/raid1/www/Hosts/bankrupt/TCRAP_Public/090511.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, May 11, 2009, Vol. 12, No. 91
Headlines
A U S T R A L I A
FORTESCUE METALS: Hunan Valin to Help Firm Secure Funds in China
HIH INSURANCE: Liquidator Heads for Settlement on FAI Claim
TRANSPACIFIC INDUSTRIES: To Raise Funds To Pay Off Debt
C H I N A
CHINA SOUTHERN: Gets US$2.2 Billion Credit Line from BoCom
COASTAL GREENLAND: Moody's Downgrades Bond Ratings to 'B3'
H O N G K O N G
ATLAS COMMUNICATIONS: Chung and Har Step Down as Liquidators
DUTY FREE: Members' Final General Meeting Set for June 12
GLOBAL EXCHANGE: Creditors' Proofs of Debt Due on June 30
GOLDEN AMBROSE: Commences Wind-Up Proceedings
JAPAN COSMO: Seng and Lo Step Down as Liquidators
JASMAN ASIA: Appoints Hing and Morrison as Liquidators
JENOX INVESTMENTS: Appoints Tong as Liquidator
LAKEWOOD GOLF: Placed Under Voluntary Wind-Up
MCCANN HEALTHCARE: Arboit and Blade Step Down as Liquidators
MICRO INKS: Creditors' Proofs of Debt Due on June 9
PURPLE KING: Placed Under Voluntary Wind-Up
SCENIC CITY: Appoints Borrelli and Walsh as Liquidators
SINO MEDIA: Members' and Creditors' Meetings Set for June 18
SPIRENT DM: Yan and Haughey Step Down as Liquidators
WALLPINE LIMITED: Appoints Borrelli and Walsh as Liquidators
I N D I A
AIRTRAX POLYMERS: Low Net Worth Cues CRISIL 'BB' Ratings
FISHFA RUBBERS: CRISIL Rates Rs.29.1 Million Term Loan at 'BB-'
GLOSTER CABLES: CRISIL Assigns 'BB' Rating on Rs.120 Mln Term Loan
HYUNDAI MOTOR: Indian Unit Workers End 18-Day Strike
JET AIRWAYS: Launches Low-Fare Jet Airways Konnect
PATODIA FILAMENTS: CRISIL Puts 'BB' Rating on Rs.70.8MM Term Loan
SRIDA KNITTTERS: CRISIL Assigns 'BB' Rating on Rs.60 Mln Term Loan
SWARAJ INDIA: Low Profitability Prompts CRISIL 'BB' Ratings
TATA MOTORS: Allots Land to 55 Vendors at its Sanand Factory
TATA STEEL: Reports 31% Rise in India Sales
I N D O N E S I A
PT CENTRAL: Fitch Affirms Issuer Default Rating at 'B'
PT CENTRAL: Fitch Corrects Ratings; Does Not Affirms 'B' Ratings
PT MEDCO: S&P Downgrades Long-Term Corporate Credit Rating to 'B'
* INDONESIA: Government to Sell IDR2 Trillion of Bonds on May 12
J A P A N
JAPAN AIRLINES: To Remove Fuel Surcharge on International Flights
PIONEER CORP: S&P Downgrades Corporate Credit Rating to 'B+'
SANYO ELECTRIC: To Push Back JPY90-Bln Profit Target by One Year
SUMITOMO MITSUI: Moody's Reviews Ratings for Possible Downgrades
TOYOTA MOTOR: Forecasts JPY550 Billion Net Loss in FY 2010
K O R E A
SSANGYONG MOTOR: Workers Stage Strike Against Massive Job Cuts
S I N G A P O R E
MOBILE & WIRELESS: To Pay First and Final Dividend on May 13
T H A I L A N D
G STEEL: Moody's Downgrades Corporate Family Rating to 'Ca'
X X X X X X X X
* IMF Sees Long Path to Asian Recovery
- - - - -
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A U S T R A L I A
=================
FORTESCUE METALS: Hunan Valin to Help Firm Secure Funds in China
----------------------------------------------------------------
Hunan Valin Iron & Steel Group will help Fortescue Metals Group
talk to Chinese financial companies to secure funds, The
Australian reports citing Dowjones.
According to the report, Valin chairman Li Xiaowei said the
cooperation between Valin and Fortescue will have a positive
impact on any financing issue, but any financing deal will be
based on "commercial principles". Valin may set up a shipping
joint venture with Fortescue, he added.
The report relates that both companies held a signing ceremony on
Valin's $1.2 billion investment in Fortescue on May 8, in
Changsha, where Valin's headquarters are located.
China-based Hunan Valin Iron & Steel Group Co. Ltd. --
http://www.chinavalin.com/-- makes steel pipes, bars, wires,
sectional products, and hot-rolled steel plates along with copper
plate pipes and inner-twisted pipes. Its annual output is about 9
million tons of steel and 8 million tons of steel products; hot-
rolled steel plate is the company's biggest revenue generator.
Hunan Valin products are distributed in mainland China and
exported throughout much of Asia as well as to the US. It was
formed in 1999. In 2005, the company sold about a one-third stake
in publicly listed subsidiary Hunan Valin Steel Tube & Wire
Company to what is now ArcelorMittal.
About Fortescue Metals
Headquartered in West Perth, Western Australia, Fortescue Metals
Group Limited (ASX: FM) -- http://fmgl.com.au/-- is involved in
the exploration of iron ore through a project to mine iron ore
in the Chichester Ranges, in the Pilbara region of Western
Australia and exporting it from Port Hedland.
* * *
Fortescue reported consecutive net losses for the past three
fiscal years. Net loss for the year ended June 30, 2008, was
AU$2.52 billion, while net losses for FY2007 and FY2006 were
AU$192.26 million and AU$2.15 million, respectively.
HIH INSURANCE: Liquidator Heads for Settlement on FAI Claim
-----------------------------------------------------------
HIH Insurance Limited's liquidator Tony McGrath is heading for a
settlement of his AU$450 million FAI takeover loss claim
litigation, The Australian reports. The report says Mr. McGrath's
lawyers, however, had to seek a three-month extension from the NSW
Supreme Court to finalize details.
According to the report, Judge Patricia Bergin set August 6 for
what should be the final hearing of the case, which relates to
allegations that FAI's accounts were significantly "prettied up"
before the insurer was bought, sight unseen, by HIH Insurance in
late 1998.
The Australian recounts Mr. McGrath's lawyers told the court last
September that he had reached a settlement with the defendants,
who include reinsurer General Re, reinsurance broker Guy
Carpenter, three former FAI executives including former chief
executive Rodney Adler, adviser Goldman Sachs Australia and its
two most senior executives at the time, Malcolm Turnbull and
Russel Pillemer.
The size of the settlement has not been announced, nor will it be,
since the major respondents have reportedly insisted it be
confidential, the report notes.
The next court date for the action, says The Australian, will be
an appearance on July 9 in front of commercial judge Reg Barrett
of the NSW Supreme Court.
As reported in the Troubled Company Reporter-Asia Pacific on
May 15, 2006, The Australian said Mr. McGrath was planning to sue
FAI Insurances Limited and FAI General Insurance Company for
hundreds of millions of dollars in damages. The lawsuit is
believed to be a move to recover cash for HIH creditors. The
Australian related that Mr. McGrath's decision to commence
a damages action follows the NSW Supreme Court's appointment of
a special purpose liquidator -- Stephen Parbery from PPB -- to
FAI Insurances and FAI General. Mr. Parbery's appointment on
May 4, 2006, came after Mr. McGrath, who was then liquidator to
both HIH and FAI, expressed his concern about a potential
conflict of interest. The Australian recalled that HIH took over
FAI for AU$300 million in 1998. The takeover has been partly
blamed for HIH's collapse in March 2001. Mr. McGrath had earlier
initiated suits against reinsurers, from which he has recovered
around AU$2 billion. He has also previously named Federal MP and
parliamentary secretary Malcolm Turnbull as defendants in a legal
action on behalf of HIH creditors. Mr. Turnbull was the chairman
of Goldman Sachs Australia, who was FAI's adviser at the time of
HIH's takeover.
About HIH Insurance
HIH Insurance Limited was a publicly listed company in Australia.
Prior to its collapse in 2001, the HIH Group was the second
largest general insurer in Australia and had operations in many
other countries.
On March 15, 2001, HIH Insurance Limited and a number of its
subsidiaries were placed into provisional liquidation.
Subsequently, on Aug. 27, 2001, the companies that were in
provisional liquidation were placed into liquidation.
Schemes of Arrangement are in place for eight of those companies.
The eight licensed insurance companies within the group were
placed into Schemes of Arrangement in Australia on May 30, 2006.
Four of these companies were also placed into Schemes of
Arrangement in the UK on June 13, 2006.
The Scheme Administrators have made initial payments to certain
creditors and will make further payments over the coming years,
HIH said on its Web site.
TRANSPACIFIC INDUSTRIES: To Raise Funds To Pay Off Debt
-------------------------------------------------------
Transpacific Industries Group has announced plans to raise capital
following its capital structure review, The Australian reports.
According to the report, the company's shareholders will be
invited to participate in the raising and key stakeholders the
Peabody family has told the board it will participate.
The Australian, citing Transpacific in a statement, relates that
the raising should provide an "appropriate basis" for Transpacific
to cut the company's debt levels and leverage.
In March, the report recalls, Transpacific was in talks with its
lenders and potential investors as it sought a waiver of a debt-
covenant breach. The company was also seeking at that time a
cornerstone investor to help it reduce and refinance around $2.18
billion debt, the Australian adds.
Transpacific Industries Group Ltd (ASX:TPI)
-- http://www.transpacific.com.au/-- is Australia-based company.
Its principal activities include solid waste, including its
collection, transportation, recycling, disposal at, and management
of landfills; management of liquid waste, including its
collection, transportation, treatment and disposal; the
collection, re-refining, processing and sale of hydrocarbon and
cooking oils; site remediation, contaminated site clean-up,
dredging, composting and biosolids management; industrial
solutions including industrial cleaning, high pressure water
blasting, total waste management business solutions and lease out
of parts washers; commercial vehicles and parts importing and
sales and manufacturing of parts for washer machines, waste
compaction systems and bins.
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C H I N A
=========
CHINA SOUTHERN: Gets US$2.2 Billion Credit Line from BoCom
----------------------------------------------------------
China Southern Airlines has received a CNY15 billion (US$2.2
billion) credit line from the Bank of Communications, Shanghai
Daily reports.
The two parties will seal a long-term strategic relationship and
cooperate in aircraft leasing, aircraft financing, lending and
bills, the Daily relates citing BoCom.
According to the report, BoCom will offer investment banking,
private banking and global cash management to the Shanghai-listed
airline.
Headquartered in Guangzhou, China, China Southern Airlines Co.
Ltd. -- http://www.cs-air.com-- operates airlines, as well as
perform aircraft maintenance and air catering operations in the
People's Republic of China and internationally. It provides
commercial airlines, cargo services, logistics operations, air
catering, utility service, hotel operation, travel services,
aircraft leasing, and Internet services.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
March 3, 2008, Fitch Ratings affirmed China Southern Airlines
Co. Ltd.'s "B+" Long-term Foreign Currency and Local Currency
Issuer Default Ratings. The Outlook on the ratings is Stable.
COASTAL GREENLAND: Moody's Downgrades Bond Ratings to 'B3'
----------------------------------------------------------
Moody's Investors Service has downgraded Coastal Greenland Ltd's
bond rating to B3 from B2. At the same time, the rating agency
has downgraded CGL's corporate family rating to B2 from B1. The
outlook for both ratings remains negative.
"The downgrade reflects CGL's weaker than expected sales
performance amid a challenging operating environment," says
Kaven Tsang, a Moody's AVP/Analyst.
"As a result, the company is unlikely to achieve its original
business plan and generate sufficient cash flow to de-leverage its
balance sheet, as was incorporated into its original B1 corporate
family rating. Moody's expects CGL's adjusted debt/capitalization
ratio will stay at around 55-60% over the next 1-2 years," says
Tsang, also Moody's lead analyst for the company.
"The reduced cash flow will also weaken CGL's debt coverage
position with projected operating cash flow interest coverage
under 1.5x in the next 1-2 years. This will position the company
at the low end of its revised rating level and is comparable with
its B2 rated peers," he adds.
Partly mitigating the concern, CGL does not have any material
near-term land payments and offshore refinancing needs. Moody's
additionally notes that the company retains access to onshore
funds for construction works.
The negative outlook reflects CGL's high exposure to business and
credit risks, given its relatively weak operating and financial
positions in the context of China's evolving property market.
The rating could undergo a further downgrade if CGL 1)
underperforms in property pre-sales and sales, thereby further
undermining its financial and liquidity positions; 2) engages in
aggressive land acquisitions and/or debt-funded
investments/acquisitions; and/or 3) faces weakened funding access.
A signal for a downgrade would be CGL's EBITDA interest coverage
consistently dropping below 1.2x, or its unrestricted cash
declining and remaining below HK$400-500 million.
The ratings are unlikely to be upgraded given their negative
outlook, though the outlook could revert to stable if CGL achieves
its business plan. This could be indicated by CGL's EBITDA
interest coverage rising above 1.5-2x and adjusted
debt/capitalization dropping beneath 55%, while it simultaneously
maintains adequate balance sheet liquidity and access to bank
funding.
Moody's last rating action with regard to CGL occurred on
August 25, 2008, when its ratings were confirmed with a negative
outlook.
Coastal Greenland Ltd is a Chinese property developer focusing on
medium and high-end residential and commercial property
developments. It has an attributable land bank of 4.6 million sqm
in six major economic areas in China.
================
H O N G K O N G
================
ATLAS COMMUNICATIONS: Chung and Har Step Down as Liquidators
------------------------------------------------------------
On May 4, 2009, Wan Yiu Chung, Paul and Lin Lai Har stepped down
as liquidators of Atlas Communications HK Limited.
DUTY FREE: Members' Final General Meeting Set for June 12
---------------------------------------------------------
The members of Duty Free Corners Limited will hold their final
general meeting on June 12, 2009, at 11:00 a.m., at Suite 1, 8th
Floor of New Henry House, 10 Ice House Street, in Central,
Hong Kong.
At the meeting, Chan Cheuk Ying and Lee Cho Yiu Julia, the
company's liquidators, will give a report on the company's wind-up
proceedings and property disposal.
GLOBAL EXCHANGE: Creditors' Proofs of Debt Due on June 30
---------------------------------------------------------
The creditors of Global Exchange Limited are required to file
their proofs of debt by June 30, 2009, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on April 27, 2009.
The company's liquidator is:
Lam Chi Wai
Neich Tower, 9th Floor, Units C &D
128 Gloucester Road
Wanchai, Hong Kong
GOLDEN AMBROSE: Commences Wind-Up Proceedings
---------------------------------------------
On April 30, 2009, the members of Golden Ambrose Limited passed a
resolution that voluntarily winds up the company's operations.
The company's liquidators are:
Rainier Hok Chung Lam
John James Toohey
Prince's Building, 22nd Floor
Central, Hong Kong
JAPAN COSMO: Seng and Lo Step Down as Liquidators
-------------------------------------------------
On April 22, 2009, Natalia K M Seng and Susan Y H Lo stepped down
as liquidators of Japan Cosmo Securities (Hong Kong) Limited.
JASMAN ASIA: Appoints Hing and Morrison as Liquidators
------------------------------------------------------
At an extraordinary general meeting held on April 28, 2009, the
members of Jasman Asia Limited appointed Chan Wai Hing and Kenneth
Graeme Morrison as the company's liquidators.
The Liquidators can be reached at:
Chan Wai Hing
Kenneth Graeme Morrison
Mazars Corporate Recovery & Forensic Services Limited
The Lee Gardens, 34th Floor
33 Hysan Avenue, Causeway Bay
Hong Kong
JENOX INVESTMENTS: Appoints Tong as Liquidator
----------------------------------------------
At an extraordinary general meeting held on May 8, 2009, the
shareholders of Jenox Investments Limited passed a resolution that
appoints Yuen Shu Tong as the company's liquidator.
The Liquidator can be reached at:
Yuen Shu Tong
Malaysia Building, 3rd Floor
50 Gloucester Road
Wanchai, Hong Kong
LAKEWOOD GOLF: Placed Under Voluntary Wind-Up
---------------------------------------------
At an extraordinary general meeting held on April 29, 2009, the
members of Lakewood Golf Club (HK) Limited resolved to voluntarily
wind up the company's operations.
The company's liquidator is:
Lim Hock San
Legenda Putera, No. 9
Damansara Legenda
47410 Petaling Jaya
Selangor Darul Ehsan
Malaysia
MCCANN HEALTHCARE: Arboit and Blade Step Down as Liquidators
------------------------------------------------------------
On May 4, 2009, Bruno Arboit and Simon Richard Blade stepped down
as liquidators of:
-- Mccan Healthcare HK Limited;
-- Group Asia Limited;
-- Lowe Digital Hong Kong Limited; and
-- Scotchbrook-BSMG Worldwide (Hong Kong) Limited.
MICRO INKS: Creditors' Proofs of Debt Due on June 9
---------------------------------------------------
The creditors of Micro Inks (Hong Kong) Limited are required to
file their proofs of debt by June 9, 2009, to be included in the
company's dividend distribution.
The company's liquidators are:
Natalia Seng Sze Ka Mee
Cheng Pik Yuk
Three Pacific Place, Level 28
1 Queen's Road East
Hong Kong
PURPLE KING: Placed Under Voluntary Wind-Up
-------------------------------------------
At an extraordinary general meeting held on April 29, 2009, the
members of Purple King Limited resolved to voluntarily wind up the
company's operations.
The company's liquidator is:
Lam Chung Wah, David
The Gateway, Suite 1807, Tower II
25 Canton Road, Tsimshatsui
Kowloon, Hong Kong
SCENIC CITY: Appoints Borrelli and Walsh as Liquidators
-------------------------------------------------------
On April 24, 2009, Cosimo Borrelli and G Jacqueline Fangonil Walsh
were appointed as liquidators of Scenic City Limited.
The Liquidators can be reached at:
Cosimo Borrelli
G Jacqueline Fangonil Walsh
Admiralty Centre
1401, Level 14, Tower 1
18 Harcourt Road
Hong Kong
SINO MEDIA: Members' and Creditors' Meetings Set for June 18
------------------------------------------------------------
The members and creditors of Sino Media Group (SMG) Limited will
hold their final meetings on June 18, 2009, at 3:00 p.m. and
3:30 p.m., respectively, at the 32nd Floor of One Pacific Place,
in 88 Queensway, Hong Kong.
At the meeting, Lai Kar Yan (Derek) and Darach E. Haughey, the
company's liquidators, will give a report on the company's wind-up
proceedings and property disposal.
SPIRENT DM: Yan and Haughey Step Down as Liquidators
----------------------------------------------------
On April 29, 2009, Lai Kar Yan (Derek) and Darach E. Haughey
stepped down as liquidators of Spirent DM Limited.
WALLPINE LIMITED: Appoints Borrelli and Walsh as Liquidators
------------------------------------------------------------
On April 24, 2009, Cosimo Borrelli and G Jacqueline Fangonil Walsh
were appointed as liquidators of Wallpine Limited.
The Liquidators can be reached at:
Cosimo Borrelli
G Jacqueline Fangonil Walsh
Admiralty Centre
1401, Level 25, Tower 1
18 Harcourt Road
Hong Kong
=========
I N D I A
=========
AIRTRAX POLYMERS: Low Net Worth Cues CRISIL 'BB' Ratings
--------------------------------------------------------
CRISIL has assigned its ratings of 'BB/Stable/P4' to the various
bank facilities of Airtrax Polymers Pvt Ltd (APPL).
Rs.50.0 Million Cash Credit Limit BB/Stable (Assigned)
Rs.131.7 Million Term Loan BB/Stable (Assigned)
Rs.5.0 Million Letter of Credit P4 (Assigned)
Rs.1.0 Million Bank Guarantee P4 (Assigned)
The ratings reflect APPL's weak financial risk profile due to low
net worth, and exposure to risks relating to the fragmented nature
of the plastic packaging industry. These weaknesses are, however,
partially offset by APPL's established regional presence and
diversified product profile.
Outlook: Stable
CRISIL believes that APPL will maintain steady growth in sales,
and optimally utilise increased capacities backed by established
customer base. The outlook may be revised to 'Positive' if
increase in the company's turnover is in line with enhancement in
capacity. Conversely, the outlook may be revised to 'Negative' if
decline in profit margins leads to lower-than-expected cash
accruals for APPL.
About Airtrax Polymers
APPL, incorporated in 1997, manufactures high density polyethylene
(HDPE) and polypropylene (PP) woven fabric used for metal
packaging, woven bags, wood packaging, and other industrial
packaging applications. The product range in customised fabrics
includes lumber wraps, tarp fabrics, paper- coated fabrics,
polyethylene-coated and uncoated fabrics, and green house covers.
The company's plant at Alwar (Rajasthan) has a capacity of 4500
tonnes per annum. APPL reported a profit after tax (PAT) of
Rs.3.9 million on net sales of Rs.227.1 million for 2007-08
(refers to financial year, April 1 to March 31), as against a PAT
of Rs.2.9 million on net sales of Rs.199.2 million for 2006-07.
FISHFA RUBBERS: CRISIL Rates Rs.29.1 Million Term Loan at 'BB-'
---------------------------------------------------------------
CRISIL has assigned its ratings of 'BB-/Stable/P4' to the various
bank facilities of Fishfa Rubbers Pvt Ltd (FRPL).
Rs.6.0 Million Cash Credit Limit BB-/Stable (Assigned)
Rs.29.1 Million Term Loan BB-/Stable (Assigned)
Rs.25.9 Million Proposed Long Term BB-/Stable (Assigned)
Facility
Rs.39.0 Million Export Packing Credit P4 (Assigned)
The ratings reflect FRPL's moderate financial risk profile, and
limited financial flexibility due to low net worth. These
weaknesses are, however, partially offset by FRPL's strong growth
in turnover, backed by increasing exports.
Outlook: Stable
CRISIL expects FRPL to maintain a stable credit risk profile, and
strong growth in turnover backed by initiatives to diversify its
customer base. The outlook may be revised to 'Positive' if FRPL's
revenues and profitability increase substantially; or to
'Negative' if large, debt-funded expansions lead to stressed debt
protection indicators.
About Fishfa Rubbers
FRPL, incorporated in 2000, manufactures butyl and natural tube
reclaim rubbers, which account for about 80 per cent and 20 per
cent, respectively, of its total sales. Its two units at Rajkot
(Gujarat) have a combined capacity to produce 12,000 tonnes per
annum (tpa) of reclaimed rubber.
The company reported a profit after tax (PAT) of Rs.2.9 million on
revenues of Rs.84 million for 2007-08 (refers to financial year,
April 1 to March 31), as against a PAT of Rs.0.8 million on
revenues of Rs.31.4 million for 2006-07.
GLOSTER CABLES: CRISIL Assigns 'BB' Rating on Rs.120 Mln Term Loan
------------------------------------------------------------------
CRISIL has assigned its ratings of 'BB/Stable/P4' to the bank
facilities of Gloster Cables Ltd (Gloster Cables).
Rs.60.0 Million Cash Credit BB/Stable (Assigned)
Rs.358.0 Million Working Capital BB/Stable (Assigned)
Demand Loan
Rs.120.0 Million Term Loan * BB/Stable (Assigned)
Rs.120.0 Million Letter of Credit P4 (Assigned)
Rs.80.0 Million Bank Guarantee P4 (Assigned)
* Includes proposed amount of Rs. 25.0 Million
The ratings reflect Gloster Cables' weak financial risk profile
with large working capital requirements, exposure to risks
relating to fluctuations in the price of copper, its main raw
material, and intense competition in the cable industry. These
weaknesses are mitigated by regular infusion of funds by the
promoters, and Gloster Cables' established presence in the low-
tension (LT) and high-tension (HT) cable segments.
Outlook: Stable
CRISIL believes that Gloster Cables will maintain a stable credit
risk profile, supported by regular infusion of funds by the
promoters, and average cash accruals. The outlook may be revised
to 'Positive' if the company's financial risk profile improves on
the back of higher-than-expected operating profitability along
with improvement in capital structure. Conversely, the outlook
may be revised to 'Negative' if Gloster Cables' financial risk
profile weakens considerably, as a result of low net cash accruals
and profitability.
About Gloster Cables
Gloster Cables, incorporated in March 1995 by Mr. Ashish Modi and
Mr. Radhakishan Rathi, manufactures LT and HT cables for the
domestic market. In 1996, the company entered into a technical
and marketing collaboration with Fort Gloster Industries Ltd
(FGIL), Kolkata. Gloster Cables presently manufactures cables
under the brand, Gloster. n 2008, Gloster Cables set up a
dedicated plant for manufacturing smaller cross-section cables,
enhancing its installed capacity to 18,500 kilometres (km) per
annum from 15,100 km a year earlier.
Gloster Cables reported a profit after tax (PAT) of Rs.98.4
million on net sales of Rs.2196 million for 2007-08 (refers to
financial year, April 1 to March 31), as against a PAT of Rs.29.2
million on net sales of Rs.1729 million for 2006-07.
HYUNDAI MOTOR: Indian Unit Workers End 18-Day Strike
----------------------------------------------------
A section of workers of Hyundai Motor India Ltd (HMIL) ended its
18-day long strike on Thursday, May 7, following reconciliation
talks initiated by the state labour department between the
management and the workers, The Times of India reports. The
report says the workers are demanding recognition of a trade union
apart from other demands.
According to the report, nearly 1,100 workers who struck work for
the past 18 days including a four day hunger strike since Monday,
May 4, agreed to return to work from Friday, May 8, after the
Hyundai management decided to consider the charter of demands laid
down by the workers.
The Times relates that the charter of demands include revision of
basic wages of the employees, recognition of the union and
reinstatement of employees who were dismissed last year.
The deputy commissioner of labour have asked Soundararajan, CITU
leader who was spearheading the strike, to continue mediation
talks until May 20, 2009, the report says.
Headquartered in Seoul, South Korea, Hyundai Motor Company
(SEO:005380) -- http://www.hyundai-motor.com/-- is an automobile
manufacturer in Korea. The company markets the Atoz Prime, Getz,
Accent, Elantra, Hyundai Coupe, Sonata, Grandeur XG and Centennial
passenger cars; the Trajet, Terracan, Tucson, Santa Fe, H-1 and
Matrix recreational vehicles, and commercial vehicles, which
include trucks, buses, tractors, and specialty vehicles, such as
refrigerated vans, ready mixed concrete (remicon) mixers and oil
tankers. It operates overseas plants in North America, India and
China, and research and development centers in North America,
Japan and Europe. During the year ended December 31, 2007, the
company produced 1,706,727 vehicles sold around the globe.
* * *
As reported by the Troubled Company Reporter-Asia Pacific on
Jan. 16, 2009, Fitch Ratings downgraded Hyundai Motor's long-term
foreign currency Issuer Default Ratings to 'BB+' from 'BBB-' (BBB
minus), and the Short-term ratings to 'B' from 'F3'. The agency
revised the Outlook to Negative from Stable.
JET AIRWAYS: Launches Low-Fare Jet Airways Konnect
--------------------------------------------------
Jet Airways has launched Friday, May 8, a new all Economy service,
Jet Airways Konnect on select routes in India.
The company said in a statement, Jet Airways Konnect is designed
to meet the needs of the low fare segment and will complement Jet
Airways' full service product, by providing a service that is
better suited to cater to a market that desires an economically
priced low fare product.
Jet Airways Konnect offers a no-frills, economy class service
where guests will be offered attractive and competitive low fares
on specific routes. The on ground and in flight service will be
delivered by Jet Airways staff, the only difference will be that
travellers will have to buy their meals on board.
Sudheer Raghavan, Chief Commercial Officer, Jet Airways commented
"Consumer demands are changing rapidly in a dynamic global
environment, we believe the Jet Airways Konnect service will give
us the flexibility and speed to deploy capacity to meet these
changing trends ."
The Jet Airways Konnect Service will initially operate with two
737 and six ATR aircraft on sectors such as Chennai-Coimbatore,
Chennai-Madurai, Chennai-Kochi, Mumbai-Ahmedabad, Mumbai-Bhopal,
Mumbai-Udaipur, Bengaluru-Pune, Bengaluru-Mangalore.
Third Fiscal Quarter Loss
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 20, 2009, Jet Airways incurred a net loss of INR2141.80
million for the quarter ended Dec. 31, 2008, compared with a net
loss of INR911.20 million for the quarter ended Dec. 31, 2007.
Total income increased from INR25171.80 million for the quarter
ended Dec. 31, 2007 to INR30630.70 million for the quarter ended
Dec. 31, 2008.
For the nine months ended December 31, 2008, Jet Airways reported
a net loss of INR4553.30 million, compared with a net loss of
INR318.8 million in the same period in 2007. Total income
increased from INR60512.00 million for the nine months ended
Dec. 31, 2007 to INR90113.30 million in the same period last year.
"The company, during the quarter and nine months ended Dec. 31,
2008, suffered losses mainly on account of high fuel and other
operating costs and lower lead factors resulting into lower
revenues than expected," Jet Airways said in a filing with the
Bombay Stock Exchange.
About Jet Airways (India) Ltd
Jet Airways (India) Ltd (BOM:532617) -- http://www.jetairways.com/
-- currently operates a fleet of 84 aircraft,which includes 10
Boeing 777-300 ER aircraft, 11 Airbus A330-200 aircraft, 52
classic and next generation Boeing 737-400/700/800/900 aircraft
and 11 modern ATR 72-500 turboprop aircraft. With an average
fleet age of 4.34 years, the airline has one of the youngest
aircraft fleet in the world. Jet Airways operates over 395
flights daily.
Flights to 64 destinations span the length and breadth of India
and beyond, including New York (both JFK and Newark), San
Francisco, Toronto, Brussels, London (Heathrow), Hong Kong,
Singapore, Shanghai, Kuala Lumpur, Colombo, Bangkok, Kathmandu,
Dhaka, Kuwait, Bahrain, Muscat, Doha, Abu Dhabi and Dubai. The
airline plans to extend its international operations to other
cities in North America, Europe, Africa and Asia in phases with
the introduction of additional wide-body aircraft into its fleet.
PATODIA FILAMENTS: CRISIL Puts 'BB' Rating on Rs.70.8MM Term Loan
-----------------------------------------------------------------
CRISIL has assigned its ratings of 'BB/Stable/P4' to the various
bank facilities of Patodia Filaments Pvt Ltd (PFPL).
Rs.80 Million Cash Credit Limit BB/Stable (Assigned)
Rs.70.8 Million Term Loan BB/Stable (Assigned)
Rs.45.2 Million Proposed Long BB/Stable (Assigned)
Term Bank Facility
Rs.4 Million Letter of Credit P4 (Assigned)
The ratings reflect PFPL's small scale of operations in polyester
yarn texturising, low profitability leading to lower return on
capital employed, and exposure to fluctuations in raw material
prices and intense competition. The ratings also factor in PFPL's
average financial risk profile, marked by small net worth,
moderate gearing, and average debt protection measures. These
weaknesses are, however, partially offset by the benefits that
PFPL derives from the extensive experience of its promoters, and
interest subsidy in the form of the Technology Upgradation Fund
Scheme (TUFS). Further, PFPL's financial risk profile had
improved in recent past; however, it is likely to be adversely
affected over the near term as a result of the company taking of
large debt to fund capital expenditure (capex).
For arriving at its ratings, CRISIL has combined the business and
financial profiles of PFPL, and Srida Knitters, together referred
to as the Patodia group; this is because both the entities have a
common management, are in similar lines of business at different
stages of the value chain, and have operational synergies and
engage in inter-company transactions.
Outlook: Stable
CRISIL expects PFPL's operating margins and profitability to
remain stressed, because of the overall economic slowdown, and the
company's small scale of operations, commoditised nature of its
product, and moderate financial risk profile. The outlook may be
revised to 'Positive' if PFPL's financial risk profile improves,
on the back of fresh equity infusion into the company, and if its
profitability increases considerably. Conversely, the outlook may
be revised to 'Negative' if PFPL's operating margins remain highly
stressed, or if the company takes on large debt to fund capex,
leading to further weakening of its capital structure and debt
protection measures.
About Patodia Filaments
Incorporated in 1995 by the Mumbai-based Patodia family, PFPL
processes synthetic yarn. In 2007-08 (refers to financial year,
April 1 to March 31), PFPL reported a profit after tax (PAT) of
Rs.6.56 million on net sales of Rs.561.4 million, as against a PAT
of Rs.5.5 million on net sales of Rs.394.4 million in 2006-07.
SRIDA KNITTTERS: CRISIL Assigns 'BB' Rating on Rs.60 Mln Term Loan
------------------------------------------------------------------
CRISIL has assigned its ratings of 'BB/Stable' to the bank
facilities of Srida Knittters (SK), a Patodia group entity.
Rs.40 Million Cash Credit BB/Stable (Assigned)
Rs.60 Million Term Loan BB/Stable (Assigned)
The ratings reflect SK's small scale of operations, low
profitability leading to lower return on capital employed,
exposure to raw material price volatility, and intense competition
in the knitting industry due to low entry barriers. The ratings
also factor in the firm's average financial risk profile marked by
low net worth, moderate gearing, and weak debt protection
measures. These weaknesses are mitigated by the benefits that the
group derives from its experienced and established management.
Further, the financial risk profile of the group has improved in
the recent past, though it is likely to be affected by the
proposed debt-funded capital expenditure (capex) of group company,
Patodia Filaments Pvt Ltd (PFPL), in the near term.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of SK and PFPL, together referred to as
the Patodia group; this is because both these entities are under a
common management team and in the same line of business, but at
different stages of the value chain. The entities also share
operational synergies and engage in inter-company transactions
Outlook: Stable
CRISIL expects the pressure on SK's operating margins and
profitability to continue because of the overall economic
slowdown, the firm's small scale of operations, the commodity
nature of its product, and its moderate financial risk profile.
The outlook may be revised to 'Positive' in case of improvement in
the firm's financial risk profile through equity infusion, and
improvement in its profitability. Conversely, the outlook could
be revised to 'Negative' in case of more-than-expected pressure on
the firm's operating margins, or if it incurs more-than-expected
debt-funded capex, leading to further deterioration in its capital
structure and debt protection measures.
About Srida Knittters
SK, incorporated in 1999, is promoted by the Mumbai-based Patodia
family, headed by Mr. Sajjan K Patodia. It is engaged in knitting
of synthetic yarn. It has its unit at Silvassa, in the Union
Territory of Dadra and Nagar Haveli. PFPL is the group's first
venture. For 2007-08 (refers to financial year, April 1 to
March 31), SK reported a profit after tax (PAT) of Rs.17.3 million
on net sales of Rs.370.8 million, as against a PAT of Rs.9.8
million on net sales of Rs.258.3 million in 2006-07.
SWARAJ INDIA: Low Profitability Prompts CRISIL 'BB' Ratings
-----------------------------------------------------------
CRISIL has assigned its ratings of 'BB/Stable/P4' to the bank
facilities of Swaraj India Industries Ltd (Swaraj India).
Rs.186.5 Million Cash Credit BB/Stable (Assigned)
Rs.192.0 Million Term Loans BB/Stable (Assigned)
Rs.83.5 Million Proposed Long Term BB/Stable (Assigned)
Bank Loan Facility
Rs.50.0 Million Letter of Credit P4 (Assigned)
and Bank Guarantee
The ratings reflect Swaraj India's high gearing levels, low
profitability, limited product diversification, and exposure to
risks relating to unfavourable government regulations regarding
the dairy industry. These weaknesses are partially offset by
Swaraj India's established relationships with milk suppliers and
distributors, strong operating efficiency, and the benefits that
it will derive from its supply tie-up with Schreiber Dynamix
Dairies Ltd (Schreiber).
Outlook: Stable
CRISIL believes that Swaraj India will improve its margins over
the medium term, while sustaining its business growth. The outlook
may be revised to 'Positive' in case of significant improvement in
the company's business and financial risk profiles. Conversely,
the outlook may be revised to 'Negative' if the company's gearing
increases, or if its business or financial risk profiles
deteriorate.
About Swaraj India
Promoted by Shri Ranjeetsingh Naik Nimbalkar, Swaraj India is
engaged in the business of marketing pasteurised milk. The company
has a network of 500 authorised distributors to distribute milk to
various parts of Mumbai, Thane, and Kalyan (all in Maharashtra).
The company also sells loose milk and milk pouches directly to
institutions such as hospitals and canteens. Swaraj India reported
a net loss of ~Rs.4 million on net sales of Rs.79 million for
2007-08 (refers to financial year, April 1 to March 31), against a
profit after tax of Rs.3.6 million on net sales of Rs.49 million
for 2006-07.
TATA MOTORS: Allots Land to 55 Vendors at its Sanand Factory
------------------------------------------------------------
Tata Motors Limited has decided to allot land to its 55-odd
vendors at Sanand in Gujarat, The Economic Times reports.
According to the report, the company has asked its vendors to set
up facilities by October so that it can roll out the Nano smoothly
from the Sanand factory by January 2010.
"A timeline has been given to vendors so that Nano can be produced
at Sanand at the shortest timespan. Vendors will work according
to the schedule," a Tata Motors spokesperson told ET.
The Times discloses that the Narendra Modi government has
allocated some 1,100 acres at Sanand to Tata Motors, right along
the National Highway 8 that connects Kandla, Mundra and Dholera
ports. Tata Motors' total investment in the Sanand vendor park is
pegged at Rs 2,000 crore, which will generate employment for
around 4,000 people, the report notes.
India's largest automobile company, Tata Motors Limited --
http://www.tatamotors.com/-- is mainly engaged in the business
of automobile products consisting of all types of commercial and
passenger vehicles, including financing of the vehicles sold by
the company. The company's operating segments consists of
Automotive and Others. In addition to its automotive products,
it offers construction equipment, engineering solutions and
software operations. TML is listed on the Bombay Stock
Exchange, the National Stock Exchange of India and New York
Stock Exchange. It was ultimately 33.4% owned by the Tata Group
as of December 2007.
Tata Motors has operations in Russia and the United Kingdom.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
Mar. 27, 2009, Standard & Poor's Ratings Services lowered its
corporate credit rating on India-based automaker Tata Motors Ltd.
to 'B+' from 'BB-'. The rating remains on CreditWatch with
negative implications, where it was placed on Dec. 12, 2008. At
the same time, S&P lowered its issue rating on the company's
senior unsecured notes to 'B+' from 'BB-' and also kept the rating
on CreditWatch with negative implications.
S&P said the rating action follows material deterioration in Tata
Motors' cash flows and related metrics on a consolidated basis,
derived from an adverse operating environment, which, combined
with significantly high debt levels, will affect its credit
protection measures beyond those consistent with a 'BB' rating
category.
TATA STEEL: Reports 31% Rise in India Sales
-------------------------------------------
The Economic Times reports that Tata Steel Ltd said sales in April
from its Indian operations increased 31 per cent from a year
earlier to 452,000 tonnes.
The report, citing Tata Steel in a statement, says sales of long
products, used in construction, jumped 39 per cent in April, while
flat products that are used in automobiles and consumer durables
such as refrigerators grew 27 per cent.
According to the Economic Times, the company's Indian operations
account for about a quarter of the group's total global capacity
of 30 million tonnes annually, which includes its Anglo-Dutch unit
Corus.
Headquartered in Mumbai, India, Tata Steel Limited --
http://www.tatasteel.com/-- is a diversified steel producer.
It has operations in 24 countries and commercial presence in
over 50 countries. Its operations predominantly relate to
manufacture of steel and ferro alloys and minerals business.
Other business segments comprises of tubes and bearings. Tata
Metaliks Limited, which is engaged in the business of
manufacturing and selling pig iron, became a subsidiary of the
Company with effect from Feb. 1, 2008.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
April 7, 2009, Fitch Ratings downgraded Tata Steel Limited's Long-
term foreign currency Issuer Default Rating to 'BB+' from 'BBB-'
(BBBminus), and its National Long-term rating to 'AA(ind)' from
'AAA(ind)'. Simultaneously, Fitch also downgraded Tata Steel
U.K. Ltd's Long-term foreign currency IDR to 'B+' from 'BB'. The
Outlook on all the ratings continues to be Negative.
The TCR-AP reported on March 6, 2009, that Moody's Investors
Service downgraded the corporate family rating of Tata Steel Ltd
to Ba2 from Ba1. Moreover, the rating remains on review for
possible further downgrade.
On Feb. 9, 2009, the TCR-AP reported that Standard & Poor's
Ratings Services lowered its long-term corporate credit rating on
Tata Steel Ltd. to 'BB-' from 'BB' and that of its wholly owned
subsidiary, Tata Steel U.K. Ltd., to 'B+' from 'BB-'. The outlook
for both ratings is negative. Standard & Poor's also affirmed the
'B' short-term rating on TSUK.
=================
I N D O N E S I A
=================
PT CENTRAL: Fitch Affirms Issuer Default Rating at 'B'
------------------------------------------------------
Fitch Ratings has affirmed PT Central Proteinaprima Tbk's Long-
term Issuer Default Rating and the rating of the US$325 million
senior unsecured notes due 2012, issued by Blue Ocean Resources
Pte Ltd and guaranteed by CPP and its subsidiaries, at 'B'. The
recovery rating of the US$ Notes was also affirmed at 'RR4'. All
ratings remain on Rating Watch Negative.
The RWN on CPP's ratings - assigned originally in March 2009 -
continues to reflect the potential breach of financial covenants
attached to CPP's bank loans and the regulator's view that CPP had
failed to obtain sufficient minority shareholder approval for the
conversion of a subordinated shareholder loan to equity (for more
details please refer to Fitch Rating Action Commentary "Fitch
Places Central Proteinaprima on Watch Negative" dated March 17,
2009).
A new and additional risk factor relates to the notice of
acceleration served on Red Dragon Pte Ltd (Red Dragon, a
shareholder of CPP) by the holders of its exchangeable bonds to
enforce security over the 39% shareholding in CPP which is pledged
as collateral for those bonds. These shares are directly and
indirectly owned by the Jiaravanon family. The above development
can lead to the dilution of the Jiaravanon family's effective
ownership of CPP to below 50%, and take away the family's ability
to appoint a majority of the Board of Directors of CPP, thereby
triggering the "change of control" covenant in the US$ Notes'
indenture. In such an event, the US$ Noteholders have the right
to put the notes to Blue Ocean at 101% of the principal amount of
the notes. CPP management maintains that a breach of the above
covenant can be avoided should the Jiaravanon family buy back the
34% of CPP's shares which were sold to several hedge funds in
December 2008 with an option to repurchase.
Fitch notes that in the last quarter of FY08, the company's
liquidity profile deteriorated as a result of the higher than
anticipated capital expenditure. During this period, the company
appears to have spent IDR894 billion on capex which compares to
the IDR972 billion spent in the first nine months of FY08 and
management's initial capex budget of IDR1,225 billion for FY08.
As a result of this higher than expected cash outflow, CPP
reported a low unrestricted cash balance of IDR260 billion
(equivalent to US$23.7 million) at end-December 2008.
Nevertheless, in the first quarter of 2009, a combination of
higher cash flows from operation of IDR489 billion and lower capex
of IDR125 billion resulted in the improvement on CPP's liquidity
position as shown by the increase in the unrestricted cash balance
to IDR463 billion at end-March 2009. In addition to that, CPP has
set aside IDR207 billion in the Interest Reserves Account for the
half-yearly coupon payment on the US$ notes.
Fitch expects to resolve the RWN after any potential breach of the
said "change of control" trigger is resolved and the conversion of
the subordinated loan is approved by minority shareholders. The
ratings may be downgraded if net adjusted debt/EBITDAR is
sustained above 5.5x or interest coverage ratio (measured by
Operating EBITDA/gross interest expenses) falls below 2.0x. A
weaker business environment and/or material new capital
expenditure could result in the breach of these levels and
therefore, further evidence that the improving trend in CPP's
business since the beginning of this year is sustainable is
necessary to retain the current ratings. Given CPP's high
reliance on short term trade facilities for its working capital,
any difficulty in renewing these facilities may also result in a
negative rating action.
Founded in 1980 by the Charoen Pokphand Group, a conglomerate
engaged in agro-industrial and aquaculture businesses in Thailand,
CPP is one of the world's largest shrimp producers and processors.
The Jiaravanon family, which is the controlling shareholder of
CPG, has a 55% beneficial interest in the company.
PT CENTRAL: Fitch Corrects Ratings; Does Not Affirms 'B' Ratings
----------------------------------------------------------------
This is a correction for the version released earlier. It
corrects that PT Central Proteinaprima Tbk's 'B' Long-term Issuer
Default Rating and the 'B' rating of its US$325 million senior
unsecured notes due 2012 have not been affirmed. Here's the
corrected version:
Fitch Ratings has said that PT Central Proteinaprima Tbk's 'B'
Long-term Issuer Default Rating and the 'B' rating of the
US$325 million senior unsecured notes due 2012 (the "US$ Notes")
issued by Blue Ocean Resources Pte Ltd (Blue Ocean) and guaranteed
by CPP and its subsidiaries remain on Rating Watch Negative.
The RWN on CPP's ratings - assigned originally in March 2009 -
continues to reflect the potential breach of financial covenants
attached to CPP's bank loans and the regulator's view that CPP had
failed to obtain sufficient minority shareholder approval for the
conversion of a subordinated shareholder loan to equity (for more
details please refer to Fitch Rating Action Commentary "Fitch
Places Central Proteinaprima on Watch Negative" dated March 17,
2009).
A new and additional risk factor relates to the notice of
acceleration served on Red Dragon Pte Ltd (Red Dragon, a
shareholder of CPP) by the holders of its exchangeable bonds to
enforce security over the 39% shareholding in CPP which is pledged
as collateral for those bonds. These shares are directly and
indirectly owned by the Jiaravanon family. The above development
can lead to the dilution of the Jiaravanon family's effective
ownership of CPP to below 50%, and take away the family's ability
to appoint a majority of the Board of Directors of CPP, thereby
triggering the "change of control" covenant in the US$ Notes'
indenture. In such an event, the US$ Noteholders have the right
to put the notes to Blue Ocean at 101% of the principal amount of
the notes. CPP management maintains that a breach of the above
covenant can be avoided should the Jiaravanon family buy back the
34% of CPP's shares which were sold to several hedge funds in
December 2008 with an option to repurchase.
Fitch notes that in the last quarter of FY08, the company's
liquidity profile deteriorated as a result of the higher than
anticipated capital expenditure. During this period, the company
appears to have spent IDR894 billion on capex which compares to
the IDR972 billion spent in the first nine months of FY08 and
management's initial capex budget of IDR1,225 billion for FY08.
As a result of this higher than expected cash outflow, CPP
reported a low unrestricted cash balance of IDR260 billion
(equivalent to US$23.7 million) at end-December 2008.
Nevertheless, in the first quarter of 2009, a combination of
higher cash flows from operation of IDR489 billion and lower capex
of IDR125 billion resulted in the improvement on CPP's liquidity
position as shown by the increase in the unrestricted cash balance
to IDR463 billion at end-March 2009. In addition to that, CPP has
set aside IDR207 billion in the Interest Reserves Account for the
half-yearly coupon payment on the US$ notes.
Fitch expects to resolve the RWN after any potential breach of the
said "change of control" trigger is resolved and the conversion of
the subordinated loan is approved by minority shareholders. The
ratings may be downgraded if net adjusted debt/EBITDAR is
sustained above 5.5x or interest coverage ratio (measured by
Operating EBITDA/gross interest expenses) falls below 2.0x. A
weaker business environment and/or material new capital
expenditure could result in the breach of these levels and
therefore, further evidence that the improving trend in CPP's
business since the beginning of this year is sustainable is
necessary to retain the current ratings. Given CPP's high
reliance on short term trade facilities for its working capital,
any difficulty in renewing these facilities may also result in a
negative rating action.
Founded in 1980 by the Charoen Pokphand Group, a conglomerate
engaged in agro-industrial and aquaculture businesses in Thailand,
CPP is one of the world's largest shrimp producers and processors.
The Jiaravanon family, which is the controlling shareholder of
CPG, has a 55% beneficial interest in the company.
PT MEDCO: S&P Downgrades Long-Term Corporate Credit Rating to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had lowered its
long-term corporate credit rating on PT Medco Energi Internasional
Tbk., an Indonesia-based oil and gas exploration and production
company, to 'B' from 'B+'. The outlook is stable. At the same
time, S&P also lowered the issue ratings on the US$176.9 million
(US$124.7 million outstanding, net of treasury notes) convertible
bonds due May 12, 2011 issued by Medco CB Finance B.V. and the
US$325.4 million (US$89.2 million outstanding, net of treasury
notes) guaranteed notes due May 22, 2010, issued by MEI Euro
Finance Ltd., which are both guaranteed by Medco.
"The rating action on Medco reflects our opinion that the weaker
oil price environment is likely to result in weaker-than expected
cash flow protection measures in the medium term. S&P expects the
company's ratio of funds from operations to debt to decline to
less than 15% and its ratio of debt to EBITDA to increase to above
3.5x in the medium term. S&P believes that, combined with the
expected decline in production, Medco's already aggressive
financial risk profile could come under additional pressure," said
Standard & Poor's credit analyst Yasmin Wirjawan.
In S&P's view, Medco's financial flexibility is weak, with the
decline in oil prices reducing the company's ability to generate
internal funds and potentially affecting its ability to attract
external funds. These funds are critical for future growth
projects and to arrest Medco's deteriorating business risk
profile, as reserves and production continue to decline. At the
same time, production costs have risen, pressuring EBITDA margins.
The company has targeted certain assets for divestment to assist
in its funding requirements; however, the ability to sell these
assets and achieve a reasonable return is likely to be challenging
under current market conditions.
These factors are tempered by Medco's adequate liquidity to meet
short-term debt maturities and the good growth potential in its
exploration blocks, namely the Senoro-Toili block and Area 47 in
Libya. Although these blocks may improve Medco's existing
reserves profile, they expose the company to high execution and
operational risks, as evidenced by the continual delay in
government approval for a gas sales agreement signed last January
for the Senoro-Toili block. Further, these initiatives would not
translate into revenue in the medium term.
Standard & Poor's expects Medco to have negative free operating
cash flow over the medium term, given the company's substantial
estimated expenditure for the development of its major projects.
As such, Medco's financial profile may weaken before its business
risk profile improves, particularly in the absence of proceeds
from divestments. Although these projects may be further
deferred, given the economic climate, Medco's business risk
profile could continue to deteriorate from declining production
and result in a longer-term weakening of credit protection
measures.
"The stable outlook incorporates our expectation that Medco's
credit protection ratios may weaken due to declining oil prices
and production. Nevertheless, S&P believes the company's
financial risk profile should remain adequate for the existing
rating level. The outlook also reflects S&P's opinion that Medco
will successfully address its short-term debt maturities," said
Ms. Wirjawan.
* INDONESIA: Government to Sell IDR2 Trillion of Bonds on May 12
----------------------------------------------------------------
The Indonesian government plans to sell IDR2 trillion of bonds
-- worth IDR1 million per unit – tomorrow, May 12, to plug this
year's budget deficit, which stands at IDR139.5 trillion, Jakarta
Post reports citing the Finance Ministry.
According to the report, the government will sell:
-- SPN20100513 bills maturing in 2010;
-- FR0030 bonds maturing in 2016 and yielding 10.75 percent;
-- FR0044 bonds maturing in 2024 and yielding 10 percent; and
-- FR0050 bonds maturing in 2038 yielding 10.5 percent.
=========
J A P A N
=========
JAPAN AIRLINES: To Remove Fuel Surcharge on International Flights
-----------------------------------------------------------------
Japan Airlines Corp. and All Nippon Airways Co. will scrap fuel
surcharges on their international flights in July, The Mainichi
Daily News reports citing company officials.
According to the report, both airlines have decided to remove fuel
surcharges between July and September due to a drop in the average
jet fuel price to $55.08 per barrel between February and April,
which is below the 60-dollar benchmark to apply surcharges.
The reports says both companies introduced the latest fuel
surcharges in 2005.
Meanwhile, Aircargo Asia-Pacific reports that Japan Airlines'
subsidiary JALways has dismissed all 130 of its Honolulu, USA-
based pilots and is closing its Oahu office with the loss of five
jobs there.
Aircargo Asia-Pacific relates that the pilots, who had been flying
Boeing 747s from Hawaii to Japan and other Asian countries, were
on individual contracts delivered through three leasing companies
that provide pilots to foreign carriers.
JALways said it will continue to pay the pilots' wages and full
benefits through June, according to Aircargo Asia-Pacific.
About Japan Airlines
Japan Airlines Corporation -- http://www.jal.co.jp/-- is a Japan-
based holding company that is active in five business segments
through its 225 subsidiaries and 82 associated companies. The Air
Transportation segment is engaged in the operation of passenger
and cargo planes. The Air Transportation-Related segment is
engaged in the transportation of passengers and cargoes, the
preparation of in-flight food catering, the maintenance of
aircraft and land equipment, as well as the fueling business. The
Travel Planning and Marketing segment is involved in the planning
and sale of travel packages. The Card and Leasing segment is
engaged in the provision of finance, cards and leasing services.
The Others segment is involved in businesses related to hotels,
resorts, logistics, wholesale, retail, real estate, printing,
construction, manpower dispatch, as well as information and
communication. The Company has numerous global operating
locations.
JAL International Co. Ltd. is a wholly owned operating subsidiary
of Japan Airlines Corporation.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
February 11, 2009, Moody's Investors Service changed the outlook
on the Ba3 long-term debt rating and issuer rating of Japan
Airlines International Co. Ltd. to negative from positive. The
outlook change reflects Moody's view that JALI's profitability is
likely to remain pressured amid the recent sharp decline in
airline passenger demand.
Japan Airlines Corporation continues to carry Standard & Poor's
Ratings 'B+' LT Foreign & Local Issuer Credit. The outlook is
positive.
PIONEER CORP: S&P Downgrades Corporate Credit Rating to 'B+'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'B+' from 'BB-' its
long-term corporate credit and senior unsecured ratings on Pioneer
Corp., due to the increased likelihood of deterioration in its
financial profile and heightened uncertainty regarding its funding
plans over the next 12 to 24 months. Moreover, the company is
likely to post another large loss for fiscal 2009 (ending
March 31, 2010), which would represent the sixth consecutive year
it has done so. The outlook on the long-term corporate credit
rating is negative. At the same time, Standard & Poor's resolved
its CreditWatch placement of the ratings on Pioneer, which had
been placed on CreditWatch with negative implications on Feb. 13,
2009, reflecting the increased prospects of the company posting
considerable net losses for fiscal 2008 (ended March 31, 2009).
Pioneer announced that by the end of fiscal 2009 it intends to
completely withdraw from the plasma TV business, in which it has
posted massive losses, and to strengthen its car electronics
business through alliances with Mitsubishi Electric Corp.
(A/Stable/A-1) and Honda Motor Co. Ltd. (A+/Stable/A-1). The
company also intends to implement group-wide restructuring plans,
which include the closure of nine production facilities, the
consolidation of domestic and overseas sales subsidiaries, and
personnel reductions totaling 5,800 regular employees and about
4,000 temporary and contract employees. Pioneer aims to return to
profitability in fiscal 2010 (ending March 31, 2011), by
repositioning its business structure to focus on its car
electronics operations.
Pioneer estimates that it will cost about JPY47 billion to
restructure its business. As a result, the company has forecast
net losses of JPY83 billion for fiscal 2009. This is in addition
to JPY129 billion in net losses that the company recorded in
fiscal 2008. Standard & Poor's is of the opinion that Pioneer's
ratio of debt to total capital will have increased to about 60% as
of March 31, 2009, from 28% a year earlier. Furthermore, S&P
believes that this ratio will continue to worsen in fiscal 2009.
Pioneer predicts that it will need to find an additional JPY40
billion in funding, given the likelihood that it will post further
large losses in fiscal 2009, and its plan to redeem JPY60 billion
in convertible bonds in March 2011. However, the company's
medium-term funding plan remains unclear at this moment, as a
detailed procurement policy has not yet been disclosed.
The outlook on the long-term corporate credit rating on Pioneer is
negative. Further scrutiny of the company's business performance
and financial profile would be needed, as the business environment
of its core car electronics business is likely to remain difficult
throughout fiscal 2009. The ratings may come under further
downward pressure if the company's financial performance for
fiscal 2009 falls substantially below current company forecasts,
due to further deterioration in the business environment and
possible delays in business restructuring. Standard & Poor's
believes that Pioneer may choose to raise capital by applying for
the state-sponsored corporate revitalization program. If Pioneer
pursues this course of action, it would support the ratings on the
company. Conversely, the credit quality of Pioneer could be
negatively affected if the likelihood of raising capital through
the program diminishes. The outlook or ratings may experience
upward movement if the likelihood of financial improvement
increases, backed by stable performance and the resolution of
uncertainty surrounding the funding plan for the next 12 to 24
months.
SANYO ELECTRIC: To Push Back JPY90-Bln Profit Target by One Year
----------------------------------------------------------------
Sanyo Electric Co has decided to postpone by one year its goal of
achieving JPY90 billion in consolidated operating profit in the
face of the global economic slump, Kyodo News reports citing a
company source.
The report relates that the source said Sanyo Electric will revise
its three-year management plan for the business years 2008 to 2010
due to the current recession. The company originally aimed to
make a profit each year of JPY50 billion, JPY70 billion and
JPY90-100 billion, respectively.
The source said Sanyo will formally announce the revision on
Thursday, May 14, Kyodo News adds.
Headquartered in Osaka, Japan, Sanyo Electric Co. Ltd. --
http://www.sanyo.com/-- is one of the world's leading
manufacturers of consumer electronics products. The company has
global operations in Brazil, Germany, India, Ireland, Spain, the
United States and the United Kingdom, among others.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
November 14, 2008, Fitch Ratings placed Sanyo Electric Co. Ltd.'s
'BB+' Long-term foreign and local currency IDRs and senior
unsecured ratings on Rating Watch Positive.
SUMITOMO MITSUI: Moody's Reviews Ratings for Possible Downgrades
----------------------------------------------------------------
Moody's Investors Service has placed on review for possible
downgrade various ratings of Sumitomo Mitsui Banking Corporation.
The ratings affected are its C bank financial strength rating, A3
base line credit assessment, Aa2 senior long-term debt and deposit
ratings, and other long-term subordinated debt ratings, including
the A2-rated preferred securities issued by special purpose
corporations of Sumitomo Mitsui Financial Group Inc.
Furthermore, the Aa2 long-term deposits ratings, Aa3 senior/junior
subordinated debts ratings of Kansai Urban Banking Corporation and
Aa2 long-term deposits ratings of Minato Bank, Ltd. were placed on
review for possible downgrade. Both are consolidated banking
subsidiaries of SMBC. However, their D BFSRs and Ba2 BCAs are not
affected, and continue to carry negative outlooks. At the same
time, Moody's affirmed the Prime-1 short-term ratings of SMBC,
KUBC, and Minato.
Moody's rating action follows SMFG's announcement on May 1, 2009
that SMFG and SMBC have agreed with Citigroup and Nikko Citi
Holdings, Inc. that SMBC will acquire all the operations of Nikko
Cordial Securities Inc. (Baa2 with stable outlook) and some other
businesses, including the domestic debt and equity underwriting
operation of Nikko Citigroup Limited (Baa1 with negative outlook).
According to the announcement, the acquisition price is
approximately JPY545 billion, which is estimated at more than 10%
of SMFG's Tier I capital as of March 2009.
The review for possible downgrade of SMBC was prompted by Moody's
concern that SMFG and SMBC's capital and liquidity profiles will
be adversely affected due to the need for capital and liquidity to
be allocated to this significant acquisition.
Moody's recent rating affirmation of SMBC on April 16, 2009 --
with negative outlook -- did incorporate to a large extent the
expected positive impact of a forthcoming re-capitalization
(common stock issue of JPY800billion at maximum) of SMFG to
redress its eroded capital, the result in turn of JPY390 billion
in net losses for FY2008. But this rating affirmation had not
factored in the possibly negative implications of a large
acquisition initiative -- such as that announced -- on SMFG's
financial flexibility.
In Moody's view, the decision to embark on such a large
acquisition -- against the backdrop of a challenging operating
environment for banking as well as securities broking -- may
indicate the heightened risk appetite of SMFG management in view
of poorly performing past significant investments in non-banking
areas.
Despite the planned re-capitalization of SMFG and the less
capital-intensive nature of NCS's brokerage operations, this
latest acquisition initiative would increase its group-based risk
assets. Accordingly, in Moody's view, the expected benefits of
the forthcoming re-capitalization for SMBC's balance sheet risk
may likely be diluted.
And for SMFG, Moody's notes that significant integration and co-
ordination challenges may arise for its retail brokerage and
investment banking businesses in view of SMFG's current strategic
relationships with Daiwa Securities Group Inc.(Baa1 under review
for possible downgrade) and Daiwa Securities SMBC Co. Ltd. (A1
under review for possible downgrade).
The review for possible downgrade of KUBC and Minato has been
prompted by the review of SMBC's ratings. Moody's deposit and
debt ratings for these two banks are heavily reliant on the very
high probability of extraordinary support from SMBC in case of
stress situations. Accordingly, downward pressure on SMBC's
deposit rating would lead to downward pressure on the deposit
ratings of KUBC and Minato.
Moody's says that its review will focus on SMFG's capital plan for
managing the diversified and expanding operations of SMBC and its
subsidiaries -- in the current difficult operating environment --
and particularly for its domestic loan portfolio and brokerage
business.
Moody's last rating action on SMBC was implemented on April 16,
2009 when the bank's ratings were affirmed at Aa2/C (negative
outlook).
These ratings were placed on review for downgrade:
* Sumitomo Mitsui Banking Corporation -- C bank financial strength
rating, Aa2 long-term deposit rating, Aa2 issuer rating, Aa2
senior unsecured debt rating, Aa3 senior and junior subordinated
debt ratings
* Sakura Capital Funding (Cayman) Limited -- Aa3 junior
subordinated debt rating
* Sakura Finance (Cayman) Limited -- Aa3 senior subordinated debt
rating
* SMBC Capital Markets, Inc. -- Aa2 senior unsecured debt rating
* SMBC International Finance N.V. -- Aa3 senior and junior
subordinated debt ratings
* Sumitomo Mitsui Banking Corporation Europe -- C bank financial
strength rating, Aa2 long-term deposit rating
* Sumitomo Mitsui Finance Australia Limited -- Aa2 senior
unsecured debt rating
* SMFG Preferred Capital US$1 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital GBP 1 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital JPY 1 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital US$2 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital US$3 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital GBP 2 Limited -- A2 preferred stock
rating
* SMFG Preferred Capital JPY 2 Limited -- A2 preferred stock
rating
* Kansai Urban Banking Corporation -- Aa2 long-term deposit
rating, Aa3 senior and junior subordinated debt ratings.
* Minato Bank, Ltd. -- Aa2 long-term deposit rating
Headquartered in Tokyo, Japan, Sumitomo Mitsui Banking Corporation
is a major subsidiary of Sumitomo Mitsui Financial Group Inc.
which is a major financial group in Japan.
TOYOTA MOTOR: Forecasts JPY550 Billion Net Loss in FY 2010
----------------------------------------------------------
Toyota Motor Corp forecasts a net loss of JPY550 billion,
operating loss of JPY850 billion and consolidated net revenues of
JPY16.5 trillion for the fiscal year ending March 31, 2010. In
the fiscal year ended March 31, 2009, the company incurred a
loss of JPY437 billion.
The automaker also proposes to cut its cash dividend for the full
fiscal year by JPY40 to JPY100 per share.
On a consolidated basis, net revenues for the fiscal year ended
March 31, 2009 totaled JPY20.53 trillion, a decrease of 21.9
percent compared to the last fiscal year. Operating income
decreased from JPY2.27 trillion to a loss of JPY461 billion, and
income before income taxes, minority interest and equity in
earnings of affiliated companies was a loss of JPY560.4 billion.
Operating income decreased by JPY2.73 trillion. Negative factors
for the decline include JPY1.48 trillion due to the effects of
marketing activities and JPY760 billion mainly from the
appreciation of the Japanese yen against the U.S. dollar and the
euro.
Commenting on the financial results, TMC President Katsuaki
Watanabe said, "Both revenues and profits declined severely during
this period. The negative impact was a consequence of the
significant deterioration in vehicle sales particularly in the
U.S. and Europe, the rapid appreciation of the yen against the
U.S. dollar and the euro and the sharp rise in raw materials."
In fiscal year 2009, Toyota's consolidated sales totaled 7.57
million units, a decrease of 1.34 million units from the last
fiscal year.
Toyota estimates that consolidated vehicle sales for the fiscal
year ending March 31, 2010 will be 6.5 million units, which is a
decrease of 1.06 million units from the fiscal year 2009, due to
continuance of the current severe conditions of each market.
Toyota Motor Corporation (TYO:7203) -- http://toyota.jp/--
primarily conducts automobile, financial and other businesses.
Its business segments are automotive operations, financial
services operations and all other operations. Its automotive
operations include the design, manufacture, assembly and sale of
passenger cars, minivans and trucks and related parts and
accessories. Toyota's financial services business consists
primarily of providing financing to dealers and their customers
for the purchase or lease of Toyota vehicles. Its financial
services also provide retail leasing through the purchase of lease
contracts originated by Toyota dealers. Related to Toyota's
automotive operations is its development of intelligent transport
systems (ITS). Toyota's all other operations business segment
includes the design and manufacture of prefabricated housing and
information technology related businesses, including an e-commerce
marketplace called Gazoo.com. The Company acquired CENTRAL MOTOR
CO., LTD. on October 1, 2008.
=========
K O R E A
=========
SSANGYONG MOTOR: Workers Stage Strike Against Massive Job Cuts
--------------------------------------------------------------
Yonhap News Agency reports that unionized workers at Ssangyong
Motor Co. staged a partial strike on May 7 to protest against the
company's massive layoff plan.
Production at Ssangyong's only plant in Pyeongtaek, about 70
kilometers south of Seoul, was halted for two hours, the news
agency says citing Ssangyong in a regulatory filing.
As reported in the Troubled Company Reporter-Asia Pacific on
April 8, 2009, The Chosun Ilbo said Ssangyong planned to cut some
2,800 employees or 40 percent of its entire workforce in a bid to
revive the company.
Meanwhile, KBS News says that an audit report said the survival of
Ssangyong Motor is worth around KRW400 billion more than
liquidation.
Citing an audit report submitted by auditor Samil Pricewaterhouse
Coopers to the Seoul Central District Court on May 7, KBS News
says the value of restructuring Ssangyong stood at KRW1.3 trillion
to KRW2 trillion while its liquidation will result in KRW930
trillion in value.
According to KBS News, the court will disclose the results to the
company's creditors on May 22, when they decided whether to save
or liquidate the carmaker.
Headquartered in Kyeonggi-Do, South Korea, Ssangyong Motor Co.
Ltd. -- http://www.smotor.com/kr/index.jsp/-- is a manufacturer
of automobiles primarily engaged in production of sports utility
vehicles (SUVs) and recreational vehicles (RVs). The company's
production is grouped into four lines: SUVs under brand names
REXTON, KYRON and ACTYON; sports utility trucks (SUTs) under the
brand name ACTYON Sports; passenger cars under brand name
Chairman, and multi-purpose vehicles (MPVs) under the brand name
Rodius. It also provides automobile parts such as coolers,
engine oil filters, headlamp bulb and others. During the year
ended December 31, 2007, the company had a production capacity
of 219,220 units of vehicles and its actual production output
was 122,857 units of vehicles. The company has two
manufacturing factories in Pyeongtaek and Changwon.
* * *
As reported in Troubled Company Reporter-Asia Pacific on Jan. 12,
2009, the International Herald Tribune said Ssangyong filed for
receivership with a Seoul district court in a bid to stave off a
complete collapse. The Tribune related that the decision to file
for receivership, which is similar to bankruptcy protection in the
United States, came a day after the Ssangyong board met in
Shanghai. "After our talks with the banks failed to produce an
agreement, it became inevitable to file for court receivership to
ease the critical cash flow problem," the company said in a
statement obtained by the Tribune.
=================
S I N G A P O R E
=================
MOBILE & WIRELESS: To Pay First and Final Dividend on May 13
------------------------------------------------------------
Mobile & Wireless Group Pte Ltd, which is in creditors' voluntary
liquidation, will pay the first and final dividend on May 13,
2009.
The company's liquidators are:
Chee Yoh Chuang
Lim Lee Meng
c/o Stone Forest Corporate Advisory Pte Ltd
8 Wilkie Road
#03-08 Wilkie Edge
Singapore 228095
===============
T H A I L A N D
===============
G STEEL: Moody's Downgrades Corporate Family Rating to 'Ca'
-----------------------------------------------------------
Moody's Investors Service has downgraded the corporate family and
senior unsecured ratings of G Steel Public Company to Ca from
Caa3. The outlook for the ratings is negative.
"The downgrade reflects Moody's concern regarding G Steel's very
tight liquidity, weak asset coverage, and high probability of
default," says Kathleen Lee, a Moody's Vice President.
"In the wake of the dramatic deterioration in G Steel's business
operating environment, there has been a sharp decline in demand
and prices for the company's processed steel products; this has
caused a significant erosion of cash flow generation and very
tight liquidity," says Lee, also Moody's lead analyst for the
company.
"As a result, the company's ability to repay interest payments on
outstanding bonds and the amortized loan repayment due 2009 is
highly uncertain," she adds.
The downgrade to Ca therefore reflects the low expected recovery
rate for bond holders.
The previous rating action with regard to G Steel was taken on
March 6, 2009, when the company's corporate family and unsecured
debt ratings were downgraded to Caa3 with a negative outlook.
Headquartered in Bangkok, G Steel Public Company Limited is
Thailand's second largest hot rolled coil steel manufacturer and
distributor.
Founded in 1995, G Steel's only started producing steel products
in late 1999; the start-up thus straddled the worst period of the
Asian crisis. G Steel completed a rehabilitation program in
September 2003 and changed its name to G Steel Public Co Ltd in
March 2004 from Siam Strip Mill Public Co Ltd. Restructured debt
was subsequently pre-paid and an IPO completed in January 2006.
===============
X X X X X X X X
===============
* IMF Sees Long Path to Asian Recovery
--------------------------------------
The global crisis has hit Asia hard, and it may take some time
before the region's economies recover, the International Monetary
Fund (IMF) said in its latest report on Asia and the Pacific. The
report cautions that forceful countercyclical monetary and fiscal
policies will consequently need to be sustained through 2010. It
also warns that Asia will eventually need to rebalance its growth
from exports to domestic demand, since consumption in advanced
countries may remain weak for years to come.
"The spillovers from the global crisis have impacted Asia with
unexpected speed and force," according to the Regional Economic
Outlook (REO) for Asia and Pacific, which was released in
Singapore on May 6. "The downswing has been even larger than in
other regions, and sharper than at the epicenter of the global
crisis." In fact, GDP in Emerging Asia excluding China and India
fell at an astonishing 15 percent annual rate (seasonally
adjusted) in the fourth quarter of 2008, and a further decline
most likely took place in the first quarter of this year as well.
This severe impact is explained by the exceptional nature of
Asia's integration into the global economy:
* Asia's growth has been reliant on exports, especially of
technologically sophisticated goods such as motor vehicles
and IT products – precisely those products for which
worldwide demand has collapsed.
* Asia's growth has also been fueled by international financial
flows, including corporate borrowing on international markets
and foreign investments in local securities. These trends
are working in reverse, now that financial systems in
advanced countries are deleveraging.
These external shocks and stresses will make it difficult for the
region to recover. As long as exports remain depressed, private
investment will remain low. Meanwhile, consumption will be
hampered by growing unemployment as firms retrench in order to
restore profitability. So, a sustained recovery will need to
await an improvement in the global economy – which the IMF does
not expect before the middle of 2010. Accordingly, the IMF
forecasts that Asian growth will decelerate to 1.3 percent in 2009
before rebounding to 4.3 percent in 2010, still well below
potential and the 5.1 percent rate recorded in 2008.
What can Asian policymakers do to support economies in these
difficult circumstances? The REO recommends:
-- Sustaining policy stimulus. In many cases, there is
scope for reducing interest rates further, and for
adopting unconventional policies—such as flooding
banking sectors with liquidity or intervening to
support credit flows—as done in advanced countries.
In addition, the fiscal stimulus provided in 2009
could be sustained into next year, while being placed
in a medium-term framework that ensures a gradual
return to fiscal rigor. Finally, authorities will
need to maintain foreign exchange liquidity, drawing
where necessary on bilateral swap lines or the IMF's
new Flexible Credit Line, which provides qualifying
countries with large upfront assistance with no
policy conditions.
-- Rebalancing growth. The past year has provided an
ample demonstration of the dangers of relying solely
on one growth engine. Moreover, the export model may
not pay the same dividends as in the past, for households
in advanced economies now need to save more, rather than
spend. So, policy makers will need to rebalance growth
toward domestic demand, for example by reforming tax and
financial systems, and building strong social protection
systems that will reduce the need for precautionary
savings to meet health, education, and retirement
expenses.
In the three analytic chapters, the REO deepens its analysis of
the implications of the current global crisis for the region.
Chapter II, entitled "Recessions and Recoveries in Asia: What can
the Past Teach Us about the Present Recession?", examines past
recessions and recoveries in Asia. The chapter finds that:
* Recessions accompanied by financial stress, notably in
domestic banking sectors, are substantially longer and
deeper than the norm;
* Deep recessions have resulted in substantial and
long-lasting declines in potential growth;
* Recoveries have tended to rely on exports, which explains
why they have typically been weaker than in other emerging
markets, where the contribution from domestic demand has
been stronger.
The chapter concludes that for Asia to minimize the depth and
duration of the current downturn, it needs to preserve the
stability of the core banking system and help sustain domestic
demand to compensate for the expected weak recovery in exports.
Chapter III, "How Vulnerable is Corporate Asia?", analyzes the
impact of the current crisis on the corporate sector in the
region. Key findings include:
* The collapse of global demand is likely to lead to a surge
in corporate sector defaults, which will spill over into
the banking sector;
* Under the baseline scenario, losses are likely to be
manageable, largely because Asian corporates entered the
crisis in robust financial health;
* But if global demand plunges anew, the ranks of defaulters
could grow to uncomfortably high levels, and Asia could
become trapped in an adverse feedback loop in which the
losses in the corporate and banking sectors imperil each
other;
* So, prudence would suggest taking pre-emptive measures,
especially to shore up banking capital and improve
bankruptcy procedures.
Chapter IV, "Resolving the Global Financial Crisis: Japan's Lost
Decade in Translation," discusses Japan's experience during the
1990s and explores its implications for efforts to deal with the
current crisis. It concludes:
* As long as the economy remains weak, fiscal stimulus needs
to be sustained, centered on high-impact areas, and
reversed only when clear signs of recovery emerge;
* Direct measures to jump-start dysfunctional credit markets
may be warranted, but they need to placed in a framework
with well-defined objectives and a credible exit strategy
that is communicated clearly to markets and the public;
* Even then, unconventional tools are not a panacea, as there
are side-effects, including reduced incentives for
restructuring;
* Indeed, Japan did not recover until forceful steps were
taken to recapitalize the banks and restructure the debts
of distressed borrowers, thereby eliminating the excesses
of labor, debt, and capacity that had built up in the bubble
period.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
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., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland, USA. Pius Xerxes V. Tovilla, Valerie C. Udtuhan,
Marites O. Claro, Rousel Elaine C. Tumanda, Joy A. Agravante,
Marie Therese V. Profetana, Frauline S. Abangan, and Peter A.
Chapman, Editors.
Copyright 2009. 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.
TCR-AP subscription rate is US$625 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 US$25 each. For subscription information, contact
Christopher Beard at 240/629-3300.
*** End of Transmission ***