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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
Friday, March 20, 1998, Vol. 1, No. 23
Headlines
C H I N A & H O N G K O N G
APPLIED INTERNATIONAL: Reports Half-Year Results
HB INTERNATIONAL: Creditors file Suit
MANDARIN ORIENTAL: Net Profits Down 25%
PEREGRINE INVESTMENTS: India Unit to Wind up Operations
PEREGRINE INVESTMENTS: Steady Safe Announces Buy-Back
PLAYMATES TOYS: Incurs Exceptional Loss
SING TAO: Criminal Charges Against HSNL Executives
I N D O N E S I A
J A P A N
YAMAICHI SECURITIES: Matsumo Involved in Cover-up
K O R E A
DAESANG: Lysine Operations Acquired by BASF
KIA MOTORS: Defends its Rehabilitation Efforts
MIDOPA: Supermarket Declared Insolvent
M A L A Y S I A
PROTON: 60% Fall in Domestic Sales
P H I L I P P I N E S
S I N G A P O R E
WASSALL ASIA PACIFIC: Reports Losses
T H A I L A N D
BANK OF ASIA: ABN Amro Takes 75% Stake in Bank
BIG C: 1997 Operating Results
MONTERY ASIA: Trading Suspended for Want of Financials
NEP REALTY: 1997 Operating Results
=================================
C H I N A & H O N G K O N G
=================================
APPLIED INTERNATIONAL: Reports Half-Year Results
------------------------------------------------
For the period from July 1, 1997 through December 31,
1997, Applied International Holdings Limited reported
an HK$12.5 million net loss on turnover of HK$71.3
million, down sharply from sales of HK$199.7 million in
the corresponding 1996 six-month period when the company
booked profits of HK$15 million. (SEHK 19-Mar-1998)
HB INTERNATIONAL: Creditors file Suit
-------------------------------------
The board of directors for HB International Holdings
Limited responded yesterday to a report in a newspaper
indicating that three Writs of Summons have been issued
by trade creditors against HB Electronics Limited,
a wholly owned subsidiary and also a major subsidiary of
the Company, claiming:
Creditor Claim
-------- -----
Conlink Enterprises Ltd. HK$1,710,000
Orient Channel Enterprises Ltd. HK$560,000
12 Creditor Consortium led by
Protech Components Limited US$10,500,000
The Company admitted that Writs of Summons have been
issued against, but not served on, the Company. (SEHK
19-Mar-1998)
MANDARIN ORIENTAL: Net Profits Down 25%
---------------------------------------
The Asian financial crisis and dearth of tourists to Hong
Long pushed net profits at Mandarin Oriental International,
the hotels arm of the Jardine group, down 25 percent to
US$45m. The continuing bleak prospects have prompted the
directors to cut the total dividend from 6.30 cents to 3.50
cents. (Financial Times 19-Mar-1998)
PEREGRINE INVESTMENTS: India Unit to Wind up Operations
-------------------------------------------------------
Peregrine India is to wind up its operations in the next
few months after efforts by the parent company in Hong Kong
to seek a buyer were not successful. The board of Peregrine
Capital India Private Limited (PCIPL), which met on
Wednesday, discussed the options available and decided that
"it will be in the best interest of shareholders to conduct
an orderly wind-down of its operations in the next few
months". The company "is solvent and will pay its debts in
full," it said in a release.
The decision, it said, applies equally to its wholly-owned
subsidiary Peregrine Securities India Private Limited, but
does not apply to Peregrine Swastik, a member of the Madras
Stock Exchange and a 40 per cent affiliate of PCIPL.
The crisis began two months ago when parent company
Peregrine Investments in Hong Kong went into liquidation
following heavy investments in Indonesia which led to the
company stopping its operations in the Bombay and National
Stock Exchange of India. (Asia Pulse 19-Mar-1998)
PEREGRINE INVESTMENTS: Steady Safe Announces Buy-Back
-----------------------------------------------------
Shares in Steady Safe soared 40 per cent yesterday on
rumours the Indonesian transport firm would buy back its
US$265 million debt to failed Peregrine Investments
Holdings at a bargain price.
Steady Safe shares were suspended after rising 40 per cent
to 350 rupiah (about 26.32 HK cents) on reports of a deal
with Peregrine's liquidators to buy $265 million of unsold
promissory notes for as little as 10 cents on the dollar.
Peregrine's former Jakarta joint venture, Peregrine Sewu
Securities, traded 11 million of the 35 million shares that
changed hands in frantic activity.
Steady Safe borrowed $265 million from Peregrine last
summer in the form of promissory notes. Following the
rupiah's collapse it defaulted on payments and was a key
factor behind Peregrine's insolvency crisis and subsequent
failure.
Investors are betting that Steady Safe can buy back its
debt for as little as $26 million, launch a rights issue
and proceed with plans to run rail and shipping services in
Indonesia.
Such a plan must be negotiated with Peregrine's liquidator,
Price Waterhouse, which has come in for criticism for the
way it has handled the sale of assets. (South China Morning
Post 19-Mar-1998)
PLAYMATES TOYS: Incurs Exceptional Loss
---------------------------------------
A huge one-off loss arising from inappropriate business
decisions caused toy distributor Playmates Toys Holdings to
post a $114 million attributable loss last year against a
$53.64 million attributable profit in 1996.
The company incurred an exceptional loss of $205
million in the year to December after over-expanding its
licensing activities in the United States and from its
loss-making video games division.
The loss erased profits generated from the company's
top product - virtual pets - which contributed most of the
$75.47 million operating profit before exceptional items
last year.
Executive director Sidney To Shu-sing said: "We have a
big problem in the United States. Our strategies were
wrong.
"The US-based management was a failure. They spent
most of the time chasing after licensing contracts, but
many contracts were not viable."
The licensing activities cost the company $89.31
million, and it had to spend another $15.26 million
restructuring the management, including replacing US-based
head and Playmates executive director Richard Sallis.
After losing money for three years, Playmates spent
$55.39 million reducing its video games division last year.
(South China Morning Post 19-Mar-1998)
SING TAO: Criminal Charges Against HSNL Executives
--------------------------------------------------
The Board of Directors of Sing Tao Holdings Limited
announces the following:
1. The directors of Sing Tao Holdings Limited note
with concern the criminal charges brought by the
Independent Commission Against Corruption of Hong Kong
("ICAC") on 17th March, 1998 against Ms. Henrietta SO Shuk
Wa and Mr. TANG Cheong Shing, General Manager and Finance
Manager respectively of Hongkong Standard Newspapers
Limited ("HSNL"), a wholly-owned subsidiary of the Company.
Both employees have been charged with conspiracy to defraud
contrary to common law and false accounting contrary to
S.19(1)(a) of the Theft Ordinance.
2. Since the above individuals were first arrested in
June 1997, the Company and HSNL, through their respective
Independent Board Committees, have been monitoring and
investigating the matter and seeking to liaise with the
ICAC.
3. The Company is not in a position to form any
conclusion in respect of the charges.
4. The Company is satisfied that the subject matter of
the charges has had and can have no material effect on the
operations and businesses of the Company and HSNL.
5. The Company and HSNL will continue to monitor the
matter and liaise with ICAC as closely as they can, and
make further announcements if appropriate.
By Order of the Board
Seaman KWOK Siu Man
Company Secretary
Date: 17th March, 1998
I N D O N E S I A
J A P A N
YAMAICHI SECURITIES: Matsumo Involved in Cover-up
-------------------------------------------------
Former Ministry of Finance (MOF) official Nobuhiko Matsuno
urged a Yamaichi Securities Co. president to keep secret
his company's dealings aimed at covering up losses, a
source close to the brokerage company has told the Mainichi
Shimbun. Matsuno reportedly told former Yamaichi President
Atsuo Miki in late 1991, "Right now you can't make this
public." He was referring to Yamaichi's tobashi activities,
in which loss-making portfolios are shifted from one
corporate customer to another in an effort to keep
financial damage undisclosed.
Matsuno, who once headed the ministry's Securities Bureau,
appeared before the Diet on Wednesday as a witness. He was
asked about his alleged role in covering up Yamaichi's
losses.
In another meeting about a month later, the ministry
official once again asked about Yamaichi's tobashi
dealings, despite the fact that an amendment in the law at
around the same time had made the practice illegal.
Furthermore, despite the practice having become illegal,
Yamaichi subsequently accelerated its tobashi dealings. A
month after the second meeting, the securities company
increased from one to three the number of its dummy
companies which received loss-making portfolios.
(Mainichi 19-Mar-1998)
K O R E A
DAESANG: Lysine Operations Acquired by BASF
-------------------------------------------
South Korea's Daesang Co. has announced plans to transfer
its lysine unit to the German chemical giant BASF for
$US600 million. This is the largest sell-off of a Korean
unit to a foreign firm since the International Monetary
Fund bailout late last year. Lysine is a material used for
livestock feed. With the sell-off, the Korean food
manufacturing firm will lower its debt-to-asset ratio to
that of advanced countries and focus its efforts on more
competitive areas, the company said yesterday.
(Asia Pulse 19-Mar-1998)
KIA MOTORS: Defends its Rehabilitation Efforts
----------------------------------------------
South Korean President Kim Dae-Jung on Thursday urged the
early liquidation of ailing firms as Kia Motors Corp.
unveiled a new reform program to survive the country's
economic crisis. The president singled out the Kia, Halla
and Hanbo conglomerates as troublemakers sucking up scarce
bank loans and causing social troubles. It was his
strongest comment yet on the fate of the three insolvent
conglomerates.
Kim's comment cast a chill over hopes by Kia Motors, one of
the country's four largest car makers, for a favorable
final court decision on receivership. The auto company
filed for receivership last year when its parent group
collapsed under under debts of more than 10 trillion won
(6.7 billion dollars), speeding up the country's financial
crisis.
But Kia officials claimed Kim had not meant that Kia
Motors, which has been dogged by persistent speculation
that it would be sold to Samsung Motors Inc., should be
closed. Samsung began turning out mid-sized passenger cars
in March, despite daunting difficulties which could be best
solved by taking over an existing auto maker.
"We will be able to get back on our feet if creditors,
including the state-financed Korea Development Bank, swap
loans for equity shares," Kia Motors spokesman Chun Sang-
Jin told AFP.
"Most probably, the Korean Development Bank will emerge as
our main shareholder in a court decision before the end of
this month," he said.
On Thursday, Kia Motors announced a cut in annual
production from 700,000 units to 600,000 units, apparently
aware of the lingering controversy over its viability.
(Agence France-Presse 19-Mar-1998)
MIDOPA: Supermarket Declared Insolvent
--------------------------------------
South Korea's fifth largest department store Midopa was
declared bankrupt late Wednesday after defaulting on bills
worth 17.1 billion won (US$11.7 million) from Seoul Bank.
Midopa was the sole survivor of textile conglomerate
Dainong Group that went bust last August. It was granted a
year from creditor banks to get back on its feet with
benefits such as a roll-over and low interest rates.
Creditor banks were to review its financial standings this
coming May and determine its fate by August. But the
retailer fell before the deadline due to excessive
costs for cross-guarantees on other bankrupt Dainong
affiliates as well as sluggish sales amid the general
IMF-induced austerity mood, its main creditor Seoul Bank
said.
Midopa's financial debts total 630 billion won. The
department store plans to apply for court protection
for debt rescheduling to restructure through property
sales, but is likely to be turned down by its creditor
banks since ailing Seoul Bank has its own future to think
about. (Asia Pulse 19-Mar-1998)
M A L A Y S I A
PROTON: 60% Fall in Domestic Sales
----------------------------------
Malaysian national carmaker Perusahaan Otomobil Nasional
Bhd (Proton) will cut the production of Proton cars by 60
per cent due to slower car sales.
"In view of the massive market downturn, we have to revise
our output ... we are looking at a 60 per cent drop," DRB-
Hicom group chairman Saleh Sulong said yesterday. DRB-Hicom
owns Proton.
To counter weak domestic sales, Mr Saleh said Proton would
step up its export drive. "We sold 30,000 units in the 1998
financial year and we aim to increase it to 52,000 units
next financial year." (Singapore BusinessTimes 19-Mar-1998)
P H I L I P P I N E S
S I N G A P O R E
WASSALL ASIA PACIFIC: Reports Losses
------------------------------------
Axle and suspension manufacturer Wassall Asia Pacific
went into the red last year due to the Asian turmoil,
with net losses amounting to $2.3 million. This year
offers little respite too, as Wassall said yesterday the
group was "unlikely to return to profit".
Turnover in 1997 was $35.5 million, down 6 per cent from
the previous year. Compared with last year's losses, 1996
net earnings stood at $732,000.
Last year's pre-tax loss was $2.3 million, compared to the
previous year's $1.3 million profit. Of this decrease, the
company attributed $1.3 million to currency differences.
Group loss per share was 4.1 cents, compared to earnings
per share of 1.3 cents in 1996. Net tangible assets was
31.6 cents, down from 35.5 cents previously. No dividend
was declared for 1997. (Singapore BusinessTimes 19-Mar-1998)
T H A I L A N D
BANK OF ASIA: ABN Amro Takes 75% Stake in Bank
----------------------------------------------
The Dutch bank ABN AMRO has signed a letter of intent to
buy a 75 percent stake in Bank of Asia, the companies
announced Wednesday.
Bank of Asia becomes the second bank in Thailand's battered
financial sector to take a foreign majority owner.
Regulations were changed last year to allow foreign
majority stakes in Thai banks after the national economy
slowed and a mountain of bad debt was revealed, virtually
crippling the financial sector.
If the Bank of Asia deal is completed, ABN Amro Holding NV
will make a first payment of 7.5 billion baht ($187.5
million) in a lump sum pending completion of due diligence
and permission from the authorities, the companies said in
a joint statement. A second payment would be made after ABN
AMRO assessed the Thai bank's value again at the end of
1999.
ABN Amro Holding NV of the Netherlands agreed to buy 75
percent of Bank of Asia at 5.27 baht (13 cents) a share.
This would be much lower than Bank of Asia's Tuesday
closing price of 20.25 baht (51 cents). The Stock Exchange
of Thailand has suspended trading in Bank of Asia, waiting
for clarification.
The Thai bank has 157 billion baht ($3.93 billion) in
assets and 11 billion baht ($275 million) in shareholders'
equity. ABN AMRO is the world's 14th largest bank in terms
of total assets. It has more than 65 offices in 16 Asian
countries. (AP Online 18-Mar-1998)
BIG C: 1997 Operating Results
-----------------------------
Big C Supercenter Public Company Limited reported a
Baht1.7 billion net loss for the year ending December
31, 1997. This compares to a net profit of Baht103
million for the year ending December 31, 1996. (SET
19-Mar-1998)
MONTERY ASIA: Trading Suspended for Want of Financials
------------------------------------------------------
In response to the failure by Montery Asia Public Company
Limited to submit third quarter financial statement for
the period ending January 31, 1998 to the Stock Exchange
of Thailand, the SET has temporarily suspended trading in
MA securities from March 18, 1998 onwards, until the
company submits the required financial statements. (SET
19-Mar-1998)
NEP REALTY: 1997 Operating Results
----------------------------------
NEP Realty and Industry Public Company Limited reported a
net loss of Baht436 million for the year ending December
31, 1997, compared to a Baht58 million net profit for the
year ending December 31, 1996. (SET 19-Mar-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
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