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     T R O U B L E D   C O M P A N Y   R E P O R T E R

                            A S I A   P A C I F I C

             Wednesday, May 24, 2000, Vol. 3, No. 100

                                    Headlines


* A U S T R A L I A *

OPSM PROTECTOR LIMITED: Sells loss-making workwear units
PACIFIC DUNLOP: In Futuris' crosshairs
TELSTRA: Shares tumble to an 18-month low


* C H I N A  &  H O N G  K O N G *

CITY TELECOM: Expansion triggers first loss in 8 years
HONG KONG CONSTRUCTION HLDGS.: Posts $1.2AB loss
JOYCE BOUTIQUE HOLDINGS: SCG withdraws bid
PEREGRINE FIXED INCOME: Creditor dividend payouts in July
SOUNDWILL HOLDINGS: Annual loss widens


* I N D O N E S I A *

PT ASIANA MULTI KREASI: Converts most debts to equity
PT TEXMACO PERKASA ENGINEERING: Explains rehab to JSX
PT UNITED TRACTORS: Unit restructures debt


* J A P A N *

IDEMITSU KOSAN CO.: Capital boost needed to trim debt
IMPERIAL HOTEL LTD.: To book loss after pension writeoff
JAPAN SYSTEMS CO.: To shrink capital 75% for debt repayment
MUTSU OGAWARA DEVELOP.PROJECT: LCD firms sought to revive
NIPPON SHINPAN CO.: Stock floundering
SEGA ENTERPRISES LTD.: President to quit over weak sales


* K O R E A *

CHO HUNG BANK: Protests Thomson BankWatch downgrade
HANVIT BANK: Protests Thomson BankWatch downgrade
KOREA EXCHANGE BANK: Protests Thomson BankWatch downgrade
KOREA EXPRESS CO.: Workers to seek prosecution of ex-chair


* M A L A Y S I A *

KINTA KELLAS PUB.LTD: Needs to sell bonds to settle loans
TIME ENGINEERING: Debt-laden firm may need to borrow more


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

ASB GROUP: Creditor banks oppose plan to repay loans
PHILIPPINE NAT.BANK: Only 2 groups beat pre-qual deadline
PILIPINO TEL.CORP.: Debt restructuring to be delayed


* T H A I L A N D *

BANGKOK METRO.BANK: Sale leaves FIDF with Bt20B loss
iTV: Staff resists sale to Shin Corp
KRUNG THAI BANK: Rehab seen to take two more years
SIAM SYNTECH CONSTRUC.: Creditors fight rehab plan
THAI PETROCHEM.INDUSTRY: Denies write-down rumours
THAI TEL.& TEL.: TOT seeks approval as planner


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A U S T R A L I A
=================

OPSM PROTECTOR LIMITED: Sells loss-making workwear units
--------------------------------------------------------
OPSM Protector Limited, the leading optical health and
personal safety group, today announced that contracts have
been exchanged for the sale of Protector Technologies'
industrial clothing and footwear manufacturing businesses
which made operating losses of $5.5 million in the 30 June
1999 financial year.

The sale is subject to normal regulatory approvals being
granted.  The transactions, which will be completed by 30
June 2000, and associated restructuring will realise
approximately $21 million. Most of the proceeds will be
received within the next two years.  The footwear business
is being sold to Blundstone Pty Limited and the lothing
businesses are being sold to three New Zealand companies.  

The transactions will lead to an abnormal charge of $2.5
million after tax. A further charge of approximately $2.5
million relating to the cost of restructuring discontinued
businesses will be incurred in this second half of the
current financial year, in addition to the $1.3 million
already announced for the first half.  The total abnormal
charge for the year to 30 June 2000 is therefore estimated
to be in the range of $6.0 million to $6.5 million after
tax.

"The sale of these loss-making businesses, together with
the sale process underway for Protector Technologies'
global respiratory and head protection business, will free
up management resources to focus on expanding and
increasing the profitability of our Optical and Protector
Supply businesses and thereby maximising shareholder
value," said Mr Jeff Kelly, chief executive of OPSM
Protector.

Protector Supply, Australia and New Zealand's leading
distributor of personal protective equipment and workwear,
has contracted to purchase clothing and footwear from the
purchasers of Protector Technologies' workwear
manufacturing businesses. These will be purchased on terms
that are favourable to Protector Supply.

OPSM Protector's intention to sell its workwear businesses
was announced in October 1999. In March 2000 the company
determined that it would also sell or merge Protector
Technologies' profitable global respiratory and head
protection business. This business has a significant
international position in its markets, in which businesses
are increasingly consolidating, and needs to be global in
order to reach its full potential. The company has had to
choose between further investment in building a large
safety products manufacturing group or merging it with an
existing business which provides greater critical mass and
market reach.

This further sale process is proceeding to plan, with the
aim of exchanging sale contracts during the first quarter
of next financial year. The sale will unlock shareholder
value, and the company expects to achieve a premium over
book value which will be reflected in the 30 June 2001
results.

Following the divestment of the Protector Technologies
businesses, OPSM Protector will have two operating groups -
Optical and Protector Supply.  The Optical Group is the
leader in the eyewear and eyecare industry in Australia and
New Zealand and has growing operations in Asia. The
Protector Supply Group is the leading supplier of
protective equipment and workwear direct to industrial
users in Australia and New Zealand. (Sydney Morning Herald  
23-May-2000)

PACIFIC DUNLOP: In Futuris' crosshairs
--------------------------------------
Futuris Corp chief Alan Newman has trained his sights on
Pacific Dunlop after the ailing manufacturer terminated
discussions late last week about a possible merger between
the two companies.

Futuris, a rural services and vehicle components maker
chaired by former PacDun executive director Bill Beischer,
is believed to have put up a proposal in the second half of
last year.  Friendly discussions continued for some time,
with PacDun managing director Rod Chadwick meeting face-to-
face with both Mr Beischer and Mr Newman.  However, it is
understood that neither Mr Beischer nor Mr Newman were able
to secure a meeting with PacDun chairman John Ralph.

Last week, Mr Chadwick terminated all discussions. The
PacDun chief -- whose company has long been regarded as a
likely takeover target -- was yesterday unavailable for
comment.

Media magnate Kerry Packer, the Roy Disney family company
Shamrock, Alan Jackson's Austrim group and the former
PacDun executive Grant Latta have all been associated with
takeover speculation in the past six months. Among Mr
Newman's options now is an approach to PacDun's three big
institutional shareholders for a mandate to restructure the
board and implement his change agenda.

Collectively, Bankers Trust Australia (with a 13.8 per cent
stake), Franklin Resources (8.63 per cent) and Maple-Brown
Abbott (8.23 per cent) control PacDun's destiny with a
combined holding of about 30.7 per cent.

It is understood that Mr Newman is strongly opposed to
PacDun's previously foreshadowed plans for a 50/50 shared
services joint venture with the chartered accounting firm
Arthur Andersen.  Mr Chadwick said on May 10, when he
announced the $US368 million ($634 million) sale of GNB
Technologies to Exide of the United States, that the joint
venture would start on July 1, removing $15 million in
annual costs from PacDun.

Futuris, however, regards the joint venture as a poison
pill, creating impediments to dealing with the relevant
assets. A combination of Futuris, with a market value of
almost $1 billion, and the $1.7 billion industrial
conglomerate PacDun, would create a diversified giant with
about $10 billion in revenue.

Both businesses are strong in distribution; Futuris through
its Elders rural network as well as its Air International
business, which makes and distributes air conditioning and
heating systems for the automotive industry.  Pacific
Distribution, on the other hand, has annual sales of $1.5
billion through the distribution of electrical and
automotive products.

One observer said the big challenge in any merger would be
to leverage the distribution businesses into the new
economy. After 11 years as chief executive, Mr Newman has
recently been scaling back his activities at Futuris, most
likely in preparation for the attempt at PacDun. PacDun
shares eased 2c yes terday to $1.61, while Futuris stock
was steady at $1.68. (The Advertiser  23-May-2000)

TELSTRA: Shares tumble to an 18-month low
-----------------------------------------
Telstra Corp Ltd shares hit a new 18-month low yesterday as
the global downturn in the sector continued to haunt
Australian-listed telecommunications companies.

Telstra also refused to comment on a report it will
considering selling its directories business. Most major
telecommunications companies slipped to new lows for the
year yesterday as debate intensified over whether
telecommunications stocks remained a sound long-term
investment.

Telstra ordinary shares finished 7.8c lower at $6.502,
while Telstra 2 instalment receipts fell further out of
reach of their $4.50 issue price to $3.56. The Australian
Financial Review said yesterday that Telstra was
considering selling its Pacific Access directories
business, possibly through a public float to retire debt
raised through its $5 billion deal with Hong Kong's Pacific
Century Cyberworks Ltd.  A Telstra spokesman said the
company did not comment on decisions before the board.

"We don't comment on the discussions of the board. If a
decision was made obviously we would provide that to the
market at the appropriate time," the spokesman said.

Hutchison Telecommunications Ltd remained under its rights
issue price of $3.50, closing 3c lower at $3.34. Hutchison
is seeking to raise $700 million to fund its purchase of
mobile phone spectrum through a three-for-seven rights
issue.  Earlier in the day, Cable and Wireless Optus Ltd
looked like making its first recovery since posting its
full year results last Tuesday but ended 2c lower at $4.04.
AAPT Ltd was one of the few winners yesterday, adding on 4c
to close at $6.30.

The huge prices paid by telecommunications companies for
spectrum in recent auctions in Britain and Australia have
raised concerns about their capacity to raise funds in the
present volatile climate.  The institutional offer for a
slice of ComVergent Telecommunications Ltd opened
yesterday, with sources close to the initial public offer
saying interest was still strong despite the downturn.

ComVergent is seeking to raise $360 million through its
listing. Representatives were talking to investors in
Europe yesterday about its bookbuild which has an
indicative range of between $3 and $3.75. The source
admitted that the downturn was not helping efforts. (The
Border Mail  23-May-2000)


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C H I N A  &  H O N G  K O N G
==============================

CITY TELECOM: Expansion triggers first loss in 8 years
------------------------------------------------------
City Telecom plunged into its first net loss in eight years
of HK$52.53 million for the first half to February 29,
after spending huge sums on business expansion and customer
acquisition.

This compared with a net profit of HK$13.35 million in the
same period last year.  Although turnover grew 75.7 per
cent to HK$650.59 million on the back of strong growth in
international calls and dial-up Internet access, gross
profit margin fell to 27.9 per cent from 40.4 per cent.

"The past six months was very challenging to the group and
the industry as a whole. The rapid changes the industry
went through culminated in keener competition, higher costs
in doing business and narrowing margins," chairman Ricky
Wong Wai-kay said.

While revenues from international calls - which accounted
for 90.9 per cent of sales in the period - grew 75 per
cent, operating profit from this line of business fell 23
per cent to HK$17.65 million.  Mr Wong attributed the loss
partly to an almost HK$40 million growth in advertising
expenditure from a year earlier.

He said the company would implement stricter cost controls
in the second half to bolster its bottom line.  He also
rejected suggestions that the company had become less
aggressive in the international call price war which saw
its competitors slash prices repeatedly to below-cost
levels.

"I don't agree that we have become a passive market player.
Sometimes, doing nothing could be more effective than doing
a lot of things," he said.

He was referring to the company's "ultimate price
guarantee" programme, which purports to provide registered
users the lowest price available in the market. The company
has a market share of 18 per cent in terms of outgoing call
traffic.  Despite 80 per cent growth in the company's dial-
up Internet access revenues, operating loss widened from
HK$12.45 million to HK$72.63 million.

Mr Wong said the loss was due to sharply increased costs on
expanding customer base and technology investments, while
revenue growth was limited by the launch of a "lifetime
free" package last July. Less than 10 per cent of the
service's 390,000 subscribers are paying customers.

However, the firm is seeking to offset the loss of monthly
subscription revenues by launching next month an "infobox
service" under which subscribers will be shown banner
advertisements constantly when on-line.  The company said
it hoped to receive HK$3 to HK$4 of advertising revenues
per on-line hour per subscriber from this channel.

Customers can choose not to have the advertisements by
paying an hourly charge of HK$4, up to a maximum of HK$108
per month.  Mr Wong estimated the company would lose about
10 to 15 per cent of its dial-up customers as a result of
the infobox service.

Since launching its high-speed Internet-access service two
months ago, the firm has signed up about 1,000 in-service
households. (South China Morning Post  23-May-2000)

HONG KONG CONSTRUCTION HLDGS.: Posts $1.2AB loss
------------------------------------------------
Hong Kong Construction (Holdings) posted a HK$1.21 billion
net loss in the year to December 31, its poorest
performance since its listing in 1987.

The company had a profit of HK$298.5 million a year
earlier.  Turnover last year rose 39.95 per cent from a
year earlier to HK$3 billion.  No final dividend was given,
compared with 15 HK cents a year earlier. Basic losses per
share were 239.6 HK cents against earnings per share of
64.9 HK cents previously.

Part of the loss in the year was attributed to a HK$362.8
million provision made because of the lower value of stakes
in its units.  Of this amount, HK$346.5 million was made
for its 40 per cent-owned Hainan power plant.  It had an
operating loss of HK$336 million.

"We have taken a bold and decisive approach to our 1999
results in light of uncertainties over various joint-
venture assets and projects," said Hong Kong Construction.
"To start a clean slate, we needed to remove past burdens
by making prudent provisions on any doubtful assets and
receivables. This will give a clearer picture to our
investors.  Although the results are unexpectedly negative,
we wish to assure that we have identified the causes and
taken appropriate actions to remedy the problems."

No ongoing projects had faced any setbacks and progress was
considered satisfactory, it said.  Chief financial officer
Michael Ng said the inefficiency of the power plant was
mainly affected by the slow development of the Hainan
Yangpu Economic Development Zone. He said the value of the
power plant had been written down to about HK$600 million
from an earlier book value of HK$900 million.

The company was involved in negotiations to dispose of the
power plant, he said, adding Hong Kong Construction was
confident of selling the project at the latest valuation.
He said an aggressive accounting approach was taken to
increase transparency since the change of management two
years ago.

China Everbright Holdings is the single largest shareholder
in the company.  Hong Kong Construction had contracts
valued at HK$20 billion, Mr Ng said.  The company had a net
bank borrowing of about HK$2 billion or gearing ratio of
more than 60 per cent, he said.

To capture e-commerce opportunities, the company is
considering teaming with strategic partners to develop
electronic platforms for business to business and business
to customers.  Services include design, contracting,
project-development and materials souring.

Negotiation are also under way with a number of leading
mainland, Japanese and US entities in connection with
proposed investments in Internet firms. (South China
Morning Post  23-May-2000)

JOYCE BOUTIQUE HOLDINGS: SCG withdraws bid
------------------------------------------
Internet investment company Strategic Capital Group (SCG)
has withdrawn its bid to take over troubled Joyce Boutique
Holdings amid the loss of the retailer's franchise to
operate Giorgio Armani and Emporio Armani boutiques.

SCG and Joyce said yesterday the impact of the expiry of
the Armani franchises was discussed by the Internet-
investment company and its partner in the takeover.
Analysts said the expiry of the franchises might have
contributed to the collapse of the takeover.

Armani boutiques generated 33 per cent of Joyce's revenue
in the nine months to December 31, according to the
companies.  In that period, operating profit was HK$17.5
million.

SCG, led by 32-year-old United States investment banker
Eric Solberg, had proposed early last month to pay HK$202.8
million through a share subscription for a 51.7 per cent
stake in Joyce.  Investor Elliott Yuen Wai-kuen had also
planned to take 10.7 per cent by subscribing to HK$33
million worth of new shares.

However, Joyce's share price slumped by more than 60 per
cent after the takeover proposal was announced to 24.5 HK
cents on May 17, when trading in the counter was suspended.
Trading is scheduled to resume today.

In the absence of a capital injection by SCG and Mr Yuen,
Joyce said it would revert to its original business plan
and develop its Ad Hoc and Joyce Beauty divisions.
Financing would be sourced internally, it said.

Joyce is to stop operating the Armani boutiques at the end
of the retailer's autumn-winter season.  The retailer said
it was informed by Giorgio Armani that the Italian company
wanted to control its operations in Hong Kong. (South China
Morning Post  23-May-2000)

PEREGRINE FIXED INCOME: Creditor dividend payouts in July
---------------------------------------------------------
Creditors of Peregrine Fixed Income - whose claims were
subject to the outcome of a landmark court case over how
they should be valued - are set to receive a first dividend
payout in July after liquidators received a judgment in
their favour.

The case, heard in England's High Court, centred on a
dispute over how terminated swap contracts transacted under
International Swaps & Derivatives Association (Isda) master
agreements should be valued.  It was initiated by Peregrine
group liquidators PricewaterhouseCoopers after certain
counter-parties to the huge array of transactions struck by
the group believed the amount they owed Peregrine should be
scaled back due to their reduced credit standing after the
Asian crisis.

The case, made against Thailand-based Robinson Department
Stores and heard in an English court because most master
agreements are subject to English law, was necessary to
clarify how much was owed to the group and how much it
should pay out.

When the group went into liquidation in January 1998, it
had unsettled derivatives transactions comprising more than
2,000 swaps, forwards, options and other products involving
almost 300 counter-parties. These contracts had a notional
value of more than US$15 billion and represented total
debtor and creditor positions of about US$1.5 billion and
US$1 billion, respectively.

Until the judgment, however, liquidators of Peregrine Fixed
Income - the group's largest operating arm - had been
unable to process claims made by about 83 Isda creditors
for HK$6.5 billion.  At the heart of the case was whether
the credit quality of a non-defaulting counter-party to a
derivative contract should determine the settlement amount.

PricewaterhouseCoopers said yesterday the 17-page judgment,
which may still be appealed, rejected significant
discounting of Isda claims for reasons of credit standing.
It said the Peregrine Fixed Income liquidators "currently
consider that the judgment has satisfactorily resolved the
Isda valuation issue and has vindicated the approach taken
by the liquidators."

When the liquidators announced last August a first interim
payout to creditors of 12.5 cents in the dollar, they said
they had set aside about HK$850 million to cover potential
payments to Isda creditors. PricewaterhouseCoopers said
yesterday the liquidators planned to start adjudicating on
those creditors' claims as soon as practicable.

Simon Copley, lead liquidator for Peregrine Fixed Income,
said he expected to be in a position to send out cheques
for this "catch-up first interim dividend" in July.
The catch-up dividend will absorb most of the HK$850
million set aside, while the balance will be put towards a
second interim payment to all creditors.

This is likely to be declared in September and is expected
to be at least 8 cents in the dollar.  Isda master
agreements are widely used in financial markets. Most Isda-
related deals struck by the Peregrine group ended when it
went into liquidation.  Peregrine, once Asia's largest
home-grown investment bank outside Japan, collapsed with
liabilities of HK$35 billion.

Last month, liquidators revised upward their range of final
dividend forecasts to all creditors after better than
expected asset realisations. The estimated minimum return
to creditors has been increased to 25 cents in the dollar
from an original estimate of 19 cents. (South China Morning
Post  23-May-2000)

SOUNDWILL HOLDINGS: Annual loss widens
--------------------------------------
Soundwill Holdings saw its net loss widen in the year to
December 31, to HK$685.9 million against the HK$495.23
million loss a year earlier.

The company said it made a Hk$488 million provision for
losses sustained in a property disposal and projects due to
be released this year.  Executive director Keith Yip
expected the company's performance would improve this
financial year, because he felt property prices were
unlikely to suffer another significant drop.

Profit contribution to be generated from its 90 per cent-
owned Vision Telecommunications Holdings might come earlier
than expected in view of the sharp increase in demand for
bandwidth - the capacity to transmit data through Internet
- in Hong Kong and on the mainland, he said.

Vision Telecommunication has a 70 per cent stake in
Optilink Technologies - a joint venture with Peking
University for the design and manufacture of dense
wavelength division multiplexing (DWDM) open transport
systems on the mainland.

Work on the company's two property projects at Russell
Street, in Causeway Bay, had resumed following the
successful negotiation of a standstill arrangement and new
funding from bankers, the company said.

Its turnover dropped 55.64 per cent to HK$276.46 million,
while losses per share were 44.16 HK cents compared with
39.5 HK cents previously. No final dividend was declared.
(South China Morning Post  23-May-2000)


=================
I N D O N E S I A
=================

PT ASIANA MULTI KREASI: Converts most debts to equity
-----------------------------------------------------
Publicly listed toys manufacturer PT Asiana Multi Kreasi
obtained approval from shareholders here on Monday to
restructure the majority of its US$31.3 million debts
through a debt-to-equity swap.

Asiana's president, M. Ramdani Basri, said that about 70
percent of the total debts would be converted into the
company's new shares.  Creditors, under the debt-to-equity
swap, would own at least 60 percent of the company's shares
but would cause a major dilution in the ownership of the
current shareholders, he said following the company's
shareholders meeting.

According to him, the founders' stake will be reduced to 25
percent from 62.3 percent while the ownership of the
investing public will decline to 15 percent from 37.7
percent at present.  Asiana's total debt was $31.3 million
as of March. Its creditors include Schroders & Co, PT BNP
Lippo Indonesia, PT Keppel Tat Lee Buana, ABN Amro Bank,
Kim Eng Securities, PT Bank Inter Pacific and Bank Indover.

Ramdani said that about 60 percent of the company's shares
which would be given to creditors as part of the debt-to-
equity swap would be controlled directly by Kim Eng
Securities because the securities company had taken over
the majority of the debts from other creditors.

Ramdani said that the debt-to-equity swap would reduce the
company's total debts to $5.9 million but will raise its
equity from minus Rp 108 billion as of March to Rp 67
billion.  Asiana, which operates two toy factories in
Bekasi, West Java, suffered a 46 percent drop in sales in
1999 to Rp 20.7 billion (US$2.49 million) from Rp 38.6
billion in 1998.

Ramdani attributed the drop in sales to the sharp fall in
orders from foreign customers.  Ramdani said that the
company reported a net loss of Rp 49.5 billion in 1999, a
slightly lower loss than the net loss of Rp 91.5 billion in
1998.  Asiana manufactures and distributes children's toys,
games and animated cartoon films characters under licenses
of Walt Disney Company, United Feature Syndicate and Turner
Home Entertainment.

The company exported 40 percent of its products to United
States, Asian and European countries, under the trademarks
Mickey&Co, Garfield, Pokemon, The Lion King, and Scooby
Doo.  (Jakarta Post  23-May-2000)

PT TEXMACO PERKASA ENGINEERING: Explains rehab to JSX
-----------------------------------------------------
PT Texmaco Perkasa Engineering Tbk has clarified the
chronology of the implementation of company's restructuring
of its credit in state owned company banks ( PT Bank BNI,
PT Bank Mandiri, PT Bank BTN and PT Bank BRI) club lender
to the Jakarta Stock Exchange.

1. The restructuring process of credit of Texmaco Group for
engineering division including the company start in
February 1999.

2. In May 1999 PT Bank BNI as a leader (lender) appointed
Deloitte Touche Tohmatsu as an independent financial
advisor for the implementation of the company's
restructuring implementation for period up to February
1999.

3. In July 1999 had reached the inprinciple agreement with
Lender Club.

4. In March 2000 the credits were transferred to IBRA.

5. IBRA approved the Deloitte Touche Tohmatsu to continue
the company's restructuring for period up to December 1999.

6. Recently, Due Diligence is in the implementation
process. After Due Diligence finished, Deloitte & Touche
Jakarta party will execute the restructuring proposal.
(The Jakarta Stock Exchange  22-May-2000)

PT UNITED TRACTORS: Unit restructures debt
------------------------------------------
PT United Tractors Pandu Engineering (UTE), a unit of
publicly-listed heavy equipment distributor PT United
Tractors, said it had closed a deal with its creditors to
restructure a debt of US$14.5 million.

United Tractors said in a statement that the debt-
restructuring deal was signed on May 16 in Singapore.
The creditors are Salomon Brothers Holding Company Inc.;
the Singapore's branch of the Dai-ichi Kangyo Bank Limited;
the Daiwa Bank Limited; the Singapore branch of the
Industrial Bank of Japan Limited; the Singapore branch of
the Sanwa bank limited, the statement said.

Under the deal, UTE will repay its $14.5 million debt in
five years until 2004 with an initial prepayment of $1.7
million.  Interest payment will be made every three months
with a principal payment every six months.

Another united of United Tractors, coal company PT Berau
Coal, had signed a deal with its creditors to restructure a
$40 million debt in March this year.  (Jakarta Post  23-
May-2000)


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J A P A N
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IDEMITSU KOSAN CO.: Capital boost needed to trim debt
-----------------------------------------------------
Idemitsu Kosan Co., a major oil refiner and distributor, is
set to accelerate a debt reduction program by raising some
30-40 billion yen in capital through a third-party
allocation of new shares to Sumitomo Bank (8318), Sumitomo
Trust Banking & Co. (8403) and Tokai Bank (8321), company
sources said.

The three banks are likely to buy preferred shares without
voting rights in return for a higher dividend.  It will be
the first capital increase Idemitsu has made in 37 years.
The Tokyo-based oil company has capital of only 1 billion
yen, an amount considered too low in relation to sales of
1.67 trillion yen for the year ended March 1999. The poor
capital-to-sales ratio has made the company too reliant on
bank loans to expand operations, saddling the firm with
interest-bearing debt of more than 1.45 trillion yen at one
point.

The unlisted company began improving its financial position
in fiscal 1998. It plans to reduce interest-bearing debt by
some 550 billion yen from its peak to 900 billion yen in
2003.  "We are cutting our debts faster than originally
planned," the sources said.  (Nikkei  22-May-2000)

IMPERIAL HOTEL LTD.: To book loss after pension writeoff
--------------------------------------------------------
Imperial Hotel Ltd. (9708) plans to write off all its
unfunded retirement liabilities in the fiscal year ending
March 2001, expecting to show a consolidated net loss of
1.2 billion yen after taking a 5.4 billion yen charge.

The company enjoyed a 2.3 billion yen group net profit last
fiscal year after recording a windfall of nearly 1.3
billion yen from top shareholder Kokusai Kogyo Co. Using a
discount rate of 3.5%, Imperial Hotel has calculated its
retirement obligations at about 12 billion yen.

Imperial Hotel expects group operating profit to drop 9% on
the year to 2.3 billion yen. Business demand is stagnating,
and consumers are shying away from lavish weddings. (Nikkei  
22-May-2000)

JAPAN SYSTEMS CO.: To shrink capital 75% for debt repayment
-----------------------------------------------------------
Japan Systems Co. (9758) plans to reduce its capital by 75%
in order to pay down its accumulated losses.

The firm will be capitalized at about 1.3 billion yen after
the move. It had 2.7 billion yen in accumulated losses as
of the end of March, preventing it from doing business with
some local governments.  The capital reduction will total
about 3.5 billion yen, and the 800 million yen remaining
after debt repayment will be added to reserves.

For fiscal 2000, Japan Systems expects pretax profit to
fall 21% to 590 million yen as sales rise 10% to 9.25
billion yen. (Nikkei  23-May-2000)

MUTSU OGAWARA DEVELOP.PROJECT: LCD firms sought to revive
---------------------------------------------------------
The Japan Federation of Economic Organizations (Keidanren)
will ask LCD panel makers to set up at the site of Aomori
Prefecture's Mutsu Ogawara development project, which
collapsed after its industrial park failed to attract
tenant companies, sources close to the matter said Sunday.

The influential business lobby will ask several dozen
companies in the LCD panel business, including Sharp Corp.
(6753), NEC Corp. (6701), Fujitsu Ltd. (6702) and Asahi
Glass Co. (5201), to establish operations at the industrial
park.

The company which has been running the project and has
stopped paying interest on its 240 billion yen debt will be
disbanded and replaced by a new firm by this autumn. The
new company will rent out land at low prices to a leasing
firm, which will build factories and lease them out to LCD
makers, allowing them to minimize investment risk. Local
authorities will grant the leasing company tax breaks on
fixed assets and Aomori Prefecture will offer subsidies to
manufacturers.

Keidanren will also commission research to estimate what
level of incentives would be necessary for LCD companies to
choose to establish a presence in Aomori ahead of Taiwan or
other places. Mutsu Ogawara is suitable for LCD panel
production because of its cool climate and abundant supply
of water, Keidanren officials claim. (Nikkei  22-May-2000)

NIPPON SHINPAN CO.: Stock floundering
-------------------------------------
Shares of Nippon Shinpan Co. (8583) hit a year-to-date low
of 210 yen on April 21, and they are still trading near
that level.

The worsening tone of the stock market and the uncertainty
of the firm's future earnings have prompted selling,
according to a trader at Nomura Securities Co. Nippon
Shinpan fell in the red in fiscal 1999. On Monday, it
posted a 24.8 billion yen consolidated net loss for fiscal
1999 after booking an extraordinary loss of 98.9 billion
yen, mainly from writing off items such as real estate
assets.

The firm, however, appears to have completed writing off
those losses in fiscal 1999, and it expects to turn a
profit this fiscal year, with group net profit projected at
12 billion yen.  Operating profit is expected to drop 4% on
the year in fiscal 2000.

"Transactions of the firm's mainstay products, such as
consumer installment loans, will increase, but
profitability will fall," says Hideharu Matsumoto, managing
director at Nippon Shinpan.

An analyst at a U.S.-based investment-advisory company
says, "Loan loss reserves and financial expenses may take a
toll on the firm's earnings."

In the last few years, the firm's loan-loss reserves have
stood at about 100 billion yen, and its financial expenses
stand at about 55 billion yen.  This year, the group's
interest-bearing liabilities are expected to shrink by only
3%, about 80 billion yen, compared with the end of fiscal
1999.

Unless the firm reduces its interest-bearing liabilities by
reducing or withdrawing from unprofitable transactions,
Nippon Shinpan shares are not expected to rebound. (Nikkei  
23-May-2000)

SEGA ENTERPRISES LTD.: President to quit over weak sales
--------------------------------------------------------
The president of Sega Enterprises Ltd. will resign over
poor sales of the Dreamcast video-game console, according
to Japanese newspaper reports Monday.

The Sega president, Shoichirou Irimajiri, will take
responsibility as the company is expected to post its third
consecutive annual loss, the Nihon Keizai business daily
reported.  Mr. Irimajiri, 60, will step down to vice
chairman and concentrate on developing a successor to the
Dreamcast, the newspaper said.

But a spokeswoman for Sega said the company had "not been
informed" of "such a top-level decision."

Sega's chairman, Isao Ohkawa, 74, who is also chairman of
Sega's biggest shareholder, CSK Corp., will replace Mr.
Irimajiri, the report said. CSK is Japan's biggest
information services company.  The Dreamcast, which comes
with Internet access, brought in a record $97.9 million in
the first 24 hours after it was introduced in the United
States in September. But sales of the console and related
software in Japan have been disappointing.

In February Mr. Irimajiri said Sega had nearly halved its
Japanese sales forecast for the Dreamcast to 600,000 units
from 1.1 million for the six months to March.  Sega now
expects to have incurred a group net loss of 44.9 billion
yen ($41.3 million) in the year that ended March 31, more
than double the original estimated loss of 19.8 billion
yen. The company is scheduled to announce its annual
results on Friday.  Sega shares closed Monday in Tokyo at
1,670 yen, down 48.  (The International Herald Tribune  23-
May-2000)


=========
K O R E A
=========

CHO HUNG BANK: Protests Thomson BankWatch downgrade
HANVIT BANK: Protests Thomson BankWatch downgrade
KOREA EXCHANGE BANK: Protests Thomson BankWatch downgrade
---------------------------------------------------------
Following the Thomson BankWatch's announcement of a
downgrade for the won-denominated short-term debt ratings
of Cho Hung Bank (CHB), Hanvit Bank and Korea Exchange
Bank, the three banks are considering taking steps to
protest the downgrade, including sending a letter of
protest to the U.S. bank-industry rating agency and filing
a lawsuit.

Hanvit said Monday that it is planning to send a letter to
the agency that it correct the downgrade, which the bank
claims is based on false information about its operations.
The bank said Thomson BankWatchhad made the downgrade
citing the aggravated financial status of the bank, which
Hanvit insists is an inaccurate analysis.

For its part, CHB has already placed a call to Thomson
BankWatch to protest the downgrading and is also planning
to submit a formal protest in writing. CHB says the
downgrade was made on outdated performance figures and that
it plans to provide updated figures to the agency so their
rating can be corrected.

CHB staff based in New York will visit Thomson BankWatch in
person and if the rating agency does not revise the rating,
the bank said it would take court action.  Korea Exchange
also said it would be sending a letter protesting the
downgrade. (Digital Chosun  22-May-2000)

KOREA EXPRESS CO.: Workers to seek prosecution of ex-chair
----------------------------------------------------------
The unionized workers of Korea Express Co., the logistics
arm of the Dong Ah Group, said yesterday that they plan to
bring former chairman Choi Won-suk to the prosecutor for
managerial failures from which they said they were still
suffering.

Kim Hak-ryon, the leader of the company's trade union, said
in a press release that he will file a criminal suit
against the former No. 1 man and other managers of the
conglomerate, on charges of causing damage to Korea Express
by illegally arranging payment guarantees to its sister
company Dong Ah Construction Industrial Co., the flagship
unit of Dong Ah.

Choi stepped down as Dong Ah Group chairman in May 1998 in
a bid to save the heavily-debted construction conglomerate
from a liquidity crisis.  Kim said that his action was on
behalf of 6,000 Korea Express employees, who hold a
combined 13 percent share of Korea Express under an
employee stock ownership scheme.

The announcement by the labor union came two weeks after
Korea Express president Kwak Young-wook said that his
company will part with Dong Ah Construction, accusing the
sister company of acting as if it was the owner with a mere
5.3 percent share. Kwak, who has already proposed that
the creditor banks buy 10 million shares of Korea Express
at 6,100 won per share on condition they clear the firm of
its payment guarantee extended to Dong Ah Construction.

The trade union of Korea Express also threatened that it
might launch a collective action mobilizing more than 5,000
company trucks when creditor banks continue to reject
Kwak's proposal of the creditors buying 10 million shares
of Korea Express for 6,100 won per share, provided that
they clear Korea Express of its payment guarantee of Dong
Ah. The creditor banks turned down the proposal.

The Korea Express union said that despite growing ordinary
profits, their company was suffering from financial
troubles caused by payment guarantees extended to the debt-
ridden Dong Ah Construction. (The Korea Herald  22-May-
2000)


===============
M A L A Y S I A
===============

KINTA KELLAS PUB.LTD: Needs to sell bonds to settle loans
---------------------------------------------------------
Kinta Kellas Public Ltd Co needs to dispose of its PLUS
issued redeemable convertible bonds to Danaharta Managers
(L) Ltd, in order to settle term loan facilities which was
due on Nov 5 last year.

In a circular to shareholders, the company said the cash
generated from its operations would not be sufficient to
repay the term loan which amounted to US$36.57mil including
interest accrued.  The loan was taken by K Kellas unit
Askell Investment Ltd to finance the purchase of the entire
equity interest in Opus International Consultants Ltd in
1996. The acquisition was carried out by another
wholly-owned subsidiary Kinta Kellas NZ Ltd.

Danaharta Managers had agreed with the proposed divestment
of the bonds for loan repayment and also to waive interest
accruing on the term loan from Nov 5, 1999 until the bonds
were transferred to its account.  However, if the proposed
divestment of the bonds was not completed by June 5,
Danaharta Managers might enforce its rights under the
facility agreement.

These include the reinstatement of interest due on the term
loan from November onwards and to exercise the right to
determine the company in default of its loan obligation,
the circular said.

"Such an event may render the company insolvent unless it
arranges a scheme or schemes to raise the required proceeds
for the settlement of the term loan," said K Kellas.

The proposed divestment was subject to the approval of the
relevant regulatory authorities.  "There is a possibility
that when these approvals are obtained, the regulatory
authorities may impose conditions on the proposed
divestment, which may have a bearing on K Kellas's rights
under the proposed divestment," it added.

The disposal of the bonds is expected to result in a gain
of about RM85.5mil after deducting the expenses of
RM200,000 for the current financial year ending Dec 31,
2000.  Meanwhile, the company will have to forgo net
interest income of about RM4.4mil for the current financial
year.  (The Star {Malaysia}  19-May-2000)

TIME ENGINEERING: Debt-laden firm may need to borrow more
---------------------------------------------------------
Time Engineering, struggling to repay RM5 billion (S$2.3
billion) of debt, may need to borrow more money next year.

According to documents obtained by Bloomberg News, Time
faces a net cash shortfall, with revenue from operations
insufficient to cover its planned capital expenditure in
2001-2002. The manager of Malaysia's biggest fibre optics
network plans to spend RM1.89 billion over the next three
years.

"The group may rely on the provision of third party debt
funding in the future," the documents said. The ability to
borrow "at an acceptable cost and the level of
gearing...could have an impact on the group's ability to
execute its business strategies as planned."

The move underscores the problems Time could face in the
absence of a strategic partner to provide the backing it
needs to cope with intensifying competition from its five
rivals in the RM13 billion-a-year industry.  Time shares
yesterday tumbled 16 sen, or 3.7 per cent, to RM4.12, its
lowest level since March 7. Its parent, Renong, dropped 12
sen, or 4.5 per cent, to RM2.54. The benchmark Composite
Index fell 1.8 per cent.

The cashflow forecast and other assumptions are part of
Time's debt reorganisation plan, which creditors will vote
on on June 8. According to a statement submitted last week,
Time -- which expects to swap some of its debt for new
bonds -- hopes to raise about RM3.5 billion by selling
shares in Time dotCom at an "indicative" price of RM3.30
apiece to the public and to a strategic investor.

On May 12, Time said it's in talks to sell up to 30 per
cent of Time dotCom to state investment arm Khazanah
Nasional. The price hasn't been fixed.  (Bloomberg, Jakarta
Post  23-May-2000)


=====================
P H I L I P P I N E S
=====================

ASB GROUP: Creditor banks oppose plan to repay loans
----------------------------------------------------
Creditor banks are opposing the petition of the ASB Group
of Companies for the disbursement of over 71 million
Philippine pesos ($1.7 million at PhP41.801=$1) to service
obligations to over 700 individual creditors.

In a hearing yesterday at the Securities and Exchange
Commission (SEC), Metropolitan Bank (Metrobank), United
Coconut Planters Bank (UCPB) and Union Bank expressed their
apprehension over ASB's request for the Commission to allow
ASB Holdings, Inc. to use over PhP71 million ($1.7 million)
to settle its debts to individual creditors.

Earlier, ASB said it has always "acted in good faith and
with due concern for the interest of (its) creditors,"
hence, the motion despite an SEC order suspending all
claims against the group.  In its opposition, Union Bank
said the motion "clearly violates the suspension order"
issued by the SEC, enjoining ASB from making any payments
of liabilities.

The only payment allowed is that on administrative
expenses.  Considering the disbursement of funds sought is
for the payment of debts owed to ASB Holdings creditors
alone, Union bank said it should be considered void and in
violation of the suspension order.

The banks also stressed the suspension order prevents any
preference that may be given to any one of the creditors,
to the detriment of other creditors.  Union Bank said the
disbursement of PhP71 million ($1.7 million) for the
payment of debts of ASB Holdings to its creditors "give(s)
these creditors preference over the rest of ASB's
creditors."

Union Bank also said the disbursement would be, in effect,
an implementation of some of the provisions of an interim
rehabilitation plan that is "not yet approved by the (SEC),
not yet submitted for comments to all the creditors and not
yet final. To approve the provisions of a draft
rehabilitation plan would, indeed, be premature under the
circumstances, not to mention void and illegal under the
rules of corporate recovery," Union Bank said.

The SEC directed both Metrobank and UCPB to file their
formal opposition within the next five days.  The ASB Group
of Companies sought a suspension of payment last May 3 for
failure to meet liabilities amounting to over PhP12.7
billion ($0.304 billion).  It attributed such failure to
service obligations to the "massive withdrawal by creditors
of their loans, coupled by the glut in the real estate
market, the severe drop in the sale of real properties and
decreased investor confidence."

At present, ASB said, both secured and unsecured creditors
are pressing for payments of due and maturing obligations,
threatening to initiate actions that will adversely affect
its operations and "shatter its hope in rehabilitating
itself. There is a clear, present and imminent danger that
the creditors of (ASB) will institute extrajudicial and
judicial foreclosure unless restrained by the Commission,"
ASB said.

Moreover, ASB said at least 712 creditors, 317 contractors
and suppliers and over 492 condominium unit buyers will be
"prejudiced by the disruption of (its) operations."

The ASB Group has between PhP8 billion ($0.191 billion) and
PhP10 billion ($0.239 billion) in "direct borrowings" to
individuals and creditor banks. Of the amount, about PhP3
billion ($0.072 billion) to PhP4 billion ($0.096 billion)
are owed to three to four, mostly Chinese-Filipino,
investors, sources said.

Most of the loans are secured by the group's real estate
assets.  The group is composed of ASB Holdings, Inc.; ASB
Realty Corp.; ASB Development Corp.; ASB Land; ASB Finance;
as well as its allied companies -- Makati Hope Christian
School; Bel-Air Holdings Corp.; Winchester Trading, Inc.;
VYL Development Corp.; Gerick Holdings Corp.; and
Neighborhood Holdings, Inc.  (Business World  23-May-2000)

PHILIPPINE NAT.BANK: Only 2 groups beat pre-qual deadline
---------------------------------------------------------
Only two groups beat yesterday's deadline to prequalify for
the bidding of 80% of semiprivate Philippine National Bank
(PNB), a month after the government started offering it to
the public, the Department of Finance (DoF) yesterday said.

The DoF kept its doors open for potential PNB buyers until
late last night, yet only two have submitted complete
documents as of press time.

"There are two investors who have prequalified as of (last)
Friday," Finance Secretary Jose T. Pardo yesterday told
reporters.

Despite drawing few interest in PNB, Finance Undersecretary
Cornelio C. Gison yesterday said the government could now
completely rule out the possibility of a failed bid on June
9.

"There are two (prequalified bidders), possibly three. So
we will not have a failed bid," he said.

The two are the Yuchengco family-controlled Rizal
Commercial Banking Corp. (RCBC), and a consortium led by
US-based conglomerate Beatrice Foods Corp.  Mr. Pardo last
week said RCBC has prequalified to bid and is currently
doing a due diligence audit on PNB.  The bank has already
submitted a detailed financial plan for PNB and documents
showing how it will pay for the purchase.

US-based Beatrice Foods, meanwhile, has submitted the
required documents for prequalification last Friday, a
source privy to the bidding said. The American firm is
engaged in food manufacturing, and leads a consortium that
includes a financial company.

The DoF yesterday was expecting another consortium --
headed by Indonesian firm Lebung Tandai, Inc. -- to submit
documents, but the group is yet to start scrutiny on PNB's
books and submit its financial plans, the source said.
The three investors have each paid 200,000 Philippine pesos
(PhP) (US$4,800 at PhP41.801:US$1) after submitting
"expressions of interest" to the PNB Prequalification,
Bidding and Awards Committee.

Prequalified bidders will be allowed to conduct a due
diligence audit on the bank in preparation for the bidding
proper on June 9.  Since April 28, the Finance department
has been accepting bids for the purchase of 80% of PNB. The
"expression of interest" should have ended on May 15, but
extended until yesterday "to give investors more time to do
due diligence audits" of PNB.

A source, however, said the low turnout of investors forced
the DoF to extend the deadline by 13 days to June 9.
BusinessWorld sources said Mr. Pardo was again willing to
push back the deadline when the Beatrice-led group
complained about the tight timetable, but tycoon Lucio C.
Tan, PNB's biggest shareholder, immediately dismissed the
request.

To be sold on June 9 are the PNB Retirement Income Fund's
3.5% stake, and the combined 76% stake of the government
and Mr. Tan.  If the sale fails, the two parties are not
bound to do another round of joint sale through a public
bidding. This early, the government is already planning
"other options" to solve a possible failure in the bidding,
Mr. Pardo said.

He said the DoF will negotiate with the highest bidder if
all bidders would bid below the floor price set. As for Mr.
Tan, Mr. Pardo said the tycoon claims he already has a
buyer for his 46% stake in the bank. (Business World  23-
May-2000)

PILIPINO TEL.CORP.: Debt restructuring to be delayed
----------------------------------------------------
The signing of the debt restructuring agreement between
cash-strapped Pilipino Telephone Corp. (Piltel) and the
creditor banks may be delayed by a month due to some legal
procedures which have to be followed, according to Napoleon
Nazareno, Piltel president and chief executive officer.

Without going into details, Nazareno said the banks are
still working for the approval of the credit proposal which
is likely to happen "sometime in June." The signing was
supposed to have been done last week.

"There is nothing to worry. It's just that things have to
be ironed out but definitely there will be one (signing),"
he said.

He pointed out that there are no changes expected on the
terms of the deal with the banks embodied under a
memorandum of understanding (MOU) entered into by the
parties on Oct. 8 last year.

As of end of 1999, Piltel has a total obligation of
approximately P34 billion, including peso and US dollar-
denominated bank debts amounting to P7.7 billion and $133.7
million (P5.4 billion), respectively; convertible bonds
with face value of $183 million and accrued put premium of
$46.6 million, aggregating to P9.3 billion; and a
contingent liability with Marubeni Corp. of Japan of $279
million (P11.2 billion).

Nazareno said they are currently holding separate talks
with Marubeni and are finalizing documentation for the
convertible bondholders.  The implementation of the
agreement with the banks assumes that the total debt
restructuring program, which includes the bondholders and
Marubeni, is in place since it involves issuance of
convertible shares, he explained.

Piltel has incurred significant losses since 1997 which
affected its ability to service its maturing obligations on
a timely basis.  The MOU provides that half of the bank
debt will be replaced by peso-denominated convertible
preferred stock exchangeable into similar stocks in
Piltel's mother company, the Philippine Long Distance
Telephone Co. (PLDT).  (Philippine Star  23-May-2000)


===============
T H A I L A N D
===============

BANGKOK METRO.BANK: Sale leaves FIDF with Bt20B loss
----------------------------------------------------
The Financial Institutions Development Fund (FIDF), the
lender of last resort, is expected to suffer an initial
loss of about Bt20.4 billion after selling Bangkok
Metropolitan Bank to HSBC Holdings, the parent of Hongkong
and Shanghai Banking Corp.

And the Fund may suffer more losses in the future from its
guarantee to compensate HSBC for any deterioration in the
bank's non-performing loans after the sale.  Under the
privatisation plan, the Fund will sell Bangkok Metropolitan
Bank, one of Thailand's nationalised banks, to UK-based
HSBC Holdings for Bt36.6 billion. The deal is relatively
pricey compared to its predecessors due to its size as the
country's eighth largest bank. But HSBC will get a 75 per
cent stake in Bangkok Metropolitan Bank for its money.

After the FIDF turns control of the local bank to HSBC, it
will receive Bt7 billion of the bank's capital for a total
Bt43.6 billion from the deal.  However, the fund's capital
injections have totalled Bt64 billion -- Bt25 billion in
January 1998 and Bt39 billion in August of the same year.
All in all, the FIDF's net outflow for the ailing bank is
Bt20.4 billion after its proceeds on the deal.

The FIDF may still incur additional liabilities if the rate
of recovery on the bad assets of Bangkok Metropolitan Bank
is not as successful as anticipated, because it has in
effect hired HSBC to manage the bad assets on its behalf.
The yield maintenance and loss/gain sharing scheme
indicates the Fund stands to eat a large part of future
losses and get only a tidbit of future gains from the NPLs
of the bank.

The FIDF estimates the bank's NPLs amount to 74 per cent of
the total Bt189 billion in loans, while HSBC puts the
figure at 95 per cent. The difference in the estimates led
the two parties to separate the asset base into two covered
asset pools (CAP) of NPLs worth Bt165 billion.

For the first pool, amounting to Bt140 billion, the FIDF
has to first boost the bank's loan loss reserve from the
current 30 per cent of the total requirement, or Bt60
billion, to 100 per cent, then provide a progressive
guarantee.  The Fund must assume responsibility for NPL
losses up to a certain level in the proportion of 85 per
cent, while HSBC will shoulder 15 per cent. Above that
level, the FIDF must compensate HSBC for 95 per cent of the
losses.

For the second pool containing the disputed assets, the two
parties will try to deal with remaining NPLs of about Bt25
billion. These NPLs will be restructured, but if some slip
back into non-performing status again the Fund will assume
responsibility for most of the losses.

In spite of the FIDF's huge losses, a Bank of Thailand
official said authorities were satisfied with the agreement
in principle because of the extent of its liability in the
bank. The FIDF would, in the long run, receive more
benefits from selling the bank than keeping it. By
privatising the bank, the FIDF has managed to cap its
financial exposure.

On the other hand, if the FIDF elected to keep the bank it
would have to inject Bt60 billion of new capital into it to
maintain the bank's 10-per cent capital adequacy ratio and
face the downside risk of the bank failing to survive as a
viable bank in the future.

"The bank still experiences a loss of several billion baht
every single quarter. If the FIDF lets the Thai management
still run the bank, we don't know how long the bank would
continue to make losses. In the end, the FIDF may need to
inject even more money," the official said.

The upside for the FIDF is that it will still retain a 25
per cent stake in the bank. If HSBC can turn the bank
around, then the fund will see the value of its holding
appreciate.  On HSBC's side, it will only be out a net
Bt14.6 billion for about 75 per cent of the issued shares
of Bangkok Metropolitan Bank, as it will get Bt22 billion
in capital returned from the bank after paying the agreed
price of Bt36.6 billion.

HSBC will get the bank's retail network of 177 branches,
more than half of which are located in Bangkok, as well as
its strong base of Chinese customers. The source said HSBC
would be able to turn a profit from the retail business
within the next two to three years.  HSBC Holdings has made
several acquisitionssince changing to a more aggressive
policy about a decade ago.

"In a market like this, it's impossible to sell Bangkok
Metropolitan Bank at a premium. The bank was sold at
discount. It's a win-win situation for all buyers of
nationalised banks," Adisak Kammool, an analyst at Phillip
Securities (Thailand), said.

The Techaphaiboon family, the former major shareholder of
Bangkok Metropolitan Bank, has taken a big hit since BMB
was nationalised in January 1998. Shareholders' equity was
written down by as much as Bt11 billion, while par value
was reduced from Bt10 to one satang. However, like other
former owners of intervened banks, the family still owes
some debts to the bank. (The Nation  22-May-2000)

iTV: Staff resists sale to Shin Corp
------------------------------------
The news team at iTV is trying to block Siam Commercial
Bank from selling its share in the station to telecom giant
Shin Corporation.

The move followed concerns that Shin Corp would undermine
the long-held policy that iTV should remain independent.
Sources at the station said iTV staff decided on an all-out
campaign to oppose the sale because it was "widely known"
that Shin Corp still had links with Thai Rak Thai leader
Thaksin Shinawatra.  The decision would be formally
announced at a seminar on media freedoms at Thammasat
University today.

"We've decided to choose the forum because it is the
gathering place of all people in the media industry, NGOs
and academics who deal with the freedom of the press. We
hope to get their support," said one source .

A working group had been formed to lead the campaign on a
daily basis.  "We do not oppose the entry of Shin
Corporation. But we disagree with the sale of the shares in
the manner that it would allow Shin Corporation to dominate
iTV and affect the station's credibility," said the source.

A meeting was held last night between the station's news
team and an SCB executive over concerns about the bank's
plan.  The bank is a major shareholder and creditor of iTV.
Petitions will be presented to Prime Minister Chuan
Leekpai, Shin Corp shareholder Thaksin Shinawatra, former
prime minister Anand Panyarachun, opposition leader
Chavalit Yongchaiyudh and all political party leaders
encouraging them to oppose the sale.

Mr Anand helped to launch iTV, which was supposed to
provide Thai viewers with an independent news source in the
aftermath of the 1992 Black May crackdown. Certain state-
run stations were accused of presenting biased coverage at
the time.  SCB plans to divest all of its holdings in iTV
to Shin Corp in five years.

Under iTV's debt restructuring plan, capital would be
written down from one billion baht to 200 million baht.
SCB would convert its 3.7 billion baht in loans to equity,
which would then be sold to Shin Corp.  The restructuring
plan was approved by the SCB board.  The total cash amount
would be about 2.5 billion baht for a 40% stake. Another
40% in the station will be controlled by SCB and the Crown
Property Bureau, with the remainder held by other
shareholders.

The station's total debt burden after the equity swap would
fall to about 60 million baht.  Within five years, the bank
plans to completely sell its holding in iTV, potentially
giving Shin Corp as much as 80% stake in the station.
The sources said the SCB plan would allow Shin Corp to
completely dominate iTV.

"It is widely known that Shin Corp is closely linked to Mr
Thaksin, who is now a leader of a political party. We are
concerned that iTV, under the new shareholding structure,
may not be able to maintain its independence.  We urge that
Shin Corporation and SCB reconsider their plan so that iTV
can be maintained as an independent news station," another
staff member said.

The news staff would also urge Nation Multimedia Group,
another shareholder, to scrap a plan to increase its stake
in iTV from 10% to 12%.  It was decided when iTV was formed
that it could ensure its independence by allowing
shareholders to hold no more than 10% in the station.

Mr Thaksin told the Bangkok Post last week that Shin Corp's
decision to get involved in iTV was made by chief executive
Boonklee Plangsiri, and not by him.  The Thai Rak Thai
leader said the media gave him enough exposure without him
having to resort to owning a television station to glorify
his image.  He said he would not interfere with iTV's news
management team or the station's policies. (Bangkok Post  
22-May-2000)

KRUNG THAI BANK: Rehab seen to take two more years
--------------------------------------------------
Krung Thai Bank still needs two more years to finish
realigning and trimming its internal organisation before
emerging as a quality commercial bank ready for full
privatisation, said its president, Singh Tangtatswas.

"Two years from now, we'd like to turn the bank's culture
into a corporate style," Singh said during an interview
last week. "Before the equity sale begins, the bank needs
to get more efficient and that will guide us to where we
should be heading. So far, we don't even known what our
status is or what the messages (from politicians) sent to
us mean."

The country's largest state-owned bank has been a big
political plum. Owned 97 per cent by the Financial
Institutions Development Fund (FIDF), the bank is under
strict state supervision. Bureaucrats dominate the bank's
board of directors and lay down its general policies,
including interest rate movements. The strong political
colouring would dampen potential investor interest once the
bank is ready for divestiture.

Singh feels the bank's problems in transacting business
have been compounded by political actions. The bank needs
time to readjust, even though it will be considered a clean
bank following the transfer of most of its worst non-
performing loans to an asset-management company to be
established in the latter half of this year. Fortunately,
the FIDF has agreed to shoulder most of the burden in
setting up the asset-management company.

In fact, the bank's already wobbly financial condition was
exacerbated by the government's decision to fold First
Bangkok City Bank, an even shakier basket case, into KTB
late in 1998.  To Krung Thai Bank president Singh, all
these problems hamper the bank's attempt to clearly lay out
its future business strategies.

The bank's executive team, led by Singh, is currently
enjoying a small reprieve from political meddling, though
it is not quite sure that the bank will be 100-per-cent
free from politics.  Therefore, reducing the government's
stake in the bank will be one way to shield the bank from
political interference and concurrently increase its
efficiency.

However, the bank is not waiting to become a leaner
organisation. Recently, at least 2,300 employees resigned,
mostly by opting for an early-retirement programme, leading
to a reduction in the headcount from 18,000 to about
15,000.  A bank study called for a cut of at least 6,000
from the 18,000-man workforce to make it more efficient.
Some positions will also disappear following the
rationalisation of its nationwide branch network.

By the end of this year, the bank should be operating with
only 650 branches. More will be closed later to pave the
way for the introduction of smaller but more efficient
branches equipped with the latest technology. In the third
quarter of last year, back office operations were also
centralised into nine centres to make its branches more
productive.

According to Singh, the most important goal today is to
improve the bank's risk management. A dependable check-and-
balance system must be put in place, while the risk factors
of customers must be analysed more deeply.  While major
local banks and foreign-owned banks are competing for
customers by offering products through new electronic
channels, Krung Thai is taking a follow-the-leader role. So
far, a few electronic services have been introduced,
particularly in business-to-business e-commerce, such as
electronic payments and direct debit products.

"Other banks, including foreign-owned banks, certainly want
to boost their market share with electronic banking
products. Krung Thai Bank will just flow with the market,"
said Pairote Varophas, senior executive vice president.
"Most of our resources will be devoted to improving the
bank's internal efficiency first. An efficient bank should
be able to compete with others."

The bank would make sure that it would not miss the boat,
he added.  Within the next one to two years, it would
review its e-banking strategy again. But Pairote
acknowledged that the bank might possibly fail to catch up
now that many banks here were actively pursuing this retail
business segment.  While the restructuring effort is
underway, the bank's management team is pinning its hopes
on the bank's retail network, now the largest in the
industry.

"The size of our network is second to none. Therefore, once
it becomes stronger, it will be a vehicle to bring us other
advantages," Pairote said.

However, being the biggest does not always mean being the
fittest, as the market environment has changed drastically.
And Singh realises that the circumstances of the bank are
different from those in the past. Today, the second largest
bank in Thailand in terms of assets can no longer serve as
the government's mouthpiece in signalling desired interest-
rate levels as it did in the past.

Singh, having taken the bank's helm less than a year ago,
suffers no illusions about resurrecting Krung Thai Bank in
the near term. "Thailand is a free market now, and the bank
will be just one player among others," he said. (The Nation  
23-May-2000)

SIAM SYNTECH CONSTRUC.: Creditors fight rehab plan
--------------------------------------------------
Eight creditors of Siam Syntech Construction Plc have
lodged an objection to the company's petition for business
rehabilitation.

The creditors are Sinkijpaibul Lohakarn Co, PEC Engineering
& Construction Co, Setcon (2524) Co, NP Law and Accounting
Co, Speccon (Thailand) Co, Proteccon (Thailand) Co, Pipat
Temeesatit, and The Book Club Finance Co.  The Central
Bankruptcy Court will hear the petition and creditor
objections today.

Sawang Mungkongcharoen, chief executive of Siam Syntech
Construction, said most of the creditors were trade
creditors. They were major creditors of the company's
subsidiaries but were only small creditors of the parent
company.

"They want us to be responsible for the debts of our
subsidiaries. We couldn't comply with their request because
we never guaranteed the related debts before. If we accept
all their requests, other creditors will also suffer," said
Ms Sawang.

She said that most creditors of the company agreed with the
rehabilitation petition since each of them recognised that
the company now had no assets and was not a producer of
goods.  The fact that it had been able to persuade foreign
investors to inject some 400 million baht in new capital
meant that the creditors would get partial repayments
instead of nothing. Ms Sawang said the total value of
projects for which the company had won contracts and which
had to be completed this year exceeded four billion baht.

These projects include the construction of police flats
nationwide, water-treatment facilities in Bangkok, and
construction of a microchip centre for the Ministry of
Science, Technology and Environment.

"We have been trying to resolve our debt problems and have
succeeded to a certain extent," she said. "However, if we
cannot rehabilitate our business, our obligations to the
projects that have to be completed this year would suffer.
Then the related state agencies would sue us for breaching
the contracts. If that happens, the foreign investors would
pull out and this would benefit nobody."

Siam Syntech Construction is undergoing debt-restructuring
under the supervision of the central bank's Corporate Debt
Restructuring Advisory Committee.  It submitted its
rehabilitation petition to the court in late April, and 54%
of its creditors voted their support. The firm now has
about 1,500 creditors with debts totalling 8.3 billion
baht.  (Bangkok Post  22-May-2000)

THAI PETROCHEM.INDUSTRY: Denies write-down rumours
--------------------------------------------------
Thai Petrochemical Industry (TPI) and its creditors have
repeatedly denied rumours that the company will be forced
to write down its capital.

TPI's chief executive Prachai Leophairatana and Anthony
Norman, managing director of Affective Planner - the ailing
petrochemical firm's debt-restructuring planner - rushed to
downplay the market after TPI's share price was trounced.
TPI's share price yesterday fell Bt0.70 to Bt5.90 before
recovering slightly to close the day at Bt6. Its stock had
been hit by rumours of a capital write-down on Friday.

"We will not reduce the value of TPI shares to below par
value to write down accumulated losses," Norman was quoted
by Reuters as saying.

The rumour came after investors' speculation that TPI's
creditors might write down the company's capital in the
wake of the bearish market sentiment. In addition, TPI's
current share price, which is below its Bt10 par value, was
cited as a factor making it difficult to fulfil its crucial
part in its US$1 billion (Bt39.05 billion) recapitalisation
as stated in its US$3.5-billion debt-restructuring plan.

But Norman confirmed that TPI's rehabilitation plan would
proceed as planned and expected it to be proposed at a
creditors meeting in late July or August. Wachirapunthu
Promprasert, TPI's executive vice-president, painted a rosy
picture, saying he expected the firm's earnings before
interest, tax, depreciation and amortisation to rise by 40
to 50 per cent year-on-year to $280 to $300 million this
year.

He optimistically predicted the company's sales revenue
this year would jump to Bt80 billion against Bt50 billion
last year.  This prediction was supported by TPI's better-
than-expected earnings performance in the first quarter,
with consolidated sales of Bt3.2 billion, compared with a
forecast of Bt2.7 billion.

"The strength of the dollar to the baht and the hike in
global oil prices have not severely affected our
performance in the first quarter because we used the spot
rate [to quote prices for our products]," said
Wachirapunthu.

Asked about any impact from rising interest repayments due
to the weak baht, Wachirapunthu said an increase in the
firm's sales revenue helped offset a rise in interest
burdens.  (The Nation  23-May-2000)

THAI TEL.& TEL.: TOT seeks approval as planner
----------------------------------------------
The Telephone Organisation of Thailand is lobbying hard
ahead of a May 29 deadline for creditors to back it as the
planner of the 44.36-billion-baht debt restructuring of
Thai Telephone & Telecommunication.

However, TOT board chairman Sombat Uthaisang acknowledged
that he was uncertain if enough creditors could be swayed
to the TOT side.  TT&T's major creditors are Sumitomo Bank,
Thai Farmers Bank, Krung Thai Bank, BankThai, Credit
Lyonnais and Bank of Sweden. Its major shareholders are
Jasmine International, Nippon Telephone and Telegraph,
Loxley and Italian-Thai Development.

The TOT said the provincial fixed-line operator owed it
four billion baht in unpaid rent for leased lines and
telephone circuits. TT&T claims the figure is in fact three
billion baht.  Mr Sombat said the TOT board did not order
TOT management to oppose TT&T as the planner for the debt
restructuring. "However we considered the action of the TOT
was correct."

TOT president Olarn Pientam said the state agency wanted to
be the planner because it was committed to seeing TT&T
remain as a strong business.  TT&T management say the
company has been crippled by a concession contract that
requires it to pay 43.1% of all its call revenue to the
TOT-more than double the share collected from Bangkok
fixed-line operator TelecomAsia.

Mr Olarn said the TOT hoped that a conversion of the
company's concession would be part of the debt-
restructuring plan. Conversion would result in the TOT
becoming a shareholder and some of its managers working
with TT&T. "If TT&T has problem, the TOT also will be
affected," he said.

An industry executive who asked not to be named said the
TOT ultimately wanted to take over TT&T, as it viewed the
company's current management as incapable of creating
further growth.  As well, the executive said, the TOT did
not want to see fundamental national telecom infrastructure
fall into the hands of foreigners.

He said TT&T management was very different from that of
TelecomAsia, which had strong and explicit backing from the
Charoen Pokphand Group.  TT&T, he said, was less stable
because there were too many shareholders and no clear
picture of who was in charge.

A TT&T executive dismissed the argument. "The only problem
is that we still have to pay an excessive portion of our
revenue to the TOT."

Pornchai Meemark, president of the TOT employees'
association, said he believed the TOT had the upper hand.
The existing contract, he said, called for TT&T to submit
all its revenue to the TOT, which returned 57% after taking
its cut. "Therefore, TOT is tantamount to being TT&T's
financial controller and is in an advantageous position."

If creditors looked into the cashflow of TT&T, they would
see that the TOT was in control. "They may change their
minds if they knew this fact."

He also said that if creditors chose TT&T as the planner,
problems would arise if TT&T paid its financial creditors
first rather than the TOT.

"In such a case, the TOT could impound TT&T's revenue and
would not return the company's 57% share until its debts
were paid first."

If that happened, he said, other creditors of TT&T would be
in trouble.  A TT&T executive said that holding up payments
would be "unethical". He also said that if the TOT wanted
to become a planner, it should propose the name of a
credible financial adviser.

"No state enterprise has ever done this kind of work
before," he said.  (Bangkok Post  22-May-2000)


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