/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/990913.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 Monday, September 13, 1999, Vol. 2, No. 177 Headlines * C H I N A & H O N G K O N G * BILLION REWARD INVESTMENT: Facing petition for winding up CLASSIC PASSION LTD.: Facing petition for winding up FAIRY STAR INDUSTRIAL: Facing petition for winding up JASMINE INSURANCE BROKERS: License suspended TRANSPORTATION CONSOLIDATION: Facing winding-up petition WAI MING PRECISION MOULDING: Facing petition for winding up WELLNAME LTD.: Facing petition for winding up * I N D O N E S I A * PT BANK BALI: Auditors not seeing all accounts, papers PT BANK BALI: Audit uncovers funds irregularities * J A P A N * CRESVALE INT'L: FSA imposes partial suspension DAIICHI PHARMACEUTICAL: Fined for price-fixing EISAI CO.: Fined for price-fixing NEC CORPORATION: Presents sweeping restucturing plan TAKEDA CHEMICAL INDUSTRIES: Fined for price-fixing * K O R E A * DAEWOO GROUP: Notes payable - even under workout DEUTSCHE BANK: FSC issues `institutional warning' to branch KANGWON BANK: Bank officials charged with mismanagement KOREA LIFE: FSC to deem self-rescue infeasible, take action SAMBU FINANCE: President investigated for embezzlement SAMSUNG MOTORS: Seeks overseas buyer for Pusan plant * M A L A Y S I A * ADVANCE SYNERGY FURNITURE: Gets special administrator AUSTRAL AMALGAMATED: Gets special administrator FABER GROUP: Appoints liquidators to wind up seven subsids. INSTANGREEN CORPORATION: Gets special administrator INSTANGREEN (LANDSCAPE): Gets special administrator MEC INDUSTRIAL PARK: Gets special administrator PENGKALEN HOLDINGS: Expects to end restructuring soon PERUSAHAAN SADUR TIMAH: Gets special administrator SENG HUP CORPORATION: Gets special administrator SPJ CONSTRUCTION: Gets special administrator SPORTMA CORPORATION: Gets special administrator UNZA HOLDINGS: Undertaking restructuring * P H I L I P P I N E S * PHILIPPINE AIRLINES: EximBank to drop objections if . * S I N G A P O R E * L&M GROUP: Posts first-half loss SHANGRI-LA HOTEL: Posts first-half loss UNIPHOENIX CORP.: Voluntarily winding-up two subsidiaries * T H A I L A N D * MEDIA OF MEDIAS: Appoints debt-restructuring advisor NAKORNTHON BANK: StanChart seals takeover SAMART CORP.: Reaches rollover agmts with most creditors THAI EKALAK SUGAR: Creditors postpone vote on rehab plan ============================== C H I N A & H O N G K O N G ============================== BILLION REWARD INVESTMENT: Facing petition for winding up --------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 17 on the petition of Tse Mun Kei for the winding up of Billion Reward Investment Limited. A notice of legal appearance must be filed on or before November 16. CLASSIC PASSION LTD.: Facing petition for winding up ---------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 27 on the petition of Kwan Yau Wing trading as King Tai Loong for the winding up of Classic Passion Limited. A notice of legal appearance must be filed on or before October 26. FAIRY STAR INDUSTRIAL: Facing petition for winding up ----------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 24 on the petition of Hayco Manufacturing Limited for the winding up of Fairy Star Industrial Limited. A notice of legal appearance must be filed on or before November 23. JASMINE INSURANCE BROKERS: License suspended -------------------------------------------- Mainland insurance regulators have taken strong action against Hong Kong-based Jardine Insurance Brokers (JIB) for alleged illegal broking practices. The China Insurance Regulatory Commission (CIRC) has revoked the licence of JIB's representative office in Beijing and banned Wang Jiacong - its Beijing office chief representative - from broking operations, Xinhua news agency said late last night. CIRC officials said the action was part of a wider attempt to clean up the non-life insurance sector, which has suffered from the effects of widespread unlicensed broking activities. JIB yesterday declined to comment in detail on a similar report in the China Daily. "The CIRC has not contacted us," said managing director Mike Methley. "We are obviously concerned about the unconfirmed report in the Chinese media." Efforts are being made to open talks with the CIRC to clarify the issue. In May, Sedgwick, a British-based unit of Marsh & McLennan of the United States, was ordered by the CIRC to close its mainland operations for three months for unlicensed broking activities. In a more low-key case in the same month, the CIRC forced New World Infrastructure to cease its insurance broking activities, again for operating without a licence. JIB - the Asian arm of Britain's largest independent quoted insurance broker Jardine Lloyd Thompson - had been conducting intermediary businesses in recent years through its Hong Kong and mainland offices, Xinhua said. It was licensed to run insurance representative offices in Beijing and Guangzhou, and was restricted to liaison operations, a CIRC official said. It had yet to receive official approval to operate intermediary operations, he said. Mr Methley said JIB had met CIRC requirements. "We have been in regular dialogue for a year to ensure that our activities meet fully with the CIRC's approval," he said. "And in June, we actually made a full disclosure to the CIRC regarding our activities in China back to 1998. We believe we have acted appropriately in these circumstances." However, Xinhua said JIB had "illegally lowered underwriting requirements, enlarged insurance obligations and engaged in improper re-insurance practices. This behaviour not only added to management risks of insurance companies but severely disturbed the insurance market." Industry observers said the severity of the punishment underscored the CIRC's determination to clean up the industry. The fledgling nature of the mainland's insurance industry and the CIRC's cautious approach towards opening it up have left foreign insurers unable to tap opportunities for new business. Foreign operators have been lobbying the CIRC to speed up licensing and other procedures. Sedgwick has been the only foreign company to receive a broker's licence but even that was restricted to risk- management consultancy. Jardine Lloyd Thompson chief executive Ken Carter expressed surprise at the CIRC's statement. "Until we have had contact and a meeting with the Chinese authorities, I cannot really comment," he said. Mr Carter plans to be in Hong Kong by tomorrow night on a scheduled trip, by which time he hoped a meeting might be arranged with mainland officials. (South China Morning Post 10-Sep-1999) TRANSPORTATION CONSOLIDATION: Facing winding-up petition -------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 10 on the petition of Hung Sing for the winding up of Transportation Consolidation Hong Kong Godown Ltd. A notice of legal appearance must be filed on or before November 9. WAI MING PRECISION MOULDING: Facing petition for winding up ----------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 24 on the petition of Hayco Manufacturing Limited for the winding up of Wai Ming Precision Moulding Limited. A notice of legal appearance must be filed on or before November 23. WELLNAME LTD.: Facing petition for winding up --------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 17 on the petition of Leung Hoo Cheong for the winding up of Wellname Limited. A notice of legal appearance must be filed on or before November 16. ================= I N D O N E S I A ================= PT BANK BALI: Auditors not seeing all accounts, papers ------------------------------------------------------ Auditors investigating controversial transactions involving Indonesia's Bank Bali were not allowed to examine personal bank accounts of those linked to the scandal, reports said yesterday. They quoted central bank governor Syahril Sabirin as saying only law enforcement officials had the authority to examine personal accounts. "There have been demands for documents and investigation which is no longer categorised as a financial audit," the Jakarta Post quoted Sabirin as saying. "There are also demands for data and documents of office phone and cellular phone conversations of Bank Indonesia senior officials." He said these demands were beyond the remit of the auditors. The World Bank and International Monetary Fund have warned that loans to Indonesia could be suspended if the Bank Bali scandal is not properly investigated and resolved. They demanded an independent audit of the central bank as part of the probe. Indonesia's Supreme Audit Agency and PricewaterhouseCoopers finished an audit on Tuesday and gave the report to parliament, but no details have been released. Newspapers quoted legislators as saying the report may not be released to the public. The IMF and World Bank have said the investigation should be as transparent as possible. Analysts said that if senior figures in the political and economic establishment were indeed implicated in the scandal, their efforts to avoid being exposed could put Indonesia on a collision course with its multilateral donors. Although analysts do not expect a complete suspension of loans, a delay in disbursement of a US$450mil IMF loan tranche, which is due in mid-September, looks increasingly likely. (Reuters, Star Online 10-Sep-1999) PT BANK BALI: Audit uncovers funds irregularities ------------------------------------------------- The financial audit carried out by State Audit Board (BPK) on Bank Indonesia in relation to the Bank Bali (BB) scandal has found irregularities, including a fund transfer to the "escrow account" of Bank Indonesia at BB originating from overseas. House member of Commission VIII, Thomas Suyatno, in between the working session of the Commission with Bank Indonesia governor Syahril Sabirin here yesterday said, there was evidence of funds having been transferred to the bank from overseas. He neither disclosed the amount nor identity of the country of transfer. He believed the transferred funds from overseas was a peculiarity in the BB scandal. The BPK audit result will be made public on September 23. (Asia Pulse 09-Sep-1999) ========= J A P A N ========= CRESVALE INT'L: FSA imposes partial suspension ---------------------------------------------- The Financial Supervisory Agency (FSA), Japan's banking watchdog, yesterday imposed a partial suspension on the Tokyo operations of Cresvale International, the Hongkong- based broker. The penalty prevents Cresvale from selling bonds underwritten by parent company Princeton Economics International for six months. The ban is the second most serious punishment to be imposed on a foreign broker. The FSA expelled part of Credit Suisse's operations this year for obstructing regulators and helping Japanese clients hide balance sheet losses. The issue continues to cast a shadow over the US$10.3 billion (S$17.4 billion) agreed bid by HSBC Holdings, Britain-based international banking group, for the Republic New York banking group, whose securities arm handled accounts for the Japanese clients. The FSA said the penalty had been imposed because Cresvale had not ensured that client assets were segregated properly. The regulators were alleged to have been alarmed by unusual declines in some of these assets in recent years. Cresvale said it was shocked and angered by the penalty and said that the assets in these bond trades were managed mostly by Republic New York Securities. Princeton Global Management (PGM), an offshore fund which is part of the same group as Cresvale and handled investments for Japanese clients, said: "It is important that investors know that we have disputed the accuracy of certain of Republic's statements and have requested an audit of the PGM accounts." PGM said it had received US$2.4 billion from Japanese clients and paid back US$2.1 billion in redemptions between 1996 and March this year. It said speculation by the media that it had engaged in fraudulent transactions was completely without merit. Republic's shares continue to trade well below HSBC's offer price of US$72. Investors said the difference represented a concern that HSBC would seek to renegotiate the takeover terms to take into account any potential liability. (Financial Times, Straits Times 11-Sep-1999) DAIICHI PHARMACEUTICAL: Fined for price-fixing EISAI CO.: Fined for price-fixing TAKEDA CHEMICAL INDUSTRIES: Fined for price-fixing -------------------------------------------------- Three Japanese pharmaceutical companies said Friday they have agreed to pay the U.S. government a total of 14.8 billion yen in fines to settle an international price- fixing cartel busted by the U.S. Justice Department. Takeda Chemical Industries Ltd., Eisai Co. and Daiichi Pharmaceutical Co. acknowledged having conspired to raise and fix prices and allocate market share for certain vitamins sold in the United States. Three European companies -- BASF AG of Germany, F. Hoffmann-La Roche Ltd. of Switzerland and Rhone-Poulenc SA of France -- were reportedly involved in the cartel which a senior U.S. Justice Department official said gave the companies "hundreds of millions of dollars" in additional revenues. Takeda Chemical Senior Managing Director Koichi Yanashita told a news conference in Osaka his company agreed to pay 8 billion yen, or 72 million dollars, in fines for conspiring to fix the price and allocate sales of vitamins B2 and C internationally. The fine was a record paid by a Japanese company to the U.S. government. "Our company is really sorry and will strive to live up to higher standards of ethics as a corporate entity," Yanashita said. Takeda President Kunio Takeda will take a 15% pay cut for three months, while all board members and auditors will take a 5% pay cut during the same period, he said. Eisai and Daiichi Pharmaceutical called separate news conference in Tokyo and said they have agreed to pay 4 billion yen and 2.8 billion yen in fines, respectively, on similar charges relating to sales of vitamins E and B5. All three cases were handled at the U.S. district court in Dallas. In Washington, Joel Klein, assistant attorney general in charge of antitrust, said Thursday the cartel "artificially inflated the cost to virtually every American" of such everyday necessities as milk, bread, orange juice and cereal, which are fortified with the vitamins produced by the companies. With the cartel, the companies reaped "hundreds of millions of dollars in additional revenues," Klein said. The U.S. Justice Department said the three companies started price fixing in early 1991 jointly with a number of European companies. Takeda stopped the practice in late 1995, but Daiichi and Eisai continued price fixing through February this year, it said. Eisai said all board members will take a 10% monthly pay cut for three months and give up their winter bonuses. Daiichi Pharmaceutical said all board members will take pay cuts ranging from 5 to 10% for three months. (NewsHound 10-Sep-1999) NEC CORPORATION: Presents sweeping restucturing plan ---------------------------------------------------- NEC Corp. has devised a corporate restructuring plan under which its three major product divisions -- computers, telecommunications equipment and semiconductors -- will each be responsible for operating profitably, NEC officials said Friday. The plan is expected to receive final endorsement from the NEC board later this month, and details of the plan will be announced at that point, the officials said. The plan also calls for NEC to funnel greater financial and personnel resources into Internet-related businesses. Under the plan, NEC will shut down its money-losing subsidiary, NEC Home Electronics, and transfer its operations to other in-house divisions, they said. Three affiliated defense contractors with low profitability - including Niko Electronics Co. -- will merge to create a new company, NEC Network Sensor, they added. The downsizing program will likely result in an unconsolidated extraordinary loss of 100 billion yen in closing books for fiscal 1999 ending March 31, 2000, they said. NEC plans to offset the loss by selling stock holdings with latent gains and other assets, the officials said. NEC is also contemplating selling its head office building in Tokyo's Minato ward. The plan to give the company's three major product divisions greater autonomy is designed to enable their managers to react quickly in the fast-changing business environment of high-technology fields, officials said. NEC incurred a group net loss of 157.9 billion yen in closing books for fiscal 1998, which ended March 31 this year. The electronics giant earlier announced a plan to eliminate 15,000 jobs, or 10% of the group workforce. (NewsHound 10-Sep-1999) ========= K O R E A ========= DAEWOO GROUP: Notes payable - even under workout ------------------------------------------------ Daewoo Group units will be declared insolvent if they fail to honour promissory notes backed by commercial transactions, even if they are placed under debt workout plans, an official of the Corporate Restructuring Committee said. "In principle, the debt workout plan is applicable only to companies that are capable of honouring commercial debt such as promissory notes backed by real commercial deals with suppliers. If some Daewoo units fail to honour these promissory notes or fail to repay due interest, they will be declared insolvent even if they are placed under debt workout plans," he said. The debt workout plan only deferred repayment of the loan principal by three months, the official explained. (Star Online 10-Sep-1999) DEUTSCHE BANK: FSC issues `institutional warning' to branch ----------------------------------------------------------- South Korea's financial watchdog yesterday asked German and Singaporean bank supervision authorities to punish those involved in a case concerning Deutsche Bank AG's Seoul branch, which allegedly carried out irregular deals. Korea's watchdog Financial Supervisory Commission (FSC) yesterday slapped a punitive "institutional warning" on Deutsche's Seoul branch over the alleged issue. An institutional warning is the most serious step regulators can take, short of revoking a bank's licence. The FSC said Deutsche, the world's biggest bank, was found to have applied "abnormal" prices when its Korean and Singapore branches purchased local currency bonds and derivatives from Central Banking Corp and two other Korean finance companies. The FSC said the artificially low prices Deutsche charged allowed the Korean companies to reduce the amount of money they set aside to protect against bad debt and to exaggerate their capital adequacy ratios, a measure of loans as a percentage of cash typically used by regulators to gauge a bank's financial health. Deutsche recouped the shortfall by charging extra when selling those clients foreign currency securities, the FSC said. The bank applied the practice with Central Banking Corp in September 1998. The German bank also bought mispriced foreign currency forward contracts, a type of derivative, from Central Banking and two other Korean finance companies between January and March this year. A Deutsche Bank spokeswoman in Singapore declined to comment. Staff in the bank's Seoul office weren't available. This is the first time a foreign bank with a Korean branch has been warned by the FSC since March 1998, when Credit Suisse First Boston Corp received a similar censure. The FSC also asked the German bank to penalise its employees involved in the transactions. It said it would take further steps against the Korean financial institutions which dressed up their capital adequacy standards through such transactions. Deutsche opened its Seoul branch in 1978 and employs about 160 people. (Bloomberg, Business Times 11-Sep-1999) KANGWON BANK: Bank officials charged with mismanagement ------------------------------------------------------- Signaling a purge of bank executives responsible for non- performing loans (NPLs), the Financial Supervisory Service (FSS) yesterday asked the prosecution to investigate former Kangwon Bank President Choi Jong-moon and two other executives on suspicions of reckless lending to unqualified firms. The financial watchdog also reprimanded the bank's 23 former and incumbent senior officials, while censuring two former chairmen of Hyundai International Merchant Bank (HIMB), which merged with Kangwon in February, and 15 other executives of the now-defunct merchant bank for sloppy management. The FSS action against Kangwon Bank, which is set to merge with Cho Hung Bank, and HIMB is seen as heralding a new catharsis of former and incumbent executives of banks where public funds have been injected to keep them afloat. The watchdog has launched an intensive audit of all commercial banks to examine their lending practices, with particular focus being placed on nationalized banks. The FSS is reportedly deciding upon the level of punishment to be meted out to former presidents of Hanil and Commercial Banks, which merged into Hanvit Bank, for their violation of lending rules in extending loans to Samsung Motors. It completed the audit on Hanvit in July. The watchdog is currently conducting probes into Korea Exchange and Peace Banks and plans to start audits on Cho Hung, Korea First and Seoul Banks after the Chusok holiday. Bank executives who are reprimanded, or referred to the prosecution for investigation, are highly likely to be expunged when the government injects public funds to shore up their capital base later this year or in the early part of next year. These banks' capital adequacy ratios are expected to fall significantly as a result of their exposure to the Daewoo Group. (Korea Herald 11-Sep-1999) KOREA LIFE: FSC to deem self-rescue infeasible, take action ----------------------------------------------------------- The Financial Supervisory Commission (FSC) plans to order the ailing Korea Life Insurance Co. to scrap its outstanding stock and designate it as "an insolvent institution" next week in the run-up to its nationalization, an FSC official said yesterday. "Such steps will be taken early next week since Korea Life Insurance chairman Choi Soon-young's self-rescue plan is deemed infeasible," the official said. Choi, now serving a five-year jail term for capital flight and embezzlement, yesterday submitted a rationalization plan for the troubled life insurer. An FSC task force for the restructuring of the life insurance industry will review Choi's self-rescue program, but there is little possibility that the task force will accept it, the official said. The financial watchdog will thus push forward in its plan to nationalize Korea Life Insurance since further delays in recapitalizing the insurer may increase the amount of public funds to be injected, he added. The regulatory agency originally targeted around 2.5 trillion won for Korea Life Insurance early this month to turn it around. The FSC, however, was forced to delay its nationalization plan in the wake of a court ruling Aug. 31 which ruled that the government decision to recapitalize Korea Life Insurance was illegal. In line with the court ruling, the government allowed Choi one week to put forward a viable rationalization plan, but the government cannot waste any more time, the official said. The FSC also said that Panacom, a U.S. investment firm seeking to acquire Korea Life Insurance, seems to have backtracked on its plan to participate in the firm's planned capital increase. The U.S. investment firm was supposed to make a capital investment of 50 billion won by purchasing Korea Life's 42 million new shares. Korea Life Insurance's board of directors was to meet Thursday to discuss Panacom's capital investment, but the meeting was canceled. Panacom has reportedly shelved its plan because of the government's strong objections. (Korea Herald 11-Sep-1999) SAMBU FINANCE: President investigated for embezzlement ------------------------------------------------------ The main investigation team at the Prosecutor's Office embarked on its investigation of Sambu Finance president Yang Jae-hyuk Friday under suspicion that Yang misappropriated hundreds of millions of Korean won and secreted the funds to overseas banks accounts for his own personal use. In addition to searching Yang's home in Seoul, investigators have searched the main branch of Sambu in Pusan, the Seoul offices of the firm and the offices of sister firms Sambu Venture Capital and Hankyul Finance. According to the prosecutor's office, the search turned up records of investment funds, company debts and lists of investors, which have been confiscated for further analysis. The prosecutor's office also said that they believe Yang had been skimming as much as W10 billion monthly from investors' funds between 1996 and last month. Yang's company invested W20 billion into the Korean blockbuster sci-fi film, Yonggary, but investigators suspect that he ended up pocketing W15 billion for himself. He is also suspected of having diverted W30 billion from the company's general investment funds into his personal bank accounts. Investigation head Lee Chong-wang said that a number of financial institutions with "Finance" in their names seem to have inflicted much damage on the general public in recent years, attracting investor funds without a plan on how exactly how to invest funds once they have been deposited. Lee added that Sambu Finance is one of the biggest cases of such unscrupulous business practices, adding that he suspects that the company has placed funds in foreign accounts. (Digital ChosunIlbo 10-Sep-1999) SAMSUNG MOTORS: Seeks overseas buyer for Pusan plant ---------------------------------------------------- Minister of Finance and Economy Kang Bong-kyun said Friday that following the resolution of Samsung Motor's debts, the Pusan based car manufacturer will seek an international buyer for its plant there. In a breakfast speech sponsored by the Korea Employers Federation at the Shilla Hotel, Kang said, "`With a solution to the 4.3 trillion won Samsung Motors incurred in debts on the horizon, I believe that the Pusan plant can continue to be used as a production facility." Kang, however, did not elaborate on which automakers are engaged in the discussions. Motor analysts say that Samsung is known to be involved in discussions with Japan's Nissan and its owner, Renault of France. In particular Nissan is know to be studying use of the facility to produce its mid-sized cars, utilizing Samsung's existing distribution system to sell its autos while exporting the surplus. Ford Motor of the United States, which came close to forming a partnership with Samsung Motors, may also be an interested party. However, many see Nissan with troubles of its own, unable to take on Samsung's W500 billion to W1 trillion in debt. An official at Samsung said that a detailed study had been presented to the parent company Renault and that a response was being waited for. He continued that Samsung was still maintaining contact with Ford, Daimler-Chrysler and Volkswagen. At any rate, Kang's reference signifies the end of a tug of war between Samsung and the government over the Pusan plant and its readiness to move on to resolve one of the most troublesome outstanding issues in the corporate restructuring process. The breakthrough came when Samsung's Lee Kun-hee voiced his willingness to clear all debts incurred by his ill-fated motor vehicle manufacturing operations. (Digital ChosunIlbo, Korea Times 10-Sep-1999) =============== M A L A Y S I A =============== ADVANCE SYNERGY FURNITURE: Gets special administrator AUSTRAL AMALGAMATED: Gets special administrator INSTANGREEN CORPORATION: Gets special administrator INSTANGREEN (LANDSCAPE): Gets special administrator MEC INDUSTRIAL PARK: Gets special administrator PERUSAHAAN SADUR TIMAH: Gets special administrator SENG HUP CORPORATION: Gets special administrator SPJ CONSTRUCTION: Gets special administrator SPORTMA CORPORATION: Gets special administrator ------------------------------------------------------ Pengurusan Danaharta Nasional Bhd has appointed special administrators to five publicly-listed companies and four private limited companies from Sept 9. The five listed companies are Instangreen Corporation Bhd, Austral Amalgamated Bhd, Perusahaan Sadur Timah Malaysia Bhd (Perstima), Seng Hup Corporation Bhd and Sportma Corporation Bhd. The other companies are Advance Synergy Furniture Sdn Bhd, MEC Industrial Park Sdn Bhd (property holding company of the MEC Bhd group) and SPJ Construction Sdn Bhd and Instangreen (Landscape) Sdn Bhd, both linked to Instangreen Corp. "With these appointments, the special administrators assume control of the assets and affairs of the companies," Danaharta said in a statement late yesterday. It said the powers of the management and the board of the companies were effectively suspended and only the special administrators could deal with the assets of the companies. The special administrators are: * Syed Amin Aljeffri and Mohd Arif Haji Mustapah of Aljeffri & Co for Advance Synergy Furniture; * Lim Tian Huat and George Koshy of Arthur Andersen for both Austral Amalgamated and MEC Industrial Park; * Mak Kum Choon and Chu Siew Koon of Kassim Chan & Co for Instangreen Corp, SPJ Construction and Instangreen (Landscape); * Adam Primus Varghese Abdullah, Foo San Kan and Wong Lai Wah of Ernst & Young for Perstima; * Tan Kim Leong and David Siew Kah Toong of BDO Binder for Seng Hup; and * Datuk Abu Hanifah Noordin and Robert Teo Keng Tuan of Hanifah Teo & Associates for Sportma Corp. Danaharta said the appointment of the special administrators was provided for under Section 24 of the Pengurusan Danaharta Nasional Bhd Act 1998 and approved by Danaharta's oversight committee. "In order to preserve the assets of the companies until the special administrators are able to complete their tasks, a 12-month moratorium will take effect from the date of appointment and during the period no creditor may take action against the companies," Danaharta said. It added that the special administrators would prepare workout proposals which must be examined by independent advisers, whose role was to review the reasonableness of a proposal, taking into consideration the interest of all creditors--be it secured or unsecured--and shareholders. "If Danaharta approves the proposal prepared by the special administrators, the latter will call for a meeting of secured creditors to consider and vote on the proposal," it said. "A majority in value of secured creditors present and voting at the meeting must approve the proposal before it can be implemented and relevant regulatory approvals must also be obtained," Danaharta said. (Star Online 10- Sep-1999) FABER GROUP: Appoints liquidators to wind up seven subsids. ----------------------------------------------------------- Faber Group Bhd reports that it has appointed liquidators to voluntarily wind up seven of its subsidiary companies. In a statement, the company said Chua Hwee Kiang had been appointed liquidator for Merlin Management Corp Pte Ltd and Merlin Interhotel Reservations Systems Pte Ltd, while Michael Joseph Monteiro and Heng Ji Keng had been appointed liquidators of the remaining units. (Star Online 11-Sep- 1999) PENGKALEN HOLDINGS: Expects to end restructuring soon ----------------------------------------------------- Pengkalen Holdings Bhd hopes to complete its restructuring by next month and reactivate its stockbroking business soon. Chairman Datuk Ibrahim Zain said his experience throughout the restructuring exercise was that the spirit of Malaysia Inc was still very much alive. "The banks have been very helpful and there is a strong desire to get companies in difficulties back on to their feet," he said. Pengkalen Holdings' restructuring exercise involves two stockbroking companies--Pengkalen Securities Sdn Bhd and Kimara Securities Sdn Bhd. Ibrahim said ultimately, his appointment on to the board of Astaire & Partners Ltd would be a boost for the group. Currently, it was still too early to say if Pengkalen would be involved in the Astaire business, as the London-based firm may conduct its business through a few brokers, he said. He said the relationship with Astaire could be the first in a series of relationships for Pengkalen with international broking houses. "Pengkalen aims to be a leading broking house with the strong backing of the Malayan United Industries group," he said. (Star Online 10-Sep-1999) UNZA HOLDINGS: Undertaking restructuring ---------------------------------------- Unza Holdings Bhd is undertaking a restructuring and rationalisation scheme involving an acquisition, implementing a one-for-one bonus issue, issuing new shares and applying for a transfer to the KLSE main board. Unza is acquiring the entire equity in sister company Berjaya Unza Holdings (BVI) Ltd (BVI) for RM75mil via a share swap from Cosway Corporation Bhd and Air Mancur Holdings Ltd. Unza will buy 80% equity in BVI from Cosway for RM60mil, and the balance 20% from Air Mancur for RM15mil. The company will issue a total of 12.9 million new shares at RM5.80 apiece for the acquisition. "The exercise will immediately give Unza access to an established regional presence and export markets to the Middle East and Indian subcontinent," Unza said in a statement. "It will also consolidate all Unza related businesses (including ownership of brand names and trademarks) under Unza." BVI manufactures and markets a comprehensive range of personal-care and household products similar to the existing operations of Unza. BVI has 480 brand names and trademarks registered in 42 jurisdictions. The brands include Enchanteur, Eversoft, Dashing, N-Hance, Shurei, New & Trendy and Safi. BVI has an established marketing and distribution presence in Singapore, Hong Kong, China and Vietnam. It has manufacturing facilities in Dongguan (China) and Ho Chi Min City (Vietnam). In a separate statement, Cosway said that after the acquisition its stake in Unza--its listed subsidiary--would be reduced to 53.9% from 56%. Cosway has invested RM30.64mil in BVI since 1992. The entire BVI group is valued at RM75mil or RM522.82 per BVI share based on the adjusted audited net tangible assets on April 30, 1999, of RM9.97mil (US$2.62mil). As at this date, the trade-marks in the books of BVI were valued at approximately RM41.45mil (US$10.9mil). Unza also has proposed a bonus issue of 27.7 million new shares on a one- for-one basis after the proposed acquisition of BVI by Unza. The bonus issue was to better reflect the company's capitalisation in relation to its enlarged operations and assets employed, Unza said. Furthermore, it will issue up to 13.6 million new Unza shares at a price to be determined later. Of the 13.6 million shares, 10 million are for bumiputra investors and the balance for eligible directors and employees of the Unza group and BVI and its subsidiaries. "The fresh issue will ensure that the Unza group maintains its very low level of gearing while pursuing growth plans," Unza said. The proposed transfer of Unza from the second to the main board was also in line with the company's state of growth and maturity, it said. The exercise will see Unza's share capital increasing from RM14.8mil to approximately RM69.08mil. It will also raise fresh funds of about RM29mil to be used for investment in Vietnam, expansion of capacity and repayment of an inter-company loan back to Cosway. "Earnings' improvement is expected for the enlarged Unza group in the longer term from internal factors such as synergy and greater employee dedication, and external factors principally from expected improvement in the regional economies," Unza said. (Star Online 11-Sep-1999) ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: EximBank to drop objections if . ------------------------------------------------------ Recent developments on the side of US Export-Import Bank (Eximbank) show signs of a smoother rehabilitation process for cash-strapped Philippine Airlines (PAL). In a letter to the Securities and Exchange Commission (SEC), the US Eximbank said it is ready to withdraw the pending case earlier filed before the San Francisco bankruptcy court against the debt-laden flag carrier. The US creditor also clarified that the most recent "objection" filed with the commission last week was not a reiteration of its earlier objections to the approved PAL rehabilitation plan. The said motion for reconsideration, US Eximbank said, was "the best way to respond to the filing deadline for reply papers ... we intend to withdraw the opposition ... as soon as certain written assurances relating to the SEC process is issued." The US creditor -- with claims accounting for two-thirds of PAL's $2.24-billion debt which paid for four Boeing 747-400 jumbo jets -- had been very persistent to have the SEC reconsider and reject its earlier approval of the plan. "The US Eximbank wanted to have further level of comfort that things are not miscarried in the process of PAL's rehabilitation," Perfecto Yasay, Jr., SEC chief, said in an earlier interview. "Chairman Yasay agreed to provide (US) Eximbank with certain written assurances relating to the SEC process ... (he) conveyed these same assurances to the European credit agencies in a letter," the US Eximbank said. Among the "assurances" granted by the SEC, is the putting up of an "observer" to the airline's rehabilitation. For as long as such "level of comfort is not detrimental to the procedure of the plan" the SEC would be willing to grant creditors a seat as rehabilitation "observer," Mr. Yasay said earlier. The SEC has also agreed to certain suggestions made by US Eximbank for improvement of the rehabilitation plan, without having to change the plan. Improvements made outside the plan include the reduction in the membership of the permanent rehabilitation receiver (PRR) from seven to three. The commission also agreed to US Eximbank's suggestion to grant the receiver body the power to review and evaluate PAL operations. However, the authority to approve the sale and disposal of assets is still with the SEC, Mr. Yasay pointed out. (Business World 10-Sep-1999) ================= S I N G A P O R E ================= L&M GROUP: Posts first-half loss -------------------------------- Mainboard listed specialist engineering and construction group L&M Group Investments stayed in the red for its half- year ended June 30 with net losses of $472,000. This was much smaller than the $6.6 million loss reported for the first half of last year. Turnover for the period fell a hefty 51 per cent to $77 million, while operating profits dropped 16 per cent to $9 million. And in L&M's latest financial period, the group's loss per share stood at 0.31 cents. This compares to loss per share of 4.27 cents it reported for 1H98. Net tangible assets dived from 53 cents to 26 cents a share. L&M blamed the lower revenue on poorer business from its core structural and geotechnic divisions. The company said these divisions were hit by the continued impact of the economic downturn on the construction industry, difficulties in securing credit facilities, phasing down of its equipment trading business and reduced contributions from its Indonesian and Brunei subsidiaries. L&M added that the timing of revenue recognition, whereby many projects for the latest interim period did not cross the threshold level of 40 per cent to qualify for revenue recognition, was another factor that led to its turnover decline. The group said that as at July 1, it had secured projects worth some $245 million. On the market yesterday, L&M shares ended the week half a cent higher at 70 cents with 305,000 shares traded. No interim dividend was declared. (Business Times 11-Sep-1999) SHANGRI-LA HOTEL: Posts first-half loss --------------------------------------- Plagued by deepening losses from its associated companies, Shangri-La Hotel plunged into the red for the half-year ended June 30 with a $11.3 million loss. The group had reported a $3 million profit for the same period last year. However, Shangri-La managed a 7 per cent rise in turnover to $59.7 million. This was mainly due to the inclusion of Sentosa Beach Resort, which became a subsidiary last September. Pre-tax operating profit tumbled 84 per cent to $1.4 million due to the closure of the hotel's Tower Wing, and the increase in interest costs and depreciation as a result of its refurbishment programme. Shangri-La said losses of associates increased from $4.8 million to $13 million due to the inclusion of a $10.8 million loss arising from an associate which wrote down the value of its properties. Loss per share was 6.78 cents, compared with earnings per share of 1.83 cents last year. Net tangible assets per share dipped five cents to $6.59. The group declared an interim dividend rate of 2 per cent less tax. It also reported extraordinary items totalling $11.8 million -- comprising a substantial write-back in provision for diminution in value of long-term investments and gain on disposal of long-term investments. Due to this, profit after tax and extraordinaries was $584,000 compared with a $25 million loss last year. Shangri-La expects hotel operations to get better in the latter half of the year because of improving regional economic conditions and lessened operating costs due to the centralisation of the group's hotel operations. The return of the hotel to full operations after renovations should also help to pull in better results. It also expects continued strong showing from its Shangri-La Apartments and the Shangri-La Residences. An interim dividend of 2 per cent was declared. (Business Times, Straits Times 10-Sep- 1999) UNIPHOENIX CORP.: Voluntarily winding-up two subsidiaries --------------------------------------------------------- Uniphoenix Corp Bhd (UCB) said it is currently taking steps to voluntarily wind-up two of its group companies. In a statement, the company said its wholly own subsidiary incorporated in Singapore, Arikara Pte Ltd, had decided to voluntarily wind-up as it was dormant, with the group not expanding into Singapore in the near future. Uniphoenix- Damansara Security Services Sdn Bhd, a joint venture between UCB and Damansara Realty Bhd, had also opted to wind-up voluntarily in view of bleak business prospect. The company also announced that one of its subsidiaries, Capri Gold Investments Ltd, a company incorporated and registered in the British Virgin Islands, had been de- registered by the British Virgin Islands authorities due to non-compliance with certain filing requirements. (Star Online 10-Sep-1999) =============== T H A I L A N D =============== MEDIA OF MEDIAS: Appoints debt-restructuring advisor ---------------------------------------------------- Media of Medias says it has appointed Total Consulting as an advisor on the company's debt restructuring. Creditors have formed a committee to consider the plan, which calls for rescheduling, lower interest rates, and a capital increase from a new partner. (Bangkok Post 11- Sep-1999) NAKORNTHON BANK: StanChart seals takeover ----------------------------------------- Standard Chartered Bank of the UK yesterday sealed its take-over of Nakornthon Bank for Bt12.377 billion and unveiled its management team in a landmark deal that increases momentum for other bank privatisations to follow. Full integration and division of business operations between the two merging entities will take about a year. The US$300-million bill was wired yesterday afternoon to the Financial Institution Development Fund, slightly helping to stabilise the baht, which closed at Bt39.46 to the US dollar. Starting next week, Standard Chartered will send people of its own to run the bank, which has been renamed Standard Chartered Nakornthon Bank Plc. Standard Chartered Bank will have five representatives on the nine-member board of directors of Standard Chartered Nakornthon Bank. They are David Moir, chairman, Dru Narwani, deputy chairman and CEO, Lee Boon Huat, Standard Chartered Bank regional treasurer, David Proctor, regional head of corporate banking for Southeast Asia and Indonesia, and Michael De Noma, regional head of consumer banking. Proctor is a former country head of Bank of America's Bangkok Branch and a former chairman of the Foreign Bankers' Association of Thailand. The FIDF will keep its seats on the board of directors, while the bank plans soon to appoint two independent directors. On the management team, Narwani is to become chief executive officer; Mark Devadason will be head of corporate banking, Dickie Fu head of consumer banking, Thippaporn Gertphol treasurer and John Lee human-resources head. "We believe Thailand has substantial growth potential. This acquisition is a key element in our growth strategy, which is enabling Standard Chartered to emerge stronger from the Asian crisis," said Rana Talwar, group chief executive of Standard Chartered Plc. Mr Narwani said the bank will focus on small- and medium- sized businesses and retail customers. Standard Chartered, meanwhile, will concentrate on large corporate clients, treasury and wholesale products. Mr Narwani said it was too early to say when Standard Chartered's investment will pay off, but he expressed confidence that the partnership will help the British bank in the long term. About two months after the official intervention in Nakornthon Bank and an injection of Bt7 billion, the FIDF has succeeded in privatising the bank, which was once controlled by the Wanglee family. The deal represents hard- won progress in financial-sector reform, the pace of which remains slow amid the rough course of the economy. The FIDF will also soon also announce a privatisation deal for Radanasin Bank, which is widely believed to have been nearly acquired by United Overseas Bank of Singapore. The Singapore bank was also a bidder for Nakornthon Bank before changing its target to Radanasin Bank. Other Thai banks to have come under decisive foreign control are Bank of Asia, which is controlled by ABN Amro Bank of The Netherlands, and DBS Thai Danu Bank, which is majority- owned by the Development Bank of Singapore. Following the Nakornthon Bank transaction, the FIDF, which used to hold 99 per cent in the bank, will see a dilution of its holding to 24.97 per cent. Although the FIDF makes an immediate profit of Bt5 billion, the difference between its initial injection of Bt7 billion and the Bt12.37 billion paid by Standard Chartered Bank, it is obliged to compensate Standard Chartered for a certain amount of the losses incurred from the bad debts of the local bank. Under this arrangement, the FIDF will provide yield maintenance (compensation for loss of interest due to the bad debts) and bear 85 per cent of any future losses on a portfolio of identified loans for a period of five years. Standard Chartered will bear the remaining 15 per cent. This buy-out formula is similar to a structure in the proposed sales of Radanasin Bank, Siam City Bank and Bangkok Metropolitan Bank. Both Siam City Bank and Bangkok Metropolitan Bank are expected to be privatised later this year. Still, the deal has Standard Chartered pay a premium over Standard Chartered Nakornthon Bank's book value in return for outright control of Nakornthon, yield maintenance and significant protection against latent deterioration of loan portfolio. Standard Chartered Nakornthon Bank is saddled with Bt36 billion in non-performing loans, about 65 per cent of the total loan portfolio. Narwani said it was too early to say when Standard Chartered Nakornthon Bank could return to profitability but it should be soon. Trading of the bank's stocks, halted since the intervention two months ago, is also expected to resume soon. Standard Chartered Nakornthon will focus on building a consumer-banking franchise using its well- established network to reach a strong base of over 100,000 customers. There are plans to introduce many new consumer products such as debit and credit cards as well as mortgages, investment and personal-finance products to Thai customers. Nakornthon, Thailand's second-oldest bank after Siam Commercial Bank, operates 67 branches and posted losses of 5.9 billion baht for the first half of this year. Total assets at the end of June were 57.7 billion baht, with loans of 52.5 billion and deposits of 50.29 billion. Standard Chartered, while listed on the London Stock Exchange, claims more than 60% of its profits from the Asia-Pacific region. The bank has 26,000 staff in more than 50 countries. (The Nation, Bangkok Post 11-Sep-1999) SAMART CORP.: Reaches rollover agmts with most creditors -------------------------------------------------------- Samart Corporation Plc, a debt-ridden telecom firm, has announced it has reached agreements with most creditors to roll over the Bt7-billion debt burden as a major part of a debt-restructuring plan. A company statement said it had held a meeting with its creditors and bond-holders on Wednesday to ask for approval of the Bt7.2-billion debt-restructuring plan. As a result, 87.69 per cent of the lenders under the the Corporate Debt Restructuring Advisory Committee (CDRAC) of the Bank of Thailand and 84.17 per cent of all creditors passed a resolution to grant an extension of debt-payment to the company. Almost all 30 of Samart's approved its debt rescheduling plan and no creditors will have to take write- downs on any of the loans. Major creditors include Credit Lyonnais, Bank of America, Bank of Tokyo-Mitsubishi, Bangkok Bank and Thai Farmers Bank. Of the total debts, two-thirds are in foreign currencies. While the company declined to specify the length of the period, a source from Samart Corp said that the company had won seven years for the roll-over. A senior source who asked not to be named said that Samart will start to pay the principal in 2001 as the company has been granted a one-year grace period by the creditors. The amount of the principal payment will depend on the free operating cashflow, he said. Samart will carry fixed interest at the market rate. He declined to elaborate. The source said Samart is preparing to announce its new corporate plan this month, after its debt rescheduling agreement is finished. Samart Corp is expected to sign the debt-restructuring agreement with the creditors on Sept 30. Julpas Kreusopon, vice president of Samart Corp, said that the agreement was coming at a right time, when the company had just finished planning a move in a new direction. "Samart Corp will concentrate future investment on three of its core businesses: mobile phones, paging and the Internet. More details will be unveiled on Oct 1," he said. Samart Corp is one of the cash-strapped telecom firms now making a breakthrough in a long-stalled debt-restructuring plan. Samart has not made loan payments since 1997. The deal follows one by Total Access Communication Plc (TAC), which has already been granted a six-year extension of the maturity of loans worth US$537.7 million by its creditors. TAC's creditors also agreed to extend the repayment of short-term loans until November 2004. The rolled-over loans account for 54 per cent of the company's outstanding loans of $1.18 billion. Another telecom firm which has concluded a debt- restructuring deal is United Communication Industry Plc (Ucom). The company has passed the most critical stage of its struggle for survival by clearing $573 million in debts. Ucom's total debts consist of the equivalent of $208 million in bank facilities, $264 million of euro- convertible bonds and Bt3.6 billion worth of baht debentures. The last two will be converted into equity of $120 million, according to the debt-restructuring agreement. Only the provincial fixed-line operator Thai Telephone and Telecommunication (TT&T) and the metropolitan fixed-line carrier TelecomAsia Corporation Plc (TA) have lagged behind in the debt-clearing process under the supervision of CDRAC. TT&T has recently appointed Kensington Group from New York its new financial consultant, replacing Chase Manhattan, to study the company's debt-restructuring plan. TT&T hired Chase Manhattan at the end of last year to work out a Bt39-billion debt-restructuring plan of which Bt14 billion is owed to its major suppliers, Alcatel, Ericsson and Sumitomo. However, the process has been halted, despite many rounds of negotiations with the creditors. To hasten the debt- restructuring process, TT&T finally decided to place itself under the supervision of CDRAC to manage its debt burden. TA also has yet to finish its US$8-million debt- rescheduling process, which it expects to complete in October. (The Nation, Bangkok Post 11-Sep-1999) THAI EKALAK SUGAR: Creditors postpone vote on rehab plan -------------------------------------------------------- The creditors' meeting on the last mill of the Thai Ekalak Sugar group yesterday agreed to postpone the vote to accept the company's debt restructuring plan for another two weeks, a decision that was widely expected. However, sugarcane planters, who are creditors of Nakhon Sawan Industrial Co, said if the creditor banks of the company wanted to strike a compromise with them, they would agree only to certain terms. These were that the banks accept their conditions that the company's shares must not be written down, its management must not be replaced and the company must not sue sugarcane planters who were debtors of the company. They said these conditions would also be applied to talks on the Kaset Thai Sugar Co case. Thai Ekalak Sugar Co, Kaset Thai Sugar Co and Nakhon Sawan Industrial Co are in the same group with the same management team. On Tuesday, the debt restructuring plan for Thai Ekalak Sugar Co was turned down by the sugarcane planters. Therefore, the creditor banks, who were the major creditors of the group, asked for the postponement of the vote for the plans of the remaining two mills at the meetings on Wednesday and yesterday. The meeting yesterday started in the morning as about 2,200 sugarcane planters had authorised only a few representatives to attend the meeting. Not only opposing the proposal to write down the company's shares to one satang each, sugarcane representatives also strongly opposed South Sathorn Planner Co's proposal to appoint Seri Manop (1998) Co as planner for the company. The company would have to pay about 100,000 baht a day to the proposed planner. Nattapan Siriviriyakul, assistant managing director of the company, said the group's three sugar mills are the only sugar mills out of a total 36 mills throughout the country that have not yet got their debts restructured. Other mills, he said, could settle out-of-court with their creditors and were granted very favourable terms for the debt restructuring plan. He said the management of the group's three mills are ready to re-negotiate with the creditors. "However, the postponement of the meetings might only be a tactic of the major creditors to buy time for lobbying among them," Mr Nattapan said. The sugarcane representatives said all the sugarcane planters had to return to their homes after attending the meeting on Wednesday. They had left their homes at 9 p.m. on Tuesday night and arrived in Bangkok at three o' clock in the morning. The representatives denied that the planters were paid by the sugar mills to attend the meeting. (Bangkok Post 10-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. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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