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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      

      Wednesday, May 27, 1998, Vol. 1, No. 67

                    Headlines


C H I N A   &   H O N G   K O N G

CP POKPHAND: Creditors Will Likely Allow Restructuring
CATHAY PACIFIC: Holding Talks with British Airways
MING FUNG GROUP: Brokerage Fails on Director's Losses
PEREGRINE SECURITIES: Search for Fixed Income's Contracts
TA FU INTERNATIONAL: Warns Exchange of Liquidity Problems


J A P A N  

FUJITSU LTD: FY97 Profit Drops 88%
MITSUBISHI HEAVY: Net Plunges 51% in FY97
NIPPON CREDIT BANK: Downgraded to 'BBB-' by Fitch IBCA


K O R E A

HALLA CEMENT: Can Resume Normal Banking Procedures
HYOSUNG GROUP: Selling Affiliates to Lure Foreign Investors
KDB FUTURES CO: Parent to Close Firm This Year
KDB SECURITIES: Parent to Close Firm This Year
KIA MOTORS: Affiliate Asia Motors to Receive Emergency Loan


M A L A Y S I A

HALIM MAZMIN: Proposes Rights Issue
KUMPULAN FIMA: Court Dismisses Winding Up Application


P H I L I P P I N E S

ALSONS CONSOLIDATED: Plans Private Placement to Lower Debt
OCE PLANS: Sale of Firm's Properties Stopped


S I N G A P O R E

NATSTEEL: Temasek's $57 Million Placement Not a Bailout


T H A I L A N D
KRUNGTHAI THANAKIT: Needs Injection to Merge Finance Firms
WIRELESS COMMUNICATION: Mobile Phone Operator Goes Under


=================================
C H I N A   &   H O N G   K O N G
=================================

CP POKPHAND: Creditors Will Likely Allow Restructuring
------------------------------------------------------
Business group C.P. Pokphand Co Ltd faces a critical
creditors' meeting on Friday, but analysts say it will
probably achieve a debt restructuring that would allow its
profitable China businesses to carry on. Creditors last
month agreed to delay the redemption of floating-rate notes
issued by the Hong Kong-listed subsidiary of Thailand's
Charoen Pokphand conglomerate. The notes were due in 2000
but had put options that were exercisable on April 23 this
year. Creditors are seeking a total of US$92.8 million.

The creditor group includes three Korean banks that hold
$19 million in notes, according to the Far Eastern Economic
Review. An executive of one of the banks said the decision
to redeem the notes was more a reflection of the struggling
banks' need for cash than CP's creditworthiness.

Like its parent CP Group, the company has begun selling
assets to salvage what it can and improve liquidity.

Creditors will be scrutinising the results of C.P.
Pokphand's 93 joint-venture feedmill and chicken-raising
operations in China, which the company said were performing
well.
(Bangkok Post 26-May-1998)


CATHAY PACIFIC: Holding Talks with British Airways
--------------------------------------------------
Cathay Pacific Airways yesterday confirmed it was holding
talks with British Airways (BA) about forming a possible
alliance but said no decision had been reached.

A Cathay spokesman said: "We are in discussions with a
range of airlines reviewing the whole area of alliances.

"We have spoken with British Airways, and the Star
Alliance, among others, but we have not made a decision
about which alliance we will join."

British newspaper reports at the weekend said Cathay would
probably conclude an alliance deal with BA and American
Airlines by the end of this year.

BA and American Airlines are awaiting approval from US and
European competition authorities for their planned
alliance.

Critics have argued an alliance between BA and American
Airlines would reduce competition on routes between the US
and Britain.

There has been plenty of speculation over the past year
about which partners Cathay Pacific would choose.

Besides BA and American Airlines, other possible alliance
candidates have included Dutch airline KLM and the Star
Alliance, the world's largest airline grouping.

Star comprises Lufthansa, Air Canada, United Airlines,
Varig, Scandinavian Airline System and Thai Airways.
(South China Morning Post 26-May-1998)


MING FUNG GROUP: Brokerage Fails on Director's Losses
-----------------------------------------------------
The collapse of the Ming Fung Group yesterday became the
largest failure of a brokerage in the 12-year history of
the unified exchange, with compensation claims already
hitting $349 million. The brokerage's failure is the latest
financial scandal to plague Hong Kong since the regional
economic crisis began last year, undermining investor
confidence in the domestic market.

Ming Fung Group's majority shareholder and managing
director Chan Kwong-hung, 61, was released by the police
yesterday on bail of $4 million in cash and third-party
surety. He was detained by the police on Saturday in
connection with an alleged theft. It is alleged Chan
suffered huge losses after futures trading on his own
account, then allegedly used his clients' funds to cover
his loss-making positions, drawing up false documents to
authorise the fund transfers.

The Commercial Crime Bureau (CCB) said yesterday there was
a shortfall of about $200 million at four of the group's
branches.

The Securities and Futures Commission said it had received
1,324 compensation claims involving about $349 million. In
response, the commission put out restriction notices on the
Ming Fung Groups' member firms - Chark Fung Securities,
Winton Commence and Ming Fung Bullion - banning them from
conducting further business. The SFC also plans to apply to
wind the companies up to preserve their assets for
potential creditors.

Hongkong Clearing assistant director Betty Chan Shiu-fong
said Chark Fung had been declared a defaulter by the
clearing house. The clearing house would sell shares
allocated to the firm to settle its unpaid positions.
(South China Morning Post 26-May-1998)


PEREGRINE SECURITIES: Search for Fixed Income's Contracts
---------------------------------------------------------
Liquidator Price Waterhouse has raised US$260 million
settling derivative positions of Peregrine Fixed Income,
but sold none of the largely Indonesian corporate bond
portfolio at the centre of the group's collapse.

More than 2,000 derivative contracts involving 300
counterparties have been traced, although many remain live
- making a definitive picture of the fixed-income unit's
liabilities impossible, according to Price Waterhouse.

There was no precedent for liquidating a derivative trading
investment bank, but "order has been achieved where there
was chaos", said partner Stephen Caswell.

Last week saw the first legal action from a creditor bank,
with Commerzbank seeking US$40 million for a cross-currency
swap entered two days before Peregrine went bust.

The German bank wanted to establish a "proprietorial claim"
but the liquidator contended it must line up with other
creditors, Mr Caswell said.

Legal interpretation of derivative contracts has formed the
most complex part of the liquidation process, according to
Price Waterhouse partner Simon Copley.

While master documents - such as those used by the
International Swaps Dealers' Association - had clauses
closing the position should one party go under, much of
Peregrine's derivative book was not subject to such
standard codes.

Depending on market movements, many positions could equally
end up in the red or the black, making it impossible to
pinpoint Peregrine Fixed Income's financial position, he
said.

Price Waterhouse will report to creditors on June 11 when
an oversight committee will be appointed to represent their
interests.

Having received 50 expressions of interest, it must decide
when to sell Peregrine Fixed Income's Asian corporate bond
portfolio, which last November had a face value of US$1.1
billion.

About US$1.5 billion of bonds held in custody by Peregrine
have been returned to investors, while HK$350 million was
recovered from the sale of equity derivatives at Peregrine
Derivatives.

While such sums were significant, they paled next to the
amount owed to creditors, although Mr Copley declined to
give a precise figure.

Commenting on Peregrine Fixed Income's risk-management
systems, he said said there were serious failings, but that
considerable improvements had been made during its final
six months of operation.

"Ultimately it was the assessment credit risk that caused
its [Peregrine's] downfall," he said.
(South China Morning Post 26-May-1998)


TA FU INTERNATIONAL: Warns Exchange of Liquidity Problems
---------------------------------------------------------
The directors of Ta Fu International Holdings Limited ("TA
FU") announce that the Ta Fu group of companies has    
liquidity problems.  Letters have been received from five
of its bankers demanding repayment of debt in the
aggregrate amount of approximately HK$98,000,000.  A writ
has been issued by another bank demanding repayment of
another debt in the aggregate amount of approximately
HK$7,200,000. Ta Fu does not have sufficient cash resources
to pay the debts immediately and is seeking a meeting with
its bankers to discuss its liquidity problems with a view
to restructuring its debt.

A further announcement will be made as and when
appropriate.  Investors should exercise extreme caution
when dealing in the securities of the Company.

    By order of the board
    Fan Yen-Ta
    Managing Director

    Hong Kong, 22 May 1998"

(SEHK 22-May-1998)


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




=========
J A P A N  
=========

FUJITSU LTD: FY97 Profit Drops 88%
----------------------------------
Fujitsu Ltd. announced Friday that its consolidated net
profit for the fiscal year ended March 31 declined 88%, to
5.6 billion yen. Fujitsu's purchase of Amdahl Corp. of the
U.S. led to a heavy one-time loss. The Fujitsu group also
incurred 14.4 billion yen in exchange losses due to the
plunge in Southeast Asian currencies. Consolidated sales
increased 11%, while operating profit rose by 6% to 189
billion yen. Declines in profitability were seen in its
communications and electronic-device businesses, but the
group saw a slight profit rise in data processing.
(Nihon Keizai Shimbun 23-May-1998)


MITSUBISHI HEAVY: Net Plunges 51% in FY97
-----------------------------------------
Mitsubishi Heavy Industries Ltd. (7011) posted a 51% plunge
in consolidated net profit to 60.6 billion yen in fiscal
1997 ended March, down from a record high in the previous
year, company officials said Friday. The company attributed
the fall to a large number of contracts for exports of
cranes and other heavy equipment that turned out to be
unprofitable and to lower returns on domestic orders of
generator turbines and other motors.

pretax profit in fiscal 1997 fell 37% to 120.6 billion yen
on a 3% decline in sales, due to a plunge in sales of
motors and steel structures, particularly to Southeast
Asia. Mitsubishi Heavy predicts a 22% group net profit
increase in the current fiscal year through March 1999 to
74 billion yen, due to cost management restructuring, the
officials said.
(Nihon Keizai Shimbun 23-May-1998)


NIPPON CREDIT BANK: Downgraded to 'BBB-' by Fitch IBCA
------------------------------------------------------
Nippon Credit Bank's (NCB) long-term rating is downgraded
to 'BBB-' from 'BBB' by Fitch IBCA. The bank's short-term
rating is affirmed at 'F2'. The long-term rating of NCB has
remained unchanged since 1995. It had long recognized that
the bank was likely to suffer such large loan losses and
had premised its securities ratings on support from the
Japanese authorities.

Having supported the bank only last year, Fitch IBCA does
not expect the authorities to withdraw their support in the
short-term; it is therefore making no change to its short-
term rating of 'F2'. In the long-term, however, Fitch
IBCA had some concerns over the extent of support that may
be given to various classes of creditor. Concerns take note
of the expiry in 2001 of the MOF's "guarantee" to protect
depositors in (and, implicitly, senior creditors of) the
country's major banks. Fitch IBCA is therefore lowering its
long-term rating of NCB to 'BBB-'.


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

HALLA CEMENT: Can Resume Normal Banking Procedures
--------------------------------------------------
Halla Cement has become the latest of Halla companies to
resume normal banking, meaning that it can seek loans from
financial institution and issue promissory notes to cover
payments.

Halla officials said Halla Cement, along with Mando
Machinery and Halla Engineering and Construction, is
awaiting a court decision on mediation, meaning that its
management will be allowed to control its business
activities.

The court has already given the initial green light for the
Halla companies to proceed with the final phase of court
mediation and final decisions are expected in a couple of
months.

Halla went bankrupt at the end of last year under heavy
debt incurred by Halla Engineering and Heavy Industries and
has been trying to regroup with a focus on Mando, Halla
Cement and Halla Engineering and Construction.
(Korea Times 26-May-1998)


HYOSUNG GROUP: Selling Affiliates to Lure Foreign Investors
-----------------------------------------------------------
South Korea's Hyosung Group announced Tuesday it would sell
its affiliates in the hope of luring foreign equity
investment of $US1.5 billion. U.S. investment bank, Salomon
Smith-Barney, will manage the sale of the group's
subsidiaries and businesses, a Hyosung spokesman said. The
conglomerate is under negotiations with Deutsche Morgan  
Grenfell to sell its polypropylene and telephtalic acid
plants for $400-500 million.

Hyosung is also offering to hand over its 50-percent stake  
in Korea Engineering Plastics Co., - a joint-venture with  
Mitsubishi - to its Japanese partner for around $150
million. A 50-percent stake in Hyosung ABB is also expected
to go to its European partner, the Asea Brown Boveri (ABB)
Group.

Hyosung is near a settlement in ridding itself of its  
magnetic media division to the Infinity Co. of Hong Kong.
Meanwhile, an investment offer worth $100 million from a  
Hong Kong investment bank was made to Hyosung Industries
Co.

It was also approached by ABB, GEC Alsthom and Siemens for  
equity investment, as well as for business mergers and  
acquisitions. Hyosung T&C is preparing to issue U.S. bonds
worth $250 million.
(Asia Pulse 26-May-1998)


KDB FUTURES CO: Parent to Close Firm This Year
----------------------------------------------
Korea Development Bank (KDB), South Korea's biggest bank,
said it will close two securities businesses and cut 10 per
cent of its workforce to help weather the country's first
recession in 18 years.

KDB Securities Co and KDB Futures Co will close this year
because of their mounting bad debts and rising costs. And
Korea Industrial Leasing Co will merge with Korea
Technology Finance Corp.

The unexpected closures reflect how hard it has become for
the bank to fund its 106 trillion won (S$130 billion) of
assets because of the country's financial crisis.

KDB, which said its bad debts jumped seven-fold in the past
17 months, has found the going particularly tough as it is
often used by the government as a policy bank to prop up
companies that have nowhere else to turn.

The closure of KDB Securities sends a signal to other
struggling brokerages that the government is ready to shut
them down unless they put their finances in order.

The decision drew angry protests immediately from labour
unions of the two affiliates, who demanded KDB reconsider
the plan and try other methods to improve its finances.
(Singapore BusinessTimes 26-May-1998)


KDB SECURITIES: Parent to Close Firm This Year
----------------------------------------------
Korea Development Bank (KDB), South Korea's biggest bank,
said it will close two securities businesses and cut 10 per
cent of its workforce to help weather the country's first
recession in 18 years.

KDB Securities Co and KDB Futures Co will close this year
because of their mounting bad debts and rising costs. And
Korea Industrial Leasing Co will merge with Korea
Technology Finance Corp.

The unexpected closures reflect how hard it has become for
the bank to fund its 106 trillion won (S$130 billion) of
assets because of the country's financial crisis.

KDB, which said its bad debts jumped seven-fold in the past
17 months, has found the going particularly tough as it is
often used by the government as a policy bank to prop up
companies that have nowhere else to turn.

The closure of KDB Securities sends a signal to other
struggling brokerages that the government is ready to shut
them down unless they put their finances in order.

The decision drew angry protests immediately from labour
unions of the two affiliates, who demanded KDB reconsider
the plan and try other methods to improve its finances.
(Singapore BusinessTimes 26-May-1998)


KIA MOTORS: Affiliate Asia Motors to Receive Emergency Loan
-----------------------------------------------------------
Asia Motors Co., the commercial vehicle-manufacturing
affiliate of the insolvent Kia Group, will receive 50
billion won (US$3.6 million) in an emergency loan from its
creditor banks June 1. Korea Development Bank (KDB), the
company's main creditor, said the funds are part of the 120
billion won package pledged by 23 creditor banks last
November. A financial management team of creditor banks
then estimated that Asia Motors needed 50 billion won by
June and 70 billion in the latter half of the year to stay
afloat.
(Asia Pulse 26-May-1998)


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

HALIM MAZMIN: Proposes Rights Issue
-----------------------------------
Shipping company Halim Mazmin Bhd was proposing a rights
issue totalling RM40 million (US$1=RM3.8), executive
chairman Halim Mohammad said. Some of the proceeds of the
issue would be used to retire borrowings, he told reporters
after the companys AGM here Tuesday. The company, he said
had disposed its 51 percent equity in Angliss Foods Sdn Bhd
and the proceeds would also be utilised to reduce the
borrowings. He said the company was positive about its
outlook for this year on the strength that it had secured
substantial earnings in US dollars. Halim also said the
company was open to merger  propositions, adding: "We are
prepared to talk to any party."
(Asia Pulse 26-May-1998)


KUMPULAN FIMA: Court Dismisses Winding Up Application
-----------------------------------------------------
Kumpulan Fima Bhd said the High Court of Malaya had        
dismissed an application to wind up the company. "The        
company announced that the company's application to  strike
out the winding-up petition was allowed by the High Court
of Malaya and that the application to wind up the company
was dismissed by the same Court on 21 May 1998," it said in
a statement released by the KLSE yesterday.

Kumpulan Fima, involved in property development,
stockbroking and plantations, did not say who had filed the
petition. No further details were given.
(Singapore BusinessTimes 26-May-1998)


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

ALSONS CONSOLIDATED: Plans Private Placement to Lower Debt
----------------------------------------------------------
Alsons Consolidated Resources Inc. (ACR), the Alcantara
family's infra-structure holding firm, is planning to push
through with its private offering next month. ACR's
consolidated debt amounted to P19.06 billion as of end-1997
of which about P10.54 billion are loans that will mature
within the year. The debts ACR wants to pay include the
bridge loans acquired last year to pay its equity in a
number of ventures, primarily power projects, it entered
into as early as two years ago

The shares for the private placement will come from major
shareholders who will then forward the proceeds to the
company as advance payment for future subscriptions.

ACR's profits fell 13.26 percent last year to P671.16
million from P773.79 million in 1997 as financing charges
soared 52.05 percent to P38.61 million due to the regional
currency crisis. The private placement will be handled by
Merrill Lynch which is already preparing the necessary
documents for the activity and regulatory approval.
(Manila Times 26-May-1998)


OCE PLANS: Sale of Firm's Properties Stopped
--------------------------------------------
The Securities and Exchange Commission (SEC) has issued a
hold order on the sale of the properties of ailing pre-need
firm OCE Plans, Inc. The company was placed under
receivership by the commission after the firm found
itself in a financial bind. The hold order will be in
effect until the SEC completes its audit of the firm's
books and assets.

Madona Borlaza, chief of the education plan group of the
SEC's investments and research department, said appointed
receiver Erlinda Sollano sought the issuance of the hold
order on OCE properties, specifically those owned by Total
Realty Development Corp. which owns 70% of OCE Plans. Ms.
Sollano recommended the move due to findings of
irregularities in the firm's books. The SEC has slapped a
cease and desist order (CDO) against OCE Plans for
constantly failing to meet its trust fund requirements.
(BusinessWorld 22-May-1998)


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

NATSTEEL: Temasek's $57 Million Placement Not a Bailout
-------------------------------------------------------
NatSteel yesterday refuted suggestions that Temasek       
Holdings' injection of $57 million into the company via a       
placement of new shares was a bailout. Responding to
questions from BT, NatSteel said the share placement to
Temasek and its purchase of a 40.2 million Brazilian reals
(S$61.4 million) stake in NatSteel's Brazil investment was
not aimed at improving its balance sheet. "They were for
NatSteel and Temasek to co-invest in an attractive
strategic investment to strengthen the core business of a
Singapore company, and place NatSteel in a strong position
to selectively seize investment opportunities."

Following last Friday's announcement of the tie-up with
Temasek, investors yesterday sold down NatSteel's shares by
8.63 per cent or 17 cents to $1.80 in heavy trading of 1.9
million shares.

In its announcement on Friday, NatSteel said the $57
million injection will be used to cut group borrowings,
which stood at more than $930 million as of Dec 31.
(Singapore BusinessTimes 26-May-1998)


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

KRUNGTHAI THANAKIT: Needs Injection to Merge Finance Firms
----------------------------------------------------------
KRUNGTHAI Thanakit Plc (KTT) is expected to need an
injection of Bt15 billion to Bt20 billion to buy and merge
assets of the seven recently-closed finance firms in return
for a banking licence. However, analysts see no end to
uncertainty surrounding KTT as the state-run company still
has its own financial problems. The government has failed
to help recapitalise the finance company as the country
takes its worst-ever economic beating. Krung Thai Bank,
which owns 82 per cent of KTT, is also having trouble
raising capital to cover its non-performing loans.

The analyst's comment came after the Bank of Thailand took
control of seven finance companies, Nava Finance Plc, Union
Asia Finance Plc, Erawan Trust Co Ltd, Bangkok Asia Finance
Co Ltd, Mahathun Finance Co Ltd, Progressive Finance Co
Ltd, and Ksit Finance and Securities Co Ltd, facing serious
financial difficulties.

KTT is expected to emerge as a core company to merge and
acquire assets owned by the seven failed companies. Central
Bank of Thailand governor M R Chatu Mongol Sonakul said
clearly that KTT might need foreign partners to inject a
massive amount of new capital into the company. Deputy
central-bank governor Tanya Sirivedhin predicted the merger
process will be finished within a couple of months. Asked
whether the merger process would throw financially ailing
KTT into jeopardy, the analyst said that it was very
likely.

KTT is expected to double its capital from Bt2.27 billion
to around Bt4 billion, while as of December its non-
performing loans were estimated at 13 to 15 per cent of its
total loans, or around Bt6 billion, the analyst said.
Despite the expectation that KTT will receive a banking
licence if the merger process is completed, analysts are
not confident that the company will be able to compete
against rivals such as Bangkok Bank and Thai Farmers Bank,
which have long experience in the banking industry.

The analyst said KTT was now a political matter as the
government aimed to use the company to help resolve the
country's financial problems.
(The Nation 25-May-1998)


WIRELESS COMMUNICATION: Mobile Phone Operator Goes Under
--------------------------------------------------------
Wireless Communication Services Co (WCS), a private
cellular mobile phone operator, has ceased operations
because of the ongoing economic crisis.

When the economy was booming, telecom licences were heavily
sought after, particularly in the cellular mobile phone
sector. WCS did not want to wait until a conventional
bidding process was organised and so decided to buy a radio
frequency from a veteran cellular phone operator, Total
Access Communication (TAC).

The company registered itself as the latest cellular
network provider and entered into a market which
unfortunately was on the brink of collapse because of the
economic crisis.

WCS planned to invest about Bt5 billion in network
equipment, which was forecast to be fully installed by
1999. Nortel helped to provide supplier credit with a 100-
per-cent guarantee, sourced from Canadian Exim Bank, EDC
and Coface. A Nortel source said the company had already
stopped supplying and installing equipment because WCS
could not pay up.
(The Nation 25-May-1998)



S U B S C R I P T I O N   I N F O R M A T I O N

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