/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/980218.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Wednesday, February 18, 1998, Vol. 1, No. 5 Headlines C H I N A CA PACIFIC: Collapse Sparks Compensation Fund Reforms H O N G K O N G GUANGZHOU-SHENZHEN: Double-B Bond Rating Affirmed by S&P HOPEWELL HOLDINGS: S&P Expected to Rate Debt as Junk I N D O N E S I A INDAH KIAT: US$175 Million Senior Secured Debt Rated Caa1 INTI INDORAYON: US$100 Million Senior Unsecured Debt at Caa1 MATAHARI PUTRA: Standard & Poor's Announces Downgrade POLYSINDO EKA: US$685 Million Senior Unsecured Debt at Caa1 SABAH SHIPYARD: Wing Tiek Files Quarter-Billion Dollar Claim STANDARD TOYO: Chemical Plant Stops Production WESTMONT INDUSTRIES: Restructuring Plan Outlined WESTMONT INDUSTRIES: Wing Tiek Bid to Lift Restraining Order J A P A N ALL NIPPON: Nixing 100 Management Jobs HIROSHIMA BANK: Cutting Costs; Estimating 90% Bad Loans HOKKAIDO TAKUSHOKU: Chuo Trust to Take Over 63 Branches LONG-TERM CREDIT: Layoffs & Closings Underpin Restructuring MITSUBISHI: Japanese Factory Builder Hurt SAILOR PEN: Shares Tumble 10% on Widened Loss Expectations TOHO MUTUAL: Joint Venture with GE Capital TOHO LIFE: GE Capital's Announces Agreement with Toho K O R E A CHEONGSOL MERCHANT: Finance Ministry Revokes License CORYO MERCHANT: Finance Ministry Revokes License GYONGNAM MERCHANT: Finance Ministry Revokes License HANBO STEEL: To Repay Debts over 20 Years HANGDO MERCHANT: Finance Ministry Revokes License HANWHA MERCHANT: Finance Ministry Revokes License KEXIM: S&P Upgrades Ratings KIA MOTORS: Samsung Denies Ford-Assisted Takeover Rumors KOREA FIRST: Korean Government and IMF Agree to Sale of Bank KOREA HOUSING: J.P. Morgan Sues Over Swap Contracts KYUNGIL MERCHANT: Finance Ministry Revokes License MANDO MACHINERY: Equity Interests in Kamco Sold to Bosch POSEC HAWAII: Suspends Senior Project SAMSAM MERCHANT: Finance Ministry Revokes License SAMSUNG HEAVY INDUSTRIES: Volvo Seeks Equipment Business SAMSUNG MOTOR: Denies Ford Helping with Bid for Kia Motors SAMSUNG MOTOR: Strikes 50/50 Deal With Ford Motor Co. SHIN WON: Creditor Banks Extend US$135 in New Loans SHINHAN INVESTMENT: Finance Ministry Revokes License SHINSEGAE INVESTMENT: Finance Ministry Revokes License SSANGYONG MERCHANT: Finance Ministry Revokes License S.K. SECURITIES: J.P. Morgan Sues Over Swap Contracts M A L A Y S I A ALOR SETAR: KLSE Imposes Trading Restrictions BANK BUMIPTURA: Moody's Downgrades from D to E+ BINARIANG SDN.: Cutting 300 Jobs to Improve Performance COMMERCE ASSET: Denying All Merger Rumors MEASAT BROADCAST: Cutting 300 Jobs to Improve Performance OMEGA SECURITIES: KL Bourse Restricts Stock Trading P H I L I P P I N E S DUTY FREE: Files for Suspension of Debt Payments EASTERN TELECOMM: Philippines Commission to Sell ETPI Shares FINANCERIA MANILA: SEC Defers Action on Debt Relief Petition MANILA ELECTRIC: Shares Drop on Adverse Ruling MIDAS DIVERSIFIED: Files for Suspension of Debt Payments ORIENT BANK: Retailer Hopes to Sell; Closes After Bank Run PACIFIC LENDERS: Files for Suspension of Debt Payments PHILIPPINE ASSOCIATED: Government will not Absolve Loan UNIWIDE HOLDINGS: Denies Buy-In Talks with Wal-Mart S I N G A P O R E T H A I L A N D FIRST BANGKOK: GE Capital Seen As Likely Acquiror SIAM CITY: GE Capital Seen As Likely Acquiror THAI AIRWAYS: Staggering First Quarter Loss ========= C H I N A ========= CA PACIFIC: Collapse Sparks Compensation Fund Reforms ----------------------------------------------------- An insurance scheme designed to protect small investors is being developed by finance chiefs in the wake of the closure of the CA Pacific Group. Existing safety nets were "rigid" and could leave investors out of pocket even when they thought they were not taking big risks with their money, Securities and Futures Commission (SFC) chairman Anthony Neoh said yesterday. Neoh revealed that SFC and Stock Exchange officials were working on an insurance scheme to replace the existing Compensation Fund, which proved inadequate for CA Pacific Group clients. The move was welcomed as a necessary confidence booster by one analyst, though any costs were likely to be passed on to investors, he warned. CA Pacific Securities called in liquidators last month, after which it emerged most clients signed margin agreements or authorisations many did not fully understand and which led to them losing money when the firm hit trouble. "As the group went bankrupt, it became clear that clients who should have been protected may not be protected," Mr Neoh said on RTHK's Letter From Hong Kong programme. "As I spoke to some of the investors . . . I could not help but sympathise with their anger and frustration. They would have a claim against the securities firm but liquidation takes time and, realistically, they would only get back a fraction of the value of their investment." Last week the Government relaxed rules and upper limits for the Compensation Fund to help investors, but Mr Neoh wants to go further. "After the CA Pacific case, the industry must do more to earn the greater confidence of investors," he said, urging an "immediate response" to margin lending by unregulated bodies. "The time has, I believe, come for us to consider whether an insurance scheme should be fashioned to replace the compensation fund, which is somewhat rigid." No details of the planned scheme were available, though Mr Neoh cited the US-run Securities Investors Protection Corporation, which offers insurance cover of US$500,000 (HK$3.87 million) per investor and allows brokers to take top-up cover. The current Hong Kong fund has a limit of $8 million in claims against any single registered broker, no matter how many clients are involved. Though a new scheme will not help CA Pacific investors, Mr Neoh said their fight for compensation was on his mind. "I will use every fibre in my being to ensure that payment is made before the summer is out and hopefully sooner than that," he said. Eugene Law Ka-kin, a director of Lippo Securities, said the costs of any new scheme were likely to be passed on by brokers. "Investors would have to pay for this one way or the other. The suggestion appears to be similar to the scheme for the travel agents where a small percentage is levied on each transaction." Compensation funds for investors were not intended to protect people who take extreme risks, but there was room for improvement, he said. "The authorities are trying to make a safety net in correct proportion to the exposure . . . it will be good for the industry by jacking up investors' confidence," Mr Law said. Eight representatives of CA Pacific brokers yesterday went to the Commercial Crime Bureau in Wan Chai, accompanied by Democratic Party politicians, pledging their innocence of any alleged fraud. They said they never lured clients into signing documents allowing the company to transfer assets to its finance arm. (South China Morning Post 01- Feb-1998) ================= H O N G K O N G ================= GUANGZHOU-SHENZHEN: Double-B Bond Rating Affirmed by S&P -------------------------------------------------------- Standard & Poor's affirmed its double-'B' rating on Guangzhou-Shenzhen Superhighway (Holdings) Ltd.'s US$600 million note issue. The rating on the bonds is affirmed, reflecting strong growth in revenues, and notwithstanding the lowering of the rating on parent company Hopewell Holdings Ltd. to double-'B', with a stable outlook, from triple-'B'-minus. The issuer of the notes is a 97.5%-owned indirect subsidiary of Hopewell and the 100% owner of Hopewell China Development Co. Ltd., which, together with the Guangdong Provincial Highway Construction Co., owns the Sino-foreign cooperative joint venture Guangzhou-Shenzhen-Zhuhai Superhighway Company Ltd. The joint venture was formed in 1987 to develop and operate a 123km (76 mile) dual three-lane expressway between Guangzhou and Shenzhen in Guangdong Province, China. Shenzhen is a Special Economic Zone bordering Hong Kong. The issuer is owned by Hopewell subsidiary Delta Roads Ltd.(Delta), a toll road developer with an existing portfolio of six other roads in Guangdong Province. The double-'B' rating and stable outlook assigned at issuance of the bonds in July 1997 was based upon the existence of prefunded interest payments through to August 1999, anticipated steady growth in expressway traffic, and support from Delta and Hopewell. Because of the substantial existing debt at the joint venture, cash flow is not expected to be sufficient to cover note coupon payments until 2002 at the earliest. Cash for the interest payments on the notes is expected to come from Delta or, if Delta has insufficient cash, from Hopewell. Therefore, after the prefunded interest account is drawn down and until residual cash flow from the joint venture can cover interest payments, noteholders are exposed to Hopewell's credit risk. The note indenture allowed Hopewell to withdraw all of the cash from the prefunded interest account and replace it with an irrevocable letter of credit from an acceptable bank. Subsequent to the issue date, Hopewell replaced the prefunded interest account with an irrevocable letter of credit from the New York branch of Hongkong and Shanghai Banking Corp. Ltd. The substitution of the letter of credit for the prefunded interest account does not adversely change the risk of interest repayment on the bonds. S&P said that operating performance for the road for the second half of 1997 was good. Toll revenue increased over 25% compared with the first half of the year, mainly as a result of a 20% base toll rate increase on PRC vehicles and 25% increase on Hong Kong vehicles. Traffic flow has not declined since September 1997, when the toll increase was put in place. Annual daily traffic increased 13% in 1997 over annual 1996 daily traffic. Bondholders, S&P noted, are exposed to both the risk of inconvertibility of the Chinese currency and currency devaluation since there is a mismatch of joint venture revenues in local currency and bond payments in U.S. dollars. There is no automatic indexing of toll rates to accommodate changes in exchange rates, although joint venture contracts allow requests for such increases. To date, the company has experienced no difficulty in converting local currency into dollars, nor in obtaining toll increases. However, the ability of the joint venture to obtain toll increases to reflect currency devaluation is as yet untested. (Standard & Poor's 16-Feb-1998) Hopewell shares closed 1.2 per cent lower at HK$1.61 yesterday. (BusinessWorld 18-Feb-1998) HOPEWELL HOLDINGS: S&P Expected to Rate Debt as Junk ---------------------------------------------------- Hong Kong's Hopewell Holdings, Ltd., is reported to be taking it casually, but Standard & Poor's Ratings Group is expected to drop Hopewell's credit ratings to junk status. Hopewell Chairman Gordon Wu says he's "not overly concerned" about S&P's move because many Asian company's ratings have been cut by S&P. (The Wall Street Journal 17-Feb-1998) The company was placed on CreditWatch with negative implications in September when the government of Thailand announced cancellation of the company's concession to build and operate a mass transit system in Bangkok (Bangkok Elevated Road and Transit System, or BERTS). Since then, the company has announced a write-off of its BERTS investment and intends to legally contest the termination, but will not invest additional funds unless the concession is favorably renegotiated. While Standard & Poor's still has residual concerns about the BERTS project, the main reason for the lower rating is the deterioration in Hopewell's business environment. S&P said that events beyond Hopewell's control, combined with additional debt service obligations, have increased business risk and somewhat reduced financial flexibility. In particular, regional currency instability has markedly increased the risk attached to the company's Indonesian power investment; has further damaged the Hong Kong property environment; and has generally made asset sales -- a past strength -- less reliable as a source of financial flexibility. The current regional currency instability also highlights long-standing currency mismatches inherent in the debt of the company's China roads operations, S&P said. S&P observed that, in late 1997, the company replaced a $120 million prefunded interest account for Guangzhou-Shenzhen Superhighway (Holdings) Ltd.'s bonds with an irrevocable bank letter of credit. The bank in turn has recourse to Hopewell. This has increased debt service requirements that will have recourse to Hopewell over the next two years. Despite deteriorating market conditions, S&P said, Hopewell continues to generate substantial core recurring cash flow from its Hong Kong property portfolio and several of its roads in China. It is expected that Hopewell will withstand market downturns and increased risks. S&P continued saying that the company has good upside potential for future earnings from much of its China roads portfolio. It also continues to own valuable and unleveraged parcels of development land in Hong Kong. The structure of debt, according to S&P, with long-term debt at the project level and manageable amounts of debt with recourse to the parent, strengthen the company. Standard & Poor's believe these strengths will enable Hopewell to sustain itself until business conditions improve and the roads investment becomes strongly cash positive. (Standard & Poor's 16-Feb-1998) ================= I N D O N E S I A ================= INDAH KIAT: US$175 Million Senior Secured Debt Rated Caa1 --------------------------------------------------------- Moody's Investors Service, Inc., downgraded US$175 million of Senior Secured debt issued by P.T. Indah Kiat Pulp & Paper Corp. from B2 to Caa1. Moody's assigns a Caa rating to bonds it considers to be of poor standing. Such issues, Moody's explains, may be in default or there may be present elements of danger with respect to principal or interest. (Moody's 10-Feb-1998) INTI INDORAYON: US$100 Million Senior Unsecured Debt at Caa1 ------------------------------------------------------------ Moody's Investors Service, Inc., downgraded US$100 million of Senior Unsecured debt issued by P.T. Indorayon Utama from B2 to Caa1. Moody's assigns a Caa rating to bonds it considers to be of poor standing. Such issues, Moody's explains, may be in default or there may be present elements of danger with respect to principal or interest. (Moody's 10-Feb-1998) MATAHARI PUTRA: Standard & Poor's Announces Downgrade ----------------------------------------------------- International ratings agency Standard & Poor's Corporation announced it has downgraded its rating on P.T. Matahari Putra Prima to CC from CCC, as a result of Matahari being highly vulnerable to nonpayment of its outstanding debt obligations. S&P said this rating action reflects deteriorating business conditions for retailers in Indonesia, with sales down sharply as a result of the currency devaluation, inflation, high interest rates and increasing unemployment. Further, according to S&P, acute systemic problems in Indonesias financial sector have made it increasingly difficult for Matahari to obtain essential working captal funding. Consequently, Matahari has come under financial stress as a result of having to fund its business from internal cash resources rather than creditors or bank lines. S&P continued, saying that weakened cash generation has substantially reduced Mataharis ability to meet its debt obligations in a timely manner. Where possible, Matahari is seeking to roll over its commercial paper obligations. S&P said Mataharis credit rating remains on CreditWatch with negative implications. The rating could be lowered if Mataharis operating cash flow and capacity to repay its debt obligations deteriorate further, or Matahari seeks to reschedule payment of its financial obligations under the voluntary framework announced by the Indonesian government on Jan 27, 1998. (Asia Pulse 10-Feb-1998). POLYSINDO EKA: US$685 Million Senior Unsecured Debt at Caa1 ------------------------------------------------------------ Moody's Investors Service, Inc., downgraded US$685 million of Senior Unsecured debt issued by P.T. Polysindo Eka Perkasa from B2 to Caa1. Moody's assigns a Caa rating to bonds it considers to be of poor standing. Such issues, Moody's explains, may be in default or there may be present elements of danger with respect to principal or interest. (Moody's 10-Feb-1998) SABAH SHIPYARD: Wing Tiek Files Quarter-Billion Dollar Claim ------------------------------------------------------------ Wing Tiek Holdings Bhd announced yesterday that it has filed a claim in the High Court for RM258.519mil against Sabah Shipyard Sdn Bhd (Saship). It has also obtained an injunction from the court restraining Westmont Industries Bhd and its wholly-owned subsidiary, Saship, from disposing and dealing with the Power Barges located at Saship's Labuan shipyard, known as Victoria III, Victoria IV, Victoria VI and Victoria VII. Wing Tiek said in a statement that it had also filed an application to set aside the restraining order obtained by Westmont and Saship under the restructuring scheme announced by Westmont. (The Star Online 17-Feb-1998) STANDARD TOYO: Chemical Plant Stops Production -------------------------------------------- A chemical industrial plant belonging to the Salim Group has been closed down. PT Standard Toyo Polymer (Statomer) has operated the plant since May 1975 in Merak, Cilegon city, to the west of Jakarta. The plant closed on Monday, sending home 200 employees, following a stoppage of production from January 21, 1998. Statomer director for production, K. Kikuchi, at the production site in Cilegon, West Java confirmed to reporters that the economic crisis was the cause. "The drop in the rupiah value against the US dollar created difficulties for us to procure imported raw materials, and the production output was also difficult to sell because of a sluggish market. A sales price is beyond the reach of consumers," he said. If production was continued, the company would suffer potential losses, because of the current exchange rate of Rp9,000 to the US dollar. "We can't possibly sell PVC resin at normal prices as we did prior to the monetary crisis, lest we go bankrupt. The sales price is only one-third of the raw material price," Kikuchi said. Flanked by the company's deputy manager I Nengah S. Artha, Kikuchi went on to say that the decision was a strategy to prevent lay-offs. "We don't know yet how long this situation will last, but if the exchange rate reaches Rp5,000, we may well start running again," he said. Salim Group has a 50 per cent stake in the company, with the remaining 50 per cent controlled by two Japanese companies, respectively Tosoh (30%) and Mitsui (20%). The plant has a production capacity of 86,000 tonnes per year. (Asia Pulse and ANTARA 17-Feb-1998) WESTMONT INDUSTRIES: Restructuring Plan Outlined ------------------------------------------------ Westmont Industries Bhd plans to restructure the group to strengthen its financial position and to enable it to make profits in the long term. A statement released last week by RHB Sakura Merchant Bankers Bhd, on behalf of WIB, said the WIB Group's revenue was insufficient to meet its financial obligation, which are due and payable and led to several creditors commencing legal actions against the WIB group to recover the amount due to them. As at June 30, 1997, WIB accumulated a loss of approximately RM459.6 million (US$121.91 million), while the WIB Group had a consolidated accumulated loss of about RM380.9 million. WIB also had total liabilities of about RM50.3 million while the WIB Group had total consolidated liabilities of about RM685.3 million as at June 30, 1997. The statement said in the event the WIB Group is liquidated, most creditors would not receive full repayment while shareholders' investment in WIB would likely be rendered valueless. It added: "To give creditors the opportunity to recover far more than could be recovered under liquidation exercise and to avoid shareholders' investment in WIB being rendered valueless, the Directors of WIB proposed the restructuring scheme." The restructuring would involves four primary schemes: * Under Scheme A, there would be a capital reduction of RM0.3333 in each existing ordinary and fully paid-up WIB share of RM1.00. The ordinary shares of RM0.6667 each would then be consolidated on the basis of 1.5 ordinary share of RM0.6667 each into one new WIB ordinary share of RM1.00. The credit arising from the proposed capital reduction of approximately 77.7 million would be utilised to partially reduce accumulated losses of about RM459.6 million as at June 30, 1997 in WIB. The proposed capital reduction exercise is to cancel that portion of the issued and paid-up share capital of WIB, which is lost or unrepresented by available assets. As a result of the proposed capital reduction, the issued and paid-up capital of WIB would be reduced to RM155.4 million from RM233.1 million. * Scheme B would see the debt of the Sabah Shipyard Sdn Bhd's to its creditors to be restructured. * Scheme C & D would have the debt of Saship and WIB to their creditors to be restructured as well. Additionally, the restructuring calls for a proposed disposal of Saship's power barge(s). WIB intended to utilise RM90 million from the disposal of Saship's power barge(s) to repay the partially secured creditors, the creditors of WIB and Saship as at Jan 15, 1998 comprising lease and hire purchase creditors, pursuant to the proposed composite schemes who have charge(s) over the power barge(s). WIB also proposed a restricted issue of 61.115 million new WIB ordinary shares of RM1.00 each at par to Swascojuta Sdn Bhd, a substantial shareholder of WIB. As at Jan 20, 1998, Swascojuta holds 38,470,000 ordinary shares of RM1.00 each in WIB, representing about 16.5% of the issued and paid-up share capital of WIB. After the proposed restructuring scheme, Swascojuta would hold 86,761,667 ordinary shares of RM1.00 each in WIB, representing about 21.8% of the enlarged issued and paid-up share capital of WIB. The exercise would yield gross proceeds of RM61.115 million, which WIB intended to use to repay the various classes of creditors pursuant to the proposed composite schemes. All new ordinary shares to be issued by WIB pursuant to the proposed restructuring scheme will be at par, which was arrived at after taking consideration the consolidated net tangible assets per share of RM0.26 based on the balance sheet of the WIB Group as as June 30, 1997. (Asia Pulse 10-Feb-1998) WESTMONT INDUSTRIES: Wing Tiek Bid to Lift Restraining Order ------------------------------------------------------------ In a statement released yesterday, Wing Tiek Holdings Bhd said that it filed an application to set aside the restraining order obtained by Wesmont Industries Bhd and Sabah Shipyard Sdn Bhd (Saship), its wholly-owned subsidiary, under the restructuring scheme announced by Westmont. The restraining order acts as an injunction prohibiting Wing Tiek from disposing and dealing with the Power Barges located at Saship's Labuan shipyard, known as Victoria III, Victoria IV, Victoria VI and Victoria VII. (The Star Online 17-Feb-1998) ========= J A P A N ========= ALL NIPPON: Nixing 100 Management Jobs -------------------------------------- All Nippon Airways Co. (9202 JP ), Japan's second largest airline, said it is seeking to eliminate 100 management jobs over the next five years through a new early retirement program to reduce costs and prepare for greater competition. (Bloomberg News 18-Feb-1998) HIROSHIMA BANK: Cutting Costs; Estimating 90% Bad Loans ------------------------------------------------------- Hiroshima Bank, Japan's eighth-largest regional bank announced that it would increase its provision against bad loans from 32% to 90% in the year to March 31. Hiroshima announced last year exposure of Yen 9.26 billion (US$75 million) to Toshoku, the collapsed food trader. Hiroshima Bank additionally announced plans to cut costs by closing offices in London, Hong Kong and New York within the next year, layoff 12% of its employees, and close subsidiaries located in the Netherlands and Hong Kong. (Financial Times 13-Feb-1998) HOKKAIDO TAKUSHOKU: Chuo Trust to Take Over 63 Branches ------------------------------------------------------- Chuo Trust & Banking Co. said it will take over 63 branches of Hokkaido Takushoku Bank Ltd. and hire 1,000 employees of the lender, which collapsed in November. (Bloomberg News 18-Feb-1998) The Sapporo-based Hokkaido Takushoku, whose liabilities exceeded assets by 901.8 billion yen, has most of its branches on the island of Hokkaido. Those will be taken over by North Pacific Bank Ltd. (Bloomberg and The New York Times 18-Feb-1998). LONG-TERM CREDIT: Layoffs & Closings Underpin Restructuring ----------------------------------------------------------- Long-Term Credit Bank of Japan said Monday it would cut its staff by 20 percent and close half of its overseas bases over two years as part of restructuring plans to improve profitability. "LTCB will pursue business efficiency, enhancement of profitability and financial soundness by improving its return on assets, personnel and cost reductions, office consolidation and other measures," the bank said in a statement. The bank, one of three long-term credit banks in Japan, said it would reduce the number of employees from 3,500 to 2,800 in two years, and slash the number of directors from 28 to six from April this year. It will relocate some of the employees to "strategic areas including joint venture," while restraining recruitment of new graduates, the bank said. The bank will also close about half of its 40 overseas bases -- branches, offices and subsidiaries -- in two years, it said. For commercial banking, operations in Europe and Asia will be consolidated into London, Hong Kong and Singapore offices, the bank said. Currently, LTCB also has operational bases in Paris, Frankfurt, Thailand and Jakarta. Its securities units will be integrated into the network of its business partner, Swiss Banking Corporation, resulting in the closure of London-based LTCB International, LTCB Switzerland and LTCB Latin America, the bank said. (Agence France-Presse 16-Feb-1998) MITSUBISHI: Japanese Factory Builder Hurt ----------------------------------------- Mitsubishi Heavy Industries Ltd., a Japanese builder of factories, said yesterday that it had cut its full-year profit forecast by 25 percent because of up to 400 billion yen ($3.18 billion) in delayed payments from Southeast Asia. Sharp declines in the value of the region's currencies have left Southeast Asian governments and corporations struggling to pay Mitsubishi Heavy for constructing steel, chemical and textile factories, said Yoshihisa Tsuda, a vice president of Mitsubishi Heavy. (New York Times 18-Feb-1998) SAILOR PEN: Shares Tumble 10% on Widened Loss Expectations ---------------------------------------------------------- Sahres in Sailor Pen Co. fell 18 yen to 175 in trading Monday. The fountain pen maker widened its pretax loss forecast 79.8% to 989 million yen for the year ended Dec. 31. That's 79.8 percent less than the most recent forecast by Toyo Keizai. The revision was announced Friday after the markets closed. (Bloomberg L.P. 16-Feb-1998) TOHO MUTUAL: Joint Venture with GE Capital ------------------------------------------ As previously reported, GE Capital Service, a leading US money lender, will set up a joint venture with Toho Mutual Life Insurance Co. Ltd. on April 1 to sell life insurance products in Japan, the companies said Wednesday. The new insurance company will be capitalized at 36 billion yen (285 million dollars), with GE Capital, a wholly-owned subsidiary of US electrical giant General Electric Co., taking a 90- percent stake. The new company will write new contracts, while Toho Life will only manage existing contracts, the companies said. GE Capital, which will take part in the venture via its GE Capital Assurance unit, will effectively take over the financially troubled Toho Mutual Life because the Japanese company will sell its license for new life insurance businesses to the venture for a maximum 70 billion yen. The move also marks GE capital's entry into the Japanese insurance market, with the new company becoming the first foreign-affiliated life insurer to operate across Japan. GE Capital and Toho Mutual Life said they will put up a total of 144 billion yen in shareholders' equity at the new company, including capital, capital reserves and subordinated loans. (Agence France-Presse 18-Feb-1998) TOHO LIFE: GE Capital's Announces Agreement with Toho ----------------------------------------------------- Toho Mutual Life Insurance Company ("Toho") and GE Financial Assurance, a wholly-owned subsidiary of GE Capital Services, announced today an agreement to establish a new life insurance company in Japan. The new company, which will have the largest capitalization among stock life insurance companies in Japan, is expected to begin operations on April 1, 1998, subject to regulatory approval. 72 billion yen ($575 million) of the new company's capital will come from GE Financial Assurance and 72 billion yen ($575 million) from Toho. The new company will acquire Toho's new business operations and sales network, and all new business will be written by the new company. The new company will focus on individual life and health insurance products, and is expected to secure a high financial rating before it begins operations. Toho will continue as an independent life insurance company and will be responsible for its existing policyholders' contracts and investment assets. Toho will be reinsurer of 30 - 50% of the new company's contracts, providing a continuing source of potential earnings and growth. In addition, Toho will receive a financial consideration for the transfer of its new business operations to the new company of up to 70 billion yen ($560 million). Existing Toho policies will not be transferred to the new company and there will be no impact on the terms or benefits associated with the existing insurance contracts. GE Financial Assurance and the new insurance company will not be responsible for the obligations under the existing Toho policy contracts. However, the new company will provide administrative services to existing Toho policyholders through a service agreement. The transaction with GE Financial Assurance is expected to close by March 31, 1998, subject to several conditions, including regulatory approval. Separately, Toho will also enter into a financial reinsurance arrangement which is expected to add 50 billion yen ($400 million) to policy reserves. Mr. Ridai Sakogawa, president of Toho Mutual Life Insurance, said, "We have been aware of the advantages of a global alliance with an international insurance company for several years. The pending Big Bang deregulation of financial services in Japan has highlighted the need for life insurance companies in Japan to prepare for a new environment of free, fair and global competition. The agreement with GE Financial Assurance will strengthen the financial position of Toho for our existing policyholders and position them to continue enjoying the same quality service and policy features." Mr. Gary Wendt, chairman and CEO of GE Capital Services, said, "This is a mutually-beneficial transaction for GE Capital Services and Toho. Toho strengthens its financial position at an important time, while the transaction enables GE Capital, with its tremendous financial strength, to enter the Japanese insurance market and take advantage of the opportunities afforded by the coming liberalization and changing business climate." Mr. Michael Fraizer, president of GE Financial Assurance, said, "By creating a strong new company with a growth focus, we look forward to bringing innovative insurance products and services to the broad market through Toho's strong distribution channels." Mr. Rone Baldwin, president of GE Capital Japan, said, "Together with our consumer finance and auto leasing businesses, this transaction represents tremendous progress in our focus to bring value-added financial services to Japanese customers. GE Capital is well positioned for long- term participation in the Japanese market." Founded in 1898, Toho Mutual Life Insurance is the twelfth largest life insurance company in Japan as ranked by assets. Its total assets as of September 30, 1997 were 4,214.8 billion yen ($33.7 billion). GE Capital Services, with assets of over US$250 billion, is a global, diversified financial services company with 27 specialized businesses. A wholly-owned subsidiary of General Electric Company, GE Capital Services, based in Stamford, CT, provides equipment management, mid-market and specialized financing, specialty insurance and a variety of consumer services, such as car leasing, home mortgages and credit cards, to businesses and individuals around the world. Its life insurance group, GE Financial Assurance, is comprised of eight businesses with $50 billion in assets, ranking it as the 13th largest life insurance company in the United States. GE is a diversified manufacturing, technology and services company with operations worldwide. ========= K O R E A ========= CHEONGSOL MERCHANT: Finance Ministry Revokes License ---------------------------------------------------- The Finance Ministry formally revoked Cheongsol Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) CORYO MERCHANT: Finance Ministry Revokes License ------------------------------------------------ The Finance Ministry formally revoked Coryo Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) GYONGNAM MERCHANT: Finance Ministry Revokes License --------------------------------------------------- The Finance Ministry formally revoked Gyongnam Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) HANBO STEEL: To Repay Debts over 20 Years ----------------------------------------- Hanbo Steel will repay Won 2.83 trillion (US$1.74 billion) in debt over the next 20 years, according to the liquidation plan the company submitted to Seoul district court Monday. The repayment is part of the total debt of Won 7.92 trillion requiring liquidation by the company under court receivership. Hanbo said its Tangjin steel mill in the "A" project zone will be 100 percent operational after the year 2000, and based on this projection, it can earn about Won 3 trillion over the next 20 years. Out of total projected earnings, Won 2.81 trillion will be used to repay the firm's debts, primarily starting with those owed to small suppliers. The company liquidation plan calls for writing off total shares valued at Won 44.5 billion held by former Hanbo owner Chung Tae-soo, his family members and other related persons. (Asia Pulse 17-Feb-1998) 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. (TCRAP 02-Feb-1998) HANGDO MERCHANT: Finance Ministry Revokes License ------------------------------------------------- The Finance Ministry formally revoked Hangdo Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) HANWHA MERCHANT: Finance Ministry Revokes License -------------------------------------------------- The Finance Ministry formally revoked Hanwha Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) KEXIM: S&P Upgrades Ratings --------------------------- Standard & Poor's ratings on Export-Import Bank of Korea (Kexim) and Korea Development Bank (KDB) have been raised (see list) in conjunction with the upgrades of the ratings of the Republic of Korea. All ratings are removed from CreditWatch, where they were placed Nov. 25, 1997 with negative implications and, from Jan. 16, 1998, with 'developing' implications. Like the Republic's ratings, the outlook on the banks' ratings is stable. Neither KDB nor Kexim has a direct government guarantee, although the government is required to replenish the capital of each bank should it fall below prudential norms. KDB is wholly owned by the government and Kexim will soon be so. Both KDB and Kexim have strong public policy roles and perform functions not easily provided by the private sector. (Standard & Poor's CreditWire 17-Feb-1998) KIA MOTORS: Samsung Denies Ford-Assisted Takeover Rumors -------------------------------------------------------- Late last week, Samsung Motors chairman Lim Kyung-choon told reporters that Samsung is not in talks with Ford Motor Company about making a bid for bankrupt Kia Motors. Rather, Samsung's chairman explained, Samsung is in talks with Ford focus on cooperation in sales, technology and parts supply as well as an equity investment in Samsung. Despite Samsung's denials, many analysts and industry observers believe that Samsung is the logical entity to rescue Kia from its bankruptcy proceedings, and would bring much-needed economies of scale to Samsung's automobile operations. (Financial Times 13-Feb-1998) KOREA FIRST: Korean Government and IMF Agree to Sale of Bank ------------------------------------------------------------ The Korean government and the IMF agreed to sell financially troubled Korea First Bank and Seoul Bank by Nov. 15, 1998, a Finance-Economy Ministry source said Monday. Public notice on the sales of the two banks will be posted toward the end of this month, and a lead manager banking institution will be selected by next month, according to the source. Details on sales conditions, including the extent sales of the government-held stake in the two banks will be announced when a lead manager is selected next month. The Korean government has already initiated talks on the sales with the world's top 10 investment banks, including Goldman Sachs & Co. The investment bank, which is highly interested in the sales and has put forth sales conditions viewed as favorable, will be picked as lead manager from among the top 10 investment banks. Lead manager candidates are expected to be internationally renowned and have an established auction track record, according to the source. (Asia Pulse 16-Feb-1998) KOREA HOUSING: J.P. Morgan Sues Over Swap Contracts --------------------------------------------------- J.P. Morgan & Co. filed a $300 million lawsuit against two South Korean banks, Korea Housing and Commercial Bank and S.K. Securities sources familiar with the case said. The lawsuit, filed in federal court in New York, alleges that Housing and Commercial Bank reneged on its obligation as guarantor on two derivatives transactions involving J.P. Morgan. J.P. Morgan refused to comment on the lawsuit but a spokesman said, "We would prefer to work this out through negotiations but we must pursue our legal claim." J.P. Morgan's complaint covers two derivatives transactions involving the U.S. bank and two South Korean counterparties. The names of these counterparties weren't immediately available. The derivatives were guaranteed by Housing and Commercial, while S.K. Securities facilitated the operations by bringing J.P. Morgan and the counterparties together. The lawsuit is the latest of several complex legal disputes involving S.K. Securities and J.P. Morgan. Separately yesterday, S.K. Securities asked a Seoul court to prevent Housing and Commercial from making a $160 million payment on a foreign exchange derivatives contract to J.P. Morgan. Yesterday's developments come after S.K. Securities successfully blocked Boram Bank of South Korea from paying yet another derivatives contract Wednesday to J.P. Morgan. S.K. Securities earlier in the week attributed its legal actions to misinformation on the part of J.P. Morgan. (Financial Times, et al., 14-Feb-1998) KYUNGIL MERCHANT: Finance Ministry Revokes License -------------------------------------------------- The Finance Ministry formally revoked Kyungil Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) MANDO MACHINERY: Equity Interests in Kamco Sold to Bosch -------------------------------------------------------- South Korea's Mando Machinery Corp. has announced in a notice to the Korea Stock Exchange that it sold off its entire equity interest in Korea Automotive Motor Co. (Kamco), a joint-venture car part firm with Bosch, to the German car part producer. Mando and Bosch have owned the firm holding an equal share of its stocks. The sale yields Won 35 billion (US$22 million) for Mando. (Financial Times 13-Feb-1998) The Korean leading car component producer, who filed an application with a court to protect itself from creditors, disposed of its 2.6 million shares in Kamco at 35 billion won (US$21.52 million) in a move to improve its financial standing. Kamco, set up by Mando and Bosch in December, 1993, posted a net profit of 1.3 billion won on turnover of 118.8 billion won in 1996. (Asia Pulse 13-Feb-1998) POSEC HAWAII: Suspends Senior Project ------------------------------------- Posec Hawaii Inc., developer of a planned senior-living tower at the corner of Kapiolani Boulevard and Ward Avenue, has drawn back from Hawaii as some staff at its Bishop Street offices have been laid off or sent back to South Korea including Project Administrator Daniel Kim. That means the $30 million-plus condominium, The Renaissance, is on "temporary suspension," according to Posec Hawaii President Young Ro Yoon. But Yoon said there is no plan to sell the project. Michael Leineweber, the vice chairman of Media Five A Design Corp. who has conducted business in Asia for more than 30 years, said Posec Hawaii's situation is part of the general pullback by South Korea companies that sometimes extends to the government telling related companies to get rid of overseas investments, he said. Pohang Steel Co., Posec Hawaii's parent, is the world's second-largest steel producer behind Nippon Steel of Japan. (Pacific Bus. News Honolulu 16-Feb-1998) SAMSAM MERCHANT: Finance Ministry Revokes License ------------------------------------------------- The Finance Ministry formally revoked Samsam Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) SAMSUNG HEAVY INDUSTRIES: Volvo Seeks Equipment Business -------------------------------------------------------- Sweden's Volvo AB is locked in negotiations with South Korean shipbuilder Samsung Heavy Industries Co. to take over its construction equipment business, a Samsung spokesman said Wednesday. "We hope to sell our equipment business only. But a joint- venture deal is welcome, too," the spokesman told AFP. Samsung Heavy Industries is a major subsidiary of the giant Samsung Group. Like other family-run conglomerates, Samsung has been under pressure to implement drastic structural reforms and concentrate on core businesses by shedding marginal units. (Agence France-Presse 18-Feb-1998) SAMSUNG MOTORS: Denies Ford Helping with Bid for Kia Motors ----------------------------------------------------------- Late last week, Samsung Motors chairman Lim Kyung-choon told reporters that Samsung is not in talks with Ford Motor Company about making a bid for ailing Kia Motors. Rather, Samsung's chairman explained, talks with Ford focus on cooperation in sales, technology and parts supply as well as an equity investment in Samsung. Despite Samsung's denials, many analysts and industry observers believe that Samsung is the logical entity to rescue Kia from its bankruptcy proceedings, and would bring much-needed economies of scale to Samsung's automobile operations. (Financial Times 13- Feb-1998) SAMSUNG MOTOR: Strikes 50/50 Deal With Ford Motor Co. ---------------------------------------------------- Ford Motor Co. of the United States agreed to jointly run Samsung Motor Inc., assuming an equal ownership stake with the South Korean automaker. The industry is not foreign to such partnerships, as Daewoo Motor Co. and General Motors Inc. had once been jointly managed, with each holding a parallel share. Samsung recently reached an agreement with Ford to jointly operate the company on an equal footing and the two are now mapping out the details, a high-ranking Samsung official said. The official, however, declined to elaborate whether Ford will be buying Samsung Group's 50 percent stake in the car affiliate or whether it would split the stakes after raising the capital of the automaking starter. When Ford invests in Samsung Motor and acquires a 50 percent stake, foreign concerns will be owning more than half of the car-maker's equity. Foreign institutional investors currently own 31 percent of Samsung Motor, whose capital reaches 805.4 billion won (US$471.8 million), while the rest is held by Samsung Group affiliates. It would take at least several months for Samsung and Ford to iron out their differences and reach a final agreement due to the size of the venture, the Samsung official said. Samsung will represent and run the motor company even though the equity is shared equally with Ford, he said. Apart from capital investment, Ford is interested in producing small Ford cars from the Samsung plant in Pusan or use Samsung's sales outlets as a window for selling Asia- made cars at home and in the region. (Yonhap and Asia Pulse 18-Feb-1998) SHIN WON: Creditor Banks Extend US$135 in New Loans --------------------------------------------------- A group of ten Korean creditor banks decided to extend a syndicated loan of 200 billion won (US$125 million) to cash- strapped Shin Won Group. To receive the loan, Shin Won earlier submitted to creditor banks a self-rescue plan calling for the sales of properties worth 678.6 billion won, sales and mergers of affiliates and downsizing. (Asia Pulse 12-Feb-1998) SHINHAN INVESTMENT: Finance Ministry Revokes License ---------------------------------------------------- The Finance Ministry formally revoked Shinhan Investment Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) SHINSEGAE INVESTMENT: Finance Ministry Revokes License ------------------------------------------------------ The Finance Ministry formally revoked Shinsegae Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) SSANGYONG MERCHANT: Finance Ministry Revokes License ------------------------------------------------------ The Finance Ministry formally revoked Ssangyong Merchant Bank's business license Friday, as part of its agreement to close one-third of the merchant bank sector as part of Seoul's efforts to implement reforms called for by the International Monetary Fund. (UPI 16-Feb-1998) S.K. SECURITIES: J.P. Morgan Sues Over Swap Contracts ----------------------------------------------------- J.P. Morgan & Co. filed a US$300 million lawsuit against two South Korean banks, Korea Housing and Commercial Bank and S.K. Securities sources familiar with the case said. The lawsuit, filed in federal court in New York, alleges that Housing and Commercial Bank reneged on its obligation as guarantor on two derivatives transactions involving J.P. Morgan. J.P. Morgan refused to comment on the lawsuit but a spokesman said, "We would prefer to work this out through negotiations but we must pursue our legal claim." J.P. Morgan's complaint covers two derivatives transactions involving the U.S. bank and two South Korean counterparties. The names of these counterparties weren't immediately available. The derivatives were guaranteed by Housing and Commercial, while S.K. Securities facilitated the operations by bringing J.P. Morgan and the counterparties together. The lawsuit is the latest of several complex legal disputes involving S.K. Securities and J.P. Morgan. Separately yesterday, S.K. Securities asked a Seoul court to prevent Housing and Commercial from making a $160 million payment on a foreign exchange derivatives contract to J.P. Morgan. Yesterday's developments come after S.K. Securities successfully blocked Boram Bank of South Korea from paying yet another derivatives contract Wednesday to J.P. Morgan. S.K. Securities earlier in the week attributed its legal actions to misinformation on the part of J.P. Morgan. (Financial Times, et al., 14-Feb-1998) =============== M A L A Y S I A =============== ALOR SETAR: KLSE Imposes Trading Restrictions --------------------------------------------- ALOR Setar Securities Sdn Bhd has become the ninth stockbroking house to face KLSE-imposed trading restrictions. A KLSE statement said the restrictions, effective immediately, include limiting the conduct or execution of selling transactions only and the conduct or execution of purchase transactions only upon receipt of 100% upfront payment. "Alor Setar Securities is also prohibited from margin purchases, direct business transactions and any other form of activitity which may increase the brokerage's potential risk or exposure," it added. The restrictions will be lifted once the brokerage's financial position is regularised to the satisfaction of the exchange. Other brokerages currently under trading restrictions are Sime Securities Sdn Bhd, CapitalCorp Securities Sdn Bhd. MBf Northern Securities Sdn Bhd, Kin Khoon & Co Sdn Bhd, Labuan Securities Sdn Bhd, MGI Securities Sdn Bhd, Halim Securities Sdn Bhd and Omega Securities Sdn Bhd. BANK BUMIPTURA: Moody's Downgrades from D to E+ ----------------------------------------------- Moody's Investors Service, Inc., announced a downgrade from D to E+ for Bank Bumiptura Malaysia Berhad. Moody's explains that under its rating system, banks rated E possess very weak intrinsic financial strength, requiring periodic outside support or suggesting an eventual need for outside assistance. Such institutions, Moody's says, may be limited by one or more of the following factors: a business franchise of questionable value; financial fundamentals that are seriously deficient in one or more respects; or a highly unstable operating environment. (Moody's 10-Feb-1998) BINARIANG SDN.: Cutting 300 Jobs to Improve Performance ------------------------------------------------------- Binariang Sdn. Bhd., Malaysia's sole satellite-TV provider, announced that it will cut 300 jobs, citing the economic downturn. Together with Measat Broadcast Network Systems Sdn. Bhd., Binariang is controlled by Malaysian tycoon T. Ananda Krishnan, a close associate of Mahatir Moamad. (The Wall Street Journal 17-Feb-1998). COMMERCE ASSET: Denying All Merger Rumors ----------------------------------------- Commerce Asset-Holding Bhd yesterday denied a newspaper report that it's in talks to merge with Bank Bumiputra Malaysia Bhd. The company also denied it's in talks to merge with International Bank Malaysia Bhd, another banking group. Commerce Asset said it is "at present neither involved in merger negotiations with Bank Bumiputra nor International Bank Malaysia". The statement came after the Asian Wall Street Journal quoted officials as saying Commerce Asset had begun talks to merge with Bank Bumiputra Bhd. It also comes after Commerce Asset called off negotiations with banking group Rashid Hussain Bhd last week. -- Bloomberg (Business Times Online 17-Feb-1998) MEASAT BROADCAST: Cutting 300 Jobs to Improve Performance --------------------------------------------------------- Measat Broadcast Network Systems Sdn. Bhd. announced that it will cut 300 jobs, citing the economic downturn. Together Binariang Sdn. Bhd., Malaysia's sole satellite-TV provider, Measat is controlled by Malaysian tycoon T. Ananda Krishnan, a close associate of Mahatir Moamad. (The Wall Street journal 17-Feb-1998). OMEGA SECURITIES: KL Bourse Restricts Stock Trading --------------------------------------------------- Omega Securities Sdn Bhd has been placed under trading restrictions with effect from 9 a.m. Tuesday, according to the Kuala Lumpur Stock Exchange. This was pursuant under Rule 15B of the KLSE's rules relating to member companies, the bourse announced Monday. The trading restrictions imposed on Omega Securities include limiting it to conducting or executing selling transactions only and conducting or executing purchase transactions only upon receipt of 100 percent upfront payment. Omega Securities is also prohibited from margin purchases, direct business transactions and any other form of activity which may increase the potential risk or exposure to the stockbroking firm. The KLSE said the restrictions would be lifted once Omega Securities had regularised its financial position to the satisfaction of the KLSE. (Asia Pulse 17-Feb-1998) ===================== P H I L I P P I N E S ===================== DUTY FREE: Files for Suspension of Debt Payments ------------------------------------------------ Duty Free First Superstore, Inc. filed for the suspension of its debt payments with the Securities and Exchange Commission (SEC) in Manila Monday. The firm ran into financial difficulties due to the present economic crunch brought on by the fluctuating Philippine peso-dollar exchange rate and surging interest rates. (BusinessWorld 17- Feb-1998) EASTERN TELECOMM: Philippines Commission to Sell ETPI Shares ------------------------------------------------------------ The Presidential Commission on Good Government (PCGG) will bid Wednesday (Feb.18) the P827.424 million (US$20.57 millon) sequestered shares Of stock of Eastern Telecommunications Philippines, Inc. (ETPI) after it was given the green light by the Sandiganbayan. The PCGG said that 2,652,000 shares of stock will be sold through sealed public bidding at an indicator price of P312.00 per share. The government is expected to gain about P1 billion from the sale of the shares. The PCGG said that among the firms interested in bidding are Globe Telecom, Bayantel and South City System. Three other unidentified firms were said to have sent representatives to a pre-qualification and pre-bid conference but only got copies of the bidding guidelines. The bidding committee is composed of PCGG commissioners Herminio Mendoza, Juliet Bertuhen and Hermilo Rosal. The government's interest in ETPI is part of businessman Roberto Benedicto's 20 percent equity, frozen by the PCGG for allegedly being part of the Marcoses' ill-gotten wealth. In 1996, Benedicto accepted a compromise where he surrendered 205,000 shares or 10.2 percent of his interest in the telecommunications firm. Benedicto retained 9.2 percent of the interest equivalent to 196,000 shares of stocks. He later sold the shares to Smart Communications, Inc. Aside from Benedicto's stake, the PCGG also sequestered ETPI shares held by businessman Victor Africa and Manuel Nieto, Jr. Their 40 percent interest represented 800,000 shares in December 1995 and had increased to 10.4 million as of November 1997. Meanwhile, British firm Cable & Wireless holds the remaining 40 percent equity. Earlier, the graft court's first division rejected a plea for a Temporary Restraining Order (TRO) by Mrs. Imelda Marcos and Irene Marcos-Araneta, daughters of former President Ferdinand Marcos. The Marcoses argued in their petition with the Sandiganbayan that the PCGG has no right to sell the ETPI shares because those are the assets "presumed to be owned by the Marcoses which should still be collated and classified by both parties under the (compromise) agreement." (PNA and Asia Pulse 18-Feb-1998) FINANCERIA MANILA: SEC Defers Action on Debt Relief Petition ------------------------------------------------------------ The Securities and Exchange Commission (SEC) has deferred action on the debt relief petition filed by lending firm Financiera Manila, Inc. pending the firm's compliance to a number of requirements imposed by the commission. In an order issued February 12, SEC chairman Perfecto R. Yasay, Jr. directed the firm to furnish the SEC within five days of receipt of the order with pertinent data about its finances and its operation. The SEC ordered the firm to submit: a list of its individual creditors and lenders; a list of the its "particular" and "separate" equity security holders; a complete report on the receivables due from its loans; inventory of its loans under litigation; inventory of its total assets; certification from the Bureau of Internal Revenue about its specific tax liability; and its debt repayment schedule indicating the period of suspension it is seeking. Last February 5, the firm -- along with its subsidiaries Growth Dimensions International, Inc. and Costa Mesa Development, Inc. -- filed a petition for temporary debt relief with the SEC concerning its maturing obligations amounting to 1.335 billion Philippine pesos (PhP). The company likewise asked the SEC to appoint a management committee which would oversee its rehabilitation. The lending firm blamed its financial woes on the continued economic crunch resulting from the peso's depreciation and high interest rates. (BusinessWorld 18-Feb-1998) MANILA ELECTRIC: Shares Drop on Adverse Ruling ---------------------------------------------- Power utility Manila Electric Co. (Meralco) was ordered to "immediately" reduce tariffs and refund overbilled customers in a ruling which sharply drove down Philippine share prices. (Agence France-Presse 16-Feb-1998) MIDAS DIVERSIFIED: Files for Suspension of Debt Payments -------------------------------------------------------- Midas Diversified Export Corp., along with its sister companies Manila Home Textile, Inc.; D&D Manufacturing, Inc.; FL Industrial Corp.; and Louisvile Realty & Development Corp. filed for a suspension of their debt payments with the Securities and Exchange Commission (SEC) in Manila. Midas filed its petition Monday, saying that the firm ran into financial difficulties due to the present economic crunch brought on by the fluctuating Philippine peso-dollar exchange rate and surging interest rates. (BusinessWorld 17-Feb-1998) ORIENT BANK: Retailer Hopes to Sell; Closes After Bank Run ---------------------------------------------------------- Philippine retail and property magnate Jose Go has decided to sell or merge his troubled Orient Commercial Banking Corp. with a bigger institution after heavy withdrawals forced it to declare a holiday, the bank said last week. Go was scheduled to hold talks with central bank officials "to obtain further assistance for the sale" or "for the infusion of fresh capital, whichever is better to lift as soon as possible the bank holiday," an Orient bank statement said. Jose Go and the other main shareholder, his brother George Go, have authorized the bank to negotiate with a bigger bank for a 100 percent buyout or a merger, it said without identifying the other bank. "We are doing this to prevent further bank runs and loss which occurred because of reports that talks for the sale or merger had collapsed," the brothers said in the statement. The talks with the unnamed bank are "almost a done deal," they added. After the sale Jose Go "will concentrate on further expanding his retail and resort developments," the statement said. The bank declared a holiday effective Saturday after suffering from bank runs which press reports attributed to rumors its majority owner was having trouble meeting loan obligations with other banks on his other business interests. (Agence France-Presse 13-Feb-1998) Wednesday, Orient suspended business due to a bank run Following the reports that its owners were having trouble meeting loan obligations with banks on other business interests. Philippine President Fidel Ramos assured investors Wednesday of the stability of the banking system notwithstanding Orient's temporarily shutdown because of heavy withdrawals. (Agence France-Presse 18-Feb-1998) PACIFIC LENDERS: Files for Suspension of Debt Payments ------------------------------------------------------ Pacific Lenders, Inc. filed for the suspension of its debt payments with the Securities and Exchange Commission (SEC) in Manila. Pacific Lenders filed its petition last Friday. The firm ran into financial difficulties due to the present economic crunch brought on by the fluctuating Philippine peso-dollar exchange rate and surging interest rates. (BusinessWorld 17-Feb-1998) PHILIPPINE ASSOCIATED: Government will not Absolve Loan ------------------------------------------------------- The government is not planning to absolve the 30.7-billion Philippine peso (PhP) loans of the Philippine Associated Smelting and Refining Corp. (PASAR) but instead hopes to auction off the debts along with the remaining assets of the firm. "The government is not writing off the loans in PASAR. Although there are restructuring schemes being explored, no definite option has been approved yet," Mariano Salazar, general manager of the National Development Company (NDC) told BusinessWorld. Mr. Salazar said NDC will pursue the privatization of the government's financial exposure in PASAR through a public bidding as soon as all concerns and issues raised by the local mining firms have been satisfactorily addressed. NDC is currently preparing a proposal for the bidding of its shares in PASAR to the Committee on Privatization (CoP). Trade and Industry Secretary Cesar Bautista who sits as NDC chairman earlier said they are looking at tapping Congress' help to write off PASAR's loans to make it more attractive to prospective investors. The government through NDC has a 41.91% stake in PASAR. The rest are distributed among local mining companies (21.78%) - - Marcopper Mining Corp., Maricalum Mining Corp., Philex Mining Corp. and Lepanto Consolidated Mining; and International Finance Corp. (5.08%). Japanese investors Marubeni Corp., Sumitomo Corp. and Itochu Corp. own preferred shares worth about 30% of the total equity. BusinessWorld 18-Feb-1998) UNIWIDE HOLDINGS: Denies Buy-In Talks with Wal-Mart --------------------------------------------------- Shopping mall builder and operator Uniwide Holdings Inc. yesterday denied a report it was holding talks for a possible buy-in by U.S.-based retailer Wal-mart Stores, Inc. The report sent Uniwide stocks soaring 24%, or 0.18 Philippine peso (PhP), to PhP0.94 in late trade. "We confirm having met with the Wal-mart officials ... they wanted to look at business opportunities in the Philippines on news that Congress is studying proposals to open retail trade to foreign investors," a spokeswoman of Uniwide told Reuters. But she said "no" when asked whether the two firms were in formal talks for a buy-in or joint-venture. On Monday, BusinessWorld quoted a Uniwide official as saying Wal-mart had three options -- purchase of shares held by Uniwide president Jimmy Gow, an infusion of funds or to become a franchisee of Uniwide. The spokeswoman said that Uniwide was considering a strategic partnership in the future. (Reuters and BusinessWorld 18-Feb-1998) ================= S I N G A P O R E ================= =============== T H A I L A N D =============== FIRST BANGKOK: GE Capital Seen As Likely Acquiror ------------------------------------------------- GE Capital, the financial services arm of General Electric of the U.S., announced its acquisition of a 49% interest in Asia Finance, a small unlisted Thai company, for Bt 300 million (US$6.9 million). Many see this acquisition as a gateway through which GE Capital can acquire interests in Thailand's 56 bankrupt finance companies which were closed down by the Government last year, including First Bangkok City Bank whose acquisition talks with Citibank came to a halt recently. (Financial Times 13-Feb-1998) SIAM CITY: GE Capital Seen As Likely Acquiror --------------------------------------------- GE Capital, the financial services arm of General Electric of the U.S., announced its acquisition of a 49% interest in Asia Finance, a small unlisted Thai company, for Bt 300 million (US$6.9 million). Many see this acquisition as a gateway through which GE Capital can acquire interests in Thailand's 56 bankrupt finance companies which were closed down by the Government last year, including Siam City Bank whose acquisition talks with ING Bank came to a halt recently. (Financial Times 13-Feb-1998) THAI AIRWAYS: Staggering First Quarter Loss ------------------------------------------- Thai Airways International Plc said Monday that it had posted a net loss of Baht 26.66 billion (US$592.4 million) in the first quarter of 1997/98 as the regional economic crisis took its toll. The slump in the fiscal first quarter -- attributed to foreign-exchange losses as a result of the collapse of the baht last year -- follows a net profit of Baht 1.5 billion in the corresponding period of 1996, the company said. The dismal result coincided with a warning by the global airline industry Monday of a severe drop in passenger numbers as Asians hit by currency depreciations stay at home, cutting out holidays and business travel. The Thai Airways statement to the Stock Exchange of Thailand said that in the three months to December 31, the company had adjusted foreign exchange losses worth Baht 32.62 billion (US$709.13 million). The state-owned airline said it had unrealised forex losses of Baht 28.42 billion and realised gains worth Baht 1.39 billion. The company said the foreign exchange figures reported were calculated monthly using an average exchange rate provided by the Bank of Thailand. In the year to September 31, Thai Airways said it had unrealised forex losses of Baht 32.6 billion from just Baht 3.4 billion previously. Thai Airways is one of about 15 public companies that the government has earmarked for privatisation by the middle of this year under conditions attached to Thailand's international bailout package. The national carrier has been forced to drastically cut costs as revenues slump in the wake of the financial maelstron which has swept throughout the region in the past eight months. The belt- tightening measures include canelling wine for business- class travellers on domestic flights and cutting back on meals outside of regular meal times on international flights. The airline -- which has a fleet of about 80 aircraft and flies to most major destinations around the world -- has also been forced to scrap plans to buy more jets from Boeing and Airbus. (Agence France-Presse 16-Feb- 1998) Other belt-tightening measures include cancelling wine for business-class travellers on domestic flights and cutting back on meals outside of regular meal times on international flights. (BusinessTimes Online 17-Feb-1998) 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., Princeton, NJ USA, and Beard Group, Inc., Washington DC USA. 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 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 * * *