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/raid1/www/Hosts/bankrupt/TCRAP_Public/040311.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 Wednesday, March 11, 2004, Vol. 7, No. 50 Headlines A U S T R A L I A COLES MYER: To Move Liquor Division to Melbourne COLES MYER: Giants Shape Up On Pharmacy Play COLES MYER: Profit Upgrade Expected COLES MYER: Profit Lift Driven by Coles Fuel Discounts C H I N A & H O N G K O N G GOLD PROFIT: Winding up Hearing Scheduled March 31 NEW WINGS: Winding up Hearing Set March 31 PYROK INDUSTRIES: Faces Winding up Petition SUCCESS ELECTRICAL: Faces Winding up Petition WIN MERIT: Faces Winding up Petition I N D O N E S I A ANEKA TAMBANG: Proposes 7 Percent Rights Issue ANEKA TAMBANG: Director Says Better Performance Likely DIRGANTARA INDONESIA: Still Owes Defunct IBRA US$49.9 Million TELEKOMUNIKASI INDONESIA: Investors Oust President Commissioner J A P A N JAPAN AIRLINES: 3-year Layoff Plan to Cost 4,500 Jobs MITSUBISHI MOTORS: Sells 7.93 Percent Stake in Proton K O R E A LG CARD: Trading Suspended SK CORPORATION: Stock Continues to Fall SK CORPORATION: Seen Winner In Board Fight SK CORPORATION: Gathering Supporters vs. Sovereign SK CORPORATION: Politicking Before The Vote M A L A Y S I A DIRECT SELLING COS: 5 Direct Selling Companies' Licenses Revoked LANDMARKS: Shares Rise Another 7.5% on Takeover Talk PERJAWA STEEL: Malaysia Steel Boss In Fraud Case PROTON: Prime Minister Not Aware Of Potential Management Changes P H I L I P P I N E S MANILA ELECTRIC: ERC Adopts Position on Franchise Tax MANILA ELECTRIC: Group Claims Firm Illegally Collected PHP200M NATIONAL POWER: Seeks 33-centavo Hike to Recover Forex Losses NATIONAL POWER: Awards Mitsubishi Corp. PHP700M Supply Contract PHILIPPINE AIRLINES: CAB Eyeing Indochina Market for PAL T H A I L A N D EMC POWER: Issues Termination of Reorganization Notice THAI MILITARY: Clarifies TMB, DTDB, IFCT Merger Details - - - - - - - - ================= A U S T R A L I A ================= COLES MYER: To Move Liquor Division to Melbourne ------------------------------------------------ Retailer Coles Myer is relocating its liquor group head office to Melbourne from its current base in Chullora, Sydney as reported in The West Australia. The move will unite the liquor and food teams and enable them to work together. However, Managing Director Craig Watkins will not be part of the move, opting instead for early retirement after 35 years with Coles Myer. Chief Executive John Fletcher said Mr. Watkins, who served as managing director for 18 years, led the liquor business through an unprecedented period of expansion. "Craig's contribution to Coles Myer and the Australian liquor industry has been outstanding," he said. The current managing director of Officeworks, Peter Scott, will succeed Mr. Watkins. Shares in Coles Myer firmed three cents to $7.93 at 1119 AEDT. COLES MYER: Giants Shape Up On Pharmacy Play -------------------------------------------- Coles Myer is fueling market speculation that it is preparing to take on Woolworths on a new battlefront as it pores over the intricacies of the $9 billion pharmaceuticals industry, reports The West Australian. A confidential detailed report by company executives confirms the retail giant's interest in the sector, strengthening suspicions that supermarkets will use the pharmacy to boost non-pharmacy sales in their stores. This runs counter to statements by Woolworths Chief Executive Roger Corbett that the industry should be deregulated so that supermarkets can offer lower drug prices to customers. It has also aggressively lobbied State and Federal politicians to change laws that inhibit competition. In contrast, Coles Myer has said little about its plans. The company said yesterday, the report, which has come to light as the company's board prepares to sign off on half-year profits, was the sort of research any prudent retailer would undertake and was based mostly on reports in the media. A spokesman for the company would not comment on whether Coles Myer had lobbied politicians, but said if the laws changed it would "explore" opportunities in the market. A range of interest groups, including the politically powerful Pharmacy Guild of Australia, has raised questions about supermarkets' ability to offer customers better prices or quality pharmaceutical services. The Coles Myer report shows customers are more concerned with pharmacist service and product knowledge than with prices. It cites a survey by Roy Morgan Research that found the most important factor when visiting a pharmacy, was good service and helpful staff, followed by convenient location and product knowledge. Value for money was fourth on the list, while low price came seventh out of nine factors. Coles Myer's research also shows that US supermarkets were increasingly turning to pharmacy and other service departments "in a battle for market share against supercentres and other formats". According to the report, in-store pharmacies would generate traffic for supermarkets, boost customer loyalty to a particular store, and boost a retailer's credibility as a health care destination by "increasing sales of non-prescription remedies and nutritional products in the process". US trends show pharmacists could also promote higher margin generic label products. Coles Myer: Profit Upgrade Expected ----------------------------------- Coles Myer is expected to raise its full year profit guidance tomorrow when it unveils net earnings of about $318 million for the 26 weeks to January 25, according to The West Australian. At the release of its interim sales last month, Coles Myer reiterated fiscal 2004 guidance of a 20 per cent to 23 per cent increase in underlying profit to between $548 million and $558 million. But some analysts say the better than expected sales figures, robust consumer spending and the rise in Coles Myer's share price since those results have heightened market expectations for a full-year profit upgrade from the company. "There's a fair anticipation of a lift in guidance," said UBS analyst Michael Peet. "It is reasonably well expected." Shares in the company closed 4› lower at $7.90 yesterday. COLES MYER: Profit Lift Driven by Coles Fuel Discounts ------------------------------------------------------ COLES Myer's entry into selling discounted petrol is expected to help fuel a strong interim profit, The Advertiser reports. Analysts expect the supermarket and department store company to report a net profit tomorrow of between $317 million and $341 million for the six months to January 25. For the same period a year ago, while hit by the one-off effect of accounting policy changes, they booked a net profit of $217.9 million. ABN Amro forecasts an interim net profit of $319 million, while Commonwealth Securities expects $317 million. CommSec retail analyst Craig Woolford said he expected a strong result from most of Coles Myer's divisions. He stated, "Food and liquor is benefiting from the petrol discount. That's helped lift their market share in the supermarket game that has been a positive. Coles Myer expects to open the last of its 580 national Coles Express fuel outlets on Monday next week. "This will be the first time petrol's going to make a contribution to profit," Mr. Woolford said. "It'll be pretty small but definitely exceeding company and most people's expectations, and it'll be an improved performer in the second half." Mr. Woolford said his forecast took into account about $40 million in restructuring costs flagged by the company this financial year. Goldman Sachs JB Were also has forecast an interim Coles Myer profit of $319 million. Shaw Stockbroking head of research Scott Marshall expects $341 million and an unchanged interim dividend of 13.5c per ordinary share. According to Mr. Marshall," It's certainly far better than what the company has reported for many years now, but it reflects Coles Myer achieving margins closer to what it should have been achieving over the last several years. It reflects continued improvement in the general merchandise divisions and improvements in food and liquor." Mr. Marshall adds that the introduction of petrol discounting by Coles Myer had leveled the retail playing field. "The reality is there's no doubt that petrol has returned sales to Coles Myer," he said." It's leveled the industry back to what it was before Woolworths introduced petrol offering. It's brought the industry back into balance." Mr. Marshall said while the petrol-discount opportunity was luring people into supermarkets and boosting food and liquor sales, the group's Myer department stores had "turned the corner". "It's got a long way to go and the outlook is uncertain, but it's improving," he said of Myer. Coles Myer shares finished trading yesterday at $7.90, down 4c on the day, but over the past month have added 5 per cent in value. ============================ C H I N A & H O N G K O N G ============================ GOLD PROFIT: Winding up Hearing Scheduled March 31 -------------------------------------------------- The High Court of Hong Kong will hear on March 31, 2004 at 10:00 a.m. the petition seeking the winding up of Gold Profit Holdings Limited. Hung Chi Hung of Room 3819, Shek Kwong House, Shek Lei (2) Estate, Kwai Chung, New Territories, Hong Kong filed the petition on February 2, 2004. Chau Ming Wai represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Chau Ming Wai, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai Hong Kong. NEW WINGS: Winding up Hearing Set March 31 ------------------------------------------ The High Court of Hong Kong will hear on March 31, 2004 at 10:00 a.m. the petition seeking the winding up of New Wings Transportation Company Limited. Fung Fai Keung of Room 2623, Mui Yuen House, Chuk Yuen North Estate, Wong Tai Sin, Kowloon, Hong Kong filed the petition on February 2, 2004. Chau Ming Wai represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Chau Ming Wai, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai Hong Kong. PYROK INDUSTRIES: Faces Winding up Petition ------------------------------------------- The High Court of Hong Kong will hear on March 31, 2004 at 10:00 a.m. the petition seeking the winding up of Pyrok Industries Limited. Ho Tat Wing of Room 3509, Wah Koon House, Wah Sum Estate, Fanling, New Territories, Hong Kong filed the petition on February 2, 2004. Chau Ming Wai represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Chau Ming Wai, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai Hong Kong. SUCCESS ELECTRICAL: Faces Winding up Petition --------------------------------------------- The High Court of Hong Kong will hear on April 14, 2004 at 10:00 a.m. the petition seeking the winding up of Success Electrical Supply Company Limited. Wong Man Che of Room 1524, Lok Yiu House, Lai Yiu Estate, Kwai Chung, New Territories, Hong Kong filed the petition on February 16, 2004. Chau Ming Wai represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Chau Ming Wai, which holds office on the 34th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai Hong Kong. WIN MERIT: Faces Winding up Petition ------------------------------------ The High Court of Hong Kong will hear on March 31, 2004 at 10:00 a.m. the petition seeking the winding up of Win Merit Asia Limited. Choi Ko Sun of Room 1301, 13/F., Fu Ching House, Tai Wo Hau Estate, Tsuen Wan, New Territories, Hong Kong filed the petition on February 2, 2004. Chau Ming Wai represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Chau Ming Wai, 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 ================= ANEKA TAMBANG: Proposes 7 Percent Rights Issue ---------------------------------------------- The management of PT Aneka Tambang Tbk (ANTM) proposes to the central government of Indonesia that out of 14 percent shares to be divested this year, about 7 percent should be of rights issue, Indoexchange reports. "If the plan goes smoothly, this year 14 percent of the shares will have been divested," said president director of PT Aneka Tambang Tbk (ANTM) Deddy Aditya Soemanegara in Jakarta last weekend. The proceeds from divestment will used for financing the project of alumina mine in Tayan of South Kalimantan. The project requires a total investment of US$210 million. In addition to the proceeds from rights issue, a strategic business partner would also finance the project. Assistant deputy to minister of state-owned enterprises (SOEs) Aloysius K. Ro said that Antam's management proposed a rights issue of US$30-31 million for the company's bauxite project. When asked about the assignment of an underwriter, Soemanegara said the government is currently reviewing a number of them. Dian Abdul Hakim, the Analyst of Trust Securities, said the most important thing about ANTM divestment is that the central government remains the majority shareholder at the company. The price will be the main focus of the public, not the 14 percent divestment. ANEKA TAMBANG: Director Says Better Performance Likely ------------------------------------------------------ The Director of Aneka Tambang Tbk (ANTM)Deddy Aditya Soemanegara is optimistic about his company's performance for the coming year, according to Indoexchange. When asked about his company's performance, Soemanegra said hopefully this year the company's performance would be better than last year's due to improving gold price in international market at above US$ 400 per troy ounce from US$ 387 last year. "Many factors have so far influenced gold price in world market, particularly the value of US dollar," he said. Due to high prices, Antam's total sales in the year 2003 would likely reach Rp2 trillion, up from Rp1.711 trillion in the year 2002. In 2002 the company's net profit was Rp202.02 billion. "The audit of financial report of the year 2003 is still under process and a final report will very likely be announced by end March this year," he said. Meanwhile, assistant to Antam's director for Pongkor goldmine, Eko Warman, said the gold deposit at Pongkor mine would be sufficient up to the year 2014, or the latest the year 2016. In anticipation of the depletion of gold deposits, Antam is currently searching for new sites. Up to this year it is estimated that Antam has totally produced 4.175 million tons of gold and 24 tons of silver. The estimate excludes the production from Cikotok at capacity of 300 kilograms this year. DIRGANTARA INDONESIA: Still Owes Defunct IBRA US$49.9 Million ------------------------------------------------------------- PT Dirgantara Indonesia (DI) will pay the US$49.9 million it owes the Indonesian Bank Restructuring Agency (IBRA) not later than December 1, 2005, says Financial Director Hidayat Hasan, according to IndoExchange. Mr. Hidayat said the company has to reschedule some debt payments due to the swelling severance it needs to pay former employees. "The swelling budget makes us owe US$66.5 million. Since we previously only planned to borrow US$49.9 million, we have to add another US$16.5 million," he told Bisnis recently. The Central Labor Conflict Settlement Committee (P4P) had ruled that the severance pay for the former DI employees was twice the amount stipulated in article 156 clause (2) of Law No. 13/2003 on Labor. Mr. Hidayat said Dirgantara had paid IBRA the first installment of IDR18 billion, which came from the sale of the non-core assets. The company expects to get fresh funds from the sale of PT Nusantara Turbin & Propulsi, he said. "Actually, our cash flow is enough to pay our debts to the IBRA. However, we allocate the funds to produce planes," he said. Since the IBRA was disbanded on February 27, the task of collecting Dirgantara's debts may be transferred to the Asset Managing Company, the report said. TELEKOMUNIKASI INDONESIA: Investors Oust President Commissioner --------------------------------------------------------------- Shareholders of Telekomunikasi Indonesia (Telkom) elected Tanri Abeng, the former Minister of State Enterprises Affairs, as president commissioner during a meeting Wednesday to revamp the board, Yahoo Asia said. Mr. Abeng replaces Bacelius Ruru, who is currently the Deputy State Enterprises Minister. The assembly retained Kristiono as president director. Three directors and two commissioners were also replaced. In June 2003, the U.S Securities & Exchange Commission refused to accept Telkom's 2002 accounts because Telkom's appointed auditor, an Indonesian company, wasn't an affiliate of a U.S.- registered auditor. This prompted Telkom to engage the services of PricewaterhouseCoopers (PWC.XX) to re-audit its 2002 results. Telkom submitted the 2002 audited accounts to the SEC last month to avoid the delisting of its shares in New York. The government has a 51.9% stake in Telkom and the public owns the remaining stake. According to the report, the problems encountered by the company in submitting the 2002 accounts prompted the meeting and the board shakeup. ========= J A P A N ========= JAPAN AIRLINES: 3-year Layoff Plan to Cost 4,500 Jobs ----------------------------------------------------- Japan Airlines System Corp. (9205.T) plans to cut 4,500 jobs in a restructuring plan; about one-third more than originally planned, reports The Associated Press, citing The Nihon Keizai newspaper. The job cuts amount to about 8 percent of its 57,000-person work force, and will be conducted through March 2007, the Nihon Keizai newspaper said. The reduction, which will mainly affect ground staff, will be achieved through cutting down on the number of new hires and not replacing workers who retire, says the newspaper. A company spokeswoman declined to comment on the issue. The company was expected to unveil its new three-year business plan yesterday. Formed in 2002 from the merger of Japan Airlines and Japan Air System, the company plans to achieve the payroll reduction through attrition. It will also consolidate administrative divisions and group companies, the report said. The company hopes that the personnel reduction will help turn around its business to post a profit of about 100 billion yen ($900 million) in fiscal 2006. JAL projects a 50 billion yen ($450 million) loss for the fiscal year ending March 31 due to a sharp drop in passenger traffic on its international routes, in part due to the war in Iraq. CONTACT: Japan Airlines System Corporation Shingawa Intercity Tower-A, 2-15-1 Konan, Minato-ku Tokyo, 108-6024, Japan Phone: +81-3-5769-6097 Fax: +81-3-5460-5929 Web site: http://www.jal.co.jp MITSUBISHI MOTORS: Sells 7.93 Percent Stake in Proton ----------------------------------------------------- Mitsubishi Motors Corp. announced Tuesday the sale of its 7.93 percent stake in Perusahaan Otomobil Nasional Bhd (Proton) for about JPY11 billion, Japan Today reports, citing Kyodo News. The sale, believed to be part of efforts to stem losses from its auto loan business in the United States, earned for Mitsubishi capital gains of about JPY8 billion. In a statement, the company said the sale may have ended its capital ties with Proton, but it "will continue to cooperate with Proton through transferring technology and supplying parts and components as a responsive supplier and partner." Mitsubishi Motors, Mitsubishi Corp. and Heavy Industries Corp. of Malaysia Bhd, a Malaysian heavy industry conglomerate, established Proton, Malaysia's biggest automaker, in 1983 as a joint venture. CONTACT: Mitsubishi Motors Corporation 2-16-4 Konan, Minato-ku Tokyo, 108-8410, Japan Phone: +81-3-6719-2111 Fax: +81-3-6719-0014 Web site: http://www.mitsubishi-motors.co.jp ========= K O R E A ========= LG CARD: Trading Suspended -------------------------- The Korea Stock Exchange (KSE) will suspend the trading of the stocks of LG Card, which has suffered from serious capital erosion, according to The Korea Times. According to Securities Trading Laws, LG Card will be de-listed from the KSE unless it makes up for its losses by the end of the month. The announcement was made after the troubled card firm reported that it posted 5.59 trillion won in losses last year, after exhausting all of its capital amounting to 780 billion won. SK CORPORATION: Stock Continues to Fall --------------------------------------- SK Corporation, the nation's largest oil refinery, declined for the fifth consecutive trading session on Tuesday, as reported by the Korea Times. They have fallen below 40,000 won for the first time in nearly three weeks as investors believe that SK Corp. will emerge as a winner against Sovereign Asset Management, the second largest shareholder in the company, in a shareholders meeting Friday. SK Corp. tumbled 4.27 percent to close at 39,200 won, while other SK Group affiliates, including SK Securities and SK Gas, also closed lower. ``SK Corp. has been falling steeply ahead of the shareholder meeting on concerns that the incumbent management would be able to retain control over the de facto holding company of the nation's third largest conglomerate. Also speculation that Sovereign may sell its stake to SK Corp. has weighed heavily on investor sentiment," said Park Dae-yong, an analyst at Hyundai Securities. ``Some investors worry that if SK wins, the restructuring efforts would be delayed. But there is no need to fret over who will emerge as the winner because either way, SK Corp. will have to improve its corporate governance and value," Park noted. He said it was time to return to the fundamentals of the oil refinery and that he believed the company will continue to make efforts in enhancing governance standards. Dongwon Securities also said the seasonality of a weak oil refining industry in the second quarter was straining SK Corp.'s share price. The brokerage firm noted that it was still difficult to predict who would come out as the winner at the meeting. But it said the company would be pressured to improve its corporate governance even if SK Group is able to defend its managerial rights. SK CORPORATION: Seen Likely Winner In Board Fight ------------------------------------------------- Domestic stakeholders may favor the giant oil refiner in a looming vote, according to The Korea Herald. SK Corp. is increasingly being tipped by market analysts to maintain control of its board against the company's largest foreign shareholder. The unprecedented public dispute is pitting the management of SK Corp., de facto holding company for the SK Group, against Monaco-based Sovereign Asset Management, which holds a 14.99 percent stake in the nation's oil refiner. Both sides have proposed amendments to bolster corporate governance, and have nominated their own candidates to run for six seats at SK board elections on Friday. Analysts say that SK Corp. appears to be gathering increasing support after months of appearing deadlocked. "At the moment, the market consensus is that SK Corp. is going to win," said Harrison Hwang, an analyst at Good Morning Shinhan Securities. Foreign investors control more voting shares than SK, but the giant oil refiner is gaining support from domestic stakeholders, including institutional investors, analysts said. SK Corp. shares dropped 1,800 won, or 4.2 percent to 40,950 won yesterday on increasing concerns that Sovereign will lose its battle to implement changes. Merrill Lynch & Co. yesterday also downgraded the company to "Sell" from "Buy" on expectations that SK Corp. will prevail on Friday. SK CORPORATION: Gathering Supporters vs. Sovereign --------------------------------------------------- After months of appearing deadlocked, SK Corporation seems to be gathering increasing support against Sovereign Asset Management, according the The Korea Herald. Though no polls exist, making predictions far from certain, a breakdown of likely supporters for each side seems to favor SK Corp. Monaco-based Sovereign is seen as counting on the support of foreign shareholders, who held an estimated 44 percent of votes as of the end of 2003, although some analysts have placed Sovereign's support level at only 20 to 25 percent. Only registered shareholders as of the end of last year are eligible to vote. SK Corp. is seen as being favored by at least 36 percent of voting shares, with SK Group affiliates, employees, and a handful of domestic lenders supporting the current management. However, the nation's largest oil refiner is seen as enjoying increasing support from domestic institutional investors, including mutual funds and investment trust companies, which could tip the balance in their favor. Analysts said that many domestic SK shareholders have direct links to the SK Group, the nation's third- largest conglomerate. They also said doubts are rising about possible motives behind Sovereign's nominees, who include a former foreign affairs minister and the former chief executive of KorAm Bank and Hanvit Bank. Furthermore, analysts noted that although Sovereign might have the edge in implementing corporate governance reforms, there are concerns the nominees may seek a management takeover of a company in a sector in which they appear to have little experience. Sovereign has denied any such intention. "Domestic investors are beginning to think that a Sovereign- controlled management would not help in the longer term because they do not have in-depth expertise in the oil refining business," said Hwang. However, the outcome is still far from certain, and most dismiss the possibility that voting will break down strictly along Korean and non-Korean lines. "Foreign investors could very well support SK Corp. and domestic investors could support Sovereign," said Park Dae-young, an analyst at Hyundai Securities. SK CORPORATION: Politicking Before The Vote ------------------------------------------- The vote to control the board of SK Corporation is due this Friday, as reported by The Korea Herald. SK Corp. is in a dispute versus Monaco based Sovereign Asset Management on who will eventually get control of the board. Both sides in the battle have engaged in heavy politicking ahead of Friday's meeting. James Fitter, the chief executive officer of Sovereign, was in Seoul last week meeting minority shareholders, reiterating at every stop that it can increase share prices should it prevail Friday and emphasizing it is not interested in management control of SK Corp. On the other hand, Chey Tae-won, chairman of SK Corp., said in a seminar last weekend that he is committed to improving corporate governance at the oil refiner and asked for patience in implementing reforms. The battle has attracted considerable global attention and is being seen by some observers as a fight between the traditional autocratic management of the nation's chaebol, or conglomerates, and minority shareholders demanding a bigger voice, and as Korean vs. foreign interests battle. At the heart of the dispute is the bailout by SK Corp. of sister affiliates SK Networks, formerly SK Global, and SK Shipping. Sovereign has strongly opposed the rescue plans, typical of the chaebol practice of using stronger affiliates to rescue weaker ones. The private equity fund has also stridently called for the removal of chairman Chey, who was sentenced to prison over his involvement in the SK Networks accounting fraud last year. Last week the Institutional Shareholder Services Inc., a U.S.- based shareholder advisory group, wrote a report calling on investors to back the nominees and proposals submitted by Sovereign. The Monaco fund also garnered the support of the Seoul-based Center for Good Corporate Governance, which called on Korean shareholders to throw their support behind Sovereign. =============== M A L A Y S I A =============== DIRECT SELLING COS: 5 Direct Selling Companies' Licenses Revoked ---------------------------------------------------------------- Bernama reports that the Ministry of Domestic Trade and Consumer Affairs has revoked the licenses of five direct selling companies. These companies were identified as Cintai Holidays (M) Sdn Bhd, Millennium One Sdn Bhd, Exquisite Supply Sdn Bhd, Asia Command Sdn Bhd and Top-ED Marketing Services Sdn Bhd. They were found to have taken deposits during the cooling off period; used unapproved marketing plans; and practiced pyramiding and get-rich-schemes among others. Meanwhile, the direct selling license of Leading Profile Sdn Bhd was suspended after it was found to be marketing products that did not meet the standards set by the Ministry of Health. The public is advised to report to the ministry's nearest enforcement office if these companies are still operating. The ministry has also issued a warning against parties using the names of officials of the Domestic Trade Division to obtain financial contributions from direct selling companies. It is advised that anyone or any company that been approached by such parties should lodge police reports or report to the ministry for further action. Queries and complaints may be forwarded to: 1-800-886-800, 03-40436888/40437888 Or e-mail aduan@kpdnhq.gov.my adupp@kpdnhq.gov.my LANDMARKS: Shares Rise Another 7.5% on Takeover Talk ----------------------------------------------------- Landmarks Bhd shares, which have been climbing steadily in price since the start of the month, rose a further 7.5% to 93.5 sen yesterday in active trade, as reported by C.S. Tan for The Star. Dealers say that the buying interest in the stock was driven by persistent market talk of an impending takeover of the property investment group. Landmarks owns the Sungei Wang Plaza in Kuala Lumpur and the Datai and Andaman luxury resorts in Langkawi. The group also operates its own property development and healthcare divisions. In addition, it has stakes in Shangri-La Hotels (M) Bhd and independent power producer Teknologi Tenaga Perlis Consortium Sdn Bhd. A defining feature of Landmarks is that two large blocks of its shares owned by Eastnusa Holdings Sdn Bhd and Peremba Holdings Sdn Bhd have been held for several years now by Pengurusan Danaharta Nasional Bhd, the national corporate debt recovery agency. According to its 2002 annual report, these shares represent 18.8% of Landmarks' equity and are believed to anchor a controlling position in the company. Hitherto, Danaharta had been satisfied with holding the Landmarks shares while it tackled more intractable debts elsewhere. There was no urgency to resolve the problems of the asset-rich group. But now, Danaharta will be accelerating debt recoveries and asset disposals as it speeds up work to meet its winding-up deadline next year. Dealers say several groups are preparing to bid for the Landmarks shares. The current interest in the stock is stirred by the possibility of a takeover by a financially stronger group that will be able to accelerate the business activities of Landmarks. But all these may not occur if Landmarks' ultimate controlling shareholder, believed to be Peremba Holdings, redeems the debt held by Danaharta. It is believed that Peremba's original investment cost for the Landmarks shares was about RM3 to RM4 each, which is still much higher than the stock's current price level. A management team that acquired the company through a buyout some years ago owns Peremba. PERJAWA STEEL: Malaysia Steel Boss In Fraud Case ------------------------------------------------- The former chief of Malaysia's state steel firm Perwaja Steel has appeared in court accused of fraud, according to BBC News. Eric Chia Eng Hock denied the charges in his court appearance on Tuesday. His arrest on Monday made him the first big businessman indicted for corruption under the 100-day-old government of Prime Minister Abdullah Ahmad Badawi. The government is keen to prove its anti-corruption credentials in light of coming elections in April. The opposition PAS party is likely to use Prime Minister Abdullah's appointment as replacement to 22-year veteran leader Mahathir Mohamad as one aspect of its campaign. The opposition bloc alleges that corruption flourished under Dr Mahathir. Mr. Chia was one of many businessmen hand-picked by Dr Mahathir to lead Malaysia's industrial development. Perwaja Steel, like many other state companies, was intended as a flagship when it was set up in 1982. But mismanagement landed it with debts of $2.6bn and losses of $790m. The company was declared insolvent in 1995, a year after Mr. Chia stepped down as managing director. Mr. Chia is now accused of embezzling 76.4 million ringgit ($20 million or œ11 million), which was ostensibly paid to a Hong Kong company called Frilsham Enterprises in 1994. Prosecutors allege that Frilsham was a bogus company used as a conduit to divert the money into offshore bank accounts. Mr. Chia continued to protest his innocence. "I will fight until the end," he told reporters at the court. "I leave it to God to judge." PROTON: Prime Minister Not Aware Of Potential Management Changes ---------------------------------------------------------------- Prime Minister Datuk Seri Abdullah Ahmad Badawi on Tuesday said that he is not aware of any management changes to be effected by the government's investment arm, Khazanah Nasional Bhd, at Perusahaan Otomobil Nasional Bhd (Proton), reports Bernama. "I am not aware of that", the Prime Minister said when interviewed by reporters after a meeting with the Sultan of Selangor and state government officials. News reports had speculated that Tan Sri Tengku Mahaleel Tengku Ariff, Proton's chief executive officer since 1997, could be moved to its distribution arm, Proton Edar Sdn Bhd. His replacement could either be former CEO Datuk Mohd Nadzmi Mohd Salleh, who now heads Nadicorp Holdings Sdn Bhd; or Che Khalib Mohamad Noh, managing director of KUB Malaysia Bhd. Khazanah Nasional is the majority stockholder of Proton, the country's first national carmaker, which is reportedly undergoing a corporate restructuring. ===================== P H I L I P P I N E S ===================== MANILA ELECTRIC: ERC Adopts Position on Franchise Tax ----------------------------------------------------- With a possible lowering of power rates for Manila Electric Co. (Meralco) customers in mind, the Energy Regulatory Commission (ERC) has asked the Department of Finance (DOF) to carefully review Meralco's franchise tax, The Philippine Star reports. In its comment sent to the DOF, the ERC cited the Electric Power Industry Reform Act (EPIRA), which provides that "a distribution utility shall pay a franchise tax only on its distribution wheeling and captive market supply revenues." This means that other charges like generation, transmission, and systems loss are excluded in the computation of the franchise tax, ERC said, citing a position paper earlier submitted by Meralco. The ERC said it agrees with Meralco's position except with respect to the systems loss charge, as such will depend on whether the mechanism the ERC will eventually adopt treats systems loss as a mere pass-through charge or not. ERC Chairman Rodolfo B. Albano Jr. said, "The franchise tax, being a mere pass-through charge, should neither earn any additional revenue nor incur any additional cost from the imposition of these taxes." He added the EPIRA also provides that the franchise tax should be imposed only on "revenues." "Rulings of the Bureau of Internal Revenue (BIR) are to the effect that the gross receipts of a taxpayer, for purposes of determining the franchise tax, do not include monies or receipts entrusted to the taxpayer who do not belong to them and do not redound to the taxpayer's benefit," Mr. Albano said. He said the commission recognizes the fact that the transmission and generation charges cannot be considered as the utility's revenue since they are automatically remitted to the transmission and generation companies. "The exclusion of generation, transmission and systems loss charge will lower the base for the computation of franchise tax. A lower franchise tax translates to reduction in rates and reduction in rates means lesser burden to the consuming public," Mr. Albano said. The DOF, which is mandated by the EPIRA to draft the guidelines on franchise tax, is expected to consider the ERC comment. CONTACT: Manila Electric Company Meralco Center, Ortigas Ave. Pasig City, Metro Manila 0300, Philippines Phone: +63-2-1622-0 Fax: +63-2-1622-8501 Web site: http://www.meralco.com.ph MANILA ELECTRIC: Group Claims Firm Illegally Collected PHP200M -------------------------------------------------------------- Consumer group People Opposed to Warrantless Electricity Rates (POWER) is pushing for an investigation into the alleged illegal collections made by Manila Electric Company (Meralco) on a 12- centavo rate hike, a month before its supposed effectivity. POWER convenor, Lolita Donato, accused the Lopez firm of collecting around PHP200 million from around four million households in December 2003 alone when they implemented the new rate. The Energy Regulatory Commission had allowed Meralco to increase its rate by 12 centavos per kilowatt-hour in a November 27, 2003 issue. But in a clarificatory order issued January 12, 2004, the regulatory body stated that the said adjustment was to take effect only in January this year. CONTACT: Manila Electric Company Meralco Center, Ortigas Ave. Pasig City, Metro Manila 0300, Philippines Phone: +63-2-1622-0 Fax: +63-2-1622-8501 Web site: http://www.meralco.com.ph NATIONAL POWER: Seeks 33-centavo Hike to Recover Forex Losses ------------------------------------------------------------- The National Power Corp. (Napocor), together with the Power Sector Assets and Liabilities Management Corp. (PSALM), filed a petition for a 33.63-centavo per kilowatt-hour rate hike, reports Business World. In their joint petition to the Energy Regulatory Commission (ERC), Napocor and PSALM said the proposed increase would cover incremental currency exchange rate adjustments (ICERA) for the October-December period. If implemented by April, they can recover the forex adjustments in six months. "The proposed ICERA is just, fair, and reasonable as it allows the implementation of just deferred cost consistent with the principles of free and competitive electricity market and will ultimately redound to the best interest and benefit of the consuming public," the petition partly reads. "Wherefore, it is most respectfully prayed that the proposed ICERA of PhP0.3363/kwh to the main grid be approved." CONTACT: National Power Corporation Quezon Ave., East Triangle, Diliman Quezon City, Metro Manila, Philippines Phone: +63-2921-3541 Fax: +63-2921-2468 Web site: http://www.napocor.com.ph NATIONAL POWER: Awards Mitsubishi Corp. PHP700M Supply Contract --------------------------------------------------------------- The National Power Corp. picked Japan's Mitsubishi Corp. to supply the needed equipment in the ongoing rehabilitation of the Mak-ban geothermal power plant, BusinessWorld reports. The contract, valued at JPY1.49 billion or roughly PHP700 million, includes the supply of steam turbine and auxiliary equipment, gas extraction system, cooling water system, cleaning and repair of cooling tower basin; generator and excitation system, 480V motor control system, and a DC system. The project is funded by the Japan Bank for International Cooperation, which earlier extended a JPY3.38 billion (about PHP1.47 billion) loan. The project is aimed to extend the life of the geothermal complex by another 15 to 20 years, Napocor said. It also hopes to increase the rated capacity of four of its units from 55 megawatts each to 63 megawatts. As of January, the rehabilitation project was already 44.53% complete. CONTACT: National Power Corporation Quezon Ave., East Triangle, Diliman Quezon City, Metro Manila, Philippines Phone: +63-2921-3541 Fax: +63-2921-2468 Web site: http://www.napocor.com.ph PHILIPPINE AIRLINES: CAB Eyeing Indochina Market for PAL -------------------------------------------------------- Flag carrier Philippine Airlines (PAL) is looking into the passenger and cargo potentials of Laos, Myanmar and Cambodia after the Civil Aeronautics Board (CAB) announced its plans to conduct air talks with the three countries, reports The Manila Times. PAL Vice President for Corporate Communications Rolando Estabillo said PAL is "very much interested" in getting more flights to the 3 countries. "It is worth looking into the potentials of these countries. These are Asean [Association of Southeast Asian Nation] members. At one fold, we are very much interested but not immediately," Estabillo said. CAB Executive Director Tomas Ma¤alac said the agency plans to have air negotiations before the end of April. A source revealed the air talks were specifically scheduled on April 4 for Laos and Myanmar. The Cambodian government, on the other hand, has yet to confirm the schedule. The Philippines will be establishing new air transport agreement (ATA) with Laos and Cambodia. The negotiations with Myanmar, on the other hand, will possibly revolve around updating the old ATA. The source added the Philippines would be asking for seating capacity entitlement which means that the frequency of flights will depend on the number of passengers; instead of frequency entitlement, which means the number of passengers depending on the number of flights made. Of the three countries, only Myanmar expressed plans to fly its local carrier to the Philippines. =============== T H A I L A N D =============== EMC POWER: Issues Termination of Reorganization Notice ------------------------------------------------------ Ref. EMC 041/2004March 9, 2004 The Stock Exchange of Thailand The Stock Exchange of Thailand Building 62 Rachadapisek RoadKlongtoey, Bangkok 10110 Attention: The Managing Director Dear Sirs, Subject: Termination of Business Reorganization According to the Central Bankruptcy Court has ordered the business reorganization to EMC Public Co., Ltd. (EMC) and appointed EMC Power Co., Ltd. to be the Plan Administrator on May 15, 2001.EMC would like to clarify that EMC has accepted the order termination the business reorganization from the Central Bankruptcy Court on March 8, 2004. This order shall have the following effects: 1. EMC will be discharged from all debts that could have been claimed from business reorganization except for the debts which creditors have claimed payment from the business reorganization. 2. The responsibility for managing the business operations and assets of EMC shall be again devolved to EMC's directors. 3. EMC's shareholders shall have the recovery of all rights pursuant to the law, Please be informed accordingly. Yours faithfully, (Komol Wongpornpenpap) President 10/30/2003 19:03 (2K) Source: Stock Exchange of Thailand THAI MILITARY: Clarifies TMB, DTDB, IFCT Merger Details ------------------------------------------------------- Re: Additional clarification regarding the Merger between Thai Military Bank Public Company Limited, DBS Thai Danu Public Company Limited and Industrial Finance Corporation of Thailand Attn: President The Stock Exchange of Thailand cc: Secretary-General The Office of the Securities and Exchange Commission Having notified a resolution of the Board of Directors'' Meeting of Thai Military Bank Public Company Limited, Special Meeting No. 1/2547 on 8 March 2004, regarding the Merger between Thai Military Bank Public Company Limited, ("TMB"), DBS Thai Danu Public Company Limited, ("DTDB") and Industrial Finance Corporation of Thailand ("IFCT"), the Bank would like to inform additional information as follows. 1. As the Bank earlier notified information regarding exchange ratio of its ordinary shares with shares of DTDB and IFCT should there be a tender offer for securities upon approval from relevant agencies as well as the shareholders' meeting, it would like to additionally clarify the initial ratios to exchange TMB's ordinary shares with convertible securities in DTDB and IFCT, whereby the exchange ratios between its ordinary shares and shares and convertible securities of DTDB and IFCT will be as follows. DTDB Ordinary shares 0.900 ordinary share of TMB per DTDB's ordinary share CAPS 0.900ordinary share of TMB per DTDB's preferred share Baht 100,000 per DTDB''s subordinated debentures No. 1 MCAPS 2 0.900 ordinary share of TMB per DTDB's preferred share 1,256,342,967 ordinary shares of TMB per 75,000 units of DTDB''s Forcibly Subordinated Debentures Nos. 4, 5, 6 and 7 Warrant 0.093 ordinary share of TMB Per DTDB's warrant Regarding MCAPS 1, holders of MCAPS 1 will convert subordinated debentures and preferred shares into DTDB's ordinary shares and will exchange ordinary shares resulted from the conversion of subordinated debentures and preferred shares on the basis of the exchange ratios of DTDB's ordinary shares. IFCT Ordinary shares 1.124 ordinary shares of TMB per IFCT's ordinary share Warrant 0.303 ordinary share of TMB per IFCT's warrant However, the exchange ratios between ordinary shares and shares and convertible securities as described above are initial ratios only, which may be subject to soundness, rules of law, approval of relevant agencies or officials including the Office of the Securities and Exchange Commission and the Takeover Panel and resolution of shareholders' meeting. 2. The Bank is currently preparing the Business Plan and will submit it to the Finance Ministry in the next step, as well as consult and seek approval from relevant agencies and persons, the Finance Ministry, the Bank of Thailand, the Office of the Securities and Exchange Commission, the Takeover Panel and the Stock Exchange of Thailand regarding details of the operation and procedures, which, if approved by relevant agencies and persons, will be later proposed to seek resolution from shareholders'' meeting as required by laws. 3. The merger process between TMB and IFCT may be different from the merger process between TMB and DTDB as it must take into consideration suitability under the Emergency Decree Amending the Industrial Finance Corporation of Thailand Act B.E 2502, B.E 2547. As soon as TMB's Board of Directors approves the Business Plan to be submitted to the Finance Ministry, the Bank will later inform you clearer details regarding the merger process. Please be informed accordingly. Yours sincerely, (Subhak Siwaraksa) President and Chief Executive Officer Source: Stock Exchange of Thailand ********* 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., Frederick, Maryland USA. Lyndsey Resnick, Ma. Cristina Pernites-Lao, Faith Marie Bacatan, Editors. Copyright 2004. 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. 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