/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/980724.MBXT 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, July 24, 1998, Vol. 1, No. 107 Headlines C H I N A & H O N G K O N G EASYKNIT INTERNATIONAL: Easyknit forced into sale for loss GKC HOLDINGS: Fraud probe blow for GKC SEAPOWER FINANCIAL: Reaps $500m through syndicated loan J A P A N LONG TERM CREDIT: Merger fears dent LTCB price MATSUSHITA: Warns lower profits NISSAN DIESEL: Troubled firm to announce pact with Daimler K O R E A CHO HUNG BANK: Cho Hung Bank's top official arrested CHUNGCHONG BANK: Takeover is officially approved DAEDONG BANK: Takeover is officially approved DONGNAM BANK: Takeover is officially approved DONGHWA BANK: Takeover is officially approved HANIL SYNTHETIC FIBER: Applies for court receivership JASAN COMPANY: Creditor reconciliation completed JURIA COMPANY: Starts creditor reconciliation KYUNGKI BANK: Takeover is officially approved MORNING GLORY COMPANY: Creditor reconciliation completed SEOKWANG COMPANY: Starts creditor reconciliation M A L A Y S I A MALAYAN BANK: S&P Puts Maybank on CreditWatch MEKAR IDAMAN SDN BHD: Receivers appointed for UEM associate PAN MALAYSIA INDUSTRIES: Bigger loss due to high provisions SENHONG ELECTRICAL SDN BHD: Winding-up petition WENANG MAKMUR SDN BHD: Winding-up petition P H I L I P P I N E S PHILIPPINE AIRLINES: Creditors to meet on PAL rehab plan PHILIPPINE AIRLINES: PAL fears for survival after walkout PHILIPPINE TELEGRAPH: Gets 30-day reprieve from creditors T H A I L A N D NATIONAL FINANCE PCL: Thai finance firm moves into red PHATRA THANAKIT PLC: Phatra Thanakit reports loss ================================= C H I N A & H O N G K O N G ================================= EASYKNIT INTERNATIONAL: Easyknit forced into sale for loss ---------------------------------------------------------- According to the SCMP of July 22, fashion retailer Easyknit International Holdings has been forced to sell property assets at a loss, as it seeks much needed cash after minority shareholders thwarted a $300 million rights issue earlier this month. The company has sold eight properties for $150.4 million to reduce debt in a deal that will incur a $158.1 million loss before expenses in the year ended March 1999. The company said the properties, largely bought at the peak of the market last year, accounted for 13.3 per cent of the unaudited book value of its property portfolio of $2.32 billion on May 31. It said it had outstanding debt before the sale of $1.07 billion, and despite the drop in rental earnings resulting from the sales, about $1.2 million in monthly interest expenses would be saved. The company plans to cut debts further by selling more property, worth $150 million. GKC HOLDINGS: Fraud probe blow for GKC -------------------------------------- According to the SCMP of July 22, the Commercial Crime Bureau (CCB) yesterday raided GKC Holdings for alleged fraud involving its management, dealing a further blow to the troubled company. The CCB also raided GKC subsidiaries German Kitchen (China), GKC Building Materials and 2 other trading companies closely linked to the company. GKC was listed on the stock exchange in December and the stock exchange is currently questioning its listing sponsor, Lippo Securities. GKC is 72 per cent owned by Major Shareholder, a company 60 per cent owned by the Tang familiy and 40 per cent by Citic Beijing's wholly owned subsidiary, Shortridge. German Kitchen (China) is a 60-40 trading joint venture between the Tang family and Shortridge. According to GKC's listing prospectus, the company was set up in 1993 to strengthen shareholders' business relationships. Since then, Shortbridge has made use of Citic Beijing's connections with prominent property developers in Hong Kong such as Cheung Kong Holdings and Wheelock & Co and introduced them as business partners to GKC. But Shortbridge yesterday sued Tang members for allegedly breaching their fiduciary duties. Shortbridge claimed the Tangs had pledged GKC shares to two finance companies, including Lippo, and kept in the dark about the deals. SEAPOWER FINANCIAL: Reaps $500m through syndicated loan ------------------------------------------------------- According to the SCMP of July 22, Seapower Resources International, which owns a brokerage and cold storages, has raised $500 million through a syndicated loan, which is expected to be used to refinance existing $300 million borrowings and to bolster working capital. The loan was secured by Seapower's two cold storages, which are valued at about $1 billion. Seapower's financial arm, Seapower Financial Services Group, has been the subject in recent months of denied rumors about its cash-flow position. After selling its corporate finance and asset management teams to Zhang Liping, the former chairman of the financial group, the brokerage mainly focuses on futures and securities trading. ========= J A P A N ========= LONG TERM CREDIT: Merger fears dent LTCB price ---------------------------------------------- According to the SCMP of July 22, the share of LTCB closed below par value, at 49 yen, down one yen, a day after ending at its face value of 50 yen on growing concern about its merger plan with Sumitomo Trust & Banking. MATSUSHITA: Warns lower profits ------------------------------- The Financial Times reports July 23 that Matsushita Electric said that first-half operating profit could be about 70 per cent of last year's level. NISSAN DIESEL: Troubled firm to announce pact with Daimler ---------------------------------------------------------- The Wall Street Journal of June 23 reports Germany's Daimler-Benz AG is close to signing a joint-production agreement with Nissan Diesel Motor Company, a truckmaking unit of Nissan Motor Company. Although the agreement won't involve Daimler taking an equity stake in Nissan Motor, Daimler's chairman, Juergen Schrempp, said his company might acquire a stake in the Japanese truckmaker in the future. The agreement involves joint production of components or vehicles. ========= K O R E A ========= CHO HUNG BANK: Cho Hung Bank's top official arrested ---------------------------------------------------- According to the Korean language Maeil Kyungje, Cho Hung Bank's high ranking official, Hur Chong-wook, was arrested on bribery charge. It is alleged that Hur has received 50,000,000 won for the bank's loan to Juriwon Department Store in the city of Ulsan. CHUNGCHONG BANK: Takeover is officially approved ------------------------------------------------ According to a Korea Times article, the Financial Supervisory Commission (FSC) has scheduled a contract signing officially approving the takeover of Korea's five weakest banks. The contract will spell out the details of the "Purchase and Acquisition (P&A) formula," whereby stronger banks absorb the weak banks by taking over their assets and liabilities. Under this P&A system, the FSC has decided to compensate the acquiring banks for the gaps in the assets and debts of the closed banks by having the state run Depository Insurance Corporation issue five-year floating rate notes, which will carry an annual interest rate of 10 to 15 percent. The FSC, Korea's financial watchdog institution, established an evaluating committee in June to diagnose 12 commercial banks which failed to meet the minimum 8 percent capital adequacy requirements set by the Bank for International Settlements (BIS). Five of those banks were ordered closed on June 29. The Chungchong Bank was taken over by the Hana Bank. DAEDONG BANK: Takeover is officially approved --------------------------------------------- According to a Korea Times article, the Financial Supervisory Commission (FSC) has scheduled a contract signing officially approving the takeover of Korea's five weakest banks. The contract will spell out the details of the "Purchase and Acquisition (P&A) formula," whereby stronger banks absorb the weak banks by taking over their assets and liabilities. Under this P&A system, the FSC has decided to compensate the acquiring banks for the gaps in the assets and debts of the closed banks by having the state run Depository Insurance Corporation issue five-year floating rate notes, which will carry an annual interest rate of 10 to 15 percent. The FSC, Korea's financial watchdog institution, established an evaluating committee in June to diagnose 12 commercial banks which failed to meet the minimum 8 percent capital adequacy requirements set by the Bank for International Settlements (BIS). Five of those banks were ordered closed on June 29. The Daedong Bank was taken over by the Kookmin Bank. DONGNAM BANK: Takeover is officially approved --------------------------------------------- According to a Korea Times article, the Financial Supervisory Commission (FSC) has scheduled a contract signing officially approving the takeover of Korea's five weakest banks. The contract will spell out the details of the "Purchase and Acquisition (P&A) formula," whereby stronger banks absorb the weak banks by taking over their assets and liabilities. Under this P&A system, the FSC has decided to compensate the acquiring banks for the gaps in the assets and debts of the closed banks by having the state run Depository Insurance Corporation issue five-year floating rate notes, which will carry an annual interest rate of 10 to 15 percent. The FSC, Korea's financial watchdog institution, established an evaluating committee in June to diagnose 12 commercial banks which failed to meet the minimum 8 percent capital adequacy requirements set by the Bank for International Settlements (BIS). Five of those banks were ordered closed on June 29. The Dongnam Bank was taken over by the Housing and Commercial Bank. DONGHWA BANK: Takeover is officially approved --------------------------------------------- According to a Korea Times article, the Financial Supervisory Commission (FSC) has scheduled a contract signing officially approving the takeover of Korea's five weakest banks. The contract will spell out the details of the "Purchase and Acquisition (P&A) formula," whereby stronger banks absorb the weak banks by taking over their assets and liabilities. Under this P&A system, the FSC has decided to compensate the acquiring banks for the gaps in the assets and debts of the closed banks by having the state run Depository Insurance Corporation issue five-year floating rate notes, which will carry an annual interest rate of 10 to 15 percent. The FSC, Korea's financial watchdog institution, established an evaluating committee in June to diagnose 12 commercial banks which failed to meet the minimum 8 percent capital adequacy requirements set by the Bank for International Settlements (BIS). Five of those banks were ordered closed on June 29. The Donghwa Bank was taken over by the Shinhan Bank. HANIL SYNTHETIC FIBER: Applies for court receivership ----------------------------------------------------- According to the Korean language Maeil Kyungje, Hanil Bank, the major creditor banks for the Hanil Synthetic Fiber Company, has agreed to the company's plan to apply for court receivership. Previously, the Hanil Bank had placed the synthetic fiber maker under an exit order as the company's restructuring plan to sell company property was not working out well. JASAN COMPANY: Creditor reconciliation completed ------------------------------------------------ The Seoul District Court announced in the Korean language Maeil Kyungje that the Jasan Company has completed its creditor reconciliation procedure. The company's address is 456-26 Kalhyun-dong, Eunpyung-gu, Seoul and the president is Mr. Yi Yong-duk. JURIA COMPANY: Starts creditor reconciliation --------------------------------------------- The Seoul District Court announced in the Korean language Maeil Kyungje that the Juria Company, one of Korea's major cosmetics makers, started its creditor reconciliation procedure. The company's address is 656-54 Teungchun-dong, Kangseo-gu, Seoul and the president is Mr. Nam Ki-bung. Creditors have until August 8 to file their claims. KYUNGKI BANK: Takeover is officially approved --------------------------------------------- According to a Korea Times article, the Financial Supervisory Commission (FSC) has scheduled a contract signing officially approving the takeover of Korea's five weakest banks. The contract will spell out the details of the "Purchase and Acquisition (P&A) formula," whereby stronger banks absorb the weak banks by taking over their assets and liabilities. Under this P&A system, the FSC has decided to compensate the acquiring banks for the gaps in the assets and debts of the closed banks by having the state run Depository Insurance Corporation issue five-year floating rate notes, which will carry an annual interest rate of 10 to 15 percent. The FSC, Korea's financial watchdog institution, established an evaluating committee in June to diagnose 12 commercial banks which failed to meet the minimum 8 percent capital adequacy requirements set by the Bank for International Settlements (BIS). Five of those banks were ordered closed on June 29. The Kyungki Bank was taken over by the KorAm Bank. MORNING GLORY COMPANY: Creditor reconciliation completed -------------------------------------------------------- The Seoul District Court announced in the Korean language Maeil Kyungje that the Morning Glory Company, one of the major stationary makers in Korea, has completed its creditor reconciliation procedure. The company's address is 1222 Chang-kang Bld. 22 Tohwa-dong, Mapo-gu, Seoul and the presidents are Mr. Hwang Kwi-sun and Pyo Tae- sun. SEOKWANG COMPANY: Starts creditor reconciliation ------------------------------------------------ The Seoul District Court announced in the Korean language Maeil Kyungje that the Seokwang Company started its creditor reconciliation procedure. The company's address is 60-25 Kasan-dong, Keumchun-gu, Seoul and the president is Mr. Shin Young-il. Creditors have until August 8 to file their claims. =============== M A L A Y S I A =============== MALAYAN BANK: S&P Puts Maybank on CreditWatch --------------------------------------------- Standard and Poor's Rating Group put the long-term single A minus and short-term single A-2 ratings of Malayan Bank Bhd. on CreditWatch with negative implications. Malayan Bank (or Maybank) is the largest bank in Malaysia. Standard and Poors pointed out that the Malaysian economy is moving sharply into a recession and a consequent increase in non-performing assets. The Asian Wall Street Journal reports that Maybank is now speeding up loan growth under pressure from the government, and the bank could face an increasing amount of non- performing loans. MEKAR IDAMAN SDN BHD: Receivers appointed for UEM associate ----------------------------------------------------------- Bankers had on July 20 appointed receivers to an associate of UEM (listed in the KLSE), Mekar Idaman Sdn Bhd (MISB), due to a default in the payment of principal and interest on its syndicated term loan facility of RM550mil and short- term loan facility of RM20mil. The default on the syndicated term loan and short-term loan will result in a cross default of a bank guarantee of RM75mil provided by MISB to guarantee the profit of Penang Bridge Sdn Bhd. PAN MALAYSIA INDUSTRIES: Bigger loss due to high provisions ----------------------------------------------------------- Pan Malaysia Industries Bhd (PMI), listed in the KLSE, incurred a loss of RM345.9mil for the year ended 31/3/98, instead of earlier estimated RM195.9mil, due to higher provisions for doubtful debts for its stockbroking associated companies. Its associated companies were dependent on the net realisable value of the collateralised securities, which were difficult to estimate with reasonable accuracy due to the volatility in share prices. SENHONG ELECTRICAL SDN BHD: Winding-up petition ----------------------------------------------- JVC Sales & Services Sdn Bhd on 24/6/98 petitioned for the winding-up of Senhong Electrical Sdn Bhd. The petition is directed to be heard on 28/8/98. WENANG MAKMUR SDN BHD: Winding-up petition ------------------------------------------ Bukit Wa Ha Quarry Sdn Bhd on 16/2/98 petitioned for the winding-up of Wenang Makmur Sdn Bhd. The petition is directed to be heard on 21/8/98. ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Creditors to meet on PAL rehab plan -------------------------------------------------------- The Philippine Securities and Exchange Commission (SEC), which gave Philippine Airlines (PAL) permission to suspend payments on it debt for 30 days, is scheduled to meet with the PAL creditors to discuss the airline's rehabilitation plan. PAL is seeking to restructure debts totaling $2.1 billion. About half of the debt is owned to a consortium of European banks, with the rest split between U.S. and Philippine financial institutions. According to the Asian Wall Street Journal, PAL's proposed plan calls for an extension in the relief period on debt payments. The SEC is also reportedly prepared to extend the period up to two months. PHILIPPINE AIRLINES: PAL fears for survival after walkout --------------------------------------------------------- The SCMP of July 22 shows a Reuters report which says that the strike by the 8000 member Philippine Airlines Employees Association forced the cancellation of 16 domestic flights. Airline officials said further disruption was possible and work stoppage could jeopardise efforts by the airline to recover from a severe downturn in Asia's aviation market. PAL is working on a rehabilitation plan for submission to the SEC, which on Tuesday said it would grant a 50-day extension for the submission. If the SEC withholds approval because of the labour dispute, the airline might have to close. According to a Bloomberg article in the Hong Kong Standard, a rescue could be beyond the government's means as the economy struggles to escape the recession gripping Asia. Besides, aggressive new competitors, which are at least partly responsible for PAL's problems, could well step into the vacuum. The presence of domestic competitors such as Air Philippines and Cebu Pacific Air, which have already eaten into PAL's business, could well take up the slack if it disappeared altogether, and the government feels there's no compelling public reason to intervene. PHILIPPINE TELEGRAPH: Gets 30-day reprieve from creditors --------------------------------------------------------- The Asian Wall Street Journal reports that Philippine Telegraph & Telephone Corporation received a 30-day reprieve from servicing its 6 billion peso ($143.2 million) debts. The Senior Vice President was quoted as saying that Philippine Telegraph & Telephone had made a private arrangement with creditors to delay payments. The company has more than 30 creditors, including the Philippine National Bank, United Coconut Planters Bank, and International Finance Corporations. The report states that Philippine Telegraph has been unable to raise much needed fresh capital due to a shareholders' dispute at Republic Telecommunications Holdings Inc., which controls 75 percent of the company. =============== T H A I L A N D =============== NATIONAL FINANCE PCL: Thai finance firm moves into red ------------------------------------------------------ National Finance PCL said it swung to a net loss of 2.74 billion baht in the first half, from the net profit of 194.5 million baht a year earlier. National Finance said in a statement to the stock exchange that the second-quarter losses accounted for 1.11 billion baht of the half year figure. The company said it set aside 2.03 billion baht as provision for doubtful accounts and bad debts. PHATRA THANAKIT PLC: Phatra Thanakit reports loss -------------------------------------------------- The Asian Wall Street Journal reported that the Thai finance company Phatra Thanakit PLC incurred a first half unaudited loss of 2.71 billion baht ($66.6 million) compared to a 320 million baht profit a year earlier. The Stock Exchange of Thailand also temporarily suspended trading in this company's stock as it had failed to submit a complete breakdown of its first half results. Thai Farmers Bank PLC currently holds a 49 percent stake in Phatra Thanakit, but announced last month that it will increase its holdings to 100 percent and delist the company. S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan and Lexy Mueller, Editors. Copyright 1998. All rights reserved. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $875 per month delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *