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/raid1/www/Hosts/bankrupt/TCRAP_Public/990927.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 27, 1999, Vol. 2, No. 187 Headlines * C H I N A & H O N G K O N G * CENTURY CITY INT'L: Posts first-half loss CHINA INVESTMENTS HOLDINGS: Posts first-half loss EXCELLENT IDEA INT'L: Facing petition for winding up GOLDEN EMPIRE INDUSTRIES: Facing petition for winding up INSTRONG INVESTMENTS: Facing petition for winding up M.C.M. INT'L CREDIT MGMT.: Facing petition for winding up MOREBEST COMPANY: Facing petition for winding up MORE RICH ENTERPRISES: Facing petition for winding up PIONEER INDUSTRIES: Annual loss, but directors get raises REGAL HOTELS: Posts first-half loss SINO HOTELS (HOLDINGS): Posts annual loss TRIM INTERNATIONAL: Facing petition for winding up WINTALENT INDUSTRIAL: Facing petition for winding up * I N D O N E S I A * BANK BALI: Parliament asks President to punish staff * J A P A N * NIPPON TEL. & TEL.: Moody's lowers credit ratings * K O R E A * DAEWOO GROUP: Big 5 Chaebol shave debt by just W230 Bil. HYUNDAI GROUP: Big 5 Chaebol shave debt by just W230 Bil. KOREA FIRST BANK: Sale contract to be signed by year-end LG GROUP: Big 5 Chaebol shave debt by just W230 Bil. SAMSUNG GROUP: Big 5 Chaebol shave debt by just W230 Bil. SEOUL BANK: Gov't to devise new plan for sale to foreigner SK GROUP: Big 5 Chaebol shave debt by just W230 Bil. * P H I L I P P I N E S * AMALGATED SECURITIES CORP.: Stock sale in limbo MONDRAGON INT'L PHIL.: SEC rejects TRO on creditors NATIONAL STEEL CORP.: Creditors to ask SEC for rehab PHILIPPINE AIRLINES: Lessor asks airline to pay up * S I N G A P O R E * HOTEL PROPERTIES LTD.: Posts first-half loss MBf HOLDINGS BHD: Posts first-half loss TWINWOOD ENGINEERING: Posts first-half loss * T H A I L A N D * NAKHON SAWAN INDUST.: Creditors reject rehab plan NAKORNTHON BANK: Ex-exec fined SRITHAI SUPERWARE: Selling assets to reduce debts SUBMICRON TECHNOLOGY: Expects fresh loans from creditors TELECOMASIA CORP.: Debt agmt in principle with suppliers THAI PETROCHEMICAL INDUS.: Ex-execs fined THANARA CO.: Completes debt-for-asset swap ============================== C H I N A & H O N G K O N G ============================== CENTURY CITY INT'L: Posts first-half loss ----------------------------------------- Net losses for Century City International Holdings were reduced by 25.23 per cent to $155.2 million for the six months ended 30 June 1999 as a result of a substantial drop in exceptional losses during the period. Total turnover dropped by 25 per cent to $2.42 billion during the interim period. A $22.1 million exceptional loss was derived mainly from provisions against other investments and a loss on disposal of share investments. This was much less than the $600 million exceptional loss recorded in the same period last year. Barring the exceptional items, however, the group recorded a $192.5 million operating loss during the interim period against a $72.2 million operating profit registered last year. Group chairman Lo Yuk-sui said the financial downturn had forced the group to implement a program for an orderly disposal of certain assets with a view to reducing the level of corporate borrowing. Mr Lo said Century City was in discussion with its lenders on the extension of the informal standstill arrangement beyond 30 September and the company was hopeful of the continuing support of its lenders. "To resolve the current financial problems, the company is actively working on the possible disposal of part of its stake in Paliburg while, at the same time, also exploring feasible means of raising new funds for the group companies by way of equity financing," he said. Meanwhile, its property development arm, Paliburg Holdings posted a net loss of $114.8 million for the six month period ended 30 June, an improvement over the previous $609.7 million loss. Again, the lift was due to a much smaller exceptional loss of $18.8 million, compared with $460 million recorded a year ago. Operating loss before exceptional items, however, dipped into the red at $108.6 million from the previous $100.5 million operating profit. During the period, turnover dropped 3.06 per cent to $2.41 billion. Against a relatively difficult environment, the group implemented an asset disposal program, aimed primarily at restoring its financial liquidity. Mr Lo said the investment property at Tsuen Wan Hoover Plaza was sold in June 1999 and sale proceeds of about $200 million were received. Moreover, during the period to date, most of the remaining commercial units and car parks at Fuller Gardens Phase I and II in Tai Po, 118 Connaught Road West and Villa Art Deco in Yuen Long have been disposed of, realising an additional $100 million in proceeds. A more significant event was that the group entered into an agreement for the setting up of a joint venture with Sun Hung Kai Properties and Kerry Properties which will take a combined 70 per cent stake in the venture for the development of the 180.500 sq ft Ap Lei Chau site currently owned by Paliburg. (Hong Kong Standard 25-Sep-1999) CHINA INVESTMENTS HOLDINGS: Posts first-half loss ------------------------------------------------- Property investor China Investments Holdings announced a 64.98%fall in attributable loss to $6.3M for the half year to June 30. Turnover fell 37.22% to $9.9M and no interim dividend was recommended. EXCELLENT IDEA INT'L: Facing petition for winding up ---------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 6 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Excellent Idea International Limited. A notice of legal appearance must be filed on or before October 5. GOLDEN EMPIRE INDUSTRIES: Facing petition for winding up -------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 6 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Golden Empire Industries Limited. A notice of legal appearance must be filed on or before October 5. INSTRONG INVESTMENTS: Facing petition for winding up ---------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 6 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Instrong Investments Limited. A notice of legal appearance must be filed on or before October 5. M.C.M. INT'L CREDIT MGMT.: Facing petition for winding up --------------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 20 on the petition of Kam Tin Po for the winding up of M.C.M. International Credit Management Consultants Limited. A notice of legal appearance must be filed on or before October 19. MOREBEST COMPANY: Facing petition for winding up ------------------------------------------------ The High Court of Hong Kong SAR has scheduled a hearing for October 13 on the petition of Law Chun Wai for the winding up of Morebest Company Limited. A notice of legal appearance must be filed on or before October 12. MORE RICH ENTERPRISES: Facing petition for winding up ----------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for October 27 on the petition of Luk Hin Po for the winding up of More Rich Enterprises Limited. A notice of legal appearance must be filed on or before October 26. PIONEER INDUSTRIES: Annual loss, but directors get raises --------------------------------------------------------- Pioneer Industries International (Holdings) gave its directors a 300 per cent raise in performance-related pay last year, despite a sixfold increase in its net loss to $317.32 million in the year to March 31. The property and securities investor's highest-paid director pocketed between $20 million and $25 million, according to the company's annual report issued last month. This represented a rise of between 30 and 66 per cent from that received by the top-paid director in the previous year. By comparison, Sir John Bond, the chairman of HSBC Holdings - the Hang Seng Index's biggest company - was paid the equivalent of $8.3 million last year. Its highest-paid director, John Strickland, was paid the equivalent of $11.9 million. HSBC Holdings, with total assets of $291.32 billion at the end of its last financial year at December 31, had a net profit of $33.44 billion, a year-on-year decrease of 21 per cent. Pioneer Industries had total assets of $2.1 billion as of March 31. It paid a total of $35.21 million to its eight directors last year. Its performance-related bonuses amounted to $27.78 million, compared with the $7.4 million bonuses paid out by HSBC to its directors. Pioneer, which could not be reached for comment yesterday, did not pay any dividends in the past two years. The company was previously the subject of an unsuccessful takeover bid by fund-management company Regent Pacific, a former shareholder. One of the reasons it launched the bid was because it had disagreed with Pioneer's management, in particular with the increase in directors' fees and other remuneration. Under stock-exchange rules, there are no limits on the size of directors' pay packages or requirements to link pay to performance. Edward Chow Kwong-fai, chairman of the Corporate Governance Committee of the Hong Kong Society of Accountants, said this pay should be left to the discretion of shareholders. "If the shareholders don't like [the size of their wages], they can vote to block it at the annual meetings," he said. He said better disclosure was needed to make directors more accountable to shareholders, rather than more protection through legislation or stock-exchange regulations. Under existing stock-exchange rules, listed companies are required only to disclose the total payout to directors and list the number of directors who fall within a particular pay bracket. There are no requirements to name the recipients. (South China Morning Post 25-Sep-1999) REGAL HOTELS: Posts first-half loss ----------------------------------- Regal Hotels International net losses narrowed by seven per cent to $119.7 million for the six months ended 30 June, 1999. The losses were due to a significant operating loss of $99.9 million and provision for loss on disposal of a subsidiary company amounting to $37.9 million. The company's turnover was $1.52 million, representing a 6.5 per cent drop as compared with the same period last year. No interim dividend was declared by the firm. Regal Hotels said the combined occupancy rates of Regal Hongkong, Regal Kowloon and Regal Riverside saw an improvement to 64 per cent. However, their average room rates remained under pressure by recording a 20 per cent decline during the period under review. The company attributed the shrinkage to the lower spending level of short-haul visitors in Hong Kong, which accounted for more than 30 per cent of the number of visitors in the first half of 1999. Over 75 per cent of the rooms in Regal Airport is available now and it is expected that the hotel, which has 1,110 rooms , will come into full operation soon and improve the results in the second half, which is normally the high season throughout the year. Regal Airport attained an occupancy rate of 60 per cent during the period to June and is the largest contributor to the firm's operating profit. The company is confident with the future of the local hotel industry as the government is dedicated to maintaining Hong Kong as a business and tourist centre. (Hong Kong Standard 25-Sep-1999) SINO HOTELS (HOLDINGS): Posts annual loss ----------------------------------------- Sino Hotels (Holdings) posted a loss of $23.57M in the year to June 30, despite a turnaround in business in the second half. This compared with a loss of $39.8M in the first half. In the preceding year, the company posted a profit of $1.63M. Hit by a decline in room rates, operating profit fell to $15.79M from $30.88M. Associated income dropped to $60.72M from $81.07M. Loss per share was 3 cents, against earnings per share for the preceding year of 0.2 cents. TRIM INTERNATIONAL: Facing petition for winding up -------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 17 on the petition of Tai kwong Wah for the winding up of Trim International Limited. A notice of legal appearance must be filed on or before November 16. WINTALENT INDUSTRIAL: Facing petition for winding up ---------------------------------------------------- The High Court of Hong Kong SAR has scheduled a hearing for November 17 on the petition of NARWANI, Prem Fatumal for the winding up of Wintalent Industrial Limited. A notice of legal appearance must be filed on or before November 16. ================= I N D O N E S I A ================= BANK BALI: Parliament asks President to punish staff ---------------------------------------------------- Indonesia's parliament yesterday left President B.J. Habibie with an awkward bequest before going into final recess -- a demand that he punish three ministers and his chief adviser for their roles in the Bank Bali scandal and conclude protracted police inquiries within a month. In naming Finance Minister Bambang Subianto, Central Bank Governor Sjahril Sabirin, State Enterprise Minister Tanri Abeng and Supreme Advisory Council chairman A.A. Baramuli as suspects in the bribery scam, the Golkar-controlled Parliament appeared unconcerned that it might kill off Dr Habibie's chances of winning next month's presidential contest. "This will give us additional reasons to change our candidate," Golkar deputy secretary-general Muchyar Yara told The Straits Times, revealing that an internal survey showed up to 70 of the party's 120 incoming MPs did not want to vote for Dr Habibie. Yesterday's legislative swansong did not surprise anyone when its special committee pressed the president to suspend and prefer criminal charges against the four officials, as well as Indonesian Bank Restructuring Agency chief Glenn Yusuf, and his deputies, Farid Haryanto and Pande Lubis. A state-commissioned probe by PricewaterhouseCoopers had said there were "numerous indicators of fraud, non-compliance, irregularity, misappropriation, undue preferential treatment, concealment, bribery and corruption" in the Bank Bali transaction. This involved the alleged siphoning of 546 billion rupiah (S$136 million) out of the recently-nationalised bank to a company owned by a now-sacked Golkar treasurer, PT EGP. Although the full audit report was subsequently suppressed, parliamentary testimony by bank owner Rudy Ramli and media reports implicated the seven state officials. Mr Ramli, his business partners and PT EGP's owners were also named as potential defendants. Releasing parliament's hit-list yesterday, Golkar MP Thomas Suyatno warned the government anew that failure to take action against the officials could lead to street riots. "The people will do what they think best," said Mr Suyatno, a banking expert. "We have already seen how the people reacted over the security Bill. The people will punish them." Analysts have been predicting that the scandal at the heart of the Habibie presidential campaign -- the siphoned money allegedly going towards his re-election -- will, along with the East Timor debacle and feet-dragging over the Suharto investigations, cause the new People's Consultative Assembly (MPR) to reject his accountability speech next month. If he fails to clear that hurdle, his candidacy is doomed, leaving Golkar in opposition unless it finds a new candidate before that. The search for a replacement had, until now, been complicated by the fact that Mr Baramuli had garnered support for Dr Habibie from 14 provincial chapters. But, armed now with the parliamentary verdict, Golkar's central board might be able to "release" Mr Baramuli as a party adviser and so neutralise his influence, Mr Yara said. Meanwhile, the growing "anti-Habibie faction" in Golkar, headed by secretary-general Akbar Tanjung, was now looking at teaming up with June's electoral front-runner Megawati Soekarnoputri, he revealed. (Straits Times 25-Sep-1999) ========= J A P A N ========= NIPPON TEL. & TEL.: Moody's lowers credit ratings ------------------------------------------------- Nippon Telegraph & Telephone (NTT), the world's largest telecommunications company, has received a cut in its domestic-currency credit ratings by Moody's Investors Service. NTT had its local currency ratings cut to Aa1 from the top rating of Aaa, Moody's said. The decision affects about 2.3trillion yen of NTT's debt, and the rating outlook is "stable," it said. The rating reflects Moody's view that "an increasingly competitive operating environment and changes in industry demand structure may lead to greater volatility in NTT's financial performance. ========= K O R E A ========= DAEWOO GROUP: Big 5 Chaebol shave debt by just W230 Bil. HYUNDAI GROUP: Big 5 Chaebol shave debt by just W230 Bil. LG GROUP: Big 5 Chaebol shave debt by just W230 Bil. SAMSUNG GROUP: Big 5 Chaebol shave debt by just W230 Bil. SK GROUP: Big 5 Chaebol shave debt by just W230 Bil. --------------------------------------------------------- The amount of debt at the nation's top five chaebol is not showing any sign of dwindling this year. The Financial Supervisory Commission (FSC) disclosed in a report submitted to the National Assembly Sunday that the total debt of the top five business groups amounted to W148.848 trillion as of the end of June, a meager W230.9 billion drop from W149.789 trillion at the end of last year. The financial watchdog added that the June-end debt amount accounted for a W17-trillion increase over W131.89 trillion at the end of 1997, which the FSC said suggests that the top five groups have not yet been able to shed a chronic management problem of depending heavily on debt. The bank borrowings of the top five did, however, show a substantial drop, from W42.11 trillion at the end of 1997 and W29.46 trillion at the end of last year to W27.93 trillion at the end of June this year. At the same time, however, the groups added to their debt through issuing corporate bonds on the non-banking financial market, to W77.968 trillion at the end of June this year from W41.98 trillion, a jump of W35 trillion. The FSC added that the top five groups lowered their average debt-to-equity ratio down to 302.2% from 386% at the end of last year through a wave of new rights offerings. (Digital ChosunIlbo 26-Sep-1999) KOREA FIRST BANK: Sale contract to be signed by year-end -------------------------------------------------------- The government and Newbridge Capital Ltd. are likely to formally sign a contract on the sale of troubled Korea First Bank (KFB) around the end of this year, officials said yesterday. The Financial Supervisory Commission (FSC) said that it is expected to take about three months for both sides to evaluate KFB's assets and liabilities and sign a final deal. In coming months, the U.S. private investment fund and the Korea Deposit Insurance Corp. will determine the amount of KFB's bad loans which the corporation should buy, an FSC official said. The deposit guarantee agency is the largest shareholder of KFB. So far, the agency has pumped 5.7 trillion won into the ailing bank to keep it afloat. The two sides will also work on sorting out KFB's assets and liabilities which Newbridge will have to take over under an initial contract, the official said. "Given the assessment process, the government and Newbridge will be able to finalize the deal by the end of this year," the FSC official said. "At the latest, the final contract is expected to be signed by early next year." The official also said that since the initial contract is legally binding, both the government and Newbridge are entitled to file a compensation suit if the other contracting party breaks the deal. Last Sunday, the government announced that it had agreed with Newbridge to sell KFB for $500 million. Under the deal, Newbridge will make a capital investment for a 51-percent stake in the nationalized bank and invest an additional 200 billion won over the next two years, depending on the progress of the bank's efforts to turn itself around. In return, the government will buy back KFB's loans that will turn sour over the two years after Newbridge's acquisition, while the "buy-back" period will be extended to three years for loans to companies under debt-workout programs. The FSC official also said that the price of KFB shares should rise to 55,000 won per share in order to "retrieve" the 5.7 trillion won put into the troubled bank. "It is not right to see the government sale of Korea First at a price of 500 billion won after putting up 7 trillion won in public funds is a losing deal," he said. "Needing consideration is the fact that the proceeds the Korea First will make under New Bridge Capital will be divided into 49 for the government and 51 for New Bridge and likewise for the stock price increases." Since the start of its financial trouble, the price of KFB shares have been at a nadir amid thin trading. Last Wednesday, KFB shares closed at 2,645 won. (Korea Herald 27-Sep-1999, Korea Times 26-Sep-1999) SEOUL BANK: Gov't to devise new plan for sale to foreigner ---------------------------------------------------------- The government will come up with a detailed plan of selling the Seoul Bank to a foreign buyer within six months after a reshuffle of the bank's management. Negotiations on the sale of Seoul Bank with HSBC recently broke down. The Financial Supervisory Commission (FSC) said that Seoul Bank's new management will be selected through an open, international process. The government will appoint a foreign professional manager by the end of next month to head the ailing bank. Prior to selling it off to foreign investors, Seoul Bank would convert into a clean bank through such measures as injection of 4.5 trillion won in public funds. (Korea Times 26-Sep-1999, Korea Herald 27-Sep-1999) ===================== P H I L I P P I N E S ===================== AMALGATED SECURITIES CORP.: Stock sale in limbo ----------------------------------------------- Far East Bank and Trust Co.'s (FEBTC) recent acquisition of over two million shares of Amalgated Securities Corp. (Amsec) registered to Trans-Philippines Investment Corp. (TPIC) may be nothing more than a paper sale. This developed as the corporate court temporarily ordered Amsec not to acknowledge the sale of the said shares. The Securities and Exchange Commission (SEC), in an order, directed Amsec's corporate secretary "not to register the sale of the Amsec shares consequent to the foreclosure sale," and barred FEBTC from disposing the corporate shares it allegedly acquired during a September 16 auction sale. The commission also said it would decide today, whether to extend to a period of 20 days or more, the 72-hour temporary restraining order on the sale of the Amsec shares. Earlier, cash-strapped TPIC asked the SEC to stop FEBTC from making any further dispositions of the Amsec shares (of TPIC) which were sold at a public auction by notary public Teodoro V. Angel. According to TPIC, two parties participated in the said auction sale, with FEBTC making the highest bid and payment of 33.71 million Philippine pesos (PhP) (US$833,000 at PhP40.488:US$1)) for the 2.11 million Amsec shares. The ongoing battle for control over TPIC is not doing the beleaguered firm any good as creditors are beginning to be turned off by the worsening intra-corporate struggle. Creditor PDCP Bank said earlier that TPIC's intra-corporate squabble and the depreciation of the company's assets have made the revised repayment plan "no longer viable." Consequently, PDCP asked the Commission to reject the proposed repayment plan. It said "even if the Commission should decide to insist on approving is (the plan), the same shall not have any finality as the same shall be subject to attacks for not having any board authority. "The non-viability of the proposed repayment plan has now become apparent TPIC has requested for funding assistance allegedly to ensure that the repayment plan will be successfully implemented if the petitioner (TPIC) cannot even fend for its operating expenses, how can it possibly pay its debts," PDCP Bank said. (Business World 24-Sep- 1999) MONDRAGON INT'L PHIL.: SEC rejects TRO on creditors --------------------------------------------------- Beleaguered casino and hotel operator Mondragon International Philippines, Inc. (MIPI) remains torn between two sets of officers as the Securities and Exchange Commission (SEC) did not grant the petition for a 72-hour temporary restraining order (TRO) filed by embattled MIPI chairman and chief executive Jose Antonio Gonzalez against the newly elected board. The commission will decide on September 28 whether to grant the Gonzalez group's petition for a 20-day TRO and preliminary injunction that would prevent the new board -- composed of the firm's creditors -- from holding office. However, in spite of the non-issuance of a 72-hour TRO by the Commission, the creditor group has not been allowed by the current board to exercise authority over the firm's operations, a source said. Earlier, MIPI and the Gonzalez board asked the SEC to grant their application for a TRO that would restrain the firm's creditors from "assuming and exercising the function as stockholders, members of the board and officers of MIPI." The new board of the hotel and casino operator is comprised of top executives of the firm's three creditor banks. Mondragon has debts of over seven billion Philippine pesos (US$173 million at PhP40.488:US$1). Its lenders include Metropolitan Bank and Trust Co., TA Bank, Philippine Banking Corp. and Dao Heng Bank. (Business World 24-Sep- 1999) NATIONAL STEEL CORP.: Creditors to ask SEC for rehab ---------------------------------------------------- Creditor banks of beleaguered National Steel Corp. (NSC) will take the initiative and ask the Securities and Exchange Commission to rehabilitate the steel firm, BusinessWorld sources in the banking industry said. The sources said the banks have "lost confidence in the present management" and will now take a more "pro-active" role by requesting the SEC to appoint a new management team. NSC owes 14 banks 14 billion Philippine pesos (US$342.1 million at PhP40.922=US$1), and is already considered "in default." "The initiative came from the creditors. In-house lawyers of the 14 creditor banks will draft a petition for SEC to rehabilitate the company," one of the sources said. "The banks opted not to hire external lawyers," another source confirmed. A third source, from one of the creditor banks, said some of the banks actually want to look on their own for a potential "white knight" to save the troubled steel firm. The source said creditors were disappointed by the offer made by Ispat International N.V., which was considered not enough to get the steel firm back on its feet. Ispat met with creditor banks last week to discuss its offer for NSC. "(Ispat's) offer is low. (It is) offering $100 million or PhP4 billion. (It gets) to own everything, (while) the creditors will have to (divide) the PhP4 billion (among themselves). It is not enough. PNB alone has a PhP5-billion ($122.1 million) exposure to NSC," one source said. "The banks feel they could do better on their own looking for a potential strategic partner," yet another source said. NSC was also reported to have received an offer from a consortium composed of Filipino investors and Duferco S.A. of Switzerland, but the sources said only Ispat International has been meeting with the banks. The Duferco group's offer reportedly involves the infusion of $50 million in working capital. It is also willing to participate in the acquisition of raw materials, assist NSC in exporting its products and provide technical support. Be that as it may, the sources also said the banks have not closed their doors to the concept of foreclosure. Earlier, majority of the NSC's creditors agreed to foreclose after the steel firm failed to pay interest payments. Philippine National Bank, state-owned Land Bank of the Philippines, Westmont Bank and Allied Banking Corp. were among those which favor foreclosure proceeding. The sources said an investor is still needed for NSC to remain viable, as "creditors will not be providing additional working capital." NSC is majority-owned by Hong Kong-based Hottick Investments Ltd. which has 82.5% stake. The government, through National Development Co. (NDC), has a 12.5% stake while the remaining 5% is held by Marubeni Corp. of Japan. Other creditor banks are AsianBank Corp., Bank of Commerce, China Banking Corp., Credit Agricole Indosuez, Wise Citco, PCIBank, Rizal Commercial Banking Corp., Traders Royal Bank, United Coconut Planters Bank and Urban Bank. (Business World 27-Sep-1999) PHILIPPINE AIRLINES: Lessor asks airline to pay up -------------------------------------------------- Aircraft Financing and Trading B.V. (AFT) reiterated its earlier plea to the Securities and Exchange Commission (SEC) over the long-overdue payment of over $10 million by Philippine Airlines, Inc. (PAL) for aircraft rental and maintenance fees. The unpaid aircraft rental and maintenance costs are part of PAL's lease termination agreement with AFT, pertaining to the redelivery of six Fokker 50 aircraft. Under the lease termination agreement, both PAL and AFT agreed that "all unpaid rents and other amounts shall be settled as a terminated operating lease claim in accordance with PAL's rehabilitation plan." AFT also stressed that PAL's obligation to pay rent corresponding to the six Fokker 50 planes "is clearly mandated by the agreement applicable law and treaty obligations of the Philippines and Geneva Convention on International Recognition of Rights in Aircraft." (Business World 24-Sep-1999) ================= S I N G A P O R E ================= HOTEL PROPERTIES LTD.: Posts first-half loss -------------------------------------------- Hotel Properties Ltd (HPL) slashed its interim net loss by 52.3 per cent to $3.73 million -- but massive provisions for its investment in Planet Hollywood dragged its bottom line deeper into the red. The half-time loss was worse than analysts expected. The consensus earnings forecast in Barra's Global Estimates was for a full-year net profit of $4.5 million. Turnover for the six months ended June 30 tumbled 37.7 per cent to $135.5 million. HPL attributed this to a drop in income from development properties. Its directors said there was no more income from its Scotts 28 project as revenue from this was recognised fully last year. They added that construction for Cuscaden Residences had begun but analysts expect HPL to start recognising income from it only from next year. Meanwhile, interest on borrowings was cut by 27.5 per cent to $17.6 million. Secured short-term loans were cut from $107.8 million at the end of last year to $51.6 million at end-June, while secured long-term loans were also reduced from $445.85 million to $356.41 million in the same period. However, unsecured loans were largely unchanged, with those repayable in a year or less falling marginally from $5.72 million to $5.69 million and those repayable after a year rising marginally from $197.19 million to $197.84 million. Loss per share dropped to 0.89 cent from 1.91 cents previously. Net tangible asset backing per share fell from $2.29 to $1.84. But $67.5 million in provisions for HPL's investment in the Planet Hollywood chain of theme restaurants were charged as an extraordinary item and the group's bottom-line loss sank 62.6 per cent to $69.4 million. HPL directors had announced earlier that they felt it was "prudent to make full provision for its investment in Planet Hollywood" after the US-based chain proposed filing for bankruptcy protection under Chapter 11. They expect the second half to show an improvement over the first half. No interim dividend was declared. Analysts said the only way for HPL to reverse the loss and meet the full-year forecast was for all remaining units in the Four Seasons project to be sold. They added that there may be some provision write-backs if Planet Hollywood is nursed back to health. Separately, HPL applied for its 75 per cent-owned subsidiary HPL 21 to be struck off the Hongkong Companies Registry following the disposal of its interest in Donna Karan Japan KK. (Straits Times 24-Sep-1999) MBf HOLDINGS BHD: Posts first-half loss --------------------------------------- MBf Holdings Bhd has registered a slightly lower group pre- tax loss of RM272.30mil for the half-year ended June 30, 1999 against a loss of RM287.44mil recorded in the same period last year. A company statement said that group operating revenue declined 31 percent to RM486.31mil against RM708.92mil recorded in the previous corresponding period. (Star Online 25-Sep-1999) TWINWOOD ENGINEERING: Posts first-half loss ------------------------------------------- Twinwood Engineering suffered a net loss of $665,000 for the six months ended June 30, overturning net profit of $173,000 of a year earlier as turnover shrank and it made an additional provision for outstanding trade debts. Turnover fell by 47 per cent to $3.06 million as sales of hydraulic hammers dropped in line with a slowdown in construction activity throughout Asia. Loss per share was 0.3 cent, compared to earnings per share of 0.1 cent previously. No interim dividend was declared. (Straits Times 25-Sep-1999) =============== T H A I L A N D =============== NAKHON SAWAN INDUST.: Creditors reject rehab plan ------------------------------------------------- A creditors' meeting of Nakhon Sawan Industrial Co, the third sugar mill of the Nakhon Sawan-based sugar mill group, has rejected its business rehabilitation plan. The rejection was expected as creditor meetings of the two other mills turned down the plans earlier. About 1,000 creditors with combined loans of 4.13 billion baht attended the meeting yesterday. Voting for the plan were 343 of them with loans of 224 million, while 610 creditors with 3.29 billion baht rejected it and 52 creditors abstained. Now the case, like the other two- Kaset Thai Sugar and Thai Ekalak Sugar-will go to the Central Bankruptcy Court for a ruling on whether to let the company go bankrupt as filed by the creditors. The combined debts of the three mills are about 20 billion baht. Kraisorn Baramee-auychai, the chief judge of the Central Bankruptcy Court who is responsible for the three sugar mill cases, said he will summon a hearing soon to allow both parties to testify and explain their reasons. The major creditors of the three mills and the planner, South Sathorn Planner Co, want the three mills' capital to be written down to one satang a share. The creditors and the planner claim that the three mills are insolvent as their liabilities are greater than their assets. They also want the existing management, led by Praphan Siriviriyakul, replaced. The three mills have the same management team. However, the three mills and their small creditors, mostly sugarcane planters, countered that South Sathorn Planner has falsified values of the three mills' assets. Two small creditors have also separately filed criminal and civil charges against the company and also M.R. Pridiyathorn Devakula, as the chairman of the debt restructuring committee for sugar mills nationwide. (Bangkok Post 24- Sep-1999) NAKORNTHON BANK: Ex-exec fined THAI PETROCHEMICAL INDUS.: Ex-execs fined ----------------------------------------- Three well-known businessmen -- Vorawee Wanglee, Prateep Leopairatana and Vallop Vimolvanich -- have all been fined for violating the securities law through their failure to disclose changes in the shareholding structure of listed companies they held executive positions on. The three businessmen were found to have breached the Securities and Exchange Act Article 59, which commands all listed company executives to prepare and disclose their own, their spouses' or their children's shareholdings as well as any other changes to the SEC office. The Securities and Exchange Commission statement showed that Vorawee, the former president of the old Nakornthon Bank, was fined Bt400,880 for failing to disclose the information between Jan 1 and Sept 14 this year. Meanwhile, Prateep, a director of Thai Petrochemical Industry Plc, was fined Bt60,000 and Vallop Bt16,000 for the same offence. The SEC also announced that the offenders' names would be announced in their weekly newsletter. Currently, the SEC is also investigating if Vorawee did transfer shares in the old Nakornthon Bank to his sons prior to nationalisation in July, as he claimed, or if he sold his shares to a third party, as suspected. As the share transfers were made when the bank was in serious financial trouble, Vorawee is suspected of transferring the shares to a third party with full knowledge of the bank's problems. (The Nation 25- Sep-1999) SRITHAI SUPERWARE: Selling assets to reduce debts ------------------------------------------------- Srithai Superware Plc, one of Thailand's leading melamine and plastics producers, is off-loading its brand new melamine production machinery in a bid to raise more than 50 million baht to pay part of its US$160-million debt. Srithai president Sanan Angubolkul announced the sale of 40 machines as the company is preparing to submit a debt restructuring plan to court officials for consideration next week. It may take three months for creditors to consider whether to approve the debt restructuring plan, he said. No matter what the creditors rule on the debt restructuring, the sale of the 40 machines, acquired two years ago for its Nakhon Ratchasima facility, must proceed because they are not needed in the present poor economic environment, he said. Mr Sanan said it may be a few years before all 300 items of machinery at its Nakhon Ratchasima factory, one of Srithai's four plants, are fully utilised. The plant is running at just 60% of its annual capacity of 10,000 tonnes. Srithai's combined annual production capacity at the four sites exceeds 40,000 tonnes. The company plans to export the machinery to melamine producers in the Philippines, Vietnam and the Middle East, he said. Proceeds from the sales will make cash available to pay the first instalments of debts, which are to be cleared in six years, he said. Srithai's financial position has shown improvement with cash in hand of about 800 million baht, he claimed. Srithai's sales in the first nine months of this year are estimated at two billion baht compared with three billion predicted for the whole year. About 57% of its income is derived from all-plastic products and 43% from melamine ware. About 55% of its melamine sales value is from local sales and 45% from exports. Some 85% of its income from plastic products is derived from local sales and 15% from overseas. Next year, the company expects to achieve 9.5-10.5% growth in sales to 3.5 billion baht. (Bangkok Post 25-Sep-1999) SUBMICRON TECHNOLOGY: Expects fresh loans from creditors -------------------------------------------------------- Submicron Technology Plc says it is sure creditors will provide new loans to continue construction of its wafer fabrication plant. Positive initial talks indicated the 20- billion-baht project would proceed, the company said yesterday. Work has been delayed by three years because of the economic crisis. Company sources said that Charn Uswachoke, chief executive, convinced creditors that the global semiconductor business would rebound by the middle of next year. Progress was being made in attracting foreign partners to provide technology and possibly capital. The source said the next meeting between Mr Charn and the creditors would be in mid- October. Submicron Technology was founded by Mr Charn in 1991, with 23 local financial institutions lending a total of 19 billion baht. After the company was listed, the recession and depreciation of the baht forced the abandonment of a planned public share offer. Creditors suspended loans at a time when the plant was 80% complete. (Bangkok Post 24- Sep-1999) TELECOMASIA CORP.: Debt agmt in principle with suppliers -------------------------------------------------------- TelecomAsia Corp expects to start charging customers for its personal cordless telephone (PCT) service in November, now that it has reached an agreement in principle on debt restructuring with its main Japanese suppliers. The debt-laden company has been giving the service away for nearly two years. It said it could not charge money until technical problems that affected service quality and coverage were solved. However, the Telephone Organisation of Thailand and other critics suggested the company did not want to charge for PCT in order to avoid having to pay its suppliers. The TOT had demanded that TA start charging for the service in October, or the state agency would scrap a plan to use the private company's PCT network. Supachai Chearavanont, president and chief executive of TA, said the company expected to seal a deal with suppliers this month. A preliminary agreement had been made with the Japanese technology supplier NEC and the Mitsui trading group on key points of debt repayment terms and PCT network quality standards, he said. He did not elaborate. TA owes key equipment suppliers-Mitsui, NEC and the TOT_ a total of $200 million. It also has bank debts totalling 85 billion baht, 60 billion of which is owed to local commercial banks: Krung Thai, Bangkok Bank, Siam Commercial Bank and Thai Farmers Bank. The remaining debt is $700 million in foreign loans. TA stopped paying the principal on most loans more than a year ago and was now paying only interest of four billion baht this year. Mr Supachai said the company expected to begin billing for PCT in November. He said he welcomed TOT's decision to use TA's network as it would benefit both groups' customers. The TOT has agreed to pay 80% of its PCT revenue to TA if the exchange rate is between 36.45 and 38 baht to the US dollar. The figure increases to 82% if the baht declines beyond 38. TelecomAsia plans to charge customers 800 baht as a start-up fee, 200 baht a month, three baht for the first two minutes of each call and 1.50 baht for each additional minute. TA also said yesterday that talks on restructuring its 85 billion baht in bank debt, under the supervision of a Bank of Thailand committee, were expected to finish in this month as well. The company has reportedly proposed to increase its capital and seek a roll-over of debts. Most local banks initially agreed to reschedule payments but refused to accept write-downs. There has been a report that Kreditanstalt fur Wiederaufbau (KfW), the German development bank, would invest US$150 million to buy a stake in the company. TelecomAsia reported a loss of one billion baht in the first half of this year, compared with a profit of 8.43 billion baht in the same period last year. In the first half of this year, TA sold 75,667 new lines, double the figure from the same period last year. To date it has sold 1.34 million of the 2.6 million lines it operates in Greater Bangkok. It pays the TOT 16% of its total revenue under the current concession. (Bangkok Post 24-Sep-1999) THANARA CO.: Completes debt-for-asset swap ------------------------------------------ Saha Pathana Inter-holding Plc'S board has resolved to accept the conversion of its Bt18.6 million baht loan provided to its affiliate Thanara Co to two rai of land with an estimated value of around Bt18.79 million. The company now holds a 5-per-cent interest in Thanara Co. (The Nation 25-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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