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/raid1/www/Hosts/bankrupt/TCRAP_Public/990909.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, September 9, 1999, Vol. 2, No. 175 Headlines * C H I N A & H O N G K O N G * DENIS DRYCLEANINGS LTD.: Facing petition for winding up FIRST PACIFIC GROUP: To sell subsidiary for debt paydown MEDIA SHOE CHAIN: Facing petition for winding up MONDITEX GARMENT FACTORY: Facing petition for winding up NPH INT'L HOLDINGS: Losses prompt cash-raising thoughts * K O R E A * DAEWOO ELECTRONICS: In export bind DAEWOO ELECTRONICS: Sale talks on tap next week DAEWOO GROUP: 3 not 10 units put under court management DAEWOO GROUP: Creditors approve W1 trillion in fresh funds DONGBU INSURANCE: Posts 1Q loss FIRST FIRE AND MARINE: Posts 1Q loss HYUNDAI MARINE AND FIRE INSUR. CO.: Posts 1Q loss HYUNDAI SECURITIES: Chair to be arrested KOREA FIRST BANK: Purchase talks stalled? LG INSURANCE CO.: Posts 1Q loss ORIENTAL FIRE AND MARINE INSUR. CO.: Posts 1Q loss SAMSUNG FIRE AND MARINE INSUR. CO.: Posts 1Q loss SSANGYONG FIRE AND MARINE: Posts 1Q loss * M A L A Y S I A * GLENEALY PLANTATIONS: Gets SC approval for restructure HO HUP CONSTRUCTION: Posts first-half loss * P H I L I P P I N E S * PHILIPPINE AIRLINES: Meeting, beating operational targets * S I N G A P O R E * FIRST CAPITAL CORP.: Annual loss projected WING TAI HOLDINGS: Annual loss projected * T H A I L A N D * EAST ASIATIC THAI: To be delisted INFO ACCESS CO.: Being acquired by Jasmine Int'l KAET THAI SUGAR CO.: Restructure derailed NAKHON SAWAN INDUST. CO.: Restructure derailed PROPERTY PERFECT: Pinning rehab hopes on new construction RADANASIN BANK: Lesser sales price anticipated RAYONG ELECTRIC: To restructure by issuing unit trusts SIAM CHEMICALS: To be delisted SIAM SYNTEC CONSTRUCTION: SET suspends trading SRITHAI SUPERWARE: Submits rehab plan THAI EKALAK SUGAR CO.: Restructure derailed THAI FARMERS BANK: Rights issue delay over Phatra Thanakit ============================== C H I N A & H O N G K O N G ============================== DENIS DRYCLEANINGS LTD.: Facing petition for winding up ------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 20 on the petition of Lee Fung Ming for the winding up of Denis Drycleanings Limited. A notice of legal appearance must be filed on or before October 19. FIRST PACIFIC GROUP: To sell subsidiary for debt paydown -------------------------------------------------------- First Pacific Group managing director Thomas Yasuda announced yesterday that its 40 per cent owned subsidiary, Indofood Sukses Makmur, was selling its Bogasari Flour Mills in Indonesia. The regional conglomerate will use the net proceeds to reduce its US$770 million (HK$5.99 billion) debts by US$400 million. "Cash has been trapped to serve debts. We hope to ultimately reduce the amount to US$250 million to US$300 million," Mr Yasuda said while announcing interim results for First Pacific. "Indofood is probably the best investment that First Pacific has ever made." In July, First Pacific purchased from the Salim Group another 12.56 per cent stake in Indofood for 1.9 trillion rupiah (HK$1.86 billion) after buying 40 per cent for US$650 million. The transaction is yet to be completed and Indofood will not be reflected in First Pacific's account until the purchase transaction is closed, First Pacific said. "The restructuring will allow the company to invite strategic and/or financial investors to acquire ownership interests in some or all of these four milling and related assets," Indofood said. Under the proposed sale, Indofood will spin off four new subsidiaries from its Bogasari division and sell up to 60 per cent in the world's two largest flour mills in Jakarta and Surabaya, its bagging plant, and its shipping business. The company will wholly own the subsidiaries until the sale is complete. Bogasari was long one of Indofood's most profitable units, and still enjoys a de-facto monopoly over milling. However, that is no longer an advantage as a new anti-monopoly law prohibits such concentration of commercial power in one company. Indofood would, therefore, have to sell a large stake in Bogasari even if it did not need the money, analysts said. Bogasari's Jakarta milling operations has a 2.3 million tonne annual capacity, while the Surabaya plant has 1.3 million tonnes. Its bag manufacturing plant makes 100 million bags a year, and its shipping operations have three ships and three barges. (Hong Kong Standard 07-Sep-1999) MEDIA SHOE CHAIN: Facing petition for winding up ------------------------------------------------ The High Court of Hong Kong SAR has scheduled a hearing for October 20 on the petition of Kwok Yin Wah for the winding up of Media Shoe Chain Limited. A notice of legal appearance must be filed on or before October 19. MONDITEX GARMENT FACTORY: Facing petition for winding up -------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 17 on the petition of Ip Mei Yan for the winding up of Monditex Garment Factory Limited. A notice of legal appearance must be filed on or before November 16. NPH INT'L HOLDINGS: Losses prompt cash-raising thoughts ------------------------------------------------------- Chinese-medicine company NPH International Holdings is considering a share placement to solve its cash flow problems after it sank to a $282.61M loss for the year ended March 31. The company was unable to pay bank loans and trade creditors and was talking to banks on a possible debt restructuring It said it had incurred a loss last year against a net profit of $1.38M in the year-earlier period on a pro forma basis. Last year's result was affected by a $188.33M exceptional loss, mainly from provisions for loan receivables and a decline in the recoverable amount in property. A loss of 439.13M was attributed to discontinued petrochemical operations. The operating loss was $55.8M compared with operating profit of $8.6M, on a 43.07% decline in turnover to 4100.93B. Loss per share was 57.29 cents against earnings per share of 0.38 cents previously. No final dividend was proposed. ========= K O R E A ========= DAEWOO ELECTRONICS: In export bind ---------------------------------- Daewoo Electronics is being pushed into a corner in exporting its products amid the liquidity crisis which has put the nation's second largest conglomerate, Daewoo Group, under a debt restructuring program. Given that exports account for over 90 percent of Daewoo Electronics' total revenues, troubles with exports are likely to deal a lethal blow to the recovery of the electronics firm. According to industry sources, Daewoo Electronics creditors, who are now supervising the debt restructuring program, halted the purchase of a DA (document against acceptance), virtually blocking the company from shipping its products. Parts suppliers also stopped providing products needed for the manufacturing of export products, citing the absence of L/C (letter of credit). The stoppage of parts supplies is sure to force Daewoo to cut its production volume, which will worsen export conditions and mar its image and credibility in overseas markets. "Although orders are still coming in from our partners, the problem with production schedules and the rejection of purchasing DA make the reduction of output inevitable," a Daewoo official said. He noted that exports could be suspended altogether unless a dramatic solution is found within this week. The DAs shunned by the Daewoo creditors are the ones guaranteed by the sales unit of Daewoo in foreign markets. Since Daewoo ships most of its exports under its own brand and its own sales network, the rejection of DAs is stifling its key export channel. Currently, the creditors are known to be insisting on cash payment of DAs owed by Daewoo as a precondition for accepting additional DA. The creditors placed a DA limit of $400 million when Daewoo Electronics was placed under the debt restructuring scheme on Aug. 25. Squeezed by the worsening situation, parts suppliers are also adamantly demanding cash payment or local L/Cs from Daewoo, which is likely to rub salt into the wounds of the faltering electronics firm. Parts of Daewoo Electronics TV and computer monitor divisions are now idling in the wake of the suspension of certain facilities. Daewoo officials, meantime, expressed regret over the demands made by creditors and parts suppliers. "It's a well-known fact that Daewoo Electronics was forced to accept the workout program because of the liquidity problem. And the demands for cash payment are a serious obstacle to the recovery of the firm," said a Daewoo official who asked not to be named. (Korea Times 07-Sep- 1999) DAEWOO ELECTRONICS: Sale talks on tap next week ------------------------------------------------ Hanvit Bank, a main creditor of Daewoo Electronics Co. (DEC), said yesterday that it will enter into talks next week with a U.S. investment fund on its proposal to acquire DEC for $3.2 billion. "Hanvit will receive the result of Walid Alomar & Associates' valuation of DEC's domestic and overseas assets," a Hanvit official said. "In return, Hanvit will submit details on DEC's debts." Hanvit and Walid agree that both sides will be able to speed up the takeover negotiations by sharing necessary information, the official said. Hanvit will review the credibility of Walid's asset valuation closely and check the U.S. fund's ability to finance the proposed acquisition, he said. "We think that Walid must have been serious in valuing DEC's assets if it has the will to buy the electronics maker," the official said, hinting that Hanvit may respect the result of its asset valuation. Walid had earlier proposed Hanvit take over DEC for $3.2 billion through a $1.2 billion capital investment and borrowings of $2 billion. The debt-ridden Daewoo Group, which owns a controlling stake in DEC, has said it signed a memorandum of understanding with Walid to sell most of the company's assets and operations. The Hanvit official explained that both sides will negotiate on the scope of DEC's assets to be handed over to Walid in return for $3.2 billion. Hanvit will also demand that the U.S. firm prove its ability to fund the takeover, he said, adding that it should be taken into consideration whether Walid will actually be able to bring in the takeover money. DEC has reported to creditors that its debts total 5.35 trillion won, which is about 1.5 trillion won more than the proposed bid price of $3.2 billion. Late last month, Daewoo's creditors placed the group's 12 units, including DEC, under a debt-workout program to stem their imminent failure. Under the rehabilitation program, the Daewoo units will be spun off, sold or reborn as independent entities. Meanwhile, Reuters yesterday quoted Lee Soo-kil, deputy chief executive officer of Hanvit, as saying that Walid' proposal to take over DEC for $3.2 billion was unacceptable. "Walid's proposal to (virtually) take over Daewoo Electronics for $3.2 billion is hard to accept," the wire service quoted Lee as saying. "However, Walid Alomar will be able to take over Daewoo Electronics through a capital investment after creditors improve Daewoo Electronics' value through a debt-for-equity swap or other means." (Korea Herald 08-Sep-1999) DAEWOO GROUP: 3 not 10 units put under court management ------------------------------------------------------- South Korean financial watchdogs said yesterday that only three units of the failed Daewoo Group had been put under court management, reversing earlier statements that 10 firms were targeted. The turnaround came after the stock market jumped on news that 10 out of 12 Daewoo units under an emergency debt rehabilitation scheme would be put into court receivership. "A meeting of creditor banks and the FSC chairman decided that three out of the 12 Daewoo subsidiaries now under workout programmes will be substantially managed by major creditor banks," a spokesman for the Financial Supervisory Commission (FSC) said. The three units are Daewoo Heavy Industries, Daewoo Electronics and Daewoo Telecom, said the official, who declined to be named. FSC, Korea First Bank and Daewoo officials all acknowledged earlier in the day that 10 out of the 12 units under a government rescue programme would formally be placed in bank receivership. "Creditor banks can expedite financial assistance and help corporate restructuring more effectively under bank management," FSC chairman Lee Hun-Jai was quoted by Yonhap News Agency as saying. But a spokesman for Daewoo's main creditor Korea First Bank also backed away from the earlier announcement, denying that any Daewoo units had been put under bank management. (Business Day 07-Sep-1999) DAEWOO GROUP: Creditors approve W1 trillion in fresh funds ---------------------------------------------------------- The local creditors of Daewoo Group finally approved an additional provision of rescue funds worth 1 trillion won ($840 million) to seven major affiliates of the group presently under the government and bank-led forced restructuring. During a meeting at the Korea Federation of Banks in downtown Seoul, local banks and investment trust companies (ITCs) endorsed extending the credit ceilings imposed on Daewoo's seven core business units by which they will get further rescue funds from the domestic financial circle. The seven to receive additional credit packages are Daewoo Corp., Daewoo Motor, Daewoo Heavy Industries, Daewoo Electronics, Daewoo Telecom, Daewoo Capital and Diners Club of Korea. For the yields on Daewoo-related bonds, the creditors came to a mutual understanding that each business unit will be held separately accountable. The creditors decided Seoul Guarantee Insurance Company will take over the responsibility, should Daewoo subsidiaries fail to cover payments. Regarding the interest payments for Daewoo-issued commercial papers, the participants decided to hold the issue until the next group meeting which will be held later in the week because of pertinent financial concerns. In a meeting last week, 93 local financial turned down the injection of additional funds for Daewoo's major subsidiaries while approving a new line of credit for Daewoo's five smaller business units. The ITCs in particular had voiced strongly against the indefinite financial support for Daewoo's business arms which are virtually on the verge of bankruptcy. The liquidity crisis of the Korea's second largest business giant dealt a severe blow to the operation of the domestic ITCs as their clients rushed to redeem Daewoo-related bonds, leading to a depletion of ITC resources. But, local bank representatives convinced the ITC officials to approve the provision of new rescue funds, saying that preventing bankruptcy of Daewoo firms should be given top priority. Earlier, the domestic lenders of Daewoo endorsed items including a rescue package for Daewoo's five smaller business arms, the scope and period of due diligence, and the formation of a steering committee. The five units were Daewoo Electronics Components, Daewoo Motor Sales, Ssangyong Motors, Orion Electronics and Keangnam Enterprise. Just two weeks into the corporate workout scheme, problems have plagued Daewoo's major business arms. Daewoo Motor has run into serious challenges in the wake of the group's financial breakdown as its suppliers and subcontractors now demand cash instead of letters of credit. Daewoo Electronics has experienced a similar problem as its rival Samsung Group has halted the provision of parts while local banks refused to honor its previously issued letters. Daewoo Heavy Industries is in no better position with new orders from overseas decreasing. (Korea Times, Digital ChosunIlbo 07-Sep-1999) DONGBU INSURANCE: Posts 1Q loss FIRST FIRE AND MARINE: Posts 1Q loss HYUNDAI MARINE AND FIRE INSUR. CO.: Posts 1Q loss LG INSURANCE CO.: Posts 1Q loss ORIENTAL FIRE AND MARINE INSUR. CO.: Posts 1Q loss SAMSUNG FIRE AND MARINE INSUR. CO.: Posts 1Q loss SSANGYONG FIRE AND MARINE: Posts 1Q loss -------------------------------------------------- Domestic nonlife insurance companies suffered combined operating losses of more than 200 billion won in the first quarter of fiscal year 1999. Insurers were able to cover the losses with earnings from their investment in stocks during the April-June period, thanks to the booming stock market. But given that share prices are not expected to rise as sharply as they did earlier, insurers are predicted to see their net profits shrink in the coming quarters. A total of 11 domestic nonlife insurance firms incurred combined operating losses of 204.8 billion won ($171 million) in the first quarter, according to industry statistics disclosed yesterday. By company, Samsung Fire and Marine Insurance Co. posted the heaviest net operating loss at 32.8 billion won during the period, followed by LG Insurance Co. (27.4 billion won), Hyundai Marine and Fire Insurance Co. (25.3 billion won), Dongbu Insurance (25.1 billion won) and Oriental Fire and Marine Insurance Co. (21.8 billion won). During the three-month period, the insurers' combined loss ratio, or loss ratio plus ratio of net operating expenses, stood at an average 107.5 percent, up 4.4 percent from the 103.1 percent recorded a year ago. None posted a combined loss ratio below 100 percent. A higher combined loss ratio equates to lower profitability of an insurer's operations. Therefore, a combined loss ratio of more than 100 percent means an insurer is running deficits in its operations. Samsung Fire and Marine showed the lowest combined loss ratio at 103.5 percent, followed by LG (106.7 percent), Hyundai Marine and Fire (107.2 percent), Dongbu (107.2 percent), First Fire and Marine (108.3 percent), Oriental Fire and Marine (110.6 percent), and SsangYong Fire and Marine (110.9 percent). Analysts attribute the losses to excessive competition among the insurers. "In order to take a bigger market share, the firms sell insurance such as car insurance at bargain prices," said an official at one of the insurers. He said the operating losses will grow bigger unless insurers put priority on profitability rather than on market share. "So far, the insurers could record profits because of the huge investment income thanks to the skyrocketing stock prices," he noted. "But given that the stock market is strewn with potentially negative factors, and the upward trend in the share prices cannot continue as it has been doing, the insurers are expected to reap less profits to cover their operating losses," he warned. (Korea Herald 08-Sep-1999) HYUNDAI SECURITIES: Chair to be arrested ---------------------------------------- The Seoul District Prosecutor's Office announced Wednesday that they would issue an official warrant for the arrest of Hyundai Securities Chair Lee Ik-chee Thursday. Lee has been in custody since Tuesday for questioning by the prosecution, which is investigating allegations of stock manipulation among Hyundai subsidiaries. One high- ranking official at the prosecutor's office said that with Lee remaining steadfast in denying all allegations, the investigation has been moving very slowly. Other officials say, however, that confessions have been secured from other Hyundai executives, with their statements all pointing to Lee as being behind the plot to drive up prices of Hyundai Electronics shares by purchasing huge amounts of stock in the company. The prosecutor's office has a list of about 20 Hyundai officials, including Lee, who are to be booked in relation to the scandal, with five executives from Hyundai Securities already in custody. The prosecutor's office also plans to detain a few other high-ranking Hyundai executives, including Hyundai Heavy Industries vice president Lee Young-ki and Hyundai Electronics executive director Kang Suk-jin, on suspicions of involvement in the case. Meanwhile, the prosecutor's office questioned and released two members of Hyundai's top brass, Hyundai Heavy Industries chair Kim Hyung-byuk and Hyundai Merchant Marine chair Park Se-young. The prosecutor's office said they would embark on their investigation of Hyundai Electronics chair Chung Mong-hun's suspected involvement as soon as possible. The scion of the Chung clan is currently in the United States on business. The prosecution said that a public announcement of the results of their investigation could be expected early next week. Hyundai has officially denied the allegations, saying that there was no pre-arranged plan to artificially inflate the value of Hyundai Electronics stock. (Digital ChosunIlbo 08-Sep-1999) KOREA FIRST BANK: Purchase talks stalled? ----------------------------------------- American investment fund Newbridge Capital has sent a letter to Ministry of Finance and Economy (MOFE) head Kang Bong-kyun requesting an exclusive interview with the minister, it was known Tuesday. The U.S. firm has been going through negotiations with the Korean government to purchase the ailing Korea First Bank. The Korean government said in early July that the major terms and conditions for the sale have been agreed upon, but, since then, the two parties have been mute on the progress of the negotiations. In the letter, Newbridge said that it has been going ahead with talks in good faith and that the interview was to lay bare its position for the sale negotiation. Another negotiation to sell off the other ailing local Seoul bank to the Britain-based HSBC Holdings was ruptured last week, and the government said that it would inject several trillions of won to normalize the operations of the bank before auctioning it off again at a later stage. (Digital ChosunIlbo 07-Sep-1999) =============== M A L A Y S I A =============== GLENEALY PLANTATIONS: Gets SC approval for restructure ------------------------------------------------------ Glenealy Plantations (Malaya) Bhd has received the Securities Commission approval for its rationalisation and restructuring, which will enable the company to focus on oil palm related businesses. The restructuring also involves its parent Lingui Developments Bhd which will concentrate on timber-related businesses. Glenealy said in a statement to the KLSE it would acquire five million new shares in Puncak Selasih Sdn Bhd at RM1 each and 304,000 redeemable preference shares (RPS) of RM1 each at RM1,000, instead of 325,800 RPS as earlier proposed. Lingui will acquire one million new TreeOne (M) Sdn Bhd shares of RM1 each at par and 5.1 million RPS A of RM1 each at RM100 apiece. Lingui will buy from Glenealy the entire stake in Samling Plywood (Lawas) Sdn Bhd for RM64.2mil instead of the RM71.4mil proposed earlier. Lingui will also buy from Glenealy the entire interest in Samling Plywood (Baramas) Sdn Bhd for RM147.6mil cash instead of RM160.2mil. (Star Online 08-Sep-1999) HO HUP CONSTRUCTION: Posts first-half loss ------------------------------------------ Ho Hup Construction Company Bhd incurred a group pre-tax loss of RM2.967mil for the half year ended June 30, 1999 against a profit of RM5.910mil in the same period last year. Sales dropped by 55% to RM92.431mil from RM203.792mil previously. (Star Online 07-Sep-1999) ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Meeting, beating operational targets --------------------------------------------------------- Philippine Airlines (PAL) is achieving and, in some cases, even surpassing the operational targets set in its rehabilitation plan as the flag carrier emerges from its first four months under rehabilitation with a much-improved performance record. For the period of April to July 1999, the airline recorded a schedule performance of 99.1 percent, which means that less than one percent of its over 6,200 scheduled flights for the period were cancelled. PAL also attained an average on-time departure reliability rate of 90.2 percent for the period, meaning that over 90 percent of all PAL flights departed on time. This is a marked improvements over its 70 percent performance of as late as two years ago. PAL's departure punctuality rate even exceeds the industry standards of 90 percent for domestic and 85 percent for international flights, as set by the International Air Transport Association (IATA). "The key to PAL's above-par operational performance is our deployment of a young, modern fleet," said Capt. Julio Hernandez, the airline's senior vice-president for operations. PAL's fleet of 24 aircraft has an average age of four years, making it one of the youngest in Asia. Over half of the fleet, comprising 13 new generation Airbus aircraft, are less than two years old. "This has allowed us to keep aircraft downtime to a minimum and improve fleet utilization and productivity," Hernandez added. The average utilization rate for PAL's four Boeing 747- 400s, the workhorse of the trans-Pacific services, was 14.85 hours per day in June, exceeding the 14.7 hours prescribed by the rehab plan. Likewise, the daily utilization rate of 8.93 hours for the eight Airbus 330- 300s, which serve regional and high-density domestic route, surpasses the 8.6 hours set in the plan. "The high utilization rates indicate that PAL is maximizing the use of a major asset, its fleet and is a key measure of our renewed efficiency," Hernandez said. The operational improvement has translated to increasing public confidence in the flag carrier. Passenger load factor, which measures the number of occupied seats in an aircraft against the total available, hit a high of 73.3 percent in the April-to-June quarter, bettering both the 51 percent target set in the rehab plan and PAL's international benchmark of 68 percent. "If our performance during the last four months is any gauge, it means that PAL has been transformed into a leaner, more productive airline that is operationally viable," Hernandez stressed. (Balita News Service 04-Sep- 1999) ================= S I N G A P O R E ================= FIRST CAPITAL CORP.: Annual loss projected WING TAI HOLDINGS: Annual loss projected ------------------------------------------ Real estate developers First Capital Corp (FCC) and Wing Tai Holdings are widely expected to show losses when they announce fiscal 1999 earnings due to insufficient provisioning, analysts said yesterday. Barra Global Estimates has consensus net loss forecasts of $72.4 million for FCC and $149.7 million for Wing Tai. But the two, scheduled to release full year results in coming weeks, could surprise and be in the black if they wrote back earlier provisions as property prices improved this year, added the analysts. "They did not make enough provisions in the interim when prices dropped a lot," said Goh Moh Lih, an analyst at Daiwa Institute of Research, "but they do not have to provide further (for this half), given the current market conditions." Analysts said FCC and Wing Tai may have made further provisions for the first six months of their fiscal year ended Dec 31, 1998, as their policy was to "revalue their provisions for inclusion in their full year rather than interim". For the full year ended June 30, 1998, FCC suffered a net loss of $23.22 million. It made a provision of $101.4 million for potential losses in its development properties at that time. In the interim ended Dec 31, 1998, FCC made $30.1 million in provisions for its projects. In 1998, Wing Tai reeled under a net loss of some $136 million. The group made a total provision of $257.2 million at that time. At its interim announcement in March, Wing Tai decided to make an additional $122.5 million in provisions for weaker property prices. Analysts said FCC and Wing Tai were on track to return to profitability by fiscal 2000, as they had been building up their land banks, buying various buildings and entering into more ventures this year. FCC and Wing Tai shares were expected to firm in line with peers such as property heavyweight DBS Land, said Prudential-Bache Securities analyst Alan Cheong. Shares of DBS Land have gained steadily since it surprised the market with a 174 per cent surge in interim profit to $122.87 million. "FCC and Wing Tai shares might try to play catch up with the other property counters like DBS Land. If the market continues to recover, they would be slightly undervalued," Mr Cheong said. FCC gained one cent to $2.41 yesterday, and was seen trading at 31.17 times its forecast 2000 earnings. Wing Tai also gained one cent yesterday to $1.74, and was trading at 33.92 times its forecast 2000 earnings. (Reuters, Business Times 07-Sep-1999) =============== T H A I L A N D =============== EAST ASIATIC THAI: To be delisted --------------------------------- East Asiatic (Thailand) Pcl, a leading distributor of chemicals, food and health care products, said it plans to remove its shares from the Stock Exchange of Thailand. The company, 49 percent-owned by Denmark-based A/S Det Oestasiatiske Kompagni, didn't give a reason for the move. The company's shares were suspended from the SET. East Asiatic's board plans to meet here tomorrow afternoon, where members are expected to discuss information that "will affect the rights and privileges of the shareholders' investment decisions or change the share price," Managing Director Anders Normann told the stock exchange. East Asiatic Thai traded last Friday at a one-month high of 19 baht (49 cents). Shares averaged 12.8 baht this year, reaching a high of 22.3 baht on June 25 and a low of 8.1 baht on March 8. The firm's market value is 1.71 billion baht ($44 million), based on 90 million shares. (Business Day 07-Sep-1999) INFO ACCESS CO.: Being acquired by Jasmine Int'l ------------------------------------------------ Jasmine International Plc, a telecom infrastructure company, yesterday announced it would take over cash- strapped Internet service provider Info Access Co Ltd to secure a foothold in the Internet business and catch up with other telecom firms. Jasmine International's restructuring plan calls for it to acquire an interest in the Internet business, following the lead of other telecom firms that already operate Internet services. The company decided to acquire a majority stake in Info Access after it failed to raise its interest in leading Internet service provider KSC Commercial Internet. Earlier Jasmine proposed to acquire a controlling stake in KSC Commercial Internet -- it already owns a 25 per cent stake in the the parent company, Internet Knowledge Service Center. However, Internet Knowldge Service Center agreed to offer Jasmine only a 12.5 per cent share in its subsidiary. The share acquisition deal is pending approval from the Communications Authority of Thailand (CAT). There was no report whether Jasmine International would maintain its stake in KSC after the takeover deal with Info Access. A source said that Jasmine had asked CAT for a new Internet service provider (ISP) licence, but the approval process was long and Jasmine had opted to take over Info Access instead. Jasmine's board of directors yesterday approved the plan to acquire a 65 per cent stake, or 974,930 shares worth Bt9.7 million, in Info Access from its major shareholder, publisher Wattachak Plc. The CAT owns the remaining 35 per cent. After due diligence is complete, Jasmine's shareholders will be asked to approve the acquisition at an extra- ordinary general meeting to be held on Oct 11. Songrit Kusomrosananan, president of Jasmine, said taking over the ISP will allow the company to use its extensive expertise in building and operating telecom networks to become a leader in Thailand's Internet access business. A source from the telecom sector said Jasmine will have to spend additional funds to retire Info Access's Bt50 million debt burden, of which Bt14 million is owned by CAT. Info Access which started providing an Internet service called Infonews in 1996, is on the CAT's list of debt-burdened ISPs. The company has failed to pay back its debt to the state agency even at only Bt1 million per year. Wattachak had tried to diversify into the telecom business, but could not survive during the financial crisis. The company last year shut down its V-sat service (Very small aperture terminal service) operated by U-Sat Co Ltd, and transferred clients to the CAT. Earlier this year Jasmine's board agreed to let the company double its capital from Bt6.67 billion to Bt12.67 billion to fund a launch into the Internet business. Funds were mobilised through a private placement of 600 million new shares and a share swap. Meanwhile, Jasmine's board also endorsed a plan to place 1,044,693 shares, worth Bt18.80 million, in its high speed telecom network subsidiary, Smart Highway, with its wholly-owned Acumen company. Jasmine said that funds obtained from the share placement will help improve its cashflow. (The Nation 08-Seo-1999) KAET THAI SUGAR CO.: Restructure derailed NAKHON SAWAN INDUST. CO.: Restructure derailed THAI EKALAK SUGAR CO.: Restructure derailed ---------------------------------------------- The attempt to restructure 20 billion baht in debts owed by three Nakhon Sawan-based sugar mills was aborted yesterday when shareholders and small creditors of Thai Ekalak Sugar Co, one of the three mills, rejected the plan. Creditors of Kaset Thai Sugar Co will meet today to vote on the plan to restructure the company's debt, but it is expected it will end with the same result as yesterday's meeting. Tomorrow's meeting on Nakhon Sawan Industrial Co is also likely to end in failure. After a meeting lasting about nine hours, the Thai Ekalak plan was rejected by 2,661 creditors, who are sugarcane planters. Only 28 creditors, all financial institutions, voted for the plan. Although the combined debts of the 28 financial institutions are 5.72 billion baht, or 89.6% of the company's total debt, the major creditors could not get the plan approved. This is because the case was filed with the court under the old Bankruptcy Act. It stated that a debt restructuring plan must be approved by at least 50% of the total number of creditors who were owed at least 75% of the total debts. It was the first rejection of a restructuring plan at a creditors' meeting organised by the order of the court. Consequently, the major creditors would have to ask the court to declare the company bankrupt. However, Praphan Siriviriyakul, managing director of the company as well as two other mills, said he would contest the issue by telling the court that the three mills were not insolvent as claimed by the major creditors. He said the planters agreed with the three mills' shareholders that the major creditors and South Sathorn Planner Co, author of the plan, had deliberately undervalued the three mills' assets. He insisted that the combined assets of the three mills were about nine billion baht higher than their combined liabilities. Earlier, a small creditor of the three mills had filed a lawsuit against the major creditors and South Sathorn, charging them with falsifying information in order to justify writing down the mills' shares to one satang each so that they could take over the businesses. Another small creditor also filed a criminal suit against the major creditors and the planner. Earlier, three executives of Kaset Thai Sugar, which will have its creditors' meeting today, were charged with masterminding the murder of an Australian auditor, Michael Wansley, who was believed to have found irregularities on the company's books. The small creditors proposed yesterday to amend the plan, particularly the share write- down, but their proposal was rejected. All votes during the meeting were based on the amount of debt owed. But the final vote was based on both the amount of debt and the number of creditors, resulting in the victory for the small creditors and the company's shareholders. If the court rules in favour of the major creditors, then Thai Ekalak would be declared bankrupt. Its assets would be auctioned with the proceeds shared among creditors. However, if the court ruled in favour of the company, then the existing management would be allowed to continue running the firm and the major creditors would have to re- negotiate. (Bangkok Post 08-Sep-1999) PROPERTY PERFECT: Pinning rehab hopes on new construction --------------------------------------------------------- Despite a massive oversupply situation, Property Perfect Plc (Perfect), a low-rise residential developer, has launched a townhouse project with an environmentally- friendly approach, similar to the one initiated by Land & Houses Plc (L&H) targeting the lower end of the market. The new project is seen as a test of Perfect's business potential, and if the programme is deemed successful, the company's eight-month-long negotiations on its Bt10 billion debt restructuring plan will have a greater chance of bearing fruit. The company has started building 48 of 100 new townhouses at its Nantana Rangsit estate. The new units are priced at 929,000 baht each and require a downpayment of 25%. "We had to launch the project as our stock is nearly sold out and we need steady income," Mr Phairat said. "We believe demand from new couples remains strong as interest rates are low and fixed-rate mortgages are available at many banks," he said. Phairat Senachack, the company's sales management director, said the firm expected its creditors to write off some of its foreign-denominated principal debt because most of them were without collaterals. Of Perfect's total debts, 20 per cent are foreign-denominated with the remainder in baht. Around 30-40 per cent of the debt carries collaterals. Perfect also remained optimistic that Kiatnakin Finance and Securities Plc would agree to write off some of the Bt2 billion in outstanding debts which the finance firm recently won in an auction from the Financial Sector Restructuring Authority (FRA), he said. If the creditors agreed to the write offs, the company may not need to revert to finding a new strategic partner, which tends to be the favoured method of troubled property developers when restructuring their debts, he said. Property Perfect Plc says it expects debts totalling 10 billion baht to be restructured by the end of this year. Thirty percent of the debt is owed to foreign creditors, mainly South Koreans who do not hold collateral. The remaining 70% is owed to Thai banks and financial institutions that have collateral, as well as to bond- holders. The company's debt-restructuring plan was drafted with advice from JP Morgan. However, some creditors have yet to approve the plan, although they are expected to do so soon, according to Phairat Senachack, Property Perfect's sales management director. Mr Phairat said that if all the creditors accepted the plan, the company would not need foreign partners. He declined to reveal details of the plan, but said the firm would do everything it could to improve its position. "First, we have tried hard to sell our inventory, mainly detached houses, at 30% to 35% discounts to get cash," he said, adding that units in stock had been depleted rapidly. In the first eight months of this year, 270 units had been sold for a total of about 800 million baht. Referring to the company's new townhouse project, he said its concept was similar to the "Baan Sabai" project launched by L&H, which concentrates on quality, competitive prices and catering to the demands of home buyers. Townhouses built under the new project focus mainly on energy conservation and security with a back-up electricity generator as well as telephone and television signal lines installed as added extras. Despite an oversupply of real estate and a 10-15 per cent increase in construction materials, Perfect had cut down the use of unnecessary materials in a concerted effort to bring down prices, he said. He said the company would construct new townhouses in accordance to clients' orders, which was a change of practice to cater to the demands of home buyers and reduced the risk of losing customers who had already paid deposits. The first houses are to be part of the Nantana Garden Rangsit project with the cheapest units priced at Bt929,000 for a house of 18 to 20 square metres. "The company hopes to sell 100 units before the end of the year," he said, adding that 48 made-to-order units were already under construction. To attract buyers, would-be clients could apply for government-sponsored lower-interest "Ruam Jai" mortgage loans, he said. Offering customers two types of lending option, banks participating in the programme charge a fixed interest rate of either 7.52 per cent over the first three years or 8.55 per cent over the first five years. (The Nation, Bangkok Post 07-Sep-1999) RADANASIN BANK: Lesser sales price anticipated ---------------------------------------------- The Financial Institutions Development Fund (FIDF) expects to sell Radanasin Bank at lower-than-expected price when compared to Nakornthon Bank due to its 80 percent of non- performing loan (NPL), according to Bank of Thailand (BOT) Governor MR Chatu Mongol Sonakul. "About 80 percent of Radanasin bank's assets worth 30 to 40 billion baht have become NPLs, leaving less than 10 billion baht of good assets," he said. He added that the three overseas financial institutions which are interested in acquiring the bank were putting more emphasis on the commercial bank's operating license, its widely distributed branches and quality staff, rather than the quality of its assets. Regarding the establishment of the Asset Management Corporation (AMC), he said the central bank has no problem if the bank's new strategic partner would prefer to set up the AMC internally or treat it as a separate entity because it would stick to the same loss-sharing agreement. FIDF Manager Chaktip Nitibhon said that there was no specific date for announcing Radanasin's strategic partner. (Business Day 08-Sep-1999) RAYONG ELECTRIC: To restructure by issuing unit trusts ------------------------------------------------------ Rayong Electric Generating Co Ltd (Regco) plans to restructure its debts through the issuance of unit trusts worth Bt1.5 billion -- the first time such a format has been used in Thailand for debt restructuring. Regco is one of the few Thai operators still having sufficient creditworthiness to raise funds in the current economic climate, the favourite means of mobilising funds for such companies normally being the issuance of debt instruments. Thai Farmers Bank (TFB) senior vice president Tawit Thanachanan explained that the proceeds from the sale of Regco's unit trusts would be used to refinance a portion of the company's syndicated tranche-C debts. As a result, interest on the debts will be switched from floating to fixed rates. The change will minimise the possible risk to the company incurred from future fluctuations in lending rates, and will make it easier for the company's financial management because of its consistent revenue, Tawit said. TFB, acting as financial adviser in Regco's debt restructuring, will be a selling agent for the soon-to-be- issued unit trusts, while National Finance Asset Management Co Ltd will manage the fund, and Krung Thai Bank will be a custodian. Tawit said that book building -- the process to set the yield for the fund -- would take place by the middle of the month, while a presentation will be held on Sept 13. The unit trusts will have a maturity of seven years and two months and will be offered via private placement. Dividends will be paid semi-annually, said Tawit. Regco's unit trusts are expected to be attractive because the yield will possibly be higher than bank deposit rates, and the principal will be repaid for all terms, he added. Moreover, Regco has reported robust financial results and its revenue structure should not fluctuate, he said. Earlier, Voravit Khamkanist -- managing director of Regco's parent Electric Generating Plc -- said restructuring of Bt2.7 billion of wholly-owned subsidiary Regco's total debts should be finalised within the current quarter. As at June 30, Regco had US$282 million and Bt2.627 billion of debt obligations, and a further Bt3.28 billion of debentures. (The Nation 08-Sep-1999) SIAM CHEMICALS: To be delisted ------------------------------ Siam Chemicals directors on Friday approved a resolution to delist the company from the Stock Exchange of Thailand. An extraordinary shareholders' meeting will be held on October 12 to consider the delisting. The registrar will attend a closed meeting on September 12. The company said the economic crisis had hindered implementation of a restructuring plan, and that delisting would help reduce costs for the firm. Wibool Sasiwimolkul, Yot Nimsomboon and Southern Oxygen Co have tendered for outstanding shares at two baht each. Seamico Securities has been appointed an independent financial adviser for the delisting. For delisting, approval is required from holders of at least 75% of issued and paid-up shares, with no more than 10% of shareholders objecting. (Bangkok Post 07-Sep-1999) SRITHAI SUPERWARE: Submits rehab plan ------------------------------------- One of Thailand's leading plastic products manufacturer, Srithai Superware Plc, has put together a rehabilitation plan to stave off bankruptcy which could serve as a model for other indebted family-owned businesses throughout the nation. At the same time, Srithai, with its core businesses still intact and full of potential, is about to tap lucrative export markets for its melamine products in the United States, Northeast Asia and Southeast Asia. An industry meltdown during the financial crisis, with around 1,500 plastic products factories closing down nationwide due to contracting demand, is also expected to give Srithai a window of opportunity to expand its domestic market and claw its way back to profitability. To stay afloat after thirty six years of ownership in Srithai, the Lertsumitkul family agreed to cut its stake in the company to 30% from 65%, in line with a rehabilitation plan which requires a debt-equity conversion. Group president Sanan Angubolkul said that the negotiations over debt restructuring took more than 18 months before most of the creditors agreed to accept the rehabilitation plan. All of its 23 creditors were international lenders. Major creditors included Bank of America, Schroders International Merchant Bank and West LB. Of the original US$80 million in outstanding loans, $60 million were in bonds. After the baht devaluation in July 1997, the debt including interest payables, rose to $160 million. "During the financial crisis, our debt-equity ratio jumped from 7.5 to 2.5 and we fully realised that we wouldn't survive if the situation persisted as our revenue would not be sufficient to service the debt," said Mr Sanan. As a result, Srithai started talking to its creditors in September 1997 to find out how to address the problem. As it had no experience in negotiating debt restructuring deals before, First Pacific Group of Hong Kong, which was a major shareholder of Berli Jucker Plc, offered to help Srithai negotiate with the creditors to repay only 40% of the outstanding debt. Apart from personal relationship between the executives of Srithai and Berli Jucker, Srithai briefly flirted with Berli Jucker to become its strategic partner. But as the Lertsumitkul family could not agree with Berli Jucker's proposed shareholding and the price for the shares, the deal fell through. In the ensuing debt restructuring process, Srithai appointed SGV Na Thalang, a leading local auditor firm, along with its partner Arthur Anderson, as its financial advisers at a fee of 30 million baht. Over half of the company's creditors have endorsed Srithai's rehabilitation plan which is being submitted to the court for sanction under the new bankruptcy law. The court has to formally ratify the plan before it could be implemented, a process expected to take about six weeks. Under the plan, creditors will convert half of the $160 million in total debt into a 60% equity stake. The company will pay only interest on the remaining loans for five years. Srithai would be allowed to pay only the interest on the remaining loans over the next five years, extendable by another year if necessary. If the plan is approved, Srithai would serve as a good national model for debt restructuring as the existing management would still be entrusted to run the company, reducing expenses on the interest and principal payments and gaining new inputs for its embattled shareholders. Moreover, if the new shareholders decided to off-load their shares in the future, they would offer the existing shareholders a buy-back option. The deal could inspire other indebted family-owned businesses which feared loss of control, to attempt similar agreements. "Srithai's case would set a precedent for other family- owned businesses in Thailand as its major shareholder agreed to let go of full control in its company while the creditors agreed to the indirect cuts," said Mr Sanan. Of paramount importance to the successful deal is the potential of the company's business and its accounting transparency, he added. After numerous checks by both its creditors and financial advisers, it was obvious that Srithai did not deviate from its core business and had clean financial statements in line with generally accepted accounting standards. Many analysts agree that the problems encountered by Srithai were mainly due to the financial crisis. As a result, the creditors still trusted in Srithai's management and agreed to endorse the recently proposed rehabilitation plan. However, Standard Chartered Bank, one of Srithai's creditors, filed an objection to the rehabilitation process under the new bankruptcy law, arguing that Srithai was still solvent as its total assets exceeded its liabilities. They also argued that Srithai still possessed valuable properties including plots of land and factories which were still operational and if sold, the proceeds from the sale would be adequate to cover the outstanding debts. If the proposed rehabilitation plan is allowed to be implemented, Srithai's debt-equity ratio would drop to 0.8 from a three-fold position now. Srithai is expected to capitalise on this to convince the Stock Exchange of Thailand to exclude the company from the SET's list of companies under rehabilitation (REHABCO) as its low debt- equity ratio would differentiate it from others on the list. According to the SET's regulations, any companies undergoing rehabilitation would have to be listed under the REHABCO category. The trading of Srithai shares has been suspended since May 25 this year. Mr Sanan said that although Srithai had to be put under the jurisdiction of the court, it had gained an opportunity to revitalise its business. He said that it was fortunate that, in the debt restructuring process, Srithai's creditors focussed on the potential of the company rather than just its balance sheet. Srithai still had around 80 million baht for its working capital. While its creditor banks would not extend Srithai additional loans, they did not cut existing credit, particularly letters of credit, trust receipts and trade finance. To maintain its revenues and positive cashflows, the company was forced to shift its focus to export markets during the economic downturn. As a result, its growth in the sales of melamine products jumped to 35% from 23%. The melamine sales accounted for 43% of Srithai's total revenues and about 45% of its melamine output was exported. In comparison, the sales of the company's plastic products accounted for the remaining 57% of its revenues and only about 15% of its plastic products was exported. Compared with its ten rivals in the market, Srithai currently held 65% of market share. All of Srithai's existing products controlled over 50% of their respective market shares. Currently, Srithai was using 60% of its melamine production capacity while it was using up to 85% of its plastic production capacity. Mr Sanan said that the Thai economy was showing signs of recovery as evidenced by the growing orders, mostly through hire purchases, through Srithai's 100,000-strong nationwide direct sales force. He said that Srithai would start building brand loyalty again through an advertising campaign, which was suspended two years ago as a cost- cutting measure. In fact, the name of Srithai was already widely accepted by many world-class players as it was commissioned to produce products for the Coca-Cola Co, McDonald's Corporation, the Walt Disney Co and Marks and Spencer Plc. In addition, world class retailer Wal-Mart Stores, Inc was placing orders for Srithai's melamine products to be sold in department stores in the United States. Srithai was also negotiating with another leading retailer in the United States to export products from early next year, with potential sales of 100 million baht a year. More orders were also coming from Asian countries. Regular orders still kept flowing from countries in South Asia such as India, Pakistan and the Maldives. Srithai is also expected to expand its domestic market with many local plastic products factories closed down and rival melamine manufacturers not operating at full capacity. (Bangkok Post 07-Sep-1999) SIAM SYNTEC CONSTRUCTION: SET suspends trading ---------------------------------------------- The Stock Exchange Of Thailand yesterday suspended trading in Siam Syntec Construction Plc stocks as the company had failed to submit its annual financial statements within five working days after SET posted a notice pending, or "NP" sign on its securities. The suspension will remain in effect until the company has submitted the required statements, the exchange said. (The Nation 08-Sep-1999) THAI FARMERS BANK: Rights issue delay over Phatra Thanakit ---------------------------------------------------------- Thai Farmers Bank yesterday announced it was delaying indefinitely plans to raise 24 billion baht in new capital through a rights issue. The bank told the Stock Exchange of Thailand that the subscription period, originally scheduled for September 10 to 23, would be postponed pending a resolution on the fate of finance subsidiary Phatra Thanakit. Thai Farmers Bank "is in the process of conferring with the Bank of Thailand for alternative solutions to resolve the issue of Phatra Thanakit", the SET statement said. "Since the solutions are not yet finalised, it is necessary for the Bank to defer the schedule for new ordinary share subscription." The news caused banking shares on the SET to slide 2.67% yesterday. Shares of Thai Farmers Bank closed at 40.75 baht, down 0.75 baht, in turnover worth 56.04 million baht. The overall SET index closed at 424.08 points, down 7.04, in turnover worth 3.42 billion baht. Chakthip Nitibhon, assistant central bank governor, said yesterday that the Financial Institutions Development Fund would lend 4.5 billion baht to Phatra as liquidity support. Under a compromise struck between Thai Farmers and regulators last week, assets from Phatra would be transferred to the bank for management. Phatra's finance licence would be returned to regulators. Future profits from managing Phatra's loans, 80% estimated as non- performing, would be shared between Thai Farmers and the fund. But Thai Farmers executives said there would be a delay in the bank's recapitalisation plan as details of how Phatra's assets would be valued and transferred remained to be finalised. "We certainly want the entire situation resolved as quickly as possible. Delays are affecting not just the bank, but also the entire financial system," one senior executive said. Another executive said that Banthoon Lamsam, Thai Farmers president, told foreign shareholders last year that he would not bail out Phatra. But the compromise represented liabilities for the bank arising in the future, he said. If the bad assets were managed well, the bank would minimise its losses or even see a profit. Last month, Thai Farmers announced plans to raise 24 billion baht in new capital through the issue of 1.33 billion new common shares. Existing shareholders would be offered 1.17 billion new shares through a 1:1 rights issue at 20 baht each. Bank executives were scheduled to hold a roadshow promoting the recapitalisation with foreign shareholders this week. The new capital will be used to set up a new asset management company by the bank, overseeing 80-billion-baht-worth of dud loans under a management contract with Goldman Sachs and GE Capital. The bank posted net losses of 17.3 billion baht for the first half of this year, compared with 3.9 billion for the same period last year. Chatri Sophonpanich, executive chairman of Bangkok Bank, said a delay for Thai Farmers' recapitalisation would affect other banks efforts to raise funds. (Bangkok Post, Business Day 07-Sep-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. 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