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    T R O U B L E D   C O M P A N Y   R E P O R T E R     
  
                  A S I A   P A C I F I C      

          Monday, February 23, 1998, Vol. 1, No. 6

                        Headlines

C H I N A

BOEING: Aircraft Delivery May be Delayed
SHAGNHAI ELECTRIC: Plans Spin-off of Four Assets


H O N G   K O N G  

BANKERS TRUST: Shifts Operations to Singapore
NIKKO SECURITIES: Will Focus on Asian Equity Sales
S.K. SECURITIES: Responds to J.P. Morgan Suit
SHANGHAI HOTELS: Profits Tumble


I N D O N E S I A

BEHANA PEMBINAAN: Delaying Payments on US$20 Million
TRANS-PACIFIC PETROCHEMICAL: Contract Restructuring


J A P A N  

KIRIN BREWERY: Rival Asahi Takes the Lead
MITISUBISHI: 100 Billion Yen Bond Issue


K O R E A

ASIANA CARGO: Cuts Weekly Flights
HYUNDAI: Electronics Unit will go to Adaptec
HYUNDAI HEAVY: No Ship Orders for January
KIA MOTORS: In Negotiations with Scania Group
SAMSUNG ELECTRONICS: Confirms Talks with Intel
SAMSUNG HEAVY: Clark Co. to Purchase Forklift Division
SAMSUNG HEAVY: Volvo Agrees to Buy Construction Division


M A L A Y S I A

ESSO: remains bullish on its investments
SEAGATE TECHNOLOGY: Lays Off 10,000


P H I L I P P I N E S

ORIENT COMMERCIAL: Bidding Deadline Extended
PHILIPPINE AIRLINES: Delays Acquisition of Aircraft


S I N G A P O R E


T H A I L A N D

FIRST BANGKOK: Citibank Abandons Takeover Moves
LAEM THONG BANK: Ordered to Write Down Capital



=========
C H I N A
=========

BOEING: Aircraft Delivery May be Delayed
----------------------------------------
Boeing Commercial Airplane Group may see the delivery of more than 20
aircraft delayed over the next three years due to the Asian financial
crisis, a company report says. Boeing's senior manager of International
Communications for Greater China and Singapore Marta Newhart said the
report suggested the timetable for aircraft deliveries might be moved.
However, she would not be drawn into whether the company expected the
cancellation of orders.

Asked about a report that Philippine Airlines had cancelled plans to buy
four Boeing 747s last month, Ms Newhart said the deal was still on.

The orders were part of a US$4 billion, 32-aircraft expansion programme
begun in 1995 to replace the airline's aging fleet. Ms Newhart said
airlines were going to think twice before restructuring their delivery
orders as there were other carriers in Europe and the United States waiting
to snap up aircraft produced by Seattle-based Boeing.

So far, Boeing has 377 unfilled orders in the Asia-Pacific amounting to
$42.8 billion.


SHAGNHAI ELECTRIC: Plans Spin-off of Four Assets
------------------------------------------------
Shanghai Electric Corp (Group) is reviving plans to spin off four assets
for a B-share listing to capitalise on the market's recent rally. Sources
said the candidate - Shanghai Consolidated Electric Co - was seeking to
emulate the successful model of red chips in Hong Kong by acquiring
assets from its powerful parent at low prices after listing. Its plan to
list late last year was held back by procedural delays and the region's
financial turmoil.
(South China Morning Post; 02/20/98)


=================
H O N G   K O N G  
=================

BANKERS TRUST: Shifts Operations to Singapore
---------------------------------------------
Bankers Trust is shifting its Asian investment banking operations from Hong
Kong to Singapore and cutting jobs as part of a restructuring. About 75
jobs, or 5 per cent of the bank's 1,500 strong Asian staff outside Japan,
will be affected. The restructuring was precipitated by the creation of a
global emerging markets business grouping. Singapore was chosen over Hong
Kong as it is the base of the core arbitrage group. Hong Kong will remain
home to other core businesses in Asia, including corporate trust, cash
management, trade finance, private banking, BT funds management and global
custody. (Financial Times 19-Feb-1998)


NIKKO SECURITIES: Will Focus on Asian Equity Sales
--------------------------------------------------
Nikko Securities Co. (Asia), the Hong Kong unit of Nikko Securities Co, has
cut staff in its Asian bonds division by 30 percent. The unit will
discontinue the underwriting
of convertible and straight bonds, but will focus on the global sale of
Asian equities. The Asian fixed-income division of Nikko (Asia) is expected
to post a loss of 1 billion yen (US$7.94 million) because of the Asian
currency crisis.


S.K. SECURITIES: Responds to J.P. Morgan Suit
---------------------------------------------
S.K. Securities has responded to J.P. Morgan's $300 million suit in Hong
Kong, saying that "the derivatives product was flawed and J.P. Morgan
pitched the product as if it were a very promising, sound investment."  

J.P. Morgan says that assertion is preposterous because J.P. Morgan never
contracted with S.K. for anything.  Rather, J.P. Morgan sold a derivative
product to Boram Bank. Boram, in turn, sold the product to S.K.  The
derivative contracts required payment by S.K. to to J.P. Morgan for
something sold by Boram, not J.P. Morgan.  

In an interview, J.P. Morgan expressed concern about having to litigate in
Hong Kong because, it explained, companies aren't allowed to testify in
court unless the presiding judge specifically invites them. (The Asian Wall
Street Journal 16-Feb-1998)


SHANGHAI HOTELS: Profits Tumble
-------------------------------
Shanghai Hotels yesterday made provision of HK$565m ($73m) against
potential losses from delays in projects in the region. A decline in
tourism also dented profits, which fell by 87% to HK$114m, from HK$861m
last year. The biggest blow came from the provisions made against
slow-moving investments. Scuppered plans to build a hotel on Sydney harbour
in Australia resulted in a provision of HK$228m. The company is building
luxury apartments on the site. The Peninsula Bangkok, due to open in
November, also prompted a HK$189m provision to cover potential equity
losses and carrying costs. Two further projects, in Vietnam and Indonesia,
have been put on ice. (Financial Times
20-Feb-1998)


=================
I N D O N E S I A
=================

BEHANA PEMBINAAN: Delaying Payments on US$20 Million
----------------------------------------------------
PT Bahana Pembinaan Usaha Indonesia delivered to noteholders holding US$20
million of debt due February 9, 1998 10% of the amount owed in cash
together with new notes for the remaining 90%.  The new notes were
accompanied by a letter from Behana's director, Hadi Rusli, stating:
"Recent events in financial markets have led to the recognition of a need
for a temporary pause in debt service to permit Indonesian companies to
regularize their financial arrangements with their creditors."  The new
notes reportedly defer payment for 6 months and pay interest at a rate
equal to LIBOR plus 3 points.  Rusli also indicated that, to help
regularize its finances, Bahana would seek the assistance of an outside
financial advisor.  (The Asian Wall Street Journal 16-Feb-1998)


TRANS-PACIFIC PETROCHEMICAL: Contract Restructuring
---------------------------------------------------
Except for minor port dredging, work will stop on PT Trans-Pacific
Petrochemical Indotama while the venture searches for fresh capital to
complete construction of the remaining 60% of the US$2.5 billion
petrochemical complex.  Mihir Taparia says TPPI has been "shell-shocked" by
the economic crisis in Indonesia.  Taparia explains that TPPI thought US$1
billion of equity investment already made by shareholders, together with
US$950 million of bank financing would be sufficient to complete
construction, but now realizes it will need greater financial support.

The equity investors include Tuban Petrochemicals Pte. Ltd. (a unit of Siam
Cement Co.), Nissho Iwai Corp, Itochu Corp.  Koch Industries, Inc., of the
U.S. has expressed interest in taking a stake in the project.  (The Asian
Wall Street Journal 16-Feb-1998)


=========
J A P A N  
=========

KIRIN BREWERY: Rival Asahi Takes the Lead
-----------------------------------------
Asahi Brewery, with 39.1% of the market against Kirin Brewery's 41.5%, aims
to oust Kirin from the top position this year. Kirin's beer sales fell 10%
in volume terms last year, while Asahi's rose 11%, in a market which shrank
2.2% overall. Falling beer sales pushed Kirin's parent company net profits
down 23.8%, pre-tax profits fell 3.2% and sales were down 9.4%. The company
has been looking to boost its overall sales, and thinks it has found it in
a low-malt beverage called Kirin Tanrei, to be launched next week. It hopes
to take 30% of the happoshu (non-beer malt beverage) market.


MITISUBISHI: 100 Billion Yen Bond Issue
---------------------------------------
Mitsubishi Heavy Industries Ltd. Faces a temporary shortage of 100 billion
yen ($794 million) in operating funds because of the reluctance of the
nation's banks to lend money. The Japanese shipbuilder says it will fill
the gap with a 100 billion yen bond issue, possibly as soon as next month.
The shortfall is tied to higher manufacturing costs as well as to the usual
delays in customer payments that come when economies slow. (The Wall Street
Journal 19-Feb-1998)


=========
K O R E A
=========

ASIANA CARGO: Cuts Weekly Flights
---------------------------------
Asiana Cargo has announced plans to cut its 10 weekly flights between Seoul
and Hong Kong to seven a week from March 1. The carrier currently operates
two B747 combi flights and eight B767 flights between Seoul and Hong Kong,
according to Asiana Cargo's regional manager, Kim
Jong-jin. Of the 10 weekly flights, three arrive in Hong Kong in the late
evening and depart the next morning.

This leaves the aircraft idle overnight, resulting in parking fees,
additional staff allowance and hotel bills. In a move to better utilise its
aircraft, Asiana is to reduce the B767 combi flights to five.


HYUNDAI: Electronics Unit will go to Adaptec
--------------------------------------------
Adaptec Inc. said it signed an agreement to acquire a U.S. electronics unit
of Korean conglomerate Hyundai for $775 million. Adaptec, which makes
hardware and software that connect personal computers in networks, said it
will fund the purchase of Symbiosis, a wholly owned subsidiary of Hyundai
Electronics America, largely out of cash reserves.

The deal comes at a time when a number of U.S. companies are examining
whether to buy assets of cash-strapped Korean companies. "Hyundai was not
hiding the fact that the Asian crisis they've experienced has caused them
to sell Symbiosis," a spokesman for Adaptec said. Adaptec said that
Symbiosis 1997 revenue was approximately $620 million. The company, based
in Fort Collins, CO, employs about 2,500 people world-wide. Like Adaptec,
Symbiosis makes hardware and software used in computer networks, and its
customers include such heavy-weights as Sun Microsystems Inc. and NEC Corp.
(The Wall Street Journal 20-Feb-1998)


HYUNDAI HEAVY: No Ship Orders for January
-----------------------------------------
In January, not a single order for a new ship came through the gates at
Hyundai Heavy Industries Co., Daewoo Heavy Industries Ltd, or any of the
other major Korean shipbuilders. It isn't that these isn't a demand. The
trouble seems to be that companies are having problems getting performance
guarantees from banks, in which the customer is assured that the
shipbuilder will deliver a vessel at a certain cost on a specified date.
Without such a guarantee, the deals haven't been able to get off the
ground. (The Wall Street Journal 20-Feb-1998)


KIA MOTORS: In Negotiations with Scania Group
---------------------------------------------
The head of South Korea's insolvent Kia Group said
Thursday that the group was locked in negotiations with Sweden's Scania to
sell its commercial vehicle division.
"Negotiations are under way with Scania on our proposal to sell Asia Motors
Co. Inc," group chairman Jin Nyum told reporters. Scania produces trucks,
buses and industrial and marine engines.

Asia Motors, together with its sister passenger car producer, Kia Motors
Corp., has been under court receivership since the Kia Group went belly-up
last
year. Kia Group officials said that several foreign firms were interested
in buying Asia Motors. But they excluded any major US auto firms including
Ford Motor Co., the largest foreign shareholder in Kia Motors. Jin said the
group still hoped to strengthen ties with Ford in passenger cars despite
its ongoing negotiations with South Korea's newly-formed Samsung Motors Inc.

But he rejected the possibility of ties with South Korean rival Samsung,
which has been dogged by persistent rumours that it was trying to take over
Kia Motors. "It is meaningless to establish ties with Samsung," he added.

His comment followed reports here that Samsung and Ford had agreed to a
50:50 joint management of Samsung Motors. A spokesman for Samsung Motors, a
subsidiary of the country's leading Samsung Group, said earlier that all
options were open in negotiations with Ford either to open a partnership or
draw capital from the US company. Samsung plans to churn out its first
mid-sized cars in March, despite slumping auto sales at home and abroad.


S.K. SECURITIES: Responds to J.P. Morgan Suit
---------------------------------------------
S.K. Securities has responded to J.P. Morgan's $300 million suit in Hong
Kong, saying that "the derivatives product was flawed and J.P. Morgan
pitched the product as if it were a very promising, sound investment."  

J.P. Morgan says that assertion is preposterous because J.P. Morgan never
contracted with S.K. for anything.  Rather, J.P. Morgan sold a derivative
product to Boram Bank. Boram, in turn, sold the product to S.K.  The
derivative contracts required payment by S.K. to to J.P. Morgan for
something sold by Boram, not J.P. Morgan.  

In an interview, J.P. Morgan expressed concern about having to litigate in
Hong Kong because, it explained, companies aren't allowed to testify in
court unless the presiding judge specifically invites them. (The Asian Wall
Street Journal 16-Feb-1998)


SAMSUNG ELECTRONICS: Confirms Talks with Intel
----------------------------------------------
Samsung yesterday said it was in talks with Intel about a possible equity
stake in its semiconductor business, Samsung Electronics. The talks are
understood to be in the preliminary stages. Last year, Intel took a 10%
stake in Samsung's new semiconductor plant in Austin, TX. Intel said this
had been aimed at ensuring a steady supply of memory chips for the personal
computer industry. There have been persistent rumors on the Seoul bourse
that Samsung might be seeking up to $1 billion from Intel as it seeks new
funds to develop its non-memory chip business. (Financial Times 20-Feb-1998)


SAMSUNG HEAVY: Clark Co. to Purchase Forklift Division
------------------------------------------------------
Samsung Heavy Industries, one of South Korea's three largest shipbuilders,
agreed to sell its forklift plant to Clark Co. of the United States.
Samsung also agreed to sell an unspecified quantity of real estate holdings
in the southern industrial complex of Changwon where the US firm plans to
set up its own plant.

Samsung Heavy Industries is a major subsidiary of the giant Samsung Group,
which like other family-run conglomerates has been under pressure to
implement drastic structural reforms and concentrate on core businesses by
shedding
marginal units.

But Samsung vowed to retain its shipbuilding business, saying the deal with
Volvo would improve the company's financial conditions. "We believe
shipbuilding is still lucrative, despite a temporary setback in January," a
Samsung spokesman said earlier. (Agence France-Presse; 02/19/98)


SAMSUNG HEAVY: Volvo Agrees to Buy Construction Division
--------------------------------------------------------
Sweden's Volvo AB has agreed to buy the construction
equipment division of South Korea's Samsung Heavy Industries Co. for some
700 million dollars, the Korean company announced here Thursday. "Letters
of intent have been exchanged and approved by board members of the
two companies," a Samsung spokesman told AFP. This would be the first major
foreign takeover of a domestic firm under new laws revised this year to
speed up industrial and financial reforms amid a staggering currency
crisis. South Korea legislated a layoff bill last week, allowing firms to
dismiss workers for restructuring efforts such as mergers and acquisitions.

Samsung and Volvo are expected to sign a final agreement "within several
weeks" after narrowing differences over the price and other terms. "Both
firms found that they could benefit from the deal. Volvo has tried to
expand its business in Asia, while Samsung needed money for restructuring,"
the spokesman said.

Samsung's construction equipment division, which produces some 80 models of
construction equipment such as excavators, loaders and cranes, registered
680 billion won (397 million dollars) in total sales last year. (Agence
France-Presse; 02/19/98)                         


===============
M A L A Y S I A
===============

ESSO: remains bullish on its investments
----------------------------------------
ESSO Companies in Malaysia remains bullish on its investment and upstream
business prospects in the country despite a reduction in sales for the
second half of 1997 due to the depreciation of the ringgit vis-a-vis the US
dollar. The group does not anticipate any restructuring of its operations
in view of the economic downturn and has not made any reduction in its
investment plans for this year.

"We have not made any changes in our investment programme and will continue
to look for investment opportunities," Philip J. Dingle told reporters in
Kuala Lumpur yesterday after presenting cheques to Esso employees in
regards to the group's 1997 Employee Involvement Programme.

Dingle put down any suggestions that the group will be restructuring its
operations due to the country's economic downturn. "We have not begun any
steps to downsize or to restructure and I do not anticipate that we would
do any of that based on what has happened so far.

For the first half of 1997, Esso Malaysia recorded a 31 per cent increase
in pre-tax profit to RM49.7 million on the back of RM1.1 billion in
turnover. (New Straits Times 19-Feb-1998)


SEAGATE TECHNOLOGY: Clarifies Lay Offs of 10,000
------------------------------------------------
SEAGATE Technology Inc's recent decision to lay off about 10,000 workers,
mostly from operations in Malaysia, Singapore and Thailand, is not
connected with the economic crisis that has hit the Asian countries.
According to the company, the move was part of Seagate's worldwide
restructuring move, but many have misunderstood it as to have been prompted
by the region's economic situation.

Seagate's Asean/South Asia country manager B.S. Teh said other than being
part of the restructuring measure, the retrenchment exercise was also
because of the troubled worldwide hard disk market.

He added that the entire hard disk industry is being affected because of
the declining demand for standalone desktops worldwide. "Seagate has been
unlucky in that the report of 10,000 retrenched workers came out just when
the impact would be the most disadvantageous," Teh told reporters in Kuala
Lumpur recently.

Seagate, the world's largest independent hard disk manufacturer, has
budgeted US$300 million (RM1.2 billion) for its restructuring measure
planned for this year. Teh said an estimated US$50 million will be used
during the
first quarter of this year, while the remaining budget will be spread out
throughout the remainder of the year. (New Straits Times; 02/19/98)


=====================
P H I L I P P I N E S
=====================

ORIENT COMMERCIAL: Bidding Deadline Extended
--------------------------------------------
The Bangko Sentral ng Pilipinas (BSP), the country's central bank, has
extended the bidding deadline for ailing Orient Commercial Banking Corp.
until Friday to give an opportunity to other interested buyers. Urban Bank,
Rizal Commercial Banking Corp (RCBC) and Philippine Commercial and
International Bank (PCIB) have expressed interest to
take over Orient Bank, which has been severely affected by the regional
financial crisis. (Asia Pulse 19-Feb-1998)


PHILIPPINE AIRLINES: Delays Acquisition of Aircraft
---------------------------------------------------
Philippine Airlines (PAL) on Friday decided to defer
the acquisition of six Boeing and three Airbus aircraft earlier scheduled
to be delivered this year due to the Asian financial crisis, an airline
official said. The postponements would mean the completion of PAL's 3.2
billion-dollar refleeting program had been put back to "beyond 1999," the
airline's senior vice president for finance Jaime Bautista told reporters
after a PAL board
meeting.

None of the 36 aircraft scheduled to be acquired under the program have
been cancelled, he stressed. PAL has yet to take delivery of 16.

Bautista said PAL's operating expenses of about 30 billion pesos (750
million dollars) this year would be cut by 10 percent under this plan,
which also involves reductions in the frequencies of some of its flights to
Europe and Asia.
The management has yet to decide whether to lay off staff, but "all
employees will have to be made more productive," he added. (Agence
France-Presse; 02/20/98)


=================
S I N G A P O R E
=================


===============
T H A I L A N D
===============

FIRST BANGKOK: Citibank Abandons Takeover Moves
-----------------------------------------------
US banking giant Citibank NA has suspended moves to
take a stake in a crippled Thai institution after the authorities here took
over the local bank, it was announced Friday. Citibank NA, which in
November announced it would take a majority stake in First Bangkok City
Bank plc (FBCB), has formally advised FBCB that it had suspended a due
diligence probe into the bank, FBCB said. The due dilligence examination of
medium-sized FBCB's financial status would have determined whether Citibank
would go ahead with the planned purchase of a majority stake.

The move effectively ends the memorandum of understanding between the two
institutions and puts paid to what was to be the first ever takeover by a
foreign instiutution of a Thai bank, analysts said.

The central Bank of Thailand late last month announced a major board
shake-up, replacing FBCB's management with executives from a stronger local
institution. It later effectively took over the ailing bank and ordered it
to reduce its capital by 9.9 billion baht (215 million dollars) to rid it
of bad debts, leaving only 10 billion baht in its coffers. It was also
given 20 days to raise 32 billion baht in fresh capital in a bid to
kickstart the flagging institution.


LAEM THONG BANK: Ordered to Write Down Capital
----------------------------------------------
Laem Thong Bank said Friday it was writing down its
capital by three billion baht to provide for bad loans, before boosting it
by 4.46 billion-to-five billion baht.
Laem Thong also said it would issue 200 million new shares to the existing
partners at 15 baht a share to boost shareholder equity by three billion
baht. Under the plan, it will offer a total of 50.8 million shares to Hong
Kong's Hotel Holdings, 333.3 million shares worth 500 million baht to
Thailand's UCOM group, and 92 million to fund managers Sofaer Capital Inc.

The major financial restructuring after its last bid to recapitalise was
foiled when a foreign partner failed to subcribe to 300 million baht (6.8
million dollars) worth of shares. Laem Thong became the first Thai bank to
announce a recapitalisation last September.

It said it would put private placements with units of telecoms conglomerate
United Communication Industry plc (UCOM), international fund managers
Sofaer Capital and Olympic Council of Asia president Sheikh Ahmed.

But, the bank said, the sheikh has so far failed to take up the 300 million
baht in shares, forcing it to rethink its financial status amid a liquidity
crunch here and problems caused by the falling baht. (Agence France-Presse
20-Feb-1998)



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