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/raid1/www/Hosts/bankrupt/TCRAP_Public/990316.MBX 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 Tuesday, March 16, 1999, Vol. 2, No. 52 Headlines * C H I N A & H O N G K O N G * AWT HOLDINGS: International Bank of Asia Pushes Liquidation CHI CHEUNG: Paliburg arm in talks to sell space in Central CHUN TAI HOLDINGS: Trilease files action over $433,165 loan GUANGDONG BUILDING: To Delay Reporting 1998 Results GUANGDONG INTERNATIONAL: China won't pay without guarantee LAI SUN: Property Sales Projected to Net HK$160 Million MATRIX HOLDINGS: Matrix holds talks over liabilities PEREGRINE INVESTMENT: Notice to Creditors to Prove Debts RANCORD INVESTMENT: Notice of meeting of creditors S. SQUARE INTERNATIONAL: Notice of meeting of creditors SONG DEVELOPMENT LIMITED: Notice of meeting of creditors STATE FRONTIER: Notice of meeting of creditors SUCCESS MANOR INVESTMENT: Notice of meeting of creditors * J A P A N * NISSAN MOTOR: DDI to buy Nissan shares in cell phone cos. NISSAN MOTOR: Renault poised to buy up to 40pc NOMURA SECURITIES: Seeks 300b yen loan to cover loss SAKURA BANK: Toyota agrees to capital injection * K O R E A * KOOKMIN LIFE: New York Life bidding for insurer * M A L A Y S I A * MBf FINANCE: Danamodal Nasional in 78% stake RENONG BHD: Solomon Smith Barney touts restructuring RASHID HUSSAIN: Bonds downgraded as situation deteriorates * P H I L I P P I N E S * PHILIPPINE AIRLINES: Resuming Flights to Xiamen PHILIPPINE AIRLINES: PAL unhappy with partial SEC approval PHILIPPINE AIRLINES: Submitting another revised rehab plan * S I N G A P O R E * AZTECH SYSTEMS: Bleeds again with S$16.2m loss SEMBAWANG RESOURCES: Suffers stiff losses VAN DER HORST: Auditor doubts survival as going concern * T H A I L A N D * KASET THAI: Denies Any Role in Deloitte Exec's Murder SIAM CEMENT: Proposes share issue to pay debts THAI AIRWAYS: SIA to bid for a stake in Thai Airways ================================= C H I N A & H O N G K O N G ================================= AWT HOLDINGS: International Bank of Asia Pushes Liquidation ----------------------------------------------------------- International Bank of Asia Ltd. said it is seeking the court-ordered bankruptcy of AWT Holdings, a freight forwarder and property company, alleging failure to repay HK$18 million (US$2.3 million) in loans. IBA has reportedly seized some commercial property put up as collateral. Last month, AWT said it was seeking to delay payment of HK$189.9 million in outstanding claims. The company this week reported an unaudited loss of HK$457.68 million for the year through last March 31, five times the loss in the previous corresponding period. CHI CHEUNG: Paliburg arm in talks to sell space in Central ---------------------------------------------------------- Chi Cheung Investment -- an arm of debt-ridden developer Paliburg Holdings -- said it was negotiating with several parties to sell an office floor at 9 Queen's Road, Central. Estate agents interviewed by reporters for the South China Morning Post said transacted office prices in 9 Queen's Road were between HK$5,000 and HK$6,000 per square foot, down about 60 per cent from the 1997 peak. Subsidiary Chi Cheung Property denied its office floor had been sold at below market price. Last year, Chi Cheung was reported to have sold property assets in an apparent effort to help reduce some of its parent's $6 billion debt. It sold an uncompleted luxury residential development in Kowloon Tong to Far East Consortium at a loss for HK$101 million last August. CHUN TAI HOLDINGS: Trilease files action over $433,165 loan ----------------------------------------------------------- According to the South China Morning Post, consumer electronics maker Chun Tai Holdings says a writ seeking the repayment of $433,165 issued by Trilease International will not affect its daily operations. Chun Tai said it was seeking legal advice and advise from its financial advisers for rescheduling the repayment of borrowings due to banks and other financial institutions. The company said it was drawing up a restructuring proposal and should be able to offer further details by March 19. It said none of its 25 creditor banks had issued proceedings against it. GUANGDONG BUILDING: To Delay Reporting 1998 Results --------------------------------------------------- The Asian Wall Street Journal reported that Guangdong Building Industries Ltd. has announced that it will delay reporting it 1998 results until the end of this month. The report mentioned that the company has received permission from both the Hong Kong and Australia stock exchange authorities for this move. Earlier reports stated that Guangdong Building Industries Ltd. is 57 percent owned by the Hong Kong listed Guangdong Investments Ltd. Guangdong Investments Ltd. itself is in turn 41 percent owned by Guangdong Enterprises, an investment arm of the Chinese Guangdong provincial government. Guangdong Enterprises and its units have currently suspended payment on debts until a debt restructuring plan can be worked out. GUANGDONG INTERNATIONAL: China won't pay without guarantee ---------------------------------------------------------- China's premier Zhu Rongji said in Beijing Monday that the bankruptcy of the Guangdong International Trust and Investment (GITIC) has sent a significant message to the outside world, that is the Chinese government will not repay debts for any individual Chinese financial institution, if the debts of the institution are not guaranteed by the governments at various levels. The foreign financial institutions "should conduct proper risk analysis and act prudently and cautiously when extending loans to China's financial institutions," warned the premier at a press conference covered by Xinhua News Agency and held right after the conclusion of the second session of the ninth national people's congress, the nation's legislature this afternoon. LAI SUN: Property Sales Projected to Net HK$160 Million ------------------------------------------------------- Debt-ridden Lai Sun Development has started selling its remaining flats at The Panorama at Tsuen Wan at an average price of $3,648 per square foot, according to a report appearing in the South China Morning Post. The company said Saturday its small residential project in Hunghom was scheduled for sale by the end of this year. It is considering redeveloping its Yuen Long industrial project as a means to expand its residential property portfolio. The company is also in negotiation with the government on land premium for a Yuen Long residential project. MATRIX HOLDINGS: Matrix holds talks over liabilities ---------------------------------------------------- According to the Hong Kong Standard, music box maker Matrix Holdings is in talks with potential investors regarding a proposed restructuring. All its trading and manufacturing operations have been suspended. In a statement to the Stock Exchange of Hong Kong, Matrix said the board hopes to present the results of its discussions to its bank and leasing creditors by the end of the week. The company's total liabilities have reached $223 million, with some $151 million owed to banks, $12 million owed to leasing companies and $60 million to trade and other creditors. Subject to audit, the board of directors believes the group's assets cover its liabilities. There are also seven outstanding writs of summons served by trade and leasing creditors claiming about $9.1 million from Matrix and its trading subsidiary, Matrix Industries. PEREGRINE INVESTMENT: Notice to Creditors to Prove Debts -------------------------------------------------------- The creditors of Peregrine Investment Limited, which is being voluntarily wound up, are required on or before April 1 to send in their names, addresses and particulars of their debts or claims to the Liquidators of the said company, David Richard Hague, John Kwok Heem Li at 27th Floor, Island Place Tower, 510 Island Plance Tower, North Point, Hong Kong, and if so required by notice in writing from the liquidators, are personally or by their solicitors to come in and prove their debts or claims at such time and place specified in such notice, or in default thereof, they will be excluded from the benefit of any distribution before such debts are proved. RANCORD INVESTMENT: Notice of meeting of creditors -------------------------------------------------- A meeting of creditors of Rancord Investment Company Limited will be held on Mar 26 at 9:30 am at the offices of Messrs Deacons Graham & James, 3rd to 6th Floors, Alexander House, Central, Hong Kong for the purposes mentioned in Sections 241, 242, 243 and 244 of the Companies Ordinance. S. SQUARE INTERNATIONAL: Notice of meeting of creditors ------------------------------------------------------- A meeting of creditors of S. Square International Limited will be held on Mar 19 at 11:00 am at 2nd Floor, Mantex Industrial Building, 37-43 Sha Tsui Road, Tsuen Wan, New Territories for the purposes mentioned in Sections 228A, 241, 242, 243 and 244 and 255Aof the Companies Ordinance. SONG DEVELOPMENT LIMITED: Notice of meeting of creditors -------------------------------------------------------- A meeting of creditors of Song Development Limited will be held on Mar 19 at 10:00 am at 2nd Floor, Mantex Industrial Building 37-43 Sha Tsui Road, Tsuen Wan, New Territories for the purposes mentioned in Sections 228A, 241, 242, 243 and 244 and 255A of the Companies Ordinance. STATE FRONTIER: Notice of meeting of creditors ---------------------------------------------- A meeting of creditors of State Frontier Incorporation (SFI) Limited will be held on Mar 19 at 11:45 am at 2nd Floor, Mantex Industrial Building 37-43 Sha Tsui Road, Tsuen Wan, New Territories for the purposes mentioned in Section 228A, 241, 242, 243 244 and 255A of the Companies Ordinance. SUCCESS MANOR INVESTMENT: Notice of meeting of creditors -------------------------------------------------------- A meeting of creditors of Success Manor Investment Limited will be held on Mar 30 at 11:30 am at 12th Floor, Dina House, Ruttonjee Centre, 11 Duddell Street, Hong Kong for matters related to the winding up of the company. ========= J A P A N ========= NISSAN MOTOR: DDI to buy Nissan shares in cell phone cos. --------------------------------------------------------- DDI Corp. plans to buy shares held by Nissan Motor Co. in three TU-KA cellular phone companies for an estimated total of 40 billion yen, DDI sources said Thursday. Nissan has already been reported considering selling part of its equity shares in the three TU-KA cellular phone companies -- TU-KA Cellular Tokyo Inc., TU-KA Cellular Tokai Inc. and TU-KA Cellular Kansai Inc. -- in a move aimed at cutting its huge liabilities. (Kyodo News 03-mar-1999) NISSAN MOTOR: Renault poised to buy up to 40pc ---------------------------------------------- Renault and Nissan Motor are close to striking a deal that would give the leading French car maker a stake of between 33.4 and 40 per cent in Japan's second-largest car company and put three directors on Nissan's board. Renault's likely investment of about 500 billion yen (about HK$32.49 billion) would help Nissan reduce its huge consolidated interest-bearing debt, estimated at 2.5 trillion yen. Details were discussed at a meeting in Paris on Saturday between Renault president and chief executive Louis Schweitzer and Nissan president Yoshikazu Hanawa, and final agreement will be announced after Renault's board meeting tomorrow, both the Nihon Keizai and Asahi newspapers reported yesterday. The two companies are considering using each other's factories, the Nihon Keizai added. Renault may produce its cars at Nissan's two Mexico factories and sell them in the United States and Canada. Renault has negligible presence in the North American market, while sluggish sales in the United States have left Nissan with surplus capacity. Nissan is interested in using Renault's production lines and sales networks in Latin America and eastern Europe. Nissan's dire financial straits have forced it to curtail investment and neglect emerging markets, according to Nihon Keizai. An alliance would propel the two companies into fourth position in global sales and production, behind General Motors, Ford and Toyota, but ahead of Volkswagen. In geographical markets the two appear well-matched, with Renault focused on Europe (where it overtook Volkswagen last year to become the top-selling brand, for the first time in 15 years) and Latin America, and Nissan strong in Asia and North America. Reforms have failed to appreciably lighten Nissan's massive debt load. After DaimlerChrysler co-chairman Juergen Schrempp flew to Tokyo last week and declared DaimlerChrysler no longer wanted to buy a stake, Moody's Investor Service downgraded Nissan's credit rating to junk, and its shares dived. (South China Morning Post 15-Mar-1999) Meanwhile another report said Renault said on Monday it was still talking about an equity deal with Nissan, but had yet to make a firm offer after weekend talks in Paris. Renault would not comment on Japanese press speculation that it might announce a deal, including the purchase of up to 40 percent stake in Nissan, after a board meeting on Tuesday. "Renault hasn't made an offer. We're still at the stage of discussions," said a spokeswoman for Renault. She said the board meeting had been scheduled some time ago. (Reuters 15-Mar-1999) NOMURA SECURITIES: Seeks 300b yen loan to cover loss ---------------------------------------------------- Japan's largest broker Nomura Securities Co Ltd is asking three domestic banks to extend 300 billion yen (S$4.3 billion) in loans to cover a loss incurred by its non-bank unit, reports said on Saturday. The banks -- Sakura Bank, Sanwa Bank and the Industrial Bank of Japan - are likely to grant the request, the Mainichi Shimbun and the Nihon Keizai Shimbun said, quoting sources. The loan is aimed at writing off huge bad loans suffered by Nomura Finance Co, its Tokyo-based non-bank affiliate, the sources said. "We are considering taking out subordinated loans, now that one of our affiliated non-banks is reviewing a financial reconstruction programme," a Nomura source was quoted by Kyodo News as saying. Nomura has so far injected 450 billion yen into the non- bank's capital base, but continued declines in land prices have created the need to channel an additional 200 billion yen in to cover losses, sources said. If Nomura Securities funnels the money and writes down the extraordinary expenditure as a special loss without asking for the loans, it would risk pushing down the parent's own capital adequacy ratio, Kyodo said. Nomura incurred a group loss of 207 billion yen for the six months to September as it took a US$600 million (S$1.04 billion) unrealised capital loss in its Russian government bond holdings, and lost another US$600 million on its US mortgage bond dealing. Nomura said in December it would cut 650 jobs in Europe and the US by March 31 to reduce overseas costs. (Agence France-Presse 15-Mar-1999) SAKURA BANK: Toyota agrees to capital injection ----------------------------------------------- Toyota Motor Corp has reversed its earlier reluctance to give financial help to its ally Sakura Bank. The top Japanese carmaker plans to buy 10 billion yen of 30 billion yen in new shares to be issued by Sakura Bank by the end of March. Toyota is expected to formally approve the capital injection at a board meeting today, the sources added. The rest of Sakura's new shares will be bought by Mitsui group companies, Kyodo quoted industry sources as saying. Sakura is the core of the Mitsui business group. Sakura earlier implemented a new share placement, worth 350 billion yen, with other business allies, although Toyota was notably absent from the deal. "Our basic approach is clear that we will act in a way which is most economically rational," Toyota president Hiroshi Okuda said. Toyota, which owns 2.3 per cent of Sakura, apparently shied away from injecting more capital amid uncertainty over the health of Japan's banking system. (Kyodo News and Agence France-Presse 15-Mar-1999) ========= K O R E A ========= KOOKMIN LIFE: New York Life bidding for insurer ----------------------------------------------- New York Life Insurance Co. will make a bid for South Korea's cash-strapped Kookmin Life Insurance Co., a senior official with New York Life's Korean affiliate said Monday. "New York Life has been interested in Kookmin Life for some time and has expressed its interest in participating in the auction," Lyndon McMullen, executive vice president of Kohap New York Life, told Reuters. McMullen said New York Life, one of the largest U.S. life insurers, had yet to put together a deal because it does not want to assume all of Kookmin's liabilities. "New York Life would not take on all past liabilities of Kookmin. And in order for the Financial Supervisory Commission (FSC) to inject public funds, the company had to be put up for auction," he said. South Korea's financial watchdog, the Financial Supervisory Commission (FSC), has announced that Kookmin would be put on the international auction block along with Korea Life Insurance Co. some time this month. Kookmin's liabilities were estimated at 390 billion won ($316.8 million), compared to a paid-in capital of 20 billion won ($16.2 million), as of end 1998, according to the FSC. Despite such disheartening figures, McMullen said New York Life found Kookmin attractive because the local insurer appeared to be a "fairly well managed company." (Reuters 15-Mar-1999) =============== M A L A Y S I A =============== MBf FINANCE: Danamodal Nasional in 78% stake -------------------------------------------- Danamodal Nasional has pumped 1.6 billion Malaysian ringgit in fresh capital in ailing MBf Finance, enabling it to recommence lending activities. The capital injection buys Danamodal a 78 per cent stake in MBf Finance, the largest finance company in Malaysia. With the fresh capital, Danamodal (the Malaysian government agency to spearhead the recapitalisation and consolidation of the Malaysian banking sector) raised the finance company's risk-weighted capital adequacy ratio to 15 per cent. The capital injection was necessary because parent company MBf Capital had failed to maintain the ratio above the minimum statutory requirement of 8 per cent. Danamodal said late last week that it had the option to raise the ownership level to 89 per cent or more if there is a need for more capital. The takeover marked the end of the Loy family's control of MBf Finance, founded by the late Loy Hean Heong in the 1970s, Business Times relates. MBf Capital owns 22 per cent of the finance arm's enlarged share capital. Danamodal will inject a total of RM1.6 billion through the subscription of: * 2.48 billion 8 per cent irredeemable non-cumulative convertible exchangeable preference shares worth RM1.24 billion; and * 724 million ordinary shares of MBf Finance for RM362 million. Danamodal said: "The increased RWCR at MBf Finance has enabled it to immediately recommence lending activities. As a 78 per cent shareholder, Danamodal will be prepared to inject further capital in MBf Finance as and when the need arises." An official of Danamodal told BT that the agency planned to exit from MBf Finance when it was on a "proper footing". Danamodal will sell the finance company to a third party or back to MBf Capital as long as it gets an internal rate of return of 12 per cent from the capital injection. RENONG BHD: Solomon Smith Barney touts restructuring ---------------------------------------------------- Salomon Smith Barney, the Government's financial adviser, has lauded Renong group's debt restructuring plan, describing it as a pacesetter in strengthening Malaysia's corporate and banking sectors. "It is firm evidence that corporate restructuring is gathering pace. In fact, we see it as a breather for businesses," they said. A Salomon spokesman in Kuala Lumpur said companies like Renong Bhd need such a breather to continue operating, adding that their creditors upon restructuring of the loans can expect better yields in the long term. "Such debt restructuring is not only fair to the creditors but also to Renong's shareholders," a SSB spokesman told Business Times in Kuala Lumpur. The US-based financial consultant also said that had such exercises taken place much earlier, some of the unpleasant impact of the regional economic crisis on local businesses may have been avoided or contained. "We are glad that it (corporate debt restructuring) finally gathering pace, although almost two years after the economic crisis first hit the country," he said, while cautioning however, that a lot more needs to be done. He also said that any debt restructuring will provide more life to the stock market although the Kuala Lumpur Stock Exchange can only expect to notch a "significant rebound" during the third quarter of 1999 once the banking sector's liquidity problem is solved. As previously reported, Renong, which is Malaysia's largest corporate borrower, last week proposed an RM8.4 billion bond issue by UEM's toll road operator unit PLUS to be used to pay off the group's debts. Under the plan, PLUS would issue RM8.4 billion seven-year bonds that carry an annual yield of 10 per cent. The proceeds of the bonds would be used to settle RM5.4 billion Renong debts and RM3.0 billion UEM debts. RASHID HUSSAIN: Bonds downgraded as situation deteriorates ---------------------------------------------------------- Rating Agency Malaysia Bhd has downgraded Rashid Hussain Bhd's (RHB) RM800mil redeemable secured bonds from A1(s) to B3. The rating agency said the downgrade reflected the unexpected deterioration in the RHB group's position since the last rating. "The swift and unprecedented economic turmoil, affecting the group's banking and securities operations, and its high debt level unmatched by its income generating ability under current economic conditions, drove RHB and some of its subsidiaries into the red in financial year ended June 1998," a RAM statement said yesterday. RAM said the sharp economic downturn affecting the performances of RHB's securities and banking subsidiaries had suppressed their ability to transmit dividend upwards to the group. The RHB group is presently undertaking a RM3.3bil recapitalisation exercise which includes raising RM716.3mil for RHB through the issue of new shares and warrants to strengthen the balance sheet and institutionalise its shareholding structure. "The rating of the bond issue is no longer accorded any enhancement as the security pledge does not provide the same comfort level under the volatile and uncertain stock market condition," RAM noted. The bond issue of RHB Capital Bhd had also been downgraded from AA3 to BBB3, with the rating remaining on "rating watch" with a "developing" outlook. RAM said the downgrade was premised on the effect that the current economic downturn had on RHB Capital's position as a bank holding company. "Its banking and other financial subsidiaries were not spared by the negative implications of the regional economic turmoil." The rating agency said as the holding company of financial institutions (FI) under the purview of Bank Negara, RHB Capital relies heavily on dividend income as it has no access to the cash flow of its FI subsidiaries. "The weakened financial state of its parent RHB also contributed to the lower rating." RAM made it clear that RHB Capital's investment grade rating was contingent upon the company's successful fund raising exercise by year-end. The company was expected to rely on further capital raising and/or refinancing of assets to enable it to repay the RM350mil bonds maturing in December 1999. With the proceeds of RM725.4mil from the sale of a 30% stake in RHB Bank to Khazanah Nasional Bhd, the group's debt level would be reduced significantly. ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Resuming Flights to Xiamen ----------------------------------------------- Philippine Airlines (PAL) said Friday it would resume flights to the Chinese city of Xiamen after a nine month suspension. The airline said it would serve the city four times a week from Monday, using an Airbus A320 and targeting Filipino-Chinese, many of whom hail from that region, as well as business travellers. Xiamen will become PAL's 12th international destination following its return to international flights on October 29, reports Agencie Press France. PAL, which is saddled with a 2.24-billion-dollar debt, shut down for 13 days in September after defaulting on its debts and after being crippled by a pilots' strike in June. The airline has until March 15 to convince creditors and corporate regulators that its proposed new rehabilitation plan is viable, APF notes. PHILIPPINE AIRLINES: PAL unhappy with partial SEC approval ---------------------------------------------------------- Philippine Airlines Inc. asked the Securities and Exchange Commission to approve in whole the agreements it earlier forged with three leasing firms so the airline can regain the confidence of creditors. PAL made the request after the SEC imposed conditions in approving the agreements, covering four aircraft leased out by the leasing firms to the country's flag carrier. The SEC conditions give the leasing firms the right to immediately repossess the planes if PAL defaults anew on their rentals. The SEC also allowed the leasing firms to repossess the planes if they feel PAL's rehabilitation plan will have an adverse effect on them. PAL, however, urged the SEC to approve the agreements in whole so it will regain the trust and confidence not only of the three but also the other aircraft lessors, not to mention the riding public. The three leasing companies-- Airplanes Finance Ltd., GPA and General Electric Capital--earlier terminated their respective leases after PAL closed down its operations last September due to a dispute with its workers. PAL at the same time defaulted on $8.93 million in contractual obligations to the three firms. However, after negotiating with PAL last month, the three agreed to resume the lease agreements. Under the compromise agreement, PAL will pay the three firms $220,000 in monthly rent and maintenance reserves for each of the leased aircraft. The arrangements shall remain PAL succeeds in drawing up a new rehabilitation plan. But the three said the rehabilitation plan must be ready on or before Sept. 1, 1999. (The Manila Times 13-Mar-1999) PHILIPPINE AIRLINES: Submitting another revised rehab plan ----------------------------------------------------------- Philippine Airlines will reportedly submit a revised rehabilitation plan to the Philippine Securities and Exchange Commission this week. Analysts surveyed by the South China Morning Post said the airline faces a long and arduous road ahead, and the rehabilitation process will be slowed by the airline industry slump and the search for a foreign partner. Details of the revised plan are still sketchy, but PAL officials earlier said PAL would try to raise $200 million in fresh equity and tapping existing shareholders and finding a foreign partner, thus addressing the two key issues for which an earlier plan was rejected by creditors in December. PAL's original plan called for a cut in its fleet to 22 from 52 in June before a debilitating pilots' strike brought it to its knees. Analysts talking to the SCMP suspect it might take PAL three to four years to reverse its losses because it would have to constantly re-invest in its operations. In recent weeks, PAL management has been courting the company's secured creditors, who represent 75 to 80 per cent of the airline's total debt of $2.1 billion, the SCMP recalled. Three potential investors have been identified for a possible buyin agreement with PAL, said Philippine Finance Secretary Edgardo Espiritu yesterday. Mr Espiritu however could not name or give details about the companies before the approval of the rescue plan. The Hong Kong Standard indicated that PAL planned to submit a new rehabilitation plan Monday, adding that the airline owes a group of European credit agencies US$890 million and the US Export-Import Bank US$341.2 million. ================= S I N G A P O R E ================= AZTECH SYSTEMS: Bleeds again with S$16.2m loss ---------------------------------------------- Aztech Systems plunged back into the red last year, in sharp contrast to two analysts' expectations of a sharp increase in profit. It turned in a net loss of $16.2 million for 1998 compared to a net profit of $2.3 million previously. Two brokerages -- Kim Eng and Merrill Lynch -- had late last year made a mean forecast of a 90 per cent surge in earnings. Their forecasts were not revised in the latest issue of The Estimate Directory. Aztech's performance has been most volatile, Business Times notes. The Sesdaq-listed firm had only crawled back into the black in 1997, after a $12.5 million net loss in 1996. Aztech, one of Singapore's biggest personal computer sound card makers and a rival of Creative Technology, did not explain the reasons for its poor showing in its statement to the stock exchange yesterday. But its segmental results showed losses in every market -- from the booming West to the depressed East -- as well as in every product group. The biggest pre-tax loss of $7.4 million was from America, followed by Europe and Asia-Pacific with over $3 million each. Turnover last year fell 11 per cent to $210 million. There was also a foreign exchange loss of about $2 million compared to a $3.7 million gain previously. The company declared a first and final dividend of 2 per cent, half the amount previously. Looking ahead, Aztech's directors said they expect the group's performance for the current year "to be better than 1998", although "it continues to be cautious". A year ago, the company had said almost the same thing -- that it expected to do "better or comparable to 1997," Business Times recalls. SEMBAWANG RESOURCES: Suffers stiff losses ----------------------------------------- Sembawang Resources fell deeply into the red last year due to heavy writedowns on its business assets -- but also unveiled a worrisome $175 million swing from net current assets to liabilities, according to a report appearing in the Straights Times. Sembawang Resources last month forewarned of massive writedowns amid a severe deterioration of its financial position as a result of the regional economic crisis. The Company yesterday reported a net loss before extraordinaries of $4.98 million last year against a profit of $9.4 million for1997. The jump in current liabilities -- up $107 million to $260 million even as current assets fell to $151 million from $220 million previously. As a result, net current assets swung from $66 million to net current liabilities of $109 million, the bulk of which appears to be bank borrowings, The Times observes. Group borrowings repayable in 12 months are $128 million, including $101 million of unsecured facilities. Close to $270 million of debt is due beyond 12 months. While total borrowings eased from $427 million to about $400 million, the Times says, its gearing -- a figure watched closely by its bankers -- rocketed to over 300 per cent due to the smaller shareholders' capital base. VAN DER HORST: Auditor doubts survival as going concern ------------------------------------------------------- Some 11,000 shareholders of listed Van der Horst were dealt a body blow last night -- VDH's external auditor, Arthur Andersen, said the company is so heavily laden with debts that it may not survive as a going concern. The warning was issued in VDH's annual report issued Friday night. Arthur Andersen said VDH's debts and the unstable conditions in Indonesia, VDH's biggest market, "raise substantial doubt that (VDH group) will be able to continue as going concern". At the end of last September, VDH had current liabilities of $262.7 million and current assets of $118.8 million, thus resulting in net current liabilities of $144 million. Compared to that, VDH's shareholders' fund of only $27.9 million was hardly a cushion. Arthur Andersen's dire words were in stark contrast to the chairman's statement -- accompanied by a smiling and confident photograph of chairman Johannes Kotjo -- which talked about better times ahead, Business Times said in its coverage of the news. The Indonesia-based Mr Kotjo acknowledged that VDH, an engineering and infrastructure company, faced a difficult regional outlook as well as problems meeting its obligations, but added: "I strongly believe that the group will be able to successfully deal with these demanding challenges." Arthur Andersen, on the other hand, had an altogether different view. In its auditor's report, it said VDH's future operations and its ability to recover trade and other debts (some $88 million as at the end of last September) have been hit by regional conditions. Moreover, BT notes, VDH's major lenders were all calling in their loans. As of last September, VDH had $227 million in term loans, mostly in a transferable loan facility, a set of floating rate notes and a set of Asian Currency Notes (in US dollars). Arthur Andersen said the VDH group had breached some agreements in these loans and "consequently, the lenders have declared all outstanding borrowing to be immediately due and payable". It added: "(VDH), which acts as a guarantor of the Asian Currency Notes issued by a subsidiary, was not able to honour the guarantee when it was called on Dec 30, 1998." As of Feb 3 this year VDH had repaid just over $40 million of the loans upon request of its lenders as part of a discussion to restructure its debts. This would leave it with some $187 million in outstanding loans. VDH's debts and the unstable conditions in Indonesia, VDH's biggest market, "raise substantial doubt that (VDH group) will be able to continue as going concerns", Arthur Andersen said. Also, the auditors said VDH's financial statements were prepared based on certain assumptions -- presumably including the value of its stocks, the quality of its receivables, and, of course, that VDH would be able to carry on its business. "The validity of the going concern assumption ... depends on the successful conclusion of the director's negotiation with the group's lenders." It said that if VDH could not carry on its business, there might be a need to "adjust" -- the polite auditors' word for "write down" -- the assets in the balance sheet. "In addition, (VDH group) may have to provide for further liabilities that might arise," it added. VDH's woes are a sad come-down for Mr Kotjo and the thousands of investors who put their money in his company, BT opines. The businessman, German-trained and at one-time a senior official of Indonesia's giant Salim group, was once seen as "the man with the golden touch". At one point, he -- sometimes with partner Bambang Trihatmodjo, second son of Indonesia's former president Suharto -- controlled four listed companies in Singapore and looked set to be a major corporate figure. The economic collapse of Indonesia changed everything. Mr Bambang disappeared from the Singapore corporate scene and Mr Kotjo's also said to be spending most of his time outside the country. The share price of VDH, which hit $7.75 in Nov 1995, closed at 40.5 cents yesterday. Despite VDH's problems, however, Mr Kotjo and his fellow directors -- the rest being Messrs Freddie Heng, Johnlin Yuwono, Richard St John Stevens, Chan Cher Boon and Albert Hong -- had emoluments and fees totalling $1.36 million for the year ended last September, against $2.27 million a year earlier. Of this, only the directors' fee of S$100,000 (up from S$70,000) was open to a vote by shareholders in the upcoming annual general meeting. =============== T H A I L A N D =============== KASET THAI: Denies Any Role in Deloitte Exec's Murder ----------------------------------------------------- The Thai business family whose indebted sugar mill was being restructured by murdered Australian auditor Michael Wansley has denied his death was linked to his discovery of corruption at the mill, news reports said Friday. Prasert Siriviriyakul, who manages Kaset Thai Sugar Co., said media reports from Bangkok that Wansley's murder was connected to an alleged 200 million baht (5.4 million dollar) business irregularity were damaging. "Who will be responsible for the reports and help us if it turns out later that the allegation is untrue," Prasert was quoted as saying in the Bangkok Post. He said the allegation could affect ongoing talks between the family and creditor banks. Wansley was shot dead in broad daylight by a gunman riding pillion on a motorcycle while on his way to the Ruamphol Enterprise Co. mill in the central Thai province of Nakon Sawan last Wednesday. The 58-year-old executive, a senior partner with Deloitte Touche Tohmatsu, led a team of 14 Australians working with the Thai government to rebuild companies hurt by the Asian financial crisis. Deloitte was engaged by local banks to rehabilitate the three firms owned by the Siriviriyakul family, the Post said. Wansley had been hired by the mill's creditor banks to help stave off the mill's bankruptcy in the face of its dlrs 450 million debt. Prasert said investigators should look at other possible motives that could have led to the murder, including Wansley's involvement in inspecting the accounts of closed Thai finance companies. Provincial police commander Colonel Weerasak Chalayonkupt said earlier that police were focusing on Wansley's role in debt restructuring as the only possible motive for the killing. "There are many conflicts in the mill's debt restructuring program and police are now questioning every concerned party," he said. Agence France Presse reports that a team of Australian insolvency advisers was evacuated from a central Thai province to Bangkok on Thursday and placed under 24-hour security after the murder. "We have received orders from the government to track down the gunman and resolve the killing as soon as possible because it is a shocking case undermining our bilateral relationship," police spokesman Gen. Chatchawal Suksomjit told the Associated Press, adding that a special police team comprising senior and experienced officers has been assigned to carry out the investigation. "It is too early to either pin down motivation or make allegations against anyone. We are working on the case around the clock," he said. Yesterday, reports said that police shot dead a Thai man who allegedly tried to flee from officers investigating the murder of Australian insolvency expert Michael Wansley. SIAM CEMENT: Proposes share issue to pay debts ---------------------------------------------- Umesh Pandey, writing for the Bangkok Post, reports that Siam City Cement Plc announced plans to double its registered capital to three billion baht by issuing 150 million shares to existing shareholders. Shareholders would be offered two new shares for every three held. Shares not purchased would be offered to other shareholders with board approval. The proceeds would be used to repay debt, company spokesman Staporn Phettongham said. Overall debt restructuring would depend on approval by all 67 creditors, he said, but the main point would be the upfront payment of about $160 million and the conversion of remaining debt to long-term. Siam City Cement currently has foreign exchange debts exceeding $540 million and local debts topping two billion baht. The company said 100 million shares of 10 baht par value would be issued to existing shareholders at 60 baht each, raising six billion baht (about US$160 million), while the remaining 50 million shares would be issued at a later date. Peter Suozzo, analyst at Warburg Dillion Read, said the new shares would benefit the company in the long term rather than dilute existing holdings. He predicted the company would raise another $40 million from marketable securities to help pay debts of about $200 million. Siam City Cement's biggest creditor, International Finance Corporation (IFC), which is owed about $75 million, said it was willing to help the company reschedule loans. "The company has been talking to us from the very beginning about its problems and now seems to be in a sound situation. We think they are serious about restructuring and therefore we are willing to accept their plans," said Khalid Mirza, regional mission chief for IFC. Last August, the Post recalls, Holderbank Financiere Glaris, the world's largest cement company, took a 24.99% stake in Siam City Cement, paying a premium of about 170 baht a share. Paul Hugentobler, senior vice-president and area manager for Asia for Holderbank and now managing director and chairman of the executive committee of Siam City Cement, said at the time that Holderbank was willing to buy new shares left unsubscribed in a future issue. Since the entry of Holderbank, Siam City Cement has been going through changes both in terms of management and business structure, the Post observes, commenting that Holderbank wants Siam City Cement to focus on its core business -- cement production. Siam City Cement would gradually reduce its stake in all other businesses or sell them. Over the years, Siam City Cement expanded its range of business into companies including Siam City Tiles and Pipes, Citypack, Ceratech, Siam City Brassware, Siam Fine China, Royal Porcelain, Lanna Lignite Plc, Gulf Power Generation and Karat Sanitaryware Plc. Since the entry of Holderbank, the major shareholders of Siam City Cement have slowly ceded management control. Somkiat Limsong, former managing director, resigned on March 1 and other managers have been reshuffled. Holderbank plans to bring in new management and production expertise. Vincent Bichet has been appointed to oversee cement and concrete businesses. Beat Malacarne is responsible for finance and administration, while Felix Hoechner is in charge of information technology. THAI AIRWAYS: SIA to bid for a stake in Thai Airways ---------------------------------------------------- Singapore Airlines (SIA) said it will bid jointly with Lufthansa of Germany for a stake in Thai Airways International, shrugging off reports that Thailand may reject its offer. "We are still going to make a proposal," said Cheong Kong, Singapore Airlines' chief executive officer. Last April, SIA said it was thinking of buying a 25 percent stake in Thai Airways, which is 93 percent owned by the Thai government. Singapore's Business Times reported a month ago that Thailand's strategic enterprise law might oppose SIA's bid, seeing it as a competitive threat. SIA, with its S$1.5 billion ($882 million) to S$2 billion cash cache, could tighten its hold on Southeast Asia's air traffic with a stake in Thai Airways, especially as the industry becomes increasingly competitive, price wars could erupt. Singapore Airline has been looking for stakes in airlines such as China Airlines and South African Airways as its business slowed in recession-torn Asia. However, the China Airlines deal was called off in January, and SIA has submitted a bid for South African Airways with Lufthansa. The German carrier is a part of the Star Alliance, an airline group which includes airlines such as Thai Airways and United Airlines. Cheong said SIA will "likely" consider joining the group. Cheong was speaking at the signing of an $80 million joint venture with Rolls-Royce and Hong Kong Aero Engine Services to maintain and repair Trent Engine for Asia Pacific customers. Hong Kong Aero is jointly owned by Rolls-Royce and Cathay Pacific Airways. The joint venture agreement also gives SIA the option to buy 10 percent of Hong Kong Aero. (Bloomberg and Business Day [Thailand] 15-Mar-1999) 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 * * *