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/raid1/www/Hosts/bankrupt/TCRAP_Public/000419.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 Wednesday, April 19, 2000, Vol. 3, No. 77 Headlines * A U S T R A L I A * AMP: Stock loses in rough seas CAIRN ENERGY PLC (CGY): Delisting from ASX CBA: Stock loses in rough seas NAT'L AUSTRALIA BANK: Stock loses in rough seas NEWS CORP.: Murdoch's $10.9B loss unhealthy situation ST GEORGE: Suffers stock loss in rocky market TELSTRA CORP.: Shares plunge * C H I N A & H O N G K O N G * NAM FONG INT'L HOLDINGS: To fight winding-up petition NHD SYSTEMS(ASIA)LTD.: Facing winding up petition NHD SYSTEMS(HOLDINGS)LTD.: Facing winding up petition PEREGRINE INVESTMENT HLDGS: Pleasant surprise for creditors SIU-FUNG CERAMICS CONCEPT CO.: Facing winding up petition SIU-FUNG CERAMICS HLDGS LTD: Facing winding up petition * I N D O N E S I A * A LATIEF CORP.: Bankruptcy hearing adjourned to April 24 BANK CENTRAL ASIA:IBRA says S'pore firm must buy IPO shares PT DHARMALA SAKTI SEJAHTERA: Values JV extra high PT FISKARAGUNG PERKASA: JSX delists PT PUTRA SURYA MULTIDANA: JSX delists * J A P A N * NISSAN MOTOR CO.: Bailing out of aerospace field SATO KOGYO CO.: Posts 20B Yen paper loss on real estate * K O R E A * SAMSUNG MOTORS: Further delay with Renault talks SEOUL BANK: Deutsche Bank agrees to advise - not manage * M A L A Y S I A * IDRIS HYDRAULIC(MALAYSIA): New shareholder after rehab? PAN MALAYSIA HLDGS: Share trading suspended indefinitely * P H I L I P P I N E S * CITYLAND DEV.CORP.: Denies report of SEC probe C&P HOMES INC.: Defaults on debt papers NATIONAL POWER CORP.: Who wants to buy Napocor assets? PHILIPINE NAT.BANK: Gov't defers PNB auction PHILIPPINE NAT.BANK: Tan vows stake sell even if no auction * S I N G A P O R E * BERGER INT'L: Loss maker to get $10M loan ONG ASIA LTD.: Shaky debut in shaky market * T H A I L A N D * BANGKOK BANK: Offs bad loans, posts loss KARNCHANA-ANAN FUND: Posts 2nd quarter loss KRUNG THAI BANK: Offs bad loans, posts loss SIAM CITY FUND: Posts 3rd quarter loss SIAM CITY TWO FUND: Posts 3rd quarter loss THAI FARMERS BANK: Offs bad loans, posts loss THAI FARMERS BANK: To cut staff by 17% THAI PETROCHEM.INDUS.: Some creditors dislike EffPlanner THAI PETROCHEM.INDUS.: Prachai makes final argument ================= A U S T R A L I A ================= AMP: Stock loses in rough seas CBA: Stock loses in rough seas NAT'L AUSTRALIA BANK: Stock loses in rough seas ----------------------------------------------- The share prices of insurance and fund management companies tumbled yesterday, as investors downgraded the earnings outlook for companies relying heavily on investment income. AMP led the fall. Its share price dropped by more than 6 per cent to $14.99. Other companies in the sector to experience share price falls of more than 6 per cent were HIH Insurance and Perpetual Trustees Australia. But the banks performed well as investors looked for safe haven stocks. Among the majors, only National Australia Bank fell by more than 3 per cent, to $22.88, reflecting its recent $4.56 billion bid for MLC. The tumble in NAB's share price reflects the perceived value of its bid for Lend Lease subsidiary, MLC. The deal looked less attractive yesterday afternoon after the earnings outlook for the fund manager deteriorated. Overall, the major banks fared relatively well, with non- investment earnings streams underpinning their performances. CBA shares fell 2.75 per cent to $24.90, compared with the 5.7 per cent fall in the All Ordinaries Index. "Banks are always seen as a bit of a safe haven," Mr Burns. "Bonds rallied as well and that helped a bit." CBA's takeover offer for Colonial is based on scrip, meaning it will not suffer from the problems experienced by NAB, and sharemarket analysts recognised this. Colonial shares closed at $8.40. After yesterday's fall in the sharemarket, CBA's bid is now worth $8.72 a share. Westpac shares closed 2.3 per cent lower at $10.65, while ANZ outperformed its peers, ending the day at $11.40, or 1.7 per cent lower. Sharemarket analysts are now forecasting weaker profit growth for insurers and fund managers during the June 2000 quarter. The companies rely on investment income, and potentially lower earnings sent the insurance sector index on the Australian Stock Exchange down by 4.4 per cent. Zurich Financial Services' fund manager, Mr Shawn Burns, said profits of life insurance and on fund management companies could suffer. "It could well put a hole in their investment earnings. It really depends on what happens when they rule of the book at the end of June. It's a bit early to say too much but it doesn't help." One leading sharemarket analyst said earnings of insurance companies would fall as a result of the lower market, but many investors looked through that to core profit from underwriting business. "It means profits are more volatile but it probably doesn't mean that people will change their stock picks," he said. As market interest rates fall, investors often switch into relatively safe bank stock investments. Regional banks performed relatively strongly. St George Bank shares fell by 1.4 per cent to $10.90. Suncorp-Metway shares actually rose, by 1 per cent to $7.79. (Financial Review 18-April- 2000) CAIRN ENERGY PLC (CGY): Delisting from ASX ------------------------------------------ Following a prolonged period of low levels of trading activity and volume in Cairn shares on the ASX the Company announces that it has received permission to delist from the ASX. Cairn shares will be suspended from trading on the ASX at the close of trading on 2 May 2000 and delisting will occur on 9 May 2000. A letter will be sent to all shareholders whose shares are traded on the ASX prior to suspension detailing arrangements made by Cairn and D&D-Tolhurst Ltd, an Australian stockbroker, to facilitate the sale of shares by Australian shareholders. Shareholders retaining their shares on delisting will have their holdings transferred from Cairn's Australian share register to the United Kingdom share register. Following delisting from the ASX, Cairn shares will be traded on the London Stock Exchange only. (Australia Stock Exchange 17- April-2000) NEWS CORP.: Murdoch's $10.9B loss unhealthy situation ----------------------------------------------------- Mr Rupert Murdoch's value to the company he founded and remains executive chairman of, News Corporation, is incalculable. News Corp lost almost $10.9 billion in value yesterday and the percentage decline of its ordinary shares outstripped the wider All Ordinaries Index by some 8.12 per cent following revelations at the weekend that the global media magnate would be treated for prostate cancer. While professional investors can monitor all manner of company performance indicators, methods of measuring one of the most crucial factors determining the strategic and operational success of an organisation - the health of its leaders - remains a hazy concept. In November 1997, the managing director of St George Bank, Mr Jim Sweeney, died of a suspected heart attack. The loss of Mr Sweeney at just 51 years of age caught everyone by surprise - the company itself had no formal succession plan, instead leaving chairman Mr Frank Conroy to temporarily take the helm. Investors quantified Mr Sweeney's value to St George by immediately wiping more than 2.4 per cent from the company's value. A major market question yesterday was just how much executives are worth to the companies they command, largely in light of news Mr Rupert Murdoch has been diagnosed with prostate cancer. "You try to assess how critical that key person is and the likelihood of that person passing away in the next two years or so," one analyst said of the method of valuing personnel. "If there's no abnormal chance [of an executive dying], you're happy to assume it's not a problem. That said, you still have to apply whatever discount you have to apply to that person being critical to the organisation." Fund managers and analysts were yesterday hesitant to ascribe the greater decline to concerns about Mr Murdoch's health, noting News Corp shares had enjoyed above-average gains in recent months. Shares in Mr Kerry Packer's various companies also fell heavily, but no-one attributed that to concerns about Mr Packer's health, despite several scares in recent years. "It's horses for courses," one investment banker said. "Kerry Packer is so uninvolved in his businesses now ... and he's got a very high quality management team for the degree of difficulty of the business that he's running. "Rupert Murdoch is still the key and sole decision-maker on anything that's important or relevant in News. This [Mr Murdoch's cancer] is a much more serious turn of events for News than it would be for Kerry Packer's companies." Analysts yesterday noted News Corp's position had been helped by Mr Murdoch's clear enunciation last year that his president and co-chief operating officer, Mr Peter Chernin, would assume the company's helm if the worst happened. But they said the health issue remained and sums would be done, particularly on the prospects for News Corp being broken up once Mr Murdoch was no longer in charge. "The sum of the parts is worth more than the whole anyway," one media analyst said. (Australian Financial Review 18- April-2000) ST GEORGE: Suffers stock loss in rocky market --------------------------------------------- Newly-floated financial service providers watched their market value plummet yesterday, dragging the fortunes of some of Australia's biggest banks with them. Shares in internet-based financial services and fund management group InvestorWeb Ltd fell 23› to 46›, capping a 66 per cent drop in its share price since mid-January. Online information vendors Marketfaxts and HWW both suffered in the rout. Marketfaxt shares fell more than 5› to 19›, and HWW shares fell 9› to 30›. Both companies listed in the second half of last year at 50›. But boutique financial services companies are not the only potential losers from the sell-off. St George could have lost more than $2 million after shares in one of its core technology investments, Bourse Data, were slashed by close to 30 per cent. St George has agreed to pay $10 million - or $2.20 per share - to acquire an initial 13.2 per cent stake in the online financial services information provider, subject to the approval of its shareholders at an extraordinary general meeting next month. But Bourse Data shares fell 71› yesterday to close at $1.74. St George's stake in Sausage Software is also worth 30 per cent less than last Friday, although the bank has not lost money on the deal. Sausage Software shares fell $1.37 to $3.06 yesterday, still a healthy premium to the $1.35 a share St George chief executive Mr Ed O'Neal paid to acquire a 6 per cent stake in the Melbourne company last year. ANZ also suffered in the sell-off. The bank last year signed an agreement with online stockbroker Etrade that will give it up to 40 per cent equity in the business. ANZ received an initial parcel of 6 million fully paid Etrade shares. Etrade shares closed at $6.50 when the deal was announced in June last year. Yesterday, shares in the broker fell 78› to $2.78. ANZ is yet to take up its $40 million equity stake in eisa, whose shares were among the hardest hit e-commerce stocks yesterday and have shed more than 60 per cent since the alliance with ANZ was announced last Thursday. (Financial Review 18-April-2000) TELSTRA CORP.: Shares plunge ---------------------------- Shares in market leader Telstra Corp plunged nearly five per cent yesterday as the Australian Stock Exchange was hit by its worst one-day loss in more than two years. And the 1.8 million Australians who invested in the second tranche of Telstra watched their investment slide 35 cents below last October's issue price of $4.50. But analysts say Telstra remains a secure investment, after holding its own in comparison to yesterday's crash by rival telcos and technology stocks. Telstra ordinary shares were the second highest traded stock on the ASX yesterday. They fell 37 cents to close at $7.12 on turnover of 20.7 million worth $147.8 million. Telstra 2 instalment receipts didn't fare so well, dipping 7.78 per cent, or 35 cents to close at $4.15 - that is 35 cents below their issue price. Telstra shares are now trading at their lowest level for more than a year, while the instalment receipts are at an all-time low. (The Mercury 18-April-2000) ============================== C H I N A & H O N G K O N G ============================== NAM FONG INT'L HOLDINGS: To fight winding-up petition ----------------------------------------------------- The Directors of Nam Fong International Holdings Limited ("the Company"), through Wong Wah, Chairman, refer to the announcements made by the Company on 24th February, 2000 and 12 April, 2000. The adjourned winding-up petition against the Company by Mr. Lau was heard to-day. The Court has granted leave to the Company to file and serve the affidavit in opposition of the winding-up petition by 5 May 2000. A further announcement on the progress of the proceeding will be made in due course. (Hong Kong Stock Exchange 18-April-2000) NHD SYSTEMS(HOLDINGS)LTD.: Facing winding up petition ----------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 19 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of NHD Systems (Holdings) Limited. A notice of legal appearance must be filed on or before May 18. NHD SYSTEMS(ASIA)LTD.: Facing winding up petition ----------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 19 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of NHD Systems (Asia) Limited. A notice of legal appearance must be filed on or before May 18. PEREGRINE INVESTMENT HLDGS: Pleasant surprise for creditors ----------------------------------------------------------- Peregrine Investments Holdings' liquidator said it will pay creditors of the failed Hong Kong investment bank more than it initially planned, as it was able to sell more assets than predicted. Banks, bondholders and employees of the firm, which went bankrupt in 1998, will receive a second payment giving them a total return of 25 cents on the US dollar for the two main units and 45 cents for the derivatives affiliate. "The realizations to date have been higher than expected," said David Hague, the PricewaterhouseCoopers (PWC) partner in charge of Peregrine's liquidation. Peregrine collapsed after currencies, stocks, bonds and real estate prices plunged in 1997, leaving many of its clients in Southeast Asia insolvent. Peregrine, once Asia's largest independent investment bank outside Japan, owed US$4.5 billion (HK$35.1 billion) from its 29 offices across 15 countries. The liquidators have raised a total HK$6.9 billion from selling assets. Peregrine Fixed Income has raised US$500 million since January 1998, with US$109 million being sold in the past year. Peregrine Investment Holdings, the parent which was mainly a creditor to its affiliates, is receiving more from sales of the firm's direct investment portfolio. The parent received US$38.5 million so far from the direct investment unit. The estimate for repayment of creditors to the holding firm has been raised to 25 cents on the dollar from between 10 cents and 15 cents, PWC said. Those owed money by Peregrine Derivatives will fare the best. Creditors to the unit will likely receive 45 US cents on the dollar, up from an initial estimate of 20 cents to 35 cents. The increase was "largely because of the rejection or partial rejection of many claims lodged, and an overestimation of claims," said Stephen Caswell, the PWC partner heading the liquidation of that unit. PWC is also awaiting the outcome of a UK lawsuit involving a dispute between the liquidators and Thailand's Robinson Department Stores, which is making an argument to represent scores of other debtors over the settlement of contracts written with the International Swap Dealers Association (ISDA). PWC expects a ruling in "three to four weeks," Mr Copley said. Payments owed to creditors with ISDA contracts are included in the total amount prepared for this instalment, and will be held until after the court hands down its verdict. (Hong Kong Standard 18-April-2000) SIU-FUNG CERAMICS HLDGS LTD: Facing winding up petition ------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 19 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Siu-Fung Ceramics Holdings Limited. A notice of legal appearance must be filed on or before May 18. SIU-FUNG CERAMICS CONCEPT CO.: Facing winding up petition --------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for May 19 on the petition of The Hongkong and Shanghai Banking Corporation Limited for the winding up of Siu-Fung Ceramics Concept Co. Limited. A notice of legal appearance must be filed on or before May 18. ================= I N D O N E S I A ================= A LATIEF CORP.: Bankruptcy hearing adjourned to April 24 -------------------------------------------------------- The Jakarta Commercial Court has adjourned a bankruptcy hearing on the affairs of A Latief Corp, a company owned by former manpower minister Abdul Latief, until April 24, according to Sihol Sitompul, the chief judge hearing the case. The hearing was adjourned to allow the company to settle its debts out of court with the plaintiff, the Indonesian Bank Restructuring Agency, Sitompul said. A Latief Corp lawyer Jamaslin Purba said the IBRA earlier agreed to restructure the company's loans as proved by an agency letter of June 11, 1999 stating: "both parties will finalise debt restructuring by June 21, 1999 at the latest." Purba said his client has asked to meet the agency's executives several times without response. IBRA said that in November 1999 A Latief Corp had total outstanding debts of 16.929 mln usd. (AFX News Limited 18-April-2000) BANK CENTRAL ASIA:IBRA says S'pore firm must buy IPO shares ----------------------------------------------------------- Indonesian Bank Restructuring Agency (IBRA) deputy chairman Jerry Ng said on Monday the Government of Singapore Investment Corporation (GSIC) must purchase Bank Central Asia (BCA) shares through the bank's initial public offering (IPO). Jerry said IBRA would treat GSIC like other potential investors in BCA. "We have decided that the divestment mechanism will be made through an IPO, so GSIC must purchase shares through (the primary market)," he told The Jakarta Post. Jerry was responding to reports GSIC had expressed interest in purchasing shares in BCA. His comments were in response to speculation that GSIC might enter BCA through other means, including a private placement mechanism. GSIC is one of the investors in a consortium led by Singapore auto distribution firm Cycle & Carriage, which recently won a deal to buy IBRA's stake in the publicly listed auto giant PT Astra International. IBRA controls over 92 percent of BCA, which was nationalized by the government in May 1998 after the bank owners failed to repay debts to the government and the bank was found to have breached legal lending limits. IBRA plans to divest between 15 percent and 30 percent of its BCA stake, or a maximum of 882.2 million shares, through an IPO on May 19 to May 23. The BCA IPO is part of efforts by the agency to raise some Rp 18.9 trillion (US$2.54 billion) to help finance the 2000 state budget. All of the proceeds from the IPO will go into the government's coffers. The indicative IPO price is between Rp 1,350 and Rp 1,750 per share. "We'll visit GSIC when we hold a road show in Singapore .... We'll treat GSIC the same as we do other investors, like Schroeders and Fidelity," Jerry said referring to international investment banks Schroeders and Fidelity Investment. IBRA is planning to hold an overseas road show covering major financial markets from April 26 to May 9, with Singapore likely to be the first stop. The lead underwriters of the BCA IPO are state-owned PT Danareksa Securities and PT Bahana Securities. According to experts, IBRA wants GSIC to become an "anchor" investor for the BCA IPO. Asked about the possibility of the IPO price being in the upper range of the indicative price, Jerry said: "I'm always optimistic." BCA, formed in 1957, was one of the country's largest private banks with total assets of Rp 96.45 trillion as of last year. The bank has some 795 branches in Indonesia and two overseas branches, and operates 1,858 automatic teller machines. BCA booked a net profit of Rp 641.29 billion in 1999 compared to a loss of Rp 28.40 trillion in 1998. (The Jakarta Post 18-April-2000) PT DHARMALA SAKTI SEJAHTERA: Values JV extra high ------------------------------------------------- PT Dharmala Sakti Sejahtera has placed an excessively high valuation on one of its joint ventures, PT A.J. Manulife Indonesia, as part of a debt restructuring proposal, the company's joint venture partner, Manulife Financial said. In a letter submitted to Dharmala Sakti's creditors today, Manulife Financial also said Dharmala's over-valuation of Manulife Indonesia casts doubt on the figures in its reports to shareholders. "If the latest value placed on Manulife Indonesia is any indication, the asset disposition values have no basis in reality and will only serve to create unrealistic expectations for creditors," Manulife said. The commercial court has granted Dharmala Sakti a 40-day suspension of payment during which time it must reach a restructuring agreement with creditors or face automatic bankruptcy. Manulife said Dharmala's valuation on Manulife Indonesia in a document prepared for creditors was "particularly implausible" as it placed a value of 500B rupiah on the company. This was significantly higher than a valuation placed by Dharmala on Manulife Indonesia in a restructuring plan submitted to creditors in February. "The earlier numbers were based on the only independent valuation completed to date and no valuation has been done by Dharmala Sakti Sejahtera or any third party at the behest of Dharmala Sakti Sejahtera in the interim that could form the basis for the value most recently provided," Manulife said. "Accordingly, this latest 'valuation' is wholly incredible and ought not to be relied on in assessing the merit of the plan." Manulife suggested a timetable be drawn up for the sale of Dharmala's stake in the joint venture, under which a deal would be concluded by May 31. (AFX News Limited 17-April- 2000) PT FISKARAGUNG PERKASA: JSX delists PT PUTRA SURYA MULTIDANA: JSX delists ------------------------------------- PT Fiskaragung Perkasa and PT Putra Surya Multidana have been delisted from the Jakarta Stock Exchange, the JSX said. "Two share issuers PT Fiskaragung Perkasa and PT Putra Surya Multidana as of April 17, 2000 have been delisted from the Jakarta Stock Exchange," it said in a statement, adding, the move was taken following a decision by the commercial court to declare the two companies bankrupt. (AFX News Limited 18-April-2000) ========= J A P A N ========= NISSAN MOTOR CO.: Bailing out of aerospace field ------------------------------------------------ Ailing Nissan Motor Co. is withdrawing completely from the business of building aircraft and rockets, becoming the first Japanese company to do so. The Tokyo-based automaker said last week it will sell its aerospace and defense division to Ishikawajima-Harima Heavy Industries Co. (IHI). Restructuring under the leadership of France's Renault SA, Nissan is making moves designed to concentrate its resources on the auto business. The company has a long history in aerospace, having started making airplanes before World War II. With the acquisition, IHI aims to take advantage of Nissan's solid-fuel rocket technology to strengthen its aerospace business. The company also hopes to win more orders for equipment from the Self-Defense Forces. IHI will set up a wholly owned subsidiary to take over on July 1 all related operations and 1,020 employees from the Nissan group. The purchase will include the division's main plant in Tomioka, Gunma Prefecture, as well as a research-and- development center in Kawagoe, Saitama Prefecture. These two locations combined have 860 employees, while the rest will come from an aerospace design subsidiary. The purchase price is estimated by industry insiders to be about 40 billion yen ($374 million), but a senior official at the heavy-equipment maker said the price will not be disclosed for the time being out of consideration for Nissan. The aerospace division had sales of about 51 billion yen in the year ended March 1999. The division's main products are solid-fuel rocket engines, defense equipment and the M-5 rocket of the Ministry of Education's Institute of Space and Astronautical Science. "The cost of the purchase will hurt earnings for the first couple of years, but results will be seen from the third year," said a senior IHI executive. During the 1990s, a number of U.S. and European automakers unloaded their aerospace and defense operations, largely because the Cold War was over and defense budgets everywhere were reduced. While Nissan had long thought of following the same course, it balked at taking the step because of strong resistance within the aerospace division. Now, however, the debt-burdened automaker can no longer afford to hesitate. Nissan has already sold its headquarters building in Tokyo's prestigious Ginza district, its textile-machinery division and other assets. The company is struggling to fulfill the pledge of Chief Operating Officer Carlos Ghosn to return to consolidated net profit in fiscal 2000 through next March, and to cut in half groupwide interest-bearing debt to 700 billion yen by the end of fiscal 2002. The sale of the aerospace and defense division marks the second time Nissan has disposed of assets to lift earnings for fiscal 2000, having already sold off shares it held in Fuji Heavy Industries Ltd., a maker of four-wheel-drive cars, to General Motors Corp. of the U.S. The only other marketable assets Nissan still has in the cupboard are the forklift and marine-equipment divisions, industry analysts said. The opportunity for future sell- offs is also limited because unrealized profits on shares held in group companies have shrunk following falls in the affiliates' stock prices. With no new models scheduled to reach the domestic or overseas car markets in the first half of this fiscal year, Nissan still faces tough times ahead, even with the contribution from the sale of its aerospace and defense division. (Nikkei 17-April-2000) SATO KOGYO CO.: Posts 20B Yen paper loss on real estate ------------------------------------------------------- Sato Kogyo Co. (1804) is estimated to have posted for the year ended March some 20 billion yen in paper loss on its properties for sale, company sources said Monday. The properties have market values that are worth only about half or less of their book value. As a result, the Toyama Prefecture-based construction firm, which had expected to break even, appears to have seen net loss of about 15 billion yen. As of Sept. 31, the company held real estate for sale worth 54.1 billion yen, and had spent 57.1 billion yen on property development projects. The company had its debt totaling 110.9 billion yen waived by financial institutions in the year ended March 1999 and has been writing off bad assets and liquidating unprofitable operations. Though Sato Kogyo had earlier intended to post the property valuation loss over several years, the Japanese Institute of Certified Public Accountants has decided to require firms to speed the booking of such losses. Sato Kogyo's extraordinary loss for fiscal 1999 is estimated at 23 billion yen as the company also had to write off bad debts and fund an early retirement program. Though the company posted sizable net loss for the second consecutive year, shareholders' equity appears to have decreased by only about 4 billion yen to just over 16 billion yen thanks to the use of deferred tax accounting. The company hopes to wipe out cumulative loss within the current fiscal year. (Nikkei 18-April-2000) ========= K O R E A ========= SAMSUNG MOTORS: Further delay with Renault talks ------------------------------------------------ Domestic creditors of Samsung Motors and Renault are likely to cancel a meeting in Paris this week to conclude the sale of the Korean auto maker, due to delayed debt settlement over the sales division of Samsung Motors. Creditors and Renault were scheduled to hold final talks in Paris before their extended exclusive bargaining period ends Friday, after the former resolves the debt issue with Samsung Corp. in bankruptcy court. Creditors and Samsung Corp. negotiated over three times for the past two weeks, but failed to reach an agreement or accept a recommendation from a court mediator. Samsung Corp., which demands full payment of 291.2 billion won ($ US261.4 million) for lending after-sales service factories and sales outlets to Samsung Motors, will hold a board meeting to decide whether to accept the court proposal by Saturday. "It will be no use to meet Renault without settling the debt issue with Samsung Corp. first," an official of Hanvit Bank, Samsung Motors' main creditor bank said. "We will have to wait until what Samsung Corp. says before we can meet Renault to sign a contract." (Asia Pulse 18-April- 2000) SEOUL BANK: Deutsche Bank agrees to advise - not manage ------------------------------------------------------- The South Korean government's appointment of Deutsche Bank AG as an adviser to Seoulbank marks a modest but important step in the effort to turn around the ailing local bank, analysts said. The Korean Financial Supervisory Commission said Friday that Deutsche Bank will serve as a financial and restructuring adviser to Seoulbank, and will assist the government in its selection of a new chief executive and senior management team for the bank. Seoulbank posted a net loss of 2.23 trillion won ($2.02 billion) in 1999, the largest such loss among all Korean commercial banks last year, but down slightly from the prior year's loss of 2.24 trillion won. Deutsche Bank said it also will conduct a review of Seoulbank's core operations and prepare a detailed restructuring plan. While Deutsche Bank's role at Seoulbank will be limited to an advisory capacity, the German bank's willingness to take on the task increases the likelihood that the government will be able to turn around the bank's operations, said H. Jin Lee, an analyst at Samsung Securities Co. in seoul. "For Seoulbank, it's good news," Mr. Lee said. The Korean government took over Seoulbank and Korea First in early 1998, and agreed with the International Monetary Fund to find foreign buyers for both institutions as part of its effort to reform the country's troubled banking sector. After protracted negotiations, U.S. private-equity fund Newbridge Capital Ltd., completed its purchase of a 51% stake in Korea First Bank in December, nearly a year after the two sides signed a memorandum of understanding on the matter. But the government has yet to find a buyer for Seoulbank. In February 1999, the government agreed to sell HSBC Holdings PLC an initial 70% stake in Seoulbank. But that deal fell apart in August because of differences concerning several central issues, including the scope of the nonperforming loans the Korean government was willing to cover on the deal's completion, HSBC said at the time. After the collapse of the HSBC talks, the government said it planned to sell a minority 10% to 20% stake in Seoulbank to a foreign investor, who also would acquired managerial control of the bank. But that plan failed to yield a bid satisfactory to the government and was called off in January. The Korean government then began a search for a new chief executive, also without success. (The Asian Wall Street Journal 17-April-2000) =============== M A L A Y S I A =============== IDRIS HYDRAULIC(MALAYSIA): New shareholder after rehab? ------------------------------------------------------- Financially strapped Idris Hydraulic (Malaysia) Bhd, which is undergoing a debt restructuring exercise, may see the emergence of a new substantial shareholder after the completion of this scheme. Though the restructuring exercise will take at least a few months to finalise, parties familiar with the group are already speculating about the entry of a well-connected individual as a new substantial shareholder who will likely be empowered with some management control. Executive director Datuk Ishak Ismail currently heads the management team in Idris. One strong candidate is former executive chairman of Malaysia National Insurance Sdn Bhd (MNI) Datuk Annuar Senawi. Last year, Annuar Senawi was speculated to be eyeing Idris' jewel Talasco Insurance Bhd. Speculation was rife then that Talasco would be sold to Second Boarder Ayamas Corp Bhd so that Idris can raise the necessary cash to pay its debt totalling more than RM500 million. Idris had even obtained approval-in-principal from Bank Negara to initiate negotiations on the sale of Talasco. There was much talk then that Annuar Senawi would join Ayamas board on speculation that the company planned to transform itself into an insurance-based company. On the possible link between Annuar Senawi and Talasco, sources believe that the former MNI executive chairman has always been eyeing for some action in the insurance industry. He has spent some 23 years in this sector before leaving MNI in 1995. In the event that talks about him emerging as a new substantial shareholder in Idris materialises, there is a good possibility of Talasco, despite being a small player in the life and general insurance sector, to become an anchor insurer as it consolidates a few others under its wings. But the latest gameplan is that the entry of the new substantial shareholder into Idris may have to do with the 55.35 per cent equity interest in the company representing 328 million shares of 50 sen each held in CLOB (Central Limit Order Book) through The Central Depository (Pte) Ltd. Idris has a issue share capital of 592.78 million as at May 20, 1999, according to its 1998 annual report. A source says Idris' creditors have recently given their approval-in principal on the company's general restructuring scheme. The creditors are said to be finalising the terms of the scheme especially their respective entitlement. An agreement on this issue is likely to be reached by September this year. In Idris' corporate and financial restructuring scheme, the Securities Commission (SC) has imposed a condition on the company that the exercise must unwind the controversial Wisma Idris transaction. The controversy started when KFC Holdings (M) Bhd transferred the title to Wisma Idris before Idris paid the price of RM108 million. Idris subsequently charged it to a stockbroking firm as secondary collateral for a loan. The transfer of the title was a condition for SC's approval for a share placement where the proceeds would be paid to KFC but Idris was unable to proceed with the share placement culminating in the controversy over the title of the building. On the latest development in Idris, sources say the financial restructuring exercise will, among others, likely to include the issue of loan stocks and other forms of debt instruments as well as a capital reduction. It is also expected to make a cash call through a rights issue after the consolidation of the shares to raise the appropriate funds for its working capital as well as for partial loan repayment. The rights issue in the restructuring exercise has emerged as the likely platform for the new shareholder to make his entry into Idris. Sources say there is a strong possibility that the new party will underwrite the shares of the right issue not subscribed by holders of the CLOB shares. This move is likely to give the new party a substantial equity interest in Idris. Observers say the new substantial shareholder will have shareholdings in a clean company after the financial restructuring exercise in Idris. With the cash from the rights issue, sources say it will prepare Idris to undertake any asset injection at a later stage. (The Edge 17-April-2000) PAN MALAYSIA HLDGS: Share trading suspended indefinitely -------------------------------------------------------- Trading in Pan Malaysia Holdings Bhd shares will be suspended on the Kuala Lumpur Stock Exchange tomorrow until further notice, a KLSE circular said. In a separate statement to the KLSE, Pan Malaysia said a winding-up petition was filed by Pilecon Geotechnics Sdn Bhd on Pan Malaysia's 70 pct-owned unit Pengkalen Heights Sdn Bhd for 598,912 rgt. "The alleged debt claimed is in respect of substructure works done by Pilecon Geotechnics for a proposed hotel and service apartment project in Kuala Lumpur, which is currently charged to Pengurusan Danaharta Nasional Bhd," the company said. Pengkalen Heights has discontinued the development of the project. It is no longer considered viable, it added. The Pan Malaysia group is not expected to suffer any loss arising from the winding up of Pengkalen Heights but instead will make a gain of 8.2 mln rgt. "As Pengkalen Heights is in the process of effecting a voluntary winding-up itself, it does not intend to oppose or take any action in respect of the winding-up petition filed by Pilecon Geotechnics," Pan Malaysia added. (AFX News Limited 17-April-2000) ===================== P H I L I P P I N E S ===================== CITYLAND DEV.CORP.: Denies report of SEC probe ---------------------------------------------- Listed property firm Cityland Development Corp. denied yesterday a report that it is being probed by the Securities and Exchange Commission over its capability to pay off borrowers of its so-called non-recourse debts. "Please be informed that this news is a surprise to us since there is no investigation by the Securities and Exchange Commission in our company regarding this matter," CDC senior vice president Rufina Buenseceso told the Philippine Stock Exchange. Quoting government sources, The STAR reported that the SEC, among with the Bangko Sentral has initiated an investigation into the borrowing and leading activities of CDC due to rising apprehensions by the holders of its non- recourse debts. Non-recourse debts are high-yielding commercial papers floated by borrowing companies to raise money for their projects. Although they earn high interest rates, investors in non-recourse debts are not given the guarantee of full recovery of their investments from the borrowing firms. The government's move was an offshoot of the similar failure of Westmont Investment Corp. to service over P7 billion of its debts. Amid this controversy, CDC stocks were prominent during yesterday's trading as its price closed 50 percent or P2 higher at P6 each. Aside from bucking the general market trend, CDC was the top gainer and was forced into a trading halt having reached the mandatory ceiling of 50 percent. (The Philippine Star 18-April-2000) C&P HOMES INC.: Defaults on debt papers --------------------------------------- C&P Homes Inc., the cash-strapped house builder founded by Speaker Manuel Villar, has defaulted on its long-term commercial papers worth P3 billion causing hundreds of investors who bought the firm's IOUs to seek compensation from banks. An industry source said C&P has stopped interest payments on its P3 billion CPs since November last year and it was unclear on when the company can honor its obligations. C&P is currently seeking a debt-restructuring program with its creditors but negotiations have not yet resulted on any positive development due to differences on the terms. C&P issued the LTCPs in 1996, just a year before the regional financial crisis erupted that put the property boom to a halt and sent property developers falling into serious financial trouble. C&P did not return the INQUIRER's calls. The C&P IOUs, which were given a primary rating, were issued in two maturity periods--5 and 7 years--with the yield to be based on the 91-day Treasury bill rate plus premium--one percent for 5 years and 1 1/8 for 7 years-- payable on a quarterly basis. Aside from the P3 billion CPs, C&P's debt stock includes a $150 million floating rate note and P5 billion owed to various domestic banks. C&P's default on its IOUs has naturally infuriated hundreds of investors who are left with no recourse since the secondary market for these CPs have shrunk. One of the irate investors said that they were planning to file a class action suit against Citibank N.A., one of 10 banks that actively sold the C&P CPs, which allegedly assured them of a ready market for these IOUs. However, a Citibank official said their transactions involving the C&P IOUs were within the standard trust banking regulations. "These are investments of clients and we just hold them in trust for them," the Citibank official said. "We don't make promises on absolute liquidity but only what the market has to offer." The Citibank official said their clients were 'very prime' and they were well informed about their investments. ''At the time of its issuance, C&P was rated highly by the credit-rating agency. It is unfortunate that it was badly hurt from the crisis. The Bangko Sentral ng Pilipinas has been informed about the plan of the investors to sue Citibank. But a BSP source said the main issue to be resolved is whether Citibank did not fully inform its clients otherwise the complaining investors are plain greedy. (Philippine Daily Inquirer 18- April-2000) NATIONAL POWER CORP.: Who wants to buy Napocor assets? ------------------------------------------------------ A list of prospective buyers of the National Power Corp. was handed to the INQUIRER yesterday by the lawyer of the power firm's union to force Napocor management to be more transparent. Most of those on the list were foreign-owned firms. Romeo Capulong, lawyer of the Napocor Employees Consolidated Union (Necu), said the list was being kept hidden from the public. "We are urging strongly the Napocor management, particularly their board of directors and top officials headed by Federico Puno to be fully transparent from hereon regarding matters connected with the privatization," Capulong said. Aside from keeping the list away from the public's view, Napocor is hiding its liabilities, list of assets and their correct valuations, according to Capulong. He said the figures being bandied about were conflicting, especially on Napocor's liabilities, which range from P500 billion to P1 trillion. "They hide it because there are anomalies inside like service contracts with the independent power producers .. They hide it so that people would not know how much they will assume once it is sold," Capulong said, citing the negotiations between a local firm and Napocor. "Right now, there are secret negotiations going on particularly with respect to the Makban and Tiwi geothermal plants," said Capulong, referring to negotiations between the Philippine Geothermal Inc. and Napocor. Capulong issued the challenge to Napocor amid speculations that the money that flowed into the pockets of congressmen in exchange for the approval of the Omnibus Power Bill came from private investors interested in buying the power firm. "They bribe so that when they buy the assets, they're free from the liabilities and the overstaffed bureaucracy," Capulong said. "I have no doubt that Malaca¤ang and the prospective buyers, especially the cronies, stand to benefit from the sale." The lobby money is not only from Malaca¤ang but also from those manipulating the legal procedures for the sale of Napocor assets, according to Capulong. In Baguio City, union leaders said the payoff to ensure the passage of the Omnibus Power Bill proved that foreign interests had been orchestrating government efforts to sell off the state power firm. Abner Eleria, Necu president, and Teodoro Orquiza, Necu vice president, told the INQUIRER last January that a multimillion-dollar fund had been put up by Napocor officials to lobby Congress and to finance a public relations campaign in support of the passage of the bill. Orquiza told the INQUIRER Monday that about $1 million had been set aside for the media. But Jimmy Salman, regional president of Napocor Employees and Workers Union (Newu)- Northern Luzon, said the bribe money itself appeared to have been raised independent of the original lobby fund from abroad. Sanlakas Rep. Renato Magtubo, who along with Rep. Loretta Ann Rosales disclosed the bribery on Sunday, said his main suspects were local power firms which would benefit from the sale of Napocor assets. (Philippine Daily Inquirer 18- April-2000) PHILIPINE NAT.BANK: Gov't defers PNB auction -------------------------------------------- The government has postponed the auction for 76 percent of the Philippine National Bank. Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura said the original bidding date of May 15 may not be met. By that time he said the government may only be ready to release the list of prequalified bidders. After that, Buenaventura said the bidders will have to be given sometime to conduct their own due diligence studies. As such, the bidding will have to be conducted before May 30, he said. In its Memorandum of Economic and Financial Policies (MEFP) to the International Monetary Fund, the government has committed to privatize PNB before June 10 this year. Buenaventura said the date holds only if the bidding is successful. If the bidding falils, Buenaventura said Lucio Tan and the government will be free to go their separate ways. According to Buenaventura, Tan said he is likely to sell his 46 percent stake on his own if the joint bidding fails. Government for its part is exploring the possibility of teamming up with the other investors. But even at this point, government and Tan have not yet agreed on a minimum sale price for the shares. The valuation of the PNB shares is still being discussed as another auditor, Arthur Andersen, is supposed to conduct on audit of PNB's finances from January to March this year. Arthur Andersen will also revalidate the audits of Price Waterhous Coopers, Punong bayan and Araullo and that of SGV. (The Philippine Star 18-April-2000) PHILIPPINE NAT.BANK: Tan vows stake sell even if no auction ----------------------------------------------------------- In what could be a bid to quash market speculation about his true intentions in semiprivate Philippine National Bank (PNB), tobacco and beer tycoon Lucio C. Tan has committed to unload his 46% stake even if the forthcoming joint sale with the National Government fails to attract buyers. Bangko Sentral (Central Bank of the Philippines) Gov. Rafael B. Buenaventura yesterday made the disclosure at a news conference, adding that Mr. Tan has already notified the government of his decision to sell his 46% PNB stake on a "stand-alone basis" in the event of a failed bidding as it is easier to find buyers for a smaller stake. The statement contradicts that of PNB president Feliciano L. Miranda, Jr., who told last Thursday's news conference his principal shareholder "will be holding his stake in the bank" if no investor shows up at by auction date. Market analysts earlier said Mr. Tan may eventually decide to hold on to his shares because of the 5.1 billion Philippine pesos (PhP) (US$123.7 million at PhP41.228:US$1) he borrowed from PNB, including those that helped finance his Philippine Airlines. Still, Mr. Buenaventura said, "If the bidding fails, then both the government and Mr. Tan will go their own ways." Socioeconomic Planning Secretary Felipe M. Medalla, in a separate interview, said the government "should be prepared to hold on" to its 30% stake in the bank "if we cannot sell our shares in good value for money." Officials earlier indicated a selling price of PhP160 per share for both the government and Mr. Tan's stakes, but this is yet to be finalized. Finance Secretary Jose T. Pardo earlier said the joint sale is expected to raise as much as $700 million or around PhP29 billion for the government and Mr. Tan. Mr. Buenaventura also yesterday confirmed a BusinessWorld report that the government's target in selling its PNB stake has been moved to May 26 from the earlier May 15. "We are adjusting the date to give prospective investors time to perform their due diligence on the bank," he told reporters. He said the government's advisers to the privatization -- investment banks Lehman Brothers and ING Barings -- will have the prospectus on the bank ready by May 15, the deadline of the sale earlier stipulated by Mr. Tan. "By May 15, (the investment banks) will have pre-qualified the bidders and we will have accepted (the bidders') deposits by then," the central bank chief said. For his part, Mr. Pardo said, "Lucio Tan was adamant about the date. We met with financial advisers. We should have approvals, publication, manual, offer documents ready on (May) 28 or thereabouts." Mr. Buenaventura, however, said the June 10 deadline set by the International Monetary Fund (IMF) will remain unchanged. "We have agreed with the IMF that the sale will be a transparent operation before June 10," he said. PNB shares on the Philippine Stock Exchange (PSE) yesterday rose 50 centavos apiece to close at PhP72 per share, on news the government will extend the offer period for the joint sale. "The market feels that the additional time will allow any investor to impute any price premium that PNB may have into the bid price," a trader with a foreign brokerage firm said. He added that such a strategy is better than selling PNB on an "as is, where is" basis where a greater degree of uncertainty has to be discounted from the bid price. The National Economic and Development Authority's (NEDA) Mr. Medalla said the sale of the government and Mr. Tan's shares in PNB is the only "sticking point" for the country to get a good review of its fiscal and monetary policies from the World Bank and the International Monetary Fund. "This is really the only main sticking point with the WB and the IMF. As with the rest of the reforms, I think we are moving very, very fast," he said. The country needs to get a positive review from the IMF to avail of the balance of its $1.4-billion stand-by facility. Mr. Medalla said the government should insist on selling its shares with Mr. Tan even if it would be "easier (for Mr. Tan) to sell his shares separately from the government." "Selling it ahead of Mr. Tan is clearly not an option. The reason of course is we will get much smaller value for the 30% if we sell it ahead of Mr. Tan. Because if you are the buyer of the 30%, you are not even sure of who your partners are going to be, is it going to be Mr. Tan or is it going to be the new owner? That is a wrong sequence. It is like getting married without knowing who the bride or the groom is," he said. "We get good value if our shares are sold together with Mr. Tan. But the problem is, Mr. Tan might want a very high price where there will be no takers," he added. Under the government's agreement with Mr. Tan, the joint sale will only be good for one public bidding. If it fails, the two parties are not bound to do another round of joint sale through a public bidding. (Business World 18- April-2000) ================= S I N G A P O R E ================= BERGER INT'L: Loss maker to get $10M loan ----------------------------------------- Berger International, which had a $15.5 million net loss last year, said yesterday that its majority shareholder Ariza Holdings has agreed to provide a $10 million bridging loan to help ease the paint company's cash flow as it attempts to wipe its slate clean. The loan carries an interest rate of 5 per cent per annum. Berger said it is the first of several steps to raise funds this year. (Business Times 18-April-2000) ONG ASIA LTD.: Shaky debut in shaky market ------------------------------------------ Ong Asia Ltd floundered on its trading debut yesterday, closing three cents below its initial offer price of 39 cents as the broader market took a severe beating. The counter was the most heavily traded stock with a turnover of 27.83 million units. Ong Asia's debut, the first by a local broking house in almost six years, came at a time when the Straits Times Index plunged 8.7 per cent, or 190.37 points, to 1,999.39. The shares did not even manage to touch the offer price of 39 cents. The intraday high was 37 cents. The stock opened at 31 cents, 20.5 per cent or nine cents below its offer price, its lowest for the day. Ong Asia, one of Singapore's oldest stockbroking houses, floated 113.1 million new and vendor shares at 39 cents each. The public offer tranche of 23 million shares was 12.9 times subscribed. Analysts said Ong Asia was an expensive buy at 39 cents a share. The stock was offered at a historical price-earnings multiple of 8.55 times. At Netresearch.com, analysts wrote that "Ong Asia is expensively priced" due to an uncertain market outlook, high dependency on retail revenue and its relative size to the more established listed brokers. "The offer price wasn't cheap and I didn't think there was a lot of meat," an analyst with a local brokerage said. "It is a tough business as traditional brokerages have been under pressure. I won't be surprised when earnings come under pressure, the stock will underperform," the analyst said. Ong Asia's share performance would probably move in tandem with the rest of the brokerages, he added. Yesterday, G K Goh Holdings fell 8 cents, or 9.4 per cent, to 96 cents. Kim Eng Holdings saw a drop of 7 cents to 83.5 cents while Kay Hian Holdings fell 6 cents to 93.5 cents. Vickers Ballas closed 8 cents lower at 86 cents. (Business Times 18-April-2000) =============== T H A I L A N D =============== BANGKOK BANK: Offs bad loans, posts loss KRUNG THAI BANK: Offs bad loans, posts loss THAI FARMERS BANK: Offs bad loans, posts loss --------------------------------------------- Thai banks reported record losses Friday of more than $6 billion for the last year as they wrote off loans that went bad during the Asian financial crisis. But, while the banks are likely to show even larger losses over the next year, their troubles will probably do little to hold back Thailand's economic recovery, analysts said. "The banks are now owning up for their past sins of bad lending," said Don Hanna, Hong Kong-based regional economist for Salomon Smith Barney. "Fortunately for Thailand, these results are more a reflection of past decisions, not the future of the economy." The largest loss, 91 billion baht ($2.43 billion), was reported by state-run Krung Thai Bank PCL, a government- designated repository for bad loans belonging to lenders that had been shut down by the government over the past two years. The largest commercial lender, Bangkok Bank PCL, reported a 1999 net loss of 60.1 billion baht, compared with a loss of 49.5 billion baht in 1998. Thai Farmers Bank PCL posted a net loss of 52.6 billion baht for 1999. By Friday afternoon, just one bank had reported a net profit. Radanasin Bank, purchased from the Thai government last year by Singapore-based United Overseas Bank Ltd., said it made 10 billion baht in 1999, reversing a loss of nearly 17 billion baht in 1998. The banks' earnings will not recover until the Thai economy has rebounded more solidly, said Bernhard Eschweiller, the Singapore-based head of Asian economic research for J.P. Morgan & Co. "Thailand's banking turnaround has not been as fast as Malaysia's or South Korea's," Mr. Eschweiller said, "but that is because the government has not been getting involved." While the Thai government guaranteed deposits and shut down shaky financial institutions, it stopped short of dictating a wholesale restructuring of the industry as some other Asian nations did in the wake of the regional economic crisis that started in Thailand in mid-1997. Despite the heavy overall losses shown by Thai banks, many institutions posted profits from normal operations as they took advantage of widening interest-rate margins late in the year. "Thailand's recent high growth rate and low interest rates will also make a good environment for creditors and lenders to come to terms with one another over debt," Mr. Hanna said. "When people can envision wanting to borrow money again, they try to pay back their old loans." The elimination of bad loans, combined with wider interest- rate margins, should bring good news to banks in the first two quarters of this year, said Chris Prasertsintanah, a bank analyst at Jardine Fleming Thanakom Securities Ltd. "The bad news is that loan restructuring will take more than just the one round we have been through," he added. In spite of debt restructuring and write-offs, more than 40 percent of all loans extended by Thai banks were classed as nonperforming as of November 1999. The stock market valuations of many banks, Mr. Prasertsintanah said, currently seem far too high. Bank stocks have risen 23 percent over the past month and nearly 50 percent in the past quarter. Stock prices of many banks tumbled Friday on news of the losses, with Krung Thai Bank shares dropping 5 percent to close at 19.50 baht and Bangkok Bank shares falling 3 percent to close at 64 baht. Overall, the Bangkok stock market's main index fell 1.6 percent to close at 478.92. (The International Herald Tribune 18-April-2000) KARNCHANA-ANAN FUND: Posts 2nd quarter loss ------------------------------------------- Karnchana-Anan Fund posted losses of 2.85m bt for Q2 ending Feb 29, compared with losses of 2.22m last year. 1H losses were 1.06m bt, compared with losses of 4.57m the year before. (Bangkok Post 18-April-2000) SIAM CITY FUND: Posts 3rd quarter loss ------------------------------------- Siam City Fund posted losses of 51.4m bt for Q3 ending Feb 29, compared with losses of 27.6m the year before. 9M losses totalled 39.8m bt, compared with losses of 386.38m the year before. (Bangkok Post 18-April-2000) SIAM CITY TWO FUND: Posts 3rd quarter loss ----------------------------------------- Siam City Two Fund posted losses of 36.2m bt for Q3 ending Feb 29, compared with losses of 18.3m the year before. 9M losses were 21.18m bt, compared with losses of 230.85m the year before. (Bangkok Post 18-April-2000) THAI FARMERS BANK: To cut staff by 17% -------------------------------------- Thai Farmers Bank plc, Thailand's third-largest bank, said it would reduce its staff by 17 per cent in May, comprising 2,000 jobs, through lump-sum cash payments that would cost about two billion baht (S$90 million). The early retirement plan, which will pay some staff as much as 11 times their highest monthly salary, is twice the size bank officials said their plan would be. The bank, which has posted losses for eight consecutive quarters, last year cut 1,300 staff, or about 9 per cent of its workforce. First senior vice-president Tongchai Charoensit said on March 28 that cuts this year would target about 1,000 jobs. The plan would put the bank's workforce at 10,000, Thai Farmers president Banthoon Lamsam said. Peak workforce was about 16,000 in the mid-1990s. (The Business Times 18- April-2000) THAI PETROCHEM.INDUS.: Some creditors dislike EffPlanner -------------------------------------------------------- Some dissident creditors of Thai Petrochemical Industry Plc (TPI) may side with Prachai Leophairatana, the embattled TPI chief executive officer, to block Effective Planner Co of the Bangkok Bankled group of creditors from going ahead with its debtrestructuring plan for the country's largest corporate debtor. Prachai yesterday suggested that he may be able to collect more than one third of the total number of votes from these minority creditors which are not comfortable with Effective Planner. They fear the planner would resort to the liquidation of group assets, rather than the resuscitation of the company, to scrape together money to pay off creditors. These creditors allying with Prachai are mainly those with no collateral. During a recent roadshow to five countries, Prachai lobbied for creditor support for his alternative planner, TPI Planner Co, to administrator the company's plan to restructure its massive $3.5 billion (Bt133 billion) debt. "Our restructuring plan is not different from what we previously agreed with these creditors," he said. The complete TPI Planner proposal will reach the Office of Business Reorganisation in the Justice Ministry today. Earlier, the company had sent TPI Planner's shareholder agreement to court officials. He claimed that creditors without collateral and personal guarantees on the debt owed by TPI to them are not supporting Effective Planner Co because these creditors will be at a disadvantage when compared to creditors with collateral. Prachai also asserted that Effective Planner should cancel the personal guarantees on TPI debt provided by the Leophairatana family if it wanted to run the company during the rehabilitation period. "It would be unfair to other family members and me if the planner failed to rehabilitate TPI successfully,'' he said. Prachai and three other unnamed members of the Leophairatana family had lent their personal guarantees on a combined debt of Bt75.3 billion owed to Bangkok Bank and the International Finance Corp. Yesterday, TPI held an ordinary shareholders meeting at which the company's financial statements as of December 31, 1999 were approved. They showed a net loss of Bt6.7 billion and total income of Bt57.9 billion, up 23 per cent. However, TPI reported a profit of BtBt7.9 billion before foreign exchange losses and other items. At the shareholders meeting, small shareholders also opposed Effective Planner because its lack of expertise in the petrochemical business. They also said that Prachai and the company's creditors should not quarrel among themselves any longer but should turn to solve the company problems (The Nation 18-April-2000) THAI PETROCHEM.INDUS.: Prachai makes final argument --------------------------------------------------- In a final bid to retain control of his company, Prachai Leophairatana, Thai Petrochemical Industry's (TPI) Chief Executive, told reporters that if Effective Planner wins court approval to run the company, his family will pull out as the company's debt guarantor. The Leophairatana family put up over 75.4 billion baht as a guarantee against debts of 133 billion baht (US$3.5 billion). Prior to yesterday's shareholder meeting, Prachai said if Effective Planner is selected against Ernst & Young, his family will withdraw as TPI's debt guarantor, and demand that the creditors install Effective Planner as debt insurer. "If the creditors' steering committee want Effective Planner to run TPI, they should make it [Effective Planner] responsible for the debt in case TPI is delinquent," said Prachai. TPI, the country's largest chemical producer, proposed to the bankruptcy court that existing management maintain control through a new company, TPI Planner, a joint-venture with Ernst & Young. However, the creditors committee, led by Bangkok Bank, the US Export-Import Bank, Citigroup and Bank of America, proposed that the Australian consultant Effective Planner take control during the rehabilitation process. TPI said it expects to have enough support to win, adding, "we are petrochemical industry experts. Effective Planner is a liquidator, whose aim is to sell assets and earn fees." "Some creditors are worried that I will siphon assets out of the company after TPI Planner is in control, but that is impossible. Creditors have every right to file criminal charges against my family if embezzlement occurs," said Prachai. Creditors will vote tomorrow on the matter. If creditors holding at least two-thirds of the total debt cannot agree, TPI's venture with Ernst & Young will be the planner. TPI stopped paying debts - most of them are in foreign currencies - after the 1997 devaluation of the baht plunged Thailand and, subsequently much of Asia, into recession. (Business Day 18-April-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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***