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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, February 19, 1999, Vol. 2, No. 35

                    Headlines


* C H I N A   &   H O N G   K O N G *

GUANGZHOU INTERNATIONAL: Firm faces liquidation


* I N D O N E S I A *


BANK INTERNASIONAL: Not taking up rights issue
DHARMALA GROUP: Sells entire stake in Manila unit


* J A P A N *

ASAHI MUTUAL LIFE: S&P cuts ratings on four life insurers
MITSUI MUTUAL LIFE: S&P cuts ratings on four life insurers
NEC CORP: Likely to lose over US$1.3b, chief to quit
NIPPON CREDIT BANK: Former execs should return retirement
SOFTBANK: Cuts stake in Yahoo!, sees profit tripling

SUMITOMO LIFE: S&P cuts ratings on four life insurers
YASUDA MUTUAL LIFE: S&P cuts ratings on four life insurers


* M A L A Y S I A *

PLUS: Road operator sees profit only in 2012
TELEKOM MALAYSIA: May refinance foreign loans, says CEO


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

GUANGZHOU INTERNATIONAL: Firm faces liquidation
-----------------------------------------------
Another prominent Chinese investment trust faces
liquidation following a failed government attempt to bail
out the firm, China's state media reported.

Guangzhou International Trust & Investment Corp., or
Gzitic, the overseas borrowing arm of Guangzhou, the
capital of Guangdong provinces, can't meet foreign-debt
payments after spending $362 million in government funds
last year to pay its hard-currency liabilities, according
to Guangzhou's vice mayor, Shen Bainian. The company has
liabilities of about 19 billion yuan ($2.3 billion). Mr.
Shen was quoted in the state-run Labor Daily as saying
Gzitic may be liquidated through bankruptcy proceedings.

Gzitic would be the second foreign borrower to be sent to
bankruptcy court, leaving foreign creditors to sort out
their claims alongside domestic creditors. Guangdong
International Trust & Investment Corp., or Gitic, was
declared bankrupt in January with $4.3 billion in
liabilities against $2.7 billion in assets.

Last month, Gzitic sold its stake in brokerage firm
Guangzhou Securities to Anhui International Trust &
Investment Corp. to settle a debt dispute. Gitic also sold
its securities operations before it was sent to bankruptcy
court.

The Labor Daily report comes after auditors at KPMG LLP
were appointed as provisional liquidators for Gzitic's
wholly owned subsidiary in Hong Kong, Guangzhou Finance.
Guangzhou Finance controls Gzitic Hualing Holdings Ltd.,
which was suspended from trading on Hong Kong's stock
exchange after the announcement.

Gzitic says it is still solvent, with some 20 billion yuan
in assets. But other Guangzhou officials have said recently
that Gzitic may be closed and its assets sold to meet debt
obligations. Guangzhou Finance's debt tally isn't clear,
and officials at the companies involved and the Guangzhou
municipal government couldn't be reached for comment
because of a holiday.

According to Labor Daily, Guangzhou Vice Mayor Mr. Shen
said once an evaluation fo Gzitic's assets is completed, as
early as March, a decision on the company's fate will be
made public. (The Wall Street Journal 18-Feb-1999)


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

BANK INTERNASIONAL: Not taking up rights issue
----------------------------------------------
PT Bank Internasional Indonesia (BII) said yesterday PT
Sinar Mas Multiartha, which currently holds a 51 per cent
stake in the bank, would not be taking up its entitlement
of shares in BII's planned rights issue.

BII corporate secretary H S Anwar told Reuters that after
the rights issue, Sinar Mas' stake in BII would drop from
51 to 5.6 per cent.

But he said BII's other founders, the Widjaja family, would
absorb 20 per cent of the rights issue, as required by the
government under the bank recapitalisation programme.

He said: "Other founders, the Widjaja family and perhaps
other investors, will absorb the rights issue but not Sinar
Mas Multiartha."

BII shares closed unchanged yesterday at 250 rupiah, while
Sinar Mas Multiartha shares, which are relatively illiquid,
traded last on Tuesday at 2,100 rupiah. (Reuters and
Singapore Business Times 18-Feb-1999)


DHARMALA GROUP: Sells entire stake in Manila unit
-------------------------------------------------
The Dharmala Group, weighed down by Indonesia's wrenching
currency crunch, has sold its entire 82.28 per cent stake
in a listed Philippine subsidiary to beef up its shaky cash
position.

Sold to VR Holdings, a property-based Manila firm, was
Dharmala Philippines Inc (DPI) with interests in banking,
stock broking, insurance, finance, trading and real estate.

In a statement to the Philippines Stock Exchange, DPI said
the transaction involved the sale of 230.699 million shares
held by the Indonesian group in the subsidiary.

The shares included those owned by the group's other units
such as Dharmala Holdings (BVI) Ltd, Well Foundation Co Ltd
and Dharmala International Philippines Inc.

DPI, however, did not indicate how much it cost VR Holdings
to buy out the Indonesian conglomerate.

Market rumours said the Dharmala Group sold the shares at a
"bargain price" of 12 centavos apiece or a total of 27.68
million pesos (S$1.2 million).

When contacted, DPI vice-president Fe Zamora said the
rumoured amount "was only an initial cash outlay" made by
the buyer to the Indonesian group.

A VR Holdings official who asked not to be named confirmed
that the company bought the shares at a low price, but said
it will absorb DPI's debts.

"We have enough real estate holdings which we can use to
pay off Dharmala's outstanding debts," he added.

Total debts of DPI, renamed Wise Holdings Philippines Inc
by the new owners, stood at 2.9 billion pesos as of the
third quarter of last year.

DPI attributed its debts to the 38 per cent drop in sales
last year of its trading operations due to the slowdown in
the crisis-hit manufacturing industry. (Singapore Business
Times 18-Feb-1999)


=========
J A P A N  
=========

ASAHI MUTUAL LIFE: S&P cuts ratings on four life insurers
---------------------------------------------------------
Standard and Poor's said Thursday it has lowered its credit
ratings on Asahi Mutual Life Insurance Co., Mitsui Mutual
Life Insurance Co., Sumitomo Life Insurance Co. and Yasuda
Mutual Life Insurance Co. The downgrade reflects a decline
in the financial strength of their balance sheets as a
consequence of market and economic volatility in Japan, the
major U.S. credit rating agency said.

Among downgraded ratings, long-term counterparty credit
ratings are BB-plus for Asahi and Mitsui from BBB-minus
each, BBB-minus for Sumitomo from BBB, and A- minus for
Yasuda from A. (Kyodo News 18-Feb-1999)


MITSUI MUTUAL LIFE: S&P cuts ratings on four life insurers
----------------------------------------------------------
Standard and Poor's said Thursday it has lowered its credit
ratings on Asahi Mutual Life Insurance Co., Mitsui Mutual
Life Insurance Co., Sumitomo Life Insurance Co. and Yasuda
Mutual Life Insurance Co. The downgrade reflects a decline
in the financial strength of their balance sheets as a
consequence of market and economic volatility in Japan, the
major U.S. credit rating agency said.

Among downgraded ratings, long-term counterparty credit
ratings are BB-plus for Asahi and Mitsui from BBB-minus
each, BBB-minus for Sumitomo from BBB, and A- minus for
Yasuda from A. (Kyodo News 18-Feb-1999)


NEC CORP: Likely to lose over US$1.3b, chief to quit
----------------------------------------------------
Japanese electronics giant NEC Corp is likely to lose more
than US$1.3 billion (S$2.2 billion) in the year to March, a
record sum that will force the president Hisashi Kaneko to
quit, a report in the Nihon Keizai Shimbun said yesterday.

It said NEC is expected to face a consolidated net loss of
150 billion yen (S$2.2 billion), smashing the previous
record of a 45.2 billion yen loss in the year to March
1993.

The loss could reach 200 billion yen in the worst case
scenario, the economic daily added. It was a sharp
deterioration even from last October's gloomy NEC forecast
of a 35 billion yen loss.

The bigger losses, a turnaround from the preceding year's
profit of 41.3 billion yen, stemmed from a fall in revenue
from the semiconductor and communications equipment
businesses, the newspaper said.

Mr Kaneko is expected to resign to take responsibility for
the result, the Nihon Keizai and Kyodo News agency said.

An NEC official said: "We are now reviewing our earnings
forecast, as we cannot avoid the negative impact of the
deterioration in Asian economies and domestically.

"We need to downgrade the net loss forecast, which was put
earlier at 35 billion yen." He would not comment on the
report on Mr Kaneko. Reports of his impending resignation
come just four months after NEC ex-chairman, Tadahiro
Sekimoto, stepped down over a military procurement scandal.

NEC will make a formal decision on Mr Kaneko's resignation
at an extraordinary board meeting on Friday, Kyodo News
quoted company sources as saying.

Moody's Investors Service yesterday threatened to downgrade
NEC's credit rating, saying the review "reflects concern
that the continuing slowdown in its core business may
further erode NEC's earnings". The review of NEC's "A3"
senior unsecured debt rating would focus on NEC's plans to
restructure its business franchise, it said. (Agence
France-Presse, Bloomberg, Singapore Business Times
18-Feb-1999)


NIPPON CREDIT BANK: Former execs should return retirement
---------------------------------------------------------
The nationalized Nippon Credit Bank (NCB) will demand its
former executives who served between 1989 and March 1997
return their retirement allowances due to their
mismanagement that contributed to its failure, bank sources
said Thursday.

Under consideration are 13 former executives who received
combined allowances of more than 1 billion yen after tax,
the sources said.

NCB will spell out the plan in its restructuring program
and seek approval from the Financial Reconstruction
Commission, they added.

Among the 13 are Shiro Egawa and Seishi Matsuoka, both of
whom served as president and chairman during the period.
Egawa reportedly received some 600 million yen in
allowances when he retired in 1992.

NCB has paid no retirement allowances for its executives
since April 1997.

NCB was put under temporary state control Dec. 13, 1998, as
it was found to have a 94.4 billion yen capital deficit at
the end of March that year. NCB was the second major bank
to be nationalized, following the Long-Term Credit Bank of
Japan (LTCB) on Oct. 23. (Kyodo News 17-Feb-1999)


SOFTBANK: Cuts stake in Yahoo!, sees profit tripling
----------------------------------------------------
Softbank Corp, Japan's top software distributor and a     
shareholder in dozens of Internet ventures, has sold a
US$410 million (S$693 million) stake in Yahoo! Inc to
finance new investments.

Softbank's US holding company sold three million shares in
the world's most-visited Internet directory, reducing its
stake to 28 per cent from 30 per cent and recording a
capital gain of US$390 million.

The one-time gain will drag the company out of the red,
tripling its group profit to 32 billion yen (S$473
million).

The company, which has accumulated several billion dollars
in paper gains on a series of early investments in Yahoo!
and other fast-growing Internet services, said it plans to
set up a new fund to add other online ventures to its
portfolio.

"They've already won on their bet on Yahoo!, so lowering
their stake to wager elsewhere is probably the right move,"
said Satoshi Hirachi, a software industry analyst at
Societe Generale Securities (North Pacific) Ltd.

The sale of Yahoo! shares will offset a drain on earnings
by its US affiliate Ziff-Davis Inc, which will necessitate
a US$57 million restructuring charge. Softbank expects to
lose 15 billion yen before tax and one-time items.

Softbank and 48 of its affiliates which contribute to group
profits earned 10.3 billion yen last year.

The sale of Yahoo! shares raised concern among some
investors and analysts that Softbank is struggling under a
heavy burden of debt it has accumulated in recent years as
a result of a string of acquisitions.

It bought Ziff in 1996 for US$2.1 billion. When it reported
half-year earnings on Nov 11, Softbank said it had
interest-bearing debt of 242.5 billion yen, versus assets
of 800 billion yen. (Bloomberg, Reuters, Singapore Business
Times 18-Feb-1999)


SUMITOMO LIFE: S&P cuts ratings on four life insurers
-----------------------------------------------------
Standard and Poor's said Thursday it has lowered its credit
ratings on Asahi Mutual Life Insurance Co., Mitsui Mutual
Life Insurance Co., Sumitomo Life Insurance Co. and Yasuda
Mutual Life Insurance Co. The downgrade reflects a decline
in the financial strength of their balance sheets as a
consequence of market and economic volatility in Japan, the
major U.S. credit rating agency said.

Among downgraded ratings, long-term counterparty credit
ratings are BB-plus for Asahi and Mitsui from BBB-minus
each, BBB-minus for Sumitomo from BBB, and A- minus for
Yasuda from A. (Kyodo News 18-Feb-1999)


YASUDA MUTUAL LIFE: S&P cuts ratings on four life insurers
----------------------------------------------------------
Standard and Poor's said Thursday it has lowered its credit
ratings on Asahi Mutual Life Insurance Co., Mitsui Mutual
Life Insurance Co., Sumitomo Life Insurance Co. and Yasuda
Mutual Life Insurance Co. The downgrade reflects a decline
in the financial strength of their balance sheets as a
consequence of market and economic volatility in Japan, the
major U.S. credit rating agency said.

Among downgraded ratings, long-term counterparty credit
ratings are BB-plus for Asahi and Mitsui from BBB-minus
each, BBB-minus for Sumitomo from BBB, and A- minus for
Yasuda from A. (Kyodo News 18-Feb-1999)


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

PLUS: Road operator sees profit only in 2012
--------------------------------------------
The toll-road operator unit of United Engineers (Malaysia)
Bhd said it expects to be profitable only in 2012, 24 years
after the highway project started. The national Bernama
news agency on Monday quoted a report in the monthly
bulletin of Projek Lebuhraya Utara-Selatan Bhd (PLUS) as
saying the firm expected to collect 1.01 billion Malaysian
ringgit (S$449.1 million) in toll fees this year.

Out of these, 66 per cent would be used to pay off bank
loans, Bernama said. Officials at PLUS and UEM could not be
immediately contacted for comment.

Last year, 75 cents of every ringgit collected was used to
pay off bank loans and the remaining 25 cents used for
highway maintenance, PLUS said in the February issue of the
bulletin.

"A big chunk of PLUS's revenue is used to pay off loans, so
it is not surprising that the company's debts to lenders
would only be settled in 2006," Bernama quoted the report
as saying.

>From 2006 onwards, PLUS would have to repay RM3.5 billion
government loan. (Singapore Business Times 18-Feb-1999)


TELEKOM MALAYSIA: May refinance foreign loans, says CEO
-------------------------------------------------------
Telekom Malaysia Bhd said it is looking to refinance its
foreign loans to minimise the impact of the ringgit's
depreciation, Bernama news agency said on Monday.

In an interview with Bernama, Telekom's chief executive
officer Mohamed Said Mohamed Ali said the firm's gearing
ratio has risen to about 0.7 currently from 0.25 at the end
of 1997. He did not say what the ratio represents.

He said the company has approved an initial capital
expenditure of nearly two billion Malaysian ringgit
(S$889.4 million) in 1999, compared to about RM2.8 billion
in 1998. The telecommunications firm's foreign loans, which
significantly are denominated in American currency, stood
at US$1.4 billion (S$2.4 billion).

"We are looking at our exposure to foreign loans from many
angles with the view of trying to minimise the impact of
the ringgit's depreciation. We are looking at refinancing
and at some derivatives.

"Our gearing is now much higher than it was at the end of
1997 . . . caused purely by the fact that our foreign loans
have increased in ringgit terms," he said. (Reuters and
Singapore Business Times 18-Feb-1999)


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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