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/raid1/www/Hosts/bankrupt/TCRAP_Public/000511.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, May 11, 2000, Vol. 3, No. 92 Headlines * A U S T R A L I A * REINSURANCE AUSTRALIA CORP.: Managing director quits TELSTRA: Shares continue nosedive * C H I N A & H O N G K O N G * CHINA EVERBRIGHT HOLDINGS: Stock falls on probe rumors FAMOUS OCEANS INT'L CO.LTD.: Facing winding up petition SIU-FUNG CERAMICS HLDGS.: Court orders winding up SIU-FUNG CERAMICS HLDGS.: Stock trading ordered ceased SUNDAY COMMUNICATIONS: Posts wider net loss WAI TAT TIMBER FACTORY LTD: Facing winding up petition * I N D O N E S I A * PT ANWAR SIERAD: Asks for 45-day debt freeze extension PT TIMOR PUTRA: IBRA orders debt paid before owner pullout PT TIMOR PUTRA: KIA to provide financial aid after rehab * J A P A N * FUJI ELECTRIC CO.: To use equity to cover pensions IDEMITSU KOSAN CO.: Cuts debt to 1.14T Yen MITSUBISHI CHEMICAL CORP.: To close acetone plant MITSUBISHI ELEC.CORP.: To use equity to cover pensions NIPPON TEL.& TEL.CORP.: Stock trades down SOFTBANK CORP.: Stock trades down TOKYO SOWA BANK: Police to probe former management VICTOR CO.: Posts third consecutive annual loss * K O R E A * DAEHAN INVEST.TRUST CO.: Cash injection to begin June DAEWOO MOTOR: Only assets to be sold off DAEWOO GROUP: Lack of cooperation renders workouts futile KOREA INVEST.TRUST CO.: Cash injection to begin June SEOUL BANK: Deutsche Bank begins due diligence audit * M A L A Y S I A * FABER GROUP BHD: Shareholders approve restructuring scheme TIME ENGINEERING: `Fate lies in creditors' hands'- Sapura TIME ENGINEERING: Sapura just wants debt settled * P H I L I P P I N E S * PHILIPPINE NAT.BANK: Buyers want more due diligence time URBANCORP INVESTMENTS: SEC grants debt repreive URBANCORP INVESTMENTS: Receiver appointed * T H A I L A N D * ASIAN DEVELOPMENT BANK: US refuses to mull new funding BANGKOK METRO.BANK: Sale to HSBC nearly wrapped up EASTERN PRINTING PLC: Rehab hearing date set GSS ARRAY TECHNOLOGY: Seeks delisting for tender offer KRUNG THAI BANK: Restructuring smaller-scale loans RAIMON LAND PLC: Reports restructuring progress to SET THAI TEL.& TEL.: Suspended from trade ================= A U S T R A L I A ================= REINSURANCE AUSTRALIA CORP.: Managing director quits ---------------------------------------------------- Reinsurance Australia Corp managing director Mr Nick Steffey yesterday quit the company after a barely a year in the post, in the process avoiding a potentially hostile gathering of shareholders at the company's annual meeting next week. In a two-line statement, ReAC said Mr Steffey had resigned and both he and the company "have reserved their respective rights." Observers took the statement to mean the parties had yet to reach a settlement of termination of his three- year contract. It is believed the decision to leave was Mr Steffey's. Recently, Mr Steffey had been working on a management proposal to take ReAc private, and was willing to commit $2 million of his own money. "He had been there for only a year and he can hardly be held responsible for the problems of the past," said a fund manager. "I don't think he was too keen to face the annual meeting. ReAC investors have lost a lot of money." Mr Steffey was to stand for re-election at ReAC's annual meeting on Monday. Last month chairman Mr Peter Cadwallader warned shareholders that the company could face damages for breach of contract if shareholders did not re-elect Mr Steffey, who received total benefits in 1999 of $1.01 million. Industry sources said Mr Steffey may have already left for the US, where he started a 30-year career in reinsurance. He joined GIO Australia in mid-1998, only to be ousted following a $3 billion hostile, and often bitter, takeover offer for the company from AMP. GIO shareholders, told by their board not to accept the AMP bid, were left with large losses after sticking with their company, finding it had massive losses from its reinsurance business. Since Mr Steffey joined ReAC in early May last year, its shares slumped from $1.51 to close yesterday at 9c after last year suffering a $467 million net loss. A string of catastrophes have placed a heavy burden on ReAC, which has undertaken to run-off its business over three to four years, involving settling obligations with policy holders and settling some contracts early. (Sydney Morning Herald 10-May-2000) TELSTRA: Shares continue nosedive --------------------------------- Shares in Telstra are down for the seventh consecutive day, despite hurried assurances that its profit and dividend streams are on track. Explaining last night's Budget, Treasurer Peter Costello said he had been told of "very bad news" regarding Telstra's dividends in the coming year. Telstra today says it expects earnings to return to double-digit growth for the full year, and its company policy [is] to declare dividends of at least 60 per cent of operating profit. Despite this assurance, Telstra was still down seven cents to $6.63 shortly before 2:00pm AEST. Overall, the All Ordinaries index is down 32 points, or one per cent, to 3,022. This is in line with a weaker Wall Street. (ABC News Online 10-May-2000) ============================== C H I N A & H O N G K O N G ============================== CHINA EVERBRIGHT HOLDINGS: Stock falls on probe rumors ------------------------------------------------------ The share prices of China Everbright companies fell again yesterday as the counters were further clouded by speculation about an investigation involving senior management. China Everbright Ltd, the listed flagship of mainland conglomerate China Everbright Holdings, fell 3.46 per cent to HK$4.875 yesterday. It fell 8.18 per cent on Monday. Affiliate China Everbright International shed 4.54 per cent to 42 HK cents yesterday, while China Everbright Technology fell 4.34 per cent to 66 HK cents. The two companies fell 5.38 per cent and 5.48 per cent, respectively, on Monday. The counters were hit on Monday by reports China Everbright executive director and general manager Shao Zhengkang was being investigated for involvement in the "economic irregularities" surrounding former chairman Zhu Xiaohua. Mr Zhu was sacked by the central government in July. SAR-based officials of the group denied the rumours about Mr Shao, who has been back in the mainland. A spokesman said yesterday: "Mr Shao is expected to come back to Hong Kong in about two weeks after his business trip in Beijing." Analysts said the share prices of group companies could face more pressure in the short term as some foreign investors might be sceptical about the denials. However, Keith Li, a Worldsec International analyst, said he was optimistic about the group's prospects in the long run as it had a clear development direction and had built a solid middle management. Mr Shao, who joined China Everbright in 1995, is viewed as a close associate of Mr Zhu. Both men worked together at the International Monetary Fund in Washington and the People's Bank of China, the central bank. (South China Morning Post 10-May-2000) FAMOUS OCEANS INT'L CO.LTD.: Facing winding up petition ------------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing for June 21 on the petition of So Wia Man for the winding up of Famous Oceans International Co. Limited. A notice of legal appearance must be filed on or before June 20. SIU-FUNG CERAMICS HLDGS.: Court orders winding up ------------------------------------------------- The Court of First Instance yesterday ordered Siu-Fung Ceramics Holdings to be wound up, ending a 3-1/2 year search for a debt restructuring plan. Alfred Chan, counsel for The Hongkong and Shanghai Banking Corporation, said its client had decided to ask for a winding up order after Siu-Fung was unable to repay its debts to the bank. He said some previous court adjournments were aimed at reaching an agreement on restructuring proposals but they had not received the approval of creditors. He also said no challenge had been made to the validity of the debts. In 1996, Siu-Fung experienced serious cash flow problems, mainly due to the liquidations of its German subsidiaries. The Hongkong and Shanghai Bank in March 1999 filed four petitions against Siu-Fung Ceramics and three of the group's subsidiaries, NHD Systems (Holdings), NHD Systems (Asia) and Siu-Fung Ceramics Concept. It was estimated that the Siu-Fung group owed about $1.53B to the bank and its subsidiary, Hang Seng Bank. The $1.53B constituted a major part of Siu-Fung indebtedness to its creditor banks. For the year ended December 31, 1999, Siu- Fung Ceramics only achieved a turnover of $18.8M, representing a 70.3% fall from 1998. Siu-Fung Ceramics Holdings recorded a net loss of $42.1M last year, according to its 1999 annual repo SIU-FUNG CERAMICS HLDGS.: Stock trading ordered ceased ------------------------------------------------------ The Stock Exchange of Hong Kong said it has ordered the suspension of trading in the shares of Siu-Fung Ceramics Holdings Ltd as the company will be wound up. Siu-Fung last traded at 0.035 hkd. (AFX News Limited 10-May-2000) SUNDAY COMMUNICATIONS: Posts wider net loss ------------------------------------------- Sunday Communications said yesterday that its net loss for the year to December 31 widened to $823.93M from $802.93M in 1998. The fall came despite a near doubling of turnover to $1.03B from $557.31M previously. Losses per share totalled 40 cents, compared with 35 cents previously. WAI TAT TIMBER FACTORY 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 Chan Kam Tong for the winding up of Wai Tat Timber Factory Limited. A notice of legal appearance must be filed on or before May 30. ================= I N D O N E S I A ================= PT ANWAR SIERAD: Asks for 45-day debt freeze extension ------------------------------------------------------ PT Anwar Sierad has asked the Commercial Court to extend its debt payment suspension for 45 more days, the Jakarta Stock Exchange said, citing a letter from the company. It said the company's debt payment suspension ended on May 8. "PT Anwar Sierad has asked for an extension on its debt payment suspension for another 45 days until June 22, 2000," it said. It said the court will decide on May 17 whether to accept the request or not. A bankruptcy petition was filed against Anwar Sierad in September for its failure to repay 2 mln usd in matured promissory notes. (AFX News Limited 10-May-2000) PT TIMOR PUTRA: IBRA orders debt paid before owner pullout ---------------------------------------------------------- The Indonesian Bank Restructuring Agency (IBRA) says that businessman Hutomo "Tommy" Mandala Putra, the youngest son of former strongmen Soeharto, must repay his debt to the agency before pulling out of the Timor car maker PT Timor Putra Nasional (JSX: TPN). The Jakarta Post reported that IBRA was responding to earlier reports the government and the South Korean Kia Motors Corp. had agreed to form a joint venture to resume the stalled Timor national car project. Minister of Trade and Industry Luhut. B. Panjaitan earlier said that under the plan, Tommy would have to leave Timor. He also indicated the government would settle Timor's debts under a debt to equity swap. Soeharto in 1996 appointed TPN to develop the Timor national car, providing the company with special privileges, including tax breaks. But the car project was halted when the country was at the height of the economic crisis in 1998 and amid pressure from the World Trade Organization. Timor owed several state banks some Rp 3 trillion (US$ 380 million) in debts, which have since been taken over by IBRA. Timor is also controlled by the agency. (Asia Pulse 09-May-2000) PT TIMOR PUTRA: KIA to provide financial aid after rehab -------------------------------------------------------- South Korea's KIA Motor Corp said it would provide financial assistance for debt ridden Indonesian car maker PT Timor Putra Nasional (TPN) immediately after the completion of its debt restructuring. Song Do Park, KIA vice president, said the Indonesian Bank Restructuring Agency (IBRA) is expected to complete the restructuring of TPN's debt not later than July. (Asia Pulse 09-May-2000) ========= J A P A N ========= FUJI ELECTRIC CO.: To use equity to cover pensions MITSUBISHI ELEC.CORP.: To use equity to cover pensions ------------------------------------------------------ Mitsubishi Electric Corp. (6503) has announced it plans to cover half of its parent-only retirement and severance fund shortfalls by transferring equity holdings to trusts in fiscal 2000. Fuji Electric Co. (6504) said it intends to use the same method to cover all of its pension fund shortfalls, company sources said Tuesday. Assuming a discount rate of 3.5%, Mitsubishi Electric's unfunded retirement liabilities total 240 billion yen. The company plans to cover half of the shortage by transferring equity holdings to trusts in fiscal 2000. The remainder will be covered over the next 10 years. Mitsubishi Electric expects to mark about 60 billion yen in extraordinary loss in fiscal 2000 to cover the shortfalls. But the company expects to secure a net profit as pretax profit is expected to exceed 60 billion yen. Fuji Electric's unfunded retirement liabilities total about 100 billion yen, using a discount rate of 3.5%. The company plans to cover the entire shortage by transferring equity holdings to trusts. Most of the equity to be transferred are likely to be those held in Fujitsu Ltd. (6702), which have large latent profit. The move is likely to have little affect on Fuji Electric's earnings since the equity holdings to be transferred to trusts have relatively low book values. (Nikkei 09-May- 2000) IDEMITSU KOSAN CO.: Cuts debt to 1.14T Yen ------------------------------------------ Idemitsu Kosan Co. cut its outstanding debt to an estimated 1.14 trillion yen as of March 31, down 93.7 billion yen from a year earlier, the company said Tuesday. The oil refiner sold abandoned gasoline stations, employee housing and other assets to pay down the debt, exceeding its initial target of a 70 billion yen reduction. Starting this year, it plans to sell large assets such as oil storage tanks, aiming to reduce the debt to 900 billion yen by March 2003. When it began its debt reduction plan in April 1998, its debt stood at 1.32 trillion yen. Idemitsu said sales in fiscal 1999 rose about 14% from the year before to 1.91 trillion yen. It is estimating pretax profit at 13 billion yen, more than double the previous year's 5.9 billion yen. Net profit is seen at 1.5 billion yen. If actual results match those projections, fiscal 1999 would be the first time since fiscal 1990 that both sales and profit have risen. (Nikkei 10-May-2000) MITSUBISHI CHEMICAL CORP.: To close acetone plant ------------------------------------------------- Mitsubishi Chemical Corp. (4010) said Tuesday that in June it will close its polycarbonate resin and acetone factory in Mizushima, Okayama Prefecture, and concentrate production at its Kashima plant in Ibaraki Prefecture. Faced with a continuing acetone glut, the company aims to restore its competitiveness by revamping its production system in line with slack domestic demand. The compound is used in solvents, as well as the polycarbonate resins of compact discs. The Mizushima plant has an annual capacity of 38,000 tons, while the Kashima factory can produce 110,000 tons a year. Kashima has been running at full tilt, but capacity utilization at Mizushima has fallen to 70%. (Nikkei 10- May-2000) NIPPON TEL.& TEL.CORP.: Stock trades down SOFTBANK CORP.: Stock trades down ----------------------------------------- Softbank, one of the world's largest backers of online businesses, was bid lower as the number of potential sellers outweighed the number of those who wanted to buy. Shares were last offered at 26,380, down from its previous close of 26,980. Its shares rose more than 25-fold between January 1999 and Feb. 15 this year. NTT fell 40,000 yen to 1.42 million after Japan's No. 1 phone company yesterday said it pay 67 percent premium to buy control of Verio Inc. for $5.5 billion. Standard & Poor's said it may revise down NTT's debt rating in the near future. Some new members of the Nikkei 225 continued to fall after buying from index-tracker funds had pushed their share prices more than justified by earnings. (Bloomberg 09-May- 2000) TOKYO SOWA BANK: Police to probe former management -------------------------------------------------- Police likely will launch in the next few days an investigation of the former management of Tokyo Sowa Bank, a major second-tier regional bank that went bankrupt in June last year, on suspicion of declaring bogus funds as part of its net worth in a bid to prevent itself from being declared insolvent, The Yomiuri Shimbun learned Tuesday. The Metropolitan Police Department believes that about 20 billion yen of funds the bank claimed to have raised in September 1997 and March 1998 for its net worth--the tally of its capital, reserves and retained earnings--were artificially inflated. This was made possible when the bank provided loans to its clients and affiliates so that they could purchase new shares the bank issued to strengthen its capital base, informed sources said. The MPD reportedly will question Shoichi Osada, 77, former chairman of the bank in connection with the case. The bank was declared insolvent by the Financial Reconstruction Commission in June. The MPD was set to hold talks with the special investigation division of the Tokyo District Public Prosecutors Office and the administrators for the bank Wednesday at the earliest, sources said. The bank extended a large amount of loans to small and medium-sized real estate companies and nonbank financing firms during the bubble economy era in the late 1980s, and the loans became irrecoverable as the debtors suffered financial difficulties once the bubble burst. The bank's own management situation then began to deteriorate, and it had been in the red since fiscal 1996. As the bank started shaving off its net worth to write off the huge amount of nonperorming loans, its capital-adequacy ratio--the ratio of net worth to total assets, which is an indicator of a bank's health--plunged to 2.85 percent as of the end of March 1997. According to the "prompt corrective action" regulation implemented by the Financial Supervisory Agency in April 1998, any bank whose capital-adequacy ratio dips below the 4 percent level is subject to the agency's disciplinary measures, which call for the bank to replenish its net worth. (The Daily Yomiuri 10-May-2000) VICTOR CO.: Posts third consecutive annual loss ----------------------------------------------- Victor Company of Japan, an audio and video equipment manufacturer of Matsushita Electric Industrial Group, said it lost money for a third year as it paid for early retirement and other one-time restructuring charges, Bloomberg reported. The maker of JVC brand appliances said its group net loss narrowed to 5.3B yen, or 21.01 yen a share, in the year ended March 31, from 8.3B yen, or 32.71 yen, a year ago. The loss in the most recent year included a four-billion yen charge for early retirement. ========= K O R E A ========= DAEHAN INVEST.TRUST CO.: Cash injection to begin June KOREA INVEST.TRUST CO.: Cash injection to begin June ----------------------------------------------------- The government will pump around 5 trillion won ($4.5 billion) in public funds into two ailing investment trust companies (ITCs) starting next month, the Financial Supervisory Commission (FSC) said yesterday. Korea Investment Trust Co. (KITC) and Daehan Investment Trust Co. (DITC) will also be split into two companies each in June, the commission said. The decision came at a meeting of top economic policymakers - Senior Presidential Secretary Lee Ki-ho, Minister of Finance and Economy Lee Hun-jai, FSC Chairman Lee Yong-keun and Planning and Budget Minister Jin Nyum. The cash injection will be made in stages until the end of the year, while its amount and timing will be decided at a financial policy consultative meeting Friday, the FSC said. Public funds for Korea Investment Trust and Daehan Investment Trust will be raised by asset-backed securities to be issued by the Korea Deposit Insurance Corp. and a loan of 3 trillion to 4 trillion won from the Korea Asset Management Corp. The commission said that each company will be split into an investment-trust management company and a securities company. Public funds will be put into each securities company after the split, it added. The decision ends months of market uncertainty over how the debt of the two investment trust companies would be restructured. A preliminary result of a due diligence on the two companies showed that their combined debts amount to around 5.5 trillion won. Upon injection of public funds, the two firms will be required to conclude a memorandum of understanding (MOU) on reorganization with the financial watchdog. (The Korea Herald 10-May-2000) DAEWOO GROUP: Lack of cooperation renders workouts futile --------------------------------------------------------- The workouts at 12 Daewoo subsidiaries are feared to be on the verge of becoming futile due to a lack of cooperation from government authorities and a revolt among minor shareholders, who are against rescue plans established to date. The head of the government's Corporate Restructuring Committee Oh Ho-keun, who is also the chair of the Daewoo group's restructuring steering committee, said Tuesday in an interview with the Chosun Ilbo that creditor banks have been unable to make headway with their voluntary workouts of Daewoo units due to the absence of active cooperation from the government. According to Oh, without the support of authorities, there is a good chance that the workouts will end in failure, which would in turn open up risk for another economic crisis. In particular, Oh drew attention to the Korea Asset Management Corp. (KAMCO), saying that the government agency, which disposes of bad assets, has not been cooperative in purchasing the bad debts of Daewoo subsidiaries. He said that as a result of KAMCO's failure to step in to help, negotiations with foreign creditors have been jeopardized. Oh also called for tax breaks in the spinning off of Daewoo subsidiaries, saying the total amount of taxes imposed on procedures necessary for workouts comes to W300 billion, a huge amount that he says has been undermining workout efforts. Oh also pointed out that indiscriminate filing of lawsuits by minor shareholders of Daewoo subsidiaries to block workout procedures they claim are disadvantageous to them, and strikes at Daewoo unit labor unions, including the Daewoo Motor union, have posed major stumbling blocks to workout efforts. Commenting on the international auction for the sell-off of Daewoo Motor, Oh said General Motor has shown the most active interest in the early stages of the bid, but recently Ford has shown increasing interest in taking over the local auto firm. According to Oh, it appears that the offering price could end up being the main factor in deciding which firm will win the bid. (Digital Chosun 09- May-2000) DAEWOO MOTOR: Only assets to be sold off ---------------------------------------- The government plans to sell off Daewoo Motor assets only, excluding the debts of the firm, according to Daewoo Restructuring Steering Committee chair Oh Ho-keun. Oh, who also heads the government's Corporate Restructuring Committee, told the Chosun Ilbo Monday that the assets of the car firm and other automotive industry subsidiaries of the ailing Daewoo group including Ssangyong Motors, Daewoo Auto Sales and Daewoo Capital, will be grouped together for sale to a third party. He also said that the preferred negotiation partners for the sell-off of Daewoo Motor would be chosen before the end of June at the latest. This is the first official announcement from the government that only Daewoo Motor's assets would be included in the sell-off deal. According to Oh, the Korean Asset Management Corp. will purchase Daewoo Motor's debt at 38% of their book value subject to due diligence. Meanwhile, Minister of Commerce, Industry and Energy (MOCIE) Kim Young-ho made a separate statement recently that in addition to taking into account the purchase price being offered, other criteria would be used in selecting the preferred negotiation partner for the sale of Daewoo Motor, such as employee retention and the continuation of partnerships with existing suppliers. (Digital Chosun 09- May-2000) SEOUL BANK: Deutsche Bank begins due diligence audit ---------------------------------------------------- Deutsche Bank has started a due diligence audit of Seoul Bank as the first step in restructuring the troubled national bank, a bank spokesman said yesterday. During the due diligence scheduled for completion in early July, Deutsche Bank will examine Seoul Bank's key operating areas and undertake a gap analysis, he said. Last month, the Financial Supervisory Commission selected the German bank as a financial and restructuring advisor to Seoul Bank in an effort to turn around the ailing bank. (The Korea Herald 10-May-2000) =============== M A L A Y S I A =============== FABER GROUP BHD: Shareholders approve restructuring scheme ---------------------------------------------------------- Shareholders of Faber Group Bhd yesterday approved its composite scheme of arrangement which entails debt restructuring and a capital reduction, giving the company a "five-year window'' to rebuild its operations. Part of the restructuring scheme calls for Faber to dispose of some of its assets, but group chairman Datuk Abdullah Mohd Yusof said this was something that it would start looking at only in the third year. All of the company's 11 hotels--nine under the Sheraton chain and two under Merlin- -were up for grabs, Abdullah said after the company's EGM in Kuala Lumpur yesterday, but only "at the right price." While waiting for better offers, he said, Faber intended to concentrate on improving its hotels' occupancy and room rates, both of which were beginning to look better, so as to enhance the hotels' value. "This is certainly preferable to disposing of these assets at the 'fire sale' prices offered during the economic slowdown, which at best represented between 30% and 50% of the pre-crisis values attributed to the same assets in 1997," said Abdullah. How many hotels Faber would ultimately need to sell hinges on how they are valued, although Abdullah mentioned a combined value of RM1bil yesterday. To a comment that Faber would not be able to meet its debt obligations even if it were to sell all of its hotels, he said: "It's a matter of valuation." But under the restructuring scheme which the Corporate Debt Restructuring Committee helped to broker, Faber would need to meet its RM1.56bil nominal value bond and loan stock obligations in five years. Including interest, it currently has loans of more than RM900mil outstanding. "We need to bring the debt to a more manageable level," Abdullah said. The proposed capital reduction would see Faber's share capital halved to RM162mil comprising 162 million shares of 50 sen each, from RM324mil comprising 324 million shares of RM1 each. Abdullah indicated that even if the debt was double or even three times more than the new share capital, it would be manageable. Given Faber's five-year window of opportunity to maximise its asset value and put itself back on a more sustainable footing, he said he did not foresee a situation where Renong Bhd's 60% equity interest in Faber, held via Cantuman Bahagia Sdn Bhd, would be diluted to less than 10%. That situation could arise under the proposed restructuring scheme should Faber not be able to redeem the secured bonds, and result in creditor bank Bumiputra-Commerce Bhd ending up with a 56.2% stake in Faber. "We're not jumping from the boat," said Faber director Datuk Ikmal Hijaz Hashim, who is with the Renong group. In the interim, Faber is also banking on its healthcare and property divisions to restore it to better financial health. The healthcare arm under subsidiary Faber Medi- Serve Sdn Bhd, which still has 12 years of a 15-year concession to provide support services to 71 government hospitals, is a 60% contributor to group revenue. (The Star 10-May-2000) TIME ENGINEERING: `Fate lies in creditors' hands'- Sapura --------------------------------------------------------- Telecoms equipment-maker Sapura Group has declared that creditors of Time Engineering and not Time's directors or shareholders, must decide the fate of Sapura's bid for a stake in Time's telecoms business. "Time is essentially close to liquidation, so anything that moves the company forward the creditors must be happy with," a Sapura company official said. "It's only fair that creditors decide for themselves whether they are happy or not." On Monday, Time rejected a proposal by Sapura to buy its telecoms assets calling it "not acceptable." Sapura and Singapore Telecommunications (SingTel), the island nation's largest listed company, have put in competing bids for Time's jewel, Time Dotcom. "This is not for Time shareholders or directors to decide," the Sapura official said. Analysts said Sapura had little choice left but to play hard ball following Time's rejection. "It now appears that Sapura's only option is to muster support of at least 26 per cent of Time's creditors, which it said it already has, at the June 8 meeting to block Time's plan," a telecoms analyst said. Under Sapura's debt-to-equity conversion plan, it would end up with 40 per cent of Time Dotcom with Time's creditors holding 39 per cent and Time owning 21 per cent. Time said: "The Sapura group proposal proceeds on an enterprise value of M$5.7 billion (about HK$11.68 billion) and will result in the company losing control of Time Dotcom." Under Time's restructuring plan, it values Time Dotcom at M$8.3 billion and it would end up with 55 per cent against Sapura's 2.4 per cent. It also involves SingTel buying 14.5 per cent in Time and 20 per cent in both Time Dotcom, which controls a 3,600 km fibre-optic network spanning peninsula Malaysia, and an Internet company, in a deal worth M$2.2 billion. Time owns 22 per cent of Renong through holdings which may leave SingTel with some say in running Renong, Malaysia's biggest conglomerate with perceived close links with top political leaders. (South China Morning Post 10-May-2000) TIME ENGINEERING: Sapura just wants debt settled ------------------------------------------------ The Sapura group will not block Time Engineering Bhd's debt restructuring scheme at a meeting with creditors on June 8 because it wants its debts repaid, according to sources close to Sapura. Sapura, which has garnered support from more than 26% of Time's creditors, will not want to be "a spoiler without reason," said one of the sources. It just wanted to be paid, to know how and when creditors would be paid, and how the valuation of Time was made, said the source. Sapura is one of the major creditors of Time, which has proposed a scheme to get it out of its mountain of debt through a settlement in cash, non-cash, an initial public offering (IPO) and a strategic alliance with Singapore Telecommunications Ltd (SingTel). But Sapura is unhappy with Time's proposal because Sapura would end up with only a 2.57% stake in Time dot.Com, the company which will become the listed holding company of Time's telecommunications assets. Consequently, Sapura has made a counter-proposal which would see it having a 40% stake in Time dotCom and none for SingTel. In the Time proposal, SingTel would take up a 20.59% stake in Time dotCom. Sapura insiders said that the company's bid was not hostile. "We are not hostile bidders at all. We are proposing an equitable bid," said one of them. But Time's board of directors has rejected the Sapura bid. Sapura insiders said that their company's proposal was clear, especially with regard to how the funds would be underwritten. The sources pointed out that up to now, Time had not mentioned anything about underwriting. They also questioned the difference in the valuations of Time's assets by the same valuer, from RM3bil less than a year ago to RM8.3bil now, even against a backdrop of easier sentiment for dotcom shares. Besides the valuation, they also questioned the almost RM1bil difference between Sapura and Time's bids to repay creditors. Meanwhile, Time said it would not be talking to Sapura on the latter's bid until June 8. Time would meet Sapura along with other creditors on June 8, Time dotCom deputy chairman Datuk Zaidan Hj Othman said at a press conference after launching a Voice Over Internet Protocol IDD/STD service for Touch 'n Go cardholders in Kuala Lumpur yesterday. Zaidan said there had been no negotiations or talks between Time and Sapura. On the proposed deal between Time and SingTel, he said: "We have to wait until Thursday (the day a binding agreement is supposed to be signed)." Time Telecommunications Sdn Bhd chief operating officer Mek Yam Jusoh said the ongoing events surrounding Time's restructuring scheme had not affected their firm's operations. Operations would continue regardless of what had happened on the corporate front, she said, adding that the launch of new products was part of the company's activities. (The Star 10-May-2000) ===================== P H I L I P P I N E S ===================== PHILIPPINE NAT.BANK: Buyers want more due diligence time -------------------------------------------------------- Prospective buyers of the Philippine National Bank are asking the government to defer by two weeks the bundled sale of the bank's assets to allow them to conduct due diligence. Finance Undersecretary Cornelio Gison said some of the bidders want the government to move the deadline so they can also review a detailed audit of the bank by accounting giant Sycip Gorres Velayo & Co. Under the planned joint sale of assets of the Philippine government and of taipan Lucio Tan, it was agreed that pre-qualified bidders will be announced on May 15 and the bids opened on the 26th. The dates were set on hopes that by May 30, the date of the PNB's annual stockholders' meeting, a new owner could be introduced and new officers could be elected. "The schedule is really too tight but we have to ask Tan if he would agree," Gison said. "The buyers still want to check the SGV audit and to conduct their own due diligence." The government is disposing its 30-percent stake in PNB, while Tan is selling his 46-percent holdings in the former national bank. The sale also includes the 3.5-percent stake of the PNB Retirement Fund. Tan earlier scheduled the sale on May 15 but later agreed to be more flexible on the date of the bank's privatization. Government sources said Tan imposed an early deadline so that he could sell his stake on his own and at a higher price, if the bid fails. Asked if Tan would reject the extension, Gison said: "Maybe we would ask the President again to intercede". Gison said the DoF still wants to come up with a list of pre-qualified bidders by May 15. But even that deadline could be extended, he said. (ABS/CBN NEWS CHANNEL 09-May- 2000) URBANCORP INVESTMENTS: SEC grants debt repreive ----------------------------------------------- The Securities and Exchange Commission said it granted a petition by Urbancorp Investments Inc for a 60-day suspension of debt payments. The SEC also approved the creation of a rehabilitation receiver and ordered Urbancorp Investments, which has total liabilities of 5.83 bln pesos, not to dipose of its properties. "Petitioner anticipates that with the rehabilitation plan it can take advantage of the future opportunities for growth given the proper support of the concerned parties," it said. Urbancorp Investments is 40 pct owned by Urban Bank Inc, which was ordered closed by the central bank and placed under receivership of Philippine Deposit Insurance Corp last April 26. (AFX News Limited 09-May-2000) URBANCORP INVESTMENTS: Receiver appointed ----------------------------------------- The Securities and Exchange Commission has chosen the chairman and senior partner of auditing firm Joaquin Cunanan and Co, Corazon de la Paz, as the interim receiver for Urbancorp Investments Inc. The SEC gave no other details. Urbancorp Investments is 40 pct owned by Urban Bank Inc which was ordered closed by the central bank and placed under the receivership of state-run Philippine Deposit Insurance Corp on April 26. (AFX News Limited 10-May- 2000) =============== T H A I L A N D =============== ASIAN DEVELOPMENT BANK: US refuses to mull new funding ------------------------------------------------------ The US set itself on a collision course with Asia last Sunday by refusing to contemplate fresh capital injections for the Asian Development Bank (ADB). While all other ADB shareholders want to study whether the bank needs to strengthen its capital base in the wake of Asia's 1997 financial crisis, a senior US Treasury official said examining the issue would be a distraction. "Fundamentally, we do not foresee a need, or the prospect of broad support, for additional capital resources for this bank," said Edwin Truman, Assistant Secretary at the Treasury and leader of the US delegation to the three-day ADB annual meeting. The American refusal to even consider new funding for the financially-strapped ADB comes amid growing scepticism in the US Congress about the roles of multilateral institutions like the International Monetary Fund and the World Bank. Washington also initially did not offer assistance to key Asian countries like South Korea or Thailand when they plunged with the rest of the region into their worst economic crisis in decades from July 1997. Japan, on the other hand, declared at the meeting that it supported a commencement of a study on the ADB's future resource requirements while taking into account its increasing outstanding loans and aggravations arising from financial changes after the 1997 currency crisis and the bank's future lending strategy. Japanese Finance Minister Kiichi Miyazawa said his country was also prepared to make a contribution of 10 billion yen ($10 million) by setting up a fund for poverty reduction to support the ADB's fight against poverty. Truman said the US believed that further assistance to emerging economies must be tied to the opening up of access to their markets. The US, meanwhile, welcomed cautiously the landmark currency cooperation agreement between 13 East Asian nations, or the so-called Chiang Mai Initiative, to fight future economic crises. Truman told a news conference that Washington supported the idea in general but was awaiting the details. As long as the details enable a quick response to financial and economic problems, he said, then "they are to be commended." (Business Day 09-May-2000) BANGKOK METRO.BANK: Sale to HSBC nearly wrapped up -------------------------------------------------- Final conditions for the sale of Bangkok Metropolitan Bank should be completed this week, M.R. Chatumongol Sonakul, governor of the Bank of Thailand said yesterday. British giant HSBC will reportedly pay 40 billion baht for a 75% stake in BMB, seized by regulators in early 1998. M.R. Chatumongol said the last obstacle to the sale hinged on BMB's 60% stake in Bangkok Metropolitan Life Assurance. The Commerce Ministry restricts foreign bank holdings in life insurance firms to 25%. HSBC had asked the central bank and the Finance Ministry to co-ordinate talks with insurance regulators at the Commerce Ministry about granting an exemption to the shareholding rule. If the Commerce Ministry refuses to grant the exemption, one option would be for the central bank's Financial Institutions Development Fund to purchase the shares in the insurer from the bank before the privatisation was completed. Chaktip Nitibhon, a central bank assistant governor, said later yesterday that the development fund would purchase the insurance firm and hold a separate auction later. "We need to buy the unit so the deal with HSBC can be concluded," he said. For regulators, this would actually lead to capital gains, as the development fund would profit from the difference between the 10- baht par value sale price and the insurer's higher market value. An earlier sale of Radanasin Bank to Singapore's United Overseas Bank was handled in a similar way, with the development fund taking over Radanasin's finance subsidiary Radanatun for a separate sale. M.R. Chatumongol said that regardless of whether BMB would be sold with the insurance subsidiary or not, the final price paid would remain near 40 billion baht. Regulators would enter a loss-sharing agreement for bad loans for five years with HSBC. The central bank estimates total losses from the sale after five years at about 150 billion baht. (Bangkok Post 09-May-2000) EASTERN PRINTING PLC: Rehab hearing date set -------------------------------------------- Eastern Printing Public Company Limited, through Weera Louwitawas, Managing Director, has reported to the Stock Exchange of Thailand that after submitting a petition for rehabilitation with the Central Bankruptcy Court on May 2nd, 2000 case No. Black 334/2543, the Court has set a hearing date on May 29th, 2000 at 9:00 A.M. (Stock Exchange of Thailand 08-May-2000) GSS ARRAY TECHNOLOGY: Seeks delisting for tender offer ------------------------------------------------------ GSS Array Technology Public Company Limited, through Mr.James Menges, and Mr. Boon Hoe, Directors, have submitted an application for delisting of shares with the Stock Exchange of Thailand (SET). At this time, the company has 21,124,400 ordinary shares, with par value of Baht 10 each, totalling Baht 211,244,000 million. The share became listed securities on the Exchange in 1989. The latest trading price: Baht 147 per share on April 28, 2000. 1.3.3 Offered to - on - . Approval from the shareholders meeting to delist the shares was obtained April 28, 2000. The number of all the shareholders 853, holding, 21,124,400 shares. The number of small shareholders each of whom holds shares of not more than 0.5% of the paid-up capital but not less than one board lot : 796, holding 3,897,195 shares, representing 18.63% of the paid-up capital. The number of shareholders who attended the meeting in person : 31. The number of shareholders who attended the meeting by proxy: 175, holding 17,913,804 shares, representing 84.80 % of the paid-up capital. The number of shareholders who approved the delisting of shares : 175, holding 17,913,804 shares, representing 84.80 % of the paid-up capital. Among the reasons and facts concerning delisting of shares are that it is a condition of the pre-tender agreement, and in order for the tender to occur, the shareholders must vote to de-list. ACT Manufacturing Inc. desires to own 100% of the Company's shares, which is in accordance with the majority of acquisitions done by USA companies. ACT Manufacturing Inc. is currently listed on the NASDAQ stock market in the USA, which enables ACT Manufacturing Inc. to raise equity capital very effectively and efficiently, in terms of valuation and timing. This listing is adequate for ACT Manufacturing Inc. to meet its current capital raising requirements. A continued listing of the Company once it became a subsidiary of ACT Manufacturing Inc. would not benefit the shareholders as the number of shares which potentially could be listed would be so small that the lack of liquidity could impact valuation. A continued listing of the Company once it became a subsidiary of ACT Manufacturing Inc. requires additional resources in terms of time and money, which would not be financially justified. Name of independent financial advisor: BNP Prime Peregrine Securities (Thailand) Limited. ACT Manufacturing Inc. will make a tender offer when the Stock Exchange of Thailand grants approval in principle on this application for delisting of shares. The tender offer will be made in accordance with the condition and time as stipulated by the relevant rules and regulations). 5. Top ten major shareholder as of the date of shareholders meeting at which the resolution to delist the Company's shares was adopted (April 7, 2000): Name/Nationality/Amount of Shareholding/Share percentage held 1.Mr.Gary American - 2,101,036 9.95 Mason Stickles 2.Albouys British - 1,697,300 8.03 Nominees Ltd. 3.Bermuda Singaporian - 1,355,700 6.42 Trust (Singapore) Limited 4.Bank of Tokyo Japanese - 1,250,000 5.92 - Mitsubishi (Luxembourg) S.A. 5.Merrill Lynch American - 1,212,218 5.74 Pierce Penner & Smith Inc. 6.State Street British - 868,900 4.11 Bank and Trust Company, for London 7.Mr. Fred B. American - 715,860 3.39 Hopkins 8.Morgan Stanley American - 598,200 2.83 & Co International Limited 9.Warburg Dillon Thai - 594,600 2.81 Read Securities Company Limited Thai 10.ABN Amro Asia Singaporian - 481,300 2.28 Service (Singapore) Pte Ltd 6. Board of Directors of the Company on April 28, 2000 Name/Position/Shareholding Percentage 1. Mr. Thomas Epstein Chairman - 2. Mr. Fred B. Hopkins Vice-Chairman 3.39 3. Mr. Robert E. Zinn Director 0.85 4. Mr. James A. Menges Director 1.25 5. Mr. Boon L. Hoe Director 0.69 6. Mr. Douglas E. Barnett Director 0.07 7. Mr. Supawit Wuthi-udomlert (Independent Director) 8. Mr. Nappun Muangkote (Independent Director) (Stock Exchange of Thailand 08-May-2000) KRUNG THAI BANK: Restructuring smaller-scale loans -------------------------------------------------- Krung Thai Bank expects to restructure bad loans totalling 90 billion baht to small-scale clients within three years. Pairote Vorapas, senior executive vice-president, said the goal was to restructure at least 35% of its small-scale non-performing loans, or 30 billion baht, by the end of this year. Small loans are defined as customers with outstanding loans below five million baht. Around 40% of Krung Thai's total consumer loan portfolio is made up of housing loans. (Bangkok Post 10-May-2000) RAIMON LAND PLC: Reports restructuring progress to SET ------------------------------------------------------ Raimon Land Public Company Limited (Raimon), through Nigel J. Cornick, Director, reports on the status of its debt restructuring. Following a presentation of the company's restructuring plan to financial creditors on 27 January 2000 the company formally opted to join the CDRAC process for debt restructuring. The company entered CDRAC on 2nd February 2000 and since that date PricewaterhouseCoopers FAS Limited, Raimon's independent financial advisor, has been working closely with Raimon's Steering Committee of financial creditors to prepare a Term Sheet which will form the basis of a CDRAC vote for the proposed restructuring of Raimon. The Steering Committee has responded positively to the draft Term Sheet and there are now only a small number of minor issues to be resolved by the Steering Committee prior to calling the CDRAC vote. We currently anticipate that the CDRAC vote will take place at the end of May, following a debenture holder meeting , required to change the terms of the debentures to reflect the Term Sheet and to elect one debenture holder to vote on behalf of all debenture holders at the CDRAC vote. Under the Term Sheet, an investor will inject new equity and the creditors would agree to restructure their debt. The plan includes the following components: Transfer of Raimon's real property assets to the secured creditors, reducing the secured debt by an amount equal to the current open market value; combination of debt write-off and debt- to-equity conversion; cash injection by the Investor; and some up-front cash to be paid to unsecured creditors out of the investors cash injection. The debt covered by the CDRAC vote accounts for approximately 90% of Raimons' debt to Financial Creditors. The majority of the balance of debt is held by the Asset Management Corporation (AMC) who have agreed to a restructuring plan and it is anticipated the final agreement will be signed between Raimon Land and the AMC by the 30th May. The company is in negotiation with several potential investors, including some substantial international groups who are interested in developing their real estate business in Thailand through a listed vehicle. These negotiations will not be formalised prior to the creditors' CDRAC vote. Maintaining Raimon Land's listing will be critical to securing the Investor which will benefit Raimon Land, Shareholders creditors and employees. (Stock Exchange of Thailand 09- May-2000) THAI TEL.& TEL.: Suspended from trade ------------------------------------- Thai Telephone and Telecommunications Plc has been suspended from trade following press reports the company's request to manage its own debt restructuring plan has been rejected by the Bankruptcy Court. The Stock Exchange of Thailand said it has requested official confirmation of the reports from the company. Meanwhile, Thai Telephone & Telecommunication Plc said the Central Bankruptcy Court has ordered the company's creditors to meet on May 29 to select a rehabilitation planner. In a statement to the Stock Exchange of Thailand, Thai Telephone said the court has also ordered the company's rehabilitation according to the terms of its petition submitted April 10 as no objections were received from its creditors on the matter. Earlier, the Telephone Organisation of Thailand had filed an objection to the appointment of a rehabilitation planner, even if most of the company's major creditors agreed to a planner being appointed. TOT is one of the company's creditors. Thai Telephone added it has been appointed by the court as interim administrator for its business operations. At 11:48 am, after being allowed to resume trading, Thai Telephone was up 0.10 baht at 8.1 on trade of 10,359 lots. (AFX News Limited 09-May-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. 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