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/raid1/www/Hosts/bankrupt/TCRAP_Public/990826.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 Thursday, August 26, 1999, Vol. 2, No. 166 Headlines * C H I N A & H O N G K O N G * CHENGDU TELECOMMUNICATINS: Posts first-half loss CHINA PROSPERITY HOLDINGS: Posts first-half loss DAH HWA INTERNATIONAL: Posts annual loss EASY CONCEPTS INT'L HOLDINGS: Posts annual loss FOK SING FAI PILING: Facing petition for winding up G-PROP HOLDINGS: Receives third loan extension PEREGRINE FIXED INCOME INVEST.: Liquidators pay dividends PIONEER INDUSTRIES INT'L: Posts annual loss UNITED PACIFIC INDUSTRIES: Posts annual loss WAH CHUN TRANSPORT CO.: Facing petition for winding up * I N D O N E S I A * BANK BALI: Commission asking for state officials to resign BANK BALI: Bappepam to fine Rp215 million BANK TABUNGAN NEGARA: Finance miniser approves dissolution PT CITRA MARGA NUSAPHALA: JSX suspends trading PT CITRA MARGA NUSAPHALA: Gets one year to pay BIA debt PT SEMEN CIBINONG: JSX suspends trading PT TRIPOLYTA INDONESIA: To restructure debt * K O R E A * DAEWOO GROUP: Creditors fail to take over securities firm DAEWOO GROUP: Chairman fails to sign restructure deal DAEWOO GROUP: Plan for some affiliates in making DAEWOO GROUP: Chaebol's top 5 accept reform items DAEWOO MOTORS: Puts off paying workers DAEWOO MOTORS: Alliance with GM on fast track HYUNDAI GROUP: Chaebol's top 5 accept reform items LG GROUP: Chaebol's top 5 accept reform items SAMSUNG GROUP: Chaebol's top 5 accept reform items SK GROUP: Chaebol's top 5 accept reform items * M A L A Y S I A * EXPRESSWAY LINGKARAN TENGAH: Asks creditors for standstill SRIWANI HOLDINGS BHD: Posts first-half loss * P H I L I P P I N E S * UNIWIDE GROUP: SEC extends debt moratorium till Oct. 10 UNIWIDE GROUP: Sale talks over retail outlets under way * T H A I L A N D * ITALIAN-THAI DEVELOPMENT: Ends revamp KRUNG THAI BANK: Regulators order wide shake-up MANAGER MEDIA GROUP PLC: Gets approval for rehab plan SRITHAI SUPERWARE PLC: Expects rehab plan approval in Oct. THAI MELON POLYN PLC: Posts first-half loss THAI OIL CO.: Cabinet approves debt restructuring ============================== C H I N A & H O N G K O N G ============================== CHENGDU TELECOMMUNICATINS: Posts first-half loss ------------------------------------------------ Chengdu Telecommunications has posted a reversal in fortunes in the first six months, announcing a net loss of $4.71M during the period, compared with a profit of $7.89M a year earlier. Turnover fell 35.06% to $150.93M. Losses per share amounted to 1.18 fen, against earnings per share of 1.97 fen. CHINA PROSPERITY HOLDINGS: Posts first-half loss ------------------------------------------------ Net losses at construction concern China Prosperity Holdings (Hong Kong) widened to $50M for the first six months of this year. Turnover plunged 60.4% tp $60.5M from the same period last year. DAH HWA INTERNATIONAL: Posts annual loss ---------------------------------------- Dah Hwa International says it has posted a loss of $7.7M for the year ended March 31 as keen competition and falling demand for its leather goods affected margins and turnover. Sales for the leather goods manufacturer reached only $291M for the period, compared with $535M the previous year. Operating loss reached $13.8M. Dah Hwa also made an exceptional loss in the disposal of its properties. EASY CONCEPTS INT'L HOLDINGS: Posts annual loss ----------------------------------------------- Department store operator and property investment company Easy Concepts International Holdings has suffered a net loss of $179.53M in the year ended March 31, up from $77.89M a year earlier. An exceptional loss of $117.25M was booked during the period for the revaluation of investment properties and the write-off for deposits paid for property acquisitions. Losses per share were 28 cents, against looses per share of 12 cents a year ago. FOK SING FAI PILING: Facing petition for winding up --------------------------------------------------- The High Court of Hong Kong Sar has scheduled a hearing for October 20 on the petition of Leung Kai Wo for the winding up of Fok Sing Fai Piling and Constructiono Company Limited. A notice of legal appearance must be filed on or before October 19. G-PROP HOLDINGS: Receives third loan extension ---------------------------------------------- Chinese medicine retailer Tung Fong Hung (Holdings) has entered into a third letter agreement to further extend to Sept. 9 the deadline for the settlement of debt owed by G- Prop (Holdings). PEREGRINE FIXED INCOME INVEST.: Liquidators pay dividends --------------------------------------------------------- Liquidators of Peregrine Fixed Income Investments yesterday surprised creditors of the collapsed firm with a HK$1 billion in interim dividend payouts and promise of more payments in the near future. It is the first payment made by the Peregrine unit since it collapsed together with its parent Peregrine Investments two years ago from an estimated US$4.5 billion (HK$35.1 billion) worth of debts. Pricewaterhouse Coopers, the liquidator of the unit, said the substantial repayment was made due to "greater than expected" realisation of assets, especially from Indonesian counterparties. It is not clear,however, whether Steady Safe, a taxi company which first defaulted on loans owed to Peregrine was among those that have repaid their dues. Pricewaterhouse said creditors will receive an interim dividend payment of 12.5 cents for every dollar owed by the unit. The dividend applies to ordinary unsecured creditors. Agreed preferential creditors are being paid in full. "At HK$1 billion, I think the total amount of the interim dividend to be paid next week is the largest in Hong Kong's corporate history," according to PricewaterhouseCoopers partner Simon Copley. The PFIL liquidators estimate the total dividend payout remains between 20 and 40 cents. "We have been working hard with our Committee of Inspection and we expect to pay an early second interim dividend within the first half of next year," said Mr Copley. Not all of the fixed-income unit's creditors will receive the payment. Banks, bondholders and others owed money from derivatives, contracts written using standard documentation won't receive any money because of a UK lawsuit, said Simon Copley, the PricewaterhouseCoopers partner in charge of PFIL's liquidation. While 163 creditors will be paid the first interim dividend next week, creditors under the ISDA (International Swaps and Derivatives Association) agreement will not be paid until legal issues are clarified by the court in the UK. Those creditors' "later participation in this dividend could mean further substantial payments for which we have set aside some HK$050 million," he said. (Hong Kong Standard; Bloomberg; Business Day 25-Aug-1999) PIONEER INDUSTRIES INT'L: Posts annual loss ------------------------------------------- Poor Performance of its listed securities portfolio has brought investment holding company Pioneer Industries International (Holdings) an attributable loss of $317.32M for the year to March 31 from $51.12M a year earlier. The loss relating to Wah Kwong group, largely write-downs, amounted to $255.91M last year. UNITED PACIFIC INDUSTRIES: Posts annual loss -------------------------------------------- Electric components manufacturer United Pacific Industries saw its net losses rise to $109M for the year ended March 31. The company recorded a turnover of $706.6M, down 36.5% from sales recorded during the same period last year. It also recorded an operating loss of $45.1M, compared with operating profits of $111.3M recorded for the year to March 31 last year. The company also had an exceptional loss of $97.3M consisting mainly of write-offs against obsolete, inventories, fixed assets and doubtful debts. WAH CHUN TRANSPORT CO.: Facing petition for winding up ------------------------------------------------------ The High Court of Hong Kong Sar has scheduled a hearing for October 27 on the petition of Leung, Shing Lin Maggie for the winding up of Wah Chun Transport Company Limited. A notice of legal appearance must be filed on or before October 26. ================= I N D O N E S I A ================= BANK BALI: Commission asking for state officials to resign ---------------------------------------------------------- The House commission for state budget and financial affairs in its political statement on the Bank Bali (JSX:BNBL) scandal has called on all state officials involved to be suspended. The political statement was read to the press on Saturday after a meeting of the formulating team that lasted for more than five hours. The 13-point political statement said the Bank Bali scandal has shaken the country's monetary system, weakened the rupiah exchange rate against the US dollar, and led to the drop of stock trading in the bourse. Such a condition has been detrimental to the public interest, lowered international confidence in the Indonesian banking system, and damaged foundations of the national economy. Therefore, as a moral and political responsibility, the House commission calls on all state officials and those directly and indirectly involved in the scandal to be suspended, aimed at facilitating the investigation of the scandal in line with the existing laws and regulations, said the statement. The statement further said that the minister of finance and the chairman of the Indonesian Bank Restructuring Agency (IBRA) should be responsible for the emergence of the scandal. If the the central bank governor is proven to also be directly or indirectly involved in the scandal, thus he should also be responsible in the framework of public accountability and he should also be suspended. The House commission demanded that banks unable to meet recapitalisation requirements should also be closed down. In this connection, the statement called for a review of banks that have been put under the government-sponsored recapitalisation programme. The statement also urged the country's legal authorities, particularly the attorney general's office, to be more pro-active in probing the Bank Bali scandal. Meanwhile, several political parties, including the ruling Golkar Party, earlier urged Finance Minister Bambang Subianto and several other officials believed to be implicated in the Bank Bali scandal to resign. House member Thomas Suyatno of the Golkar faction said officials involved in the scandal should quit. "We urge government officials involved in the scandal to resign or be removed," he said. Spokesman of the PPP faction Enbin Subihara said his party rejected the government's explanation for the case and wanted Subianto and IBRA chairman Glenn Yusuf removed. "The government explanation is not transparent and we doubt its veracity. The explanations do not reflect government accountability to the public," Subihara said. He was refering to the prolonged parliamentary hearing between the House commission and Subianto, Yusuf and Bank Indonesia governor Sjahril Sabirin, which dragged on until late Thursday. The MPs have expressed their disappointment at the reply to their queries over the Bank Bali scandal and the handling of the case by the government. The Bank Bali scandal erupted when it was revealed that it had paid PT Era Giat Prima, a company owned by a Golkar deputy treasurer, Rp546 billion in commissions to help it recover loans worth Rp904 billion from three other banks shut by the government. The scandal has implicated officials of the Golkar party and IBRA. (Asia Pulse 23- Aug-1999) BANK BALI: Bappepam to fine Rp215 million ----------------------------------------- The Capital Market Supervisory Board (Bappepam) will fine Bank Bali (JSX:BNBL) Rp215 million (US$ 27,000) for violating board regulations, Bappepam chairman Yusuf Anwar said. Anwar said Bank Bali has failed to notify the authorities of a loan-recovery deal which has turned into a major banking scandal. "For one day late, the fine is Rp1 million," he told a hearing with the House commission on state budget and financial affairs. "It has been 215 days since and the bank has not paid the fine," he added. The International Monetary Fund (IMF), which has drawn up a US$ 45 billion bailout for crisis-hit Indonesia, has told the government to sort out the controversy and prosecute culprits if necessary. Bank Bali is majority owned by the government and is now managed by Standard Chartered Bank, which holds a 20 percent stake. Under the deal, Bank Bali paid a private company Rp546 billion to help it recover Rp904 billion in interbank loans owed by the government's banking overseer, the Indonesian Bank Restructuring Agency (IBRA). The company that received the fee is headed by deputy treasurer of the ruling Golkar Party, Setya Novanto. The central bank said last week the fee has been returned, but this is unlikely to settle the controversy. (Asia Pulse 23-Aug-1999) BANK TABUNGAN NEGARA: Finance miniser approves dissolution ---------------------------------------------------------- Minister of Finance Bambang Subianto is reported to have approved a recommedation by a World Bank consultant Marja C. Hoek-Smit to dissolve the state saving bank, Bank Tabungan Negara (BTN), a source said. The call to dissolve BTN therefore needs only an approval from the state minister in charge of state enterprises, the source told Bisnis Indonesia daily. The source said BTN management was to meet Marja C. Hoek-Smit on Tuesday to discuss the follow-up of the approval of the Minister of Finance. The World Bank consultant on Aug 8, 1999 submitted a recommendation to the Minister of Finance and State Minister in charge of State Enterprises to dissolve BTN. Meanwhile, Sofjan A. Djalil, an assistant to the Minister in charge of State Enterprises, confirmed that the government planned to set up a new finance agency called Housing Overview Agency (HOA) to take over the function of BTN in financing low cost housing projects. The setting up of HOA, however, does not signal the dissolution of BTN. (Asia Pulse 24-Aug-1999) PT CITRA MARGA NUSAPHALA: JSX suspends trading PT SEMEN CIBINONG: JSX suspends trading ----------------------------------------------- The Jakarta Stock Exchange (JSX) on Friday suspended trading in shares of private toll-road operator PT Citra Marga Nusaphala Persada (JSX:CMNP) and cement maker PT Semen Cibinong (JSX:SMCB). The trading on CMNP shares was suspended after the issuer failed to disclosed the status of its US$ 70 million debt to Brunei Investment Agency. The Brunei company was earlier reported that it had asked CMNP, controlled by one of former president Soeharto's children, to repay the debt matured in June. JSX gave CMNP time until Aug 31 to improve its financial performance. Meanwhile, the trading on SMCB shares was suspended until the company gave a clear explanation on reports about its missing funds. (Asis Pulse 23-Aug-1999) PT CITRA MARGA NUSAPHALA: Gets one year to pay BIA debt ------------------------------------------------------- PT Citra Marga Nusaphala Persada (JSX:CMNP), whose shares have been suspended from trading on the Jakarta Stock Exchange, is given a year to settle a debt of US$ 70 million to the Brunei Investment Agency (BIA) or be delisted. CMNP, a road construction company, is also required to make public statement not later than 21 September, the Jakarta Stock Exchange said. JSX suspended CMNP trading after a meeting on August 19 between the company and a JSX committee. JSX has asked CMNP to clarify its debt to the Brunei company but the company, which is owned by Siti Hardiyanti Rukmana, a daughter of former President Suharto, failed to give the clarification. JSX said it could delist CMNP at any time during the one year period if the company failed to comply with its corporate plan or if it faced a conditon that could adversely affect its survival. (Asia Pulse 24-Aug-1999) PT TRIPOLYTA INDONESIA: To restructure debt ------------------------------------------- Petrochemical company PT Tripolyta Indonesia (JSX:TPIA) has named consultant Donaldson Lufkin & Jenrette (DLJ) as its financial adviser for its debt restructuring plan. Company Vice President Director and Assistant CEO Peter Young said Tripolyta was seeking to restructure a debt of US$ 185 million in guaranteed secured notes falling due in 2003. Young said the regional crisis had weakened the market of polypropylene its main product in the past 6 months and it had significantly affected its financial condition. The restructuring plan is expected to reduce the debt repayment burden of the company, he said. (Asia Pulse 23-Aug-1999) ========= K O R E A ========= DAEWOO GROUP: Creditors fail to take over securities firm --------------------------------------------------------- Creditors of Daewoo Group are having trouble taking over Daewoo Securities from the embattled group, a bank source said yesterday. The creditors were expected to complete the takeover early this week but couldn't do so because of the group's strong resistance. A Daewoo Securities official said the brokerage will carry out its rights offering plan Aug. 31- Sept. 1 as scheduled, regardless of the outcome of the hassle between the two sides. The six creditor banks, including Hanvit, Cho Hung and Korea First, have agreed to jointly take over the group's 16.38-percent stake in the prized securities unit. They also agreed to participate in the rights offering. The creditors intend to receive resignations from incumbent managers of the securities firm before taking over stock from the group. They plan to sell it off after the takeover. But the group demands that the creditors provide liquidity to the securities firm before selling it off. It also insists that its managerial rights be guaranteed before the sell-off and that it participate in the sale process. (Korea Herald 26-Aug-1999; Digital ChosunIlbo 25-Aug- 1999) DAEWOO GROUP: Chairman fails to sign restructure deal ----------------------------------------------------- Chairman of Daewoo Kim Woo-choong left the country for Germany on a Lufthansa flight at 2:55 pm immediately after attending a meeting of government and chaebol leaders at Chong Wa Dae on Wednesday without signing an agreement with Daewoo's creditor banks for a massive restructuring plan for the ailing business group. Analysts speculated that the plan, which called for loan rescheduling and the selling off of major Daewoo subsidiaries would be delayed without the Chairman's signature. One high-ranking Federation of Korean Industries (FKI) official said that the Daewoo chair would return to Korea in five days. (Digital ChosunIlbo 25-Aug-1999) DAEWOO GROUP: Plan for some affiliates in making ------------------------------------------------ The government is planning to liquidate nonviable affiliates of the ailing Daewoo Group through court management. "It is inevitable that some Daewoo companies will be liquidated, although others which are thought to be viable will be restructured and sold through the corporate workout program," a senior government official said, without naming the Daewoo affiliates facing speedy liquidation. The official said that those to be put under the workout program are likely to include firms that have good financial status and are deemed to be worth additional funding. He pointed out that even in the restructuring program agreed by Daewoo Group and the creditor banks, there is a clause that warrants the liquidation of nonviable firms through court procedures. Under the Daewoo/creditor banks agreement, Daewoo will see its present 25 subsidiaries reduced to six, centered around its car-making and car-marketing affiliates such as Daewoo Motor and Daewoo Corp., with other affiliates being sold or liquidated. In the latest development, Minister of Finance and Economy Kang Bong-kyun confirmed in a speech yesterday that the idea of putting the country's second largest group under a workout program is being considered. "The government will soon consult Daewoo chairman Kim Woo-choong about the issue," Kang said. Kang's remark was the second indication by a senior government official that Daewoo might be put under the stringent corporate restructuring program. On Tuesday, the Financial Supervisory Commission (FSC) said that Daewoo will be put under workout soon. It is said that even the application of workout to Daewoo lacks consensus. On the one hand, it is said that that this step is necessary to expedite the dismantling of the group and the prompt sale of its assets, as the workout will exempt Daewoo from interest payments for six months. On the other hand, detractors argue that this might send the wrong signal to the markets. (Korea Times 25-Aug-1999) DAEWOO GROUP: Chaebol's top 5 accept reform items HYUNDAI GROUP: Chaebol's top 5 accept reform items LG GROUP: Chaebol's top 5 accept reform items SAMSUNG GROUP: Chaebol's top 5 accept reform items SK GROUP: Chaebol's top 5 accept reform items -------------------------------------------------- Bowing to stepped up government pressure, Korea's top five chaebol yesterday agreed to end their "fleet-style" operation and accept three new reform requirements outlined by the government. The agreement was made in the presence of President Kim Dae-jung, who called in the heads of the chaebol, including the troubled Daewoo Group, and their creditor banks to expedite restructuring of the conglomerates. "We shared the view that the large business groups should put an end to their fleet-type management and that each individual firm, under a transparent cooperative structure, should be developed independently as a first-rate international company," the agreement said. The agreement, issued under the names of government ministers, the chaebol chiefs and the bank heads, rounded out the Chong Wa Dae meeting, which lasted two and a half hours. The Chong Wa Dae meeting was the first of its kind since President Kim stepped up his reform campaign on the chaebol in his Liberation Day address Aug. 15. Kim, who had already pushed for a radical overhaul of the chaebol since taking office a year and a half ago, vowed in the address that he would become the first Korean President to reform the powerful chaebol, specifically targeting their fleet-style operation. The President also outlined his new reform initiatives aimed at restricting the chaebol's control of the non-banking financial sector, barring them from circular cross-unit equity investment and inside trading and limiting illegal inheritances and transfer of wealth among the chaebol family members. The Chong Wa Dae meeting drew additional public attention because of the current liquidity crisis at the Daewoo Group, the nation's second-largest conglomerate, which is on a life-supporting bailout program. The agreement did not mention Daewoo but unequivocally pinpointed the group as a "troublemaker," saying restructuring at all but one of the five chaebol had been going as scheduled. President Kim himself blamed Daewoo for causing the problems, saying that it has failed to earn domestic and foreign markets' confidence in its restructuring program. "Now the world and the Korean public alike are closely watching each and every move of Chairman Kim Woo-choong and Daewoo," the President was quoted as saying by his spokesman, Park Joon-young. "I hope that Chairman Kim, as the head of Daewoo, will assume his social responsibility and make efforts to meet public expectations by implementing due restructuring," Kim said. Park said the President stressed that reform of the chaebol is a "matter of life and death" for Koreans. "The government is not intervening in corporate reforms because it is fun," Kim said, adding that direct and indirect intervention by the government is inevitable in emergencies. The President, however, emphasized that his government was not seeking to break up the chaebol. The Chong Wa Dae agreement said that despite the recent recovery, the structure of the Korean economy was still not strong enough to withstand any negative change in economic conditions. Park said Daewoo's Kim, while pledging to abide by the agreement on restructuring, asked the government and the creditor banks to provide speedy assistance to Daewoo firms and their suppliers to keep operations running normally and insure job security. Participants in the meeting included Samsung's Lee Kun-hee, Daewoo's Kim Woo-choong, Hyundai's Chung Mong-koo, LG's Koo Bon-moo and SK's Son Kil-seung. On the government side were Finance and Economy Minister Kang Bong-kyun; Lee Hun- jai, head of the Financial Supervisory Commission; Minister of Planning and Budget Jin Nyum; Jeon Yoon-churl, chief of the Fair Trade Commission; and Lee Ki-ho, chief presidential economic adviser. The ruling coalition leaders, Lee Man-sup of the National Congress for New Politics and Park Tae-joon of the United Liberal Democrats, also attended the meeting. Representing the chaebol's creditor banks were the heads of the Hanvit, Korea First, Korea Exchange and Korea Development banks. (Korea Herald 26-Aug-1999) DAEWOO MOTORS: Puts off paying workers -------------------------------------- Daewoo Motors said Wednesday that office workers at Daewoo Motors and its sales subsidiaries, and employees at Ssangyong Motors will receive their monthly wages on or two days later than usual. Salaries for employees in the production plants of the country's second largest automaker were paid on time on August 10, Daewoo said. The company's liquidity shortage was cited as the reason for the delay. The Daewoo business group has been dependent on various financial rescue measures offered by the government as well as its creditor banks to stay afloat since the group announced its solvency crisis early this month. (Digital ChosunIlbo 25-Aug-1999) DAEWOO MOTORS: Alliance with GM on fast track --------------------------------------------- Daewoo Motor and General Motors of the United States appear to be speeding up their efforts to strike an alliance, which the two automakers declared could include GM's takeover of the Korean carmaker. GM executive vice president Louis Hughes is slated to arrive Korea today along with a team of about 20 experts, to inspect Daewoo Motor production facilities and conduct a check on the company's financial status. Hughes is expected to meet Daewoo Motor president Kim Tae-gou. "This is one of many visits by GM personnel in the next month or so," said Kim Jong-do, chief Daewoo Motor public relations officer. "In my view, actual negotiations will get under way after these visits are wrapped up." Hughes' visit to Korea follows that by Kim to the GM headquarters in Detroit on Aug. 17. Kim is said to have met the top GM management during his Detroit visit and confirmed an agreement between the two sides to wrap up negotiations as soon as possible, one of few new elements contained in their second memorandum of understanding on a strategic alliance released last month, in comparison with the old one made last year "Taken in the context that Daewoo aims to complete its group-wide restructuring by the end of the year, I believe that the two sides will hopefully meet the year-end deadline," Kim said, adding that much of the necessary work has been done in the past year so that the two sides will need less time to reach an agreement than they would if they were starting from scratch. GM Korea senior official Lee Ki-sop concurred on the outlook that negotiations will pick up pace, but counseled caution against putting too much importance on Hughes' visit, saying, "It will be no more than a courtesy visit." Although the two sides tried to play down GM's high-level visit, industry watchers say that the visit will put some confidence back into Daewoo's efforts to restructure its debt-ridden group. "The markets are anxious to see any signs of the Daewoo-GM partnership and Hughes' visit will likely be a major morale-booster for Daewoo," one said. (Korea Times 25-Aug-1999) =============== M A L A Y S I A =============== EXPRESSWAY LINGKARAN TENGAH: Asks creditors for standstill ---------------------------------------------------------- Expressway Lingkaran Tengah Sdn Bhd (Elite), a wholly-owned subsidiary of United Engineers (Malaysia) Bhd (UEM), is asking all its existing creditors not to take further action against it prior to considering its proposed debt restructuring scheme. UEM said in a statement that Elite had defaulted in paying principal and interest on its RM400mil bond issues facility, RM440mil notes issue facility and RM100mil bridging loan facility. As at July 31, 1999 Elite had fully used RM940mil from the three facilities. Elite has received comments from its lenders on the restructuring proposal but has yet to receive default notices from them. UEM also said in another statement that its 30% associate company Puncak Vista Sdn Bhd (PVSB) had defaulted in its payment of principal and interest on a RM363mil syndicated term loan and convertible bank guarantee (TL) and RM30mil revolving credit facility (RC). PVSB has fully utilised its TL facility and RM6.1mil of its RC facility. As at June 30, 1999 the interest due for the TL facility was RM69.8mil and that for the RC was RM1.1mil. As of yesterday, PVSB had yet to receive notice from its agent bank for the facilities to place the company under receivership. (Star Online 25-Aug-1999) SRIWANI HOLDINGS BHD: Posts first-half loss ------------------------------------------- Sriwani Holding Bhd has registered a lower group pre-tax loss of RM44.764mil for the six months to June 30, 1999, compared with RM50.179mil in the previous year. Sales improved by 1.31% to RM155.268mil from RM153.256mil previously, the company said in a statement announcing its unaudited accounts. No interim dividend has been recommended. (Star Online 25-Aug-1999) ===================== P H I L I P P I N E S ===================== UNIWIDE GROUP: SEC extends debt moratorium till Oct. 10 ------------------------------------------------------- Impatient creditors of the cash-strapped Uniwide Group of Companies will have to wait just a little longer as the Securities and Exchange Commission (SEC) ordered yesterday an extension of the debt moratorium until October 10. The SEC hearing panel, chaired by the country's top corporate overseer, said the extension of the suspension of debt payments will give the newly appointed rehabilitation receiver more time to complete a rehabilitation plan for the debt-laden group. The extension order is the commission's response to an earlier request made by the interim receiver, chaired by former Petron chairman Monico U. Jacob, to grant a 60-day suspension of all actions for claims against Uniwide from August 11, or the day the receivers took their oaths of office. The interim receiver has engaged the services of an auditor who has committed to submit its final assessment and report on the Uniwide group's financial standing by end-September. In addition, appraisers commissioned by the receivership committee will also need over 30 days to complete their reports. "Without these reports, the Interim receiver cannot possibly complete the rehabilitation plan before September 29," the SEC said. Earlier, the commission granted the Gow- owned firm a 60-day extension on its debt moratorium, the first extension is set to lapse by the end of September. "To allow the interim receiver ample time to carry out its functions and to complete the rehabilitation plan the hearing panel resolves to extend the suspension order," the SEC said. The first-half results of the debt-ridden retail and property group reflected the dismal picture of the company's finances. The retail and property conglomerate reported a net loss of 410.99 million Philippine pesos (PhP) (US$10.34 million at PhP39.735:US$1) against a net income of PhP127.55 million (US$3.2 million). In a disclosure to the SEC, parent company Uniwide Hodlings, Inc. said that the company continued to experience losses in the first half as "its source of revenues remains largely dependent on the performance of its retail franchisees with the continued slump in the real estate sector." The deterioration of the company's operations was also due to significant interest payments and drop in sales, Uniwide said. (Business World 25-Aug-1999) UNIWIDE GROUP: Sale talks over retail outlets under way ------------------------------------------------------- Now in the final stages for the acquisition of a majority stake in Uniwide's warehouse clubs, Mike Velarde, leader of the local religious sect El Shaddai, has set his sight on yet another business. "We got interested in the (Uniwide) warehouse clubs because we have just recently formed the El Shaddai Brothers Keeper multipurpose cooperative. We will go into the marketing of goods for our members and the Uniwide sales clubs would be very good outlets," he explained. This is despite a denial issued by Uniwide that the church group bought a majority stake in the retail company. "The article regarding the alleged infusion of funds of El Shaddai to the Uniwide group is without basis," Uniwide said in a disclosure to the Philippine Stock Exchange, referring to recent newspaper reports. The religious group is planning a one-billion-peso (US$25 million at PhP39.735:US$1) food production venture, he told BusinessWorld after his press conference in Makati City yesterday. "We plan to go into the food business. We want to support the industry because we know it's one way of helping our distressed brothers and sisters," he said. The company which Mr. Velarde intends to put up will be primarily engaged in "rice, vegetable and poultry" production, he said. Initial investments will range from 500 million Philippine pesos (PhP) (US$12.6 million) to PhP1 billion (US$25 million) and will be sourced from both internal cash and loans from banks. He declined to give further details on the new venture. Mr. Velarde added that he would push through with the acquisition only if he would not be burdened with any of Uniwide's existing liabilities. The Gow-led firm has some PhP12 billion (US$302 million) loans to repay. Mr. Velarde added that 10,000 El Shaddai members have already expressed interest to join the newly formed cooperative. Among others, coop members will be entitled a stake in Uniwide that would range from PhP500 (US$12.6) to a maximum of PhP2 million (US$50,000) per member. Since last month, market talks are rife the religious group El Shaddai will soon sign a pact with Uniwide Hodlings, Inc. (UHI) for its 53% interest in the company's warehouse stores. The deal -- estimated to reach PhP900 million (US$22.65 million) -- is considered to be beneficial to both the buyer and the seller since the price was given at a 73% discount given the firm's appraised value at PhP3.4 billion (US$86 million). For the seller, the amount will cover 47% of "demandable" debts which have reached PhP1.9 billion (US$48 million). Currently due are loans obtained from Equitable Bank, Philippine National Bank and syndicated loans from RCBC, Asian Bank, East West Bank and Bank of the Philippine Islands. The Securities and Exchange Commission earlier granted UHI a 60-day suspension on the payment of its debts, thus suspending any claims against the company. An interim receivership committee, headed by former Petron chairman Monico Jacob, was also created to look into Uniwide's finances. (Business World 25-Aug-1999) =============== T H A I L A N D =============== ITALIAN-THAI DEVELOPMENT: Ends revamp ------------------------------------- Italian-Thai Development Plc, the country's leading construction firm, has completed a Bt3.113-billion debt- restructuring agreement through rescheduling repayments over the next five years. According to an Ital-Thai report filed with the Stock Exchange of Thailand (SET) yesterday, Bt1.71 billion of its total debts are baht-denominated, Bt1.235 billion of debt is in yen terms, with the remainder is in dollars. The interest rate charged on all the company's debt is 2.25 per cent, plus London Interbank Offering Rate and Minimum Lending Rate on foreign currency denominated debt and baht debt, respectively. Ital-Thai executives were not available to give further details of the rescheduling agreement. The company, however, said that it had been able to complete its debt- restructuring deal in just one year as a result of its management team, business strength and the cooperation between Ital-Thai and its creditor banks. Commerzbank, Ernst and Young, and Freshfields are its advisers, while SCB Securities Co Ltd acts as domestic adviser for the comprehensive rescheduling package. The company has already signed an agreement with its creditors, led by Japan-based Sanwa International Finance Co Ltd, on Aug 20. Ital-Thai's net profit for the second quarter fell year-on- year to Bt341.52 million from Bt397.669 million because most of its revenue was generated in foreign currency amid what was then a strengthening baht. Earlier, Ital-Thai had shifted its strategy to secure more overseas mega- construction projects in a bid to offset a slump in the country's construction market triggered by the economic turmoil. It expected to increase the proportion of profit generated from overseas projects from the current level of 20 per cent to 50 per cent within the next few years. Ital-Thai has already won contracts for a Bt40-billion high-speed train project and an expressway project in Taiwan, the Bt3.7-billion Mandalay International Airport project, and a Bt3-billion residential complex project in Saudi Arabia. In the Philippines, it is engaged in a Bt10- billion land development project and a Bt40-billion dam project. The company's share price yesterday leapt by Bt5.50 to close at Bt57.50 after details of the debt restructuring were released, against a 1.64-point fall in the SET index which closed at 446.55. (The Nation 25-Aug-1999) KRUNG THAI BANK: Regulators order wide shake-up ----------------------------------------------- Regulators ordered a sweeping shake-up at Krung Thai Bank yesterday, deciding to fire nine of the ten directors. The Financial Institutions Development Fund, the major shareholder, made the decision early in the morning, leaving unscathed only Singh Tangtatswas, who is both a director and the bank's president. Mr Singh, former president of the Stock Exchange of Thailand, was recruited to Krung Thai last month. Chakthip Nitibhon, assistant central bank governor and the fund's manager, said the decision was the "most appropriate for the circumstances". The Finance Ministry would have responsibility for appointing the new board, he said. The action ends a long-running, tense stand-off between regulators and Mechai Viravaidya, the bank's chairman, over how to deal with Krung Thai's huge problem loans, as well as its future direction. Regulators privately say they are convinced that Mr Mechai leaked a confidential report alleging huge deficiencies in the bank's lending practices, since denied by senior executives. Finance Minister Tarrin Nimmanhaeminda said temporary directors would be appointed from senior bank management. An extraordinary shareholders' meeting will be held on September 17 to appoint a new board, the earliest date possible under SET regulations. Mr Tarrin said the new chairman would be appointed from the private sector, and that the Finance Ministry was not expected to increase its quota on the board beyond its single representative. Krung Thai is 87%-owned by the Financial Institutions Development Fund, 4% by the Finance Ministry and the remainder by private investors. Mr Chakthip said the disclosure of the auditors' report was one factor in the fund's decision yesterday, but declined to comment further. The bank held a board meeting yesterday at 2 p.m., and was told of the fund's decision. Mr Singh said four directors-Mr Mechai, Charnchai Charuvastr, Vicharat Vichit-vadakan and Chaipatr Srivisarvacha-tendered resignations effective yesterday. All the directors knew of the fund's decision in advance. Resignations of Kamolchai Pattarodom and Kitipong Urapeepatapong are effective today. Five directors attended yesterday's board meeting: Mr Singh, Mr Kamolchai, Mr Kittipong, Suparat Kawatkul and Penwan Thongdeetae. The five agreed to appoint Mr Singh as acting chairman. Five senior bank executives were appointed as temporary directors-Pongsathorn Siriyodhin, Pairote Varophas, Dusit Tengniyom, Wanchai Thanittiraporn and Kittiya Todhanakasem. Mr Mechai said he had decided to resign before the development fund had met. "I resigned because shareholders didn't want me to stay," he said. "If I stayed, the dissension with other directors and the management team would have continued. I hope this will end the problems quickly, including the political pressures on the bank." Mr Charnchai said he was relieved and does not regret leaving the bank, albeit with a "heavy heart", but added the result was "probably the best way out for the bank". Supachai Pisitvanich, finance permanent secretary, said the board changes were necessary given ongoing conflicts between directors and management, complicating the task of restructuring the bank. Non-performing loans at the end of June totalled 393 billion baht, or almost 60%, of total loans. Employee representatives have called on the new board to demand accountability among management for the bad loans. Mr Singh said the new board would not set any new policies, but focus on improving the bank's loan quality and restructuring bad debt. Directors had showed spirit in resigning to give regulators a free hand in forming a new board, he said. Investors were little affected by the events. Shares of Krung Thai on the Stock Exchange of Thailand yesterday closed at 14 baht, down 50 satang, on turnover worth 93.61 million baht. The SET index closed at 446.55, down 1.64 points, on turnover worth 9.79 billion baht. Analysts said the board changes were not expected to have significant impact on investor sentiment in the market. Kawee Chukitkasem, an analyst with Capital Nomura Securities, said the new board was unlikely to change Krung Thai's existing priorities of restructuring bad loans, revamping internal operations and establishing a new asset management company. Paiboon Ratniyom, an analyst at ABN-Amro Asia Securities, believed the changes would be positive for the bank overall. He said Krung Thai, as a state enterprise, had greater obstacles in dealing with its problem loans, when compared with private banks. State enterprise regulations limit the flexibility of staff in accepting losses in restructuring. (Bangkok Post 25-Aug-1999) MANAGER MEDIA GROUP PLC: Gets approval for rehab plan ----------------------------------------------------- Manager Media Group Plc reported to the Stock Exchange of Thailand that the court had approved the company's debt restructuring plan. Details of the plan including a reduction in capital before raising new capital, restructuring of debt repayment terms, and the sale of non- core or non-strategic assets. (The Nation 25-Aug-1999) SRITHAI SUPERWARE PLC: Expects rehab plan approval in Oct. ---------------------------------------------------------- Srithai Superware Plc expects the final stage of its US$160 million debt restructuring plan to be approved by the civil court in October. Of the $160 million in debt, half will be restructured through a debt-to-equity swap, enabling foreign creditors to take over a 50-per cent interest in the company while payments for the other half will be extended to five to six years. The company forecast that sales this year would be the same as last year's or Bt2.83 billion before jumping to Bt3 billion in 2000. (The Nation 25-Aug-1999) THAI MELON POLYN PLC: Posts first-half loss ------------------------------------------- Thai Melon Polyn Plc reported a net loss of Bt423.47 million for the second quarter of this year against Bt779.19 million over the same period last year. For the first-half, the company showed a loss of Bt900.75 million, compared with Bt820.06 million for the corresponding period last year. (The Nation 25-Aug-1999) THAI OIL CO.: Cabinet approves debt restructuring ------------------------------------------------- The cabinet yesterday approved the debt restructuring plan of partially state-owned Thaioil Co, which will involve its registered capital being increased to 26 billion baht from 20 million. Its creditors, consisting of more than 120 financial institutions, are expected to convert US$350 million of their total $2.17 billion in loans into equity. The Petroleum Authority of Thailand will also commit the equivalent sum as fresh capital. To raise the necessary funds, the PTT will be allowed to issue up to $300 million in bonds. Guaranteed by the Finance Ministry, they will likely be sold in Japan. The plan was agreed on after creditors were successful in acquiring a 25.5% stake in the company from the Chowkwanyuen family, which earlier had been reluctant to sell. It was reported that the family sold the stake, which was worth 5.1 million baht at par, for $15 million or about 555 million baht. In committing $350 million to Thaioil, the PTT will hold 49.9% of the company's shares under the new structure. Previously it had been limited to holding 49%. A senior PTT executive said the plan was expected to be approved by Thaioil shareholders in October. "If they don't accept the proposal, they will have to bring the case to court and liquidate Thaioil. I don't think it is in the interest of anyone to do so," said Industry Minister Suwat Liptapallop. In addition to proposing debt-equity swaps, the company had asked creditors to extend loan repayment terms and cut interest rates to aid its cashflow. The cabinet also approved a plan by the PTT to pay $41 million in the form of preferred shares in Thaioil's petrochemical unit, Thai Paraxylene Co (TPX). The funds will help restart the suspended $230-million joint venture with Mitsubishi Holding (Thailand). The latter holds 38% and Thaioil 62%. Under the new structure, the PTT and Thaioil Co will together hold only 51% in TPX, while Mitsubishi and a new partner from Japan will increase their holding to 49%, Mr Suwat said. As Thaioil's operations and investment were purely financed by foreign loans, the baht devaluation in 1997 had badly hurt the company's financial position. Coupled with lower demand for oil and too much refining capacity, the company had to suspend debt servicing in November last year. Suwat said most creditors, except for some Japanese lenders agreed with the latest plan. "I am confident that Thai Oil will reach agreement with its creditors after a new capital investment by PTT," he said. Of Thai Oil's more than 120 creditors, two-fifth are Japanese banks, led by Sakura Bank and Sumitomo Bank. Other large creditors are Chase Manhattan and the Bank of Ayudhya. The retired governor of PTT, Pala Sukawesh, said this month that Thai Oil's debt restructuring package should be completed by the end of October. Some of the new funds to be invested by PTT will come from its own pocket. Any funds it obtains through loans or bond sales will be guaranteed by the Finance Ministry to "reduce the cost of funds," a government statement said. PTT said earlier this year it will sell $250 million worth of yen- denominated bonds that Japan's Ministry of International Trade and Industry will guarantee under the so-called "Miyazawa Plan" of economic assistance. (Bangkok Post, Business Day 25-Aug-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. 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