/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/990302.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 Tuesday, March 2, 1999, Vol. 2, No. 42 Headlines * C H I N A & H O N G K O N G * ALBATRONICS: Creditors seek $105m payment CHINA VENTURETECH: Bankers raise payment fears CITIC KA WAH: Sees earnings fall 79pc GUANGDONG ENTERPRISES: GDE, Nam Yue net debt at $10b GUANGDONG ENTERPRISES (HOLDINGS): Bailout plan offered INTERFORM CERAMICS: Suspension of trading PICO FAR EAST: Results announcement SING TAO HOLDINGS: Zell bids for Aw stake in Sing Tao SING TAO HOLDINGS: Sing Tao set to confirm Zell bid SUN HUNG KAI: SHK unit sued over Malaysia hotel deal TOP FORM INTERNATIONAL: Top Form units exchange assets WHIMSY CHAIN: Amusement chain collapses after 17 years YAOHAN INTERNATIONAL: Re-listing of Yaohan collapses * J A P A N * DAI-ICHI KATEI DENKI: Results announcement IMAGINEER: Results announcement MITSUI TRUST: Results announcement MITSUBISHI CHEMICAL: Results announcement NIKKO SECURITIES: Results announcement NIPPON COLUMBIA: Results announcement NIPPPON CREDIT: Ministry assured banks on bad loans in 1997 NIPPON CREDIT BANK: President denies tie up with Chuo Trust NIPPON CREDIT BANK: To lay off 290 staff OKI ELECTRIC: Results announcement PASCO CORP: Results announcement SHINKO ELECTRIC: Results announcement SHOWA DENKO KK: Results announcement TOYO ENGINEERING CORP: Results announcement TOYO SHUTTER: Results announcement * K O R E A * HAITAI ELECTRONICS: Suggests capital reduction KISAN MUTUAL TRUST SAFE: Firm is insolvent KOREA LIFE INSURANCE: Met Life to buy Korea Life SHINHAN SILK: Applies for liquidation approval SSANGYONG GROUP: Creditor supports two weak affiliates * M A L A Y S I A * GADANG HOLDINGS: Results announcement KEMAYAN CORP: Results announcement REPCO HOLDINGS: Sued by Sime Bank SISTEM TELEVISYEN: TV3 operator cuts costs to reduce losses SOUTHERN PLASTIC: Results announcement SYARIKAT KAYU WANGI: Results announcement * P H I L I P P I N E S * NAPOCOR: Enron wants government to assume Napocor debts PHILIPPINE AIRLINES: Foster committed to turnaround PHILIPPINE LONG DISTANCE: Heavy losses on provisioning PILIPINO TELEPHONE: Rehabilitation plan submitted UNIWIDE HOLDINGS: Yap Bank okays Uniwide debt shelf bid * T H A I L A N D * NAKORNTHAI STRIP: McDonald & NatWest sued on bond deal ================================= C H I N A & H O N G K O N G ================================= ALBATRONICS: Creditors seek $105m payment ----------------------------------------- According to the Hong Kong Standard, creditors of Albatronics (Far East) are pressing for immediate repayment of debts totalling $105.8 million, in addition to a demand letter early last month for the payment of $15.5 million debt. Albatronics' chairman Wakaki Kaizo yesterday said such action could severely prejudice the chances of a successful restructuring of the group's debts. He said the company had written to the creditors asking them not to enforce payment of the principal or interest, or both, on all existing bank facilities from Feb 6 to Mar 25 but it is not known whether the bank group would agree or not. He said the company had been negotiating with its creditors to reach an agreement in principle before the annual general meeting scheduled on Mar 26. If such agreement in principle could not be reached, or if the cash flow position of the group deteriorates prior to the meeting, the board would need to reconsider the continued viability of the company. As of the end of January, the company had an aggregate amount of about $459 million payable to trade creditors and about $362 million payable to its creditors. As of Feb 26, its available cash balance was about $35 million, a significant deterioration from some $79 million as of the end of January. The company hired KPMG Peat Marwick late last month as its independent reporting accountants to review the operation and the financial position of the group. CHINA VENTURETECH: Bankers raise payment fears ---------------------------------------------- According to the South China Morning Post, bankers raised concerns over the repayment of foreign debts owed by the closed China Venturetech Investment Corp (CVIC), following the way of handling foreign debts of Guangdong International Trust and Investment Corp (Gitic) were handled. When CVIC was closed last June, the People's Bank of China issued a statement saying all foreign debts and domestic individual deposits would be fully repaid. However, bankers were concerned when they saw a change in policy in the Gitic case. Adding to their uneasiness was the slow progress and lack of transparency in the liquidation process of CVIC. There is still no announcement on CVIC's assets and liabilities and creditors and bankers await further statements on the company's liquidation progress, which contrasted with the Gitic case in which preliminary estimates of financial data including assets and liabilities were revealed three months after the company's closure in October. An official at the central bank's CVIC liquidation committee said the CVIC issues were different from Gitic's and CVIC's debts would be repaid according to the promises made in the earlier announcement. The People's Bank is understood to have started to repay a three-year US$35 million floating rate note raised by a CVIC subsidiary, China Venturetechno International, but it is not known whether full repayment has been made. The committee was in the final stage of verifying creditors' claims and the official hinted that it might be completed in about a month. The other outstanding CVIC foreign loan known to date was a $27 million term loan, according to the local debt-paper publication Basis Point which also said that many of the foreign banks with exposure to CVIC were South Korean institutions which expanded aggressively in the mainland market before the Asian crisis erupted in 1997. CITIC KA WAH: Sees earnings fall 79pc ------------------------------------- Increases in provisions and operating expenses forced Citic Ka Wah Bank to report a 79.9 per cent plunge in attributable profit to $103 million last year. President and chief executive Cai Zhongzhi admitted the collapse of Guangdong International Trust and Investment Corp (Gitic) had made the bank's problem-loan collection efforts more difficult. The bank revealed it had lent $8.32 billion, or 32.2 per cent of its loan book, to mainland-related entities, of which $4.33 billion went to red-chip companies and $2.08 billion to mainland-incorporated entities. (South China Morning Post 27-Feb-1999) GUANGDONG ENTERPRISES: GDE, Nam Yue net debt at $10b ---------------------------------------------------- According to the South China Morning Post, creditor banks of insolvent Guangdong Enterprises (GDE) and Nam Yue (Group) were told last night that the two companies had a combined negative net worth of more than HK$10 billion as of September, mainly due to massive exceptional items but details of the items were not revealed. The information was revealed at steering committee meetings late last night on GDE and Nam Yue, the respective Hong Kong and Macau investment arms of the Guangdong government. The meeting, attended by about 50 creditor banks officials, was hosted by Guangdong assistant to the governor Wu Jiesi, GDE chairman Zhong Guangzhao and Nam Yue chairman Chen Duzhi, and their financial adviser Goldman Sachs. Some bankers expressed concerns that nasty surprises might come when more information about the exceptional items and financial data up till December is revealed. Such data is expected to be revealed at the end of the month. They were also upset that the government did not formally undertake, but just expressed the desire not to cut on loan principal repayment. They also voiced objection that they were not told whether there would be share-for-debt swap. Full details of the asset restructuring proposal aimed to keep the two firms afloat would be available by the middle of next month, creditor banks were told. The possible asset injection options were listed last night but details will only be made available at the meeting for all creditor banks on GDE today and on Nam Yue tomorrow. GDE and Nam Yue might be merged and Guangdong Investment and Guangnan (Holdings) might be merged too, a banker said. Goldman Sachs spokesman said no conclusion was made yesterday and the preliminary information provided would allow the steering committee members to advise other banks. The outcome of GDE's restructuring will have significant implications for other debt-laden mainland corporates that are in talks with creditor banks on debt and restructuring. GUANGDONG ENTERPRISES (HOLDINGS): Bailout plan offered ------------------------------------------------------ China's Guangdong provincial government proposed a bailout plan Monday for its cash-strapped investment arm, Guangdong Enterprises (Holdings) Ltd., including the injection of revenue from water supply, power plant and other provincial projects. The proposal came at a meeting held by Guangdong Executive Vice Governor Wang Qishan and advisers of Guangdong Enterprises to brief creditor banks on the group's financial results and the provincial government's support measures. Creditor banks were told that Guangdong Enterprises' total consolidated debt amounted to 22.5 billion Hong Kong dollars (2.9 billion U.S. dollars) as of Jan. 21. At the end of September 1998, Guangdong Enterprises' total liabilities exceeded its total assets by 13.2 billion Hong Kong dollars. The group posted a loss of 18.8 billion Hong Kong dollars for the first nine months of last year. The main pillar of the Guangdong government's support plan is the injection of revenues from projects in the province, such as water supply, power plant, bridge and highway. Wang said the restructuring of Guangdong Enterprises will be a milestone in the reform of state-owned enterprises. He did not give details of how creditors will be repaid, saying only repayment will be in line with international practice. The group said a preliminary debt-restructuring proposal will be developed in April. (Kyodo News 01-Mar-1999) INTERFORM CERAMICS: Suspension of trading ----------------------------------------- At the request of Interform Ceramics Technologies Limited, trading in its shares has been suspended with effect from 10:00 a.m. today (1/3/1999) pending an announcement in relation to standstill arrangement and proposed rescue plan of the Company. PICO FAR EAST: Results announcement ----------------------------------- Pico Far East Holdings Limited announced results for the year ending December 31, 1998 as a net loss of HK$5.63m on turnover of HK$1.09bn. This compares with a profit of HK$62.95m on turnover of HK$1.29bn for the corresponding 1997 period. SING TAO HOLDINGS: Zell bids for Aw stake in Sing Tao ----------------------------------------------------- According to the South China Morning Post, billionaire financier Sam Zell -- one of the richest men in the United States -- has made a surprise offer to buy a substantial part of Sally Aw Sian's 50.04 per cent stake in Sing Tao Holdings. Sources close to the deal said Mr Zell would form a new consortium with Dublin-listed investment funds who made an earlier offer of $115.81 million for 23 per cent of Sing Tao but had it vetoed by the court in favor of a rival bid by Lazard Asia Investment Management which the judge said would better benefit Ms Aw's creditors. The two funds -- China Enterprise Development Fund (CEDF) and the Investment Co of China -- conducted their bid through Hong Kong Sunrise Holdings, a wholly-owned subsidiary of CEDF. They said they would press ahead with their bid despite the court ruling. They said Sunrise was in advanced talks with a third party to arrange another way to buy into Sing Tao and the third party is now known to be Mr Zell. Sources said the Lazard deal involved buying Ms Aw's entire 50.04 per cent stake for $262.5 million but it failed to secure Ms Aw's backing as it would have her removed as chairman. Sources said the Zell/Sunrise would allow Ms Aw to remain chairman, a key condition in obtaining her backing, and a provisional agreement has been signed. Sources also said Mr Zell had filed an application with the Securities and Futures Commission for a waiver from making a general offer for Sing Tao, an indication of the intention to acquire a stake in excess of the takeover trigger level of 35 per cent, above Sunrise's originally intended level of buying 23 per cent. Lazard Asia said it remains interested in the acquisition. SING TAO HOLDINGS: Sing Tao set to confirm Zell bid --------------------------------------------------- According to the South China Morning Post, Sing Tao Holdings will be suspended from trading today as it will confirm reports a consortium including American billionaire financier Sam Zell has offered to buy 50.04 per cent of Sally Aw Sian's stake in Sing Tao. The offer valued Sing Tao at $1.25 a share, against a closing price of 90 cents on Friday. The new twist in the Sing Tao saga came as a price war among Chinese-language newspapers was brewing. Oriental Press Group, which owns mass market daily Oriental Daily News, is expected to launch in the near future a new daily, The Sun, which will be sold at $2 per copy in its first two weeks and $3 for the following three months. Apple Daily, owned by Lai Chee-ying's Next Media Group, has built up a war chest of more than $100 million to fend off intensifying competition. The paper's spokesman said its price will be lowered to $3 whenever The Sun was sold below $5. SUN HUNG KAI: SHK unit sued over Malaysia hotel deal ---------------------------------------------------- Sun Hung Kai Securities (SHKS) is being sued for $115.8 million by New World Development for allegedly failing to live up to its funding duties as part of a Kuala Lumpur hotel project. SHKS approached New World in April 1990 to take up a 25 per cent stake in the project, a joint venture with IGB Corp of Malaysia, to build two hotels, according to a High Court writ. (South China Morning Post 27-Feb-1999) TOP FORM INTERNATIONAL: Top Form units exchange assets ------------------------------------------------------ According to the South China Morning Post, lingerie- manufacturer Top Form International yesterday said it would swap its 40 per cent stake in a mainland property joint venture for an unfinished property project. The 40 per cent stake was valued at 28.61 million yuan and both projects are in Chengdu in Sichuan province. According to the Hong Kong Standard, wholly owned subsidiary Wide Gain Investment has signed a conditional agreement with other parties in its joint venture, Chengdu Gang-Peng Real Estate Development, in which Wide Gain has a 40 per cent interest to transfer its 40 per cent interest, valued at $29.1 million, to a state-owned enterprise and its related entity in exchange for ownership of a 3,657.6 sq m floor area in a property project in Chengdu, to be named as Gang-Peng Building. Top Form chairman said the joint venture would develop Gang-Peng Building on a site in Chengdu city centre. Construction work has been suspended for four years due to funding constraints. He said Top Form would sell its mainland property investment rents as soon as possible to refocus on its core manufacturing operation. WHIMSY CHAIN: Amusement chain collapses after 17 years ------------------------------------------------------ According to the Hong Kong Standard, debt-ridden amusement chain Whimsy, a subsidiary of publicly-listed Whimsy Entertainment, has gone bust after 17 years in operation. The chain sought voluntary liquidation after years of financial trouble, but the extent of its debts is not known yet. Court bailiffs were sent on Saturday to eight of the chain's 12 outlets, posting notices of the closure. Four other outlets had closed before Lunar New Year. The notices said the first creditors' meeting would be held within the next 28 days. As a result of the closure, 230 people will be thrown out of work. A worker representative said the company owed staff at least $5 million in wages and year-end bonuses. According to the group's 1997/98 annual report, the subsidiary contributed 89.8 per cent of the earnings of the parent company. A spokeswoman for the parent company said the company had been affected by the sluggish retail sector and dealt a fatal blow by high rentals. She confirmed that the amusement chain had not paid rentals to the tune of $5.5 million for its outlets as of January 16. Rental problems surfaced in the middle of last year when the parent company sought 30 to 40 per cent cuts in rents from landlords. The company reported a $40.05 million loss in its first-half results for the 1998/99 financial year. The stock exchange said it would contact the parent company on Monday to seek a clarification of its financial situation before deciding on withdrawing its listing. The Whimsy spokeswoman said the company would ask for its shares to be suspended from trading on Monday to make way for a formal announcement on the liquidation which is to be handled by accountancy firm Kennic L H Lui & Co. She also made it clear that the closure of Whimsy Entertainment did not mean the listed company would go into liquidation. She said Whimsy Entertainment has additional subsidiaries in the mainland which also operate indoor games centres, some of which are located in Chengdu. The group's controlling shareholder, Brilliance China Automotive Holdings, also manufactures minibuses that are distributed throughout the mainland. New York-listed Brilliance acquired a majority stake in Whimsy Entertainment in November last year for $29.8 million. Whimsy recently raised $11.5 million after making a top- share placement in January, reportedly to fund Brilliance's joint venture in Shenyang to make car axles. YAOHAN INTERNATIONAL: Re-listing of Yaohan collapses ---------------------------------------------------- According to the South China Morning Post, an attempt to re-list debt-ridden Yaohan International Holdings on the stock exchange of Hong Kong has failed. The judge made the ruling yesterday after hearing that restructuring bids had been unsuccessful. ========= J A P A N ========= DAI-ICHI KATEI DENKI: Results announcement ------------------------------------------ Shares of Dai-Ichi Katei Denki Co. fell 2 yen to 55. The consumer electronics seller widened its group net loss forecast for the year ending in March to 3.25 billion yen from an earlier loss forecast of 1.7 billion yen. That's also worse than Toyo Keizai's forecast of a 2.7 billion yen loss. (Bloomberg 01-Mar-1999) IMAGINEER: Results announcement ------------------------------- Shares of Imagineer Co. fell 200 yen to 1,010. The software company revised its parent forecast for the year ending March to a net loss of 1.2 billion yen from a net profit forecast of 200 million yen. (Bloomberg 01-Mar-1999) MITSUI TRUST: Results announcement ---------------------------------- Shares of Mitsui Trust & Banking Co. fell 3 yen to 114. Japan's third-largest trust bank widened its group net loss forecast for the year ending in March by 15 percent to 180 billion yen from an earlier loss forecast of 140 billion yen, as it writes off 390 billion yen in bad loans. That's also worse than Toyo Keizai's forecast of a 140 billion yen loss. (Bloomberg 01-Mar-1999) MITSUBISHI CHEMICAL: Results announcement ----------------------------------------- Shares of Mitsubishi Chemical Corp. fell 13 yen to 277. Japan's largest chemicals company forecasts a parent net loss for the year ending in March, because of lower sales and higher-than-expected restructuring costs, the Nihon Keizai newspaper reported, without citing sources. The company will likely post a 10 billion yen ($83.9 million) parent loss, from a 3 billion yen profit a year earlier. After the market closed, the company announced it expects to post a group net loss of 27 billion yen for the year, and a parent net loss of 10 billion yen, reversing an earlier forecast of a net profit of 8 billion yen. (Bloomberg 01-Mar-1999) NIKKO SECURITIES: Results announcement -------------------------------------- Shares of Nikko Securities Co. fell 14 yen to 361. Japan's No. 3 brokerage, had its counterparty rating lowered to "BBB-", one notch above "junk" status, by Standard & Poor's Corp. (Bloomberg 01-Mar-1999) NIPPON COLUMBIA: Results announcement ------------------------------------- Shares of Nippon Columbia Co. fell 7 yen to 210. The maker of home audio and video equipment reversed its group net forecast for the year ending in March to a loss of 1.8 billion yen from an earlier forecast of a 300 million yen profit. That's also worse than Toyo Keizai's forecast of 50 million yen. (Bloomberg 01-Mar-1999) NIPPPON CREDIT: Ministry assured banks on bad loans in 1997 ----------------------------------------------------------- The Finance Ministry assured 34 banks and insurance companies in 1997 that Nippon Credit Bank's self-assessed "third-category" bad-loan sum of 470 billion yen was credible when it asked them to help recapitalize NCB, a source at one of the 34 said Saturday. Two senior officials at the ministry's Banking Bureau gave the assurance at a meeting of representatives from the 34 banks and insurers April 1, 1997, in the ministry's annex building, the source said quoting a memo taken during the meeting. (Kyodo News 27-Feb-1999) NIPPON CREDIT BANK: President denies tie up with Chuo Trust ----------------------------------------------------------- The president of Nippon Credit Bank denied Monday that the collapsed bank, now placed under temporary state control, had decided to tie up with Chuo Trust and Banking Co. At a news conference, Takuya Fujii, president of the Tokyo- based bank, said that no concrete results were yet in sight from a plan agreed last year by the two banks to study a possible tie-up. (Kyodo News 01-Mar-1999) NIPPON CREDIT BANK: To lay off 290 staff ---------------------------------------- Nippon Credit Bank (NCB), a debt-ridden bank currently under state control, will reduce the number of employees to 1,800 from the current 2,090, the Financial Reconstruction Commission (FRC) said Monday. The staff cut forms the core of a set of restructuring steps aimed at increasing NCB's corporate value to thus find a receiving bank as early as the end of June to which all assets and operations will be transferred, FRC officials said. Among other streamlining measures are seeking voluntary return of retirement money from 16 former senior executives who in and after 1989 became directors with the right to represent NCB, the officials said. The measures also include sales of all branch offices and bank houses for employees, with some of the facilities continuing to be used by concluding leasing contracts with new owners. The restructuring steps are expected to bring NCB's personnel costs down to some 15 billion yen, half of the peak 30 billion yen for the business year ended March 1996. The FRC, the government's special panel in charge of revitalizing the nation's weak financial system, also said it will publicly seek a financial adviser to ensure quick transfer to a receiving bank. The commission added NCB will have to establish an in-house committee to examine what caused the bank to go bust late last year and who are to blame for that. It also made it clear the NCB will not be allowed to extend loans in principle to companies judged to be insolvent or companies that could go under in the future. The FRC is scheduled to accelerate its efforts soon to select loans to be separated from NCB and sold to an asset- disposal entity patterned on the Resolution Trust Corp. of the United States. (Kyodo News 01-Mar-1999) OKI ELECTRIC: Results announcement ---------------------------------- Shares of Oki Electric Industry Co. fell 7 yen to 362 on an inflow of 4.35 million yen. Japan's sixth-largest computer chipmaker widened its group net loss forecast for the year ending in March to 47 billion yen from an earlier loss forecast of 45 billion yen. That's worse than Toyo Keizai's forecast of a 43 billion yen loss. (Bloomberg 01-Mar-1999) PASCO CORP: Results announcement -------------------------------- Shares of Pasco Corp. fell 80 yen to 400 after the aerial photography company revised its group forecast for the year ending March to a net loss of 35.5 billion yen, from a net profit of 100 million yen. It also asking lenders to forgive 36 billion yen in loans and will sell 15 billion yen worth of new shares to Secom Co., the largest Japanese security service company, giving Secom a controlling stake in the company, the Nihon Keizai newspaper reported over the weekend. (Bloomberg 01-Mar-1999) SHINKO ELECTRIC: Results announcement ------------------------------------- Shares of Shinko Electric Co. fell as much as 9 yen to 191. The maker of electrical equipment revised its group net forecast for the year ending in March to a loss of 3.1 billion yen from an earlier forecast of a 350 million yen profit. That's worse than Toyo Keizai's forecast of a 300 million yen profit. (Bloomberg 01-Mar-1999) SHOWA DENKO KK: Results announcement ------------------------------------ Shares of Showa Denko KK rose as much as 3 yen to 103 on an outflow of 1.74 million yen. The chemical maker reported a group net loss of 15.18 billion yen for the year ended Dec. 31 compared with a profit of 9.5 billion yen a year ago. That's worse than Toyo Keizai's forecast of a 11 billion yen loss. It's predicting that it will rebound to a net profit of 7 billion yen this year. (Bloomberg 01-Mar-1999) TOYO ENGINEERING CORP: Results announcement ------------------------------------------- Shares of Toyo Engineering Corp. fell 3 yen to 118. The designer of fertilizer, petrochemical, and other industrial plants widened its group net loss forecast for the year ending in March to 14.8 billion yen from an earlier loss forecast of 1.6 billion yen. That's worse than Toyo Keizai's forecast of a 3.5 billion yen loss. (Bloomberg 01-Mar-1999) TOYO SHUTTER: Results announcement ---------------------------------- Shares of Toyo Shutter Co. fell 25 yen to 280. The maker of shutters fell to a 52-week low of 262 after it revised its parent net forecast for the year ending in March to a loss of 9.64 billion yen from an earlier forecast of a 400 million yen profit. That's also worse than Toyo Keizai's forecast of a 400 million yen profit. It suspended its second-half dividend. (Bloomberg 01-Mar-1999) ========= K O R E A ========= HAITAI ELECTRONICS: Suggests capital reduction ---------------------------------------------- The Korea Herald reported that Haitai Electronics will cut its capital by 90 percent in an efforts to achieve a debt for equity swap with its creditors. The proposed reduction will reduce the number of outstanding shares to 1.33 million shares, and capital to 6.67 billion won. The plan also involves writing off 43,472 shared held by large shareholders, including the Haitai chairman. Haitai Electronics was on the list of 55 nonviable firms that the Financial Supervisor Commission (FSC) issued on June 18, 1998 as being subject to immediate liquidation. Creditor banks were to stop providing new loans to the firms on this list issued by Korea's financial watchdog institution. The list was generated at the request of the FSC by the nation's 26 commercial banks which classified their business loan-clients into three groups -- normal, viable, and nonviable. At that time, Haitai Electronics was reported to have assets of 824.5 billion won. The article stated that the company will approach its creditors, including merchant banks, with its plan to convert its debts into equity stakes. KISAN MUTUAL TRUST SAFE: Firm is insolvent ------------------------------------------ The Kisan Mutual Trust Safe Company advertised in the Korean language Maeil Kyungje that it is now insolvent. KOREA LIFE INSURANCE: Met Life to buy Korea Life ------------------------------------------------ The Korea Times reported that Metropolitan Life Insurance Company of the United States is in the final negotiations over the terms for buying Korea Life Insurance Company (a.k.a. Daehan Life). Two possible options for this sale are reportedly under consideration, including the selling the assets and liabilities of Korea Life in a similar manner that was use in disposing of weak banks. The other idea is to simply transfer the operational license of Korea Life. The government is in favor of a simple exchange of operating licenses, as this will mean a minimal amount of public funding being required to complete this sale. However, the article stated that based on the progress of the negotiations to date, it is highly likely that government funds will be provided as a form of capital injection into Korea Life. Korea Life posted 14.8 trillion won in equity as of the end of 1998, and debts of 14.7 trillion won. Additionally, the Financial Supervisor Commission has reported that Korea Life has non-performing loans exceeded 2 trillion won. Korea Life is owned by the Shin Dong Ah (a.k.a. Shindong-a) Group, whose chairman, Mr. Choi Soon-young, was arrested and charged with embezzlement last month. Choi is charged with smuggling $165 million out of Korea between May, 1996 and June 1997. Choi is accused of working in collusion with Kim Chon-eun, a former co-president of SDA International (a Shin Dong Ah trading company subsidiary that was formerly known as Shinawon) in fabricating export documents in order to illegally transfer financing funds from four Korean banks out of the country. SHINHAN SILK: Applies for liquidation approval ---------------------------------------------- According to the Korean language Maeil Kyungj's Business Brief section, the Shinhan Silk Company, an affiliate of Kabul Textile Company, applied for approval to start a liquidation procedure. SSANGYONG GROUP: Creditor supports two weak affiliates ------------------------------------------------------ The Korea Herald reported that the main creditors of the Ssangyong Group agreed to provide fresh loans and capital to two of its heavily indebted affiliates. These two affiliates, which together reportedly owe 1.42 trillion won in loans to banks, are the. Ssangyong Engineering & Construction, and Namkwang Construction. Creditors agreed to swap 55.2 billion won worth of their loans for equity shares in Namkwang Construction, and also inject another 44.8 billion won in fresh capital under this program. Ssangyong Engineering & Construction will receive 85.6 billion won in fresh loans, even though its outstanding loans are largely unsecured. A proposal by the main creditor, Cho Hung Bank, to swap this firm's outstanding loans of 525 billion won for equity was, however, rejected on the grounds of excessive volume. Last November, when these Ssangyong affiliates applied for their workout programs, newspaper stories said that this move would be essentially a bail-out in the form of debt rescheduling and debt write-offs. =============== M A L A Y S I A =============== GADANG HOLDINGS: Results announcement ------------------------------------- Gadang Holdings Bhd registered a pre-tax loss of RM7.48 million for the first half of the financial year ended November 30 1998, compared to the previous pre-tax profit of RM3.71 million. Turnover dropped by 53.8 per cent to RM33.34 million from RM72.19 million before. Loss after tax was RM7.66 million compared to profit after tax of RM2.63 million previously. Loss per share was 38 sen compared to the previous earnings per share of 13 sen. No dividend has been recommended. Business Times 01-Mar-1999) KEMAYAN CORP: Results announcement ---------------------------------- Kemayan Corp Bhd registered a group pre-tax loss of RM51.29 million for the six months ended November 30 1998, compared to the previous pre-tax profit of RM20.83 million. Turnover dipped 67.58 per cent to RM76.05 million from RM234.54 million before. Loss after tax was RM102.05 million compared to profit after tax of RM32.21 million previously. Loss per share was 27.40 sen against the previous earnings per share of 6.70 sen. In a statement, Kemayan said the loss was due to development projects which were not moving as well as a lack of cashflow. The group is now in the process of discussing the proposed restructuring scheme with financial institutions and creditors. Pending the finalisation of the restructuring scheme and the prevailing economic situation, the directors do not expect the group performance to improve over that recorded in the first half. No dividend has been declared for the first half of the financial year. (Business Times 01-March-1999) REPCO HOLDINGS: Sued by Sime Bank --------------------------------- Sime Bank, which suffered huge losses last year from its aggressive lending policy, has sued a major borrower -- Repco Holdings, a company listed on the Malaysian junior board. Sime Bank -- the former financial arm of listed conglomerate Sime Darby -- issued the writs of summons against Repco for defaulting on payments of loans and interest worth RM344 million. In a statement to the stock exchange, Repco said it has filed its defence and counter-claims against Sime Bank, Sime Merchant Bankers and SimeSecurities. The Second Board company - controlled by businessman Low Thiam Hock -- did not give any reason for the defaults. Sources said Repco had suffered huge losses from its stockmarket dealings. (Singapore Business Times 01-Mar-1999) SISTEM TELEVISYEN: TV3 operator cuts costs to reduce losses ----------------------------------------------------------- Sistem Televisyen Malaysia Bhd (STMB), the operator of the TV3 channel, has undertaken various cost-cutting measures including downsizing its subsidiaries to reduce losses. The group, which had recently offered a voluntary retrenchment scheme affecting 570 employees, would be more prudent in its capital expenditure, limiting it to those for essential purposes, STMB managing director Datuk Haji Zahari Omar said. "As for our subsidiaries, we plan to be more focused and do only businesses that can attract revenue," he said after the group's AGM in Petaling Jaya yesterday. Zahari said later that the group had not discounted the possibility of divesting some of its subsidiaries, although there was no concrete discussion at the moment. Earlier, STMB chairman Datuk Mohd Noor Yusof said the group recorded losses last year for the first time since it started business in 1984, owing to the economic downturn. The group registered a loss before tax of RM168.84mil for the year ended Aug 31, 1998, compared with a profit before tax of RM17mil in 1997. The group's turnover also fell by 10.8% to RM249.6mil from RM279.9mil in 1997. As for the group's debts, Zahari said it was negotiating with its bankers to convert them into term loans and that response from the banks had been very positive. (The Star 27-Feb-1999) SOUTHERN PLASTIC: Results announcement -------------------------------------- Southern Plastic Holdings Bhd posted a group pre-tax profit of RM502,000 for the six months ended November 30 1998, a huge decrease of 76 per cent from the previous RM2.05 million. Turnover however, increased by 12 per cent to RM51.77 million from RM46.20 million before. Profit after tax was RM502,000, a drop of 66 per cent from RM1.46 million previously. Earnings per share was 1.5 sen compared to 5.8 sen recorded in the previous corresponding period. No dividend has been declared for the first half of the financial year. (Business Times 01-Mar-1999) SYARIKAT KAYU WANGI: Results announcement ----------------------------------------- Syarikat Kayu Wangi Bhd posted a group pre-tax loss of RM6.12 million for the financial year ended November 30 1998, compared to the previous profit after tax of RM547,000. Turnover dropped by 20.95 per cent to RM43.10 million from RM54.53 million previously. Loss after tax was RM5.82 million compared to profit after tax of RM696,000 before. Loss per share was 35.77 sen compared to earnings per share of 4.3 sen registered in the previous corresponding period. No dividend has been recommended for the fiscal year of 1998. (Business Times 01-Mar-1999) ===================== P H I L I P P I N E S ===================== NAPOCOR: Enron wants government to assume Napocor debts ------------------------------------------------------- An official of US-based power firm Enron International expressed concern over the National Power Corp.'s (Napocor) outstanding debts and obligations, saying this could largely undermine government's efforts to establish a competitive electricity market. In a speech during the Asia Society's 10th Annual Corporate Conference, Enron International vice-president David Terlip said the administration is largely observed to be struggling with the disposition of Napocor's existing debt and obligations which are not certain to disappear once the industry is liberalized. He added this could serve as a disincentive for investors who may want to go into power generation in the domestic market. At present, Napocor's outstanding debts total $5 billion while obligations to independent power producers (IPPs) are estimated to reach another $5 billion. Mr. Terlip said government should take the responsibility of paying some of Napocor's existing loan obligations through allocations from the national budget. This is in addition to payments made by customers as part of their monthly electricity bills. Likewise, he proposed that earnings from the privatization of the state firm's generation assets should be used to pay for Napocor's loan as a means to augment "transitional support" from the government. (BusinessWorld 01-Mar-1999) PHILIPPINE AIRLINES: Foster committed to turnaround --------------------------------------------------- Together with four other defectors from Cathay Pacific, Hong Kong's flagship carrier, Peter Foster has given up a promising, blue-chip career to take on what some might call a "mission impossible" -- rescuing Asia's oldest airline from receivership. His most immediate tasks include keeping 9,000 creditors at bay and restructuring US$2.2 billion worth of debt, while preventing the airline's jets from being repossessed, its workers going back on mass strike and somehow convincing travellers that if they book themselves on a PAL flight there's a safe bet the airline will still be around next week to honour their tickets. Only then can the difficult rebuilding exercise begin. Over the next 12 months, Mr Foster and friends want to give PAL a fresh start, with new colours, uniforms, terminal facilities, route structure, aircraft configurations, alliance partners and hopefully new equity investors. "I am not trying to belittle the task. It is huge. But there are some very simple priorities we are focusing on," Mr Foster said. One of those is convincing PAL's staff and creditors to pull together instead of pulling the airline apart. Mr Foster has made it one of his top priorities to establish better relations with the airline's two main unions, the flight attendants and ground services unions. PAL will continue to operate its own flights, ground- handling, ticketing and catering and other core activities, while peripheral businesses could be sold off to raise case. Mr Foster is equally confident of overcoming the airline's mountainous debt problems, even though all previous rehabilitation plans have been promptly shot down by creditors. A new round of talks with creditors was held in Washington last month with Mr Foster pleading for more time ahead of PAL's latest rehabilitation plan deadline of March 15. A small number of creditors represent about 80 per cent of the airline's debts and these are primarily aircraft makers who are loathe to see yet more planes returned. Mr Foster said: "It has been plain to us that these people do not want to see PAL die. They would much prefer to see these planes remain with a viable PAL. It is fair to say they are on our side." However, he admits that just a few weeks ago some creditors were very close to pulling the plug. Should new investors come in, Mr Tan says he is also prepared to invest more funds but the government will not. The Lucio Tan group of companies owns about 75 per cent of PAL, and the government may reduce its remaining 13 per cent minority stake.(South China Morning Post 01-Mar-1999) PHILIPPINE LONG DISTANCE: Heavy losses on provisioning ------------------------------------------------------ Philippine Long Distance Telephone Co. (PLDT) said Friday its net profit dived 85.5 percent to 1.1 billion pesos in 1998, dragged down by hefty provisioning. Revenues rose 19.6 percent to 42.6 billion pesos from 36.6 billion pesos, the country's main telecommunications firm announced. Net profit in 1997 stood at 7.6 billion pesos. PLDT and stock market analysts attributed the plunge to three billion pesos the company had set aside for provisioning against doubtful accounts and 2.1 billion pesos it had booked for Piltel, its money-losing mobile telephone unit. Piltel is saddled with 34 billion pesos in debt and negotiations are underway to rehabilitate the firm. Creditors have demanded that PLDT guarantee Piltel's loans. (PNA and RP Business Digest 26-Feb-1999) PILIPINO TELEPHONE: Rehabilitation plan submitted ------------------------------------------------- Telecommunications giant Philippine Long Distance Telephone Company (PLDT) disclosed today it plans to submit to the company's Board of Directors the proposed rehabilitation plan for its cash-strapped subsidiary Pilipino Telephone Corporation (Piltel) for their final approval. PLDT's announcement came as part of its clarification notice it sent to the Philippine Stock Exchange (PSE) regarding a report that said that PLDT plans to infuse P2.0 billion more in Piltel. According to PLDT Spokesperson Ma. Lourdes C. Rausa-Chan, the PLDT participation and support are necessary to ensure that the proposed rehabilitation in Piltel will be successful. She also admitted that the PLDT management is prepared to infuse additional funds in Piltel as part of its mutually acceptable rehabilitation plan. But the acceptability of such rehab plan will be determined from the PLDT's perspective. As this developed, Piltel officials and the creditors are in the process of holding ongoing discussions by presenting various proposals for its business recovery and financial restructuring. Romulo Mabanta of Buenaventura Sayoc & De los Angeles Law Offices declared that the proposals were already taken into consideration by the steering committee formed by the company's creditors. They said the discussions will continue in order to arrive at an agreement with respect to resolving its outstanding debt obligations. As such, Piltel officials told creditors that the company has incurred substantial losses for the 1998 fiscal year. At present, the company is in the process of working with auditors for the release of the company's audited 1998 financial statements which is scheduled to come out at the end of March. (PNA and RP Business Digest 26-Feb-1999) UNIWIDE HOLDINGS: Yap Bank okays Uniwide debt shelf bid ------------------------------------------------------- Publicly listed shopping mall builder and operator Uniwide Holdings, Inc. expects a recently signed debt restructuring agreement with one creditor to ease interest payment obligations. A source from the company told BusinessWorld that a "major" creditor bank has already approved the company's debt restructuring proposal. The source further added that Equitable Banking Corp., whose loan exposure to Uniwide has reached one billion Philippine pesos (PhP), met with Uniwide officials over the weekend to finalize details. Equitable Bank officials were unavailable for comment. The said agreement granted Uniwide a loan repayment scheme based on a revised maturity and interest charges spread, the source said. "The longer repayment terms granted to the company will help prop up the liquidity aspect," the source said. The company however, has yet to seek the approval from other local creditor banks for its separate debt restructucturing proposals. Payments on interest charges dragged down the nine-month consolidated net income of the company to as much as PhP496 million, down 83.6% to PhP97 million from the previous PhP593 million. (BusinessWorld 01-Mar-1999) =============== T H A I L A N D =============== NAKORNTHAI STRIP: McDonald & NatWest sued on bond deal ------------------------------------------------------ Crain's Cleveland Business reports that a group of disgruntled bondholders has accused McDonald Investments Inc. and NatWest Capital Markets Ltd. of securities fraud in connection with the financing of a steel mill expansion in Thailand. Five mutual funds belonging to the IDS Mutual Fund Group, a family of mutual funds managed by American Express Financial Corp. of Minneapolis, said they bought $62 million of bonds as part of a $452.5 million debt offering last February and March for the Nakornthai Strip Mill PCL in Chonburi, Thailand. But a string of negative announcements, including a credit downgrade on the bonds last October, Crain's relates, has caused those bonds to lose the vast majority of their value. IDS Mutual claims that two of the offering's underwriters, McDonald Investments and NatWest Capital Markets Ltd. of New York, made "materially false and misleading statements" about the Thai steel mill while promoting the bond offering. "Had the funds) known of the materially adverse information misrepresented or concealed by the defendants, they would not have purchased the notes at such inflated prices, or would not have purchased the notes at all," according to the lawsuit, filed Jan. 25 with the U.S. District Court of Minnesota in Minneapolis. IDS Mutual wants its money back, plus interest. In response to the lawsuit, McDonald Investments, a unit of KeyCorp, issued a statement, saying: "We are aware that a lawsuit has been filed. We believe McDonald conducted itself properly in this transaction and we plan to vigorously defend that position. As this matter involves pending litigation, we have no further comment." McDonald owns 2% of Nakornthai, according to the lawsuit. A NatWest spokeswoman declined comment to Crain's, saying the company doesn't comment on pending litigation. According to the suit, the complex's hot mill facility wasn't completed even though McDonald and NatWest claimed it was. The suit also alleges the complex couldn't process as much scrap steel as the underwriters claimed in offering documents. The Nakornthai deal was the latest in a series of steel financing deals led by David L. Stickler, managing director of McDonald's steel group, Crain's says. McDonald was brought in to restructure the mill's finances after a Thai bank group couldn't finance the project in the wake of the collapse of Thailand's currency. Last March, Mr. Stickler told Crain's Cleveland Business that investors initially were skeptical about the financing deal. According to the IDS lawsuit, the underwriters worked "to overcome this resistance" to the financing package by misleading potential bond buyers about key parts of the mill and its management. To raise the money for the mill, underwriters sold two major bond issues: $249 million of 12% senior mortgage notes due in 2006, and $203.5 million of 12.25% senior subordinated notes due in 2008. While McDonald and NatWest are the only two underwriters named in the suit, two others, PaineWebber Inc. and ECT Securities Corp., both of New York, also participated in the offering. The four firms collected fees totalling $15 million, according to the suit. Crain's describes a string of recent events has soured IDS on its purchase of the Nakornthai bonds and has sent the bonds' value plummeting. According to the lawsuit, the Nakornthai steel mill has dropped plans to build a power plant and an iron-production operation -- both of which were promised during the offering. In addition, Steel Dynamics Inc., a steel producer from Butler, Ind., and part-owner of Nakornthai, has dropped plans to provide management services and technical assistance to the Thai mill, the lawsuit says. Though not mentioned in the lawsuit, the bonds have been downgraded by Moody's. In October, Moody's dropped by one notch its rating on the 12% senior mortgage notes to Caa3 from B3 and on the 12.25% notes to Ca from Caa2. Moody's cited a decline in worldwide steel markets and concerns about Nakornthai's operating performance for its action. The 12.25% senior subordinated notes last traded Jan. 19 at a value of $9, down from their original par value of $100, and the 12% senior mortgage notes last traded Jan. 20 at $20, according to the Bond Investors Association of Miami Lakes, Fla., a nonprofit group that publishes the Defaulted Bonds Newsletter. A $30 million payment on all the bonds issued at the offering is due Aug. 1, 1999, according to the Bond Investors Association. "We're watching this, and from our viewpoint these (bonds) are ready to go" into default, said Jack Colombo, managing editor of Defaulted Bonds Newsletter. The newsletter has placed both the 12% and 12.25% bonds on its monthly list of "default candidates." 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 1999. All rights reserved. ISSN: 1520-9482. 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 $575 for 6 months 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 * * *