2004. - As disclosed in April, a leading communications semiconductor company in the US, with production commencing in second quarter 2003. During the quarter, Chartered and Legerity, a leading provider of analog/mixed-signal integrated circuits for voice and data networks, announced that Legerity's flagship proprietary high- voltage process, called HV7, completed qualification for production at Chartered. Chartered will now manufacture all of Legerity's products based upon the HV7 process, which include the VoiceChip family, products from the newly formed HPA business, and the products from the acquired Agere Systems business. In addition, the partnership with Chartered will allow Legerity to develop new advanced products. Chartered continues to strengthen its EDA and IP design solutions by strengthening and extending its alliance programs, focused on enabling more first-source wins. A robust network is an integral part of Chartered's total "time-to-design" product support for the development of system-on-chip devices manufactured with Chartered's leading edge and mature semiconductor technologies. Recent announcements include: - Virage Logic for its Technology-Optimized Platform on Chartered's 0.13-micron baseline logic process. In support of Virage Logic's platform strategy, this latest development furthers a successful alliance between the two companies, which currently features the availability of silicon-proven embedded memories on multiple technology nodes from 0.35-micron down to 0.13-micron. The new technology-Optimized Platform for the Chartered 0.13-micron process will be available in September 2003. - Mentor Graphics for analog/mixed-signal design kits validated for Chartered's manufacturing processes at multiple technology nodes, starting first with 0.18-micron and extending through 0.13-micron to 90 nanometer. - Virtual Component Exchange (VCX) for the second phase of the Chartered-VCX Foundry IP Program. The latest rollout features an enhanced Web portal enabling chip designers to quickly find third-party intellectual property (IP) building blocks that have been qualified for Chartered's semicondctor manufacturing processes. Among the program participants are: the Catena group, represented by Catena Wireless Electronics AB; ChipIdea Microelectronics; Fujitsu Digital Technology; LEDA Systems; Pultronics; SMSC Analog Technology Center; Ulead Technology and Unive. =============== T H A I L A N D =============== KRUNG THAI: Reports Unexpected THB624 Million Q2 Net Loss --------------------------------------------------------- Krung Thai Bank PLC surprised the market last week in reporting a net loss in the second quarter, contrary to expectations that it would duplicate its feat last year, Dow Jones said. In a survey conducted by Dow Jones, most analysts told the paper they had expected the bank to report a net profit of THB2.06 billion to THB2.44 billion. In the first quarter, Krung Thai had a net profit of THB2.21 billion. But the bank said provisions for doubtful accounts and loss on debt restructuring had to be accounted. These provisions amounted to THB3.54 billion. The provisions were set aside based on "prudent banking practices with respect to uncertainties regarding troubled debt restructuring loans," it said. Pre-provision operating profit for the three-month period was at THB2.92 billion, up THB644.04 million, or 28%, from a year earlier, the bank said. Improved operations were due to an increase in both net interest and dividend income and non- interest income, it said. For the six months to June 30, net profit amounted to THB1.58 billion, or THB0.14 a share, compared with THB4.80 billion, or THB0.43 a share, a year earlier. These are the highlights of Krung Thai's second quarter/half- year result: Krung Thai Bank PLC (H.KTB) - Bangkok 2nd Quarter Ended June 30: Figures in baht (THB). 2003 2002 Net Profit (THB624,458,142) THB2,283,353,034 Earnings Per Share (0.06) 0.20 1st Half Ended June 30: 2003 2002 Net Profit THB1,584,163,697 THB4,796,065,035 Earnings Per Share 0.14 0.43 ($1=THB42.620) ********* 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. Lyndsey Resnick, Mavy Nineza-Merlin, Maria Cristina Pernites-Lao, Editors. Copyright 2003. 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 240/629-3300. *** End of Transmission ***