---

     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

             Friday, June 2, 2000, Vol. 3, No. 107

                                     Headlines


* A U S T R A L I A *

FIVE ARROWS AUSTRALIA FUND: Removed from trading list
NEWCASTLE BREAKERS: Faces debts coming due, investigation  
WESTON FOODS: In trouble again days after being fined


* C H I N A  &  H O N G  K O N G *

CHAMAX DEVELOPMENT LTD: Facing winding up petition
CHI CHEUNG PROPERTY AGENCIES: Facing winding up petition
EAST ASIA MARBLE LTD: Facing winding up petition
FANDASY COMPANY LTD: Facing winding up petition
GITIC ENTERPRISES: Posts narrower loss
GOOD FAMOUS (HK) LTD: Facing winding up petition
GRADE TOP INVESTMENTS LTD: Facing winding up petition
GREATER BEIJING FIRST EXPRESWYS: Facing winding up petition
GUANGDONG INT'L TRUST & INVEST.: Property allocation made
MICKEN HANDBAGS MFG.CO.LTD: Facing winding up petition
POLLY TOUR LTD: Facing winding up petition
SUI FUNG PLASTIC BAGS LTD: Facing winding up petition
TIANJIN BOHAI CHEMICAL INDUS.: Narrows but posts net loss


* I N D O N E S I A *

MEDCO GROUP: Restructures debts
PT DHARMALA SAKTI SEJAHTERA: Declared bankrupt
PT SATELIT PALAPA INDONESIA: Signs restructure pact


* J A P A N *

ADVANCE INT'L: Declared bankrupt
ALL NIPPON AIRWAYS: Posts its largest loss ever
DAIHYAKI LIFE INS.CO.: Collapse forces Gov't step-in
EIE INT'L GROUP: RCC files bankruptcy petition against
HIKARI TSUSHIN: Share price drops
NAMIHAYA BANK: FRC chooses Daiwa Bank to take over  
NIPPON CREDIT BANK: Softbank consortium misses 2nd deadline
NISSAN DIESEL: Posts annual loss
SEIYO CORP.: Seibu Dept.Store to sell stock, pay debts
SOFTBANK: Share price drops


* K O R E A *

DAEWOO GROUP: Devaluation of collateral exposes creditors
HYUNDAI ENGIN.& CONSTR.: Offers securities as collateral
HYUNDAI GROUP: To increase cashflow, as much as W6Tln
HYUNDAI GROUP: Founder, sons step down  


* M A L A Y S I A *

ABRAR CORP. BHD: Restructuring proceeding
PERWIRA AFFIN MERCHANT BANK: Struggling to survive


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

PHILIPPINE AIRLINES: Strike threat by airline staff
PHIL. APPLIANCE CORP.: Philratings downgrades credit grade
PHILIPPINE NAT.BANK: US group makes it to bidder list
UNIWIDE: Gov't wants creditors to okay plan
URBAN BANK: Still open for buyers -- PDIC


* T H A I L A N D *

RIGHT PICTURES: Finalises debt restructuring


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

FIVE ARROWS AUSTRALIA FUND: Removed from trading list
-----------------------------------------------------
Five Arrows Australia Fund Limited (the "Company") was
removed from the official list at the close of trading on
30 May 2000, in accordance with the timetable for the
Company's voluntary liquidation. (Sydney Morning Herald  
31-May-2000)

NEWCASTLE BREAKERS: Faces debts coming due, investigation  
---------------------------------------------------------
Soccer Australia will hold a board meeting today to discuss
the Newcastle Breakers as concerns for the club mount.
SA general manager Stefan Kamasz will give a report on the
Breakers at the meeting in Perth.

Kamasz summoned Breakers owner David Hall to a meeting in
Sydney on Monday where he requested documentation regarding
the purchase of the club from the old consortium, to which
he still owes $1.25million. Hall was given 48 hours but
Kamasz has not received the documentation.  SA is also
concerned with Hall's past business dealings, which were
revealed in an investigation by The Herald on Tuesday, but
Kamasz said they were not an issue at this stage.

Kamasz would not predict any likely outcome from today's
meeting but said he would follow it up with Hall when he
returns to Sydney on Monday.  The main issue was the
arrangement of the club's sale and whether there had been
any changes in the purchase of shares.

At the Sydney meeting, Hall told Kamasz there had been no
deviation from the original sale and that he still owned
the club.  That statement was at odds with comments from
the club's chief executive officer, Morris McAlister, who
said last Friday that the Breakers were now an asset of Tru
Blue Holdings.  Hall, who is a director and secretary of
Tru Blu, sold the majority of the company to a Central
Coast-based consortium, believed to be headed by John
Palmer.

Hall and the new investors are scheduled to meet with
former chairman and old consortium member Bill Collins on
Monday.  McAlister said payments to creditors, who are owed
about $100,000, would start next week and he hoped to have
most paid out by the end of next month.  Coach Lee Sterrey,
who has been approached by two clubs, said he had been kept
in the dark about the ownership dealings. (Newcastle Herald  
27-May-2000)

WESTON FOODS: In trouble again days after being fined      
------------------------------------------------------
Four days after being fined $1.25 million for illegally
interfering with the retail price of Victorian bread,
George Weston Foods tried to fix the price of its biscuits
sold in two of Tasmania's leading supermarket chains.

The attempt by two of Weston's sales managers to increase
the price of Lots O' Cookies biscuits by 24 cents a packet
cost the company $900,000 in fines from Federal Court judge
Alan Goldberg.  Yet, if the price fix had been successful,
Weston's, with annual sales of $1.3 billion and profits of
$62 million, would have saved itself only $5000.

In mid-1997, the company decided to stop making Lots O'
Cookies, which had been retailing in supermarkets for
between $3 and $4 a packet, and clear stock by offering a
promotion price of $1.99 a packet.  Tasmanian bargain store
chain Chickenfeed ordered 9000 packets to be sold at $2 a
packet, and Purity, a division of Woolworths, ordered
23,130 packets to be sold at $1.99.

Each chain offered the biscuit special in the week
beginning Monday, May 26, 1997, and each immediately
complained to Weston's that their promotions had clashed.
At the beginning of the following week, Purity manager Rick
Sheehan told Weston's Tasmanian operations manager Phillip
McLennan that Chickenfeed had dropped its price on Lots
O'Cookies to $1.75. He said Purity had been obliged to
follow suit and would claim a 24 cents a packet credit from
Weston's.

Mr McLennan's boss at Weston's, southern states sales
manager Peter Gilbert, told him the company had lost money
on the biscuit deal, and the two discussed what to do. Mr
McLennan rang Chickenfeed's merchandising manager, Ashley
Wilson, who recorded their conversation, reportedly as an
evidence-gathering exercise for the Australian Competition
and Consumer Commission.

Mr McLennan asked Mr Wilson if it would be beneficial for
him to sell the biscuits at $1.99. Mr Wilson said he wanted
the price to be $2 but because of Purity they had to go
down to $1.75.  Mr McLennan asked if Purity went back to
$1.99, would Chickenfeed go back to $2, to which Mr Wilson
said yes.

In the course of the conversation, Mr McLennan said: "Now
all I'm trying to do is trying to fix the situation . . .
because at the end of the day nobody is winning at $1.75,
are they?"

Mr Wilson immediately rang the ACCC.  Mr McLennan rang Mr
Sheehan at Purity to see if they would raise their price to
$1.99. Mr Sheehan said they had just about sold all their
stock.

"There was a deliberate and conscious attempt to eliminate
competition in the relevant market, to disadvantage
consumers," Justice Goldberg said.

The attempt occurred four days after Weston's had been
fined $1.25 million on bread price-fixing charges brought
by the ACCC and heard by Justice Goldberg.  (The Australian  
31-May-2000)


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

CHAMAX DEVELOPMENT LTD: Facing winding up petition
--------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 21 on the petition of
China Weal Property Management Limited for the winding up
of Chamax Development Limited. A notice of legal appearance
must be filed on or before June 20.

CHI CHEUNG PROPERTY AGENCIES: Facing winding up petition
--------------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 28 on the petition of Chan
Ming Man for the winding up of Chi Cheung Property Agencies
Limited. A notice of legal appearance must be filed on or
before June 27.

EAST ASIA MARBLE LTD: Facing winding up petition
------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for July 19 on the petition of Ng
Fok for the winding up of East Asia Marble Limited. A
notice of legal appearance must be filed on or before July
18.

FANDASY COMPANY LTD: Facing winding up petition
-----------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 14 on the petition of
Young Yim Yi for the winding up of Fandasy Company Limited.
A notice of legal appearance must be filed on or before
June 13.

GITIC ENTERPRISES: Posts narrower loss
--------------------------------------
Gitic Enterprises, the Hong Kong-listed arm of the bankrupt
Guangdong International Trust and Investment Corp,
continued to make a loss last year, although it was
significantly smaller than that of 1998. The company posted
a net loss of HK$ 79.98 million, compared with HK$ 190.81
million in 1998. Loss per share was 16.5 HK cents, down
from 39.4 cents. Turnover, including discontinued
operations, fell 76 per cent to HK$ 97.28 million. (South
China Morning Post  31-May-2000)

GOOD FAMOUS (HK) LTD: Facing winding up petition
------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 21 on the petition of
Standard Chartered Bank Limited for the winding up of Good
Famous (Hong Kong) Limited. A notice of legal appearance
must be filed on or before June 20.

GRADE TOP INVESTMENTS LTD: Facing winding up petition
-----------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 21 on the petition of
China Weal Property Management Limited for the winding up
of Grade Top Investments Limited. A notice of legal
appearance must be filed on or before June 20.

GREATER BEIJING FIRST EXPRESWYS: Facing winding up petition
-----------------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 7 on the petition of The
Chase Manhattan Bank, as trustee under a certain Indenture
dated 17 June 1997 for the winding up of Greater Beijing
First Expressways Limited. A notice of legal appearance
must be filed on or before June 6.

GUANGDONG INT'L TRUST & INVEST.: Property allocation made
--------------------------------------------------------
The first allocation of 51.3 million yuan (6.18 million US
dollars) in the property of the bankrupt Guangdong
International Trust and Investment Co. (GITIC) was made
yesterday.

At the creditors' meeting convened by the Intermediate
Court of Guangzhou yesterday, the liquidation group said
this sum was paid to creditors of the Guangdong
International Leasing Co. Ltd., a GITIC subsidiary.
The first allocation amounted to 3 percent of the company's
debts.

The liquidation group, composed of experts from world
famous accountant and legal firms including KPMG Peat
Marwick, has confirmed 67 debt claims of the Guangdong
Int'l Leasing Co. Ltd., totaling 1.68 billion yuan (202
million US dollars).  Sources at the meeting reported that
the liquidator is now committed to collecting debts owed to
Guangdong Int'l Leasing, and staging auctions to liquidate
the company's property.

GITIC, the investment arm of booming Guangdong Province,
was closed in October 1998 because of its inability to meet
outstanding debts. It had assets of 21.47 billion yuan (2.6
billion dollars) but debts amounting to 36.15 billion yuan
(4.3 billion dollars).  

GITIC's liquidation proceedings will be handled in four
stages according to GITIC's assets, which are divided among
its four companies: GITIC headquarters, Guangxin Enterprise
Co., GITIC Shenzhen Co. Ltd., and Guangdong International
Leasing Co. Ltd. (Xinhua News Agency  31-May-2000)

MICKEN HANDBAGS MFG.CO.LTD: Facing winding up petition
------------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 28 on the petition of
Chung Yuet Ho for the winding up of Micken Handbags
Manufacturing Co. Limited. A notice of legal appearance
must be filed on or before June 27.

POLLY TOUR LTD: Facing winding up petition
------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for July 5 on the petition of Au
Mei Ki for the winding up of Polly Tour Limited. A notice
of legal appearance must be filed on or before July 4.

SUI FUNG PLASTIC BAGS LTD: Facing winding up petition
-----------------------------------------------------
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for June 14 on the petition of Lau
Wai Wing for the winding up of Sui Fung Plastic Bags
Limited. A notice of legal appearance must be filed on or
before June 13.

TIANJIN BOHAI CHEMICAL INDUS.: Narrows but posts net loss
---------------------------------------------------------
Tianjin Bohai Chemical Industry (Group) reported yesterday
it had cut its net losses to 364.4M yuan last year from net
losses of 608.1M yuan in the previous year.  

The chemical firm, which has H shares listed in Hong Kong
as well as A shares listed in Shanghai, posted a net profit
of 27.1M yuan in 1997.  It blamed the losses on depressed
prices for some of its products and acute competition in
the domestic chemical industry.  

"We will try our best to reduce losses by a big margin this
year," company general manager Gong Suozhu told reporters
in Hong Kong at the firm's 1999 results briefing.  

Mr. Gong said that without asset restructuring, the company
was almost certain to report further losses this year.  Mr.
Gong said although the company would benefit from the
improving mainland economy, there was still a glut in the
domestic chemicals market and would take more than a little
government effort to ameliorate.  Board secretary Chen
Yuanzhen said the company, which repaid US$27.55M in
foreign debts last year, would have no problem repyaing
foreign syndicated loans of $25M.


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

MEDCO GROUP: Restructures debts
-------------------------------
Medco Group has restructured US$623 million in debts, or
86 percent of the total, the company said in a statement on
Friday.

"The remaining $100 million of debt, of which $40 million
is with IBRA (Indonesian Bank Restructuring Agency) and $60
million with other financial institutions, is currently
under negotiation for the group's next debt restructuring
program," it said.

It said Medco Group's total debt stood at $613 million and
Rp 881 billion, or together about $723 million as of the
end of 1997. It did not provide the latest data on the
group's total debts.  All the personal wealth of the
group's owner, businessman-politician Arifin Panigoro, has
been pledged to creditors to cover the restructured
debts, the company said.

Arifin is the majority shareholder in the group.
The group operates diversified businesses, including
petroleum services, food and agriculture, construction,
manufacturing and financial services.  (Jakarta Post  27-
May-2000)

PT DHARMALA SAKTI SEJAHTERA: Declared bankrupt
----------------------------------------------
PT Dharmala Sakti Sejahtera has been declared bankrupt by
its creditors following their disapproval of its debt
restructuring proposal at a creditors meeting, supervisory
judge for the case Syamsudin Manan Sinaga said.

Sinaga said of the company's 28 creditors, 74.97 pct
representing debt totaling 1.56 trln rupiah, disagreed with
the proposal.  He said only 1 creditor, owed 331.9 bln
rupiah or 15.92 pct of the total, agreed.  Three creditors
abstained, with total debts owed to them worth 189.7
bln rupiah, or 9.1 pct, he said.  He said the company's
total debts were 2.84 trln rupiah, and as of the end of
1999, its capital was a minus 500 bln.

"With the voting results, Dharmala Sakti's restructuring
proposal is rejected," Sinaga said. "The bankruptcy
declaration will be formally announced next Monday by the
commercial court."

He said part of the debts will be repaid through the sale
of the company's 40 pct stake in Manulife Indonesia, worth
160 bln rupiah. The shares will be purchased by Manulife,
Sinaga said.  (AFX News Limited  31-May-2000)

PT SATELIT PALAPA INDONESIA: Signs restructure pact
---------------------------------------------------
Cellular telephone operator PT Satelit Palapa Indonesia
(Satelindo) has secured an agreement from its creditors to
restructure US$ 583 million in debt.

The agreement was signed yesterday with Credit Suisse Fund
Boston, representing a creditor syndicate. The $583 million
debt is part of Satelindo's total debt of US$ 750 million
including US$ 167 million paid last year to US Exim Bank.  
The debt to the US Exim Bank was paid partly with fund
received by Satelindo in insurance compensation for failure
in the launching of its satellite Palapa C1. The insurance
compensation amounted to US$ 130 million.

In addition to the US$ 750 million, Satelindo also had US$
70.83 million in debt to state banks represented by the
Indonesian Bank Restructuring Agency (IBRA).  IBRA said
Satelindo's debts to the state banks had been restructured.

Satelindo president Abdul Kadir Assegaf signed the
agreements, the result of 18 months of negotiations, with
representatives of the creditors in a ceremony at the
company's headquarters. IBRA was represented by the deputy
for assets management credit Irwan Siregar.

"The completion of the debt restructuring is an important
milestone for Satelindo," Assegaf said.  "Completion allows
Satelindo to redirect its focus on managing its business
and maintaining its position as the leading integrated
telecom company in Indonesia," he said.

Besides operating the Palapa C2 telecommunications
satellite, Satelindo also runs the second largest GSM
cellular network in Indonesia with some 800,000
subscribers.  The debt restructuring will be conducted
through an initial payment of the 1998 interest,
capitalizing the 1999 interest, converting matured notes to
new notes, a rescheduling of debts which will mature in
2006 with secured creditors being paid earlier than
unsecured creditors, and new standby credit facilities
worth $50 million provided by Alcatel and Deutsche Telekom.

The debt to IBRA of $70.83 million consists of $65.88
million principal debts and $4.95 million in deferred
interests from 1999. The principal debts comprise $60.88
million in letters of credit transferred from Bank Exim
Indonesia, and $5 million in commercial paper transferred
from Bank Dagang Negara (BDN).

Satelindo is jointly owned by state-owned PT Telekomunikasi
Indonesia (JSX:TLKM) (22.5%), state-owned PT Indonesian
Satellite Corp (JSX:ISAT) (7.5%), DeTe Asia (25%) and
Bimagraha Telekomindo (45%).  (Asia Pulse  31-May-2000,
Jakarta Post  01-Jun-2000)


=========
J A P A N
=========

ADVANCE INT'L: Declared bankrupt
--------------------------------
Advance International, a major mobile-phone sales agent for
Japan's troubled Internet investor Hikari Tsushin Inc., was
declared bankrupt Wednesday with an estimated 28 million
dollars in liabilities.

Based in Kitakyushu on the southern island of Kyushu,
Advance International was the third Hikari sales agent to
go under, a spokesman for the mobile phone shop chain said.
Advance International's liabilities were estimated at 3.0
billion yen (28 million dollars), according to the private
credit research agency Teikoku Databank Ltd.

No officials were immediately available to comment at the
head office of the company, which runs about 70 "Hit Shop"
mobile phone shops in western Japan.  The Fukuoka District
Court's branch in Kitakyushu declared Advance International
bankrupt the day after the company filed for bankruptcy, a
court spokesman said.

The business failure further depressed Hikari Tsushin's
shares, which have plunged by nearly 98 percent from its
mid-February peak amid a slump in its mobile-phone business
and worries about its Internet-related activity. On
Wednesday, Hikari Tsushin slumped 1,000 yen, or 16.4
percent, to close at a record low 5,100 yen.

Hikari Tsushin stock was listed on the Tokyo Stock
Exchange's major board last September and peaked at 241,000
yen on February 15, against a par value of 50 yen, amid a
market rush for Internet-related issues.  Another major
sales agent for Hikari Tsushin, Global Wave, filed for
bankruptcy with liabilities of 2.36 billion yen in April
when the mobile shop chain announced a parent operating
loss of 13.0 billion yen (118 million dollars) in the
September-February period.

Claims by British newspaper Financial Times that 20 staff,
including two vice presidents, would leave the company's
60-strong head office were denied by the company.
"About 10 of Hikari Tsushin's 70 employees plan to quit,"
company spokesman Koji Shibayama said. "The article is
exaggerated," Shibayama said, adding that he did not know
if two vice presidents were leaving.

Advance International, founded in 1997, was reorganised in
the following year with a capital injection from Hikari
Tsushin.  Now capitalised at 233 million yen, it chalked up
sales of 6.4 billion yen in the year to last September,
Teikoku Databank said.

"But it has been forced to seek quick sales for small
profits in 'Hit Shop' operations," the credit agency said
in a statement.

Hikari Tsushin's 35-year-old entrepreneur Yasumitsu Shigeta
said in April that he planned to shut down about 700 money
losing units out of his company's 1,600 mobile-phone sales
franchisees by August.  Those shops sell subscriptions and
receive one-time commissions for sales from phone carriers.
But press reports said Hikari Tsushin's retailers had
received the commissions from mobile phone operators as
incentives for sales which they falsely reported.  (Agence
France Presse  31-May-2000)

ALL NIPPON AIRWAYS: Posts its largest loss ever
-----------------------------------------------
All Nippon Airways (ANA), Japan's largest domestic airline,
has posted its biggest full-year loss amid fierce domestic
competition.  The company had a group net loss in the year
to March 31 of 15B yen or a loss of 10.54 yen a share, up
from a loss of 4.73B yen, or 3.3 yen a share, a year
earlier.  That was in line with the 15B yen loss ANA
forecast in March.  Analysts estimated a loss of 10.4 yen a
share.  The airline has lost money in seven out of the past
eight years and is under pressure to revive finances as
competition grows.

DAIHYAKI LIFE INS.CO.: Collapse forces Gov't step-in
----------------------------------------------------
Daihyaku Life Insurance Co has collapsed, forcing the
government to step in to guarantee payouts to
policyholders, Financial Supervisory Agency director
general Masaharu Hino said.

"Daihyaku Life Insurance Co decided to give up continuation
of its businesses at an extraordinary board meeting," Hino
told a news conference.

Policyholders with the medium-sized insurer should remain
calm, he said, stressing that payouts would be protected in
full under a safety net system operating until March 2001.

"I strongly hope that all the policyholders act calmly
without being confused by any rumours," Hino added.
"Operations related to cancellations of contracts, lending
to clients and dividend payment will be suspended, but
those related to payouts and receipt of premiums will
continue."

Finance Minister Kiichi Miyazawa told a news conference the
collapse would have little impact on Japan's financial
system.  "I have not heard about it in detail but I don't
think this particular case will have great influence," he
said.

The Financial Supervisory Agency said it would ask an
administrator, to be appointed soon, to draw up measures to
transfer the insurance policies to another company.

"Our agency believes that preserving the existing insurance
contracts is the best way to protect policyholders," Hino
said.

The FSA said its inspections showed Daihyaku's liabilities
exceeded capital by 55.4 bln yen in the year to March 1999.
The insurer had 34.5 bln yen in capital at the end of March
1999, while its liabilities included 146.9 bln yen in
appraisal losses from marketable securities and other
assets, the agency said.  Daihyaku, founded in 1914, sought
help last year from a Canadian life insurer, Manulife
Financial, forming a joint venture in April 1999 to market
new products.  (AFX News Limited  31-May-2000)

EIE INT'L GROUP: RCC files bankruptcy petition against
------------------------------------------------------
The Resolution and Collection Corp (RCC), a quasi-
government body specialising in the nation's bad debt
solution, said it has filed an application with the Tokyo
District Court seeking certification of bankruptcy for EIE
International Group of companies.

Private credit rating agency Teikoku Databank said the EIE
group has an outstanding debt of some 600.9 bln yen. RCC
said it has outstanding credit of 223.7 bln yen to EIE
International and a further 11.3 bln yen to EIE's affiliate
General Lease.  (AFX News Limited  31-May-2000)

HIKARI TSUSHIN: Share price drops
SOFTBANK: Share price drops
---------------------------------
Shares in Hikari Tsushin, the troubled Japanese mobile
phone distributor, plunged again on Tuesday as news spread
of management defections from one of its highest-profile
subsidiaries.

The shares closed at Y6,100, down 10.8 per cent on the day
and 97 per cent below their February peak of Y241,000,
underlining the disenchantment of Japanese investors
towards internet stocks.

It is understood that as many as 20 of the 60 employees of
Hikari Tsushin Capital, Hikari's wholly owned venture
capital fund, have left this week.  Hikari declined to
comment, but sources said the departures follow internal
disputes over the future strategy for the fund in light of
the collapse in the group's share price.

Two vice-presidents are understood to have resigned this
week after they suggested HTC become more independent from
its parent company.  The executives had recently proposed
to Yasumitsu Shigeta, Hikari president, to open the fund to
outside - including foreign - investors.

The precise nature of Mr Shigeta's response was not clear
yesterday, but the defections, mainly of people who worked
under the senior executives involved in the dispute,
comprise nearly a third of the employees of HTC.

"There may be more people [who leave] in the next two
weeks," said one person close to the company.

HTC, one of Japan's largest technology-focused venture
capital funds, has recently been struggling to convince
companies to accept its funding after a public dispute with
a director at Softbank, the leading internet investment
group.  Also, Hikari's lower than expected profits
tarnished Mr Shigeta's image as one of the country's most
promising internet entrepreneurs.

Hikari's announcement last month that it had arranged a
loan worth Y25bn ($235m) from an affiliate has further
fuelled concerns about the company's financial situation.
"Anything HTC invests in won't make it to an IPO," said one
Tokyo banker on Tuesday.

Shares in Softbank, another former internet favourite, fell
a further Y270 to Y18,020 on Tuesday, after the company
indicated it wanted to reduce its planned stake in the
rescue of Nippon Credit Bank. Tuesday's fall leaves the
shares down nearly 70 per cent from their February peak.

Meanwhile, Softbank is also struggling with internal
disputes over strategy. The group was last night embroiled
in intense negotiations about its planned purchase of
Nippon Credit Bank, the failed bank nationalised two years
ago.  Softbank had initially indicated that it would
purchase about half of NCB, with Orix, the leasing group,
taking up to 20 per cent and Tokio Marine and Fire taking
slightly less.

However, though the government had planned to announce the
sale today, Softbank has now indicated it wants to cut its
share.

Analysts say the NCB deal has highlighted conflicts between
senior Softbank executives in recent months: though some
hope that NCB could be a flagship project for the internet
group, others argue that excessive involvement could
distract the group from other businesses when it is already
under pressure due to the falling share price.  (Financial
Times  30-May-2000)

NAMIHAYA BANK: FRC chooses Daiwa Bank to take over  
--------------------------------------------------
The Financial Reconstruction Commission has decided to
transfer the sound assets of failed Namihaya Bank to the
Daiwa Bank (8319) group, The Nihon Keizai Shimbun learned
Tuesday.

The Osaka-based second-tier regional bank went bankrupt in
August 1999. At the end of September, its liabilities were
calculated to exceed assets by 287.4 billion yen. Several
hundred billion yen in public funds is expected to be
injected into the bank to eliminate the negative net
balance and increase its loan-loss reserves.

The Daiwa Bank group was also a candidate to take over the
operations of Kofuku Bank, another failed financial
institution. The FRC, however, unofficially decided on May
18 to transfer them to a U.S. investment fund.  The Daiwa
Bank group subsequently sweetened the terms of its takeover
offer for Namihaya Bank, such as hiring more of the bank's
employees.

Of the seven banks that went bankrupt under the financial
rehabilitation law, all but Tokyo Sowa Bank have found
buyers for their operations. (Nikkei  30-May-2000)

NIPPON CREDIT BANK: Softbank consortium misses 2nd deadline
----------------------------------------------------------
Japanese Internet giant Softbank Corp. and its partners
missed a second deadline Wednesday for exclusive bidding
rights for failed lender Nippon Credit Bank.

The Softbank-led group and the government broke off talks
because of differences over how much the consortium should
set aside to cover losses, should some of the bank's
corporate borrowers declare bankruptcy, said Masahiko
Hasegawa, a spokesman for the Financial Reconstruction
Commission.

The Financial Reconstruction Commission is the government
agency charged with managing failed banks that have been
temporarily nationalized.  The impasse means that the May
31 deadline giving Softbank's group exclusive rights to
negotiate the purchase will lapse. Softbank said it will
continue to bid for the bank.

In February, the commission gave the Softbank group
exclusive rights to negotiate the purchase. The consortium
also includes leasing company Orix Corp. and nonlife
insurer Tokio Marine and Fire Insurance Co.  Wednesday was
the second time the Softbank group failed to meet its
deadline for buying the bank. The initial April 30 deadline
expired without an agreement.

Hasegawa said the commission will resume talks with other
investors, including those from the United States.
Softbank, headed by billionaire investor Masayoshi Son, has
been hoping to add a bank to its portfolio of publishing
and Internet companies to help customers pay for online
purchases.  Some analysts say Softbank's purchase of a
major bank would be a plus because Internet use and
electronic commerce, such as online stock trading, are
expected to grow rapidly in Japan.

Softbank owns stakes in more than 300 companies worldwide,
including Buy.Com, ETrade Group, E-Loan and ZDNet. It has a
24 percent stake in Yahoo!  Rumors that negotiations with
the government broke off sent Softbank's shares down 1,520
yen (dlrs 14.17), or 8.4 percent, to 16,500 yen (dlrs
153.77) in Tokyo Wednesday. The shares had earlier risen to
an intra-day high of 19,130 yen (dlrs 178.29).

News of the talks breaking down came after Tokyo markets
closed.  Nippon Credit Bank is one of three long-term
credit banks that loaned money to Japanese companies after
World War II, helping the nation rebuild its industries. It
was declared insolvent and put under government control in
1998.  The Long-Term Credit Bank of Japan, another failed
long-term lender, was sold to a group of foreign investors
led by U.S. fund Ripplewood Holdings LLC.  (AP Worldstream  
31-May-2000)

NISSAN DIESEL: Posts annual loss
--------------------------------
Japanese truck-maker Nissan Diesel, struggling to re-invent
itself with the help of Renault, has posted losses for the
year to March.  The company reported a net loss of 728M
yen.  It gave no comparison after reporting consolidated
group earnings for the first time.  Nissan Diesel's sales
stood at 376.3B yen and its pre-tax loss at 9.61B yen.

SEIYO CORP.: Seibu Dept.Store to sell stock, pay debts
------------------------------------------------------
Seibu Department Store Ltd. plans to make its affiliates
sell their shareholdings in Mikasa Coca-Cola Bottling Co.
to repay part of the debts of Seiyo Corp., an affiliated
real estate developer, informed sources said Monday.

The department store operator, which is a core company of
the Saison group, is also considering selling holdings of
shares in Loft Co., a sundry goods shop operator, and
Saison Life Insurance Co., the sources told Jiji Press.
Mikasa Coca-Cola Bottling, listed on the second section of
the Osaka Securities Exchange, is a Coca-Cola bottler
covering the western Japan prefectures of Shiga, Nara and
Wakayama.

The company is owned 24.5 pct by Asahi Food Processing Co.
and 12.4 pct by Asahi Industries Co., both affiliates of
Seibu Department Store.  The Saison Group is in the final
stage of talks with Dai-Ichi Kangyo Bank, its main
creditor, on how much of Seiyo's debts it will shoulder.
Seiyo, which had net debts of 460 billion yen at the end of
March, is due to be liquidated.

The Saison Group aims to reach agreement with Dai-Ichi
Kangyo and seven other creditor banks by mid-June over how
to cover the debts.  Seibu Department Store plans to raise
about 20 billion yen by selling shares of affiliates and
another 30 billion yen or so by securitizing its flagship
Ikebukuro outlet in Tokyo, the sources said.

The funds thus raised would still fall short of the 100
billion yen in financial assistance the creditors are
urging Seibu Department Store to provide to cover Seiyo's
debts.  The focus of attention will be how much will be put
up by four other major group firms, Seiyu Ltd., Credit
Saison Co., Seiyo Food Systems Inc. and Parco Co., the
sources said.  (Jiji Press English News Service  29-May-
2000)


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

DAEWOO GROUP: Devaluation of collateral exposes creditors
---------------------------------------------------------
The value of W10 trillion in collateral which includes
private assets belonging to former chair Kim Woo-choong
offered to creditor banks and investment trust companies
for W4 trillion in bail-out loans for the Daewoo group
during its liquidity crisis last summer has plummeted to
just W1 trillion due to a plunge in share prices.

As a result, these institutions stand to take another W3-
trillion hit in addition to losses already sustained from
their original loans to Daewoo. Of the total loan amount,
W2.58 trillion came from investment trust firms, W1.36
trillion from banks and W35.7 billion from merchant banking
firms.

One official of a creditor bank said his bank would
normally have set aside loss reserves for the new loans,
but at the time, the Ministry of Finance and Economy and
the Financial Supervisory Commission, which had pressed for
the bailouts, had told his bank not to worry, saying the
value of the collateral was more than enough to cover the
loan amount. The official said his bank would not hesitate
to take legal action against the government if they end up
sustaining losses.  (Digital Chosun  31-May-2000)

HYUNDAI ENGIN.& CONSTR.: Offers securities as collateral
--------------------------------------------------------
The Hyundai Group agreed to offer Korea Exchange Bank (KEB)
340 billion won worth of securities held by Hyundai
Engineering & Construction Co. (HEC) as collateral as part
of its self-rescue efforts, KEB president Kim Kyung-lim
said yesterday.

"Hyundai made the offer on condition that HEC's debts to
KEB be offset or fresh loans be made," Kim said in a news
conference after a meeting with two high-ranking Hyundai
officials. "If necessary, KEB and other creditor banks will
be entitled to dispose of the securities put up as
collateral."

HEC, the conglomerate's cash-strapped construction arm, is
known to hold securities worth 1.4 trillion won as of the
end of last year, including stocks of 30 listed and
unlisted companies.  Kim further said that the nation's
largest conglomerate pledged to sell off some of its units
and spin off others in order to improve its financial
health. As of the end of March this year, Hyundai had 35
affiliates.

Kim Jae-soo, head of Hyundai's restructuring committee, and
Kim Yun-kyu, president of HEC, reacted positively to KEB's
request that Hyundai come up with a strong restructuring
plan to regain market confidence, Kim said.  The KEB head
also said that Hyundai is expected to put forward a
trustworthy restructuring plan by today as part of efforts
to improve its financial soundness.

"Hyundai agreed to submit a package of debt-reduction
measures sincere enough to win market confidence."

The KEB president said he had "in-depth discussion" with
the Hyundai presidents over the conglomerate's self-rescue
efforts for two hours and that the bank will continue to
talk closely with Hyundai about the efforts.  However,
President Kim said that he didn't discuss with the
presidents the resignation of top Hyundai managers,
including Honorary Chairman Chung Ju-yung.

"Nothing has been talked about the issue," Kim said. "In my
opinion, it is totally up to Hyundai to decide whether to
remove them."

The request of KEB, or Hyundai's main creditor bank, came
after the bank provided an emergency, short-term loan of
100 billion won to HEC and Hyundai Merchant Marine Co. to
help ease their short-term cash-flow problems. In return,
KEB has given Hyundai a Wednesday deadline to announce a
debt-reduction package, including the sale of units and the
resignation of Chung from management.

Three other creditor banks of Hyundai - Hanvit, Cho Hung
and Housing and Commercial Bank - have also pledged to give
emergency loans of 50 billion won each to the conglomerate.
In response, Hyundai Sunday announced a plan to raise 3.4
trillion won in cash but refused to accept other demands,
while KEB and Hyundai were in talks to iron out
differences.

Hyundai had debts of 31.4 trillion won as of the end of
April this year, while its assets amounted to 88.6 trillion
won as of the end of March.  Meanwhile, the government and
KEB demanded yesterday that Hyundai further complement its
plan to secure cash, which they say lack "specificity and
liquidity," a government official said.

KEB approves of HEC's cash-raising plan and Hyundai's offer
to sell a huge reclaimed farm about 150 km south of Seoul,
but it thinks that Hyundai's plan to secure 2.2 trillion
won by cutting capital spending is not specific and
unrealistic, he said.  Given that, KEB has called on
Hyundai to put additional cash-raising steps in the
envisioned debt-reduction plan, including the introduction
of foreign capital investments, the official added.  (The
Korea Herald  31-May-2000)

HYUNDAI GROUP: To increase cashflow, as much as W6Tln
-----------------------------------------------------
Hyundai Group, Korea's largest conglomerate, said it will
announce a plan to sell assets and repay debt aimed at
calming investor concern about its cash flow.

Details haven't been released, though reports said the
program will include ways to raise 6 trillion won ($5.3
billion), including 3.4 trillion won in proceeds announced
last week through the sale of securities and property.
Many Hyundai Group shares, including Hyundai Electronics
Industries Co., Hyundai Engineering & Construction Co. and
Kia Motors Corp., surged today in expectation of a positive
outcome.

The group's restructuring plan should help persuade
investors and creditors to roll over maturing debts at
Hyundai Engineering & Construction Co., Hyundai Merchant
Marine Co. and some other Hyundai Group units, which face
short-term liquidity problems.  Hyundai Group will raise
3.8 trillion won through the sale of securities, property
and other assets, including 2.7 trillion won worth of
shares in listed and unlisted group units, reports said.
The group also plans to save an additional 2 trillion won
by delaying some of its earmarked investment projects this
year.

Under the latest program, not only Hyundai Engineering but
also Hyundai Heavy Industries Co., Hyundai Electronics
Industries Co. and other group units may join the sale of
shares of group units and property, the reports said.

Hyundai Engineering, Korea's largest contractor, said it
promised main creditor Korea Exchange Bank that it will
sell 340 billion won worth of its stakes in listed and
unlisted group units soon, and provide them as collateral.
The contractor has stakes in listed Hyundai Motor Co.,
Hyundai Heavy Industries Co., Hyundai Pipe Co. and unlisted
Hyundai Petrochemical Co., Hyundai Oil Refinery Co. and
others.

Hyundai Electronics, the most active stock by volume, rose
as much as 1,100 won or 6.9 percent to 17,000 won. Hyundai
Engineering, the second most active stock by volume, rose
as much as 65 won, or 2.0 percent, to 3,300 won. (Bloomberg  
31-May-2000)

HYUNDAI GROUP: Founder, sons step down  
--------------------------------------
Chung Ju-Yung's journey from migrant labourer to head of
South Korea's largest conglomerate appeared to have reached
an end Wednesday when he announced he would step down from
the Hyundai Group's management.

Chung, 84, said that he and his two sons -- group chairman
Chung Mong-Hun and Hyunai Motor Co. chairman Chung Mong-Koo
-- would resign, bowing to pressure from the government and
investors. However, Chung said his son, Chung Mong-Wun,
would take care of the group's economic projects in North
Korea.

Hyundai's interests in North Korea -- which include the
Mount Diamond tourist resort, a train manufacturing plant
and a ship repair yard in the eastern port of Wonsan -- are
close to the heart of the elder Chung, linking him with his
past.  Born to a poor farming family in Tongchon county in
northern Kangwon province in present-day North Korea, Chung
transformed himself from migrant labourer to the founder of
South Korea's largest business group, Hyundai.

Last June, the South Korean tycoon led 500 cattle into
reclusive North Korea, in pursuit of one of his last
dreams: doing business in his birthplace and moving Korea
closer to reunification.

"What I want to do (in the remaining years of my life) is
to develop Mount Diamond (Kumgang), in the North's eastern
province of Kangwon, and to help advance reunification,"
Chung said at the time.  "They need cows to help plough,"
Chung said, explaining why he was bent on taking cattle to
the famine-hit North instead of cash or other gifts.

After three months of negotiations, Chung was able to
achieve what South Korean officials had tried in vain to do
for seven years -- to induce the North to reopen its
section of the truce village of Panmunjom to civilians.
The cattle drive was the latest in a string of colourful
feats which make up Chung's rags-to-rich story.

As a 22-year-old, Chung the workaholic eldest son of eight
children, left home to take a job at a rice store. Four
years later he bought the store and turned it into a
booming concern.  He took his first major step into big
business when he founded Hyundai Engineering and
Construction Co. in 1947, the company which was the future
flagship of the Hyundai Group.

Construction booms after the Korean War and infrastructure
build-up during the country's industrialization drive in
the 1960s brought him a wave of lucrative contracts.
The group has since expanded its business to include
automaking, shipbuilding, machinery as well as
semiconductors and electronics.  Emboldened by his
spectacular business success and angered by endless demands
for political donations, Chung decided to test his luck in
the unruly political arena by running in the 1992
presidential elections and coming a distant third.

In 1989, he travelled to the North for the first time since
the partition of the country in 1945 and was given a red-
carpet welcome.  (Bloomberg News  01-Jun-2000)


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

ABRAR CORP. BHD: Restructuring proceeding
-----------------------------------------
Danaharta Nasional Bhd. appointed special administrators to
restructure the debts of Abrar Corp. Bhd and its privately
held subsidiary Abrar Group International Bhd.

Danaharta, the country's agency overseeing bad debts, said
it has appointed Lim San Peen and Gong Wee Ning of
PricewaterhouseCoopers to prepare a debt-restructuring
plan.  Abrar, whose shares have been suspended from trading
since July 1998, is a construction and property company.
Its subsidiaries are involved in financial services. (The
Asian Wall Street Journal  30-May-2000)

PERWIRA AFFIN MERCHANT BANK: Struggling to survive
--------------------------------------------------
The task of turning around a merchant bank deeply hit by a
protracted bout of Asian flu may well scare many away, but
not Datin Zuraidah Atan-Shahariman, the first woman chief
executive officer of Perwira Affin Merchant Bank (PAMB).

Barely nine months in office, she has already suffered the
indignity of seeing PAMB being placed on rating watch by
Rating Agency Malaysia for its bulky non-performing loans
(NPLs).  Allegations ranging from being "slow or reluctant
to write off NPLs" to "being overly conservative" in
extending new loans have been circulating in the banking
circles as market pundits analyse the developments.

Brushing aside such allegations as "short-term noise" and
choosing instead to "focus on what is best for PAMB in the
long haul", Zuraidah seems to have withstood the glare of
negative publicity quite well.  In an exclusive interview
with TheEdge.Com.my, she takes the bull by the horns and
clears the air on the merchant bank's NPLs position, which
is perceived as its most sensitive area.

The merchant bank's net NPLs increased to RM522 million, or
30.7 per cent of net total outstanding loans, last year
from RM161 million or 6.8 per cent in 1998.

"The reason is simple. Like many other bankers, PAMB had
exposure to chunky loans in infrastructure and property,
which turned non-performing as the economic crisis dragged
on. Many of these loans fell due for reclassification as
non-performing only in 1999. That is what caused the jump
(to RM522 million)," says Zuraidah.

She says the situation was exacerbated by dwindling net
total outstanding loans. The net loans fell to RM1.67
billion from RM2.32 billion in 1998, following several
large scheduled repayments and a sale of RM366 million to
Danaharta. This fall pushed the ratio even higher [to 30.7
per cent].

"The economy was still sluggish for most of 1999. So there
wasn't exactly a rush in demand for loans yet. Furthermore,
PAMB had to make do without a chief for some three months
until I assumed office in September. So it is not right to
say the bank was too conservative," she said. "Make no
mistake. We are making out new loans, but selectively and
prudently. However, our loan growth may be overshadowed by
provisions and repayments."

Expressing regret over RAM's decision to place the merchant
bank on rating watch, Zuraidah is nonetheless confident of
being able to secure a more positive result at the next
review.

"We want to point out that we have not been downgraded. We
are just being placed on rating watch. Of course, we are
not happy about it and neither do we agree with the rating
agency's criteria, but we have to respect it," she said.
"Still, investors and depositors must bear in mind that our
risk-weighted capital adequacy ratio stood at 20.4 per cent
at the end of 1999 and that is way above the minimum
requirement of 8.0 per cent."

Zuraidah, who has over 15 years experience in banking, has
come out with a multi-pronged approach to re-energise the
bank.  "We have to restructure and reorganise ourselves
internally first. So far, we have identified and revamped
all the main divisions. One of the most important pillars
will, of course, be loans recovery and corporate care," she
adds.

On staffing and skills enhancement, she says: "We have to
right-size our organisation and match the right skills to
the right type of job. Yes, we will also bring in
specialists to beef up specific areas like law and taxation
or those with cross-border expertise to deepen our range of
products."

On whether PAMB could take on the "big boys" in the
competitive merchant banking world, Zuraidah says: "PAMB
has its own strengths and advantages. We are a well-
connected and well-diversified group with very strong
shareholders. There is no reason why we cannot tap into our
strengths and get our fair share of the market."

Marketing strategies such as forming strategic alliances
with foreign-based partners for projects that may require
specialised skills or to meet with the requirements of
discerning clients are also on the cards.  Steps will also
be taken to raise the image of the merchant bank, which
Zuraidah feels has been "too low-profile" in the past.

"Creating a brandname for the special skills that we can
offer is very important for strategic reasons. Of course,
we will make sure that we deliver," she said.

She has a three-year turnaround plan for PAMB. While she
agrees it is a massive one that includes charting a new and
more focused course, she is quick to reassure investors
that she realises the NPLs are very much the current
concern.  She says to deal with the problem, the merchant
bank has set up a division that will concentrate and
specialise in loan recovery.

"Many of these chunky NPLs are already in the process of
being reviewed by the Corporate Debt Restructuring
Committee. Many of these loans are also collateralised by
shares. They are not unsecured or granted on clean-basis.
So long as the economy continues recovering, the NPLs can
be resolved. It will take time because of all the
regulatory procedures involved but I expect to see a major
improvement by the third quarter of next year," she adds.
(The Edge  30-May-2000)


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

PHILIPPINE AIRLINES: Strike threat by airline staff
---------------------------------------------------
Financially troubled Philippine Airlines is on course for a
crippling strike in the next three weeks, says the
president of the labour union representing 5,300 PAL ground
staff.

The PAL Employees Association is preparing to strike
over the planned spin-off of the airline's maintenance and
engineering division.  Negotiations have stalled and union
officials have been barred from PAL premises, says union
president Jose Peas.

"Management refuses to talk with us, contrary to the labour
code," he told the Review. PAL wants to raise cash
and cut costs by selling the division to a consortium that
includes Lufthansa.

The plan threatens 1,600 jobs, says Peas, who also claims
the spin-off deal was rushed past government regulators
without a thorough review. PAL was driven close to
bankruptcy by strikes in 1998.  (Far Eastern Economic
Review  01-Jun-2000)

PHIL. APPLIANCE CORP.: Philratings downgrades credit grade
----------------------------------------------------------
Local credit rating agency Philippine Rating Services Corp.
(Philratings) said it has downgraded its credit rating for
refrigerator and freezer manufacturer Philippine Appliance
Corp.'s outstanding P1-billion long-term commercial debt
paper (LTCP).

Under the new "PRS Ca" rating, the appliance company's LTCP
has a "very poor credit standing that there is a high
possibility of a default." Of the P1-billion debt, P350
million will mature on May 30 this year while the rest will
mature in 2001-2002.

Philratings said it downgarded Philacor's rating since the
latter's "present cash position is insufficient to service
its scheduled maturing obligations" even if its assets are
more than sufficient to meet its liabilities.  With its
poor present financial situation, Philratings said the
appliance firm has already requested the LTCP holders for a
four-month grace period to settle the maturing LTCP amount.

Philacor plans to pay its P1-billion debt through an
asset-for-debt-swap arrangement through its property in
Sucat, Paranaque, which is the site of its old plant.The
company said the four-month extension will give it enough
time to negotiate the swap with its creditors. The
appliance company issued the LTCP in May 1997 and used the
proceeds for the construction of a new manufacturing
facility in Calamba, Laguna.

Philratings said that based on the appliance company's
financial statement for December 1999 to February 2000, the
latter "remained in the red, with net losses of 144 million
arising from increases in operating losses and significant
interest payments for bank loans which the company has been
diligently serving." (Business World  29-May-2000)

PHILIPPINE NAT.BANK: US group makes it to bidder list
-----------------------------------------------------
Key government officials heaved a collective sigh of relief
yesterday after Chinese-Filipino tycoon Lucio C. Tan agreed
at the last minute to prequalify a consortium led by US-
based TLC Beatrice International Holdings Inc. to join the
June 9 bidding for Philippine National Bank (PNB).

The tycoon, who controls 46% of the bank, was already close
to calling the joint undertaking with the National
Government a farce and was preparing for a failed bidding
after only Rizal Commercial Banking Corporation (RCBC)
prequalified last May 22.

In the end, Mr. Tan was reportedly "prevailed upon" -- not
by President Estrada, but by SGV & Co. founder and PNB
director Washington SyCip -- to prequalify another group to
avoid a failed bidding.  This was contrary to Finance
Secretary Jose T. Pardo's claim yesterday that President
Estrada "has imposed on Mr. Tan" to accommodate the group.

Sources said Mr. SyCip managed to convince the tycoon "not
to disqualify (the Beatrice group) on the basis of
technicality."  Aside from failing to beat the deadline for
submitting the documents to prequalify, well-placed
BusinessWorld sources said the Beatrice group was not able
to find a financial partner as of Monday.

Under the bidding rules, the bids committee can accept bids
only from financial companies or consortia of financial and
non-financial firms "to ensure efficient management of the
bank" once sold.  A few hours before the PNB pre-
qualification, bidding and awards committee (PBAC) had even
met to approve the last-minute application, Mr. Pardo told
reporters the Beatrice group had prequalified.

"They have pre-qualified as far as I know. That is the
decision of the bidding committee," Mr. Pardo said.

The PBAC, composed of representatives from the Department
of Finance, the Bangko Sentral's (Central Bank's) policy-
setting Monetary Board, and Mr. Tan's group, convened later
in the afternoon to decide whether the US firm would be
allowed to join the bidding.  After a meeting that lasted
nearly two hours, the committee agreed to "conditionally
prequalify" the Beatrice group, the sources said.

This was after receiving some documents that showed the US
conglomerate has teamed up with Hong Kong-based fund
manager Templeton Asset Management Ltd. for the bidding,
they added.  However, the PBAC asked the consortium to
submit more documents to that would establish its financial
position.  Bangko Sentral Gov. Rafael Buenaventura also
said the group will have to find a local bank as a partner
since local laws permit non-banks to own up to only 40% of
local banks.

"They need a bank to be able to buy up to 80% of PNB," he
said.

Earlier in the day, at PNB's annual stockholders meeting,
Templeton executive vice-president and director Allan Yam
was still non-commital when asked by reporters to confirm
the group's team up with TLC Beatrice.  "We are open to
joining the consortium," Mr. Yan, who flew in from Hong
Kong to represent the emerging markets fund at yesterday's
stockholders meeting, told reporters.

TLC Beatrice LLC chairman and chief executive officer Loida
Nicolas-Lewis, who also attended yesterday's stockholders
meeting, claimed Templeton "is part of us. They're part of
the consortium...that is being put together."

Ms. Nicolas-Lewis said the consortium will consist of two
groups, one of which will be an American financial
institution.  "The second group is the group I am forming
in the United States of Filipinos who have achieved the
'American dream'...I'm talking to them. It's time now to
invest in the Philippines. In a way, it's like balik yaman
para sa bayan (returning prosperity to the motherland).
That's the consortium," she said.

She said TLC Beatrice LLC has tapped ATR Kim Eng
Securities, headed by Diosdado Macapagal, Jr., as financial
adviser for its planned bid for PNB.  The group is willing
to put in additional capital to prop up PNB, she said, and
claimed TLC Beatrice LLC is "liquid."

When pressed about details of the conglomerate's financial
health, however, Ms. Nicolas-Lewis coyly said, "(That's)
privileged (information)."

ATR's Mr. Macapagal said the group has yet to start its due
diligence audit on PNB and determine its value.  "I have
plans to make PNB great again," Ms. Nicolas-Lewis said.
Meanwhile, PNB president Feliciano L. Miranda, Jr. said the
bank is still grappling with a high level of nonperforming
or past-due loans.

As of April 30, 33% or 36.3 billion Philippine pesos
($0.848 billion at PhP42.829=$1) of the bank's PhP110-
billion ($2.57-billion) loan portfolio is nonperforming,
based on Bangko Sentral computations, he said.  As of end-
1999, NPLs accounted for PhP30.1 billion ($0.703 billion),
or 28.83% of PNB's total loans, amounting to PhP104.392
billion ($2.44 billion).

"The problems got worse this quarter...We are seeing more
problem accounts," PNB director Enrique G. Filamor said.
"The impact of the 1997 Asian crisis is beginning to be
felt only now. Why the delayed reaction? Then, we prayed a
lot but we did not cut costs. Only now are we praying and
cutting costs," he added.

Mr. Miranda stressed, however, that PhP78.824 billion
($1.84 billion) of PNB's total loans are secured by
collateral and only PhP25.567 billion ($0.597 billion) are
unsecured.  He also assured the stockholders that the
bank's exposure to the companies of tycoon Lucio Tan like
Asia Brewery, Fortune Tobacco and Philippine Airlines
(PAL), are "current."

PAL has been paying interest and a portion of the
principal, he added.  Mr. Miranda said PNB is projecting a
modest PhP300 million ($7 million) in net income this year
and a 10% profit growth in 2001.  A positive income will be
a dramatic turnaround from 1999's staggering PhP9.874-
billion ($0.231-billion) net loss.  On the deposit side,
the bank president said 32% of the PhP164.708-billion
($3.85-billion) total are government deposits.

PNB will remain a government depository bank until 2003,
despite its impending full privatization.  Mr. Miranda said
PNB may still continue to have government deposits beyond
2003 since the bank has loans to government-owned
corporations.

"As long as the government is indebted to a bank, that bank
will remain a depository bank," he explained.

As of end-1999, PNB's capital stood at PhP14.776 billion
($0.345 billion).  Mr. Miranda said a capital infusion of
between PhP5 billion ($0.117 billion) and PhP6 billion
($0.14 billion) will push up PNB's capital adequacy ratio
(CAR) to 10%, the minimum required by the Bangko Sentral.
At present, the bank's CAR is only six percent.  (Business
World  31-May-2000)

UNIWIDE: Gov't wants creditors to okay plan
-------------------------------------------
To spare Uniwide Group of Companies from complete financial
deterioration, government agencies - along with Uniwide's
interim receivership committee (IRC) - have engaged in
efforts to change the minds of the group's opposing
creditor banks.

Representatives from the Department of Trade and Industry,
Bangko Sentral and the Securities and Exchange Commission
(SEC), and IRC chairman Monico Jacob are "trying to
convince (creditors) to let go of their opposition."

So far, Allied Banking Corp. and Philippine National Bank
(PNB) have thumbed-down Uniwide's amended rehabilitation
plan, other creditors are given 15 more days to comment on
the same. Both banks note that the provision under the
rehab plan, which compels the bank to convert its
security to shares of stock in a Special Purpose Corp.
(SPC), "impairs (their) rights as secured creditor as (they
are) left to forgo (their) security in lieu of mere
condominium shares."

Moreover, the banks said the implementation of the
rehabilitation plan also "constitutes a violation of the
rule on the inviolability of contracts and courts have no
authority to prescribe the terms and conditions of a
contract for the parties."

As an alternative, the Uniwide creditor proposed the
deletion of the provision on the creation of an SPC
composed of PNB, Bank of the Philippine Islands, Rizal
Commercial Banking Corp, Asian Bank and East West Bank,
with the Metromall development as the only asset. The said
property was originally mortgaged to both PNB and Allied
Bank.  

Uniwide's other creditor banks and their respective claims
are: Allied Banking Corp., P358.26 million; Asian Bank,
P251.93 million; BPI, P720.08 million; East Asia Capital
P60.40 million; East West Bank P134.28 million; Equitable
Banking Corp., P1.75 billion; ING Bank, P172.52 million;
International Exchange Bank, P475.32 million; Land Bank of
the Philippines, P676.92 million; Metropolitan Bank & Trust
Co. P62.74 million; Philippine Bank of Communications P48.5
million; Philippine National Bank P832.96 million; Rizal
Commercial Banking Corp., P1.65 billion, and UCPB P1.04
billion.

The implementation of Uniwide's amended rehabilitation plan
is crucial to the closing of the retail firm's deal with
French investor Casino Guichard-Perrachon.  The entry of
the Casino group, which will bring in P3.57 billion in
cash, is crucial to Uniwide's rehabilitation program.
Casino - the third largest retailing outlet in France and
the fifth largest in the world - is set to put up at least
10 retail stores all over the country. The SEC earlier said
the entry of the Casino group "might build up the
confidence of other foreigners now considering investing in
our country."

Meanwhile, the corporate regulatory is likely to grant
Uniwide's earlier request to be exempted from the
commission's tender offer rules.  Under the rules, anyone
who acquires controlling interest in a company will have to
make an offer to buy the shares of minority shareholders,
at the same price.

"The Gow-owned shares (which are part of the deal with
Casino) are valued at zero or offered less than market
price...I don't think anyone will want to sell. The other
shareholders would want to hold on to their shares," Ms.
Bautista said.

The Uniwide Group is composed of Uniwide Sales, Inc.,
Uniwide Holdings, Inc., Naic Resources & Development Corp.,
Uniwide Sales Reality & Resources Corp., First Paragon
Corp., and Uniwide Sales Warehouse Club Inc. (BusinessWorld  
29-May-2000)

URBAN BANK: Still open for buyers -- PDIC
-----------------------------------------
Regulators will continue to entertain interested investors
in Urban Bank even as Cojuangco-controlled Bank of Commerce
(Bancommerce) already entered into a deal with the majority
shareholders of the closed bank.

Philippine Deposit Insurance Corp. (PDIC) president
Norberto C. Nazareno yesterday said Bancommerce will not
enjoy the first option despite recently signing a
memorandum of agreement (MoA) with Urban Bank.

"They (would) still need to submit a rehabilitation plan...
They don't have the first option," he told BusinessWorld.

Mr. Nazareno earlier said Urban Bank has attracted six
interested buyers, including Bancommerce, Allied Banking
Corp. and the Rizal Commercial Banking Corp.  In a separate
interview, Bancommerce president Raul B. de Mesa said the
MoA is just an agreement to present a viable rehabilitation
plan for Urban Bank.  He said the agreement involved two
thirds of Urban Bank's shareholders, including Urban Bank
president and chief executive officer Teodoro C. Borlongan
and chairman and founder Arsenio M. Bartolome III.

"The principle is to protect the interest of the
depositors, preserve the assets," Mr. de Mesa said.
He said some assets of Urban Bank will be liquidated
through sale and loan collection.

Well-placed sources said Bancommerce, controlled by the
family of businessman Antonio O. Cojuangco and the CAP
Group, may not be willing to infuse cash to rehabilitate
Urban Bank, but may just propose debt-to-equity conversion
as well as longer write-off of loans.

This is despite the huge cash hoard of the Cojuangco group
from the sale of their shares in dominant carrier
Philippine Long Distance Telephone Co. (PLDT) last year,
amounting to 17 billion Philippine pesos (PhP) (US$397.0
million at PhP42.829:US$1).  The sources said the money is
aimed at propelling Bancommerce into one of the country's
biggest banks. After Urban Bank, the midsize commercial
bank is reportedly eyeing the Metro Pacific Corp.'s PDCP
Development Bank and the Tan Yu Group's Panasia Bank. This,
however, could not be confirmed.  Mr. de Mesa said Urban
Bank's network of 28 branches will complement Bancommerce's
42.

"The branches are located in areas where Bancommerce does
not have a presence," he said.

He said Bancommerce has yet to decide if it will include
Urban Bank's subsidiaries in its rehabilitation proposal
since there are some duplications.  Bancommerce already has
an existing tie-up with an insurance company and an
indirect seat at the Philippine Stock Exchange, he said.

The merger of Bancommerce and the Benedictos' Traders Royal
Bank (TRB) was already approved in principle by the
Monetary Board, the policy making body of the Bangko
Sentral.  Mr. de Mesa said TRB's 55 branches, concentrated
in the Visayas and Mindanao, will also complement Urban
Bank and Bancommerce's combined network.

"TRB's branches are not fully automated... Urban Bank has
fairly advanced technology, which is a key component to the
growth of the bank," he added.

Bancommerce has asked Bangko Sentral (Central Bank of the
Philippines) to take out PhP1.5 billion ($35.0 million)
worth of TRB's bad assets. Sources said without this
incentive, the Bancommerce-TRB merger will not materialize.
(Business World  31-May-2000)


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T H A I L A N D
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RIGHT PICTURES: Finalises debt restructuring
--------------------------------------------
Right Pictures, a subsidiary of Onpa International,
yesterday finalised the restructuring of most of its Bt304
million debt.

"We are delighted to finally reach an agreement with Right
Pictures' creditors," Onpa chairman and chief executive
officer Itthivat Bhiraleus said.  "The company's debt
burden has been reduced from Bt304 mil-lion to less than
Bt14 million as a result of this restructuring and we can
now get the business back on track."

Onpa signed the restructur-ing agreement at the Bank of
Thailand. The agreement, which finalised the debt
restructuring of both Right Pictures and Onpa, was reached
under the supervision of the Corporate Debt Restructuring
Advisory Committee.

"Right Pictures holds many licences to numerous video and
music titles and these (restructuring deals) will enable
Onpa to expand its product base and eventually to offer the
market a greater variety of products," Itthivat said.

Under the agreement, creditors agreed to restructure all of
Right Pictures' Bt304 million in outstanding loans. The
secured creditors agreed to reschedule Bt19.6 million in
se-cured debt into three equal annual instalments of Bt6.53
million. The first instalment was paid on Tuesday.

The unsecured creditors agreed to waive Bt79.53 million or
about 40 per cent of Right Pictures' outstanding unsecured
debt. In return, Right Pictures' repaid the remaining
Bt119.3 million in full on Tuesday.  Seamico Securities
served as financial adviser to Right Pictures in the
restructuring negotiations.  Onpa also announced last week
it would acquire the remaining 20 per cent of Right
Pictures it does not already own, making the company a
wholly owned subsidiary. (The Nation  01-Jun-2000)


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