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         T R O U B L E D   C O M P A N Y   R E P O R T E R

                               A S I A   P A C I F I C

            Thursday, October 28, 1999, Vol. 2, No. 210

                                       Headlines


* C H I N A  &  H O N G  K O N G *

JIANGXI PHOENIX OPTIC INSTRUM.: Signs debt-to-equity swap


* I N D O N E S I A *

PT PUDJIADI PRESTIGE LTD.: Bond claim filed against it


* J A P A N *

MITSUBISHI MOTORS: Implementing cost-cutting moves
TOSHIBA: Posts six-month loss


* K O R E A *

DAEHAN INVEST.TRUST CO.: Gov't funding a possibility
DAEWOO GROUP: No gov't guarantee reaffirmed
DAEWOO GROUP: Workout despite 14.5T won negative worth
DAEWOO SECURITIES: Purchase bids to be accepted next week
DAEWOO TELECOM: Asset evaluation completed, plan to follow
KOREA INVEST. TRUST CO.: Gov't funding a possibility


* M A L A Y S I A *

ARAB-MALAYSIAN CORP.: Revising its debt rehab proposal


* P H I L I P P I N E S *

MONDRAGON INT'L PHILIPPINES: Bond filing ousts creditors


* T H A I L A N D *

SIAM CEMENT: Expects to post 3rd quarter loss


==============================
C H I N A  &  H O N G  K O N G
==============================

JIANGXI PHOENIX OPTIC INSTRUM.: Signs debt-to-equity swap
---------------------------------------------------------
The China Orient Asset Management Corporation (COAMC)
signed its first debt -to-equity agreement with the Jiangxi
Phoenix Optic Instrument (Group) Co., Ltd., on Oct 25.

Under the deal, the COAMC will change the 90 million yuan
debt owed to it into equities of the Phoenix group in
central China's Jiangxi Province.  Wang Chaosong, chairman
of the Phoenix group, said the deal would reduce the
group's debt from 69% of its asset to 41% and would save it
seven million in financial costs a year.  He added that the
deal would help his company establish a modern enterprise
system and lay a sound foundation for its future
development.

According to the Chinese government's policy for debt-
equity conversion, the COAMC would eventually cut its ties
with the Phoenix group through equity transfer and other
means if the deal proves successful in turning the group
into a profitable company.  The Phoenix group is a large
state-owned enterprise with relatively advanced technology
and products among Chinese opticians.

However, the company has been unprofitable in years past
due to capital shortage and heavy financial burdens. The
COAMC was founded in mid-Oct to deal with the bad assets of
the Bank of China. It is one of the four similar firms set
up by the Chinese government to deal with the bad loans of
its commercial banks.  (Asia Pulse  26-Oct-1999)


=================
I N D O N E S I A
=================

PT PUDJIADI PRESTIGE LTD.: Bond claim filed against it
------------------------------------------------------
Indonesia company PT Nikko Securities Indonesia (NIKKO
Securities) has applied for a bankrupcy claim to the
commercial court against PT Pudjiadi Prestige Limited Tbk
(JSX: PP) about its matured bonds.

Nikko Securities said that it owned 31 series B bonds
issued by PP worth Rp7 billion (US$ 1.02 million). The
bonds currently held by Nikko, Coupons 7 and 8, matured on
14 February 1999 and 14 May 1999 respectively. However, on
the maturity dates, PP failed to pay the 47.85% interest
specified by PT Bank Negara Indonesia despite frequent
warnings by Nikko.Nikko's lawyer, Amaliha Lase said the
bonds carry floating rates.  (Asia Pulse  26-Oct-1999)


=========
J A P A N
=========

MITSUBISHI MOTORS: Implementing cost-cutting moves
--------------------------------------------------
Japan's Mitsubishi Motors announced yesterday it would shed
9,900 jobs, or 11 percent of the workforce, by March 2004
in a global restructure.

"The measure is to cut costs," said a spokesman for
Mitsubishi Motors after the announcement.

The troubled auto maker, which had 88,800 employees in the
fiscal year to March 1999, said in a statement it planned
to reduce total numbers to 78,900 by March 2004.  Some
2,500 jobs had already been reduced through restructuring
in the fiscal year to March 1999. If those were included,
the total number of job cuts would come to 12,400.
The future job reductions would be achieved "through the
restructuring of subsidiaries worldwide," said the
statement.  The number of subsidiaries would be pared to
57,500 in March 2004 from 63,800 last March.

The announcement followed a decision by Japan's number two
car maker Nissan Motors on October 19 to close five plants
and cut 21,000 jobs in a desperate attempt to stay afloat.
Mitsubishi Motors would cut its staff "by early retirement
programs and freezing hirings of college graduates," said a
company spokesman.

"Although we have already implemented restructuring
measures, we felt it necessary to take further steps to
boost our competitiveness and survive in the increasingly
competitive global auto market."

Mitsubishi Motors share price fell one yen to close at 573
yen (US$5.46) on the Toykyo Stock Exchange.  Chikao
Masuzawa, auto analyst at ING Barings, said the company may
have to go further than announced so far.

"If Mitsubishi further combines operations between cars and
trucks, it may have to cut its workfore more than it has
announced so far," he said.

Other car makers also needed to pursue efficiency by
cutting personnel and production costs as the Japanese auto
industry was still bloated with surplus labour, she said.
The next target may be parts makers and truck
manufacturers, the analyst forecast. Both would be forced
to cut employee numbers to cope with foreign competition.
In the past year to March, Mitsubishi Motors pulled group
net profit back into the black at 5.7 billion yen, with
land sales helping it recover from the previous year's
101.8 billion yen loss.

Now Mitsubishi is praying its gasoline direct injection
engine technology, which gives better fuel efficiency and
lower carbon dioxide emissions, can drive it back to
stronger profits.  The firm is rated junk bond by Moody's
Investors Service.  Mitsubishi signed an alliance with
Swedish truck maker Volvo on October 8 to create the
world's biggest truck business, after a months-long search
for partners.  (Business Day  27-Oct-1999)  

TOSHIBA: Posts six-month loss
-----------------------------
Toshiba yesterday blamed lower microchip prices and
restructuring costs for a parent company loss of 46.1
billion yen (US$439 million) in the six months to
September.

The firm, Japan's second-biggest comprehensive machinery
maker, said the miserable result compared to a loss of 6.4
billion yen in the same period last year.

"Profitability deteriorated sharply as prices of memory
chips were far below the expected level," Toshiba said in a
statement.

Even margins for more profitable microchips such as logic
and system LSI (large-scale integration) microchips fell as
rivals also accelerated a shift away from memory
microchips, the company said.

"Deteriorated margins for logic and system LSI microchips
added to factory restructuring aimed at improving the
business structure of semiconductor operations and
disposals of facilities," Toshiba said. (Business Day  27-
Oct-1999)


=========
K O R E A
=========

DAEHAN INVEST.TRUST CO.: Gov't funding a possibility
KOREA INVEST. TRUST CO.: Gov't funding a possibility
----------------------------------------------------
The government is considering injecting public funds into
two debt-ridden investment trust companies (ITCs) early
next month as part of its plan to restructure the troubled
investment trust industry.

"The government plans to put public cash into Korea
Investment Trust Co. and Daehan Investment Trust Co. early
next month," an official at the Ministry of Finance and
Economy said yesterday.

A variety of options on how to pump public funds into the
two ITCs is now under consideration but nothing has been
determined yet, he said.  However, one possible option is
to have banks and securities firms with a stake in the two
ITCs make capital investments, depending on the future
value of the embattled trusts, he said.

The option is reportedly being considered since the
government cannot inject public funds into the ITCs via
Korea Asset Management Corp., Korea Deposit Insurance Corp.
or the Bank of Korea under the current laws.  Under the
option, a consortium of shareholder banks - such as Korea
Development, Cho Hung and Hanvit - will participate in re-
capitalizing the two investment trusts.

The shareholder capital of Korea Investment Trust and
Daehan Investment Trust, which stands at 200 billion won
each, will be reduced to 10 billion won, the official said.
The government has not revealed the amount of public funds
to be injected into the embattled investment trusts but it
is reportedly mulling a public fund infusion of more than 2
trillion won.

Currently, Korea Investment has liabilities exceeding
assets by 1.15 trillion won, while Daehan Investment's
liabilities exceed assets by 598.5 billion won.  With the
injection of public funds eyed for early next month,
sources said that the clock has begun ticking away for the
government-led restructuring of the investment trust
industry.

Worried about a negative impact from the overhaul of the
financial markets, the government has reiterated that the
restructuring of the sector will be postponed until July
next year.  But the sources said that the government can no
longer put it off because the ITCs' losses from their
exposure to the crumbling Daewoo Group will be made public
early next month.

Top economic policy-makers also expressed the need to
advance the overhaul of the investment trust sector. Lee
Ki-ho, senior presidential secretary for economic affairs,
said Tuesday that the government will inevitably make a
public cash injection into Korea Investment Trust and
Daehan Investment Trust in the wake of the Daewoo crisis.

As of Oct.11, the domestic investment trust industry had a
combined exposure of around 17.9 trillion won to Daewoo's
unsecured bonds and commercial paper (CP). Korea Investment
Trust had an exposure of 3.1 trillion won, while Daehan
Investment Trust held Daewoo bonds and CP worth 1.7
trillion won.  Industry experts estimated that the two
ITCs, expected to post a combined net profit of 500 billion
won this year, may suffer losses of 800 billion won due to
their exposure to Daewoo.  (Korea Herald  28-Oct-1999)

DAEWOO GROUP: No gov't guarantee reaffirmed
-------------------------------------------
With a meeting of Daewoo Group's 200 foreign creditors
scheduled for today, Korea's top financial regulator
reaffirmed that there is no chance for the government
guarantee for the group's $5.05 billion short-term overseas
liabilities.

Chairman Lee Hun-jai of the Financial Supervisory
Commission (FSC) said that the government is not in a
position to guarantee the deal in the private sector,
adding that the international standard does not approve of
any state authorities' involvement in private sector
borrowings.

"The government will not provide any assurance on Daewoo's
overseas liabilities. It is in violation of the
international business rules," Lee told reporters at Shilla
Hotel, following his speech for the American Chamber of
Commerce in Korea.

The foreign creditors of Daewoo have argued that the Korean
government decided to provide an assurance on local
creditors while ignoring the calls from overseas creditor
banks.  The foreign banks view that the FSC's planned
injection of public funds into ailing investment trust
companies (ITCs) and banks which were heavily exposed to
Daewoo was part of the government guarantee.

"The government's injection of public money into the local
ITCs and banks and policies for Daewoo are two separate
issues. They are unrelated to the Daewoo crisis," Lee said.
"Rescuing the poor-performed ITCs and some domestic banks
has been planned for many months. It is merely a
coincidence that the decision has been reached amid the
Daewoo crisis," the FSC chairman said.

The local financial authorities said Tuesday that it will
inject nearly $2 billion public funds into two major ITCs -
Korea and Daehan - as early as next month, before being
sold overseas.  The government is expected to provide
additional resources out from state coffers to ease the
burden facing Korea First Bank and Seoul Bank.

"The provision of public funds into the local creditors of
Daewoo is aimed at preventing financial instability rather
than rescuing individual companies," Lee said.

The FSC head was more cautious this time on forecasting
possible outcome of today's foreign creditors meeting in
Tokyo.  While declining to further elaborate on the issue,
he simply said, "Things are not looking good."

Lee said last week that the steering committee representing
Daewoo's overseas creditor banks had come to an agreement
to give a standstill on the group's foreign debts until the
end of this year, adding it only needs an approval from the
meeting of all foreign creditor banks in Tokyo's Imperial
Hotel on Oct. 28.

On the pace of the workout of the core business units of
Daewoo, Lee said the process for the companies with heavy
foreign borrowings will be slower than the others.

"In the case of the Daewoo affiliates with a relatively
simple composition of creditors, workout plans will be
finalized within this month," Lee said.  "As for the other
companies with relatively heavy foreign borrowings, the
workout plans will be finalized after sufficient reviews
and discussions by the foreign and domestic creditors take
place."

The Daewoo subsidiaries with heavy foreign debts are Daewoo
Corp., Daewoo Motor, Daewoo Electronics and Daewoo Heavy
Industries.  He warned foreign creditors, saying a selfish
attitude in securing their interests only will do harm.

"A selfish attitude defying appropriate loss sharing will
not only do harm to the whole but also lose its own stake,"
he said.

Through the steering panel, foreign creditors have demanded
that the government discuss with them prior to issuing any
debt restructuring plans for Daewoo.  They also provided a
view through the committee that the financial authorities
provide a guarantee on their credits in Daewoo should the
group fail to repay their overseas borrowings.

However, the two sides have reached no accord on any of the
issues raised in the last two months.  The local
authorities directed the rehabilitation of Daewoo while
excluding the group's foreign creditors.  On the issue of a
government guarantee, the Korean authorities flatly ruled
out the possibility, saying the international standard does
not allow the government to offer assurances on private
sector deals.

Foreign creditors, on the other hand, also failed to live
up to their words of refraining from legal actions as some
have already filed law suits overseas to secure their
money.  (Korea Times  27-Oct-1999)

DAEWOO GROUP: Workout despite 14.5T won negative worth
------------------------------------------------------
Creditors of Daewoo Corp. will keep the hugely indebted
company afloat through a debt-workout plan despite its huge
amount of debts, which reportedly exceed assets by 14.5
trillion won, a government official said yesterday.

He refuted press reports that the flagship of the crumbling
Daewoo Group would be excluded from a workout plan because
of its enormous debt, estimated at 26.3 trillion won
against assets totaling 11.8 trillion won. The figures
suggest that creditors are poised to lose 59 percent of the
credit extended to the company.

"Creditors are promoting a workout plan which calls for
spinning off the company's construction and trading units
and making them clean by transferring a large chunk of
their debts to a bad company consisting of its
administrative divisions," the official said.

The construction and trading units, when burdened with all
their debts, will not be able to survive, so it is
essential to make them clean companies, the official said.

"Then, they will become attractive acquisition targets,
since they still have competitiveness in their own fields."

The bad company will eventually be liquidated.  He said
this plan is much better than liquidating the entire
company by excluding it from a workout plan. This idea is
also different from the original restructuring plan, which
envisioned separating only the construction unit from the
company.

Daewoo Corp. has played the role of the group's holding
company. By arranging loans for other subsidiaries, it
amassed a huge amount of debt.  (Korea Herald  28-Oct-1999;
Korea Times, Digital ChosunIlbo  27-Oct-1999)

DAEWOO SECURITIES: Purchase bids to be accepted next week
---------------------------------------------------------
Creditors of Daewoo Securities said yesterday that they
will invite bids from potential buyers of the brokerage
house next week in order to select a priority candidate by
the middle of next month.

Auditors will determine the company's value this week based
on the outcome of due diligence procedures and taking into
account its business capabilities, future profitability and
the prospects for the brokerage industry.  An official of a
creditor bank said an interim assessment by Arthur Anderson
of the company's assets and liabilities estimated assets at
5.7 trillion won and liabilities at 3.7 trillion won,
excluding the latent losses from the company's holdings of
bad bonds issued by the Daewoo Group.

Arthur Anderson, the lead manager of the brokerage's sale,
plans to select a potential buyer between Nov. 8 and 15 and
receive an acquisition proposal between Nov. 29 and Dec.
12. A memorandum of understanding is then expected to be
signed before the end of December and a final contract
concluded by January next year.

"Since Daewoo Securities is Korea's leading brokerage
house, it will be an attractive target for many domestic
and foreign investors," the official said.

Meanwhile, the U.K.-based financial magazine, Euromoney,
selected Daewoo Securities as one of the top 10 brokerage
houses in the world in terms of research of the Korean
stock market. The only Korean securities firm included in
the list, Daewoo ranked 7th, following Jardine Fleming and
Merrill Lynch, which shared top spot, Warburg Dillon Read
(3rd), ABN-AMRO (4th) and ING Baring (5th).  (Korea Herald  
28-Oct-1999)

DAEWOO TELECOM: Asset evaluation completed, plan to follow
----------------------------------------------------------
Creditors of Daewoo Telecom said yesterday the company's
liabilities were in excess of its assets by 930 billion
won.

According to the outcome of auditors' due diligence on the
company, its assets totaled 2.25 trillion won as of the end
of August, while its debts were recorded at 3.18 trillion
won, posting an asset loss ratio of 31.6 percent.  The
asset loss ratio refers to the difference between the book
value of assets and their actual value divided by the book
value.

According to the creditors, auditors suggested that the
company be kept alive through debt rescheduling since its
future value is higher than its present asset value
calculated on the premise of liquidation.  The company's
main creditors plan to present a final workout scheme to a
general meeting of creditors Saturday for approval.  (Korea
Herald  28-Oct-1999)


===============
M A L A Y S I A
===============

ARAB-MALAYSIAN CORP.: Revising its debt rehab proposal
------------------------------------------------------
Arab-Malaysian Corp Bhd (Amcorp) has revised its debt
restructuring proposal, dropping initial plans to reduce
capital, consolidate and issue warrants.

The company said in a statement the changes were due the
improvement in stock market conditions since the plans were
first made on Dec 18.  The revisions include repayment of
RM112.39mil in cash to secured creditors.  Other changes
include the conversion of debt totalling RM479.01mil into
redeemable convertible secured loan stocks with a nominal
value equivalent to that amount.

The terms of the loans stocks will be mutually agreed upon
by the company and creditors.  Amcorp also plans to convert
debts of RM366.62mil into term loans, with tenures and
interest rates to be decided mutually.  In addition, the
company proposes to issue new ordinary shares and use the
proceeds to repay other debts.  It plans to issue 317.4
million shares to settle debts of RM317.40mil and an
additional 408.47 million shares to settle its 5%
irredeemable convertible unsecured loan stocks which mature
in 2002, on a one-for-one basis.

To help offset the dilution effect that minority
shareholders face, creditors and major Amcorp shareholder
Tan Sri Azman Hashim who would be receiving the new Amcorp
shares will offer the new shares for sale, the statement
said.   The basis for the sale would be two new Amcorp
shares for every one existing share at the same price as
the new shares.

The company said the revised scheme was still subject to
acceptance by creditors.  Amcorp said that since talks with
creditors were on-going, the terms of the revised scheme
may be modified.  (Star Online  27-Oct-1999)


=====================
P H I L I P P I N E S
=====================

MONDRAGON INT'L PHILIPPINES: Bond filing ousts creditors
--------------------------------------------------------
The new self-elected board of Mondragon International
Philippines, Inc. (MIPI) -- composed mainly of the leisure
firm's creditors -- will have to bid their (board) seats
goodbye as the "other" group of MIPI officers posted the
100,000-peso (US$2,500 at PhP40.117:US$1) bond. The bond
makes the corporate court's injunction order against the
creditors effective.

Documents filed with the Securities and Exchange Commission
(SEC) on Monday showed that MIPI officers, led by president
and chairman Jose Antonio Gonzalez, complied with the
PhP100,000 bond required by the Commission, for the
injunction order to take effect.

In what the Gonzalez group considers a "mock" meeting,
creditors elected eight of their own bank executives to the
MIPI board, including Eduard S. Go, president and chief
operating officer of AsianBank as chairman of the board and
Mario B. Palou, first vice-president of Far East bank and
Trust Co., as MIPI president, among others.

"The (respondent's) representations with the public as the
newly elected officers of MIPI has created confusion and
chaos within the corporation, its investors and the
public," the SEC hearing panel said in its earlier
injunction order.  "Certainly, this poses danger to MIPI's
stock valuation and the interest of the investing public.
This is the damage sought to be prevented by the
commission," the corporate regulator added.

The SEC said the injunction would only take effect once a
PhP100,000 bond is posted by the Gonzalez group. The bond
will be used to cover whatever damages respondents of the
creditor banks may incur within the duration of the
injunction.  Earlier, the beleaguered firm's officials
asked the corporate court to declare the September 20
special stockholders meeting (conducted by the firm's
creditor banks) null and void, and to fine the banks PhP61
million (US$1.5 million) for moral and other damages.

According to the recent SEC decision, the Gonzalez-led
board "adequately established their entitlement to the
injunctive writ applied for. (They) had duly cancelled and
rescheduled the meeting of September 20 to November 15, as
all stockholders of record and respondent-banks were
notified thereof." The creditor banks, despite the said
notice (of change of meeting schedule), proceeded to hold
the annual meeting and elected themselves as the new set of
officers, the commission further pointed out.  (Business
World  27-Oct-1999)


===============
T H A I L A N D
===============

SIAM CEMENT: Expects to post 3rd quarter loss
--------------------------------------------
Siam Cement is expected to report a loss in the third
quarter, compared with a net profit of 6.04 billion baht
($154 million) for the same quarter a year earlier,
analysts said.

Siam Cement will release its earnings today before the
stock market opens its afternoon session at 2:30 pm local
time.  Siam Cement will report a loss of at least 10
billion baht on foreign currency translations, analysts
said. During the third quarter of this year, the baht
weakened 10 percent against the U.S. dollar, increasing the
burden of about $3.8 billion of foreign debt when
translated into baht.

In last year's third quarter, Siam Cement posted a currency
translation gain of 7.05 billion baht, reflecting a 7
percent strengthening of the baht.  Stripping out currency-
related losses, most analysts expect the latest third
quarter results to be better than a year earlier after the
shrinking economy bottomed out at the end of 1998. Higher
exports and the opening of an olefins plant should boost
sales.

Paper and chemicals will drive third-quarter earnings,
analysts said. A slowdown in construction activity because
of the rainy season will hold back earnings on cement and
building materials.  Interest expense is expected to be
little changed, with the benefits of falling lending rates
offset by interest costs on a total of 38 billion baht of
bonds issued in April and August.

Siam Cement will gradually recover in line with the
improving economy," said Kitti Hamnilrat, an analyst at
Phillip Securities (Thailand). "But we shouldn't expect to
see any double-digit growth for quite a long while."

In previous market reaction, Siam Cement declined 5.7
percent to 592 baht on July 30, a day after it posted
second-quarter profit of 3.38 billion baht, compared with a
loss of 12.9 billion baht in the same period a year
earlier.  Analysts said investors didn't respond positively
to the results because most of the profit came from a 2.31
billion baht currency translation gain as the baht
strengthened.

Siam Cement shares have fallen 5.4 percent this year,
compared with a 28.6 percent increase in the benchmark SET
Index.  The stock's 52-week high of 808 baht came on May 6
and its 52 week low of 328 baht occurred on October 27 last
year. On Friday, it rose 1.5 percent to 536 baht.
(Bloomberg, Business Day  27-Oct-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
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