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/raid1/www/Hosts/bankrupt/TCRAP_Public/000418.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 Tuesday, April 18, 2000, Vol. 3, No. 76 Headlines * A U S T R A L I A * VIDEO EZY: ACCC widens pricing probe * C H I N A & H O N G K O N G * BRIGHT TRADE (HK)LTD: Facing winding up petition CITIFORTUNE LTD: Facing winding up petition DATATECH (FAR EAST) CO.LTD: Facing winding up petition GUANGDONG INT'L TRUST AND INV.: Restructuring at standstill HABIKA INDUSTRIES LTD: Facing winding up petition INT'L TRUST AND INVEST.CORP.: Restructuring at standstill JOINWELL CONSTRUCTION SVCS.LTD.: Facing winding up petition NORTH DISTRICT MOTORS LTD: Facing winding up petition SUNNY SAIL INDUSTRIES LTD: Facing winding up petition TECHWARE LIMITED: Facing winding up petition THE UNION TRADING CO.LTD: Facing winding up petition TOP-FASHION TRADING LTD: Facing winding up petition TSINGTAO BREWERY'S: Net to hurt from acquired firms' losses WISEN HOLDINGS LTD: Facing winding up petition * I N D O N E S I A * PT HANIL BAKRIE FINANCE: Requests other administrator PT NEWMONT MINAHAS RAY: Supreme Court delays closure PT OMETRACO CORP.: Trying to `self-liquidate',vies vs.IBRA PT SORINI CORP.: Reports to JSX on restructuring progress * J A P A N * HIKARI TSUSHIN INC.: Denies rumor of bankruptcy filing HITACHI LTD.: Erases 250B Yen pension fund shortfall KUMAGAI GUMI: Reports 4.5B Yen net loss for FY99 MARUETSU INC.: Suffers 17.1B Yen FY99 group net loss NICHIBOSHIN LTD.: Expected to file for rehab this month NIPPON SEISEN CO.: Puts pension gap at about 3.2B Yen SANKO METAL INDUSTRIAL CO.: Posts 2B Yen net loss for FY99 TOYO STEEL CORP.: Files for court settlement with creditors * K O R E A * HYUNDAI MOTOR: DaimlerChrysler eyes stake NARA BANKING CORP.: KDIC unable to cover deposits SAMSUNG MOTORS: Debt feud feared to derail Renault talks * P H I L I P P I N E S * CITYLAND DEVELOPMENT CORP.: Gov't probes brokering ops NATIONAL POWER CORP.: Sale proceeds to pay for firm's debts NATIONAL POWER CORP.: Gov't won't absorb all its debts PHILIPPINE NAT.BANK: Winning bidder to get 'sweetener' UNIWIDE GROUP : SEC approves amended rehab plan * T H A I L A N D * BANK OF AYUDHYA: Poised to raise capital with Govt help MAGIC LAND: Preparing for its final party ================= A U S T R A L I A ================= VIDEO EZY: ACCC widens pricing probe ------------------------------------ The Australian Competition and Consumer Commission has widened its inquiry into Video Ezy. The company has been under investigation for seeking to anticipate the goods and services tax in its prices. Companies found guilty of taking advantage of the introduction of the new tax system in July face fines of up to $10 million. The commission's chairman, Alan Fels, told Channel Ten the inquiry initially concentrated on 22 corporate Video Ezy stores. "We have, in fact, been investigating a far wider range than the 22 corporate stores nominated, but we haven't concluded our investigations on them," he said. "The evidence on the corporate stores is pretty straightforward in our view. Regarding the non-corporate stores, we're investigating a large number of them and we're continuing with those investigations during the week." (ABC News Online 17-April-2000) ============================== C H I N A & H O N G K O N G ============================== BRIGHT TRADE (HK)LTD: Facing winding up petition ------------------------------------------------ The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for April 19 on the petition of Xiamen Temao Corporation for the winding up of Bright Trade (HK) Limited. A notice of legal appearance must be filed on or before April 18. CITIFORTUNE LTD: Facing winding up petition ------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 17 on the petition of Yau Fook Hong Company Limited for the winding up of Citifortune Limited. A notice of legal appearance must be filed on or before May 16. DATATECH (FAR EAST) CO.LTD: Facing winding up petition ------------------------------------------------------ The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 17 on the petition of Wayoung Enterprises Limited for the winding up of Datatech (Far East) Company Limited. A notice of legal appearance must be filed on or before May 16. GUANGDONG INT'L TRUST AND INV.: Restructuring at standstill INT'L TRUST AND INVEST.CORP.: Restructuring at standstill ----------------------------------------------------------- Foreign creditors have been left on the sidelines as domestic wrangles over the financial overhaul of China's troubled International Trust and Investment Corporations (Itics) have slowed the sector's cleansweep to a snail's pace. China's trust firms, the fund-raising arms of local governments and ministries, hit the international headlines in October 1998 when flagship Guangdong International Trust and Investment Corp (Gitic) collapsed under a US$4.7 billion (HK$36.66 billion) mountain of debt. The country's 240 Itics were expected to be whittled down to just 70 or 80 within a year of Gitic's closure, but over a year and a half later only one other Itic, the Hainan Hong Kong and Macau Itic, has been shuttered. "Nobody is talking about closures anymore. Gitic was an exception because it's problems were so big," said an analyst with Shanghai International Trust and Investment Corp, one of the country's healthier trust firms. "The government has the funds to pay the foreign debt but it's a question of priority." The state media reported this week that the country's trust law, which observers hoped would clearly define the role of China's trust firms and pave the way for a culling of the worst-run Itics and restructuring of the remainder, is still under discussion. The article in the official China Securities News on Wednesday made no mention of when the law will be unveiled. The problems with the sector's clean-up highlight the complexity of restructuring China's creaking financial sector where the nexus of relationships between state-owned enterprises, local governments and financial institutions has built a web of bad loans. "There are a lot of practical problems, the debt negotiations are still in a deadlock situation and the central government has not issued any clear policy towards the restructuring of the Itics," said Makoto Ikeya, chief analyst with Japanese ratings agency RetI. Mr Ikeya said that regulators have to untangle such a complex web of domestic relationships in addition to foreign creditors' demands, that the original target of publishing a list of surviving Itics by June this year may be delayed for as much as six months. "Itics' reported financial performances at present bear little relation to reality and their true financial condition - especially the value of their assets but even including the extent of their liabilities," said a report by Moody's Investors Services. Foreign banks, which have lent several billions of US dollars to the Itics, may have to take a so-called "haircut" on debt repayments as some of the Itics are closed, merged or restructured. But the final plan of which Itics will survive and in what form they will continue their business is still in flux, said Charles Tan, senior analyst on Chinese financial institutions at Moody's. Originally, China's government had felt that clearly separating the country's trust, insurance, banking and securities businesses would minimise financial risk, but a global financial sector consolidation has called that assumption into question. "If the thinking is going forward is to build a universal banking model, that is something Chinese authorities will have to consider," said Mr Tan. (Hong Kong Standard 17- April-2000) HABIKA INDUSTRIES LTD: Facing winding up petition ------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Asia Gravure Limited for the winding up of Habika Industries Limited. A notice of legal appearance must be filed on or before May 30. JOINWELL CONSTRUCTION SVCS.LTD.: Facing winding up petition ----------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for April 26 on the petition of Golden Harvest Industrial Engineering Limited for the winding up of Joinwell Construction Services Limited. A notice of legal appearance must be filed on or before April 25. NORTH DISTRICT MOTORS LTD: Facing winding up petition ----------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 17 on the petition of Unirich Industries Limited for the winding up of North District Motors Limited. A notice of legal appearance must be filed on or before May 16. SUNNY SAIL INDUSTRIES LTD: Facing winding up petition ----------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 3 on the petition of Kincheng Banking Corporation for the winding up of Sunny Sail Industries Limited. A notice of legal appearance must be filed on or before May 2. TECHWARE LIMITED: Facing winding up petition -------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 10 on the petition of Hayes (Asia Pacific) Limited (In Liquidation) for the winding up of Techware Limited. A notice of legal appearance must be filed on or before May 9. THE UNION TRADING CO.LTD: Facing winding up petition ---------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 31 on the petition of Standard Chartered Bank for the winding up of The Union Trading Company Limited. A notice of legal appearance must be filed on or before May 30. TOP-FASHION TRADING LTD: Facing winding up petition --------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 3 on the petition of Wong Lai Fan for the winding up of Top-Fashion Trading Limited. A notice of legal appearance must be filed on or before May 2. TSINGTAO BREWERY'S: Net to hurt from acquired firms' losses ----------------------------------------------------------- Tsingtao Brewery's net earnings growth last year will be hit by "heavy operating losses" of tens of million of yuan incurred by newly bought breweries, according to sources. These operating losses are understood to have brought about a net loss for the second half, wiping out some of the H share's first-half net profit of 50.17 million yuan (about HK$46.93 million) and culminating in a full-year net profit slightly below the 38.29 million yuan in 1998. It is expected to announce full-year results today. Its 51 per cent-held Shenzhen Tsingtao Beer Asahi, which began production last July, had about 20 million yuan in operating losses. A dozen other breweries have been losing during their start-up stages. The operating losses underscore the growing pains the H share is facing as it moves to beef up capacity and boost market share. Last year's production was a record 1.07 million tonnes, up substantially from 1998's 557,000 tonnes, making it the mainland's largest brewery in terms of production and market share. As of December the Shandong-based firm had bought 22 cash-strapped breweries over two years to stay competitive and to prepare for the onslaught of foreign competition. The issue has taken on renewed urgency with Beijing's expected entry into the World Trade Organisation later this year. About 50 foreign brewers with facilities in the mainland account for 30 per cent of the market. Tsingtao's mainland market share increased from 2.8 per cent to 4.4 per cent in the first half of last year. As part of the move, the H share is stepping up the push to improve its domestic sales network and adding focus on the freshness of its products. (South China Morning Post 17- April-2000) WISEN HOLDINGS LTD: Facing winding up petition ---------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 3 on the petition of Ming Kee Asphalt Engineering Limited for the winding up of Wisen Holdings Limited. A notice of legal appearance must be filed on or before May 2. ================= I N D O N E S I A ================= PT HANIL BAKRIE FINANCE: Requests other administrator ----------------------------------------------------- PT Hanil Bakrie Finance has requested that the supervisory judge in the bankruptcy case of PT Dharmala Sakti Sejahtera replace the administrator in charge of organising the company's liquidation. "We respectfully request you to consider replacing Mr Tafrizal Hasan Gewang ... as the administrator," Hanil Bakrie president director S.C. Chung said in a letter submitted at a hearing with the judge, Syamsudin Manon Sinaga, today. "We, and we believe most of the unsecured creditors, are not satisfied with his performance." Hanil Bakrie vice-president Franky Ongky alleged the administrator allowed the company to misrepresent the number of noteholders present at a previous meeting. "The administrator has also not been transparent with creditors and would not provide data requested by creditors," Ongky said. (AFX News Limited 17-April-2000) PT NEWMONT MINAHAS RAY: Supreme Court delays closure ---------------------------------------------------- Indonesia's Supreme Court has reportedly ordered the Tondano District Court in North Sulawesi to delay the execution of its order to shut down PT Newmont Minahasa Raya's gold mine. The Jakarta Post quoted Newmonth president Richard Ness as saying the Supreme Court's decision was a victory for the people and economy of Minahasa regency. The decision was made after the district court had ruled that Newmont must shut down its mine by Sunday. The Supreme Court's intervention follows protests from almost all levels of the government, economic observers and legislators over the district court's closure order. The Minahasa regency sued Newmont for a total of Rp19 billion (US$ 2.4 million) in taxes on the overburden it extracted from 1995 to 1998. Newmont refused to pay, saying the taxes were not included in its contract of work and that it had extracted the overburden to access the gold deposit underneath. (Asia Pulse 14-April-2000) PT OMETRACO CORP.: Trying to `self-liquidate,' vies vs.IBRA ----------------------------------------------------------- IBRA lawyer Denny Harman told the hearing Ometraco is attempting to self liquidate and argued that the move that should be overruled by the commercial court. Ometraco filed for self liquidation on April 3 at the South Jakarta state court, only days after IBRA filed its bankrupty suit against the company on March 29. On April 7, the South Jakarta court granted Ometraco's request despite the fact that such decisions can legally only be made by the commercial court. "Debtors are inclined to do whatever suits them -- in this case, to avoid bankruptcy they (Ometraco) have filed for self-liquidation," Harman said. He said the company wants to self liquidate because it can then control the sale of its assets whereas, in a bankruptcy procedure, this would be done under the supervision of a receiver, whose responsibility is to the court. Judge Mahdi Soroindo Nasution ordered the court to reconvene on Wednesday to hear responses from both sides to the evidence presented today. Meanwhile, PT Ometraco Corp has challenged the right of the Indonesian Bank Restructuring Agency (IBRA) to claim debts owed by the company to banks taken over or controlled by the government. A lawyer for Ometraco, Leonard Simorangkir, told the Jakarta commercial court that government regulation No. 40, which outlines IBRA's authority, does not specifically empower the state-run agency to act under its own name as a debtor in cases to recover claims owed to banks under its supervision. "Clause 40 of government regulation No. 17, 1999 does not give absolute authority for IBRA to act for and under its own name," Simorangkir said. He was speaking against a bankruptcy suit filed by IBRA which alleges that Ometraco has failed to repay debts and interest totalling 5.031 mln usd and 4.521 bln rupiah owed to banks under the agency's supervision including PT Bank Exim and PT Bank Dagang Nasional Indonesia. Exim was one of four state banks whose bad loans were transferred to IBRA ahead of their merger to form a larger state bank, PT Bank Mandiri, last year. Ometraco is also allegedly indebted to American Express Bank Ltd (Singapore), Oversea Chinese Banking Corp Ltd, Royal Bank of Canada, PT Fuji Bank International Indonesia and The Commercial Bank of Korea (Singapore). Ometraco is the holding company of a property and finance conglomerate. (AFX News Limited 17-April-2000) PT SORINI CORP.: Reports to JSX on restructuring progress --------------------------------------------------------- Previously, PT Sorini Corporation Tbk ("Company") had reported the complete proposal of restructuring to the Steering Committee from the Company's Banking Syndication on 15 April 1999. Since that time, the Steering Committee from the company's banking syndication has been discussing among member of the company's syndication bank. The company had received the restructuring proposal from the Steering Committee. On 16 November 1999, the company had appointed Dresdner Kleimworth Benson as a financial consultant within the framework of restructuring. On 20 December 1999, the company together with Dresdner Kleimworth Benson had submitted the restructuring proposal to the company's banking. The company's banking itself had submitted the restructuring proposal to the company on 10 January 2000 and recently the company has been in negotiating process with the company's banking. Besides that, the company had informed the truth of Derivatives to Prakarsa Jakarta and recently, the company has been waiting the extended progress of derivatives through Prakarsa Jakarta. (Jakarta Stock Exchange 13- April-2000) ========= J A P A N ========= HIKARI TSUSHIN INC.: Denies rumor of bankruptcy filing ------------------------------------------------------ Hikari Tsushin Inc. (9435) said in a statement Friday that market rumors about the company seeking court protection under Japan's corporate rehabilitation law are groundless. Hikari contacted the Securities and Exchange Surveillance Commission Friday regarding the possibility of a violation of the Securities Exchange Law that prohibits spreading rumors to move share prices, Hikari said. Hikari shares ended ask-only at Y33,800 Friday amid deteriorating investor confidence in prospects for the company's mobile phone business and venture capital portfolios. Hikari shares have not traded during market hours in the last 11 straight sessions. Friday's ask price is down 57% from the issue' last session-hour trading price of Y78,000 on March 30, and sharply down from its record high of Y241,000 on Feb. 15. (Nikkei 15-April-2000) HITACHI LTD.: Erases 250B Yen pension fund shortfall ---------------------------------------------------- Hitachi Ltd. (6501) erased its shortage in reserves for parent-only retirement pay obligations in the year to March 31, The Nihon Keizai Shimbun learned Sunday. Hitachi had a pension fund shortfall of 250 billion yen at the end of fiscal 1998, but that was turned around to a 30 billion yen surplus in fiscal 1999. The sharp improvement is partly due to a 21% return on investment -- on a preliminary basis -- as well as amelioration in the financial health of its pension accounts and strengthening of fund management. Assuming a discount rate of 4.5%, Hitachi had 1.38 trillion yen in aggregate liabilities at March-end. Meanwhile, the company holds pension assets worth 1.16 trillion yen and retirement reserves of 250 billion yen. The surplus will be booked into operating profit over five years. Hitachi cut payroll by some 7,000 in 12 months through September 1999, and has trimmed total pension payouts since 1998. It also added an extra 130 billion yen into its pension assets pool to improve investment efficiency. On a consolidated basis, the Hitachi group had a 200 billion yen pension/retirement liabilities shortfall at the end of last December. (Nikkei 17-April-2000) KUMAGAI GUMI: Reports 4.5B Yen net loss for FY99 ------------------------------------------------ Kumagai Gumi Co. (1861) reported a consolidated net loss of 4.5 billion yen for fiscal 1999, worse than its projection of a 2 billion yen net loss and its year-earlier net loss of 2.5 billion yen. The loss grew mainly because the parent company took a 17.5 billion yen extraordinary loss on real estate it held for sale, and because a newly consolidated subsidiary that manages golf courses remains in a slump. Parent-only extraordinary losses totaled 26 billion yen. On a consolidated pretax basis, the company lost 1.1 billion yen. The company used tax assessment values as a basis for reevaluating properties that had fallen to less than 50% of their book value. Kumagai Gumi also booked an additional extraordinary loss of 2.5 billion yen as it paid special retirement bonuses to 730 employees who took advantaged of the company's early retirement program. The company revised its group structure, based on the actual level of management involvement by the parent company, and increased the number of its consolidated subsidiaries by 32 to a total of 61. It also added seven equity-method affiliates, for a total of 13. (Nikkei 15- April-2000) MARUETSU INC.: Suffers 17.1B Yen FY99 group net loss ---------------------------------------------------- Maruetsu Inc. (8178) posted consolidated net loss of 17.1 billion yen for the year ended February, the supermarket chain operator said Friday. The poor figure is attributable to a 31.8 billion yen extraordinary loss which the firm booked to cover latent losses on its holdings of Daiei Inc. (8263) shares. In a bid to cut unrealized loss, Maruetsu in January sold and repurchased 18 million Daiei shares, about 85% of its total stake in the firm. The move helped to slash total securities paper loss for the year to 8.6 billion yen, down 34.7 billion yen. Although the parent company recorded a 14.4 billion yen net loss, it will dip into reserves to maintain its annual dividend payment at 12 yen per share, company officials said. Parent-only pretax profit increased 22% to 4.66 billion yen on sales of 325.5 billion yen, up 0.5%. The company's shift to straight-line depreciation boosted pretax profit by 1.07 billion yen, meaning that such profit effectively fell by 6%. For fiscal 2000, Maruetsu projects a 4% rise in pretax profit to 4.85 billion yen, and a 3% increase in sales. The firm expects to return to the black with a net profit of 2.5 billion yen. (Nikkei 15-April-2000) NICHIBOSHIN LTD.: Expected to file for rehab this month ------------------------------------------------------- Troubled nonbank financial institution Nichiboshin Ltd. has solidified plans to file this month for a court-led rehabilitation, an effective bankruptcy that leaves around 300 billion yen in liabilities, The Nihon Keizai Shimbun learned Friday. Nichiboshin, which had an estimated negative net worth of 240 billion yen as of the end of March, is turning to legal proceedings because it has failed to win agreement from creditors on a restructuring plan based on debt cancellations, informed sources said. Once an agreement with creditors is worked out, the firm will seek new equity capital or a sponsor to take over its business. One leading candidate whose name is already being mentioned as a potential sponsor is the U.S. investment fund Lonestar, which could exploit Nichiboshin's expertise in loan collection to build a presence in Japan's real estate securitization market. Nichiboshin is expected to use a new rehabilitation law that took effect April 1 as an alternative to composition. The legislation sets up streamlined procedures designed to prevent asset quality from deteriorating and employees from leaving before a reorganization can be worked out. (Nikkei 15-April-2000) NIPPON SEISEN CO.: Puts pension gap at about 3.2B Yen ----------------------------------------------------- Nippon Seisen Co. (5659), using a discount rate of 3.5%, estimates that its parent-company unfunded retirement liabilities total almost 3.22 billion yen. Nippon Seisen plans to take an extraordinary charge of 1.64 billion yen for the fiscal year ended March 31 to narrow the shortfall. This will leave the manufacturer of stainless steel wires with a net loss of 850 million yen. The nearly 1.58 billion yen in remaining unfunded pension and severance liabilities will be eliminated over a 15-year period starting in fiscal 2000. Nippon Seisen wants to spread out the charges in order to keep the impact on annual earnings to the smallest possible level. (Nikkei 15-April-2000) SANKO METAL INDUSTRIAL CO.: Posts 2B Yen net loss for FY99 ---------------------------------------------------------- Sanko Metal Industrial Co. (1972) said Friday that it posted a net loss of 2.07 billion yen for fiscal 1999, which ended March 31, compared with the 230 million yen loss forecast earlier. The manufacturer of metal roofing registered a net loss of 1.82 billion yen in fiscal 1998. The downward revision stemmed mainly from a special charge, which itself was a result of the company writing off unfunded pension liabilities worth about 1.3 billion yen. Sales dropped 14% to 30.7 billion yen on the heels of tapering construction works by the public and private sectors. Pretax loss came to 490 million yen, compared with the year-earlier loss of 527 million yen. (Nikkei 17- April-2000) TOYO STEEL CORP.: Files for court settlement with creditors ----------------------------------------------------------- Toyo Steel Corp. (5443) said Friday that it has filed at the Tokyo district court for a court-mediated settlement with its creditors. Liabilities left behind as of February 29, 2000, totaled 5.91 billion yen. This move comes amid a prolonged sluggish period in the construction industry and a pervasive oversupply of steel, the company said in a statement. While it has reduced costs and cut back production, the company said that it is no longer able to raise funds. The company said that it has been in the red for six consecutive years because of sharp falls in sales and revenues and a dramatic drop in demand for steel products. The company also said that it has halted production at its Ishioka plant and that it intends to pay off its liabilities. Separately, the Tokyo Stock Exchange said Friday that shares of Toyo Steel will be delisted July 15. The shares of Toyo Steel are traded on the second section of the Tokyo bourse. A private credit research agency Teikoku Databank Ltd. said Toyo Steel became the third listed company which failed this year after supermarket chain operator Nagasakiya Co. and developer L Kakuei Corp. (Nikkei 14- April-2000) ========= K O R E A ========= HYUNDAI MOTOR: DaimlerChrysler eyes stake ----------------------------------------- German-U.S. automaker DaimlerChrysler is seeking to acquire a stake in Hyundai Motor, reported the German weekly Der Spiegel in its edition due to be published Monday, with no mention of sources. According to Der Spiegel, DaimlerChrysler is considering two approaches: either its new partner Mitsubishi, which already holds 5 percent of Hyundai's capital, could increase its stake, or the German-US group could directly buy shares in the Korean company. DaimlerChrysler recently became the world's third-largest automaker after General Motors and Ford Motor, after acquiring a 34-percent stake in Mitsubishi. Spokesmen from both DaimlerChrysler Korea and Hyundai Motor refused to comment on the Spiegel report, dismissing it as "speculation." The possible alliance between DaimlerChrysler and Hyundai Motor, two of the five bidders for ailing Daewoo Motor, if materialized, will likely bring about drastic changes in the automaker's sales. Earlier this month, Daimler-Chrysler Chairman Juergen Schrempp said in a press interview that the German-U.S. auto is interested in pushing for alliance with Hyundai Motor, raising speculation that they may jointly attempt to take over the troubled Daewoo. "I'm interested in working together with Hyundai on certain projects," Schrempp was quoted as saying. The labor and lawmakers at the Grand National Party are stubbornly opposed to the possible foreign sale of Daewoo Motor to a foreign company. Amid overall uncertainties further confounded by stiff labor resistance, a possible alliance between foreign and domestic automakers may gain a more advantageous stance in the Daewoo bidding. Daewoo creditors are scheduled to select one or two companies from among the five bidders by June 30 for exclusive negotiations. (The Korea Herald 17-April-2000) NARA BANKING CORP.: KDIC unable to cover deposits ------------------------------------------------- With the deadline to pay out W3.4 trillion in deposit guarantees to clients of Nara Banking Corp. coming up at the end of this month, it appears that Korea Deposit Insurance Corp. (KDIC) will be unable to meet its repayment obligations. It is expected that the KDIC will not be able to cover the W1.6 trillion in deposits made by banking institutions. Nara had its operations suspended since January 21 and the government has since moved to liquidate the troubled merchant bank. Deposits at Nara break down into W300 billion from individual customers; W1.5 trillion from corporate clients; and W1.6 trillion from banking institutions. The KDIC plans to buy time in order to sell off Nara assets, with the aim of building up its fund reserves so it can repay Nara depositors. (Digital Chosun 16-April-2000) SAMSUNG MOTORS: Debt feud feared to derail Renault talks -------------------------------------------------------- Sale of Samsung Motors to Renault is expected to face long delays, amid intensifying loss-sharing disputes between creditors and the Samsung Group, analysts said yesterday. Creditors for Samsung Motors, now put under court receivership, and the Samsung Group have held a series of talks since early this month to discuss how to settle the automaker's recently revealed "contingent debt" worth about 291.2 billion won ($260 million), which is owed to Samsung Corp., a Samsung company. But the talks fell through, as both sides turned down the court's mediation ruling calling for payment of about 200 billion won to Samsung Corp., on condition that Renault would buy 70 percent of Samsung Motor for 600 billion won. Creditors said that they will not pay more than 97 billion won in light of the contingent debt's portion in the automaker's total liabilities, while Samsung Corp. is demanding full redemption. In the meantime, the embarrassed court threatened to launch liquidation procedures for Samsung Motors, unless the creditors and Samsung Group accept its final mediation by the end of May. The complicated contingent-debt problem was regarded as the biggest cause behind the collapse of the third round of negotiations between creditors and Renault in Seoul April 3 and 4. In their two previous talks in Paris, the two parties had succeeded in ironing out the pricing gap and other key differences, except the contingent debt issue. The sale price was reportedly settled at around 600 billion won. Creditors and Renault are scheduled to meet again in Paris this week, but the contingent debt issue is clouding the outlook of the sale. Earlier, creditors extended the deadline for the exclusive negotiations with Renault, originally set at March 31, to April 29. "Talks on the sale of Samsung Motors to Renault are in dangers of collapse, due to the escalating creditor-Samsung Corp. dispute," an analyst said. The hidden debt load came to light as Samsung Corp., a flagship of the Samsung Group, recently asked the creditor banks for an immediate repayment of the 291.2 billion won. In its filing with the court, Samsung Corp. insisted that Samsung Motors bought Samsung Corp.'s real estate assets for use in the building of its after-sales and marketing facilities in June 1998, but has since failed to settle the account, except for the initial contract deposit of 6 billion won. Notably, the liabilities to Samsung Corp. are classified as top priority "public debt," as the ownership of the concerned real-estate assets has not been legally transferred to Samsung Motors. Creditors have no legal right to sell off Samsung Motors' after-sales and sales facilities without the consent of Samsung Group, said officials at Hanvit Bank, the main creditor for Samsung Motors. In this regard, civic groups in Pusan, the host city to Samsung Motors's sole passenger car plant, issued a joint statement last week, urging the Samsung Group to write off the contingent debt as losses. Analysts say that the sharp in the valuation of creditors' liabilities to Samsung Motors stems from the differences in the valuation of the 350 million Samsung Life Insurance shares donated by Samsung Group Chairman Lee Kun-hee to help cover up the failed automaker's liabilities. Creditors, estimating the insurer' per-share price at 280,000 won, insist that their total debts to Samsung Motors amount to 1.83 trillion won. In contrast, however, the Samsung Group said that the creditors' aggregate liabilities are just 500 billion won, with the unlisted Samsung Life Insurance's per-share price reaching 700,000 won. (The Korea Herald 17-April-2000) ===================== P H I L I P P I N E S ===================== CITYLAND DEVELOPMENT CORP.: Gov't probes brokering ops ------------------------------------------------------ Cityland Development Corp., a real estate firm with several residential and commercial condominium projects, is being investigated by the government for engaging in the same controversial brokering operation as Westmont Investment Corp. (Wincorp) and ASB Realty. Government sources said that the Securities and Exchange Commission (SEC) has intiated an investigation into the borrowing and lending activities of Cityland due to rising apprehensions by holders of Cityland's non-recourse debts. Non-recourse debts are high-yielding commercial papers which borrowing companies sell to investors for them to raise money for their projects. The without recourse papers yield investors high interest rates but do not entitle them to the recovery of their investments from the borrowing firms. Sources revealed to The STAR that the SEC investigation, being conducted together with the Bangko Sentral ng Pilipinas (BSP) on Cityland is the offshoot of the probe on ASB Realty which suffered from a liquidity crunch due to Wincorp's failure to service over P7 billion in debts. Wincorp's check payments to investors bounched when a financing agreement it had with UOB Philippines was stopped. This led to a suspension of payments for other investors. Sources said the government is worried that the borkering operation, which supposedly matches the borrower and the lender, is being abused to the point that the borrowing operations of companies skirt the 19-lender rule. Under SEC rules, a borrowing company cannot sell debt investments tomore than 19 lenders. However, that borrowing firms do is to engage in brokering opertion to allow them to borrow from more than 19 lenders. Sources said that the SEC is looking into the operation of ASB and Cityland since their owners are siblings. Likewise, the SEC is also looking into the related State Investment House which in the past had also been involved in some sour deals. The SEC and BSP are now silently looking into the borrowing and lending activities of companies as the practice is considered more prevalent than actually known by the public. Market sources said such a practice is actually very common, especially with investors who are not satisfied with the returns that are offered by duly authorized and licensed banks and financial institutions. What happens, sources explained is that a firm usually matches a lender and a borrower, in effect brokering the transaction. The "broker firm" usually finds investors and offer a guaranteed yield that tops the rates offered by banks and other licensed financial institutions in exchange for without recourse debts from borrowing firms. Such a practice, sources said is allowed but is limited to the 19-lender rule. The broker is normally able to successfully provide the yields to its investor. But the whole scheme could collapse if the borrower default on his obligation. The Capital Market Association of the Philippines has already expressed its concern to the BSP and SEC and has urged that an educational campaign be launched to inform the public about the risk of such investments without recourse. The BSP and the Association, sources said, are hoping to convince the public to stick to making their investments only with the banks and authorized and licensed financial houses. (The Philippine Star 17-April-2000) NATIONAL POWER CORP.: Sale proceeds to pay for firm's debts ----------------------------------------------------------- Revenues earned from the planned sale of National Power Corporation (Napocor) will be used to pay for the firm's 240 billion Philippine pesos ($5.83 billion at PhP41.157=$1) worth of liabilities assumed by the government, Finance Secretary Jose T. Pardo said over the weekend. He said in a statement that proceeds from the privatization of the power firm will be the main source of funds to service transferred obligations. "The privatization proceeds that will be remitted to the National Government will be the primary source of financing for the debt servicing of the transferred obligations," he said in the statement. Napocor has transferred to the National Government foreign obligations incurred prior to the effectivity of the Electric Power Industry Reform Bill. The debts are part of Napocor's PhP240-billion ($5.83-billion) stranded liabilities, the bulk of which represents "take or pay" contracts entered into by the firm with several independent power producers. The DoF presented to Congress earlier a proposal for the National Government to assume up to PhP240 billion ($5.83 billion) of Napocor's liabilities to make it more attractive to potential buyers. This amends a provision in House Bill 8457, or the proposed Electric Power Industry Reform Act, wherein Congress suggested that the government will absorb only PhP100 billion ($2.43 billion) of the power firm's debts while the private investors buying into it will shoulder the balance. Under DoF's new financial plan, the National Government will only absorb liabilities corresponding to the assets to be sold by Napocor. It will not include the transfer of the firm's contractual obligations with independent power producers (IPPs). The liabilities to be assumed, therefore, will be less than the PhP240 billion ($5.83 billion) outstanding loan obligations, Mr. Pardo said. He did not cite details. The DoF wants to speed up the sale of Napocor to the private sector to earn revenues for the government. The power firm is included in the DoF's PhP22-billion ($0.535- billion) privatization program that also includes the full privatization of Philippine National Bank and Manila Electric Company. It also includes the sale of media corporations IBC-13 and RPN-9 and the sale of the Philippine National Oil Co.-Energy Development Corp. Meanwhile, congressmen believe the National Government will not be able to maximize the privatization of Napocor since only four of the seven generating companies (gencos) may be up for sale in the interim. Despite this, however, the congressmen believe that the government may recover more than the estimated PhP220 billion ($5.35 billion) in proceeds from the privatization process. Of the PhP220 billion ($5.35 billion), PhP120 billion ($2.92 billion) will be generated from the privatization of the gencos while PhP100 billion ($2.43 billion) will come from the partial sale (or 60%) of the National Transmission Company. "To begin with, this is a very conservative estimate, the (House of Representatives) committee on energy opted for the low-side. But because of the low side, any enhancement of the sale should improve the (over-all-proceeds) even if you take away those that cannot be privatized yet," Negros Occidental (Western Visayas) Rep. Julio A. Ledesma IV told BusinessWorld in a telephone interview yesterday. Mr. Ledesma, one of the co-sponsors of House Bill 8547 or the proposed Electric Industry Reform Act, also added that the PhP100 billion ($2.43 billion) estimated proceeds from the privatization of the transmission commission could go higher. HB 8547, which the House passed on third and final reading last week, provides for the restructuring of the power sector and the privatization of Napocor. Under the privatization program, however, the bill exempts the 700-megawatt Agus hydropower plant in Mindanao in response to fears from Mindanao legislators that power rates in the region will increase once the facility is privatized. In another interview, Batanes (northern Luzon) Rep. Florencio B. Abad, co-sponsor of HB 8547, noted that besides the Agus hydro complex, the government cannot yet put in the market two other gencos: the 765-MW Tiwi-Makban geothermal plant in Southern Luzon and the 350-MW Caliraya- Botocan-Kalayaan (CBK) hydro plant in Laguna (southern Luzon). Mr. Abad noted that the Tiwi-Makban plant is still under litigation while the CBK plant is under a rehabilitate- operate-transfer scheme. However, Mr. Ledesma explained that despite the exemption given to the Agus complex, "this does not stop the government from making plans" for its privatization in the long run. "The government can already properly evaluate the assets. Eventually, there will really be a plan for the privatization of the Agus complex," Mr. Ledesma said. Napocor, for its part, reiterated that the sale of its generation and transmision assests upon its privatization under the restructuring of the power industry will not favor foreigners nor "cronies" of the Estrada administration. Napocor president Federico E. Puno said in a statement that the public bidding for the privatization of these assets will be conducted with transparency under the supervision of the Committee on Privatization and will follow standard rules for international bidding. The statement was referring to allegations raised by some legislators last week that the sale of Napocor's assets may be dominated by only a few individuals. "The sheer number alone of the local and foreign investors (more than 100) interested in Napocor's privatization will make it impossible for a handful of firms to dominate the bidding," he said. Mr. Puno also clarified that the National Government's absorption of about PhP240 billion ($5.83 billion) of Napocor's debts under HB 8547 will not impose additional burden on consumers. In Baguio City, a top officer of a local electric cooperative said the privatization of Napocor will force rural electric cooperatives to retrench employees or even forego expansion plans to stave off the possible entry of private corporations into rural electrification. Gerry Verzosa, general manager of the Benguet Electric Cooperative (Beneco), said the Napocor privatization and the National Electrification Administration's (NEA) inclination towards private sector participation in the electrification program are forcing rural electric cooperatives to offer competitive rates. This could mean retrenching employees for computerization and foregoing expansion plans to match the capital of private corporations, he said. NEA is reportedly finalizing guidelines on private equity investment and joint ventures in electric cooperatives after the Aboitiz Equity Ventures submitted an 80-20 joint venture proposal to the board of directors of Davao del Norte Electric Cooperative, Inc. Electric cooperatives fear Aboitiz or other private companies might do the same with other electric cooperatives in the country, including Beneco. A group of private citizens in Baguio formed a coalition to spearhead the campaign for the registration of Beneco with the Cooperative Development Authority (CDA) and stave off the possibility of the privatization of the electric cooperative. The CDA has set a May 4 deadline for electric cooperatives to register and continue availing of the tax exemptions offered to cooperatives. Beneco has set a May 1 referendum for its consumers to ratify a board resolution seeking its registration with the CDA. The CDA registration is needed as most electric cooperatives in the country, including Beneco, are operating as "quasi-cooperatives." NEA continues to wield administrative control over them. At least 25% of the total number of consumers should cast their votes in the referendum, according to CDA guidelines. Three-fourths of votes cast is needed for ratification. Atty. Renato Fernandez, head of the coalition and president of the Baguio-Benguet Cooperative, admitted to the difficulty of garnering the needed 25% votes, much less the three-fourth majority. He said turnout during Beneco elections or referenda have always been poor. Mr. Fernandez, however, said Beneco as a cooperative will help keep electric bills affordable. He said a privately run Beneco would become profit-oriented and eventually increase electric rates. Mr. Verzosa, in a separate interview, said a failure in the May 1 referendum would not mean the automatic privatization of Beneco. It would remain a "quasi-cooperative" as it is governed by Presidential Decree 269 -- the law that created NEA. Mr. Verzosa, however, said a non-registration with CDA may mean forcing Beneco to pay taxes it was otherwise exempted from in the past. It may also make Beneco vulnerable to private corporation takeovers as it may not be able to stay financially stable without the tax exemptions. "The only way we could match the capital of private corporations and offer more affordable rates is to cut back on our expenses," Mr. Verzosa said. "This cut back on expenses may mean going towards computerization and retrenching employees. It may also mean being less aggressive on expansion programs as this would entail a lot of expenses," he added. (The Business World 17-April-2000) NATIONAL POWER CORP.: Gov't won't absorb all its debts ------------------------------------------------------ The government will absorb the outstanding foreign debt obligations of the National Power Corporation (Napocor) which it incurred prior to the passage of the power reform act mandating its privatization. Finance Secretary Jose Pardo said the government will use the proceeds from Napocor's privatization to pay off the transferred debts, Pardo said in a statement. The power reform bill was passed earlier this week by the House of Representatives but the Senate has still to approve its own version of the bill, one of the key legislative measures committed by the government under the programme with the International Monetary Fund. Napocor, the country's largest electricity supplier, has total outstanding loans of P240 billion which were obtained to meet the country's growing electricity needs. Pardo said the liabilities to be absorbed by the government should be equivalent to the value of the assets Napocor will sell. He did not provide a figure. Napocor officials earlier said government could raise between $200 million to $300 million from the company's privatization. Under the power reform bill, Napocor will retain 60 percent of its transmission business. Its Agus complex in southern Philippines will also be excluded from the generating assets to be sold. (Manila Bulletin 17- April-2000) PHILIPPINE NAT.BANK: Winning bidder to get 'sweetener' ------------------------------------------------------ The Bangko Sentral ng Pilipinas (BSP) will give extra incentives to the successful bidder of ailing Philippine National Bank (PNB), BSP Gov. Rafael B. Buenaventura said over the weekend. Buenaventura said the "sweetener" could include the continued authority of the bank to accept government deposits, a rehabilitation plan for the bank, incentives that could include revaluation of properties, and continued branch access to government facilities. Buenaventura, however, clarified that the BSP or the government will definitely not agree to absorb any non- performing loans (NPLs) of the bank as part of its rehabilitation even if some of the loans are so-called "sweetheart political loans" granted in the past. The sale of PNB, Buenaventura insisted, is on "as is, where is," basis which means that the buyer must buy the bank, including all of its bad debts. Buenaventura said that another auditing firm, Arthur Andersen, has been hired by PNB to conduct a final "due diligence" audit that will again go through the separate audit conducted by Pricewaterhouse Coopers, Punongbayan and Araullo and SGV. Arthur Andersen will also do an audit of PNB's finances from January to March this year completing the financial audit of the bank. The Arthur Andersen audit will also help in valuating the shares of the bank. Buenaventura said the government is still eyeing a May 15 bidding of PNB with the sale price to be agreed upon by both the government and business tycoon Lucio Tan. "Tan has indicated some flexibility with regard to the P160 per share price that he had initially insisted," Buenaventura said, adding that "Tan has apparently softened his price stand following the discovery of PNB's true financial situation." Bank analysts have repeatedly said that a P160 per share price may not be attainable and that at best it could be between P120 to P140 each on the assumption of a premium of two times the book value of the bank. PNB's current book value is only P70 per share. (The Philippine Star 17- April-2000) UNIWIDE GROUP : SEC approves amended rehab plan ----------------------------------------------- The Securities and Exchange Commission (SEC) has approved the amended rehabilitation plan of the debt-saddled Uniwide Group of Companies. SEC Chairman Lilia Bautista, who signed the approval along with two other hearing officers, also ordered the continued suspension of debt payments by the ailing retail company. She also directed the interim receivership committee to monitor the implementation of the amended rehabilitation plan, recommended revisions and to submit a bi-monthly report of all activities undertaken in relation to the recovery plan. The SEC said it saw the potential of a turnaround after reviewing the pros and cons of the proposed amended rehabilitation plan of Uniwide. It said saving the holding firm, Uniwide Holdings Inc. (UHI), will prevent further deterioration in the sagging confidence in the securities market. "Beside seeing Uniwide rehabilitated, our primary concern is the protection of the rights and interests of creditors... and the rehabilitation plan will enable them to satisfy their outstanding obligations. It is undisputed that Uniwide's business are viable and given a breathing spell, may be able to meet and settle its just obligations," the SEC order read. The corporate watchdog cited the advantages of giving Uniwide's recovery program a chance to work. For one, the entry of foreign investment in the amount of P3.57 billion will build up the confidence of other foreigners now considering investing in the country. The plan will also improve Uniwide Warehouse Stores which in turn will benefit employees, the consumers and the suppliers. The SEC also noted that the Uniwide owners, the Gow family, "did not take out funds from the Uniwide Group of Companies for their personal use and thereby completely losing ownership of any and all their companies by virtue of the amended rehabilitation plan." The SEC said Uniwide has more to lose if its proposed recovery scheme is not approved. For one, it will lose French retail investor Casino Guichard-Perrachon which is willing to infuse new money totaling P3.57 billion in exchange for 89.2 percent share of Uniwide wholesale club subsidiary, Uniwide Sales and Warehouse Club Inc. (USWCI). Moreover, the liquidation of Uniwide will leave about 1,200 unsecured creditors virtually no chance to recover their claims, while some of the creditors will be getting more than the amounts they loaned out to the company because they are over-collateralized. Worse, UHI, a listed firm, will become bankrupt, resulting in the loss of the investment of hundreds of small investors. The SEC also noted that the number of creditors who approved of the recovery package of Uniwide, outnumbered those who continue to oppose the plan. Uniwide has 39 secured and unsecured creditors out of 1,200 creditors among secured creditors, three banks whose total exposure to Uniwide amounts to P1.531 billion, filed their opposition to the plan. These oppositors comprise 22 percent of the total value of the obligation to secured creditors. The company, however, is continuing its negotiations with these banks and it is expected that they will eventually come to terms. One of those still opposing the plan is one of Uniwide's principal creditors, the Allied Banking Corporation (ABC) which is objecting to the planned conversion of some of the debts into condominium shares in Uniwide Metromall in Las Pi�as and the Coastal Mall along Roxas Boulevard. (The Philippine Star 17-April-2000) =============== T H A I L A N D =============== BANK OF AYUDHYA: Poised to raise capital with Govt help ------------------------------------------------------- Bank of Ayudhya (BAY) is planning to raise 26 billion baht under a government program to help strengthen its financial stability, according to a source at the Finance Ministry. Despite maintaining that its situation is not serious enough to required capital raising assistance, the bank may take advantage of the government plan, dubbed the August 14 Rescue Package, aimed at supporting institutions crushed by bad debt. The source said BAY wants to reinforce its financial capacity since it still posted non-performing loans (NPL) at 31.5 percent of total loans as of the end of last year. Under the government program, which began in mid-1998 at the height of the country's financial crisis, banks can qualify for funds from the government equal to the amount of capital they can raise from the market. BAY plans to use its 26 billion baht equity-backed SLIP (Stapled Limited Interest Structure) it issued last year as a fund which the government will match, freeing the bank from having to raise funds from the market. In March, the BAY board of directors approved the issue of two billion capital raising shares by offering one billion right issues and one billion through private placement. In addition, the board also endorsed a plan to attach 1.7 billion units of free warrants. The warrants give investors the right to buy shares held by the Finance Ministry in the future, allowing the government to recoup its investment. (Business Day 17-April-2000) MAGIC LAND: Preparing for its final party ----------------------------------------- Before Magic Land, Thailand's first amusement park, closes on May 28, it will target customers with a campaign dubbed "Magic Land, I miss you". The campaign aims to attract more than 250,000 people through the gates before the park closes for the last time. Ampol Sutiphein, assistant managing director of Amusement Centre Co Ltd, which operates Magic Land, said the company launched "Magic Land, I miss you" for nostalgic older customers who wanted to visit the park one last time. The leasing contract, which was signed in 1976, expires in June and the land owner, Rattanakul Seriruangrit, did not agree to its renewal. Magic Land is Thailand's oldest amusement park, located on Phaholyothin Road opposite Central Department Store, Lat Phrao. Covering 33 rai, the land would fetch a high price if the owner decided to sell it to a property developer. The area is now priced at about Bt100,000 per square wah. On a 12m wide road, the land is also zoned to allow high-rise building development. A land development expert said the location is good, but the land probably would not sell at the moment, because there were already many office buildings and condominiums in the neighbourhood. If the owner invested in a new project, it would face stiff competition from other developers, the source said. Ampol said that to reach the company's target of 250,000 visitors by May 28, the park would have to attract more than 2,000 people each working day and 4,000 people on holidays. He did not think this was unreasonable, as visitor numbers had increased by 30 per cent from the same period last year. "The 100 staff at Magic Land will not be laid off. They will be transferred to other amusement parks that the Kittiparaporn family is operating," he said. The company was also planning to invest Bt80 million to operate new amusement centres in three major department stores. These were the Lotus Supercentre on Rama 4, The Mall Nakhon Ratchisima, and Future Park Rangsit, he said. Currently, the Kittiparaporn family operates Dream World, an amusement park at Rangsit, and amusement centres in major department stores including Imperial Department Store Lat Phrao, The Mall stores and Fashion Islands. "[Even when] Magic Land is closed, the company's profit will not be effected, because 60 per cent of current revenue comes from Dream World," he said. (The Nation 17- April 17-2000) 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 newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Darryl Henning, Managing Editor, James Philip P. Jover and Cristina Pernites, Editors. Copyright 2000. All rights reserved. ISSN: 1520-9482. 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