TCRAP_Public/000515.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

             Monday, May 15, 2000, Vol. 3, No. 94


* A U S T R A L I A *

EAST PARK DEVELOPMENTS: Another builder calls a halt
GREYHOUND: Payout to holders not likely
SAUSAGE SOFTWARE: Rejects Solution 6

* C H I N A  &  H O N G  K O N G *

CHUNG HWA DEVELOP.HLDGS.LTD: Restructure progress to HKSE
SOUNDWILL HOLDINGS LTD: Debt restructure report to HKSE

* I N D O N E S I A *

BANK OF CENTRAL ASIA: IBRA sets share price
PT CHANDRA ASRI: Gov't to launch CAPC debt restructuring

* J A P A N *

KYOTO KINTETSU DEPT.STORE: Stock flounders after loss
MATSUSHITA ELEC.INDUS.CO.: To spearhead group restructuring
TOKYO SOWA BANK: Former chair, five past execs arrested

* K O R E A *

DAEHAN INVEST.TRUST CO.: To receive 1 trillion Won
DAEWOO MOTOR: GM pledges to keep it Korean company
HANDUK LIFE INSUR.CO.: SK Group agrees to take over
KOREA INVEST.TRUST CO.: To receive 1 trillion Won

* M A L A Y S I A *

NALURI BHD: Set to seal deal under restructuring exercise
TIME dotCOM: Sapura Holdings makes counter offer
TIME ENGINEERING: SingTel in cold as suitor swap looms

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

PHILIPPINE NAT.BANK: Buyers get new perk; auction stalled
PHILIPPINE NAT. BANK: Tan bucks 1-month auction delay
RURAL BANK OF F.BALAGTAS: PDIC pays off depositors
RURAL BANK OF SISON: PDIC pays off depositors
UCPB SAVINGS BANK: Junks savings bank subsidiary sale plan
UNIWIDE GROUP: PNB wants Uniwide rehab plan amended
URBAN BANK: Sale may include all its assets, subsidiaries
WESTMONT INVESTMENT CORP.: SEC bars lending functions

* T H A I L A N D *

BANGKOK MILITARY BANK: HSBC to pay Bt36B for stake
SIAM STEEL INT'L: Rehab plan report to SET
THAI MILITARY BANK: Share offer 90 percent 'taken'


EAST PARK DEVELOPMENTS: Another builder calls a halt
Another Victorian home builder is in trouble, as earlier
this month, East Park Developments, a Melbourne home
builder, stopped work on some 25 dwellings.

The managing director noted that the rush to build before
the introduction of the goods and services tax (GST) had
caused problems with building approvals, supplies and
labour. Days earlier, the Victorian home builder, Avonwood
Homes, was put into liquidation. It owes over $A13 million.

Subcontractors have been hurt by the Avonwood collapse. The
spate of collapses raises questions about the effectiveness
of laws regulating the industry. Insiders believe that
reporting systems should be tightened to catch companies
before they collapse. (World Reporter   09-May-2000)

Telecom company First Netcom Pty Ltd could be fined up to
$10 million after becoming the first carrier to receive a
formal warning under the industry complaints scheme.

The Australian Communications Authority (ACA) said it had
put Sydney-based First Netcom on notice to pay its
outstanding debts to the Telecommunications Industry
Ombudsman (TIO) or face legal action.  ACA chairman Tony
Shaw said avoiding payment could put First Netcom in breach
of the Telecommunications Act, which carries a penalty of
up to $10 million.

Telecommunications carriers and Internet Service Providers
are required to fund the TIO scheme, with fees based on the
number of complaints received about each company.
Ombudsman John Pinnock said his office had unsuccessfully
launched legal action to try to get First Netcom to pay up.

"We have given First Netcom every opportunity to pay their
outstanding complaint handling fees and this action is an
appropriate response by the ACA as the industry regulator,"
Mr Pinnock said. (Australian It  11-May-2000)

GREYHOUND: Payout to holders not likely
Greyhound Pioneer chairman Stephen Jones said early in May
2000 that a planned payout to shareholders was not likely.
The coachline was likely to axe plans for the payout in the
wake of a major asset sale, and in its place, reduce debt
and fund a spin-off enterprise.

Jones said that shareholders would be asked to approve a
proposal to sell the GPA coach enterprise and channel funds
into a new business focused on coach building, e-tourism,
and minor coach charter.

Jones said that Greyhound wanted to bolster its debt
repayment proposal, completely wiping the $A9.2 million
owed to the major shareholder. GPA has been in default of
debt arrangements with creditors Retirewise Capital
Australia and Altramira. (ABIX - Australasian Business
Intelligence  10-May-2000)

SAUSAGE SOFTWARE: Rejects Solution 6
E-Commerce developer Sausage Software has rejected Solution
6's bid to takeover the company as `unacceptable'.

In a statement issued to the Australian Stock Exchange, the
Sausage board said Solution 6's offer significantly
undervalued the company.

"On the current proposal, the Board does not believe it
could recommend the merger terms to its shareholders," the
statement said.

Sausage also advised a group of shareholders that control
more than 20 per cent of the company have also rejected the
offer.  Meantime, Telstra chief executive CEO Ziggy
Switkowski said the rejection would not materially affect
Telstra's Internet strategy.  He said Telstra would
continue to work constructively with both companies.

Under the merger proposal, Solution 6 would have exchanged
six of its shares for every ten Sausage shares. The company
also proposed to acquire all outstanding Sausage options on
similar terms. (Australian It  11-May-2000)

C H I N A  &  H O N G  K O N G

CHUNG HWA DEVELOP.HLDGS.LTD: Restructure progress to HKSE
Chung Hwa Development Holdings Limited, through Cheung Yu
Shum, Jenkin Wong Kam Fu, Nelson Deputy Chairman and
Managing Director Director, has reported to the Hong Kong
Stock Exchange that the formal settlement agreement with
the Creditors has not yet been executed on 8th May, 2000.
The circular will be despatched as soon as practicable.

Reference is made to the joint announcements of the Company
and the Subscriber (the "Joint Announcements") dated 10th
February, 2000 (the "First Joint Announcement"), 1st March,
2000 (the "Second Joint Announcement"), 30th March, 2000
(the "Third Joint Announcement") and 27th April, 2000 (the
"Fourth Joint Announcement"). Terms used in this
announcement shall have the same meanings as defined in the
Joint Announcements unless the context otherwise requires.

As mentioned in the Fourth Joint Announcement, according to
a letter from the coordinating bank of the Creditors to all
the Creditors and the Company dated 27th April, 2000, the
coordinating bank will arrange for the execution of the
formal settlement agreement on or before 8th May, 2000. As
there are 20 Creditors, more time is required to execute
the settlement agreement. As at the date of this
announcement, 18 Creditors out of a total of 20 Creditors,
representing approximately 85.6 percent of the total
indebtedness, have executed the formal settlement

As mentioned in the First Joint Announcement, the proposed
transactions contemplated under the Agreement are subject
to, inter alias, the execution of the settlement agreement
with all the Creditors and the approval of the Independent
Shareholders. Pursuant to the Agreement, such conditions
should be fulfilled by 30th June, 2000.

In view of the time constraint and the current progress on
the execution of the settlement agreement, the Directors
are of the view that it is in the best interest of the
Company and the Shareholders to despatch the Circular as
soon as practicable whether or not the settlement agreement
has been executed by all the Creditors. Further
announcements will be made upon the execution of the formal
settlement agreement by all the Creditors and the despatch
of the Circular.

At the special general meeting, approval from the
Independent Shareholders will be sought for, amongst
others, the Agreement and the settlement agreement based on
the terms and conditions as described in the Circular. If
the terms and conditions of the formal settlement agreement
are amended after the despatch of the Circular,
announcement will be made on such amendments and another
special general meeting will be held to approve such

However, the Company and the Subscriber have no intention
to amend any terms and conditions of the settlement
agreement.  (Hong Kong Stock Exchange  12-May-2000)

SOUNDWILL HOLDINGS LTD: Debt restructure report to HKSE
The Board of the Company, through Yip Kwai Cheung,
Executive Director, wishes to inform its shareholders,
warrantholders and the public that after negotiation with
all its Bank Creditors, a debt restructure agreement has
been entered into on 9 May 2000 amongst the Company, all of
its subsidiaries (other than Golden Dragon), HSBC as the
Agent, and the Bank Creditors to restructure the
indebtedness of the Group.

BACKGROUND:  The board of directors (the "Board") of
Soundwill Holdings Limited (the "Company") refers to the
Company's previous announcement dated 21 October 1998 in
relation to the negotiation with the bank creditors (the
"Bank Creditors") for a formal standstill and a possible
debt restructuring of the Company and its subsidiaries (the

As previously announced by the Company, whilst the Board of
the Company believes its business of property development,
management and investment is still viable, the Group has
insufficient funds to service interest and principal
repayment as they fall due. Based on the unaudited
consolidated profit and loss account and balance sheet of
the Group for the six months period ended on and as at 30
June 1999, the Group had an unaudited consolidated total
assets of approximately HK$3,865 million and total
liabilities of approximately HK$2,478 million. Of the total
liabilities, there were total net bank borrowings of
approximately HK$1,941 million, and total shareholders'
loans of approximately HK$51 million and HK$200 million
convertible bonds held by Madam Foo Kam Chu, Grace, an
approximate 51.12% controlling shareholder of the Company.
The Group had incurred a loss of approximately HK$112
million attributable to its shareholders during the six
months period.

The debt restructure agreement (the "Agreement") will
* a standstill arrangement until 31 January 2002 (pursuant
to which the Bank Creditors agreed not to, amongst other
things, take any steps to seek repayment of or take any
action or legal proceedings in respect of any of the bank
indebtedness) unless The Hongkong and Shanghai Banking
Corporation Limited ("HSBC") as the agent and the security
agent (the "Agent") (acting on the instructions of a two
third majority in number and value of the Bank Creditors
determined by the bank indebtedness owing to the Bank
Creditors at the relevant time) give at least 7 banking
days notice in writing to the Company;

* new funding of up to HK$70,000,000 will be provided by
HSBC (the "HSBC New Loan") to finance 70% of the remaining
construction costs of the development project at 6--16
Russell Street, Causeway Bay, Hong Kong;

* new funding of up to HK$52,500,000 will be provided by
Sin Hua Bank Limited, Hong Kong Branch ("Sin Hua New Loan")
to finance 70% of the remaining construction costs of the
extension of Soundwill Plaza, 38 Russell Street, Causeway
Bay, Hong Kong of 8 additional floors and the Penthouse;

* the issue of unlisted warrants ("Warrants") to each of
the Bank Creditors within 3 months after the Completion
Date in consideration of which each Bank Creditors shall
release the Group from all default interest which has
accrued but remains unpaid as at the Completion Date;

The Agreement is subject to satisfaction of various
conditions including, inter alia:

(a) the Company and its subsidiaries (other than Golden
Dragon Land Development Limited (in liquidation) ("Golden
Dragon")) executing and delivering the scheme security,
including the mortgage of the two development projects
financed by the HSBC New Loan and the Sin Hua New Loan, to
the Agent;

(b) Madam Foo Kam Chu, Grace and the related companies
executing a subordination agreement in form and substance
satisfactory to the Agent; and

(c) the Company by its directors resolving to issue the

Completion of the Agreement will occur on the banking day
on which the Agent receives notice in writing to the
Company that all the conditions set out in the Agreement
have been satisfied or waived (the "Completion Date"). If
such conditions cannot be satisfied or waived in accordance
with the terms of the Agreement on or before 9 June 2000 or
such other date as is agreed between the Company and the
Agent, the Agreement shall be of no further effect.
Investors are advised to exercise caution in dealing in the
securities of the Company.

As a result of the Asian financial turmoil and the adverse
change in the property market in Hong Kong, the Group had
insufficient funds to service interest and principal
repayments as they fell due. Accordingly, it is necessary
for the Group to implement the Agreement in order for it to
restructure the repayment schedule of its indebtedness in
order to allow the Group to strengthen its capital base and
to continue its operations.

The implementation of the Agreement will facilitate the
Group to complete the development projects at 6-16 Russell
Street, Causeway Bay, Hong Kong and the extension of 8
additional floors and the Penthouse at Soundwill Plaza, 38
Russell Street, Causeway Bay, Hong Kong.

Shareholders and warrantholders of the Company will be
notified the terms of the Warrants when they are finalised.
Golden Dragon is not a major subsidiary of the Group and
its net assets as at 31 December 1998 accounted for less
than 1.3% of the consolidated net assets of the Group. The
liquidation of Golden Dragon has no material impact on the
financial position and operation of the Group.  (Hong Kong
Stock Exchange  12-May-2000)


BANK OF CENTRAL ASIA: IBRA sets share price
The Indonesian Bank Restructuring Agency (IBRA) has
announced it will sell Bank Central Asia (BCA) shares at Rp
1,400 (17.5 U.S. cents).

IBRA chairman Cacuk Sudarijanto said the agency planned to
sell 22.5 percent of BCA's shares in the initial public
offering (IPO) on May 31 and expected to raise Rp 927.3
billion from the share offering.  Cacuk admitted that the
price was at the lower end of IBRA's initial target range
of between Rp 1,350 and Rp 1,750.

"The price is set at the lower end of the target range due
to the still unfavorable banking conditions in East Asia
and the Pacific region," said Cacuk, who just returned from
a road show covering Hong Kong, Singapore, the United
States and Europe to promote BCA's IPO.

Investors in London, he added, were more interested in
learning about Indonesia's security and political situation
instead of details on BCA's IPO.  "This shows that the
international market is very careful in assessing our
political situation," he said.

IBRA vice chairman Jerry Ng said that of the 22.5 percent
stake on offer, he expected more than 20 percent would be
bought by foreign investors.  He said the Rp 1,400 price
was 1.7 times BCA's 1999 book value, or 1.2 times the 2000
prospective book value, still lower than the average level
of 1.3 times in the region.

"We believe BCA shares will stimulate the capital market,
especially the banking sector," he said.

BCA is 92.8 percent owned by IBRA, a unit of the finance
ministry. The government nationalized BCA in May 1998
following a massive run on the bank.  The bank's former
founder, the Salim Group, owns the remaining 7.2 percent.
According to Cacuk, as a shareholder, the Salim Group is
not allowed to purchase BCA's shares during the IPO.

Under existing regulations, the group is only allowed to
purchase the shares through the secondary market. Cacuk
said that if the Salim Group intended to buy more than 5
percent of BCA, it must first report to the Capital Market
Supervisory Agency (Bapepam).  The Salim Group must also
wait for at least six months after the IPO before it can
sell its shares, he added.

"After the IPO, the government will still own a 70 percent
stake in BCA," he said.

Cacuk said BCA shares would be offered from May 19 to May
24. He expected to obtain Bapepam's approval by May 12.
BCA's lead underwriters include Merril Lynch, Lehman
Brothers, PT Danareksa Securities and PT Bahana Securities.
Jerry described the IPO of the once largest private bank as
a landmark in the privatization of other banks currently
under IBRA's care.

IBRA took over some Rp 600 trillion in assets of banks and
companies after their shareholders failed to repay their
debts to state banks and the government.  Under IBRA, BCA
booked a net profit Rp 641.29 billion in 1999, a turnaround
from a loss of Rp 28.4 trillion in 1998.  According to
Jerry, a successful BCA IPO would boost the country's
economic recovery.

"The IPO will not only generate cash, but also raise
investors' confidence in the Indonesian capital market,"
Jerry said. (Jakarta Post  11-May-2000)

PT CHANDRA ASRI: Gov't to launch CAPC debt restructuring
The government is expected to soon announce a plan to
restructure debts of PT Chandra Asri Petrochemical Centre
(CAPC), Industry and Trade Minister Luhut Panjaitan says.

He said Co-ordinating Minister for Economy, Finance and
Industry Kwik Kian Gie would make the announcement in his
capacity as chairman of the Committee for Financial Sector
Policy. Kwik's senior assistant Dipo Alam said the
government held 80% of the shares worth US$469 million,
which were CAPC's debts to state banks and Marubeni Corp.
which heads a creditor consortium would own 20% worth
US$100 million of the country's largest petrochemical

After long drawn out talks, Marubeni, which heads the Japan
Indonesia Petrochemical Centre (JIPIC), that gave CAPC
credit of US$700 million agreed to a debt-to-equity swap
for US$100 million.  Under the arrangement, the government
will take over the responsibility for the remaining US$600
million debts of CAPC to JIPIC.

CAPC was set up in 1991 with an investment of US$400
million with JIPIC providing US$100 million and the rest
put up by Siemen & Stallion, representing tycoons Prajogo
Pangestu, Bambang Trihatmodjo, Henry Pribadi dan Peter
Gontha. (Asia Pulse  11-May-2000)


KYOTO KINTETSU DEPT.STORE: Stock flounders after loss
The share price of Kyoto Kintetsu Department Store Co.
(8244) has been turning in a lackluster performance.

The issue slumped to 98 yen on March 13 and then rallied to
a year-to-date high of 168 yen on April 3. But buying did
not persist and the issue closed Wednesday at 130 yen.
Kyoto Kintetsu sustained a net loss of 3.31 billion yen for
the fiscal year ended Feb. 29, its fifth straight year in
the red. Fiscal 1999 also marked the second straight year
the company's liabilities outstripped its assets, this time
by 6.83 billion yen.

Kyoto Kintetsu in September 1999 closed its unprofitable
Gifu outlet, leaving it with just one store, which is
located in Kyoto. On March 25, the store was transformed
into an integrated retail mall with specialty retailers as
tenants.  By the end of August, the firm will sell the
building in Kyoto and lease it back, in order to trim its
liabilities. Kyoto Kintetsu also plans to receive an
injection of funds from the Kintetsu group in order to
bring itself back to health.

Over the first month since the launch of the reconfigured
store, revenue has surged 40% on the year. Nevertheless,
"you need a couple of months to see if it possesses the
ability to draw customers, with competitor Isetan Co.
(8238) having a store at the nearby JR Kyoto station,"
cautions an official at Okasan Securities Co.

Many analysts also cite the firm's lack of activity in
investor relations as a source of its faltering share
price. The issue will continue to face upside resistance.
(Nikkei  11-May-2000)

MATSUSHITA ELEC.INDUS.CO.: To spearhead group restructuring
Matsushita Electric Industrial Co. (6752) will take charge
of its groupwide restructruing efforts, the company said
Wednesday as it reported consolidated earnings for fiscal

"Victor Co. of Japan (6792) and Matsushita-Kotobuki
Electronics Industries Ltd. (6783) have dragged down group
earnings," Senior Managing Director Motoi Matsuda told a
news conference. Both subsidiaries sustained considerable
pretax losses in fiscal 1999.

Matsushita Electric Industrial's move will mark a major
shift in management philosophy because the firm has
traditionally let subsidiaries handle their own
streamlining, holding them accountable for their decisions.
Matsuda said he has directed JVC executives to review their
existing streamlining plan and propose a specific course of
action in two to three months.

JVC plans to cut its payroll and shift production overseas,
while Matsushita-Kotobuki will introduce the group's first
voluntary retirement program. But the two firms will most
likely be asked to implement more rigorous streamlining

Matsushita Electric Industrial has accelerated its
groupwide restructuring efforts, including eliminating
overlap, since last fall. But these measures have affected
only main group companies with close ties to the parent,
such as Matsushita Refrigeration Co. (6583) and Matsushita
Seiko Co. (6587). (Nikkei  11-May-2000)

Software developer Crayfish Co. (4747) reported a pretax
loss of 1.7 billion yen in the first six months ended
March, a 22-fold rise from the 78 million yen loss a year

The company blamed increased research and development costs
and spending to obtain customer e-mail addresses for the
blowout, despite a steady rise in users of its mainstay e-
mail service for small and midsize companies.

Sales also surged more than 900% to 2.44 billion yen. The
number of customers of its Hitmail e-mail service rose
41,000 in the past six months to 62,000 at the end of
March, faster than initially forecast.

The subsidiary of Hikari Tsushin Inc. (9435) spent 630
million yen on R&D and 600 million yen purchasing e-mail
addresses. Crayfish relies almost entirely on its parent
for sales of the Hitmail service.

"To depend on a single company for sales is not healthy. We
want to reduce the contribution by Hikari Tsushin to less
than 50% of total sales," President Isao Matsushima said.

He claimed the recent plunge in Hikari Tushin's earnings
and stock price have not affected Crayfish operations
adversely. (Nikkei  11-May-2000)

TOKYO SOWA BANK: Former chair, five past execs arrested
Shoichi Osada, the 77-year-old former chairman of the
failed Tokyo Sowa Bank, was arrested in the morning of May
11 along with five past and present bank executives on
suspicion of fiddling the bank's books on capital assets.

Earlier, in an interview with Asahi Shimbun, Osada said he
had been so intent on helping his institution look fiscally
sound that he sought to arrange capital infusions himself.
The suspects are believed to have extended 19 billion yen
($174 million) of the bank's money to three affiliated
companies via a consumer finance company and other firms to
to buy new Tokyo Sowa shares. The idea was to show that the
bank had bolstered its capital base.

In doing so, police say the suspects filed false financial
statements on the bank's capital replenishment. They had
claimed it stood at 32.6 billion yen as a result of an
infusion of funds.  Tokyo Sowa desperately needed to
bolster its capital to inflate its capital-adequacy ratio.

Under Financial Supervisory Agency regulations which took
effect in April 1998, banks operating only in Japan are
required to maintain a 4 percent capital adequacy ratio or
face disciplinary action. That means their capital must be
equal to at least 4 percent of risk-weighted assets,
including loans.

The bank's capital-adequacy ratio had dropped to 2.85
percent by March 1997 after it wrote off some bad loans.
With the allocation of new shares in 1997 and in 1998, the
ratio shot up to 5.29 percent a year later.  Sowa bank is
the fifth financial institution declared insolvent under
new laws governing the financial system. The others are
Long-Term Credit Bank of Japan, Nippon Credit Bank, Kofuku
Bank and Kokumin Bank.

In the interview, Osada said he could not remember the
details of the loan transactions. He also asserted that he
had done nothing wrong.  According to bank sources, the
bank held a series of study meetings to decide ways to
disguise the capital increase. The study meeting was under
the direct control of the strategy panel run by the bank's
top leaders, including Osada, they say.

Investigators suspect the study meeting came up with a plan
once Osada had decided on the capital increase by extending
loans for the new stocks' recipients.  In the interview,
Osada insisted that it is natural for affiliated companies
to become recipients of new stocks, and that it is not
illegal if the loans extended in such cases were made under
a normal contract with a proper due date and collateral.

"I am involved in all the decisions of how much capital to
increase and how much in loans to extend, but I do not know
about how the transactions are carried out in detail,"
Osada said. "I never ordered anybody to do something
wrong, but I fingers have been pointed at me so I will
apologize and take responsibility," he said. (Asahi News
Service  11-May-2000)


DAEHAN INVEST.TRUST CO.: To receive 1 trillion Won
KOREA INVEST.TRUST CO.: To receive 1 trillion Won
Korea Investment Trust Co. and Daehan Investment Trust Co.,
two of the nation's three top trust firms, will each
receive 1 trillion ($900 million) in June, the first part
of a 4.9 trillion won bailout, the government said.

The government is focusing on investment trusts in its
second round of financial reforms, trying to clean up these
companies, which are the nation's biggest buyers of
corporate bonds. The trusts ran into trouble following a
recession that sparked a spate of corporate bankruptcies,
including problems at Daewoo Group, which said in July that
it could no longer pay its debts, which total at least $80

The bailout is essential for a government that wants to see
a stronger stock market. The benchmark Kospi index has
declined 28 percent so far this year as investors channeled
their money from trusts into safer banks deposits rather
than to brokerages, where individuals' deposits fell by a
quarter in two months.

The government announcement today "is good because it means
the government is getting on with the process" of bailing
out these trust firms, said Bill Hunsaker, head of research
at ING Baring Securities in Seoul. "I think the government
had been waiting until formal audits were done."

Bailout Details Korea Investment Trust will receive a total
of 3 trillion won, while Daehan Investment is set to
receive 1.9 trillion won, starting next month in a bailout
that will last through September, said Yim Jong Yong, a
director at the Ministry of Finance and Economy.

The funds will be used to buy shares to be issued by the
companies, which may be sold locally or overseas in the
future, the government said. Last year, the two investment
trust companies received 3 trillion won in public funds.

The funds this time will come from Korea Deposit Insurance
Corp., which has 400 billion won to 500 billion won in
public funds and will borrow 3 trillion won from Korea
Asset Management Co., a state-run agency in charge of
cleaning up bad credits in Korea's banks. KDIC will also
raise up to 1.3 trillion won from issuing asset-backed
securities, Yim said.

The government said Korea Investment's debts exceed assets
by 3.4 trillion won at the end of March, while Daehan
Investment's debts exceed assets by 2.1 trillion won.
Korea Investment lost 1.9 trillion won from its exposure to
Daewoo Group, once Korea's second-largest industrial group.
Daehan lost 1.5 trillion won from Daewoo exposure, the
government said.

The companies will start receiving public funds after
they've completed their transition into securities
companies under an official plan to change trust companies
into brokerages and to spin off their asset management

"The government is intent on cleaning up the system,"
Hunsaker said. "The rest will be up to the trust

Yim said the government wants the two companies to raise a
total of 600 billion won on their own: 400 billion from
Korea Investment and 200 billion from Daehan Investment by
streamlining their businesses and moving their headquarters
to cheaper facilities.

The bailout precedes a government plan to introduce the
mark- to-market system in which the bonds held by trust
companies will be evaluated according to their latest
market value. "It's a pre-step to introducing the mark-to-
market system," said Uhm Rak Yong, vice finance minister.
(Bloomberg  12-May-2000)

DAEWOO MOTOR: GM pledges to keep it Korean company
General Motors Corp. pledged to keep Daewoo Motor Co.
operating as a Korean company and retain all its factories,
as it tries to win support for its bid to take over the
bankrupt carmaker.

General Motors Chairman John F. Smith Jr. said his company
would also develop new car models with Daewoo Motor aimed
at Asian markets.  Smith's effort to woo backers for his
company's offer comes ahead of a June 28 deadline for
submissions set by the bid organizing committee.

"GM doesn't want to absorb all of Daewoo's losses," said
Deutsche Bank Alex.Brown analyst Rod Lache.  The automaker
is vying with four rivals to snap up Korea's second-biggest
carmaker and gain entry into one of Asia's most closed auto
markets. Smith's comments echo promises by Ford Motor Co..

The victor, likely to be announced in September, may find
union protests the hardest to quell. Autoworkers staged
all-out strikes last month to block the sale of Daewoo
Motor to a foreign company. The unions fear such a takeover
would soon be followed by big job cuts.  (Detroit News  11-

HANDUK LIFE INSUR.CO.: SK Group agrees to take over
The Financial Supervisory Commission (FSC) said yesterday
that it signed a formal contract with the SK Group for the
sale of ailing Handuk Life Insurance Co.

After taking over Handuk Life at 20 billion won, SK will
merge the troubled life insurer with SK Life and Kookmin
Life, which it acquired in March.  As a due diligence audit
on Handuk showed that its debts exceeded assets by 355
billion won, the government will make a capital investment
of 102.3 billion won into the insurance firm in addition to
a previous capital injection of 232.7 billion won, the FSC

The deal will be concluded May 15, when the government will
hand over its stake in Handuk to SK, which will invest 20
billion won in the insurer, the commission added.  For fast
normalization of the troubled insurer, the government will
take over Handuk's real estates and part of its non-
performing loans for 26.7 billion won through the state-run
Korea Deposit Insurance Corp.

SK will inherit at least 50 percent of the current Handuk
employees, while the government will buy loans going sour
over the next year.  The deal will conclude the
government's efforts to sell six insolvent life insurers.

Dong-A Life, Chosun Life and Pacific Life have been sold to
the Kumho Group, the Hyundai Group and the Tong Yang Group-
Rothchild consortium, respectively, while Doowon Life has
been acquired by Korea Life in a purchase-and-acquisition
(P&A) scheme. (The Korea Herald  12-May-2000)


NALURI BHD: Set to seal deal under restructuring exercise
Naluri Bhd will seal a deal next week as part of a
restructuring exercise brokered by the Corporate Debt
Restructuring Committee (CDRC), its chairman Tan Sri
Tajudin Ramli said.

"Some of you (reporters) will be invited to a function next
week," he said when asked by newsmen for an update on the
CDRC-brokered debt restructuring scheme. "It will be a
signing. You just wait," Tajudin told reporters during a
break at the 54th Umno general assembly in Kuala Lumpur

Naluri's debts amounted to about RM1.2bil, which included
obligations under its five-year RM600mil 2% redeemable bank
guaranteed bonds 1995-2000 maturing on June 12 this year.
Tajudin holds 47.41% interest in Naluri, which owns a
29.09% stake in the national carrier Malaysia Airlines Bhd

On the MAS plan to join a global alliance of airlines, he
said a study on the matter was at the final stage and this
would be tabled at the MAS board meeting at the end of this
month.  "An announcement could possibly be made in a
month," he added.

Tajudin said that last month MAS had identified three
alliance groupings it might join--the Wings group,
Qualifier group and One World.  Through a global alliance--
a network of global airlines--airline companies can take
joint initiatives in passenger, cargo and ground

Tajudin said the benefits accruing to MAS in joining an
alliance included cost savings, raising the status of the
KL International Airport (KLIA) as a regional hub and the
spillover effects of higher spending by a larger number of
travellers in the country.

Tajudin said KLIA was the third hub for the Asean region at
the moment, handling 673 flights per week compared to
almost 1,800 at Singapore's Changi airport and 1,200 at the
Don Muang airport in Bangkok.

"That is why there is a lot to be done to make KLIA a hub,"
he added.

Tajudin said that after committing itself to an alliance,
MAS would still pursue international landing rights.
For instance, he said, MAS wanted to increase its flights
to New York.  He said that in joining alliances, MAS was
looking at the possibility of others taking up a stake in
MAS and it taking a stake in airlines within the group.

On another note, Tajudin, who is also chairman of
Technology Resources Industries Bhd (TRI) which owns
Celcom, denied rumours of a tie-up between mobile operator
Celcom and Telekom Malaysia Bhd which had resurfaced of
late. (The Star  12-May-2000)

TIME dotCOM: Sapura Holdings makes counter offer
Coming barely two months after being edged out of the Cable
& Wireless HKT deal by Richard Li's last-minute counter-
offer, the 11th hour bid for Time dotCom by Sapura Holdings
must have seemed like deja vu for Singapore

In fact, the similarities in the case of the Time
Engineering subsidiary do not end there. Speculation that
Sapura is backed by powerful forces in the corridors of
power in Kuala Lumpur, who oppose SingTel's entry into
Malaysia, gives this episode a familiar ring. In the HKT
case, there was similar speculation about how Beijing was
supposed to have blocked SingTel's bid.

Strategic partner : Under the Time dotCom deal, SingTel was
to enter as a strategic partner to help Time Engineering to
retire about RM4.8 billion (S$2.2 billion) of its debts.
The Malaysian company was to allot to SingTel 506.16
million shares, or 20 per cent of Time dotCom -which owns a
prized network of fiber optic cables in Malaysia -at RM3.30
per share costing RM1.67 billion. In addition, SingTel
would get to buy a 14.5 per cent stake in Time Engineering
for RM649.3 million.

On top of that, SingTel was expected to pump in another
RM100-odd million into Time Online, an Internet subsidiary
of Time dotCom. The "heads of agreement", which was signed
with Time Engineering and its 47 per cent owner Renong,
carried a 30-day validity period for a final agreement to
be signed. The validity period, which started ticking
down from the April 7 announcement, was extended till
tomorrow, May 11.

The month must have seemed an eternity for SingTel. On
April 28, Sapura - which is owed RM440 million by Time
Engineering -put in a bid for control of Time dotCom. Its
bid valued the company at RM5.7 billion, significantly
lower than the RM8.35 billion estimated by Time
Engineering itself.

Under the plan, Sapura would inject RM1.8 billion into Time
dotCom and convert its debt into stock. The deal would end
up with Sapura owning 40 per cent of Time dotCom, while
Time Engineering's other creditors would hold 39 per cent,
leaving Time Engineering with just 21 per cent. In a
nutshell, Sapura is offering a lot less cash than SingTel,
but hopes to attract other creditors to throw in their lot
on the promise of upside prospect in Time dotCom's stock.

Little wonder that Time Engineering, led by Renong boss
Halim Saad, is far from pleased with the Sapura bid and
duly threw it out of the window this week. But observers
note that the rejection does not have a ring of finality
about it.

Sapura could very well come back with a new offer. And even
if it doesn't, there is no guarantee that SingTel will get
the blessings of the powers-that-be in Kuala Lumpur. If
SingTel fails to clinch Time dotCom -an increasingly
distinct possibility, according to some sources -it will
not be for lack of trying. The company learnt some valuable
lessons from its HKT bid, did its sums and was already in
the process of undertaking due diligence when Sapura sprang
the surprise.

But once again, events have proven that the lines
separating business and politics can be rather hazy when it
comes to doing deals in Asia. That being the case, the
debate over which offer for Time dotCom is better takes a
back seat.

As the date for inking the SingTel-Time deal draws closer,
there are still many questions in the air. For example:

* Why is Sapura's president and chief executive Shahril
Shamsuddin insistent on bidding for Time dotCom knowing
full well that Mr Halim favours a straight cash injection
from SingTel?

* And if the Sapura deal is not as attractive as SingTel's,
why is it being entertained by Time Engineering? Is this
another wayang kulit (shadow play) with Time Engineering
itself the puppet-master?

* Is Mr Shahril aligned to any political powers opposed to
the SingTel entry, and if so, who?

* Why is a SingTel purchase of a stake in Time dotCom
perceived to be such a big threat when other Malaysian
telecoms players have brought in foreign players?

* Is the real force behind the Sapura bid Telekom Malaysia?
After all, Telekom is one of Time Engineering's biggest
creditors, and could see its market share come under threat
by the SingTel-Time tie-up.

Plot thickens: No one is in a position to answer these and
other questions. But with the plot thickening and numerous
unknown players lurking in the shadows, some observers are
perhaps justified in asking whether it is worth SingTel's
while to invest in Time dotCom and Time Engineering. Given
the political intricacies and sensitivities, SingTel
may find its hands tied even after having successfully
bought into these Malaysian companies. (Business Times  10-

TIME ENGINEERING: SingTel in cold as suitor swap looms
Singapore Telecommunications (SingTel), the company that
two months ago lost in its bid to buy Cable & Wireless HKT,
may be headed for another setback as it seeks to expand

The latest hurdle? Time Engineering may have cancelled the
sale of a piece in Malaysia's biggest fibre-optics network
to SingTel and will allow the Malaysian Government's
investment arm, Khazanah Nasional, to buy a stake instead,
Malaysia's Business Times reported.

"This seems to have the sole intention of keeping SingTel
out of the deal," said Neil Juggins, Prudential-Bache
Securities' regional telecommunications analyst in
Singapore.  "It's a political move and sentiment towards
SingTel will be quite negative if it succeeds."

Some critics say SingTel's failure to complete acquisitions
abroad is the price the island's dominant telephone company
must pay to have the Singapore Government as a major
stakeholder. Singapore owns 76 per cent of SingTel.

That is the same thinking some blamed for scuttling
SingTel's plan to buy HKT, though the Straits Times
yesterday said the company was looking to renew its bid as
early as this week, this time with a mainland partner and
Rupert Murdoch's News Corp.

Singapore has conceded its stakes in large companies have
blocked their expansion on fears the city state's
government may tamper in the operations of foreign
companies.  In response, Prime Minister Goh Chok Tong
admitted last month to a "perception problem" and pledged
the government would sell some of its holdings to help its
firms compete with more nimble global companies.

Singapore's government, through its main holding vehicle
Temasek Holdings, controls assets with a market value of
S$88 billion (about HK$396.46 billion) more than a third of
the Singapore Stock Exchange.

At stake this time for SingTel is Time Dotcom's 3,600
kilometre fiber-optics network across peninsular Malaysia
joining Singapore with Thailand, a critical link for any
company looking to provide telecommunications services
throughout Asia.

N M Rothschild & Sons (Singapore), which is advising Time's
creditors, said in private notes that SingTel was likely to
pay more than any other bidder for stakes in Time and two
of its units. Still, a tie-up with SingTel needs to be
approved by the Malaysian Government.  Time's network is
considered by Malaysia to be a national asset, and
yesterday Malaysian Prime Minister Mahathir Mohamad warned
of the dangers of selling such assets.

"We have seen how companies and banks in neighboring
countries have been crippled and forced to sell off to
Westerners. There will no longer be national industries,"
he said.

Time had been expected to sign its pact with SingTel
yesterday. SingTel, which wants to buy 14.5 per cent of
Time and 20 per cent each of Time Dotcom and Time Online
for more than M$2 billion (HK$4.09 billion), was mum on the
report that the sale has been called off.

SingTel shares closed yesterday at S$2.33, down one cent.
The shares have fallen 32.4 per cent so far this year,
while the benchmark Straits Times Index has declined 18.6
per cent.

Expansion abroad is crucial for SingTel since Singapore
opened its telecommunications market last year, handing out
new licences to more than 30 companies. SingTel said
earlier it expects investments abroad to make up a quarter
of its operating profit in 2003, from 14 per cent in the
six months to September.

Two years ago, SingTel was also kept out of the Malaysian
market when it lost a bid to buy a stake in Maxis
Communications, Malaysia's No 2 cellular phone company, to
British Telecommunications.  Not everyone thinks the
setbacks in Malaysia and Hong Kong will be big stumbling
blocks in SingTel's plans to expand its operations.

"As long as it has cash, good management and low gearing,
it can still make the acquisitions it needs in the next one
to two years," said Tjandra Kartika, vice-president at GK
Goh Research in Singapore. (South China Morning Post  12-


RURAL BANK OF F.BALAGTAS: PDIC pays off depositors
RURAL BANK OF SISON: PDIC pays off depositors
The Philippine Deposit Insurance Corporation (PDIC) will
start paying off insured depositors of four rural banks
closed by the central bank five to seven months ago. In its
statement, the government deposit insurer said it will
conduct initial settlement claims in four closed rural

in Bulacan, Pangasinan and Aklan starting May 9 at the
bank's premises. PDIC said it will pay-off clients of Rural
Bank of Francisco Balagatas, Inc (Bulacan) from May 9 to
June 8; First Manufacturers Rural Bank, Inc (Bulacan) from
May 9 to May 18; Rural Bank of Sison Inc. (Pangasinan) from
May 9 to June 1 and Samahang Nayon Rural Bank of Malay
Inc.(Aklan) from May 9 to May 25. The Bulacan-based rural
banks were closed in September last year, the

Pangasinan-based rural bank in November and the Aklan based
rural bank in December. The deposit insurer said all
depositors must present evidence of deposits such as
passbooks, certificate of time deposits, unused checkbooks
and valid identification cards bearing the claimant's
signature. Other documents may be required during the
course of claims processing.

After the designated period for processing the claims,
depositors can file their claims at PDIC's head office at
2228 Chino Roces Avenue, Makati City, either through mail
or personally. Official data showed the PDIC, which insures
deposits up to PhP100,000 ($2,418), closed 31 rural banks
last year.  (Business World  11-May-2000)

PHILIPPINE NAT.BANK: Buyers get new perk; auction stalled
Two days before the scheduled bidding for an 80% stake in
the Philippine National Bank (PNB), the Securities and
Exchange Commission (SEC) has exempted the winning bidder
from making a tender offer to minority shareholders.

In a memorandum, the SEC's money market operations
department (MMOD) said that under the Revised Securities
Act and consistent with its previous position, it is
exempting the winning bidders of PNB from making post-
acquisition tender offer.

Earlier, the Equitable-PCIBank, Bank of the Philippine
Islands and Metropolitan Bank and Trust Company mergers
were exempted from the tender offer requirements. The
Department of Finance (DoF), in a letter to SEC chairman
Lilia R. Bautista, sought a confirmation that the sale of
approximately 80% of PNB's outstanding common stock will
not be subject to the rules.

The DoF, Lucio C. Tan and the PNB Retirement Fund, Inc.
subsidiary, RF Investments, Inc., are the beneficial owners
of approximately 46%, 30% and 3.8%, respectively, of common
PNB shares.  And to give prospective investors time to
perform a more thorough due diligence process, the National
Government will move the PNB bidding by one month.

"We will ask for the sale to be moved by one month to allow
for the passage of the new General Banking Act and for
potential investors to perform a due diligence on the
bank," Bangko Sentral Gov. Rafael B. Buenaventura said

Thus, the new sale date will be June 26. All other dates --
such as the May 15 deadline for buyers' prequalification --
will also be moved proportionately.  Meanwhile, the
government expects to earn over 9.6 billion Philippine
pesos ($0.232 billion at PhP41.398=$1) from the block sale,
Finance Secretary Jose T. Pardo said.

The Finance chief said the government raised by 54.8% its
revenue target from the sale after Mr. Tan agreed to sell
his 45% holdings together with the government's remaining
30% stake.  The government also convinced Hong Kong-based
Templeton Asset Management Corp., managed by emerging
markets guru Mark Mobius, to join the deal by selling its
12.9% stake in PNB. The DoF believes selling the shares as
a block will be more attractive to strategic investors.

At an earlier press conference, PNB president Feliciano L.
Miranda announced a net loss of PhP9.87 billion ($0.238
billion), due primarily to PhP8.5 billion ($0.205 billion)
in loan loss reserves and a PhP2.9-billion ($0.07-billion)
income tax expense.

Mr. Miranda admitted PNB's capital adequacy ratio (CAR) --
the ratio of the bank's risk assets versus its capital base
-- stood at only six percent as of end-1999, below the
minimum level of 10% required by the Bangko Sentral
(Central Bank) and the internationally prescribed eight
percent level.

Mr. Miranda said either Mr. Tan or a new owner will have to
put up "at least PhP6 billion ($0.145 billion) in fresh
capital" to make the bank compliant with Bangko Sentral

Of this amount, up to PhP4 billion ($0.097 billion) may
come from an appraisal surplus that the bank will record if
it adjusts the value of its head office building.
PNB director Enrique G. Filamor said the fresh capital is
needed on top of the PhP9.47 billion ($0.229 billion) the
bank raised via a stock right offer last year and which has
already been wiped out by bad-debt provisioning.

PNB originally earmarked the new funds for more aggressive
lending operations, but the plan was scrapped due to the
steady deterioration of its loan portfolio.
The PNB director also said the bank is now in talks with
its debtors. "We are even willing to provide cash flow
support as long as they put up additional collateral," he

In a related development, President Estrada is expected to
sign the new General Banking Act into law which allows
foreigners to own up to 100% of local banks. Under present
laws, foreigners are limited to only a 60% ownership.
Also, a number of interested parties have reportedly asked
for more time to examine PNB's books to be able to come up
with a more accurate bid price.

Mr. Buenaventura said the government will seek the
International Monetary Fund's (IMF) permission to delay the
PNB sale by one month.  "The IMF said that we should just
let them know about the schedule," he said.

He expressed confidence the 182-nation multilateral funding
agency will be reasonable and grant the government's
request, especially if the market conditions for the sale
under the original timetable are unfavorable.

"They have indicated that they will accept the request if
it is reasonable and will improve the chances of a good
sale," he said, adding that as long as the IMF's primary
condition of transparency in the privatization process is
met, the request will likely be well received.

On the other hand, the Department of Finance (DoF) will
negotiate with Mr. Tan for a one-month extension in the
public bidding.  Finance Secretary Jose T. Pardo said the
government will discuss with Mr. Tan the postponement of
the sale to June 26.

"We are waiting for Mr. Tan to request him to see if we can
move by one month the bidding for PNB," he told a press
conference the other night, adding, "(We will) move
proportionately all the other dates."

So far, four investors have prequalified for the purchase
of PNB, Finance Undersecretary Cornelio C. Gison said
yesterday. He did not identify the firms.  Mr. Pardo hinted
that two local banks and two consortia from the United
States are interested in bidding for PNB.

Meanwhile, the delay in the sale of PNB is not expected to
affect the release of a $100-million loan from World Bank.
Finance Undersecretary Joel A. Ba¤ares said the government
expects to receive the $100-million World Bank loan by the
end of the first semester when the sale of PNB is

"We expect the loan to be released next month. We have
fulfilled the conditions in principle on the privatization
of PNB," he said in a recent interview. (Business World

PHILIPPINE NAT. BANK: Tan bucks 1-month auction delay
Taipan Lucio Tan has rejected the government's appeal to
delay the sale of about 80 percent of Philippine National
Bank but government officials were hoping he would change
his mind over the weekend.

Tan met with Finance Secretary Jose T. Pardo and Bangko
Sentral Governor Rafael Buenaventura Thursday night.
Another meeting was scheduled late yesterday.  Pardo
yesterday said Tan had refused to agree to an extension
initially but he may reconsider, depending on how the
meeting late Friday night would go.

The finance official hinted that Tan could be prevailed
upon by President Estrada to extend the schedule of the
bidding, just as he was convinced by Mr. Estrada to sell
his 46-percent share with the government's.  May 15 was the
original deadline set by the taipan for the bundled sale of
his 46 percent in the bank, the government's 30 percent and
PNB Retirement Fund's 3.5 percent.

"At first he really refused. He would get back today and
hopefully he would sign because Buenaventura and I already
signed," Pardo said. He said the new schedule was to open
the bids on June 15, not June 16 as he earlier announced.

The extension, Pardo explained, was sought by the
prospective bidders who had asked for more time to conduct
their due-diligence audit. He said the potential buyers
also wanted to wait for the enactment of the amendments to
the General Banking Act that would give them more

The original schedule that the DOF and Tan had agreed to
was to announce the list of pre-qualified bidders by May
15, collect a bid deposit of P200,000 and open the bids on
May 26.  By May 30, the date of PNB's annual stockholders'
meeting, a new owner could be introduced and new officers
could be elected. If Tan would be firm in his objection,
Pardo said the government would have no choice but to stick
to the original timetable.

"He was saying the delay would cost money. He had a few
demands (in order to extend) that we felt were reasonable,"
Pardo said.

Tan, according to the finance official, had asked for the
government not to move its P50 billion in deposits. Pardo
said that based on the terms of reference they have
drafted, the government deposits in PNB would stay for
three years.

Pardo said that in the event that the PNB auction would be
postponed, PNB could still elect a board of directors
during the stockholders' meeting in May 30 but this would
be replaced once the new owners of the bank have been
named.  Buenaventura earlier said the International
Monetary Fund has approved the extension of the bidding
even by a month.

"The IMF told us to just let them know of the final date
because the request was reasonable and might improve the
chances of a successful sale," Buenaventura said.

Pardo has assured that there were several "global names"
that have indicated their interest to participate in the
PNB bidding.  Pardo said these included two big local banks
and two groups from the United States. (Philippine Daily
Inquirer  13-May-2000)

UCPB SAVINGS BANK: Junks savings bank subsidiary sale plan
United Coconut Planters Bank (UCPB) has abandoned its plan
to sell its subsidiary, UCPB Savings Bank, as it would be
used as a vehicle to expand its presence in the consumer
market, a bank official told The STAR yesterday.

UCPB Savings Bank president Vicente Sarza said the bank
wants to become among the country's top five thrift banks
within seven years from its current number 30th position.
He said the sector is still dominated by BPI Family Bank,
ABN Amro, PCI Savings Bank, and Equitable Savings Bank.

"It's a pretty tall order but we are optimistic we can do
it," Sarza said.

Recently, he said UPCB has agreed to increase the capital
of its thrift bank subsidiary to P475 million from P325
million. This would enable the bank to put up more
branches. Once the moratorium on bank branches is lifted,
he said it would open up five to 10 branches a year in the
next five years from its current 18.

It intends to open branches mostly in Metro Manila and in
the Visayas and Mindanao regions, especially in second and
third-class municipalities that are not serviced by UCPB.

The bank is gradually positioning itself in the consumer
market through its auto loans, launching of a new housing
product and revival of its credit card business. It would
soon engage in trading of government securities and in
mortgage securitization. Plans are also on the way to
engage in foreign exchange.

The new UPCB management has decided to keep the thrift bank
after realizing that the consumer market has been growing
over the past two to three years while the corporate sector
remains week.

"The only sector that is moving is the consumer market.
That is where most of the action is. Almost all the big
boys are into it," he said.

Competition in the sector, he said is intensifying as shown
by the drop in lending rates for consumer loans,
particularly for car and auto loans. The rates on these
loans, he said are even lower than that charge for
corporate clients. Easily, he said consumers could borrow
at 11 percent while corporate borrowers are charged with 13

While the savings bank was just "coasting along" in the
past waiting for new buyers, it is now ready to compete.
Its finances have been restored, first, by cutting the
level of its non-performing loans to 15.6 percent of total
loans from over 30 percent a few years ago. (Philippine
Star  12-May-2000)

UNIWIDE GROUP: PNB wants Uniwide rehab plan amended
The Philippine National Bank, a principal creditor of
financially-challenged Uniwide Group of Companies wants the
Securities and Exchange Commission (SEC) to modify the
approved amended rehabilitation plan of the company to
ensure its rights are protected.

The bank said the rehab plan approved last month by the
regulator does not assure that creditors will be able to
collect what is due them.

PNB said the following schemes were not designed for the
bank's rights as mortgagee-creditor: creditors secured with
operating and non-operating assets will be paid in cash
with a 20-percent discount to appraised values, and dacion
en pago or payment in kind which will be affected by means
of the creation of a special purpose corporation (SPC), the
shares of which will be distributed to the creditors by way
of payment for the outstanding obligations.

PNB said its position under the dacion en pago scheme has
always been rendered essentially inferior, such as the
sharing in the Metromall under the SPC ownership is reduced
from 70 percent to 28 percent in view of the participation
of the Coastal Mall syndicate compared of other creditors
such as Bank of the Philippine Islands, Rizal Commercial
Banking Corp. Asian Bank and East West Bank.

In contrast, the collateral position of other participants
who hold only leasehold rights on the Coastal Mall has been

PNB complained, saying, "PNB is in the business of
banking... and the management and business operation of the
Metromall, however, is beyond PNB's competence. That is not
what the PNB bargained for. Under that scheme, it may not
only take longer for PNB to recover its financial
exposure... there is even the possibility that the business
venture of the Metromall may not be successful and PNB
might never recover at all."

PNB cited other provisions in the rehab plan that are
adverse to its interests: the condonation of accrued
interests and penalties from July 1, 1999 onwards, as of
March 31, 2000, unpaid interests and penalties amounted to
P318 million out of which P258 million will be condoned.

PNB will be made to advance P43.364 million was the
estimated pro-rata share of PNB in SPC expenses; and, the
joint agreement executed by spouses Jimmy and Aniceta Gow
in favor of PNB and other creditors will be cancelled,
virtually letting them scot-free.

PNB said that as an alternative to the dacion en pago or
payment in kind scheme, the bank and another principal
creditor, Allied Bank Corp. (who holds the mortgages on the
Uniwide Metromall), be paid the loans due and owing them,
and release the said mortgage lien on the Metromall, or the
Metromall be sold and the proceeds be applied in payment of
those obligations, and the excess be distributed to the
other creditors.  (Philippine Star  12-May-2000)

URBAN BANK: Sale may include all its assets, subsidiaries
To maximize the proceeds from the sale of Urban Bank, bank
regulators will push for the inclusion of all its assets
and subsidiaries in the sale.

"We might include Urbancorp Investments, Inc. and Urbancorp
Realty and Development, Inc. in the sale," Bangko Sentral
(Central Bank) Gov. Rafael B. Buenaventura said yesterday.

The Bangko Sentral and the Philippine Deposit Insurance
Corporation (PDIC) originally planned to sell Urban Bank on
a stand-alone basis to speed up its reopening. MoBut as
things are turning out, Urban Bank may not reopen within a
month, as originally planned.  In an interview, PDIC
president Norberto C. Nazareno said the original target is
"too idealistic."

"We are working within the 90-day framework," he said.
Technically, the PDIC has 90 days from April 26 -- the date
Urban Bank was placed under PDIC receivership -- to decide
whether to rehabilitate or liquidate the bank.  At least
seven financial institutions have expressed interest in
rehabilitating Urban Bank, five of which are foreign-owned.

Mr. Nazareno said since not all the interested foreign
parties have branches in the country, Urban Bank may be
sold "at a premium" for its franchise. The bank has 28
branches.  Also interested in Urban Bank is Bank of
Commerce (Bancommerce), whose president, Raul B. de Mesa,
said the bank sent a letter of intent to the PDIC the other
day. Interested parties have until today to submit a letter
of intent to the PDIC.

Mr. Buenaventura said the central bank and the PDIC are
rushing the collating of records and the valuation of
assets of Urban Bank "to determine if the sale should be
done as a group."

"The intent is to maximize the payout for depositors," he

Under this scheme, sale proceeds will be used to satisfy
the bank's liabilities to creditors and depositors first,
with any remaining funds being distributed among investors
in its trust division and common trust fund.  The central
bank chief expressed optimism the reconciliation of records
will be completed soon because of Urban Bank's efficient
reporting system.

"All records are intact because there are centralized at
the main office," he said.

He said preliminary examination of bank records indicate
that its main asset is the Urban Plaza building in Makati,
which was "financed partly by the common trust fund and
bank credits."

Mr. Buenaventura said that from the original three
interested buyers, the number has now risen to six -- both
foreign and local.  To sweeten the deal, the Bangko Sentral
will also grant incentives to the buyer who will reopen
Urban Bank.

"We are amenable to give flexible rehabilitation terms to
the new bank, like leeway for provisioning, recognition of
non-performing loans, and revaluation of assets," he said.

The central bank, Mr. Buenaventura said, will wait for the
PDIC to collate all data about the Urban Bank's operations
before determining whether any banking laws were violated
leading to its closure.

"PDIC will send the data to the Justice department which
will determine if fraud existed," he said.

He added that the sale per se will not clear shareholders
and top management from any possible civil or criminal
liabilities.  Prior to its closure, Urban Bank has 15
billion Philippine pesos ($0.362 billion) in assets and
PhP2.209 billion ($0.053 billion) in capital, the bank's
statement of condition as of April 25, a copy of which was
obtained by BusinessWorld, showed.

The statement of condition was said to have been prepared
by its management and distributed to major stockholders and
depositors.  Its asset base actually grew 29.9% from
PhP11.544 billion ($0.279 billion) as of March 27.
Sought for explanation, Mr. Nazareno said Urban Bank's
asset base rose after some of its investment house's assets
were transferred to the bank.

"The capital may have to be adjusted. We will look at the
quality of the assets, the loan portfolio...on a line by
line basis," he added.

While Urban Bank's closure was attributed to heavy
withdrawals, its statement of condition as of April 25
actually showed an 8.57% increase in deposit base to PhP8.6
billion ($0.208 billion) from PhP7.921 billion ($0.191
billion) in March 27.  Most of the withdrawals serviced by
Urban Bank were said to be pre-termination of placements by
investors of its subsidiary.

"The investment house and bank should have an arms-length
relationship. It is the bank's responsibility to protect
the interest of the depositors...There is a distinction
between investors and depositors," Mr. Nazareno said.

Urban Bank has PhP8.55 billion ($0.207 billion) in net
loans as of April 25, up from PhP5.536 billion ($0.134
billion) in March 27.  It has PhP12.854 billion ($0.31
billion) in total liabilities, down from PhP9.105 billion
($0.22 billion) a month ago.  (Business World  12-May-2000)

WESTMONT INVESTMENT CORP.: SEC bars lending functions
The Securities and Exchange Commission has issued a cease-
and-desist order on Westmont Investment Corp. restraining
the investment house from engaging in any activity in
relation to its alleged P7 billion worth of commercial
papers issued to more than 2,200 individual creditors.

In the CDO dated May 5, Ruben Ladia, then acting director
of the SEC's prosecution and enforcement department, said
that data it gathered showed that Wincorp had violated
provisions of the new rules on registration of short-term
commercial papers.

Wincorp, a wholly owned subsidiary of publicly listed
Unioil Resources Holdings Corp., reportedly brokered the
lending of about P7 billion of funds from more than 1,000
investors to 20 companies. The 20 borrower firms were
mostly owned and controlled by the Cua family of ACL
Development Corp., Exequiel Robles of Sta. Lucia and Manuel
Tan of Pearlbank Securities, all of whom are major
shareholders of Wincorp through Unioil.

"It appears . . . Wincorp is engaged in the business of
lending or extending credit to corporations or individual
borrowers by requiring the execution of a Promissory Note
and Loan Agreement payable to Wincorp. Before lending or
extending credit, Wincorp looks for funders who are mostly
individuals and issues them pertinent Confirmation Advice
using the Loan Agreement as reference collateral/security,"
Ladia said in the CDO order.

"The Confirmation Advice, which is considered a Commercial
Paper under the New Rules on Registration of Short Term
Commercial Paper, has not been registered with the
commission nor can it be considered exempt from
registration under the said rules," the PED official said.

He noted that a review of Wincorp's books as of end-1999
showed that the investment house sourced funds from "more
or less 2,200 individuals with an average of more than P7
billion worth of commercial papers per month."

The SEC official said Wincorp's use of the loan agreement
or promissory notes may be interpreted as a negotiation of
the said securities and would be in violation of provisions
of rules on short-term CPs.

It was further determined from Wincorp's operations that it
normally shouldered in advance the interest of the loan of
the funder for the account of its borrower whenever one of
its borrowers failed to pay the principal amount and
interest of the loan. An analysis of its corporate books
will reveal that, as a result of this practice, Wincorp has
an accumulated interest paid in advance to the funders for
the account of the borrowers amounting to P165,811,298.14
as of Dec. 31, 1999.

"This bolsters the fact that Wincorp's borrowers have been
defaulting on their obligations to the detriment of the
funders/investing public," Ladia pointed out. (Philippine
Daily Inquirer  13-May-2000)


BANGKOK MILITARY BANK: HSBC to pay Bt36B for stake
The Financial Institutions Development Fund (FIDF) will
receive Bt36 billion from London-based HSBC Holdings for
the sale of 75 per cent in a nationalised bank, a
government official said.

Finance permanent secretary Supachai Pisitvanich told
reporters yesterday that under the agreement to sell
Bangkok Metropolitan Bank (BMB), an asset-management
department will be established as part of the bank to
handle non-performing loans (NPLs), instead of a separate
company as expected earlier.

"If we don't sell the bank, we must close it and be
responsible for deposits totalling around Bt190 billion,"
Supachai said, replying to the months-long protest from a
group of nationalists which has lobbied the financial
authorities to hold on to the Thai bank for Thai investors.

BMB is one of four nationalised banks put up for sale. With
NPLs of Bt150 billion, the small-sized bank was perceived
as unattractive and unable to find takers until HSBC
emerged as a potential buyer.  A source at the Bank of
Thailand estimated that only around 45 per cent of the NPLs
are recoverable, while the rest, or about Bt70-Bt80
billion, will be irrecoverable and the eventual amount will
come under a loss/gain sharing scheme.

Under the scheme, the FIDF guarantees the buyer that it
will be compensated for potential losses after five years.
According to the central bank source, the NPLs will be
managed under two pools in accordance with the different
NPL estimates by the fund and HSBC. While the FIDF
estimated that BMB's delinquent loans are only 70 per cent
of outstanding loans, the HSBC estimate is 95 per cent.
Thus, 70 per cent of the bank's delinquent loans will be
managed in the first pool, while the disputed 25 per cent
of delinquent loans will be put in the second pool.

Under the agreement to handle NPLs in the first pool set up
according to the FIDF's estimate, the fund will set aside
full provisioning against such loans. If the loan quality
is 100-150 per cent worse than now, its compensation
payment will total 85 per cent of the total losses and HSBC
will shoulder the rest. If the loan quality worsens by more
than 150 per cent, the compensation will rise to 95 per
cent of potential losses.

"It's impossible that the loan quality will deteriorate by
more than 150 per cent, but we accepted the agreement to
comfort HSBC," the central bank source said.

Concerning the second pool, the fund will set aside only
57.5 per cent of additional reserves for the NPLs in this
category, while HSBC is to shoulder the rest. If the loan
quality deteriorates, the fund will pay full compensation.
If the quality improves, the reserves set aside by the fund
will be returned to the fund five years from now with

BMB's total lending is about Bt188 billion. The bank
reportedly has made provisions of about Bt58 billion, Bt3
billion below the minimum requirement.

Supachai, who is an FIDF director, said the deal with HSBC
has been agreed in principle and some finer legal details
are currently being worked out.He said the FIDF board would
"soon" sign a sales agreement with the Hong Kong listed
bank while the government was now sorting out some "legal
wording" in the contract.

BMB is the third nationalised bank to be sold to foreign
investors. The government sold has already sold Nakornthon
Bank to Britain's Standard Chartered Bank and Radanasin
Bank to Singapore's United Overseas Bank. (The Nation  13-

SIAM STEEL INT'L: Rehab plan report to SET
Siam Steel International Public Company Limited ("SIAM")
has been subjected to the business reorganization process
with South Sathorn Planners Co., Ltd. being the Planner.
South Sathorn Planners Co., Ltd. prepared and completed the
plan for SIAM, which was, then, approved by the special
resolution of the creditors meeting on April 24, 2000.

On May 11, 2000, the Central Bankruptcy Court considered
and approved the plan.  As a result, the plan has become
effective since then, with Deloitte Touche Tohmatsu
Planners Co., Ltd. and Siam Steel Planner Ltd. being the
First and the Second Plan
Administrators respectively to manage the business of SIAM.

Since the securities of SIAM are temporarily suspended, the
Administrator would greatly appreciate should the SET lift
the suspension and resume the trading of SIAM securities.

Summary of the Rehabilitation Plan:

1. The amount of debts repayable in the rehabilitation by
SIAM is Baht 2,950,671,118.75, which can be allocated upon
the following groups of creditors:

Tax Creditor: Baht 6,831,521.00
Trade Creditors: Baht 13,975,260.79
Finance Institution Creditors:- Baht Debts Baht
- USD Debts US$ 39,508,445.97
- AUD Debts AUD 52,899.25

1.2 Repayment

The Tax Creditor and the Trade Creditors will be repaid
within 1 month after the court's approval of the plan, or
in case the debts have yet to be due, within 1 month when
the debts fall due.

The debts due to the Finance Institution Creditors are
divided into 3 tiers (translated into Baht currency for
convenience of dividing into tiers):

Tier 1 Debt: Amount Baht 1,000,000,000.00.
Interest rate MLR + 1% for Baht debts; SIBOR/LIBOR
(whichever is higher) + 2% for non-Baht debts. Repayment
Within 5 years unless extended.  Source of fund - Income
for business operation;
- Increased Capital of Baht 250 million to be raised by
issuing 83,333,333 new ordinary shares of a par value at
Baht 10 to
be offered at Baht 3.00 within June 30, 2002; -

Tier 2 Debt: Amount Baht 680,000,000.00.  Interest Rate
Repayment Within 5 years unless extended. Source of fund -
Proceeds from sales of non-core assets and others.

Tier 3 Debt: Amount Baht 1,270,671,118.75.
Interest Rate None. Repayment By means of debt to equity
swap, which will be made within 6 months. The conversion
price is fixed at Baht 10 per 1 new ordinary share.

1.3 Currency Conversion -- Finance Institution Creditors
may choose to convert their non-Baht Tier 1 Debt or Tier 2
Debt into Baht currency by giving a notice to the Plan
Administrator within 1 month after the court's approval of
the plan.

2. The term of the plan is fixed at 5 years from the
court's approval of the plan unless there is an event of
The Plan Administrator may seek an approval of the court
for a time extension, provided that the extension shall not
be made more than 2 occasions, each not exceeding 1 year.
Therefore, if the court extended the term on 2 occasions,
the term of the plan would not be longer than 7 years.

3. Plan Administration -- To implement the plan, Deloitte
Touche Tohmatsu Planner Co., Ltd. and Siam Steel Planner
Ltd. have been appointed the First Plan Administrator and
the Second Plan Administrator respectively. Their power and
duties are stipulated in the plan.

4. Rights of Shareholders -- No shareholders shall be
entitled to dividends or any distributions until SIAM has
fully repaid its debts in accordance with the plan.  (Stock
Exchange of Thailand  12-May-2000)

THAI MILITARY BANK: Share offer 90 percent 'taken'
Thai Military Bank pcl yesterday said investors have
committed to buy more than 90 per cent of the new stock it
plans to sell on May 19, even though shares are now trading
below the offer price.

Thailand's sixth-largest bank is seeking to raise 10
billion baht (S$443.6 million) from the private sector by
selling one billion new shares for 10 baht apiece. About
700 million shares are earmarked for Shin Corp, National
Finance pcl and Thai Life Insurance Co, and another 300
million shares will be allotted in an issue for existing

The three "strategic" investors have fully subscribed their
portion of the sale and at least half of the shares being
sold to existing shareholders are sure to be taken up, said
Thai Military president Thanong Bidaya, citing pledges from
major shareholders including units of the armed forces.
National Finance, the underwriter, has guaranteed to buy up
to 100 million shares if they are not subscribed in the
rights offer, he added.

The sale is part of a recapitalisation plan which will see
Thai Military raise another 20 billion baht by selling
equity to the finance ministry through its aid program for
ailing lenders.

"We're quite confident about the (private) share sales,"
said Mr Thanong.

About a third of the proceeds will be used to provide for
bad or doubtful debts, with some funds being alloted to set
up a separate unit to buy bad loans from the bank at a
discount and manage them. (Business Times  12-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

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Inc., Trenton, NJ USA, and Beard Group, Inc., Washington,
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Jover and Cristina Pernites, Editors.

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

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