TCRAP_Public/000217.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, February 17, 2000, Vol. 3, No. 34


* C H I N A  &  H O N G  K O N G *

CHINADOTCOM: Posts wider annual loss
DATSUN COURT SAUNA HOUSE: Facing winding up petition
THOUSAND DRAGON DEVELOPMENT: Facing winding up petition
WAH LEE RESOURCES HLDGS.: Reports share fluctuation to HKSE

* I N D O N E S I A *

PERUSAHAAN LISTRIK NEGARA: Expects to post 9-month loss
PT LIPPO KARAWACI: Offers asset-to-equity swap
PT PUTRA SURYA MULTIDANA: JSX updated on bankruptcy

* J A P A N *

L. KAKUEI CORP.: Files for bankruptcy
MICROSOFT JAPAN: Under fire like U.S. parent
NAGASAKIYA: LTCB may ask Gov't to cover loan
NAGASAKIYA: Stock exchanges to delist
NAKANO CORP.: Shares hit low point
NIPPON CONLUX CO.: Expects to post annual loss
NIPPON CREDIT BANK: Softbank consortium lead bidder
NIPPON SHINPAN CO.: To cease real estate biz, post loss
NISSAN MOTOR: Stock hits 13-month low
SUMITOMO METAL INDUSTRIES: Net loss triggers exec paycut

* K O R E A *

DAEWOO MOTOR: Bid invitations go out

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

GERRY COMMERCIAL: Sugar trader faces perjury raps
INT'L CONTAINER TERMINAL SVCS.: To hold port-pullout talks
NATIONAL STEEL CORP.: European group in buyout final stages
NEW FRONTIER SUGAR CORP.: Sugar trader faces perjury raps
SHEMBERG GROUP: Creditors OK debt relief
SOUTH PACIFIC SUGAR CORP.: Sugar trader faces perjury raps
UNIWIDE GROUP: Asking for 50% debt repayment discount

* T H A I L A N D *

SIAM CEMENT: Reports Baht 4.7B loss
SIAM CEMENT PLC: Unloads Bt35B in holdings
THAI PETROCHEMICAL INDUS.: Creditors ask court for control
THAI PETROCHEMICAL INDUS.: Bankruptcy court delays decision
THAI PETROCHEMICAL INDUS.: Challenges creditors

C H I N A  &  H O N G  K O N G

CHINADOTCOM: Posts wider annual loss
Chinadotcom's net loss last year more than doubled from
1998 to US$18.7M, despite a more than five-fold leap in
revenue to $20.1M. In the final quarter of last year, the
net loss widened more than five times from 1998 to $13M, as
revenue more than doubled to $10.8M.  Chief financial
officer Peter Hamilton said fast expansion in a bid to tap
market share in the region resulted in an operating loss of
$19.7M in the fourth quarter. A full year figure was not

DATSUN COURT SAUNA HOUSE: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for March 22 on the petition of
Kong Wai Fu for the winding up of Datsun Court Sauna House
Limited. A notice of legal appearance must be filed on or
before March 21.

THOUSAND DRAGON DEVELOPMENT: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for March 15 on the petition of Sin
Ping for the winding up of Thousand Dragon Development
Limited. A notice of legal appearance must be filed on or
before March 14.

WAH LEE RESOURCES HLDGS.: Reports share fluctuation to HKSE
The Directors of the Wah Lee Resources Holdings Limited
(incorporated in Bermuda with limited liability), through
Yeung Kwok Fan, Chairman and Managing Director, have noted
the recent increase in the price and trading volume of the
shares of the Company and wish to state that  other than
the matter set out below they are not aware of any reasons
for such increase.

The Directors announce that they are informed by Lucky
Bingo, a substantial shareholder of the Company holding
approximately 33.01 per cent. of the issued share capital
of the Company, that it has commenced preliminary
negotiation with an independent third party not connected
with the Company, its directors, chief executives or
substantial shareholders of the Company or any of its
subsidiaries or any of their respective associates (as
defined in the Listing Rules) for the disposal of shares
held by it in the Company.

The Disposal may or may not proceed and no binding
agreement in relation to the Disposal has been made between
the parties. In particular, details of the Disposal,
including timing of the disposal, the number of the shares
to be disposed and the consideration, has not been
discussed.  At this moment, the Directors do not have any
idea of when the negotiation will be materialised or if new
Directors are to be appointed to the board of directors of
the Company.

The Directors also confirm that save for the Disposal,
there are no negotiations or agreements relating to
intended acquisitions or realisations which are
discloseable under paragraph 3 of the Listing Agreement,
neither are the Directors aware of any matter discloseable
under the general obligation imposed by paragraph 2 of the
Listing Agreement, which is or may be price-sensitive
nature.  If the Company should enter into any agreement
which constitutes notifiable transaction under the
applicable provisions of the Listing Rules, an announcement
will be made.

The Directors refer to the announcements of the Company
dated 21 September 1999 and 30 November 1999 regarding the
restructuring of the indebtedness of the Group and wish to
state that the Company is still in the progress of
negotiations with the bankers and financial institutions of
the Group. The Company will keep the public informed on the
progress of the debt restructuring.

In the meantime, public investors are urged to exercise
extreme caution in dealing in the shares and warrants of
the Company.  (Hong Kong Stock Exchange  16-Feb-2000)


PERUSAHAAN LISTRIK NEGARA: Expects to post 9-month loss
Perusahaan Listrik Negara, Indonesia's state-owned power
company, expects to lose 4.04 trillion rupiah in the April-
December period, even after a sharp increase in electricity
prices. The loss would have been 7.9 trillion rupiah
without the 29.3% electricity price increase, said Mines
and Energy Minister Susilo Yudhoyono.

PT Bunas Finance Indonesia Tbk, through Yose Rizal Bambang
Aribowo, Head of Listing Division Pjs. Head of Trading
Division, reports to the Jakarta Stock Exchange on a recent
bondholder meeting conducted 10 February 2000.

1. Approved and accepted clarification/responsibility of
company regarding default of payment of Interest Coupon
Bond No.5.

2. Did not approve plan of the company's debt

3. Approved to give power to the trustee agent regarding
steps which should be executed related with result of
General Bondholder Meeting.

4. Did not approve the write-off the company's financial
ratio as determined in the Trustee Agreement.

For the third meeting agenda in the General Bondholder
Meeting regarding approval proposal to the change of
agreements related with Bond Emission, and give power to
the trustee/bondholder appointed to discuss the Company's
Debt Restructuring with Informal Steering Committee and
Company, can not be executed because the plan proposal of
debt restructuring was not approved by majority bondholders
(Jakarta Stock Exchange  15-Feb-2000)

PT LIPPO KARAWACI: Offers asset-to-equity swap
PT Lippo Karawaci (JSX:LPKR), property subsidiary of the
Lippo Group, said it is offering asset to equity swap or
sell part of its assets in its attempt to restructure its

Company executive Hendra Sidin said LPKR had US$ 40 million
in foreign debts and that some of the debts were overdue.
The company also has Rp200 billion (US$ 28.5 million) in
debt to Bank Danamon and Rp28 billion to other domestic
banks that is also overdue.

Hendra said his company had not succeeded in reaching an
agreement with its foreign creditors on its proposed
restructure, but it had signed a letter of commitment on
its domestic debts with the Indonesian Bank Restructuring
Agency (IBRA) that was now in control of Bank Danamon and
its other creditor banks.  (Asia Pulse  14-Feb-2000)

PT PUTRA SURYA MULTIDANA: JSX updated on bankruptcy
Appointing to the hearing was conducted between Jakarta
Stock Exchange, Kantor Kurator dan Pengurus Indonesia
Lucas, SH,CN through letter No. 132/KP-L/PSM/II/200 dated
09 February 2000 regarding Update the first verification
meeting of PT Putra Surya Multidana Tbk, informs the
progress of bankruptcy of PT Putra Surya Multidana Tbk
especially regarding debt-credit verification meeting
conducted on 4 February 2000.

In the meeting, there was no approval regarding credit-
debit between creditors and Curator, therefore the extended
verification meeting will be executed on 14 February 2000.
The further progress of the extended meeting will be
reported to the Jakarta Stock Exchange.  Kantor Kurator dan
Pengurus Indonesia Lucas, SH, CN released the announcement
as per attached.  (Jakarta Stock Exchange  15-Feb-2000)


L. KAKUEI CORP.: Files for bankruptcy
A mid-sized property developer affiliated with the
collapsed Long-Term Credit Bank of Japan (LTCB) went under
Tuesday with debts of 135.1 billion yen (1.3 billion
dollars). L Kakuei Corp., which develops suburban
condominium complexes, lodged an application for bankruptcy
with the Tokyo District Court.

"The company filed for bankruptcy today and we accepted
it," said a spokesman for the court who declined to be

L Kakuei becomes Japan's biggest construction failure this
year, after proving unable to clear the large debts dating
from Japan's "bubble economy" investment boom of a decade
ago.  "Also it was due to the collapse of LTCB," said
Shirou Abe of private research agency Teikoku Databank,
which monitors corporate failures in Japan.

LTCB, L Kakuei's main creditor, collapsed in October 1998
under the weight of massive bad loans dating back to the
bubble economy.  Last Wednesday, it concluded a deal with a
syndicate led by Ripplewood Holdings of the US on the first
outright sale of a Japanese bank to foreigners.

L Kakuei was founded in 1949 and employs 117 people. Its
financial standing deteriorated sharply after LTCB's
collapse and in the year to last March, it reported a net
loss of 1.83 billion yen.  The Tokyo Stock Exchange said it
would delist the firm from its first section in May.

Trading in L Kakuei shares was suspended on Tuesday. They
ended Monday down two yen, 3.4 percent, at 58 yen.  Teikoku
Databank said in a report on Tuesday that the number of
Japanese firms going bankrupt in January jumped 43.7
percent from a year earlier to 1,441, with smaller
companies particularly hard hit.  It was the third month in
a row that the number of failures has gone up year-on-year.

"Bankruptcies appear to be increasing sharply again as a
number of small- and mid-sized firms are exposed to severe
conditions by their banks and business partners," the
agency said.  (Agence France Presse  15-Feb-2000)

MICROSOFT JAPAN: Under fire like U.S. parent
The U.S. Justice Department's antirust suit against
Microsoft is a hotly disputed topic that world over, with
many accusing the federal government of regulatory
overreach. Less well known is that the Japan Fair Trade
Commission has also challenged Microsoft Japan, a wholly
owned subsidiary of U.S. Microsoft, under the Japanese
Antritrust Law.

Though the Japanese case has been resolved without
litigation, on close examination the criticisms of
Microsoft are no more warranted in Japan than in the U.S.
In November, `1998, Japans' FTC called on Microsoft Japan
to consider whether its practices were illegal under the
Antimonopoly law. The agency suspected that Microsoft Japan
forced personal computer manufactures to accept a contract
by which Microsoft Japan licensed the shipping of its
spreadsheet software Excel only when the Japanese version
of its word-processing software, Word, was licensed with

At the time Excel was the top selling spreadsheet software
program in Japan, but Microsoft Word lagged behind other
programs in the Japanese word-processing software market.
Likewise, Microsoft Japan was accused of forcing PC
manufactures to accept a similar contract for the email
program Outlook, which lagged behind other email programs
with schedule-managing functions.

Through these practices, the government alleges, Word and
Outlook became the top software programs in their
respective markets, in terms of market share. These
practices were alleged to be the result of unreasonable
tying arrangements, and thus illegal under Article 19 of
Japan's Antimonopoly Law.

As a remedy, the Japanese FTC proposed that Microsoft Japan
cease the above practices, accept PC manufacturers'
applications for licenses for Excel only, and refrain from
the above practices in the future. This case ended the
following month because Microsoft Japan accepted this
recommendation by Japan's FTC. In addition, Microsoft
stated that it welcomed the agency's approach: At the very
same time, Microsoft was being attacked in the U.S. through
much harsher litigation.

When the Japanese FTC issues a "warning," it is an
indication that the agency suspects illegal practices but
is not completely sure of its case; a "recommendation," in
contrast, is declaration that some practices are certainly
illegal. For Microsoft, then it was a relief that Japan's
FTC issued a warning rather than recommendation. After all,
Microsoft Japan was being charged with practices very
similar to those for which Microsoft was taken to court in
the U.S.

However, we cannot and should not think that the Japanese
FTC administers its Antimonopoly Law generously. The reason
the agency issued a warning rather than a recommendation
was that the distributional share of the overall market
held by Microsoft Japan was, in contrast with the U.S.
market, very small. For example, the Internet service
providers that were presumably forced to exclude browsers
other than Microsoft Japan's had less than 10% of the total
volume of Japanese browsers.

It is doubtful whether the U.S. Department of Justice would
have challenged Microsoft if the situation had been the
same as in the Japanese case. Of course, it is
understandable that Microsoft said it welcomed the Japanese
FTC warning, since Microsoft hoped that a lenient Japanese
settlement would provide a model for the U.S.

But what about the economics of the claims themselves? Is a
"tying agreement" harmful to consumer and to market
competition? Prior to this case, the Japanese FTC had
judged a tying arrangement to be wrong solely because it
led to "coercing victim to purchase tied items," In its
Microsoft case, however, the agency slightly amended its
claims to say that the practice led to "establishing entry
barriers and excluding competitors." Hence, the Japanese
standard is now fairly close to the U.S. standard is now
fairly close to the U.S. Standard established in the 1984
antitrust case, Jefferson Parish Hospital District No. 2
vs. Hyde.

It is impossible for any merchant to be perfectly satisfied
with a contract's conditions. It can always claim to have
been "coerced," provided we use a very loose definition of
that term. So the new legal standard of
"anticompetitiveness: is actually less dangerous to market
freedom than the former one. At least now there is
additional tying arrangement has harmed someone besides the
contracting merchant.

And yet, even in this case, there are reasons to question
the regulators' logic. It is perfectly normal for firms to
seek contract conditions that are the most advantageous for
themselves. This suggest nothing more than that the firm is
defending itself against pressure from competitors, which
is precisely what Microsoft was doing in Japan.

If this type of decision making itself were made illegal
under antimonopoly law, all strategic marketing would be
illegal under under antimonopoly law. To declare strategic
decision making suspicious or illegal is equivalent to
denying the merit of the market economy itself. It is very
difficult, if not impossible, for a federal agency -
whether it be in Japan or the U.S. - to distinguish the
behavior of a supposed monopolist from that of market
rivalry itself.

The Japanese FTC has not yet recognized the important of
this argument, and neither the importance of this argument,
and neither have Japanese courts. But as the economy
becomes ever more internationally integrated,
technologically innovative and strategically competitive,
it becomes increasingly clear that antitrust law itself
violates the basic principles of a truly competitive market
economy. (The Asian Wall Street Journal  14-Feb-2000)

NAGASAKIYA: LTCB may ask Gov't to cover loan
Long-Term Credit Bank of Japan, which is to be transferred
to a consortium led by Ripplewood Holdings LLC of the U.S.,
may ask the government to purchase its 18 billion yen loan
to Nagasakiya Co. (8262), sources close to the matter said.
Retail chain operator Nagasakiya effectively went bankrupt
on Sunday.

The contract transferring the bank to the consortium
contains the provision that if loans extended by LTCB fall
in value by 20% or more, the new LTCB can call on the
state-run Deposit Insurance Corp. to purchase them at book

The bank plans to write off all of the 18 billion yen loan
in the current fiscal year. Most of the amount is covered
by loan-loss reserves and loan collateral. But the value of
the loan could drop more than 20% if the value of property
backing it plunges sharply, the sources said.

Because the restructuring plan for Nagasakiya will take a
long time to work out, the bank's purchase request would
not be made for another 18-24 months, if at all, according
to the sources. The amount payable at that stage would also
be much lower than 18 billion yen. (Nikkei  15-Feb-2000)

NAGASAKIYA: Stock exchanges to delist
The Tokyo, Osaka and Sapporo stock exchanges will delist
the shares of Nagasakiya Co. (8262) on May 14, exchange
officials announced Monday. The company was granted court
protection from creditors under the Corporate
Rehabilitation Law on Sunday.

The exchanges today placed the stock of the embattled
supermarket operator in the liquidation post category,
which allows limited trading in the issue until May 13.
At the same time, Japan Securities Finance Co. (8511) has
removed Nagasakiya from the list of issues tradable on

In Monday's morning session on the Tokyo Stock Exchange,
Nagasakiya shares drew a flood of sell orders, remaining
asked-only at 47 yen, below its face value, with no stock
changing hands.

Nagasakiya announced on Feb. 7 that it expected liabilities
to exceed assets for the fiscal year through Feb. 29. Over
the three days following the announcement, the company
stock price fell by 40%.  (Nikkei  14-Feb-2000)

NAKANO CORP.: Shares hit low point
Shares of Nakano Corp. (1827) have been sinking since last
summer. They fell to a year-to-date low of 89 yen on
Tuesday, and sell orders have continued to emerge from the
unwinding of corporate cross-holdings.

The building contractor expects a net loss of 11 billion
yen for the fiscal year ending March 31, compared with the
initially projected 1.1 billion yen. Extraordinary losses
are estimated to total 11 billion yen, with much of this
relating to assistance to a financial subsidiary. The
parent will forgive about 4-5 billion yen of loans to that

Beginning next fiscal year, companies will be required to
mark down the value of property held as inventory that has
fallen to less than half its original value. Nakano, which
will adopt the lower of cost or market value method, is
expected to record losses in excess of 1 billion yen this
fiscal year. It will also book a loss of nearly 3 billion
yen on the disposal of property owned by its U.S.

With this, the firm hopes to finish disposing of losses
incurred during the bubble period. While the market looks
favorably on the improvement in Nakano's balance sheet,
many observers are focusing on how it handles the worsening
environment for condominium orders. (Nikkei  16-Feb-2000)

NIPPON CONLUX CO.: Expects to post annual loss
Nippon Conlux Co (TSE:6970) expects to record a
consolidated net loss of 400 million yen (US$ 3.7 million)
for the year to March, pushing the firm into the red,
against an earlier projection of 850 million yen in group
net profit, the company said on Thursday.

The manufacturer of coin mechanisms for vending machines
posted group net profit of 800 million yen a year earlier.
Sales are expected to decline 12 per cent as vending
machine makers have been reluctant to buy the existing coin
selection system ahead of the issue of new 500-yen coins,
company officials said.

The firm will post an extraordinary loss of three billion
yen on the sale of securities holdings and reserves set
aside to cover loan losses.  Consolidated pretax profit is
expected to fall 27 per cent to 2.2 billion yen.

For the year to March 2001, the company forecasts earnings
recovery thanks to expected demand for mechanisms able to
handle the new 500-yen coins.  A stronger financial
position following the recording of an extraordinary
loss this fiscal year will also bolster the bottom line
next year, the officials said.

The firm's stock was favored by investors last autumn
following the government's October announcement of a plan
to issue 2,000-yen notes this summer.  The stock price,
which had hovered around 600 yen until Oct 5, shot up
briefly to 766 yen. The issue closed on Thursday at 575
yen.  (Asia Pulse  14-Feb-2000)

NIPPON CREDIT BANK: Softbank consortium lead bidder
A Japanese consortium led by Internet investor Softbank
will win the two-horse race to take over the failed Nippon
Credit Bank (NCB), a leading business daily said yesterday.

The Financial Reconstruction Commission will formalize the
decision by the end of this month, leaving US investment
group Cerberus out in the cold, the Nihon Keizai Shimbun
said.  The Softbank group, which includes leasing firm Orix
and Tokio Marine and Fire Insurance, had been selected by
the commission because Cerberus "failed to find key
supporters in Japan," it said.

But Financial Reconstruction Commission spokesman Masahiro
Hasegawa downplayed the report.  "There is nothing
concrete. We have so far chosen two candidates, including
the Japanese consortium led by Softbank," he said.
"But we need several more discussions with each candidate.
We still don't know when we can reach a final decision."

The newspaper said the Softbank consortium would pay up to
10 billion yen (US$92 million) to acquire all the
outstanding shares of NCB, which is under temporary state
control after failing in December 1998.  The group will
also inject about 100 billion yen into the bank, while the
government will provide more than 200 billion yen in public
funds through a purchase of preferred shares in NCB, the
daily said.

NCB, one of Japan's three long-term credit banks, collapsed
under a mountain of bad loans dating back to the "bubble
economy" investment boom of the late 1980s.  It has been
under special state control for eventual sale to the
private sector. (Business Day  16-Feb-2000)

NIPPON SHINPAN CO.: To cease real estate biz, post loss
Nippon Shinpan Co. (8583), a nonbank financial institution,
plans to get out of the real estate business by the end of
fiscal 2001, The Nihon Keizai Shimbun learned Tuesday.

The major credit card service company has about 80 billion
yen worth of real estate for sale in Japan and about 50
billion yen worth of mortgage loan credits. The company
also has about 50 billion yen worth of real estate in the
U.S., Australia and other countries.

In selling off or disposing of these real estate-related
assets, Nippon Shinpan is expected to record about 40
billion yen in loss.  The firm plans to use the proceeds to
beef up its mainstay credit card and loan operations and to
repay debts.

Nippon Shinpan's real estate division marked about 300
million yen in loss in the fiscal year ended March 1999,
due to a fall in land prices.  The company had increased
its investment in real estate to about 500 billion yen
during the economic bubble era of the late 1980s.

The market-price valuation method will be introduced in
fiscal 2000 for real estate for sale, forcing companies to
book the market value of property holdings.  This trend is
likely to encourage other nonbank financial institutions to
withdraw from real estate-related operations. (Nikkei  16-

NISSAN MOTOR: Stock hits 13-month low
Shares in Nissan Motor fell to a 13-month low yesterday as
two corporate bankruptcies focused concern on the loss-
making Japanese carmaker's future, brokers said.  The
weekend failure of supermarket operator Nagasakiya was
followed on Monday by the collapse of mid-sized property
developer L Kakuei.  agasakiya's failure in particular
revived concern about loss-making companies as banks scale
back their credit lines. (Business Day  16-Feb-2000)

SUMITOMO METAL INDUSTRIES: Net loss triggers exec paycut
Sumitomo Metal Industries Ltd is set to suffer its second
straight net loss in the year to March, partly due to
substantial extraordinary losses.  As a result, the company
will cut renumeration of its executives by up to 50% due to
the firm's poor performance, the Nihon Keizai Shimbun

To underscore management responsibility for the
deteriorating profit performance, Sumitomo Metal Industries
reduced the renumeration of chairman Reijiro Mori and
president Matao Kojima by 50%.  The company also slashed
salaries of senior vice president Mikio Kato and other
executives by 20%-30%, depending on the division's
performance they are responsible.  The company has yet to
decide how long the reductions will last.

In January of last year, Sumitomo Metal reduced directors'
salaries by 10%-20%, with the chairman and president taking
a 20% cut.  In the year to March 2000, the company is most
likely to post a pretax loss due largely to weak domestic
demand for the firm's mainstay seamless pipes, the weakness
more than offset by rising exports to other Asian
countries.  (The Star  16-Feb-2000)


DAEWOO MOTOR: Bid invitations go out
South Korea's ailing Daewoo group invited General Motors
Corp. and other potential buyers to take part in a bidding
for its carmaking business Daewoo Motor Co. and Ssangyong
Motor Co.

The group's corporate restructuring committee said in a
statement Tuesday that the invitations were sent to "world-
class foreign and domestic automobile manufacturers" and
that participation via a consortium will be allowed.

The potential buyers were being asked to submit letters of
intent by Monday, it said.  Daewoo did not identify the
potential buyers but GM's Seoul office confirmed
that the American auto giant has been invited to the

South Korea's national news agency Yonhap, quoting
unidentified industry sources, said Ford Motor Co. of the
United States, DaimlerChrysler of Germany, Fiat of Italy,
Volkswagen of Germany and South Korea's Hyundai Motor Co.
were invited as well.  Yonhap said one or two bidders will
be selected by May for full-scale negotiations.

The committee said letters had been sent out Monday
inviting potential acquirers to submit their bids by
February 21, adding that it would provide them with a
chance to conduct a "limited" due diligence on Daewoo

"We are going to hold a transparent and fair auction in
which all terms will be screened carefully according to our
principles," the committee's Han Yong-Chul said.  "Yes, the
price is the most important factor, but it's not
everything. The winning company should contribute to the
development of the local auto industry," he said.

Finance Minister Lee Hun-Jai earlier named GM, Ford,
Germany's Volkswagen and Italy's Fiat as potential foreign
buyers for the whole of Daewoo Motors and its subsidiaries
along with Seoul's biggest manufacturer, Hyundai Motors.
Creditors have said that DaimlerChrysler was interested
only in Ssangyong Motors, which Daewoo acquired two years
ago. But government officials have indicated they would
prefer to sell all of Daewoo Motor's assets together.

The bidding schedule has been anticipated since January
when Daewoo reached agreement with its foreign creditors on
how to address its $4.84 billion in foreign debts.  The
deal removed the biggest stumbling block to restructuring
Daewoo, the nation's third-largest conglomerate. South
Korea sees a successful reform of the conglomerate as a key
to its overall economic recovery.

Under the deal, Daewoo's foreign creditor banks agreed to
reclaim only 39 to 40 percent of their loans to Daewoo
subsidiaries and regard the remainder as losses. Daewoo
group narrowly escaped bankruptcy when its domestic
creditors agreed last June to delay repayment of $8.3
billion in debt for six months and to extend $3.3 billion
in new loans.

In return, Daewoo agreed to sell or spin off 13
subsidiaries. Its 12 other units, including the carmaking
arm, were placed under a restructuring program that calls
for creditor banks to turn debts into equity or delay debt

Daewoo Motor started as a joint venture between Daewoo and
GM in 1978. The partnership ended in 1992 when GM sold its
50 percent stake to Daewoo for $170 million.  U.S.
automakers hope to strengthen their presence in Asia, which
is expected to become the fastest-growing auto market in
the world.

Daewoo Motor, South Korea's second largest automaker,
produced 758,500 vehicles in 1999 at its 17 facilities in
home and abroad. They include an operation in Poland that
holds about a third of Poland's market, which sells
more than 500,000 vehicles a year.

At the end of June last year, Daewoo Motor had $18.3
billion in total assets and $13.9 billion in debt.
Ssangyong Motor, a sport utility vehicle maker, produced
98,000 vehicles last year. It was acquired by Daewoo Motor
in 1998.  (AP Online  15-Feb-2000, Business Day  16-Feb-


GERRY COMMERCIAL: Sugar trader faces perjury raps
NEW FRONTIER SUGAR CORP.: Sugar trader faces perjury raps
SOUTH PACIFIC SUGAR CORP.: Sugar trader faces perjury raps
A big-time sugar trader is facing perjury charges for
allegedly lying before the House good government committee.
Rep. Rolex Suplico (LAMP, Iloilo) told reporters yesterday
that he would ask the committee to cite sugar trader
Margarita Sia in contempt and punish her for supposedly
hiding the truth.

Sia, who controls South Pacific Sugar Corp., New Frontier
Sugar Corp. and Gerry Commercial, is being investigated for
her alleged smuggling into the country of 30,000 tons of
sugar worth about P500 million.  During a good government
committee hearing in Bacolod City last weekend, Suplico
said committee members asked Sia if she is the majority
owner of Gerry Commercial.

He said the trader denied controlling the sugar trading
company but that he confronted her with documents showing
her majority ownership of Gerry Commercial.  He added Sia
also insisted that she notified the Sugar Regulatory
Administration (SRA) before her shipment arrived.

"This claim is belied by official SRA records which show
that notification was made only after the arrival of the
shipment," he added.

He pointed out that he had initially moved for citing Sia
in contempt of the committee during the Bacolod City
hearing, but that the panel postponed decision on his

"I will pursue this to its logical conclusion.
Congressional inquiries should not be taken lightly by all
concerned," he stressed.

It was Suplico and Rep. Julio Ledesma (LAMP, Bacolod City)
who had exposed the alleged smuggling of sugar by Sia's
companies.  Ledesma and the mayor of San Carlos City in his
district even led Customs officials last year in impounding
a North Korean cargo ship that docked in the city's port
with tens of thousands of tons of Thai sugar without the
proper documents.

At that time, Ledesma said he checked with SRA
Administrator Nicolas Alonzo if the shipment was covered
with the proper SRA permits and was told that no such
permits were issued.  He said Sia was supposed to pay SRA
millions in sugar levies before the shipment was to arrive,
but that no such levies were paid.

However, Sia's sugar cargo impounded in San Carlos City and
another one held in Iloilo City were later released by
Customs reportedly upon the intercession of a presidential
friend. The sugar trader claimed then that all her
shipments were legal.  (The Philippine Star  16-Feb-2000)

INT'L CONTAINER TERMINAL SVCS.: To hold port-pullout talks
Listed port operator International Container Terminal
Services, Inc. (ICTSI) said it will negotiate with the
Argentinian government for a possible settlement following
its decision to pull out from Port of Rosario due to
worsening industrial peace in the area.

ICTSI president Enrique Razon, Jr. told analysts yesterday
that the company incurred $40 million in operating and
capital investment losses in the operation of Port of
Rosario in Santa Fe due to illegal strikes and loss of
client confidence. As of end 1999, Puerto Rosario S.A.
(Prosa) - incorporated by ICTSI to manage the concession -
posted $12 million in net losses.

Provincial authorities in the area have reportedly failed
to restore peace at the port, which in turn resulted in
heavy losses for the port.

"Loss of confidence from clients, an extremely hostile
working environment, extraordinary costs, negligence on the
part of government officials, and the resultant heavy
losses have prompted Prosa to withhold payment on the first
(annual rental charge) due in January," ICTSI said.

Prosa is 100%-owned by ICT International Holdings Corp., a
subsidiary of ICTSI which holds interests in the port
firm's foreign operations.

"In ICT's business, it is normal to incur initial losses,
and to encounter labor resistance as changes and
betterments are introduced. This can last up to six months.
However, repercussions of the strikes at the Port of
Rosario were already starting to be damaging and far
ranging, and PROSA realized that the situation was moving
beyond the start-up stage," ICTSI said.

Earlier, ICTSI said it was planning to be aggressive in the
international market, as it is looking into several port
development projects overseas. It has participated in the
bidding of two port projects in Chile. These are the
Valparaiso and San Antonio ports in Chile.

The company is also looking at other ports in Latin America
and the Middle East which are scheduled for privatization.
At least half of ICTSI's earnings come from international
operations. The list includes ports in Saudi Arabia,
Tanzania and Egypt. (Business World  16-Feb-2000)

NATIONAL STEEL CORP.: European group in buyout final stages
The Pentium Group (PG) announced yesterday that they have
successfully completed the buyout offer and financing
arrangements to purchase National Steel Corp. (NSC).
Pentium Group is in the final stages in its preparation to
sign the offer sometime next week.

Pentium Financing has been done in conjunction with the DLJ
Group in New York.  The Philippine government in general
terms has given the go ahead to the Pentium Group offer and
acquisition of NSC. The government is awaiting the final
commitments in relation to the Pentium Group acquisition.

Gilles Corset, chairman of the board of the Pentium Group
based in Paris and Geneva said he is confident that NSC,
under its new management will flourish and will supply all
the steel requirements of the Philippines. The excess
production will be exported to other Asian countries and
become a major source of foreign currency.

Plans are already underway for NSC initial public offering
(IPO), two years after the re-start of its operation. The
IPO already has indications of interest, and is actually
over subscribed in the French and Swiss markets.

Pentium Group has plans of turning NSC into a B2B (Business
to Business) Internet business model. All production
planning supplier relations and orders will be coordinated
and processed through the Internet. This is to facilitate
the large volume of transactions that is anticipated by

Pentium Group has been in discussion with Microsoft and
Data Return Corp. which has agreed to take care of all the
B2B requirements for NSC. This move is intended to
revolutionize NSC and jumpstart it's transition into the
new age of Internet e-commerce.

Another interested buyer of NSC, Novolipetsk Iron and Steel
Corp. of Russia earlier formed a partnership with a group
of local downstream steelmakers to pursue its bid to
acquire the steel company. Russia's third-ranked steelmaker
is currently conducting a thorough evaluation of NSC's
assets before it makes an offer in tandem with the
downstream steelmakers led by Philippine Steel Rolling
Mills Association (PSRMA).

In a statement, Novolipetsk head of foreign markets Y. A.
Ermakov said the company would invest in NSC once it finds
the investment climate here favorable. Novolipetsk is one
of Russia's top 20 corporations but it is facing financial
difficulties at home. It was abandoned by American
investors, including financier George Soros, since
Washington started clamping down on Russian steel imports
last year.

In tying up with Novolipetsk, PSRMA said this would ensure
NSC of reliable and cheaper supply of slabs, a major raw
material. Slab is a major cost factor of NSC which imports
90 percent of its total slab requirement. By eliminating
this cost disadvantage, PSRMA and Novolipetsk are
optimistic that NSC can produce competitively priced hot
rolled coils, cold rolled coils and tinplate.

Among the interested buyers of NSC, only PSRMA and other
downstream steelmakers (belonging to the Association of
Philippine Steel Mills and Filipino Galvanizers Institute)
have offered to resuscitate the company's operations even
without government protection in the form of higher tariffs
and import quotas. PSRMA and the downstream steelmakers
have committed to acquire all of NSC's output before
importing their remaining requirements from abroad.

Despite having a superior offer, the downstream steel
industry is still considered dark horse in the bidding for
NSC since Cathay Pacific Steel Co. is considered as the
favorite. Capasco is owned by presidential adviser on iron
and steel John Ng and banker Benjamin Chua who are both
close allies of taipan Lucio Tan.

The beer and tobacco tycoon revealed that he has a majority
interest in Philippine National Bank which, as the biggest
creditor of NSC, has a major say on who gets NSC. With the
backing of the government, PNB and other creditor banks
have moved to foreclose on NSC's assets because of the
steel giant's failure to meet mounting interest rate

But NSC's controlling shareholder, Hottick Investments-
Renong Bhd. of Malaysia, has obtained a temporary
restraining order stopping the bidding of NSC's assets and
it has applied for a debt rehabilitation program with the
Securities and Exchange Commission. The government and the
banks want a new investor in NSC who will pump in new cash
of $130 million to reopen its Iligan steel plant (which has
been shut down since November last year) and strengthen its
operations to compete with foreign steelmakers.

The government, which is blaming the Malaysians'
mismanagement for NSC's woes, was even willing to impose
barriers to protect the local steel industry in order to
drum up interest in NSC.  (The Philippine Star, Philippine
Daily Inquirer  15-Feb-2000)

SHEMBERG GROUP: Creditors OK debt relief
Cebu-based "carageenan king" Benson Dakay has dropped plans
to sell the Shemberg group after 18 creditor-banks agreed
to restructure its P3 billion in outstanding debts,
Inquirer sources said yesterday.

Based on an emerging rehabilitation plan accepted in
principle by the creditors' consortium led by Equitable-PCI
Bank, Shemberg Marketing Corp. and Shemberg Food Inc. will
be allowed to restructure their debts over a period of 10
years, with a two-year grace period on principal.

The sources said the restructuring of Dakay's companies
would make it easier for him to attract new investors who
would infuse fresh capital into the company, which was
badly hit by the Asian financial crisis.  Within 24 months
from the date of restructuring, the preliminary blueprint
stated that the Shemberg group must reduce outstanding
debts by at least 35 percent through any of the following

o Dacion en pago or asset swap.

o Conversion of debt into equity.

o Sale to cash of some property.

The sources said the debts would be restructured at an
interest rate based on the average 91-day Treasury bill
yield and Philippine interbank offered rate (Phibor) plus a
one percent spread for the first two years. From the third
year, the loans will be repaid at a spread of 1.5 percent.

The Shemberg group will likewise be required to surrender
additional property to cover its liabilities. A source said
that at present, only 67 percent of outstanding loans were
covered by collateral.

"They will have to give additional property to cover the
33-percent deficiency," the source said.

Among the Shemberg group's biggest creditors are Equitable-
PCIBank (P630 million), UCPB (P291 million), Landbank (P421
million), Far East Bank and Trust Co. (P541 million), Bank
of the Philippine Islands (P300 million) and Metrobank
(P263 million).

The Shemberg group was forced to seek concessions from its
creditors because it was badly hit by the peso devaluation
in July 1997. A big chunk of the group's loans were dollar-
denominated.  Another factor which had depressed the
group's earning capacity was its decision to invest in a
subsidiary engaged in the biotechnology business. The
investment in this subsidiary resulted in cost overruns
which had adversely affected the core carageenan business.

The sources said that at present, Dakay was still scouting
for a new investor to bring the Shemberg group back to a
formidable financial footing. (Philippine Daily Inquirer

UNIWIDE GROUP: Asking for 50% debt repayment discount
The management of cash-strapped Uniwide Group of Companies
is asking creditors and suppliers for a 20% to 50% discount
on the payment of loans.

A well-placed company source told BusinessWorld yesterday
that the group is proposing to pay off obligations in cash,
provided the creditors and suppliers agree to the proposed
payment discount.  Out of the Uniwide group's total debt of
11.1 billion Philippine pesos (US$274.8 million at
PhP40.396:US$1), some PhP6.95 billion ($172 million) is
owed to 13 creditor banks.

"We're negotiating for a haircut in the payment of our
obligations. We're asking for a discount from 20% to 50%.
We will not restructure our debts anymore but instead pay
them in cash but at a discount," the company official said.

The source added that the group is also planning to settle
obligations via debt-for-asset swap. All properties of the
Uniwide Group including properties in Coastal Road,
Maragondon and Tarnate in Cavite and in Cabuyao, Laguna
will be used to pay off debts.

"All our properties that will not be needed will be used
for dacion en pago aside from the Cubao property and the
personal properties of the Gow family," the source said.

Last week, French retail firm Casino Guichard-Perrachon SA,
France's second-largest retail chain, has agreed to invest
$110 million (approximately PhP4.4 billion) in the ailing
retail company.  The capital infusion is equivalent to 60%
shareholdings currently held by the Gow family.

Under the agreement, Casino will acquire Uniwide's 10
hypermarkets or warehouse-type discount stores, one
distribution center and five real estate projects. The said
assets are estimated to be worth PhP4 billion ($99
million).  However, the French group will only infuse its
investment once Uniwide's assets have been restructured and
transferred debt-free. The management is now fast-tracking
the settlement of the companies' debts.

The Uniwide group has already settled obligations owed to
East Asia Capital Corp. amounting to PhP60.4 million ($1.5
million) and United Coconut Planters Bank totaling PhP1.044
billion ($25.8 million).  The Securities and Exchange
Commission (SEC) has extended for the fourth time Uniwide
group's debt moratorium pending submission of the said
revised rehabilitation plan.

The recent entry of Casino may just be the key in
preserving operations of Uniwide affiliates -- Uniwide
Sales Warehouse Club, Inc. (USWCI) and Uniwide Sales Realty
& Resources Corp. (USRRC).

In a revised rehabilitation plan filed with the SEC
yesterday, the Uniwide group said "the fresh equity
infusion together with the dacion en pago arrangements with
the creditor banks will allow (the firm) to settle its

Casino's PhP3.57-billion ($88.4 million) investment will be
used to pay off obligations not settled through dacion en
pago, allowing repayment of all debts of Uniwide Holdings,
Inc. (UHI), USWCI and USRRC.  Uniwide is set to restructure
UHI to wholly-owned USRRC which will be the property
development arm and USWCI which will be the retail company.

"The corporate restructuring folds the retail operations of
USWCI into UHI, transforming UHI from a mere property
developer and franchisor of the Uniwide brand name into a
retailer with the potential to be a leading retailer in the
country," Uniwide said.

From Casino's investment, it is projected that over 4,000
direct jobs will be saved, more than 2,000 suppliers will
resume business stalled by the temporary halt in Uniwide's
business operations, while more than 200,000 workers of
suppliers will regain employment.  The Casino Group also
intends to construct and operate five additional warehouse
club stores over the next several years in various parts of
the country. (Business World  15-Feb-2000)

The French retail giant, Casino Guichard-Perrachon will pay
P3.57 billion in cash for 89.2 percent of Uniwide Sales
Warehouse Club Inc. (USWCI), the retail arm of the cash-
strapped Uniwide group of companies. The Casino Group and
UHI signed a memorandum of understanding (MOU) for the sale
of the warehouse clubs which will be finalized by June this

In a disclosure to the Securities and Exchange Commission
(SEC), Uniwide said that with the fresh equity infusion,
together with the dacion en pago arrangements with the
creditor banks, Uniwide will be able to settle a
substantial portion of its obligations.

The sale is part of the rehabilitation plan for Uniwide. A
majority of its creditor banks has already agreed in
principle to the dacion en pago or payment in kind
arrangement, and negotiations are currently centered on
valuation issues.

Recently Uniwide signed a memorandum of agreement (MOA)
with two of its creditors, the United Coconut Planters Bank
and East Asia Capital. Two other banks are currently
preparing their MOA for signing within the next two weeks.

The Casino Group, aside from upgrading the existing
Warehouse Club stores, will also construct and operate five
additional Warehouse Club stores in the next few years. The
properties have already been identified. The new investors
will also raise working capital and capital expenditure
related to the refurbishing and upgrading of all existing

Prior to the target closing date, Uniwide has to comply
with all the conditions spelled out in the MOU. The Uniwide
receiver group said the investment of the Casino Group will
save about 4,000 direct jobs, more than 2,000 suppliers
will resume business stalled by problems of Uniwide, while
more than 2000,000 workers of suppliers will regain

There are 10 Warehouse Club stores nationwide and five
distribution centers. The combined sales of these stores
from July-December 1999, reached P2.41 billion and P5.35
billion for the entire year. Uniwide has piled up debts of
about P12 billion, a result of an all-timed expansion and a
failed diversification program. (The Philippine Star  15-


SIAM CEMENT: Reports Baht 4.7B loss
Siam Cement, Thailand's largest industrial group, fell to a
larger-than-expected loss in 1999 from a profit the
previous year because of a decline in the value of the baht
and the sale of subsidiaries at below cost.

Its consolidated loss was 4.7 billion baht ($125 million),
or 39.15 baht a share, compared with a profit of 19.3
billion baht, or 160.84 baht a share, in 1998. The mean
estimate by five securities houses polled by IBES predicted
a loss of about 13.5 baht a share.

The diversified group's petrochemical sales exceeded its
cement and building materials sales for the first time
because of a building glut, a legacy of the Asian financial
crisis that hit Thailand first in 1997.

"The building materials business remains a problem," said
President Chumpol NaLamlieng.  "It will take about two more
years to recover because of all the over-construction."

The company, which also makes a variety of chemicals, pulp
and paper, said that without the foreign exchange and
investment losses, it made an operating profit of 2 billion
baht.  Siam Cement ended in the black in 1998 despite an
operating loss of 1.8 billion baht, because that year the
baht appreciated against the dollar, producing a currency
gain. Last year, though, the baht's weakness increased the
burden of the company's foreign currency debt.

Total sales rose 5 percent to 108.2 billion baht. Cement
sales comprised a fifth of the total, falling 10 percent.
Petrochemical sales almost doubled to 29 billion baht. Pulp
and paper sales rose by about 10 percent to 22 billion
baht, almost on a par with cement sales.  The company
expects to increase sales by 10 percent this year.

Siam Cement had assets of 271 billion baht last year, down
6 percent from a year earlier as the company sold stakes in
auto parts producers such as Nawaloha Industry, Siam AT
Industry Co. and Thai Engineering Industry Co.  The company
has achieved about 60 percent to its goal of divesting
"non-core" units, whose combined assets are about 60
billion baht, Chumpol said.

The company's debt restructuring program calls for it to
focus on three core industries: cement, chemicals and pulp
and paper. (Business Day  15-Feb-2000)

SIAM CEMENT PLC: Unloads Bt35B in holdings
Siam Cement Plc, the country's largest industrial
conglomerate, has successfully divested Bt35 billion of its
holdings in non-core subsidiaries and affiliated firms
since the first quarter of last year, in line with its
restructuring to focus on core businesses.

The divested amount represents about 13 per cent of the
conglomerate's total assets, which totalled Bt271.48
billion at the end of the year, and on schedule with the
plan to ultimately divest assets worth Bt60 billion.

"While we're close to completing the financial
restructuring plan, we will have to further continue with
this (divestiture)," said Aviruth Wongbuddhapitak, SCC
vice-president for finance.

SCC plans to sell most of, or entire, stakes in businesses
that include the production of float glass, auto parts and
alloy wheels.  The company yesterday reported improved
performance last year with a consolidated operating profit
of Bt1.999 billion, a Bt3.84 billion increase from 1998
when it showed operating losses of Bt1.84 billion.

The company attributed the rise to higher sales revenues
and the decrease in costs of sales and administrative
expenses.  After forex loss and restructuring expenses, SCC
reported a net loss of Bt4.7 billion for the year, compared
to a net profit of Bt19 billion in 1998, when the company
recorded forex gains. Losses in 1999 were attributable to a
swing from foreign exchange gains of Bt24.51 billion in
1998 to losses of Bt4.65 billion.

In its non-consolidated statement, Siam Cement showed a net
profit of Bt15.508 billion due to the transfer of assets at
appraised value in the cement business to subsidiaries of
Siam Cement Industry Co Ltd, a wholly-owned company, as
part of its business restructuring programme.

Investors dumped the company's shares yesterday, pushing
the price down to Bt538 at end of trading, from Bt588 at
closing on Friday.  SCC drew up a plan at the beginning of
1999 to restructure both its financial structure, to bring
down the portion of foreign currency-denominated loans, and
the business structure to focus on only three major
businesses - petrochemicals, cement and paper.

The plan's success was reflected in the operating profit,
before special items and forex losses, of Bt1.999 billion
for the year 1999.  The petrochemical business made the
highest contribution with net sales of Bt28.6 billion
compared to Bt15 billion the previous year. Cement was the
weakest performer. Income from the cement group before
exchange rate effects and special items dropped to Bt302
million from Bt529 billion, as sales fell to Bt22.69
billion from Bt25.20 billion in 1998.

SCC president Chumpol Na Lamlieng anticipated a brighter in
the sectior as the construction sector has room for growth,
seen from the rising sales of construction materials. The
company disclosed that consolidated revenue for last year
was Bt111 billion, up Bt5.816 billion, or 6 per cent, from

This was attributable to the 3 per cent increase in
domestic sales and 9 per cent increase in export sales.
Sixty-seven per cent of total sales were derived from the
core businesses while the total export value accounted for
30 per cent.  Despite the losses, an analyst from Capital
Nomura Securities Plc said that the results are in line
with expectations.

"At the present market price, SCC is reasonable for long-
term investment as it has sufficiently reduced interest
expenses," he said.

In 1999, SCC's average interest cost was 8 per cent,
slightly higher than the previous year's level. SCC last
year issued bonds of Bt50 billion to refinance foreign
loans. The ultimate aim is to reduce the portion of foreign
debt to 25 per cent of the total, to minimise the impact of
exchange rate fluctuations. The debentures reduced for
foreign debt from US$4.2 billion in 1998 to US$1.8 billion
last year, accounting for 36 per cent of the total debt.

Aviruth said SCC plans to maintain the foreign loan portion
between US$500 million and $1 billion which will better
reflect its trade finance as well as foreign currency-
denominated loans.  The company's board of directors
recently approved another Bt50 billion issue of bond with
up to 20 years' maturity. The plan is awaiting approval by
shareholders, who meet in late March.

"The amount represents our financial obligations to come
due in the next few years. However, we may not issue all of
the bonds now since the operating income is sufficient to
service debts (due this year)," Aviruth said.

Without revealing the amount of obligations in the next few
years, Aviruth said the total value of bonds to be issued
would depend on the negotiations with creditors to repay
some debts before the due date.  SCC needs to repay debts
of Bt15 billion this year.

Besides the bond issuance, SCC will also see the extension
of loan maturity. "As a result, the company's short-term
debts account for only 23 per cent, and the amount serves
as working capital," Chumpol said. (The Nation  15-Feb-

THAI PETROCHEMICAL INDUS.: Creditors ask court for control
Creditors of Thai Petrochemical Industry petitioned
Thailand's bankruptcy court Friday to allow them to take
control of the company.

The bankruptcy court is due to meet today to consider the
creditors' plans to take over the company, as well as TPI's
attempt to block the takeover. TPI management couldn't be
reached for comment Friday.  After a telephone conference
early Friday, creditors decided to petition Thailand's
bankruptcy court to appoint an independent planner to
administer a plan for restructuring TPI's $3.5 billion in
debts, sources close to the talks said. Appointment of a
planner chosen by creditors will give them control of the
company's management.

Creditors filed the petition in court late Friday.  The
creditors' decision marks the collapse of more than two
years of negotiations with TPI chief executive and
prominent shareholder, Prachai Leophairantana, on how to
restructure the company's debts. The creditors' decision
came after TPI filed objections last week in court to the
restructuring plan it had accepted in mid-January.

TPI filed its first objection Wednesday, saying creditors
acted in bad faith in the restructuring plan, falsely
asserting the company was insolvent. After receiving an
ultimatum from creditors, TPI withdrew the objection early
Thursday but then filed another objection just before the
close of business late Thursday.

TPI has also evicted staff of international auditors
PriceWaterhouseCoopers, appointed by the creditors to
monitor TPI's financial status on their behalf, a source
close the negotiations said. (The Asian Wall Street Journal

THAI PETROCHEMICAL INDUS.: Bankruptcy court delays decision
Thai Petrochemical Industry's (TPI) bankruptcy ruling was
delayed to tomorrow, as the court sought to settle a
dispute over who should manage the rehabilitation of the
country's largest delinquent debtor.

Five creditors led by the U.S. Export-Import Bank,
International Finance Corp. and Bangkok Bank Pcl want their
own representative to manage the chemicals producer while a
restructuring plan is initiated, said Judge Wat Luklertkul.
Thai Petrochem, behind on about $3.5 billion of debt, wants
Chief Executive Prachai Leophairatana as planner for the
three months or so needed for the revamp.

The judge said the delay of at least two days would provide
time for opinions from more than 100 other creditors.
Documents must be filed by Feb. 16, after which a ruling
would be made, he said.  Creditors and Thai Petrochem
earlier agreed on Prachai as manager, though some creditors
changed their mind after the Thai Petrochem founder this
month asked the lenders to write off more debt then earlier
agreed upon.

The request for a different manager "has been forced upon
the (five creditors) as a result of TPI's clear breach of
its formal agreement not to raise any objections to the
reorganization plan," the group of five said in a

The preliminary agreement, made a year ago, called for
forgiveness on $400 million of unpaid interest. Prachai
recently asked for an increase to $600 million, and both
sides also disagree on terms of a proposed $1 billion share
sale. The proposed changes by Thai Petrochem "would
represent a fundamental and unacceptable change" to the
reorganization plan, the statement said.

"The disagreement is the widest among creditors and a
debtor since the Bankruptcy Court was established" last
year, Wat said. In all other large cases, both sides agreed
on all terms of preliminary restructuring proposals, he

Thai Petrochemical has about 150 creditors. The U.S. Exim
Bank, Bangkok Bank and units of Citigroup Inc. and Bank of
America Corp., and IFC, the private lending arm of the
World Bank, comprise those who want a plan administrator
other than the founder of Thai Petrochem.

Other major creditors include the KfW, one of Germany's
development banks; Krung Thai Bank Pcl, which is owned by
the Thai government; and Sanwa Bank. (Business Day  15-Feb-

THAI PETROCHEMICAL INDUS.: Challenges creditors
Thailand's leading corporate debtor, Thai Petrochemical
Industry (TPI), yesterday became the first indebted company
to challenge the definition of corporate insolvency in the
Central Bankruptcy Court.

There was no ruling yesterday as the court was able to hear
testimony from only five creditors before adjourning the
hearing to today. During the past dozen debt-restructuring
cases before the court there were no disputes between
creditors and debtors over whether the company was
insolvent or not, said legal and court officials.

When debt-restructuring cases go to the court, debtor
companies and creditors usually agree that the company is
insolvent and that it requires debt restructuring to turn
it around. An exception was the controversial case
involving Thai Identity Sugar Group. After accepting a
debt-restructuring plan, its owner later claimed solvency.

However, in the case of TPI, the indebted company filed a
petition objecting to the debt-restructuring plan prior to
the court's approval of it. TPI is claiming that it is not
insolvent as alleged. In fact, the company's assets exceed
its liabilities by Bt28 billion, according to the petition
from TPI.

However, according to the creditors' debt-restructuring
plan, TPI's liabilities exceeded its assets by more than
Bt100 billion.  With competing views on the company's
financial health, the court is facing a major test on what
constitutes corporate insolvency.

Khalid A Mirza, the chief Thai representative of
International Finance Corp (IFC), the investment arm of the
World Bank and a major creditor of TPI, could not be
reached for comment yesterday. However, in an earlier
interview with The Nation he said that the definition of
insolvency in Thai law, which is currently based on an
analysis of a company's balance sheet, was a major
stumbling block to the corporate-debt restructuring process
in Thailand.

A more effective definition of insolvency would be based on
cashflow, he said. "At present, many insolvent corporates
can still escape serious restructuring because they are
able to show that their assets still exceed liabilities,"
Mirza added. TPI owes the IFC US$500 million.

TPI's solvency claim is based on financial results as at
Sept 30, 1999.  The company has defaulted on its debt
repayment since July 1997. However, last year, it
reportedly had a monthly cashflow of Bt4 billion.

Apichart Phunkeasorn, a lawyer with Johnson Stokes and
Master, a firm representing creditors, said yesterday the
debtor's default on interest and principal contributed to
the insolvency claim.  When debtor companies do not support
restructuring plans, creditors have to point out their true
status rather than focusing on balance sheets, he said.

According to court officials, several matters must be
considered in the TPI case: whether TPI is a limited
company; whether it has more than Bt10 million in debt;
whether it has more liabilities than assets; and whether
rehabilitation is possible.

TPI will try to convince the court that it is still solvent
and therefore has no need for the debt-restructuring plan
filed by its creditors, sources said. (The Nation  15-Feb-

Creditors controlling 85 per cent of Thonburi Automotive
Assembly Plant's (TAAP) Bt23.3-billion debt have approved a
debt-restructuring plan for the Thai luxury car maker at a
meeting yesterday.

The plan features conversion of debts into equity, debt
foregiveness, disposal of some assets and lower interest
rate. The debt reform would proceed under the supervision
of the Corporate Debt Restructuring Authority Committee

TAAP director Mike Jirapongponnaz said that the company
would file a petition in the Central Bankruptcy Court this
week, asking for rehabilitation under the court to prevent
minor creditors who did not endorse the plan from filing a
suit against the firm.

"According to the CDRAC's process, the company would be
able to ink the deal with 15 creditors 60 days after filing
the petition to the court," he said.

Bangkok Bank, Krung Thai Bank, Industrial Finance
Corporation of Thailand, Thai Military Bank, Thai
Farmers Bank, Siam City Bank and Sumitomo Bank are among
the major creditors who endorsed the debt plan for the
Mercedes Benz core dealer and manufacturer. Dai-Ichi
Kangyong Bank and Bank of Ayudhya were reportedly absent.

Under the plan, the recently-established Thonburi
Automotive Group (TAG) will hold the entire stake in TAAP
and in return the present major shareholders of TAAP (the
Viriyahphant family) will take 27 per cent in TAG while the
remainder will be held by the creditors.

In addition, the creditors will pump fresh funds into TAAP
to finance its business. The indebted carmaker's registered
capital stands at Bt500 million.

"Our creditors offered an incentive to TAAP. If the company
always services its debts, the creditors will allow TAAP to
take more stake in TAG," Mike said.

He said that after completion of the debt restructuring,
TAAP would remain a subcontractor and dealer of

"Although DaimlerChryler is not a shareholder in TAAP, it
will continue providing support to us," he said.  (The
Nation  15-Feb-2000)

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 2000.  All rights reserved.  ISSN: 1520-9482.

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