/raid1/www/Hosts/bankrupt/TCRAP_Public/980226.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
Thursday, February 26, 1998, Vol. 1, No. 8
Headlines
C H I N A
CHINA AGRIBUSINESS: China Winds Up Second Largest Trust Firm
HAINAN AIRLINES: To Receive Infusion of Cash
H O N G K O N G
HSBC HOLDINGS: Sees Tough Year Over Loans
HUTCHISON WAMPOA: Moody's Downgraded Outlook
LAI SUN: Foreign Hotel Stakes Attract Investors
I N D O N E S I A
J A P A N
CROWN LEASING: BT Alex. Brown Won Bidding for $2.2B Portfolio
FUJI BANK: Downgraded by Moody's
JAPAN AIRLINES: Joint Flight Sevices with American Airlines
K O R E A
DAEWOO ELECTRONICS: Company Profile
DAEWOO ELECTRONICS: Financial Overview
DAEWOO HEAVY: Company Profile
DAEWOO HEAVY: Financial Overview
DAEYU SECURITIES: Becomes Joint Venture In Merger
HYUNDAI ELECTRONICS: Adaptec to Buy Symbios
HYUNDAI MOTOR: Company Profile
HYUNDAI MOTOR: Financial Overview
KIA MOTORS: Company Profile
KIA MOTORS: Financial Overview
POHANG IRON: Company Profile
POHANG IRON: Financial Overview
SAMSUNG ELECTRONICS: Company Profile
SAMSUNG ELECTRONICS: Financial Overview
DAEYU SECURITIES: Becomes Joint Venture In Merger
M A L A Y S I A
ARUS MURNI: Torie to Own 22pc Stake Upon Revamp
HONGKONG BANK MALAYSIA: Bad Debts Hit Malaysian Arm
TELEKOM MALAYSIA: Net Profit Fell 2.7%
P H I L I P P I N E S
BAUANG PRIVATE POWER: Rating Outlook to Negative By S&P
PHILIPPINE AIRLINES: $99 Million Loss Expected in 1998
NATIONAL POWER: Signs $160 Million Loan With Citibank
QUEZON POWER: Standard & Poor's Outlook To Negative
S I N G A P O R E
T H A I L A N D
SIAM CEMENT: Massive Net Loss On Foreign Exchange Losses
=========
C H I N A
=========
CHINA AGRIBUSINESS: China Winds Up Second Largest Trust Firm
------------------------------------------------------------
China officially wound up the country's second largest trust and
investment firm yesterday, sending a sharp warning as Beijing
seeks to clean up its financial sector. Separately, official media
reported that Beijing was considering a special bond issue to
recapitalise state banks, which are technically insolvent.
Shaken by the Asian financial crisis, China is overhauling its
debt-laden banks and trying to rein in the excesses of its non-
bank financial institutions.
The China Agribusiness Development Trust and Investment Corp was
closed in January last year. At the time, the People's Bank of
China, the central bank, said irregularities had caused serious
losses. The company had been crippled by failed real estate and
stock market investments. The China Construction Bank took over
the firm's domestic business while its overseas affairs were
handled by the Bank of China. An announcement by the central bank
yesterday said the custody period had been completed. The trust
firm's securities business would be taken over by China Cinda
Trust and Investment Co. Other assets and liabilities would be
taken over by the China Construction Bank, apart from those
already transferred to the Ministry of Finance, the Bank of China
and the Agricultural Bank of China. China Agribusiness had more
than 300 subsidiaries across China and 10 overseas branches,
including one in Hongkong. The company had 10,000 direct employees
and total assets in 1996 were about 30 billion yuan (S$5.9
billion).
In closing the company last year, officials warned that other
badly managed trust and investment companies could expect a
similar fate. Trust companies are poorly regulated and many are
heavily exposed to the overbuilt property market, raising concerns
that they could collapse and shake the financial system. Analysts
said Beijing was preparing to streamline the industry. "Large and
profitable trust firms will be kept," said one Cinda analyst. "But
some smaller and poorly-managed trust firms will definitely be
closed." Official newspapers said yesterday that China's State
Council, or cabinet, had proposed that the Ministry of Finance
make a special state debt issue to "supplement" the capital funds
of state-owned commercial banks.
The proposal was under review by senior members of the Standing
Committee of the National People's Congress, or parliament, at a
meeting that began on Monday. Government-backed banks are
technically insolvent after years of propping up ailing state
firms. "China is learning lessons from the Asian financial
crisis," said Liao Qun, a senior economist for Standard Chartered
Bank in Hongkong.
HAINAN AIRLINES: To Receive Infusion of Cash
--------------------------------------------
A recent agreement calls for Hainan Airlines to receive a
syndicated foreign loan of US$11 million. A banking consortium
consisting of Banque de l'Indochine et de Suez of France, Banca
Commerciale Italiana, and the Shanghai branch of Hua-Xia Bank of
China agreed to the loan following an inspection of the company's
operational performance, credit status and
development plan. The Shanghai Joint Financial Co will serve the
lead manager. A 1997 agreement calls for the Bank of China to
provide separate loans totalling 6.5 billion yuan (US$783.13
million). (Xinhua and China Daily 20-Feb-1998)
=================
H O N G K O N G
=================
HSBC HOLDINGS: Sees Tough Year Over Loans
-----------------------------------------
HSBC Holdings PLC, the global banking powerhouse that makes most
of its money in Asia, said its net profit rose 8 percent in 1997,
less than expected, and it more than tripled its provisions for
bad debts in Asia and warned that 1998 would be rockier. HSBC,
the largest banking company in both Britain and Hong Kong, is now
based in London, but the company traces its origins to Hongkong &
Shanghai Banking Corp. Its net profit rose to l3.36 billion ($5.5
billion), the holding company said. Analysts had expected an
increase of at least 10 percent.
HSBC indicated in its earnings report that the most serious
consequences of the region's financial crisis had yet to be seen.
Given that the company is one of Hong Kong's healthiest banks,
that could spell poor results for many of the
region's other banks, most of which report their earnings this
week and in early March. The company said its exposure to
borrowers in the Asian countries that sought bailouts from the
International Monetary Fund in 1997 South Korea, Indonesia and
Thailand represented less than 2 percent of its assets at the end
of last year.
Earnings at HSBC's largest unit, the Hongkong Bank group, fell 2
percent when stated in pounds. Like all big banks in Hong Kong,
HSBC's operations here, which include its 61 percent-owned Hang
Seng Bank, have heavy exposure to mortgage lending. Hang Seng
Bank's net profit rose 10 percent, falling short of the consensus
forecast of 14 percent made by 32 analysts surveyed by IBES Inc.
HSBC said its charges for nonperforming or doubtful debts totaled
l615 million, 60 percent more than in 1996. Provisions against bad
debts at Hongkong Bank more than tripled, to 4.5 billion Hong Kong
dollars. (International Herald Tribune 24-Feb-1998)
HUTCHISON WAMPOA: Moody's Downgraded Outlook
--------------------------------------------
Moody's Investors Service, the US credit rating agency downgraded
its outlook for Hutchison Whampoa and Sun Hung Kai Properties, two
of Hong Kong's biggest properties. Hutchison Whampoa said the
change in its long-term foreign currency outlook from stable to
negative was simply in line with that for the sovereign.
Hutchison and Sun Hung Kai pointed to their strengths, including
strong balance sheets and liquidity.
Several analysts in Hong Kong said Moody's had lost credibility
and that the ratings agencies are reactive rather than forward
looking. (Financial Times 25-Feb-1998)
LAI SUN: Foreign Hotel Stakes Attract Investors
----------------------------------------------
Lai Sun Development says investors have expressed interest in
acquiring its overseas hotel investments, including the Four
Seasons Hotel in New York. Director Keith Wu said the promising
outlook of the hotel sector in the United States had made
investors interested in their hotels, although the group
had not formally put any assets on the market.
Lai Sun shares have been hit heavily by the recent slide in the
property sector, and analysts see the disposal of hotel interests
as a way to strengthen the group's financial position.
"Talks are always on," Mr Wu said, but added negotiations had not
advanced far.
Through its 52 per cent owned subsidiary, Lai Sun Hotels
International, the property developer owns interests in about 13
hotels and resorts in Asia, North America and Europe, with more
than 2,900 rooms. Assets in North America include a 49.99 per
cent stake in the 370-room Four Seasons Hotel in New York, and a
25 per cent stake in the Regent Beverly Wilshire in Los Angeles,
which it acquired in 1996.
Analysts say the value of hotel rooms in the US has risen more
than 20 per cent in the past year, boosted by the improved
economy. Lai Sun also led a consortium, which included Hong Kong
Parkview, to acquire the Four Seasons Hotel in Milan last June.
Those assets were on the possible sale list, with the aim of
raising capital to repay company debts, Mr Wu said.
Its debt-to-equity ratio is estimated to be more than 50 per cent.
Victor Tin, associate director of Kennedy Goldman International, a
subsidiary of US-based real estate agent Kennedy Wilson
International, said US funds were keen to acquire hotel properties
in the US. But potential buyers wanted to acquire an entire hotel
project, rather than a stake in a property, he said.
Mr Tin said Lai Sun either would need to persuade its partners to
agree to the sale of the hotels, or sell its hotel interests to
its partners. Hong Kong Parkview yesterday would not say whether
it was interested in buying the hotel interests owned by Lai Sun.
Mr Wu said selling overseas hotel interests was not the sole way
of lowering the group's gearing. He said the group was finalising
the sale of several small properties in Hong Kong, which could be
worth several hundred million dollars.
(South China Morning Post 11-Feb-1998)
=================
I N D O N E S I A
=================
=========
J A P A N
=========
CROWN LEASING: BT Alex. Brown Won Bidding for $2.2B Portfolio
-------------------------------------------------------------
BT Alex. Brown won the bidding for a $2.2 billion portfolio of
loans backed by distressed Japanese real estate assets-the largest
sale of its kind. Deutsche Morgan Grenfell, Lennar Corp., and
General Motors Acceptance Corp. teamed up with the Bankers Trust
unit to buy the portfolio, which includes
office, multifamily, industrial, and retail properties. The group
paid $220 million, or 10% of the loans' face value.
The seller is Crown Leasing, a Tokyo finance company that filed
for bankruptcy last year. The transaction is expected to close in
this quarter. Japan is readying roughly $600 billion of
distressed real estate for sale. That is double the amount handled
by the Resolution Trust Corp., which liquidated bad U.S. real
estate loans held by savings and loans in the 1980s.
As the distressed realty debt business has evolved into a whole
loan and securitization business in the United States, opportunity
funds have cast their eyes abroad for hefty returns. In markets
like Mexico, France, and Japan, where major economic crunches have
put financial institutions into distress, a backlog of
nonperforming and subperforming loans has built up.
But risks abound. While Bankers Trust, along with Goldman, Sachs &
Co., Morgan Stanley, and Lehman Brothers Inc., have been slowly
building their expertise in Asian real estate for two years, no
one knows how prolonged the downturn will be.
In Japan, where property prices are as much as 80% off their peak,
the government is beginning programs to stimulate economic growth.
That includes simplifying the tax structure and changing real
estate zoning laws.
BT Alex. Brown, which has created a special-purpose acquisition
vehicle to buy this portfolio, plans to restructure and reorganize
the debt and negotiate with borrowers for discounted payments. In
addition, that involves managing the properties.
Though there have been a few sales of smaller portfolios, future
sales are bound to be in the $1 billion range, given that
financial institutions are trying to get so much product off their
balance sheets before the end of the fiscal year in Japan on March
31. (American Banker 23-Feb-1998)
FUJI BANK: Downgraded by Moody's
--------------------------------
Moody's downgraded the debt of Fuji Bank, one of Japan's largest
banks. Moody's cut the long-term deposit and senior debt ratings
of Fuji Bank, from "A1" to "A3." After the collapse of Yamaichi
Securities, Fuji's share price slid. Moody's blamed the down
grade on the bank's recent decision to participate in a rescue of
Yasuda Trust. Yasuda Trust, in Moody's opinion has very
substantial levels of impaired assets and limited earnings power.
Moody's said its move had also been triggered by the recent
announcement that Fuji planned to sell part of its stake in Heller
Financial, its US subsidiary. (Financial Times 25-Feb-98)
JAPAN AIRLINES: Joint Flight Sevices with American Airlines
-----------------------------------------------------------
Japan Airlines (JAL) and American Airlines (AA) have
reached a basic agreement on joint flight services, the first such
link-up between Japanese and U.S. carriers. The chairmen of the
two airlines said today that through the "code- sharing
arrangement," Japan's largest carrier and the second biggest U. S.
airline will put their "designator codes" on many of each other's
flights.
At a joint conference, JAL Chairman Susumi Yamaji ('Soo-SOO-mee
Yah-MAH-jee") and Robert L. Crandall, chairman of the Fort Worth,
Texas-based parent company of American, said the two carriers
will sell seats on such flights as if they were their own. A
Japan-U.S. bilateral aviation agreement in late January that
allows unlimited code-sharing between carriers of the two
countries made the agreement possible.
JAL will put its flight numbers on AA's flights between Japan and
the United States as well as AA's services within North America
and to Latin American destinations. AA will put its flight
numbers on JAL's trans-Pacific flights as well as
JAL's services within Japan and the rest of Asia. Joint operations
are expected to begin as around October, covering 15 routes first,
then expanding to 70 routes in April 1999 and to more than 100
city pairs by summer 1999.
AA is planning a comprehensive alliance with British Airways (BA),
which, like AA and JAL, is among the world's largest carriers. But
JAL's Yamaji said the latest JAL-AA agreement is limited to the
two carriers, and JAL at this moment has not decided yet whether
to join the BA-AA partnership.
=========
K O R E A
=========
DAEWOO ELECTRONICS: Company Profile
-----------------------------------
Daewoo Electronics Co., Ltd
541 5-Ga Namdaemunno
Chung-Gu, Seoul, KOREA
Telephone: 82 2 360 7114 Fax:
Business: Manufacture of integrated electronic appliances.
Founded 1972; Employs 1,2421 workers.
DAEWOO ELECTRONICS: Financial Overview
--------------------------------------
Daewoo Electronics Co., Ltd
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 0 0
Operating Income 0 295,593 228,893
Net Income 0 0 0
Current Assets 0 0 0
Current Liabilities 0 0 0
Working Capital 0 0 0
Total Assets 0 776,226 742,055
Total Liabilities 0 0 0
Shareholder Equity 0 776,226 742,055
DAEWOO HEAVY: Company Profile
-----------------------------
Daewoo Heavy Industry, Ltd.
6, Mansuck-Don
Tong-Gu, Inchon, KOREA
Telephone: 82 32 760 1114 Fax: 82 32 762 1546
Business: Manufacture of general machinery, diesel engines,
industrial vehicles, reilroad carriages,
industrial automated materials and aircraft
components
Founded 1937; Employs 1,9563 workers.
DAEWOO HEAVY: Financial Overview
--------------------------------
Daewoo Heavy Industry, Ltd.
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 3,963,039 1,618,467
Operating Income 0 396,059 165,542
Net Income 0 129,483 74,435
Current Assets 0 4,265,835 3,233,607
Current Liabilities 0 2,713,814 2,508,576
Working Capital 0 1,552,021 725,031
Total Assets 0 0 0
Total Liabilities 0 0 0
Shareholder Equity 0 0 0
DAEYU SECURITIES: Becomes Joint Venture In Merger
-------------------------------------------------
South Korea's Daeyu Securities Co. will be converted to a joint-
venture brokerage house in the first friendly merger and
acquisition executed by a foreign concern on a South Korean
financial institution. The British financial institution, Regent
Pacific Group, announced that it had agreed to buy half of
the 48.77-percent stake owned by the largest shareholder in Daeyu,
Korea's 18th largest securities company, for about US$10 million
(16 billion won) by offering more than 8,000 won per share to
acquire joint managerial rights.
HYUNDAI ELECTRONICS: Adaptec to Buy Symbios
-------------------------------------------
In a deal that went from initial proposal to fait accompli in two
weeks, Adaptec Inc. will buy Symbios Inc. for $775 million from
its Korean parent company. Adaptec will double in size by
acquiring Symbios, a semiconductor manufacturer with operations in
Colorado Springs and Wichita, Kan., and headquarters in Fort
Collins. Symbios' parent, Hyundai Electronics America Inc., had
planned to take Symbios public this year, hiring a new chief
executive and raising its marketing profile for the storage and
silicon products it sells, mostly to original equipment
manufacturers (OEMs).
But ongoing economic woes in Korea apparently forced the company
to shop its profitable subsidiary for $765 million cash plus
assumed debt. Adaptec will finance the purchase from its $318
million cash reserve plus debt. "Hyundai's felt the stress of
that situation," F. Grant Saviers, Adaptec's president and chief
executive officer, said Thursday. "Two weeks ago, Hyundai's
bankers contacted us, and we executed the definitive agreement
today."
Both companies make storage devices and integrated circuits,
although Symbios concentrates on the high end of the market while
Adaptec focuses on the desktop. Hyundai also owns Maxtor Corp., a
hard drive company with operations in Longmont that last week
announced its first profitable quarter in five years.
"Maxtor is not being shopped," spokesman Doyle Albee said.
(Rocky Mountain News 20-Feb-1998)
Hyundai, South Korea's No 2 computer chip maker, plans to invest
the money from Symbios' sell-off in its US$1.3 billion
semiconductor plant under construction in Eugene, Oregon, company
officials said. The sale is the latest in a series of overseas
investment pullbacks by South Korea's debt-ridden conglomerates,
whose cash flows have been aggravated by the
nation's financial crisis. (China Daily 21-Feb-1998)
HYUNDAI MOTOR: Company Profile
------------------------------
Hyundai Motor Co. South Korea
140-2 Kye-Dong
Chongno-Gu, Seoul
KOREA
Telephone: 82 2 764 1114 Fax: 82 2 741 0470
Business: Manufacure of automobiles.
Founded 1967; Employs 4,5373 workers.
HYUNDAI MOTOR: Financial Overview
---------------------------------
Hyundai Motor Co. South Korea
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 10,339,186 0
Operating Income 0 234,528 0
Net Income 0 156,670 0
Current Assets 0 0 0
Current Liabilities 0 0 0
Working Capital 0 0 0
Total Assets 0 0 0
Total Liabilities 0 0 0
Shareholder Equity 0 0 0
KIA MOTORS: Company Profile
---------------------------
Kia Motors Corp.
992-28, Shihung-Dong
Kuru-Gu, Seoul
KOREA
Telephone: 82 2 788 1114 Fax: 82 2 784 0746
Business: Manufacture of motor vehicles.
Founded 1944; Employs 2,9525 workers.
KIA MOTORS: Financial Overview
------------------------------
Kia Motors Corp.
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 0 0
Operating Income 0 899,953 0
Net Income 0 266,726 0
Current Assets 0 -936,489 0
Current Liabilities 0 0 0
Working Capital 0 -936,489 0
Total Assets 0 0 0
Total Liabilities 0 0 0
Shareholder Equity 0 0 0
POHANG IRON: Company Profile
----------------------------
Pohang Iron & Steel Co., Ltd.
POSCO Center
892 Taechl-4-dong
Kangnam-ku, Seoul
SOUTH KOREA
Telephone: 02 7584-114 Fax: 02 752-5986
Business: Manufacture, sale and export of steel products,
including hot rolled products, plates, wire rods,
cold rolled productsm silicon steel sheets,
and stainless steel products.
Founded 1968; Employs 2,9161 workers.
POHANG IRON: Financial Overview
-------------------------------
Pohang Iron & Steel Co., Ltd.
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 8,642,886 8,306,094
Operating Income 0 1,507,693 947,634
Net Income 0 948,364 371,571
Current Assets 0 5,038,923 4,471,523
Current Liabilities 0 4,018,476 3,772,935
Working Capital 0 1,020,447 698,588
Total Assets 0 14,715,094 13,592,236
Total Liabilities 0 8,671,620 8,527,431
Shareholder Equity 0 6,043,474 5,064,805
SAMSUNG ELECTRONICS: Company Profile
------------------------------------
Samsung Electronics Co., Ltd.
250, Taepyonfno 2-ga
Chung-Gu. Seoul
SOUTH KOREA
Telephone: 82 02 727-7114 Fax: 82 02 753-0967
Business: Manufacture of consumer electronics, information
and telecommunication equipment, semiconductors
and computers.
Founded 1969; Employs 5,6999 workers.
SAMSUNG ELECTRONICS: Financial Overview
---------------------------------------
Samsung Electronics Co., Ltd.
Amounts stated are in millions of Won for the year ending on each
date indicated. Zeros generally indicate financial data is not
available.
31-Dec-1996 31-Dec-1995 31-Dec-1994
----------- ----------- -----------
Total Revenues 0 16,189,836 11,518,080
Operating Income 0 0 0
Net Income 0 0 945,048
Current Assets 0 325,577 0
Current Liabilities 0 341,797 0
Working Capital 0 -16,220 0
Total Assets 0 13,561,817 0
Total Liabilities 0 13,130,950 0
Shareholder Equity 0 430,867 0
===============
M A L A Y S I A
===============
ARUS MURNI: Torie to Own 22pc Stake Upon Revamp
-----------------------------------------------
ARUS Murni Corp Bhd (AMCB) said that after its proposed
restructuring exercise, its substantial shareholder, Torie
International Pte Ltd will have a stake of 22 per cent in AMCB
with 37.64 million shares. In addition, two other substantial
shareholders - HLBC Nominees (Tempatan) Sdn Bhd and HLB Nominees
(Tempatan) Sdn Bhd - will each hold 15.89 million shares
representing 9.44 per cent stake in AMCB.
Arus Murni Sdn Bhd (AMSB) will hold 11.98 million shares
representing 7.47 per cent, said AMCB in a response yesterday to a
Kuala Lumpur Stock Exchange (KLSE) request for further information
regarding its proposed restructuring. AMB will also holds 2.99
million warrants after the share sale amounting to 5.05 per cent.
AMCB, in a statement to the KLSE last week, had said it proposed
to acquire various assets comprising residential and commercial
properties in Singapore worth RM117.43 million in cash and various
assets comprising commercial, industrial, residential and
recreational facilities in Malaysia worth RM289.74 million in cash.
In its statement yesterday, AMCB said the price of the shares and
warrants which are to be disposed to Torie International would be
at RM2.40 and 40 sen, respectively. The company added that the
directors and substantial shareholders of Torie
International are Mr Eric Tan Eng Huat (70 per cent), Mr Lu Chai
Hong (20 per cent) and Mr Tan Ler Choo (10 per cent).
On the proposed Singapore and Malaysian acquisitions, AMCB said
the amount of deposit paid as purchase consideration is RM39
million with the outstanding sum to be settled on the completion
date of the agreement. There is no agreement for deferred
payment. On the sources of funds for the proposed subscription
agreement, AMCB said it will come from the sale of Kewangan
Bersatu Bhd (KBB) to Hong Leong Finance Bhd and internally
generated funds.
The disposal of KBB, AMCB said, is a condition stipulated by Bank
Negara Malaysia in their approval for the share sale.
Furthermore, it is in line with the central bank's call for
mergers within the industry, it added. According to AMCB, the main
activity of the group will be property investment and property
development upon completion of the proposed
restructuring which will then eliminate its dependence on the
finance industry.
AMCB went on to say that the profit guarantee from the vendors of
the Singapore and Malaysian property companies will ensure that
the group's pre-tax profit will not be less than RM35 million per
year for the two calendar years commencing from the completion
date. In addition, the income generated from the properties in
Singapore will be denominated in Singapore currency, which will
enable AMCB to earn foreign
exchange.
AMCB further disclosed that Encik Mohd Faiz Abdullah and Encik
Hamzah Harun, who are directors and substantial shareholders of
AMCB and AMSB are deemed interested parties, by virtue of the
share sale being conditional on, inter-alia, the completion of the
restructuring. AMCB also said that Setaragaya Ekuiti Sdn Bhd
will be a wholly owned subsidiary after the proposed subscription
agreement. (Business Times 24-Feb-1998)
COMMERCE ASSET HOLDINGS: RHB-CAHB Pact May be Final This Week
-------------------------------------------------------------
TAN Sri Abdul Rashid Hussain says talks with Commerce Asset
Holdings Bhd (CAHB) on the purchase of Bank of Commerce Bhd (BOC)
by Rashid Hussain Bhd (RHB) could be finalised this week.
The RHB executive chairman said the RHB board of directors gave
its approval for the company to start negotiating with CAHB for
the purchase of BOC, which is CAHB's commercial banking arm, on
Saturday.
The renewed negotiations, after the collapse of the first one a
week ago, will pave way for the merger of RHB Bank Bhd and BOC.
"We are pleased to be back in negotiations with CAHB and now that
we have full board approval, we will move towards finalising the
agreement within next week," Rashid said in a statement on
Saturday.
Rashid said the merger between both banks will create a "much
stronger" integrated financial institution in the country, at a
time when stability and strength are vital. "The enlarged bank
will continue to focus on our respective core businesses
which is to service the manufacturing industry, which forms the
backbone of the Malaysian economy," he added.
He also said that with their combined expertise in trade
financing, the merged entity will be in a strong position to
compete with international players as the market opens in 1999.
Rashid also said the merger of the two banks will result in a
"win-win" situation for shareholders of both groups and that the
RHB group believes the exercise "makes sense for Malaysia." The
Government through Bank Negara has been encouraging financial
institutions, including banks and finance companies, to form
larger and more viable units through mergers.
While the central bank had started making the call quite some time
ago to ensure local financial institutions would have enough
muscle to eventually compete with their international
counterparts, the prevailing economic situation has rendered
rationalisation of the industry even more urgent. News that both
the financial groups were talking of merging their two banks
surfaced some two weeks ago although negotiations later stalled
when both parties could not agree on certain structural issues.
When backing out of the first merger talks, CAHB said it felt that
the RHB group was giving too much emphasis on arriving at a
corporate restructuring
scheme.
The exercise was given a new lease of life when a revised proposal
was received by CAHB from the RHB group last Wednesday.
Subsequently, CAHB agreed to open another round of talks based on
the revised proposal. Among other things, the revised proposal was
for the acquisition of BOC by the RHB group at a price based on
the bank's net tangible assets as at December
31 1997, subject to adjustments if any, following a due diligence
exercise.
Bank Negara, in its role as facilitator in the merger exercises
involving financial institutions, had said earlier that it was
seeking to ensure that price paid and terms in any acquisition
will be levels that would satisfy shareholders of the acquiree
while not burdening the acquiring parties. (Business Times
23-Feb-1998)
HONGKONG BANK MALAYSIA: Bad Debts Hit Malaysian Arm
---------------------------------------------------
Hongkong Bank Malaysia's profits fell 29 per cent to M$345 million
(about HK$703.11 million), as bad debts soared to $249 million,
from $38 million in 1996. The bank said it had taken an extra
general provision of $98 million, from $21 million, but said it
was enjoying growth in interest-earning assets mainly from loans
and advances. Net interest income improved by $49 million to $632
million, while its other operating income line jumped $74 million,
to $361 million, but specific provisions rose to $151 million
following the currency crisis. Total assets rose $7.2 billion,
with cash and short-term funds up $3.2 billion. (South China
Morning Post 24-Feb-1998)
TELEKOM MALAYSIA: Net Profit Fell 2.7%
--------------------------------------
Last year, Telekom Malaysia's net profit fell 2.7 percent to $486
million as competition intensified and the sharp drop in the value
of the Malaysian currency took its toll. The weak ringgit has
been especially hard on companies with debt denominated in foreign
currency. Telekom is optimistic. Mohamed Said Mohamed Ali, chief
executive of the company said that the group believes that the
economic situation will recover and that there will be
opportunities for the company to grow in the domestic market,
which will be augmented by the company's overseas investment.
=====================
P H I L I P P I N E S
=====================
BAUANG PRIVATE POWER: Rating Outlook to Negative By S&P
-------------------------------------------------------
Standard & Poor's today revised its outlook on Bauang Private
Power Corp. to negative from stable. Additionally,
Standard & Poor's affirmed its double-`B'-plus rating on Bauang
Private Power's senior secured notes due 2008.
This follows Standard & Poor's outlook revision on the Philippines
foreign currency rating (double-`B'-plus/single-`B') to negative
from stable and the downgrade of the local currency rating to
triple-`B'-plus/`A-2 from single- `A'-minus/`A-1'. The local
currency rating outlook is now negative. Standard &
Poor's emphasizes that the outlook revision for the project bonds
is a direct result of deteriorating economic conditions in the
Philippines and not due to project level operating risks.
The Bauang project is a 235 MW (gross), diesel-fired power
generation facility, located about 255 kilometers north of Manila
in the Philippines. Bauang was formed in 1993 as a special-purpose
entity to develop, design, construct, and operate the facility.
First Private Power Corp., a Philippine
corporation, has a 93% majority interest in the partnership, and
The Philippine American Life Insurance Co. holds the remaining 7%
interest. Bauang Private Power services the debt with revenues
from a Build-Operate- Transfer agreement
with NAPOCOR. The agreement provides for a capacity payment that
completely services debt requirements and an energy fee for
electricity generated. Financial projections demonstrate that
under most adverse conditions, adequate cash exists to service
debt obligations.
OUTLOOK: NEGATIVE
Government guarantees, high facility availabilities and the
project's experienced management and operations staff clearly
benefit the project's credit rating and will prevent downward
rating movement due to potential project level problems. However,
the project's troublesome legal and financial
structure, its expected high-priced power relative to other
projects, and its higher position in NAPOCOR's merit order
dispatch likely will limit upward ratings movement. If
macroeconomic problems persist in the Philippines and a
foreign currency downgrade results, the rating on the project's
bonds would fall with the sovereign, Standard & Poor's.
(Standard & Poor's CreditWire 24-Feb-1998)
PHILIPPINE AIRLINES: $99 Million Loss Expected in 1998
------------------------------------------------------
Philippine Airlines expects to lose more than $99 million in 1998,
compared with earlier expectation of breaking even which had
hinged on a $4 billion refleeting program. The airline is now
deferring the delivery of nine aircraft due in 1999.
(Financial Times 25-Feb-1998)
NATIONAL POWER: Signs $160 Million Loan With Citibank
-----------------------------------------------------
The National Power Corp. of the Philippines on
Tuesday said that it had signed a 160-million-dollar loan
agreement with Citibank NA-led bank syndicate. The loan, to be
guaranteed by the Philippine government, will be used as bridge
financing for part of the cost of the non-power portions of a 1.1
billion-dollar dam to be set up in the northern town of San Roque,
the utility said in a statement.
The non-power components, including irrigation, flood control and
water quality, will cost an estimated 400 million dollars.
Citibank was the lead underwriter of the loan which was syndicated
by ABN-Amro Bank, Credit Agricole Indosuez, Kredietbank N.V. and
the Development Bank of Singapore Ltd.
The plant, which will generate electricity, control flooding,
irrigate agricultural land and improve the quality of water, will
be constructed under the build-operate-transfer scheme through a
consortium led by Marubeni Corp. of Japan.
Build-operate-transfer refers to a system where a private firm
sets up a major piece of infrastructure, operates it for a certain
period and then transfer it to the government.
(Agence France-Presse 24-Feb-1998)
QUEZON POWER: Standard & Poor's Outlook To Negative
---------------------------------------------------
Standard & Poor's revised its outlook on Quezon Power
(Philippines) Ltd. Co. to negative from stable. At the
same time, Standard & Poor's affirmed its triple-'B'-minus local
currency and double-'B'-plus foreign currency issuer credit
ratings on Quezon Power. This follows Standard & Poor's outlook
revision on the Philippines foreign currency rating (double-'B'-
plus/single-`B') to negative from stable and the downgrade
of the local currency rating to triple-'B'-plus/'A-2 from single-
'A'-minus/'A-1'. The local currency rating outlook is now
negative. Standard & Poor's emphasizes that the outlook revision
for the project bonds are a direct result
of deteriorating economic conditions in the Philippines and not
due to project level or construction risks.
Quezon Power Inc. is owned by an affiliate of Ogden Energy Group
Inc. (26% interest), a wholly owned subsidiary of Ogden
Corp. (triple-'B'-plus, outlook stable); Quezon Generating Co.
(72% interest), a Cayman company owned by affiliates of
International Generating Co. (Intergen), a subsidiary of Bechtel
Enterprises; and PRML (2%).
A combination of Bechtel Overseas Corp. and Overseas Bechtel Inc.
is responsible for the design, engineering, construction, testing,
and start-up at the facility. The project is located on the east
coast of the Island of Luzon, southeast of Manila. Coal supplies
will come from the PT Adaro and PT Kaltim
Prima mines, located on the island of Kalimantan, Indonesia.
Quezon Power will service its debt from revenues pursuant to a 25-
year, unconditional take-or-pay contract with Meralco. Capacity
payments alone will be sufficient to service the debt.
OUTLOOK (FOREIGN AND LOCAL CURRENCY): NEGATIVE
The project's strong economic fundamentals, strategic importance
to its offtaker, its highly experienced sponsors, and
fundamentally sound electricity economics allow Standard & Poor's
to conclude that the project's foreign currency and local currency
ratings will not deteriorate due to project level
reasons. However, further deterioration of the Philippine economy
could result in a lowering of the Philippine foreign currency
rating, which could then cause the project's bond rating to fall
also, Standard & Poor's said.
=================
S I N G A P O R E
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T H A I L A N D
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SIAM CEMENT: Massive Net Loss On Foreign Exchange Losses
--------------------------------------------------------
Thailand's biggest conglomerate, Siam Cement Plc.,
is poised to report a massive net loss on the back of huge foreign
exchange losses, analysts said Tuesday.
ING Barings analyst Eric Unchida Henderson said he expected the
company to report a 1997 net loss of 48 billion baht (1.1 billion
dollars) Wednesday, with forex losses of 56 billion baht.
He said the higher than expected losses may see Siam Cement's
equity completely wiped out, when it reports its results
Wednesday. Last month the company's vice president Aviruth
Wongbuddhapitak estimated the 1997 forex loss at 40.5 billion baht
on a conversion rate of 47 against the dollar.
He said Siam Cement had total foreign debt of 4.2 billion dollars,
of which 30 percent or about 1.2 billion dollars is soon to be
converted into yen-denominated loans following approval by
Japanese creditors. Aviruth said the conversion would help reduce
the interest payment burden, while the company planned a special
program to re-value its assets.
An analyst with Thai Investment and Securities said that due to
sluggish demand and to ease its financial problems, Siam Cement
had cancelled or suspended 21 investment projects, both domestic
and overseas. The analyst said the cement industry faced a very
difficult time in the next few years because of oversupply
problems, with demand this year estimated to drop 30 percent.
Many analysts regard Siam Cement as an indicator for the economy
at large, given its spread of businesses and customer base.
Siam Cement reported a third quarter net loss of 18.3 billion
baht, compared with a net profit of 1.53 billion ln the previous
year. For the nine months to September, the net loss stood at
21.93 billion baht, after a profit of 5.93 billion baht.
In 1996, the company reported a net profit of 6.78 billion baht.
(Agence France-Presse 24-Feb-1998)
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