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/raid1/www/Hosts/bankrupt/TCRAP_Public/980202.MBX T R O U B L E D C O M P A N Y R E P O R T E R Asia & Pacific Edition Monday, February 2, 1998, Vol. 1, No. 1 Headlines C H I N A BEIJING TUNING DEVICE PLANT JINGSHENG COPPER TUBING COMPANY LIMITED MANSION HOLDINGS RIHUA NO 1 CHEMICAL INDUSTRY PLANT WUZHOU POWER SUPPLY PLANT XINYUE BRONZE PIPE PLANT H O N G K O N G CA PACIFIC SECURITIES PEREGRINE INVESTMENTS HOLDINGS LTD. J A P A N DIANA GILKEN KK HOKKAIDO TAKUSHOKU BANK LTD. JUROKU BANK KANSAI KISEN HAISHA MITSUBISHI ELECTRIC CORP. NAMCO LTD. NIKKO SECURITIES CO. NITTO KOGYO COMPANY NL FINANCE CO., LTD. SANYO SECURITIES CO. SHIN NIKKEI CO. TAKUGIN TEITO SHOKEN TOTOKU ELECTRIC CO. YAMAICHI INFORMATION SYSTEM YAMAICHI SECURITIES K O R E A BOSSUNG CONSTRUCTION CO. CHONG GU CONSTRUCTION CO. CHUNG KWANG IND. CHUNGSOL MERCHANT BANK CORYO MERCHANT BANK DONG SUNG GYONGNAM MERCHANT BANK HALLA GROUP HANGDO MERCHANT BANK HANWHA MERCHANT BANK HYOSUNG MOTORS AND MACHINERY HYUNDAI GROUP JINRO COORS BREWING CO. KIA MOTORS KUKDONG CONSTRUCTION CO. KYUNGIL MERCHANT BANK POSONG CO. SAMMI STEEL CO. SAMSAM MERCHANT BANK SAMSUNG ELECTRONICS CO. LTD. SAMYANG FOODS CO. LTD. SEO KWANG CONSTRUCTION IND. SHINHAN MERCHANT BANK SHINSIGAE MERCHANT BANK SSANG BANG WOOL SSANGYONG MERCHANT BANK O C E A N I A PT. ADHI KARYA PT. WIJAYA KARYA T H A I L A N D BANK OF SIAM HANBO STEEL CORP. HWA KAY THAI HOLDINGS LTD ========= C H I N A ========= BEIJING TUNING DEVICE PLANT --------------------------- Because of poor management and asset shortages, as well as its inability to service debts, the Government of China has decided to liquidate Beijing Tuning Device Plant in order to transfer the concern's assets and restructuring debts. See http://www.chinanews.com/eng_dir/9712/1217.html (China News Service 12/17/97). JINGSHENG COPPER TUBING COMPANY LIMITED --------------------------------------- The shareholding enterprise Jingsheng Copper Tubing Company is jointly operated by the China National Non-Ferrous Metals Industry Corporation and Xinyue Copper Tubing Plant. The company, which specialises in red copper products, has made losses since it began operations, and had debts of RMB73.12m by May, 1997. The company was declared bankrupt by the Beijing Higher People's Court for failing to meet debts and is slated for auction. See http://www.chinanews.com/eng_dir/9712/1217.html (China News Service 12/17/97) MANSION HOLDINGS ---------------- Mansion Holdings says it is experiencing liquidity problems and will have difficulty servicing hundreds of millions of dollars in bank borrowings. Mansion said it had unaudited utilised bank loans and trade facilities amounting to $513 million as of December 15. Its unaudited cash balances at that date were $26 million. Trust receipt loans and other bank loan repayments of $249.5 million had become overdue as of January 20. A further $110.5 million would become uverdue within three months. This compared with the company's audited consolidated net tangible assets as at December 1996 of $291.7 million. Mansion said it was discussing a restructuring with bankers and had appointed Coopers & Lybrand as independent reporting accountants to evaluate its financial position and future cash flow projections. A report is due by the end of January or early February. The company also said a mainland enterprise, China Success International Investment (Group), had agreed to subscribe for a $13.96 million secured note. The note was convertible into 87.28 million new shares, representing about 14.8% of the company's enlarged issued share capital. (South China Morning Post 01/21/98) RIHUA NO 1 CHEMICAL INDUSTRY PLANT ---------------------------------- Beijing-based and state-owned Rihua No 1 Chemical Industry Plant will be liquidated because of poor management and asset shortages, as well as Rihua's inability to service debts. See http://www.chinanews.com/eng_dir/9712/1217.html (China News Service 12/17/97). WUZHOU POWER SUPPLY PLANT ------------------------- The Changhong Electronics Group, China's largest color TV producer, is pulling together the details to take over Sichuan's largest enterprise ever to go bankrupt, the Wuzhou Power Supply Plant, in a 72.5 million yuan purchase agreement. (Xinhua English Newswire 01/30/98) XINYUE BRONZE PIPE PLANT ------------------------ Xinyue Bronze Pipe Plant, a copper tubing producer in North China, accumulated debts of RMB135million between 1991 and May, 1997. The State owned plant is slated to to be auctioned after being declared bankrupt by the Beijing Higher People's Court for failing to meet debts. See http://www.chinanews.com/eng_dir/9712/1217.html (China News Service 12/17/97) ================= H O N G K O N G ================= CA PACIFIC SECURITIES --------------------- Financial Services Secretary Rafael Hui said following the collapse of CA Pacific Securities Ltd the compensation fund available to victims of brokerage collapses will be expanded. Hui told a news conference yesterday that the upper limit of 8 mln hkd available for a payout to investors of a failed stockbroker will go up. However, he said he is unable to announce the new upper limit, as this depended on the results of investigations into the failure of CA Pacific. Hui said the new limit will be set after the firm's liquidators "work out a reasonable figure" based on the compensation demands of some 6,000 investors who lost out when CA Pacific collapsed last week. Stock exchange authorities and the Securities and Futures Commission will each inject 150 mln hkd into the compensation fund, boosting it from its current 480 mln, Hui added. C.A. Pacific Finance Ltd owes 20 financial institutions debts totalling 570 mln hkd, according to statments made by provisional liquidators Denis Ho and Jan Blaauw earlier this month. The provisional liquidators told reporters at a news conference that CA Pacific Securities has 2,000 clients, while CA Pacific Finance has 9,000. They added that a preliminary report on the liquidation will be completed within six months. Securities and Futures Commission chairman Anthony Neoh said the market value of shares owned by the CA Pacific and pledged as collateral to creditors was worth about 1 bln hkd as of last Friday. "One of the tasks of the provisional liquidators is to ensure that all investors in the securities company and clients in the finance company register their claims," Neoh said. * * * On Monday, the Stock Exchange of Hong Kong invited claims againstthe Unified Exchange Compensation Fund for losses incurred by clients of CA Pacific Securities. The claims can be for pecuniary loss incurred in the course of or in connection with CA Pacific Securities' stockbroking business; or in relation to any money, securities or other property entrusted to CA Pacific Securities or any of its employees. Claimants must complete a claim form and produce evidence substantiating their claims to the Exchange's Compensation Committee. Claim forms are obtainable in person or through the post at the following offices of the Hong Kong Stock Exchange: (a) 1st Floor, One and Two Exchange Square; (b) 36th Floor, Jardine House; (c) 17th Floor, Worldwide House, 19 Des Voeux Road, Central; and (d) Upper Ground Floor, V-Heun Building, 128-140 Queen's Road Central All claims must be submitted not later than 5 pm on Friday, May 1, 1998. The Exchange's hotline, 2840 3729 will answer investors' queries between 9 am and 5 pm. PEREGRINE INVESTMENTS HOLDINGS LTD. ----------------------------------- Banque Nationale de Paris is poised to acquire Peregrine Investments Holdings Ltd's equity operations in Hong Kong and China, the South China Morning Post reported last week. The newspaper quoted senior Peregrine equity executives as saying that group managing director Francis Leung will come with any acquisition of the equity business. Executives from Peregrine's international operations will make a last ditch effort to find a buyer for the regional equity operations, with another European bank said to be interested. The South China Morning Post said the price agreed by BNP is not known but senior managers within Peregrine's Hong Kong and China team are "said to have lobbied for a deal with the French bank." By Friday, in Hong Kong, senior BNP officials in Paris were claiming a deal had been concluded for Peregrine's equity franchise, the newspaper reported. ========= J A P A N ========= DIANA GILKEN KK --------------- Teikoku Data Bank said privately held property developer Daina Giken KK and two affiliates have filed for self liquidation with the Tokyo District Court. The Daina group reports debts of 12.3 bln yen, and attributes its collapse largely to funding difficulties stemming from its failure to achieve a restructuring. (AFX News 01/20/98) HOKKAIDO TAKUSHOKU BANK LTD. ---------------------------- Hokkaido Takushoku Bank Ltd., one of Japan's top 10 commercial banks, collapsed, marking the country's worst banking failure since World War II. Executives of the Sapporo-based Hokkaido Takushoku Bank announced that their institution was effectively bankrupt. All of the bank's senior executives formally resigned after the announcement. The bank's president, Sadamasa Kawatani blamed Hokkaido Takushoku's woes on bad loans made during the speculative 1980s. Kawatani said his bank's operations and assets, excluding non-performing loans, would be transferred to North Pacific (Hokuyo) Bank Ltd., a regional bank on the northern island of Hokkaido, "in a few months." (TCR 11/18/97) Last week, the Mainichi newspaper reported that Finance Ministry bank inspector Toshimi Taniuchi, arrested recently in a bank-related bribery case, helped failed Hokkaido Takushoku Bank Ltd. obtain large tax deductions related to the bank's bad loans at the bank's request. The newspaper report failed to cite sources. Before April last year, banks were allowed to deduct bad loans that inspectors judged were "uncollectable," or "hard to collect." Takushoku Bank declined to comment on the matter, the paper said. JUROKU BANK ----------- Gifu-based Juroku Bank plans to disclose the nonperforming loan total of all the companies in the group, including businesses involved in credit card and leasing operations, for the fiscal term ending in March 1998. This covers 11 companies, including: * Juroku DC Card, * Juroku JCB, and * Juroku Lease. The nonperforming loan amount will be split into three categories: loans to failed borrowers, loans in default, and loans exempted from full interest. The bank will apply consolidated concepts to nonperforming loans in an effort to raise the clarity of operations. Juroku Bank is the first financial institution in all of Japan to announce a groupwide nonperforming loan summation. (Tokyo Financial Wire; 01/29/98) KANSAI KISEN HAISHA ------------------- Shares in Kansai Kisen Kaisha fell 18 yen to 91 in trading Friday. According to Bloomberg News, the ship operator widened its pretax loss forecast 120 percent to 550 million yen for the full year ending in December -- 22.2% less than the most recent forecast by Toyo Keizai. MITSUBISHI ELECTRIC CORP. ------------------------- Standard & Poor's lowered the short-term credit rating for Mitsubishi Electric Corp. to A-2 from A-1, citing the waning competitiveness of the firm's semiconductor and consumer electronics businesses. NAMCO LTD. ---------- Moody's Investors Service said it placed Namco Ltd's Baa1 senior unsecured long-term debt and counter party ratings under review for possible downgrade. Moody's said the move was prompted by the accouncement earlier that Namco Cybertainment Inc, Namco's wholly-owned unit, filed for restructuring under Chapter 11 of the U.S. Bankruptcy Code. The review will consider the potential impact that the bankruptcy of the U.S. subsidiary may have on the company's operation, as NCI contributed about 9% of Namco's consolidated sales. Moody's said the move will affect Namco's outstanding debt, totalling 40 bln yen. NIKKO SECURITIES CO. -------------------- As President Masashi Kaneko and former Managing Director Hiroyuki Hamahira were questioned at a budget committee of the lower house in parliament in connection with making alleged illegal payoffs to lawmaker Shokei Arai, shares in Nikko Securities Co. fell 50 yen to 456, according to a report published by Bloomberg News. NITTO KOGYO COMPANY ------------------- Nitto Kogyo Company, owing 276 billion yen to creditors, together with its golf course management subsidiary, The Nitto Life Company, owing 69 billion yen in debts, applied for a court-mediated settlement with its creditors in the Tokyo District Court, according to a report published by Bloomberg News. Nitto, boasting membership in excess of 73,000 golfers, owns and operates 30 golf courses in Japan, five in the United States. Prior to making its application in the Tokyo District Court, Nitto sold the Sottish Turnberry Hotel to Starwood Lodging Corp. for approximately $51.5 million. (TCR 12/30/98) NL FINANCE CO., LTD. -------------------- Matsushita Electric Industrial Co., Ltd. announced Thursday its decision to liquidate its subsidiary NL Finance Co., Ltd. NLF, an Osaka-based wholly-owned subsidiary of MEI, was established in March 1992 for the purpose of collecting outstanding loan receivables transferred from the former National Leasing Co., Ltd., another subsidiary of MEI. As announced by MEI in February 1997, an aggravated business environment triggered by a decline in real estate mortgage values and business failures of various debtors forced NLF to write down a substantial part of its loan portfolios, resulting in a substantial loss, and in March 1997 MEI wrote off its outstanding loan to NLF in the amount of 100 billion yen and its 4 billion yen investment in share capital of NLF. Thereafter, NLF has concentrated its efforts on collecting and settling its outstanding loan receivables and it has now reached a point in which all matters can be conclusively settled. In connection with the liquidation of NLF, MEI will incur a liquidation loss. While the exact amount of the loss is not yet determined, on a non-consolidated (parent company alone) basis the amount is expected to total some 120 billion yen. MEI intends to cover the loss through the use of non- recurring profit realized from the sale of a part of its securities portfolios, and the above measures are not expected to have a material effect on MEI's parent-alone earnings for the current fiscal year, ending March 31, 1998. On a consolidated basis, as well, the liquidation of NLF will not have a material adverse effect on the Matsushita group's consolidated earnings for the current fiscal year. Matsushita Electric Industrial Co., Ltd. is better known for its "Panasonic," "National," "Technics" and "Quasar" brand names. SANYO SECURITIES CO. -------------------- Sanyo Securities Co. announced it had obtained court protection from its creditors and that it is giving up on trying to free itself from a crushing debt burden. Sanyo said it will stop all business operations except customer withdrawals, and make "utmost efforts" to restructure under the protection of the Tokyo District Court, which will appoint an administrator. (TCR 11/06/97) SHIN NIKKEI CO. --------------- Shin Nikkei Co. shares dropped 15 yen to 131 in trading Friday. The building material maker widened its pretax loss forecast 58.3 percent to 9.5 billion yen for the full year ending in March -- 58.3% lower than the most recent forecast by Toyo Keizai, according to Bloomberg News. TAKUGIN TEITO SHOKEN -------------------- Takugin Teito Shoken, a nonbank affiliate of the failed Hokkaido Takushoku Bank (Takugin ) has applied to the Sapporo regional courts for voluntary bankruptcy. Total losses are 539.1 billion yen. Excess liabilities are 205.2 billion yen. Takugin had been supporting the securities firm for four years. The peak lending balance in March 1994 was 528.1 billion yen, and the sales balance was 180.3 billion yen. But after the bubble collapsed and land prices tumbled, the firm's performance worsened. (TCR 11/20/97) TOTOKU ELECTRIC CO. ------------------- Shares in Totoku Electric Co. fell 19 yen to 285 in trading on Japanese exchanges Friday. The company widened its pretax loss forecast 172.7% to 1.50 billion yen for the full year ending in March. That's 114.3 percent less than the most recent forecast by Toyo Keizai, according to Bloomberg News. YAMAICHI INFORMATION SYSTEM --------------------------- Yamaichi Information System and Yamaichi Research Institute have both filed applications with the Tokyo District Court for liquidation, Teikoku Data Bank told AFX News service today. Teikoku said Yamaichi Information had debt of 45 bln yen and Yamaichi Research Institute 6.0 bln yen. The move follows Yamaichi Securities' decision last year to wind up its operations following the booking of off-balance sheet losses. YAMAICHI SECURITIES ------------------- One of Japan's "big-four" securities companies has announced that it is effectively insolvent and will decide Monday whether or not to close its doors. A statement issued today by the 100-year-old Yamaichi Securities company in Tokyo said: "We are currently discussing the options, including a voluntary closure, but we have reached no conclusion yet." The statement said the company does not have a deficit in its capital account, and its first priority is to protect its clients. Atsushi Nagano of the Finance Ministry's Securities Bureau told reporters at an emergency news conference the ministry will take what he termed "appropriate steps," based on Yamaichi's final decision. Nagano said the government suspects the company of having been less than honest about its true financial condition, having liabilities in excess of 200 billion yen ($1.59 billion) on its balance sheets. Nikkei News said Yamaichi had debts of about 3 trillion yen, or $24 billion. (TCR 11/25/97) The Nihon Keizai reported in December 1997 that Japan's Sumitomo Bank Ltd. and Paris-based Societe Generale will buy as much as a 90% stake in subsidiary Yamaichi International Capital Management Co. (TCR 12/11/97) Last week, Yamaichi Securities Co. announced that it would dismiss 1,990 employees, or about 23 percent of its workforce, and close 19 domestic branches, the Nihon Keizai newspaper reported. Those layoffs will be followed by the firing of 2,345 more employees and close 57 more branches at the end of February, with the remaining branches to be closed and all but 300 employees to be dismissed by the end of March. The brokerage has canceled contracts for about 3.5 trillion yen ($27.46 billion) of the remaining 5 trillion yen in assets it holds, and is in the process of returning stock and other certificates to investors, the paper said. In trading on the Tokyo exchange Friday, YSC's shares rose 1 yen to 3 yen on speculation that shareholders would receive a dividend in March. According to Bloomberg News, the Company denied that speculation. ========= K O R E A ========= BOSSUNG CONSTRUCTION CO. ------------------------ Bosung Construction Co. is a construction firm reportedly gone bust, leading to a reduction in the overall supply of new homes. (The Korea Herald News 01/27/98) CHONG GU CONSTRUCTION CO. ------------------------- Chong Gu Construction Co. and three other key subsidiaries of the Chong Gu conglomerate announced that they will default on $9.9 million in maturing debts and are asking a court to help reschedule debt payments and allow time to unload assets. Chong Gu is South Korea's leading apartment builder, The concern borrowed heavily in the early 1990s to build a department store in Seoul and open a regional television network in the central provincial city of Taegu. The group's debts total $713 million, roughly the amount of its total sales last year. Apartment sales this year did not meet expectations. (TCR 12/30/97) The company is also known as Chonggu Construction Co. (The Korea Herald News 01/27/98) CHUNG KWANG IND. ---------------- Chung Kwang Ind., a leading name in animal feed manufacturing, requested court mediation after its preliminary bankruptcy, failing to honor 500 million won worth of promissory notes. (The Korea Herald News 12/22/97) CHUNGSOL MERCHANT BANK ---------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. CORYO MERCHANT BANK ------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. DONG SUNG --------- Dong Sung, a construction firm affiliate of Hyosung Motors and Machinery, went belly up after it failed to honor 6 billion won in promissory notes. (The Korea Herald News 12/22/97) GYONGNAM MERCHANT BANK ---------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. HALLA GROUP ----------- Halla Group, South Korea's 12th-largest conglomerate and best known for its shipbuilding and auto parts manufacturing, was declared bankrupt Saturday after defaulting on $220 million in debts. Halla is the sixth among the country's top 30 conglomerates to topple this year. In total, the conglomerate is estimated to owe $6.4 billion, or 20 times the total value of its equity, according to Associated Press reports. Debts began accumulating when Halla began building a multibillion-dollar shipyard on the southwest coast in 1992. Its troubles came to a head when Southeast Asian financial turmoil hit South Korea, sending interest rates higher and making already debt-ridden South Korean banks reluctant to lend. This month, saying it was badly strapped for cash, Halla announced it would lay off half of its 6,000 workers. (TCR 12/09/97) HANGDO MERCHANT BANK -------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. HANWHA MERCHANT BANK -------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. HYOSUNG MOTORS AND MACHINERY ---------------------------- Hyosung Motors and Machinery, a motorbike manufacturing company, was declared bankrupt by its creditors Saturday after it failed to honor promissory notes of 4 billion won. (The Korea Herald News 12/22/97) HYUNDAI GROUP ------------- As part of its restructuring program, the Hyundai Group will suspend or postpone all new business projects, including the construction of an integrated steel plant, Park Se-yong, president of the group's planning and coordination office, announced. Hyundai is Korea's biggest conglomerate in terms of total assets. Hyundai will also withdraw its management control of the vernacular daily newspaper, the Munhwa Ilbo. The giant business empire has meanwhile no intention to take over subsidiaries of its ailing sister Halla Group. Meeting with the press, Park said that the business group has decided to shelve its long-wished project to build a large steel plant as it requires too much money at a time when the nation needs to implement a retrenchment policy in return for the IMF bailout loan. To focus all of its energy only on core businesses, Hyundai will pull out from its operations of the Munhwa Ilbo, Se-yong said. Hyundai will also introduce outside directorship at all of its subsidiaries on a gradual basis in order to enhance managerial transparency. (The Korea Herald News 01/20/98) Hyundai also faces labor and union issues. Hyundai union leaders, according to an article appearing in the International Herald Tribune, the solution to Korea's economic crisis lies in getting rid of the leadership of the chaebol, premised on a belief among union members that the owners of the chaebol are primarily responsible for the overexpansion that led to Korea's economic crisis. Union leaders, the IHT says, assert that "new management, not family management," is their first demand. Friday, a report circulated that South Korea's President- elect has recommended that Hyundai turn over its chip operations to rival Samsung Electronics Co. Ltd. in exchange for Samsung's fledgling automotive operation, according to a report in Monday's Electronic Buyers' News. The report can be found on the publication's Web site at: http://techweb.cmp.com/ebn/942/daily/013098news10.html A Samsung spokeswoman in Seoul confirmed today President- elect Dae-Jung Kim's proposal, which the two companies are calling "The Big Deal." The two conglomerates "are studying the proposal but have many questions on it," the spokeswoman told CMP Media's Electronic Buyers' News. The spokeswoman also indicated that antitrust issues exist. A spokesman for Hyundai in San Jose this week stressed that the company had no intentions of giving up its core DRAM business. JINRO COORS BREWING CO. ----------------------- Jinro Coors Brewing Co. of Korea will be bailed out through its joint venture with Coors Brewing Co. of the United States, according to a Jinro spokesman. Jinro Coors is part of the Jinro Group that went bankrupt in early November, 1997. Creditors are expected to cooperate in salvaging the flagship company Jinro Ltd. and Jinro Coors. (TCR 09/16/97) KIA MOTORS ---------- With more than $10 billion in debt, Kia was declared near bankrupt in July, 1997. In Octoer, 1997, the government said it would place Kia under court receivership, assume majority ownership through a state-controlled bank and install a temporary new management team. (TCR 11/06/97) Despite filing for court protection last year, Kia, the nation's third largest auto maker, continues aggressive marketing efforts in Aisa, Europe and the USA. See http://203.255.151.12/kh0116/m0116b10.html Kia announced its reorganization plan last week, premised on selling off most of its unprofitable subsidiaries while attempting to raise 1 trillion won ($580 million) from foreign and domestic investors. To raise the money, Jin Nyun, Kia's chairman, has appealed Ford Motor Co., which owns 7.3 percent of Kia Motors Corp.'s shares, to raise its stake in the company, according to a report published in the International Herald Tribune. Ford continues to refuse comment relative to Kia. Failing Ford's acceptance of Nyun's bid, Kia places its hope in large part on the government-owned Korea Development Bank, Kia's principal creditor, accepting payment of its loans in the form of shares in Kia. The plan would turn Kia into a company largely owned by the government, but Mr. Jin made clear he believed the company would soon resume making profit after posting a loss last year. He also said he would welcome new investment (perhaps from General Motors, Daewoo or Samsung) that would free Kia from government control. KUKDONG CONSTRUCTION CO. ------------------------ Kukdong Construction Co. is a construction firm reportedly gone bust, leading to a reduction in the overall supply of new homes. (The Korea Herald News 01/27/98) KYUNGIL MERCHANT BANK --------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. POSONG CO. ---------- Posong Co. and one of its affiliates, Posong Construction, have decided to ask the court to arrange reconciliation with their creditor banks as they couldn't stand financial difficulties any longer. Posong Co., founded in 1974, is one of the three leading contractors of the Taegu area, the two others being Cheonggu, which has already asked for reconciliation with its creditors, and Woobang. Besides Posong Construction, Posong Co. has nine other affiliates which include Posong Housing, Posong General Construction, Posong Development, Maewon Development (golf course) and the Daily Taegu Ilbo companies. The total turnover of the Posong and its 10 affiliates was 673.6 billion won in 1996 and their combined assets 1.1 trillion won as of the end of 1996. Currently, Posong Co. is building a total of 10,581 apartment units in 17 areas and carrying out civil engineering projects at 16 sites. (The Korea Herald News 01/14/98) SAMMI STEEL CO. --------------- The future of the bankrupt Sammi Steel Co., is uncertain as officials attempt to implement a protocol to facilitate negotiations between creditor banks of the steelmaker and potential buyers. Currently, Inchon Iron and Steel Co. and a consortium led by Pohang Iron and Steel Co. are two of the main contenders to take over Sammi. (The Korea Herald News 01/22/98) SAMSAM MERCHANT BANK -------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. SAMSUNG ELECTRONICS CO. LTD. ---------------------------- During the past month, South Korea's leading conglomerate Samsung Group has announced plans that: (1) its chairman, Lee Kun-Hee, would inject 100 billion won (62.5 million dollars) of his personal wealth into the group to improve its financial standing; (2) Samsung will concentrate on semiconductors and finance as its core businesses; (3) Samsung will eliminate cross-loan guarantees between its affiliated companies by the end of next year; (4) the group plans to float its core business, Samsung Electronics Co., on the New York Stock Exchange by 2002 after improving its managerial transparency and financial status to meet international standards; and (5) Samsung will work to lower the group's overall debt to equity ratio from the current 2.67 to one to 1.5 to one within five years, partly through scrapping a costly plan to build a 102-storey office building. Samsung made these pledges in a restructuring program Samsung announced to meet the demand of the International Monetary Fund (IMF) that South Korea's bloated, family- controlled conglomerates should be reformed. Samsung further agreed to start producing consolidated financial statements from the year 2000 to enhance managerial transparency by enabling investors to see through the financial situation of all Samsung subsidiaries. (Agence France-Presse; 01/21/98) Last Friday, a report circulated that South Korea's President-elect has recommended that Hyundai turn over its chip operations to rival Samsung Electronics Co. Ltd. in exchange for Samsung's fledgling automotive operation, according to a report in Monday's Electronic Buyers' News. The report can be found on the publication's Web site at: http://techweb.cmp.com/ebn/942/daily/013098news10.html A Samsung spokeswoman in Seoul confirmed today President- elect Dae-Jung Kim's proposal, which the two companies are calling "The Big Deal." The two conglomerates "are studying the proposal but have many questions on it," the spokeswoman told CMP Media's Electronic Buyers' News. The spokeswoman also indicated that antitrust issues exist. A spokesman for Hyundai in San Jose this week stressed that the company had no intentions of giving up its core DRAM business. SAMYANG FOODS CO. LTD. ---------------------- South Korea's Samyang Foods Co. Ltd. said Friday that it would file an application with a Seoul district court for mediation to restructure its debt. The company said it will also seek court mediation or court receivership for some of its unlisted units. A company spokesman said the company had been suffering from a drop in sales and heavy short-term debt. Samyang, with paid-in capital of 7.2 billion won (4.5 million dollars), recorded sales of about 153 billion won from January to June last year. The Korea Stock Exchange said it had suspended trading in the shares of Samyang Foods since Friday afternoon. (Agence France-Presse 01/30/98) SEO KWANG CONSTRUCTION IND. --------------------------- A listed construction firm, Seo Kwang Construction Ind., declared insolvency, causing further alarm in the construction secto. (The Korea Herald News 12/22/97) SHINHAN MERCHANT BANK --------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. SHINSIGAE MERCHANT BANK ----------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. SSANG BANG WOOL --------------- U.S. pop star Michael Jackson flew to South Korea recently to discuss an investment in a ski resort owned by a South Korea's bankrupt underwear-maker, Ssang Bang Wool, according to a report published by the Associated Press. (TCR 12/30/97) SSANGYONG MERCHANT BANK ----------------------- One of ten merchant banks declared insolvent by the Ministry of Finance and Economy on Friday, January 30, 1998. The MoFE has ordered the bank to close and has scheduled a hearing for revocation of the bank's business license. ============= O C E A N I A ============= PT. ADHI KARYA -------------- PEFINDO lowered the corporate credit rating of PT. Adhi Karya (ADIK) to idB+/Negative from idBBB/Negative. PEFINDO notes that more than 80% of ADIK's construction revenue are subject to diminution attributable to reduced government spending. The company's debt to capitalization ratio has already reached more than 75% during the last few years, and is expected to be worse in 1997 and 1998. With dollar- denominated debt amounting to USD 121 million at end 1997, ADIK is under the pressure of sharp rupiah depreciation and high interest rate environment. PT. WIJAYA KARYA ---------------- PEFINDO issued a downgrade on the long-term debt credit rating of PT. Wijaya Karya (WIKA) to to idB+/Negative from idBBB/Negative. The downgrade reflects an anticipated drop in WIKA's government-related construction projects, which account for more than 70% of its construction revenue. These include the IDR 500 billion Cileunyi-Nagreg Toll Road project which has been delayed by the Government, under current fiscal austerity program. The company's short dated debt maturity profile and its uncertain ability to roll over part of its debt are compounding its financial pressures. Nevertheless, the explicit and implicit government support for WIKA is still believed to provide liquidity support for the company. =============== T H A I L A N D =============== BANK OF SIAM ------------ A Siam City Bank official who asked not to be named revealed to AFX News that the Bank of Thailand is NOT expected to take control of the bank tomorrow as was speculated by the market. AFX's source said the central bank has not yet found the appropriate people. HANBO STEEL CORP. ----------------- On January 23, 1997, Korea's second-largest steel maker Hanbo Steel Corp. defaulted on $6 billion of low-interest, government-controlled loans. This was the first of a string of major corporate failures in 1997 in Thailand and Asia and the beginning of the so-called Asian Flu and Asian Contagion that rocked world financial markets. HWA KAY THAI HOLDINGS LTD ------------------------- Hwa Kay Thai Holdings Ltd said it is in restructuring talks and may have to close if the negotiations fail, according to a report released by AFX News. AFX said Hwa Kay is in talks with potential investors, bankers and a major business partner to restructure its business. Hwa Kay said that if the negotiations are not successful, "the company may not have adequate resources to carry on its business." Hwa Kay said the talks will include the possibility of selling part or all its subsidiary, Yee Hing. Hwa Kay additionally said one of its landlords has served the company with a writ claiming the sum of about 4 mln hkd for nonpayment of rent. The company's shares, which have been suspended since Jan 14, will remain suspended pending further notice, according to the AFX report. In other news, Bankgkok Bank sued Hwa Kay Thai Holdings Ltd executive chairman Wong Chong-shan personally over the repayment of a 40 million USD loan, the South China Morning Post reported. The newspaper said Bangkok Bank is suing Wong, who is also known as Keeree Kanjanapas, for "damages suffered" as a result of his breach of the agreement for the loan. 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 Edition is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington DC. Debra Brennan and Lexy Mueller, Editors. Copyright 1998. All rights reserved. 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 Edition subscription rate is $875 per month delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *