/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/990414.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 Wednesday, April 14, 1999, Vol. 2, No. 72 Headlines * C H I N A & H O N G K O N G * CHUNG HWA DEVELOPMENT: Winding-up hearings adjourned CITIC PACIFIC: Citic struggles with changes in fundamentals GKC HOLDINGS: Tangs declared bankrupt; last-minute rescue fails GUANGDONG ENTERPRISES: GDE debt restructuring plan set for May GUANGNAN HOLDINGS: Fortuna in talks on debt of $30m KWAI GANG FINANCE: Winding-up petition MAGIC COLOUR PHOTOFINISHING: Winding-up petition MAY ZURE COMPANY LIMITED: Notice of first meetings N N INVESTMENT LIMITED: In members' voluntary liquidation PACIFIC DIALYSIS CENTRE: Notice to creditors to prove debts SING TAO: HK regulator asked to block Lazard Asia's Sing Tao bid SOUNDWILL INVESTMENTS LIMITED: Winding-up petition TAK WING INVESTMENT: Winding-up hearings adjourned TANFUL RICH LIMITED: Winding-up petition TRIPLE INDUSTRIES COMPANY: Winding-up petition * I N D O N E S I A * PT ASTRA: Astra to lobby individual creditors to OK plan PT INDOFOOD: Creditors stall Indofood sale * J A P A N * FUJI ELECTRIC: Moody's cuts Fuji's ratings KOKUMIN BANK: Nonaka calls for calmness after bank failure NISSAN MOTOR: Renault's 'le cost cutter' starts work at Nissan SHOKUSAN BANK: Shokusan Bank faces losses * K O R E A * DAEWOO GROUP: S&P downgrades Daewoo's credit KOREA FIRST BANK: Korea bank deal at risk on debt * M A L A Y S I A * RENONG BHD: The PLUS factor * P H I L I P P I N E S * PHILIPPINE AIRLINES: Boeing opposes PAL rehab plan PHILIPPINE AIRLINES: PNB wants to be PAL creditors' rep * S I N G A P O R E * CYCLE & CARRIAGE: C&C buys into dealership * T H A I L A N D * KASET THAI: Third suspect surrenders in Wansley case NAKORNTHAI STRIP MILL: Meets with creditors RADANASIN BANK: BOT reports strong foreign interest in bank ================================= C H I N A & H O N G K O N G ================================= CHUNG HWA DEVELOPMENT: Winding-up hearings adjourned ---------------------------------------------------- According to the Hong Kong Standard, the Court of First Instance yesterday adjourned the winding-up hearing of Chung Hwa Development Holdings to next month and of Tak Wing Investment (Holdings) to next week. The Chung Hwa petition was issued in February by its US-listed subsidiary Leading Edge Packaging and the Tak Wing petition was issued the same month by Standard Chartered Bank. CITIC PACIFIC: Citic struggles with changes in fundamentals ----------------------------------------------------------- After Hong Kong's stock market bubble burst in late 1997, Citic Pacific's share suffered a drop from HK$53 in August 1997 to HK$18.05. The tumble in the company's market value made the debt levels seem worrisomely high. "My personal priority is to reduce our liability. The fundamentals have changed," says Citic head Larry Yung. Reducing the company's debt has become an obsession for Mr Yung and his senior management at Citic Pacific. At the company's results meeting in March, Citic announced that the company had been actively paring its debt from HK$21.2bn ($2.7bn) at the end of last year to HK$18.3bn by the middle of March. Its gearing has come down from 51 percent to 43 percent. (Financial Times 12-Apr-1999) GKC HOLDINGS: Tangs declared bankrupt; last-minute rescue fails --------------------------------------------------------------- According to the South China Morning Post, GKC Holdings' high- fliers Eric Tang Yiu-hong and Eugene Tang Yiu-chuen were declared bankrupt by the court yesterday at the request of creditor Internatonal Bank of Asia. An outstanding $2 million on a $41 million loan had not been repaid to the bank, prompting the bankruptcy petitions. Control of the brothers' assets now rests with the Official Receiver, who must realise the assets and apply them to repay creditors by way of dividends. The Tangs will be unable to sell or dispose of any personal assets and cannot trade or conduct business without disclosing their bankruptcy. They have to wait four years before they could be eligible for a discharge from bankruptcy, which can be extended to eight years if they fail to cooperate with the Official Receiver. An inquiry by the Commercial Crime Bureau is still underway but no charges have been laid so far. GUANGDONG ENTERPRISES: GDE debt restructuring plan set for May -------------------------------------------------------------- According to the Hong Kong Standard, Guangdong Enterprises (Holdings) is expected to announce its debt restructuring proposal to its creditor banks in mid-May, reports said. No final decision has yet been reached, however, on whether to ask the banks for a "haircut" on their lending to the group. GUANGNAN HOLDINGS: Fortuna in talks on debt of $30m --------------------------------------------------- According to the South China Morning Post, Fortuna International is in advanced talks with Guangnan Hong (Group), the unlisted parent of insolvent red chip Guangnan Holdings, over the repayment of more than $30 million in debt. Vice-chairman and managing director of the company, David Chan Chuen-wing, said yesterday the company might make a provision for the debts for the financial year to last December, but that would depend on the outcome of the talks. The debts arose from the sale of Fortuna's entire interest in electronics firm Firstone Investment to Guangnan Hong last year for $64.21 million, of which Guangnan Hong had yet to settle $8.94 million, due on December 31. Guangnan Holdings, which holds 20 per cent of Fortuna, has yet to decide if it will take up its entitlement of a rights share sale by Fortuna last week. Fortuna is raising $39.5 million via a one-for-two rights issue largely to fund acquisitions of abattoir, butchery and tannery facilities for ostriches in South Africa. The company said three brokerages had promised to underwrite excess rights shares and had confidence that its fund-raising would not be affected by Guangnan's financial problems. Mr Chan said that demand for ostriches in Africa was far stronger than supply and he believed it was a lucrative business. He said death rate was a headache but the company would try to keep it at 15 per cent. KWAI GANG FINANCE: Winding-up petition -------------------------------------- A petition for the winding up of Kwai Gang Finance Company Limited was presented to the High Court on Mar 1 by Guangdong International Trust and Investment Corporation Hong Kong (Holdings) Limited (In creditors' voluntary liquidation), whose registered office is at 8th Floor, Prince's Building, Chater Road, Central, Hong Kong and acting through its Joint and Several Liquidators Mr Gabriel Chi Kok Tam and Mr Alan Chung Wah Tang and the said petition is directed to be heard before the court at 11:00 am on April 21, and any creditor or contributory of the said company desirous to support or oppose the making of an order on the said petition may appear at the time of hearing by himself or his counsel for that purpose, and a copy of the petition will be furnished to any creditor or contributory of the said company requiring the same by Solicitors for the Petitioner, Clifford Chance, 30th Floor, Jardine House, One Connaught Place, Central, Hong Kong, on payment of the regulated charges for the same. MAGIC COLOUR PHOTOFINISHING: Winding-up petition ------------------------------------------------ A petition for the winding up of Magic Colour Photofinishing Company Limited was presented to the High Court on Feb 20 by Kodak (Far East) Limited, and the said petition is directed to be heard before the court at 9:30 am on April 21, and any creditor or contributory of the said company desirous to support or oppose the making of an order on the said petition may appear at the time of hearing by himself or his counsel for that purpose, and a copy of the petition will be furnished to any creditor or contributory of the said company requiring the same by the Solicitors for the Petitioner, Fred Kan & Co, 31st Floor, Central Plaza, 18 Harbour Road, Hong Kong, on payment of the regulated charges for the same. MAY ZURE COMPANY LIMITED: Notice of first meetings -------------------------------------------------- A meeting of creditors of May Zure Company Limited will be held on April 30 at 10:30 am to be followed at 11:30 am by a meeting of the contributories at the Official Receiver's Office, 10th Floor, Queensway Government Offices, 66 Queensway, Hong Kong. Acting Official Receiver and Provisional Liquidator: C J Robinson. N N INVESTMENT LIMITED: In members' voluntary liquidation --------------------------------------------------------- The creditors of N N Investment Limited, which is being voluntarily wound up, are required on or before May 10 to send in their names, addresses and particulars of their debts or claims to the Liquidator(s) of the said company, and if so required by notice in writing from the liquidator(s), 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. Joint and Several Liquidators: J G W Blaauw, 22/F., Prince's Building, Central, Hong Kong. PACIFIC DIALYSIS CENTRE: Notice to creditors to prove debts ----------------------------------------------------------- The creditors of Pacific Dialysis Centre Limited, which is being voluntarily wound up, are required on or before May 11 to send in their names, addresses and particulars of their debts or claims to the Liquidators of the said company, 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. Joint and Several Liquidators: Matthew Finbarr O'Driscoll, Thomas Brian Stevenson and Wilfred Keith Timso, 15th floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong. SING TAO: HK regulator asked to block Lazard Asia's Sing Tao bid ---------------------------------------------------------------- A consortium backed by US billionaire financier Sam Zell has filed a complaint with Hongkong regulators seeking to block Lazard Asia Fund's takeover of media group Sing Tao Holdings Ltd, press reports said yesterday. The consortium, which itself is seeking to acquire Sing Tao, claimed Lazard Asia Fund's bid for the group did not treat minority shareholders fairly, the reports said. The consortium complained to the Securities and Futures Commission (SFC), and demanded the regulator veto the HK$524.52 million (S$116.8 million) takeover bid by Lazard Asia, the South China Morning Post said. A spokesman for the SFC when reached for comment said: "If there is a complaint we will look into it. We don't disclose any complaint." Last month, Sing Tao chairman Sally Aw Sian agreed to sell her 50.04 per cent stake in her family business to the fund operated by investment house Lazard Asia for HK$262.38 million. The deal values the entire company at HK$524 million. Lazard Asia is providing Ms Aw with a HK$78 million financial assistance package -- an interest-bearing loan which Ms Aw may be exempted from repaying under a profit-sharing arrangement, yesterday's report said. The move effectively gives Ms Aw an extra 37 cents a share on top of the HK$1.25 general offer price, it said. In addition, Ms Aw has been offered a six-year consultancy contract, which will pay her HK$9 million a year, the report said. Last week, the daily said the consortium including Dublin-listed funds China Enterprise Development Fund and Investment Co of China had been snapping up Sing Tao shares in the market. The group now owns some 3 per cent of of Sing Tao and is expected to continue its buying spree to bolster its influence during an upcoming special general meeting to approve the Lazard deal, it said. Sing Tao, founded by the Aw family in 1938, publishes the English-language Hong Kong Standard and the Chinese-language Sing Tao Daily. The agreement with Lazard Asia came as Ms Aw was facing bankruptcy. Ms Aw recently sold the Tiger Balm Gardens and her residence there to property tycoon Li Ka-shing for HK$100 million for redevelopment. (Agence France-Presse and Singapore Business Times 13-Apr-1999) SOUNDWILL INVESTMENTS LIMITED: Winding-up petition -------------------------------------------------- A petition for the winding up of Soundwill Investments Limited, (now known as Golden Dragon Land Development Limited) was presented to the High Court on Mar 16 by United Marble Company Limited whose registered office is Flat B, 7th Floor, World Tech Centre, 95 How Ming Street, Kwun Tong, Kowloon, and the said petition is directed to be heard before the court at 11:00 am on May 5, and any creditor or contributory of the said company desirous to support or oppose the making of an order on the said petition may appear at the time of hearing by himself or his counsel for that purpose, and a copy of the petition will be furnished to any creditor or contributory of the said company requiring the same by Solicitors for the Petitioner, Norman M.K. Yeung & Co, Room 1005, 10th Floor, Wheelock House, 20 Peddar Street, Central, Hong Kong on payment of the regulated charges for the same. TAK WING INVESTMENT: Winding-up hearings adjourned -------------------------------------------------- According to the Hong Kong Standard, the Court of First Instance yesterday adjourned the winding-up hearing of Chung Hwa Development Holdings to next month and of Tak Wing Investment (Holdings) to next week. The Chung Hwa petition was issued in February by its US-listed subsidiary Leading Edge Packaging and the Tak Wing petition was issued the same month by Standard Chartered Bank. TANFUL RICH LIMITED: Winding-up petition ---------------------------------------- A petition for the winding up of Tanful Rich Limited was presented to the High Court on Feb 26 by Chan Chi Wang, Ronnie of Room 815, 8/F., Tai Tung House, Tung Tau Estate, Kowloon, and the said petition is directed to be heard before the court at 9:30 am on April 21, and any creditor or contributory of the said company desirous to support or oppose the making of an order on the said petition may appear at the time of hearing by himself or his counsel for that purpose, and a copy of the petition will be furnished to any creditor or contributory of the said company requiring the same by Solicitors for the Petitioner, on payment of the regulated charges for the same. TRIPLE INDUSTRIES COMPANY: Winding-up petition ---------------------------------------------- A petition for the winding up of Triple Industries Company Limited was presented to the High Court on Mar 1 by Guangdong International Trust and Investment Corporation Hong Kong (Holdings) Limited (In creditors' voluntary liquidation) whose registered office is at 8th Floor, Prince's Building, Chater Road, Central, Hong Kong, and acting through its Joint and Several Liquidators Mr Gabriel Chi Kok Tam and Mr Alan Chung Wah Tang and the said petition is directed to be heard before the court at 11:00 am on April 21, and any creditor or contributory of the said company desirous to support or oppose the making of an order on the said petition may appear at the time of hearing by himself or his counsel for that purpose, and a copy of the petition will be furnished to any creditor or contributory of the said company requiring the same by Solicitors for the Petitioner, Clifford Chance, 30th Floor, Jardine House, One Connaught Place, Central, Hong Kong on payment of the regulated charges for the same. ================= I N D O N E S I A ================= PT ASTRA: Astra to lobby individual creditors to OK plan -------------------------------------------------------- The Asian Wall Street Journal reported PT Astra International, an Indonesian conglomerate in the automotive and agro-industry sectors, held its last meeting with a group of creditors before it starts an effort to lobby individual creditors to approve its proposed debt restructuring plan. This meeting was held in Singapore, where the president of the group announced the sale of its 17 percent share in a change of Makro wholesale food stores as part of a program of selling non-core assets to help deal with its debts. Astra's executives will now reportedly start holding one-on-one meeting with major creditors in Tokyo, Hong Kong, Singapore, and Jakarta to tailor the overall agreement to meet specific demands. The date set to receive votes on the rehabilitation plan has been moved from the earlier scheduled April 21 date. Votes will now be received from banks on April 28, and bondholders on April 29. The complex plan reportedly involves at least two tranches for commercial lenders, and one for bondholders. Earlier reports stated that all lenders would start getting current interest payments starting on July 1, with overdue loans in a first tranche getting repaid more quickly than loans in the second tranche. Under the Indonesian bankruptcy standards employed by Astra, at least half of its creditors that also represent two thirds of the outstanding debt must approve the restructuring plan. . Astra had announced last October that its business has fallen so much that it had stopped paying interest on about $1.4 billion in loans. Astra has a total of $2 billion in foreign debt obligations plus about 2 trillion rupiah in local currency debt. Astra was once Indonesia's most profitable and well managed conglomerates and suffered greatly when the rupiah's 1997 plunge against the dollar made it impossible for it to service its foreign debt. Astra's automobiles sales, once one of its main revenue generators, were off 85 percent in 1998, and are expected to drop further this year. PT INDOFOOD: Creditors stall Indofood sale ------------------------------------------ The planned US$570m acquisition of a 60 percent state in Indofood Sukses Makmur, Indonesia's biggest food producer, has been stalled by its inability to obtain all the necessary approvals. Indofood secured shareholders' approval for the sale to First Pacific of Hong Kong and Nissin, a Japanese food maker, but had not received the necessary backing from its creditors, to whom Indofood owes more than US$1bn in debts. The deal, announced in December, marked a breakthrough for the indebted Salim Group, which controls Indofood, and for Indonesia, which has attracted little of the foreign investment making its way back into Asia. Salim also controls First Pacific. Yesterday, First Pacific told the Hong Kong stock exchange that several conditions of the deal -- including obtaining third party consents -- remained unfulfilled and warned this might remain the case. "At this time there can be no assurance that these issues will ultimately be resolved to the parties' satisfaction. If these issues are not resolved, the parties to the stock purchase agreement may either waive the relevant conditions or terminate the agreement," it said. The delay is the second setback this month for Salim's efforts to pay several billion dollars in offshore debt, as well as Rp32,000bn (US$3.66bn) owed to the Indonesian government. Last week Salim announced that the sale of 23 percent of its United Industrial Corp property subsidiary in Singapore, to Hong Kong's HKR International, had collapsed. This was because United Industrial had failed to meet a guarantee that its profits for 1998 would not fall by more than 35 percent. (Financial Times 13-Apr-1999) ========= J A P A N ========= FUJI ELECTRIC: Moody's cuts Fuji's ratings ------------------------------------------ The Asian Wall Street Journal reported that Moody's Investors Services lowered the long-term debt rating of Fuji Electric Company from Baa2 to Baa3. The company's Japanese shelf registration was also lowered from (P)Baa2 to (P)Baa3. The downgrade of Fuji Electric, which sells power plants, power transmission and distribution systems, and related equipment, reflects a view that adverse changes in Japan's electric power industry will weaken the company's cash flow and earnings. This rating move affects around 160 billion yen of long term debt and 100 billion yen of shelf registration bonds. KOKUMIN BANK: Nonaka calls for calmness after bank failure ---------------------------------------------------------- Japan's Chief Cabinet Secretary Hiromu Nonaka Monday asked borrowers and depositors of Kokumin Bank to stay calm following the Tokyo-based regional bank's collapse. All the deposits at the bank will be protected, and the bank will continue providing loans for healthy borrowers, he told a press conference. On Sunday, the Financial Reconstruction Commission declared Kokumin Bank to be insolvent and appointed administrators to take over its management. Nonaka blamed a media report Thursday that Japanese financial regulators had judged the bank insolvent and would soon start a liquidation process. The news aggravated rapidly the bank's creditworthiness and fund-raising capability, he said. While the bank had striven to improve its business performance and still had a chance to survive, the report deprived it of time to make efforts, he said. (Jiji Press English News 12-Apr-1999) NISSAN MOTOR: Renault's 'le cost cutter' starts work at Nissan -------------------------------------------------------------- A top executive from France's Renault SA begins work today at Nissan Motor in Tokyo, facing the unenviable task of clearing out the troubled Japanese carmaker's huge debts. Carlos Ghosn, executive vice-president at Renault where he was dubbed "le cost- cutter," will take over as number two at Nissan. Last month Renault said it would spend 643 billion yen (5.4 billion dollars) buying minority control of the Japanese firm and a stake in its truck-making affiliate Nissan Diesel Motor Co. Ltd. Since then the true depths of Nissan troubles have become apparent. With falling demand in its home market and a persistent economic crisis across the key Asian market, the number two carmaker has struggled in recent months. The firm's total debt now stands at 4,080 billion yen, the Nihon Keizai Shimbun said Friday. That figure is some 1,000 billion yen higher than first estimated, the paper said, and includes debt held by non-core affiliates like Nissan Credit Corp. and Nissan Real Estate Development Co. Ltd. Yet even that hefty sum excludes the 500 billion yen in debts held at Nissan Diesel, the paper said. Nissan's net assets amount to just 1,370 billion yen, it added. Ghosn, 45, born in Brazil to a Lebanese family, has built himself a reputation as a hatchet-brandishing cost-cutter after less than three years at Renault, where he has overseen the transition to the private sector. (Agence France-Presse and Business Day [Thailand] 12-Apr-1999) SHOKUSAN BANK: Shokusan Bank faces losses ----------------------------------------- Second-tier regional bank Shokusan Bank said Monday it now expects losses for the business year ended March 31, scrapping its earlier profit forecast. The Yamagata-based bank, listed on the Tokyo Stock Exchange's second section, expects a recurring loss of 6.7 billion yen, against the earlier projected profit of 800 million yen. It expects an after-tax loss of 4.9 billion yen, against the earlier profit estimate of 200 million yen. The bank is braced to suffer its first losses since the period of confusion that followed World War II, it said. The revenue estimate was cut to 19.3 billion yen from 20 billion yen. The estimate of net business profit from core banking operations was reduced to 1.2 billion yen from 1.9 billion yen. The bank's capital-to-assets ratio is estimated at above 5 pct as of March 31, against 6.74 pct as of the end of March 1998. In the March 1998 term, Shokusan Bank reported 1,817 million yen in recurring profit, 662 million yen in after-tax profit and revenue totaling 21,782 million yen. Net business profit from core banking operations totaled 2,991 million yen. (Jiji Press English News 12-Apr-1999) ========= K O R E A ========= DAEWOO GROUP: S&P downgrades Daewoo's credit -------------------------------------------- Standard and Poor's (S&P) announced Tuesday that it had downgraded Daewoo's credit rating from B to B-, due to problems with overseas subsidiaries, restructuring and poor financial status. The credit rating agency added that it will continue to monitor the conglomerate's efforts and would not rule out a further downgrade. A Daewoo spokesman said that S&P's decision was made on material from last March's shareholders meeting and did not reflect restructuring accomplished since then. He added that the company will request a formal reappraisal in May. (Digital ChosunIlbo 13-Apr-1999) KOREA FIRST BANK: Korea bank deal at risk on debt ------------------------------------------------- According to the South China Morning Post, the sale of a majority stake in Korea First Bank to a US consortium was threatened by a failure between the South Korean government and Newbridge Capital, which includes GE Capital as a shareholder, to agree on the method for valuing the bank's assets. Newbridge is demanding adherence to western standards for the valuation of the bank's non-performing loans, while the government is insisting on more lax Korean standards. According to the initial agreement, the US consortium would buy a 51 per cent stake in Korea First Bank, whose assets are estimated at 40 trillion won. A failure to achieve an accord would be a blow to the government's efforts to reform the country's banking system through the introduction of Western capital and management. The government and Newbridge are understood to be observing a two-week cooling-off period ahead of the April 30 deadline following the near collapse of talks. The chairman of the Financial Supervisory Commission, which is overseeing the restructuring of the country's banking industry, recently admitted that disagreements existed between the commission and Newbridge over the size of Korea First Bank's non- performing loans. However, the commission declined to comment on reports that the US side estimated the bank's non-performing loans at about seven trillion won, compared with the Korean side's estimate of 4.5 trillion won. The US consortium is expected to flip its holding in First Korea Bank for a short-term gain while HSBC, which is in talks with Seoulbank about the sale of an initial 70 per cent, is seen in Korea as a longer-term investor. This perception of the US group is seen as an influence on the mood of negotiations. =============== M A L A Y S I A =============== RENONG BHD: The PLUS factor --------------------------- The successful restructuring of the Renong Group is dependent on its shining star, Projek Lebuhraya Utara Selatan Sdn Bhd (PLUS). PLUS, which is wholly-owned by United Engineers Malaysia Bhd (UEM), has always been regarded as the cash cow of the Renong Group. Its listing was eagerly awaited by investors -- both local and foreign -- as it held the toll road concession for the North South Expressway (NSE), the most lucrative in the country. But as the listing of PLUS approaches, its potential earnings appear to be uncertain. "After the listing of Tenaga (Nasional Bhd), PLUS was expected to be the largest ever public offer exercise," says a merchant banker. "But the latest corporate development within the group and depressed stock market will probably put off its listing for a couple of years." By the most conservative of standards, PLUS is worth about RM2 billion while the most bullish of predictions puts the figure in excess of RM8 billion. The bullish valuation of PLUS is based on expectations of a three per cent growth in traffic volume annually and a low discount rate of about 10 per cent. To help out its parent company UEM and Renong Bhd, PLUS will issue RM8.4 billion worth of bonds maturing in 2006. The funds will be channelled to both UEM and Renong to settle some of their debts. The plan basically calls for a refinancing of the debts of both companies using PLUS as the vehicle to issue bonds. There is a cross holding between UEM and Renong. The latter owns 37 per cent in UEM and the former owns 32.4 per cent in Renong. Although PLUS generates cash of more than RM1 billion a year in toll revenue and the figure is expected to increase with toll hikes, investors and analysts reckon there is an overwhelming risk on the toll operator. This is because the net cashflow generated by PLUS from now until the year 2006 will not be enough to redeem the bonds. The overwhelming financial risk faced by PLUS is apparent in the way UEM share prices have performed since talk of the proposed restructuring hit the market. Early this year, UEM was trading at about RM3.20. But after the restructuring proposal came to light, the price has fallen to less than RM1.90 at the time of writing. The dive reflects the fortunes of the company. This is a far cry from its earlier image of a much sought after blue-chip. A company official contends that putting aside its high-risk debt and the adverse reports surrounding the company, PLUS has been able to maintain the highways, thanks to the gradual toll hikes. To entice foreign investors, PLUS bonds are exempted from the exchange control rules and are not subject to the single customer exposure ruling. Under this rule, banks cannot expose more than 30 per cent of their funds available for investments to a single customer. Only time will tell if the PLUS bonds are successfully subscribed. But going by the government's determination in restructuring the banking and corporate sector, one shouldn't bet against its success. (Malaysian Business 01-Apr-1999) ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Boeing opposes PAL rehab plan -------------------------------------------------- US aircraft manufacturer Boeing Co. has rejected the revised rehabilitation plan of Philippine Airlines, Inc. (PAL), describing it as "flawed". Although the plan has already been revised, it "remains defective," Boeing said in comments submitted to the Securities and Exchange Commission (SEC). The commission is conducting a review of the PAL rehabilitation proposal. The SEC is due to render tomorrow, April 15, its decision on the PAL proposal. SEC chairman Perfecto Yasay, Jr. said yesterday that the commission will stick to this schedule, rejecting earlier suggestions that it would give PAL until the end of May to clarify questions on the rehabilitation proposal, including naming the investor for the $200 million new equity required in the program. Boeing said PAL's new rehabilitation plan still does not recognize or propose any payment or settlement of its claims against PAL for damages for the airline's cancelation of a purchase order for four Boeing 747-400 aircraft. Boeing recently filed a motion before the SEC claiming $128.5 million worth of damages and compensation from PAL for canceling the aircraft purchase order. The firm said the cancellation of the purchase order resulted in substantial income losses for the company. Boeing said it decided to file its notice of claims since PAL has not acknowledged or disclosed to the SEC that it has liabilities to the aircraft maker. Before PAL started having its financial problems, it signed a purchase agreement with Boeing for the purchase of seven Boeing 747-400 aircraft. Because of tight money problems, however, PAL decided to cancel the order for four of these aircraft. In return, Boeing filed for damages before the SEC, citing PAL's breach of contract. The compensation it asked for covers remarketing costs, interest accruals, and costs of storage, maintenance and insurance, and other related costs in finding new buyers for the aircraft. In its comments to the revised plan, Boeing said "similar to the original rehabilitation plan, the amended plan is defective in that it still does not recognize Boeing's huge claims for damages for PAL's default under or breach of the canceled portions of the purchase agreement. Nor does the amended plan propose any settlement or payment of such claims of Boeing." It added that it was "an admission that PAL is not recognizing as its liabilities any contingent claims against it or any claims that have not been reduced to a defined monetary value. It is also an admission that PAL is not making any provision for payment of such claims." Boeing also criticized provisions of the plan calling for the write-off of some of PAL's debts, saying this is "contradictory" or "inconsistent" with the nature of allowing firms to suspend debt payments. "It is elementary that in suspension of payment proceedings, a rehabilitation plan must provide for payment or settlement of all claims of all creditors. This is precisely why a prerequisite for the filing of a petition for suspension of payments is that the petitioner be solvent, i.e. its assets exceed its liabilities -- even though the petitioner may be undergoing problems of liquidity, i.e. inability to meet debts as they fall due." Boeing said suspension of payments should only result in the "deferral of the payment of liabilities -- not reduction or cancellation of debts which is the remedy in insolvency proceedings." Related to this, Boeing also objected to PAL's plans not to pay any post-petition interest to its unsecured creditors. "Given the time value of money, this is tantamount to a write-off of more than 65% of the principal." Boeing also considers as a flaw PAL's failure to identify the investor which could sink in the needed $200-million equity. "One cannot just assume that PAL has an investor able, ready and willing to pour such a huge amount into PAL during the ongoing Asian economic crisis." The firm said PAL must identify the investor who could infuse the required capital before the SEC can even consider approving the plan. Meanwhile, a ranking PAL official yesterday indicated that the airline's chairman Lucio Tan is not the only one interested in "saving" the national flag carrier because other prospective investors are "very much around and waiting in the wings." The official, who requested anonymity, told BusinessWorld there are "definite" groups committed to investing in the flag carrier but have now chosen to "wait and see" whether or not Mr. Tan will indeed stage a comeback. Of the four groups seriously interested, the PAL official said, only one investor was Filipino while the rest are foreign entities who also have investments in other in international airlines. The official also admitted even Mr. Tan is not privy to all the PAL management's discussions with the prospective investors and that the identities of some are allegedly still unknown to the airline chairman. Last week, PAL's interim rehabilitation receiver sent a letter to Mr. Tan soliciting his official confirmation whether he would exercise his right of pre-emption and participate in the $200 million equity injection for the airline's five-year rehabilitation. "Mr. Tan has to decide if he wants to continue to support PAL or not...But he would also have to see whether his investment will be good for PAL. If he sees that the money he brings in will only be detrimental to the future of PAL, then he will let the other groups come in," the official said. (BusinessWorld 14-Apr-1999) PHILIPPINE AIRLINES: PNB wants to be PAL creditors' rep ------------------------------------------------------- The Asian Wall Street Journal reported that the Philippine National Bank (PNB), the largest domestic creditor of the Philippine Airlines (PAL), has made a request to be the representative of the creditors' group for oversight proceedings for the carrier's restructuring. PNB has loaned PAL $70 million in 1990 and also led a syndicate of local banks that provide PAL another $182 million in 1996, and another syndicate that provided a $60 collateralized loan in 1997. A revised restructuring plan has been submitted to the Philippine Securities and Exchange Commission (SEC). The SEC is scheduled issue a decision on its acceptance of the plan in mid-April. ================= S I N G A P O R E ================= CYCLE & CARRIAGE: C&C buys into dealership ------------------------------------------ In a move to further expand its presence in the leasing business and tighten its grip on the motor distributorship segment, Cycle & Carriage will buy into one motor dealership and has restructured its interest in another. The company yesterday announced plans to buy a 30 per cent stake in Fulco Holdings Pte Ltd, leaving the remaining 70 per cent stake in the hands of its current owners, the Phuas. The new joint venture motor dealership will be named Cycle & Carriage Fulco Motor Dealer Pte Ltd and will have paid-up share capital of $1.5 million. C&C, which is funding the purchase of its stake through internal sources, said the move was in line with its plan to further strengthen its retail network in Singapore. C&C, which distributes Mercedes Benz, Mitsubishi and Proton vehicles, reported a net loss of $26.7 million for the year ended Dec 31 -- its first spill of red ink since 1985 and a far cry from its 1997 profit of $158.8 million. Despite the losses -- which were largely due to provisions for its property business -- C&C is going ahead to use its $300 million cash hoard to revamp its motor operations. (Singapore Business Times 13-Apr-1999) =============== T H A I L A N D =============== KASET THAI: Third suspect surrenders in Wansley case ---------------------------------------------------- A third Namtal Kaset Thai Co Ltd executive suspected of involvement in the Michael Wansley murder case surrendered to police yesterday morning, and was detained after having a request for release on bail turned down by the authorities. Somchoke Sutthiwiriwan made an appearance in Bangkok with deputy police chief Prasarn Wongyai and was later flown by helicopter to Nakhon Sawan where he has been detained. The suspect, a senior Namtal Kaset Thai Co Ltd employee, is the third executive of the sugar company suspected of involvement in the murder plot to have surrendered to police. The first two are his brother, Boonphan Sutthiwiriwan, and Pradit Siriwiriyakul. Somchoke said he had nothing to do with the killing of Australian auditor Michael Wansley and vowed to fight the murder charge in court. His lawyer Koson Onkliang screened all questions directed at his client and reacted angrily to many of those which he thought were inappropriate. Pol Lt-Gen Sophon Sawikhamin, chief of Provincial Police Region 6 which is overseeing the case, said police had obtained substantial evidence against Somchoke as well as the two other executives who are suspects in the case. Police are currently trailing two major suspects who are suspected of leading roles in the shooting -- the alleged gunman Phichet Kaewsamduang, and the alleged plot coordinator Somphong Buasakul. (The Nation 13-Apr-1999) NAKORNTHAI STRIP MILL: Meets with creditors ------------------------------------------- Nakornthai Strip Mill Public Company Limited ("NSM") recently met with certain of its creditors to discuss its financial condition and the condition of its steel mini-mill located in Chonburi, Thailand (the "Mill"). As previously reported, commercial operations at the Mill were suspended in early December 1998 in order to repair certain electrical equipment damaged by a lightning strike. Although this damage has since been repaired, NSM has determined not to restart commercial operations at the Mill in the near-term because of (i) finding shortages, (ii) the need to supplement existing management, and (iii) the global pricing environment for the Mill's steel products, which are currently at historically depressed levels. NSM's financial advisor currently estimates that the core facility would require approximately US$10 million of additional capital expenditures and spare parts. NSM's financial advisor further estimates that necessary working capital requirements together with aggregate operating losses (excluding the costs of recruiting new management personnel) over an 18-month period of pre-production preparation and production ramp-up to a target level thereafter, would be approximately US$50 million (without accounting for servicing existing indebtedness). In addition, NSM currently has approximately US$40 million of existing accounts payable. Completion of NSM finishing facilities is estimated by its financial advisor to require approximately US$50 million of additional capital expenditures. Events of Default are alleged to have occurred under each of the indentures governing NSM's 12% Senior Mortgage Notes due 2006, 12-1/4% Senior Subordinated Mortgage Notes due 2008 and 12-3/4% Subordinated Mortgage Debentures due 2009, each guaranteed by NSM (the "Securities"). As a result of such alleged Events of Default, NSM currently has to obtain the consent of its non-trade creditors to access certain of the funds remaining in its bank accounts. As of March 31, 1999, NSM had an aggregate cash balance of approximately US$80 million in its bank accounts, of which approximately US$31 million is restricted and segregated to make interest payments on certain of the Securities. The balance of NSM's funds are not currently available to NSM due to the need for creditor consent to expend such funds. RADANASIN BANK: BOT reports strong foreign interest in bank ----------------------------------------------------------- About 30 foreign financial institutions have expressed interest in acquiring a major stake in Radanasin Bank, said Bank of Thailand's Deputy Governor Kitti Patpongpibul. The government is allowing bids for Radanasin Bank to be submitted during March 25 to April 22 through the financial advisor, Union Bank of Switzerland (UBS). It is expected that the shortlisting of potential candidates will take about a week after the deadline. About three to four applicants would be selected in an initial screening, Kitti said. "A good partner is needed to protect the Financial Institution Development Fund's interest in bank," he said. The FIDF is expected to maintain at least 25 percent atake in the bank. The Thai cabinet approved the guideline for selling Radanasin Bank on March 16. Bidders could choose to buy the bank either with or without its bad assets. If the new investors choose to buy the bank along with its bad assets, the FIDF will compensate for about 85 percent of a possible loss in the first five years of operation. UBS estimates that the FIDF will have to spend about 8.5 billion baht during the period as the bank is forecast to run in the red for a few years to come. Industry insiders said three foreign banks, comprising Credit Agricole Indosuez, Standard Chartered and Commonwealth Bank of Australia, will join the race for Radanasin Bank. (Business Day [Thailand] 13-Apr-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 * * *