TCR_Public/990616.MBX   T R O U B L E D   C O M P A N Y   R E P O R T E R

                      A S I A   P A C I F I C

               Thursday, June 17, 1999, Vol. 2, No. 117

                            Headlines


* C H I N A  &  H O N G  K O N G *

CHIGO TOYS LTD.:  Facing petition for winding up
FAN MEI ELECTRONIC:  Facing petition for winding up
FIBRE CONCRETE LTD.:  Facing petition for winding up
FIRST CAPITAL GROUP CO.:  Facing petition for winding up
FU HOO INTERNATIONAL:  Facing petition for winding up
GUANGDONG ENTERPRISES:  Creditor banks discuss counteroffer
HANDJADE COMPANY LTD.:  Facing petition for winding up
HENMAX INDUSTRIES:  Facing petition for winding up
HONBASE HOLDINGS LTD.:  Facing petition for winding up
HSIANG TIEN LTD.:  Facing petition for winding up
HUNG KAY DEVELOPMENT:  Facing petition for winding up
LADEN TRADING COMPANY:  Facing petition for winding up
LINGGUANG ENTERPRISES: Rebuked by regulators
MAIN GOODS INDUSTRIAL:  Facing petition for winding up
MAN MEI INTERNATIONAL:  Facing petition for winding up
MAX KING LTD.:  Facing petition for winding up
SOUND KINGDOM LTD.:  Facing petition for winding up
WINSKY CARGO LTD.:  Facing petition for winding up


* J A P A N *

ATLUS COMPANY:  Stock falls after annual loss disclosed
KAWASHIMA TEXTILE:  Stock falls after annual loss disclosed
MIKUNI CORPORATION: Stock falls after annual loss disclosed
NIIGATA CHUO BANK:  Stock falls after 2 days of non-trading


* K O R E A *

AJU TOUR BUS CO.:  Gets okay for creditor reconciliation
DAEWOO:  Auto merger with Samsung expected by weekend
KOREA LIFE:  2nd auction aborted, next one in July perhaps
KOREAN AIRLINES:  To be penalized for poor performance


* M A L A Y S I A *

RENONG:  Anticipating investor support of bond sale


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

BENGUET CORP.:  Reaches agreement with creditor banks
PHILIPPINE AIRLINES:  Accord with Lufthansa near
PHILIPPINE AIRLINES:  Union urges rehab rejection
PHILIPPINE AIRLINES:  Can't terminate consultants' contract
PRIME SAVINGS BANK:  PDIC to acquire nonperforming loans
SERG'S PRODUCTS:  SEC vetoes suspension of debt payments


* T H A I L A N D *

NAKORNTHON BANK:  FIDF proposal separate from central bank
PHOENIX PAPER:  Banks reviewing loans


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

CHIGO TOYS LTD.:  Facing petition for winding up
------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Lau Wai Wah for the winding up
of Chigo Toys Limited.

FAN MEI ELECTRONIC:  Facing petition for winding up
---------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 7 on the petition of Lee Pui Man for the winding up of
Fan Mei Electronic Company Limited.

FIBRE CONCRETE LTD.:  Facing petition for winding up
----------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 23 on the petition of The Hongkong and Shanghai
Banking Corporation Limited for the winding up of Fibre
Concrete Limited.

FIRST CAPITAL GROUP CO.:  Facing petition for winding up
--------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 30 on the petition of Guangdong International Trust
and Investment Corporation Hong Kong (Holdings) Limited for
the winding up of First Capital Group Company Limited.

GUANGDONG ENTERPRISES:  Banks contemplate counteroffer
------------------------------------------------------
The Asian Wall Street Journal reported in the Asian-Pacific
Briefs that the steering committee of bank lenders to
Guangdong Enterprises (GDE) will brief creditor banks today
on their progress in producing a counter proposal to
restructure the ailing company.

GDE and its adviser, Goldman Sachs, unveiled their
restructuring proposal last month and asked for creditors
to come back with a formal response by June 15, according
to the report. The creditors' steering committees dismissed
the plan as unsatisfactory, although they did say it
represented a starting point for further negoitiations.
However, the Asian Wall Street Journal reported, that
creditor banks have said they won't abide by GDE's proposed
timetable and are aiming to have their
counter proposal ready by June 30.

The steering committee of creditors plans to develop their
proposal over the next couple weeks and present a plan for
all creditors to endorse at a meeting scheduled for June
30, the paper reported. The initial restructuring plan
included a broad restructuring of the GDE group and a $3.9
billion debt swap for notes, equity and cash.

According to the paper, analysts estimate that the
effective writedown for the banks under the GDE plan could
be anywhere between 27 percent and 65 percent, although
most estimates seem to lean toward a figure of more than 50
percent. But bank creditors who stand to receive only 17
cents on the dollar following the collapse of Guangdong
International Trust and Investment Corp. aren't yet
resigned to taking a debt writedown on GDE, the paper
reported.

FU HOO INTERNATIONAL:  Facing petition for winding up
-----------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Dorup Limited trading as Ng Wing
Fai for the winding up of Fu Hoo International Limited.

HANDJADE COMPANY LTD.:  Facing petition for winding up
------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 23 on the petition of Dorup Limited trading as LG
Semicon (H.K.) Limited for the winding up of Handjade
Company Limited.

HENMAX INDUSTRIES:  Facing petition for winding up
--------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 23 on the petition of Dorup Limited trading as Tung
Kong Electrical Company for the winding up of Henmax
Industries Limited.

HONBASE HOLDINGS LTD.:  Facing petition for winding up
------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 23 on the petition of Commissioner of Inland Revenue
of Hong Kong  for the winding up of Honbase Holdings (H.K.)
Limited.

HSIANG TIEN LTD.:  Facing petition for winding up
-------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Chiu Ling Yau for the winding up
of Hsiang Tien Limited.

HUNG KAY DEVELOPMENT:  Facing petition for winding up
-----------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 30 on the petition of Laipwing Industrial Co. for the
winding up of Hung Kay Development Limited.

LADEN TRADING COMPANY:  Facing petition for winding up
------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Lam To Keung for the winding up
of Laden Trading Company Limited.

LINGGUANG ENTERPRISES: Rebuked by regulators
--------------------------------------------
The Asian Wall Street Journal reported that state-owned
Lingguang Industry Co. was rebuked by regulators at the
Shanghai Stock Exchange for failure to disclose important
information to investors.

Lingguang provided false information to investors regarding
the amount of loan guarantees it proided to affiliated
companies and the number of lawsuits that have been filed
against it, according to the report.  Last year, the paper
reported, Lingguang said it had made commitments to
guarantee 183.6 million yuan ($1 = 8.278 Yuan) in financing
deals for three affiliates.  It also told investors that it
was involved in no litigation.  

But at the request of the Shanghai exchange, the company
recently disclosed that it had guaranteed a total of 353.9
million yuan in loans and other credits for seven
affiliates, and that it has been named as a defendant in
eight separate lawsuits, the Asian Wall Street Journal
reported.  The company also admitted, according to the
paper, that the Chinese courts may force one of its major
shareholders to sell its stake in Lingguang to make
payments to creditors.

MAIN GOODS INDUSTRIAL:  Facing petition for winding up
------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 30 on the petition of Saima Avandero Hong Kong Limited
for the winding up of Main Goods Industrial Limited.

MEI INTERNATIONAL:  Facing petition for winding up
------------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 30 on the petition of Guangdong Textile Import &
Export Cotton Manufactured Goods Company Limited for the
winding up of Man Mei International Holdings Limited.

MAX KING LTD.:  Facing petition for winding up
----------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Wong Wah Shing for the winding
up of Max King Limited.

SOUND KINGDOM LTD.:  Facing petition for winding up
---------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
June 30 on the petition of Choi Kwok Man for the winding up
of Sound Kingdom Limited.

WINSKY CARGO LTD.:  Facing petition for winding up
--------------------------------------------------
The High Court of Hong Kong has scheduled a hearing for
July 14 on the petition of Kwok Tak Shing for the winding
up of Winsky Cargo Limited.


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

ATLUS COMPANY:  Stock falls after annual loss disclosed
-------------------------------------------------------
Atlus Co. (7866 JP ) fell 50 yen, or 3.1 percent, to 1,540.
The developer and seller of video game software reported a
group net loss of 6.1 billion yen for the year ended March
31, from a profit of 2.1 billion yen a year earlier.  
(Bloomberg Online  15-June-1999)

KAWASHIMA TEXTILE:  Stock falls after annual loss disclosed
-----------------------------------------------------------
Kawashima Textile Manufacturers Ltd. (3009 JP ) fell 6 yen,
or 2.8 percent, to 210. The fabric manufacturer reported a
group net loss of 4.7 billion yen for the year ended March
31, from a loss of 2.5 billion yen a year ago.  (Bloomberg
Online 15-June-1999)

MIKUNI CORPORATION: Stock falls after annual loss disclosed
-----------------------------------------------------------
Mikuni Corp. (7247 JP ) fell 4 yen, or 2.2 percent, to 180.
The carburetor manufacturer lowered its group net loss
forecast for the year ended in March to 2.3 billion yen,
from a previously forecast loss of 800 million yen.  
(Bloomberg Online  15-June-1999)

NIIGATA CHUO BANK:  Stock falls after 2 days of non-trading
-----------------------------------------------------------
Niigata Chuo Bank Ltd. (8538 JP ) fell 180 yen, or 72.9
percent, to 67. Shares were untraded the previous two days
amid a glut of sell orders. The regional bank said Friday
that its capital-to-asset ratio fell below the required 4
percent level to 2.01 percent, reflecting a government
audit which found the lender had 30.1 billion yen more in
bad loans that need to be written off. The bank said
yesterday its board of directors will resign for allowing
the lender's capital to fall below the regulatory
requirement.  (Bloomberg Online  15-June-1999)


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

AJU TOUR BUS CO.:  Gets okay for creditor reconciliation
--------------------------------------------------------
The Pusan Regional Court announced in the Korean language
Maeil Kyungje that the Aju Tour Bus Company had been given
permission to begin a creditor reconciliation process. The
company representative is Kim Il-kyoon. The company's
address is 89-1, 4 Ka, Joong-ang Dong, Joong-Gu, Pusan.

DAEWOO:  Auto merger with Samsung expected by weekend
-----------------------------------------------------
The Samsung and Daewoo groups are close to wrapping up
their months-long talks on the merger of their auto
affiliates, with both sides likely to evenly assume Samsung
Motors' 4.3 trillion won ($3.67 billion) in debts, industry
sources said yesterday.

Samsung has allegedly agreed to shoulder about 2 trillion
won of the debts, while Daewoo may take over between 1
trillion won and 1.5 trillion won, said the sources.
Additionally, a couple of Samsung affiliates, including
Samsung Life Insurance, will push to make equity
investments, worth 1 trillion won, in Daewoo Motor to
compensate for the group's debt assumption, they added. The
remaining balance, estimated at 1 trillion won, is expected
to be assumed by creditor banks in the form of debt-to-
equity swaps, they said.

The debt-sharing issue has been the last stumbling block in
the dragged-on negotiations over Daewoo Motor's acquisition
of upstart Samsung Motors, dubbed the centerpiece of the
government-arranged "big-deal" restructuring.  A Samsung
spokesman said that disputes on major issues, including
debt assumption, have been settled and the deal will be
finalized by the end of this week.

"In a bid to avoid resistance from shareholders, Samsung's
unlisted companies, like Samsung Life Insurance, will
participate in the debt takeovers," he said.

Daewoo executives also said that the group intends to take
over parts of Samsung Motors' debts if certain conditions
are met, including reducing the automaker's debt ratio to
below 200 percent.  (Korea Herald  16-June-1999)

KOREA LIFE:  2nd auction aborted, next one in July perhaps
----------------------------------------------------------
The sale of the troubled Korea Life Insurance Co. is likely
to be delayed until after this month as the second
international auction has been aborted.

An official of the Financial Supervisory Commission (FSC)
said yesterday that all of the eight bidders for the second
auction failed to meet government-set criteria. On Monday,
an ad hoc committee of the FSC reviewed eight offers that
had been submitted for the second auction.

With the two auctions aborted, the official said the
commission in charge of the nation's financial
restructuring has picked seven "priority negotiation
partners" and requested them to hand in revised offers.  He
refused to reveal the seven partners, but four prospective
buyers - LG Group, Hanhwa Group, a consortium led by AMCO
and Novecon of the United States - were known to be
included in the list.

LG, which participated in the first-round bidding, dropped
out of the second auction, citing a lack of funds to buy
Korea Life.  The priority negotiation partners are
investors whom the government considers likely to make new
offers for Korea Life in line with government stipulations,
the official said.  But Axa of France and Metropolitan of
the United States, which had not participated in the first
and second auctions, were excluded.

Bidders who participated in the second auction were three
U.S. consortia led by AMCO, Novecon and GAI; two Hong Kong
financial firms; and three Korean consortia led by Hanhwa,
the Myungsung Group and Shindongyang Machinery Engineering,
an auto parts maker.  The first-round auction for Korea
Life failed last month as all of the four bidders,
including LG, failed to live up to a set of government
criteria.

Korea Life, the nation's third largest life insurer, is now
under government supervision due to its weak financial
status - liabilities exceeding assets by more than 2
trillion won ($1.7 billion).  (Korea Herald  16-June-1999)

KOREAN AIRLINES:  To be penalized for poor performance
------------------------------------------------------
The Korea Herald and Korea Times reported that the Seoul
government, Ministry of Construction and Transportation
(MOCT) said that it will ground 50 percent of Korean Air
flights on the Seoul-Pohang route for six months, beginning
July 1st. The MOCT will also disqualify KAL from opening
new air routes and expanding flights on existing routes in
the coming 12 months, the papers reported.

Such harsh penalties are expected to cause KAL a loss of
about 36 billion won ($1 = 1172 Won) in annual sales, the
papers reported. The frequent accidents by KAL plane's has
already caused many passengers to avoid KAL. These new
troubles fall on the company after other airlines cancelled
code sharing agreements and other cooperative measures that
increased income.

The actions against KAL stem from a series of accidents
that have been linked to airline management decisions to
skimp on maintenance and proper safety measures.


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

RENONG:  Anticipating investor support of bond sale
---------------------------------------------------
Renong, Malaysia's most indebted industrial group, will
find out this week if investors will back its unit's RM8.4
billion (S$3.8 billion) bond sale to rescue its parent.  

A successful response is assured, analysts say, and will
clear the final hurdle for the country's biggest corporate
debt restructuring.  The move will keep Renong from
collapsing under a debt burden of RM20 billion -- more than
5 per cent of the nation's total loans.

"If interest rates keep falling, its a foregone conclusion"
that the response will be positive, said Mr Gary Tang, head
of institutional sales at OSK Securities.

Renong's subsidiary, Projek Lebuhraya Utara Selatan, is
selling seven-year, zero-coupon bonds which yield a revised
9.4 per cent. The proceeds will be used to pay off
creditors of Renong and its unit, United Engineers
Malaysia.  Malaysian banks, insurers and pension funds such
as the Employees Provident Fund are the likely buyers.  
Renong will get "an indicative response" from bond buyers
this week, according to a statement issued to Renong
creditors.  (Straits Times  15-June-1999)  


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

BENGUET CORP.:  Reaches agreement with creditor banks
-----------------------------------------------------
Benguet Corp., the country's oldest mining company, has
reached an agreement with its creditor banks for the
restructuring of its P1.36 billion debts.

In a disclosure to the Philippine Stock Exchange (PSE),
Benguet said the agreement was signed last June 11.  The
details of the restructuring plan are contained in a Term
Sheet prepared by Union Bank of the Philippines, one of the
creditors, and signed by Benguet.

Under the agreement, the maturity of Benguet's loans will
be extended up to June 30, 2000 with automatic renewal
every anniversary date up to the year 2002, upon payment of
annual interest, and subject to the company's compliance
with the agreement.  A major provision in the agreement
stipulates the sale of the company's non-performing assets
to pay off its debts. The other terms of the agreement
include provision for additional collateral.

The terms of the restructuring agreement will be formalized
in a Memorandum of Agreement to be signed by all secured
and unsecured bank creditors of Benguet.  The banks' loans
to Benguet are secured by a mortgage trust indenture which
the banks will maintain as collateral for the loans.

In its quarterly report as of Sept. 30, 1998 submitted to
the PSE, Benguet's long-term debt totaled P140 million
while banks loans amounted to P742.895 million out of its
total obligations. At least six banks extended long-term
loans to Benguet, namely, Keppel Monte Bank (P49 million),
United Coconut Planters Bank and Trust Co. (P34.8 million),
and Far Bank and Trust Co (P9.8 million).

As of the third quarter of the year, it has a combined
dollar denominated loans worth $23.97 million which it owes
to Philippine National Bank ($4.7 million), Rizal
Commercial Banking Corp. ($ 4.6 million), Union Bank of the
Philippines ($1.9 million), UCPB ($2.7 million), Credit
Lyonnals ($1.8 million), Security Bank ($466,000), Banque
Nationale de Paris ($1.03 million), Urban Bank ($806,000),
Lazard Freres & Co. ($777,000), Philippine Banking Corp.
($259,000), AsiaBank ($259,000), Metropolitan Bank ($3.8
million) and other local companies.
(Manila Times  16-June-1999)


PHILIPPINE AIRLINES:  Accord with Lufthansa near
------------------------------------------------
Philippine Airlines, Inc. (PAL) and Germany's Lufthansa
Technik AG are in the "serious" stage of their negotiations
to set up a joint venture which will handle the flag
carrier's maintenance and engineering unit.

In fact, BusinessWorld sources at PAL expect the two to
sign a "binding" document before the week ends.  One PAL
official who asked not to be identified said the document
"could be either a letter of intent or a memorandum of
understanding" that would eventually pave the way for a
joint-venture contract.

BusinessWorld learned officials of the Lucio Tan group and
the Filipino counsels of Lufthansa Technik are in
"continuous negotiations" over provisions of the soon-to-
be-signed document. However, the PAL official said it may
still take some time before an actual agreement is signed
as Lufthansa Technik is still conducting a due diligence
study.

"It's difficult to say what will happen because unless
something is actually signed, you're still not sure until
the last minute," the official said.

Meanwhile, in a related development, leaders of PAL's
6,000-strong ground crew union are now focusing their
criticisms on the Securities and Exchange Commission and
its approval of the flag carrier's rehabilitation plan.  In
a statement, leaders of the PAL Employees Association
(PALEA) yesterday questioned the approval of the
rehabilitation plan, saying the commission failed to
consider the issues raised by the union concerning the
alleged violation of their labor rights and threat to their
job security.

In particular, the PALEA expressed "serious doubt" about
the flag carrier's proposal to spin off its non-core
business units, saying such a move "defies business logic"
as some of these units are believed to be revenue earners.  
In a motion filed with the SEC yesterday, the union said
the spinoff of these income-generating ancillary businesses
may result in the unemployment of about 4,200 workers. It
also noted that even without the spin-off or sale of
ancillary businesses, 900 employees stand to lose their
jobs.

Earlier, in anticipation of a retrenchment in the
implementation of the plan, PALEA had asked PAL management
where the 900 employees to be retrenched will come from. It
got no answer.

"This is very crucial on the issue of industrial peace,"
PALEA said. "There can be no labor problem if those to be
retrenched (are contractual and administrative employees),"
it said.

PALEA likewise reiterated its rejection of the management-
initiated stock distribution scheme in exchange for the
suspension of the union's collective bargaining agreement
(CBA).

"The SEC, as it confronts the concerns of big businesses
like the Lucio Tan group, is strongly urged to address and
not to ignore or remain silent about the basic concerns of
PAL workers for the protection of their livelihood,
benefits and lawful rights," the group said.  "It is not
true that PALEA had agreed to a suspension of the CBA for
10 years this has to be clarified because investors and
creditors may be misled into believing that there is such a
final agreement on CBA suspension," the union said.  
(Business World   16-June-1999)

PHILIPPINE AIRLINES:  Union urges rehab rejection
-------------------------------------------------
The Philippine Airlines (PAL) ground crew union has urged
regulators to ditch the debt-ridden flag carrier's latest
rehabilitation plan, the Securities and Exchange Commission
said yesterday.

The PAL Employees' Association asked the commission to
revoke its approval of the plan and seek a new one
"addressing all the concerns" of the union, according to a
statement.  The loss-making airline beat a June 4 deadline
to find 200 million dollars in fresh equity coupled with a
workers' pledge of no strikes for 10 years to convince the
commission to let it continue flying.

But the union, comprising more than 5,000 ground crew, said
in its statement that the rehabilitation plan did not
address its members' fears over the planned spinoff and
sale of non-core PAL businesses.  It also expressed concern
over a provision to suspend the union's collective-
bargaining agreement.

PAL president Avelino Zapanta earlier said at least 65
percent of the union members had accepted 60,000 PAL shares
each in exchange for the 10-year suspension of the union's
collective-bargaining agreement.  The latest survival plan
stretches repayment of PAL's debt of 2.24 billion dollars
in loans to 12 years.

PAL, Asia's oldest airline, has been in the red for the
past six fiscal years to March 1998. It was forced to close
temporarily in September following a crippling pilots'
strike but has since returned to the skies with drastically
limited operations.   (Business Day  16-June-1999)

PRIME SAVINGS BANK:  PDIC to acquire nonperforming loans
--------------------------------------------------------
The Philippine Deposit Insurance Corp. (PDIC) through the
financial backing of the Bangko Sentral (Central Bank),
will take out some 1.8-billion-peso worth of nonperforming
loans and assorted assets from Prime Savings Bank's books,
paving the way for a "clean book" buyout by interested
investors.

"The kumpare loans, which constitute the nonperforming
loans, are approximately 1.5 billion (Philippine) pesos
(PhP). There are also other items which would need to be
taken out in order to produce a clean balance sheet," said
PDIC senior vice-president Ricardo Tan. "All in all, (it
will) just be a little over PhP1.8 billion approximately.  
Those are the assets, and that will be the extent of the
'take out'," he added.

He clarified, however, that taking out the bad loans falls
within PDIC's mandate and does not violate any provisions
of its charter, as embodied in Republic Act 3591, the law
creating the deposit insurance body.

"I must emphasize that under the charter, we have what we
call PDIC's 'least cost', and that is not going to be
violated," he explained. "We are not going to provide
assistance over and beyond what is capped in our charter."  
The PDIC official explained that offering Prime Bank on a
"clean book" basis should help it fetch a higher price on
the market.  "It is anticipated that the most interested
'white knight' or investor will offer a premium, because
there are 62 branches including their head (office)," he
said, "and there is also a fairly large deposit base of
close to PhP4.0 billion."

Mr. Tan said that any premium offered by an investor will
translate to the discount at which PDIC and Bangko Sentral
will take out Prime Bank's loans.

"We will see if we can collect on some of them," he said of
the assets PDIC plans to assume. "These are the kinds of
loans that any investor banking institution would not be
saddled with, and they would want that cleaned out."

He noted that these bad assets had already been identified
by PDIC early on together with the Bangko Sentral.  With
regard to the bids expected to be submitted by 5:00 p.m.
yesterday, he explained, "PDIC and BSP (Bangko Sentral ng
Pilipinas) staff will be jointly evaluating these bids."

"The decision will have to be made at the joint meeting of
the Monetary Board and the PDIC board, hopefully tomorrow,"
he added. "If there are responsive bids and there is
something to consider, we will have to meet (on it)."

As of yesterday evening, however, only one bank was
confirmed to have submitted its bid to acquire the capital-
deficient bank. The Bangko Sentral refused to name the
bank.  Five banks sounded off last week their interest in
acquiring the thrift bank.

Metropolitan Bank and Trust Corp.'s subsidiary Global
Business Bank submitted documents to the Bangko Sentral
yesterday although the latter refused to confirm whether
the bank is formally bidding for Prime Bank.

"After the submission, the Monetary Board will discuss the
merits of their proposals. The authorities will evaluate,
assess and analyze their offers relative to Prime Bank
needs," Acting Bangko Sentral Governor Edgardo P. Zialcita
said.

The Monetary Board is scheduled to meet today. Bangko
Sentral Gov. Gabriel Singson and Deputy Governor for
banking supervision and examination Alberto Reyes are,
however, out of the country. The Bangko Sentral earlier
said Prime Bank, the latest bank that reported a bank
holiday, has attracted five interested buyers, namely
Global Business Bank, Bank of Commerce, Export and Industry
Bank, Manila Banking Corp. and Allied Banking Corp.

The central bank, which is concurrently the regulator of
the banking system aside from being the implementor of the
government's monetary policy, has committed to settle the
problem of Prime Bank and ensure that it reopens this week.  
Prime Bank has collapsed from huge withdrawals two weeks
ago after news that its capital has turned negative
heightened existing fears that the bank is in trouble.

The Bangko Sentral has admitted that Prime Bank is
suffering from more than 50% nonperforming loan ratio, most
of which are through "kumpare" loans or unpaid salary
loans.  (Business World  16-June-1999)

PHILIPPINE AIRLINES:  Can't terminate consultants' contract
-----------------------------------------------------------
Philippine Airlines (PAL) can't terminate a consulting
contract with five former Cathay Pacific Airways executives
unless the debt-laden carrier hires other experts to
replace them, the country's top corporate regulator said.
Securities and Exchange Commission (SEC) chairman Perfecto
Yasay said a rehabilitation plan approved by PAL's
creditors requires the airline to have technical experts
under contract.  Last week, PAL president Avelino Zapanta
said the airline is negotiating with Deutsche Lufthansa AG
to replace Regent Star Services Ltd., which signed a five-
year contract in January to oversee its rehabilitation.

"The SEC will never allow the cancellation of any
contractual arrangement with Regent Star, because that
would be a violation of the terms of the rehab plan," Yasay
said.

He was also commenting on Regent Star's request for
reassurance from SEC and PAL that its management
consultancy contract with the airline will still be
honored.

"The SEC is not in the position to make a clarification (on
the status of Regent Star Services within PAL) since the
agreement was signed between PAL and Regent Star,'' Yasay
said. "We will always make sure that there can be no hiatus
at the time that PAL is under rehabilitation, where there
will be no professional team there to act as management
consultant and to serve as member of permanent
rehabilitation receiver (PRR)," he added.

Last week, Regent Star told PAL and the SEC that its
officials won't serve on the rehabilitation committee
unless the carrier honors its contract.  The sacking of
Regent Star could rattle PAL's creditors, some of which
insisted that the consultants remain in place to implement
the airline's rehabilitation plan. In a Reuters report,
Zapanta said the PAL management was seeking a more
established and credible group of advisers.

"We would like to have more established and credible group
of advisers. Lufthansa Consulting is a professional
organization, Regent Star was born overnight," Zapanta
said.
Yasay said Regent Star's participation "is an important
component in the rehabilitation plan, to ensure that we
have the proper professionals or experts assisting in the
rehabilitation."  (Manila Times  16-June-1999)

SERG'S PRODUCTS:  SEC vetoes suspension of debt payments
--------------------------------------------------------
THE Securities and Exchange Commission (SEC) has rejected
the petition for suspension of debt payments filed by
chocolate maker Serg's Products Inc. due to
misrepresentation.

The SEC found Serg's guilty of misrepresentation for not
disclosing all its creditors and for including among its
supposed assets, properties registered in the names of
other persons.  Following the dismissal of the case,
creditors of Serg's can now start foreclosure proceedings
against the chocolate maker.

Rizal Commercial Banking Corp. (RCBC) is Serg's biggest
creditor with a loan exposure of P89.41 million. Other
creditors include Allied Bank, Dao Heng Bank, PNB
SolidBank, Standard Chartered, UCPB, East Asia, Equitable
Bank, PDCP Bank, First Metro Investment Corp., Development
Bank of the Philippines, SolidBank and Metropolitan Bank &
Trust Co.

The SEC said all companies seeking debt relief from the
Commission is required to identify all its creditors and
specify whether the claim is admitted, contingent, or
disputed.  Serg's however, argued that it does not
recognize the alleged credits made by several firms against
the firm.

"The fact alone that the credit is disputed is no reason
for non-disclosure of the amount.," the SEC said.

Among the assets found by the SEC under the name of third
persons include properties in Lipa, Batangas, Davao City,
and Calaca, Batangas.  The SEC also found that Serg's
overstated its cash deposits in PCIBank by P24.97 million.
A certification issued by PCIBank showed that Serg's
current and savings account balances as of Sept. 30 last
year was only P5,929.74.

Creditor banks of Serg's earlier said the chocolate
producer is not entitled to debt relief since it is
insolvent and that its financial difficulties were caused
by gross mismanagement. The banks said the value of the
properties which Serg's claimed it owned, when in fact they
belong to other persons, is less than its liabilities.

Without the properties owned by other persons. Serg's has
assets of only P1.87 billion or P31.17 million less than
its total liabilities of P1.9 billion.  Under SEC rules, an
applicant must have sufficient assets to cover all its
debts and must disclose all its liabilities to qualify for
debt relief.

In its petition with the SEC, Serg's said it has sufficient
assets to cover its liabilities, but it cannot pay its
maturing debts on time due to financial constraints brought
about the economic crisis.   As of end-September this year,
the company's total assets amounted to P2 billion.

At least three banks (PDCP, PCIBank and Dao Heng Ban) have
already initiated foreclosure proceedings against Serg's.
Serg's said it can pay off all its debts if it will be
given enough time to work out a viable and feasible
rehabilitation plan.  The company embarked on a
modernization program starting in 1996 to boost
productivity and enhance the quality of its products.  It
also set up a P30 million bean processing plant which is
expected to be operational in the first quarter of 1999.

Serg's said it has held discussions with at least three
parties interested in infusing equity into the company. The
company is also negotiating with its creditors for a
restructuring of its debts.  Established in 1954 by
businessman Sergio Goquilay, Serg's manufactures and sells
chocolate, chocolate candies, wafers, biscuits, as well as
food and beverages derived from coffee. With a manpower of
671 employees, Serg's exports its products to the US,
Europe and Southeast Asia.  (Manila Times  16-June-1999).


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

NAKORNTHON BANK:  FIDF proposal separate from central bank   
----------------------------------------------------------
Nakornthon Bank's board resolution announced yesterday has
nothing to do with the central bank's pending negotiation
with London-based Standard Chartered Bank, which is tipped
to become the Thai bank's largest single shareholder,
according to a source at the Bank of Thailand.

''The bank did not inform the central bank [of the
decision]. The Bank of Thailand is still in talks with
StanChart and expects to conclude the proposed deal within
this week,'' the source said.

He noted that the proposal would then be forwarded for
approval to the Financial Institutions Development Fund,
which was expected to inject around Bt10 billion into NTB.
The FIDF's board of directors will meet next week.  
However, if the FIDF board resolves that it cannot accept
the conditions of the deal, Finance Minister Tarrin
Nimmanahaeminda will need to make a decision. The FIDF has
been reluctant to make the injection with the Finance
Ministry providing no guarantee of associated risks.

''There are a number of matters which we intend to continue
to discuss. We would continue the negotiation, but no
comment on market rumours,'' said Paul Dowling, head of
StanChart's Southeast Asian External Affairs Department.

NTB said yesterday that it had revised its recapitalisation
plan. Its capital will be raised to only Bt18.8 billion,
down from the previous expectation of Bt30 billion.  The
bank's present capital is expected to fall to Bt2 million
after reducing on the Bank of Thailand's orders. Then the
capital will be raised to Bt18.8 billion by 1.18 trillion
preferred shares and 700 billion common shares with par
value of Bt0.01 each, NTB said in a filing to the Stock
Exchange of Thailand. NTB will seek approval from its
shareholders on June 24.

Under the previous plan the bank was to issue 1.33 trillion
preferred shares and 1.67 trillion common shares at par
value of Bt0.01 each. Then the Thai authorities were to
inject Bt13.26 billion into NTB in order to cover the
bank's negative net worth and StanChart another Bt6.194
billion.  NTB explained that the revision followed
recapitalisation uncertainty.

Earlier NTB's board of directors approved the plan to apply
for the government tier-1 support scheme from the Financial
Restructuring Advisory Committee (FRAC). Now that the Bank
of Thailand is considering having the FIDF recapitalise NTB
as the FRAC cannot help institutions with negative net
worth, the bank has added in the filing that it ''will seek
tier-1 capital support from the FIDF, the Finance Ministry,
another government agency or another party selected by the
FIDF or the Finance Ministry''.

Vincent Milton, a banking analyst at Fitch IBCA, said: ''We
expect the deal will go ahead. It's a matter of going
through the normal process of negotiations between the Thai
authorities and the private parties. It would be positive
in terms of rehabilitating Nakornthon.''

He expected the government to eventually recoup Bt4 billion
to Bt5 billion of its investment by selling back the
preferred shares.  (Nation  16-June-1999)


PHOENIX PAPER:  Hostile takover has banks reviewing loans
---------------------------------------------------------
The hostile takeover battle for Phoenix Pulp and Paper Co
has led a group of Scandinavian banks to review its US$80
million loan commitment to the company.

Representatives of the banks visited Bangkok last week to
meet senior officials of the Bank of Thailand and the
Industrial Finance Corp of Thailand which provides the
guarantee for the offshore loan to the pulp and paper
company, officials sources said yesterday.  The trip was
made ahead of today's all-important extraordinary meeting
of Phoenix shareholders at which Globex Co, an Indo-Thai
investment group, aims to wrestle control of the company
from the management.

Kitti Patpongpibul, deputy governor of the Bank of
Thailand, confirmed that a recent meeting had been held
with representatives of Finland's Leonia Bank which is
subsidising the interest on the $80-million loan from two
Scandanavian banks -- EKN and Finnvera.  He said the
committee on debt restructuring had advised the Finnish
bank to discuss the matter with other creditor banks of
Phoenix before taking any decision because the company's
current problems had to do with the shareholders and the
board and were not related to the debt.

The Scandinavian banks had become concerned about the
hostile takeover battle and the use of the money which had
been provided on environmental and social grounds. Finland
supplied a pulp and waste treatment system for Phoenix
which also created jobs for 60,000 families.  The banks
have seen the environment issue becoming a local political
game while the hostile takeover was regarded as an attempt
to drive up the share price of the company.

''We have not made any decision [on the loan],'' said
Heikki Nokelainess from Leonia Bank in a telephone
interview with The Nation.  Vashi Purswani from the Globlex
camp denied that the Scandinavia banks were planning to
pull out, saying they wanted to see the firm run by a
professional team.

The uncertain loan outlook nevertheless adds more
complexity to Phoenix.  George Davison, who has run the
company for 20 years, yesterday submitted his resignation
from the company following a series of recent setbacks. On
Monday, a group of workers from Phoenix plants in Khon Kaen
threatened not to join the extraordinary shareholders'
meeting today in Bangkok, saying the management was
insincere in its efforts to solve the pollution problems
caused by waste water from its plant.

George Davison's son Mark is also a director of the
company, but the current management will need a strong show
of support to fight off the Globex bid.  The Globex group
is expected to win easily because of the number of shares
it holds by itself and through proxy.  Globex has proposed
expanding the number of Phoenix directors to 33 from 15, of
which 18 would be its nominees. If it wins, Globlex will
control almost three quarters of the board.

But it cannot seek an immediate dismissal of the Davison
management. The Public Company Act stipulates that such a
move can only be carried out by a vote of more than 50 per
cent of the shares and 75 per cent of those attending the
shareholders' meeting.  The Davison camp has the capacity
to mobilise 4,000 people at the meeting, which means the
Globex group would have to muster 12,000 to vote down the
management.  (Nation  16-June-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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Copyright 1999.  All rights reserved.  ISSN: 1520-9482.

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