/raid1/www/Hosts/bankrupt/TCRAP_Public/000620.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                           A S I A   P A C I F I C

             Tuesday, June 20, 2000, Vol. 3, No. 119


* A U S T R A L I A *

BIRRI GUBBA ABORIGINAL CORP.: Gov't inquiry on $3M grant
EDGE GROUP: Grim news for creditors
EDGE GROUP: Receiver chasing PC shipment to NZ
GREYHOUND PIONEER: In trouble after s'holders fail to act
HIH INSURANCE LTD.: Continues to struggle abroad
PETSEC ENERGY LTD.: To sell bankrupt US subsidiary
URANNAH PROPERTIES ASSN.: Gov't inquiry on $3M grant

* C H I N A  &  H O N G  K O N G *

CITY HONG KONG HOLDINGS LTD: Facing winding up petition
ELITE WEALTH (HK) LTD: Facing winding up petition
GALACHASE INT'L LTD: Facing winding up petition
MEGA GEOGI HOLDING LTD: Facing winding up petition
PACIFIC SHEEN FINANCE CONSULS.: Facing winding up petition
PHILIMINE RESOURCES (ASIA)CO.: Facing winding up petition

* I N D O N E S I A *

PT ANWAR SIERAD: Creditors approve debt rehab
PT DOK & PERKAPALAN KODJA BAHARI: Court rejects bankruptcy

* J A P A N *

JAPAN BUILDING PROJECT CO.: Asks for court rehabilitation
KOKYO SECURITIES CO.: Kankaku may absorb by merger

* K O R E A *

DAEWOO MOTOR: Bidders in last spurt for June 26 deadline
HYUNDAI INVEST.TRUST: Signs recap accord with FSS  
HYUNDAI MOTOR: Spin-off from parent unlikely soon

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

ALL ASIA CAPITAL: Cash squeeze prompts raising fresh equity
MONDRAGON INT'L: In final talks with white knight
PHILIPPINE NAT.BANK: Re-bidding set in 30-60 days
PRIME SAVINGS BANK: PDIC seeks buyers for branches
URBAN BANK: SMC,Meralco,Petron to swap stakes for equity
URBANCORP INVESTMENT: SEC pushing criminal case vs execs

* T H A I L A N D *

ASIA FINANCIAL SYNDICATE: FRA to pay creditor claims
SCF FINANCE AND SECURITIES: FRA to pay creditor claims
SIAM CITY CREDIT: FRA to pay creditor claims
SIAM CITY SYNDICATE: FRA to pay creditor claims


BIRRI GUBBA ABORIGINAL CORP.: Gov't inquiry on $3M grant
URANNAH PROPERTIES ASSN.: Gov't inquiry on $3M grant
A Federal Government inquiry will be asked to examine a
$3.2 million Commonwealth grant for the purchase of grazing
properties to an indigenous corporation which was later
placed in liquidation.

The three properties west of Mackay, known collectively as
the Urannah Pastoral Holding, are at the centre of a
dispute between traditional land owners over whether
logging and other development should be allowed.  The
Minister for Aboriginal Affairs, Senator Herron, has
appointed a former head of the Attorney-General's
Department, Mr Stephen Skehill, to examine a series of
allegations concerning the Government's Indigenous Land
Corporation (ILC).

Mr Norman Johnson, as head of the Birri Gubba Aboriginal
Corporation, applied successfully to purchase the
properties through the ILC in April, 1998.  Soon after, the
Aboriginal and Torres Strait Islander Commission ordered a
review of the corporation. The review report, which has
been referred to the Federal Police, said there was "strong
indication" Mr Johnson had misused his position as Birri
Gubba's chief executive officer to further his own

Birri Gubba was placed in liquidation in January after an
action initiated by the Registrar of Aboriginal
Corporations. Auditors are trying to determine whether
there is a proper account of $800,000 paid by the resource
giants Chevron and Rio Tinto to the corporation as a
result of native title agreements.

An audit of the spending by the Wirri Yuwiburra Community
Benefit Trust of $650,000 some of which was passed to Birri
Gubba after payment by the Rio Tinto subsidiary Pacific
Coal is continuing.

A 1997 letter to the ILC by Mr Johnson said the Birri Gubba
people had "survived one of the worst holocausts of all
time" and that the purchase of Urannah would help them
restore their culture.  The letter said there was no
intention of running the properties for profit: "We want
and need it mostly for cultural and social

The properties were transferred from Birri Gubba to the
Urannah Properties Association in March last year. Records
of the association's inaugural meeting list Mr Johnson as a
management committee representative, and he has continued
to play a central role in Urannah's administration. A
former Birri Gubba co-ordinator, Mr Rick Wilson, said he
would supply Mr Skehill with documents relating to the ILC

Mr Wilson said the ILC should not have facilitated the
properties' transfer to the Urannah Properties Association,
because it was aware there were two competing land claims
over the surrounding area.  Traditional owners had been
assured there would be no commercial development on the
properties, but logging and the construction of a dam
had been approved, he said.

A spokesman for the ILC, Mr Matthew Coleman, said the
problems facing Birri Gubba were "irrelevent to the status
and ownership of Urannah, which is vested in Urannah
Properties Association."

Mr Coleman said the ILC was not aware of competing land
claims at the time it considered Birri Gubba's application.
In addition to Mr Skehill's inquiry, a former NSW chief
justice, Mr Laurence Street, is examining the $9million ILC
purchase of the Roebuck Plains station in Western
Australia. Mr Johnson declined to comment. (Sydney Morning
Herald  19-Jun-2000)

EDGE GROUP: Grim news for creditors
Alan Topp of Armstrong Wily & Co, administrator of the Edge
Group of Companies, said there is only one way most of its
unsecured creditors can be paid ? recover the company's
unpaid inter-company loans.

This was revealed at a creditors' meeting in Sydney on 14
June 2000 over the collapse of Johnson Wang's group of 10
companies which owe unsecured creditors more than $A30m.
Topp said he is looking at the inter-relationship with the
group's overseas companies and the loans made to see how
they impact on the cash flow throughout the group. Topp
said liquidation is the most likely outcome. (ABIX  15-Jun-

EDGE GROUP: Receiver chasing PC shipment to NZ
The Sydney-based receiver of just-collapsed computer
company Edge Group has moved his inquiries to New Zealand
in a bid to extract payment for $A150,000 worth of

Just days before computer entrepreneur Johnson Wang's Edge
group went bust in Australia with debts of around $A30
million, 30 pallets of computers were shipped across the
Tasman to the NZ Edge company. While this is a separate
entity from the Australian group, receiver Chris Wykes of
Lawler Partners says he'll be seeking to recover the debt.

Wykes was appointed last Thursday by Edge group's only
secured creditor, Cash Resources Australia, which is owed
about $A1 million.  Wang sold the NZ company early last
month to Kiwi businessman Charles Yiu. Its 30 employees,
spread between three offices in Auckland, Wellington and
Christchurch, distribute computers sourced from abroad
and in New Zealand to the Kiwi market.

Company accountant Tony Franklin says he is unaware of the
debt or the delivery of 30 pallets of computers, which he
says "seems like a lot" but says he'll investigate. The NZ
company, meanwhile, is trying to distance itself from its
collapsed Australian cousin and a new name is being
registered with the Companies Office. Of the $A30 million
owed by Edge in Australia, about $A10 million is being
claimed by Microsoft for licence fees.

This is being disputed in court. Prior to the collapse the
group was one of Australia's largest sellers of personal
computers. Wang left for Hong Kong last week, after signing
his company over to voluntary administrators - a pre-
receivership step. Wang hit the headlines a few years ago
when Edge Computers in NZ was fined $50,000 for selling
fake memory chips. It admitted the charges, brought by the
Commerce Commission. (Independent Business Weekly  14-Jun-

GREYHOUND PIONEER: In trouble after s'holders fail to act
Greyhound Pioneer Ltd is teetering on the edge of
insolvency after spiteful shareholders at a meeting
yesterday failed to approve the sale of the coachline's
major assets.

The extraordinary meeting was called to vote on a motion to
sell the company's freight and passenger business to Nowra
Coaches for $15.3 million and put the remaining assets
into a separate company.  The motion was defeated 6.16
million votes to 2.22 million after major shareholder, the
Retirewise Capital group, did not support the sale but
instead backed a rival $9.6 million bid from McCafferty's
Holdings Ltd. (Canberra Times  17-Jun-2000)

HIH INSURANCE LTD.: Continues to struggle abroad
HIH Insurance Ltd. said its international operations,
except those in New Zealand, are continuing to impede a
full earnings recovery. But shares of the insurer,
Australia's second-largest in terms of market share, rose
7.4% Thursday.

HIH Chief Executive Ray Williams told Dow Jones Newswiers
in an interview that insurer's shares are "very much
undervalued" considering the value of its distribution
network.  Traders said most investors are buying on
prospects of a rebound n international operations in the
next two years.

"People feel that this stock is good value at this point in
time. There's a feeling earnings will improve in the nxt
couple of years," said Lucinda Chan, a senior trader at
Macquarie Equities Ltd. "No one wants to miss out on HIH."

The company said in a statement that overall, its
international operations won't contribute to net profit for
the year ending June 30.  HIH shares rose to $1.02 (61.2
U.S. cents) Thursday, an increase of seven Australian
cents. Nearly five million shares of the issue changed
hands on the Australian Stock Exchange.

The stock was at A$1.35 in early March after the insurer
reported net profit for the half-year ended Dec. 31, 1999
of A$40.2 million, up from A$19 million a year earlier.
Mr. Williams said the underwriting environment in U.K
continues to be tough, but there are signs that market will
improve. He said January 2001 is expected to be a major
period for the renewal of insurance policies in the U.K.,
and this should boost profit for the year ending June 30,

The chief executive said HIH will no longer operate a
workers' compensation business in New Zealand from July 1,
as the government plans to rationalize the nation's workers
compensation scheme.  This won't have a major impact on net
profit because of the growth in HIH's general insurance
business in New Zealand, Mr. Williams said.

He said HIH has no plans to sell any of its overseas
operations. Australia remains a "very solid" core business
base, and industry consolidation is supporting an improving
environment for premium rates, he said Some 63% of HIH's
Australian portfolio involves home, motor and travel

HIH's combined operating ratio - which measures claims and
expenses versus net earned premium - of 103.8% for
Australia was "sustainable and capable of further
improvement," Mr. Williams said. The Australian industry's
average combined operating ratio for the year ended June
30, 1999 was 115%.

Analysts expect HIH to face a struggle when standard
calculations for claims and risk-weighted solvency are
eventually introduced by the Australian Prudential
Regulatory Authority.

Mr. Williams said the insurer will continue to manage its
capital using reinsurance protection, and by making
appropriate capital allocations decisions. He said HIH has
no plans or need to raise capital.  Analysts said HIH's
problem is that the market will take into account the value
of the calculations for claims and risk-weight solvency up
front, rather than retrospectively, which will have
negative implications for the insurer.

"If you move towards prudential margin standards when you
don't have prudential margins in place and have no
flexibility to change the central estimates.clearly when
you lift up your understanding claims you have a negative
impact through your profit-and-loss account which reflects
the movement in outstanding claims," said one analyst who
declined to be identified by name. (The Asian Wall Street
Journal  15-Jun-2000)

PETSEC ENERGY LTD.: To sell bankrupt US subsidiary
Petsec Energy Ltd has announced that an agreement has been
reached with the unsecured creditors committee for the sale
of its wholly-owned US subsidiary, or all its assets.

On April 13, Petsec Energy Inc (PEI) filed a voluntary
bankruptcy petition in the Louisiana Federal Court under
Chapter 11 of the US Bankruptcy code.  The court procedure
followed negotiations in January between PEI and its US
unsecured noteholders, so that the company could
reconstruct its balance sheet.  Petsec Energy Ltd was
ordered not to extend loans to the US company, which owes
$A107 million ($US64.68 million) to the noteholders.

"Subject to approval by the Bankruptcy Court presiding over
Petsec Energy Inc's Chapter 11 proceedings, Houlihan Lokey
Howard & Zukin Capital, LP will be managing the divestiture
process for Petsec Energy Inc and the unsecured creditors
committee," Petsec said in a statement today.

Houlihan Lokey will distribute an information memorandum
describing the PEI assets to potential interested parties.
All sale transactions will be subject to the approval of
the Bankruptcy Court, it said.

"Petsec Energy Inc anticipates filing a Plan of
Reorganisation which contemplates an agreed distribution of
the sale proceeds to the creditors, the equity owner and
certain of Petsec Energy Inc's senior management team in
the USA."

Petsec operates oil and gas exploration activities in the
shallow waters of the US Gulf of Mexico.  Last month, angry
investors directed a barrage of questions at the Petsec
board over the future of the troubled US subsidiary.

"The outcome of this process is unpredictable and may
result in the sale of all of Petsec Energy Inc's assets,"
Petsec chairman and managing director Terrence Fern told
shareholders at the May 25 meeting.

One shareholder demanded to know whether the sale of the US
assets would impact the Australian company's already
troubled balance sheet, and the future profitability of the
company.  "No, the noteholders only have recourse to the US
assets," Mr Fern said.  

Petsec shares will re-open trade today at 9.1 cents.  (Asia
Pulse  19-Jun-2000)

C H I N A  &  H O N G  K O N G

CITY HONG KONG HOLDINGS LTD: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for July 12 on the petition of Lee
Yi Pui for the winding up of City Hong Kong Holdings
Limited. A notice of legal appearance must be filed on or
before July 11.

ELITE WEALTH (HK) 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 Ho
Yun On for the winding up of Elite Wealth (Hong Kong)
Limited. A notice of legal appearance must be filed on or
before July 18.

GALACHASE INT'L 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 Fok
Wai Kuen for the winding up of Galachase International
Limited. A notice of legal appearance must be filed on or
before July 18.

MEGA GEOGI HOLDING 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 Earn
Elite Development Limited for the winding up of Mega Geogi
Holding Limited. A notice of legal appearance must be filed
on or before July 4.

PACIFIC SHEEN FINANCE CONSULS.: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing for August 9 on the petition of Lam
Pui Sze for the winding up of Pacific Sheen Finance
Consultants Limited. A notice of legal appearance must be
filed on or before August 8.

PHILIMINE RESOURCES (ASIA)CO.: 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 Szeto
Sin Man for the winding up of Philimine Resources (Asia)
Company Limited. A notice of legal appearance must be filed
on or before July 4.


PT ANWAR SIERAD: Creditors approve debt rehab
In a case pending in the Jakarta Commercial Court, a
majority of the creditors of publicly listed PT Anwar
Sierad voted to approve the debt restructuring proposed by
the company, but with a few conditions attached.  The debt
restructuring agreement involved a debt to equity swap and
a 15-year tenor bond issuance.

Set as prerequisites to the debt restructuring agreement by
the creditors are the completion of a planned merger
between Anwar Sierad with its sister company, PT Sierad
Produced.  The creditors also said the debt restructuring
agreement would be automatically canceled if Anwar Sierad's
other sister companies, namely, Sierad Produce and Sierad
Grain (currently filed for bankruptcy) were declared
bankrupt. (Jakarta Post  16-Jun-2000)

PT DOK & PERKAPALAN KODJA BAHARI: Court rejects bankruptcy
In a case pending in the Jakarta Commercial Court, state-
owned PT Dok & Perkapalan Kodja Bahari managed to survive a
bankruptcy threat for the fourth time on Wednesday, when
the Jakarta Commercial Court rejected a bankruptcy suit
filed by its foreign creditor.  (Jakarta Post  16-Jun-2000)


JAPAN BUILDING PROJECT CO.: Asks for court rehabilitation
Japan Building Project Co has filed with the Tokyo district
court for rehabilitation.  The Tokyo-based building
construction consulting company has liabilities totaling
560 billion yen, according to Teikoku Databank Ltd.  The
debt amount is the second largest this year after Life Co.,
which filed for court protection from creditors in May with
debts of 966.3 billion yen.

KOKYO SECURITIES CO.: Kankaku may absorb by merger
Kankaku Securities Co. is mulling the possibility of taking
over the operations of affiliate Kokyo Securities Co.
through a merger, with a final decision to be made early
next week.

The two firms believe that Kokyo, a Tokyo-based midsize
brokerage, may not be able to survive on its own given an
intensification of competition that has following the total  
deregulation of brokerage fees last October and the arrival
of new firms into the market.  If such a merger is to take
place it would be scheduled to take effect on Oct. 1,
sources at the two firms said Saturday.

Kankaku already has been regrouping affiliates for awhile.
By taking over Kokyo, it would seek to expand its retail
business along with the integration of Fuji Bank,
Industrial Bank of Japan and Dai-Ichi Kangyo Bank
(Kankaku's top shareholder) under the Mizuho Financial


DAEWOO MOTOR: Bidders in last spurt for June 26 deadline
The outlook for the Daewoo Motor bidding is turning
increasingly unpredictable, with the deadline for the
presentation of takeover proposals just a week away,
analysts said yesterday.  Creditors of the ailing automaker
are scheduled to receive letters of proposals from five
bidders - Ford Motor, General Motors, DaimlerChrysler (DC),
Fiat and Hyundai Motor - by 5 p.m. June 26 before selecting
two of them for exclusive negotiations by June 30.

Of the five bidders, Hyundai, Ford and GM have taken up
very aggressive attitudes towards Daewoo, whereas DC and
Fiat have appeared less enthusiastic.  Until recently,
Hyundai had been seen holding a strong lead over other
bidders, amid speculation that the No. 1 Korean automaker's
alliance with DC was imminent.

But the announcement on the Hyundai-DC joint bid has yet to
come, apparently due to the latter's lack of interest in
Daewoo, clouding the prospect for the final outcome, said
the analysts.  Worse yet, other negative factors include
the management dispute between Hyundai Motor Chairman Chung
Mong-koo and his father and group founder Chung Ju-yung and
also subsequent delays in the automaker's separation from
the rest of the Hyundai Group.

In contrast, GM and Ford are briskly unveiling various
post-merger pledges, including technology transfer and
strong commitment to employees and suppliers, in a bid to
take advantage of Hyundai's wavering. GM, for instance,
said this week that it will include Daewoo Motor into its
global research and development network, transfer engine
and e-business technologies and use Daewoo platforms for a
joint "world car" project. Some speculate that GM may join
forces with Fiat, one of its capital tie-up partners, for
joint takeover of Daewoo.

Similarly, Ford has reiterated its pledges to retain the
Daewoo brand, transfer e-commerce technology and develop
Daewoo into a base for its "world car" projects. Ford may
submit an exceptionally high price to catch up with the
alleged leads of Hyundai and GM.

Amid intensifying competition, the price will most likely
become the most important criterion, said the analysts. The
Daewoo Group Restructuring Committee in charge of the sale
of Daewoo Motor and its affiliate Ssangyong Motor said that
price, management plans, employment, parts suppliers and
technology transfer are among the key evaluation

With non-price terms from the five bidders expected to be
near identical, the price will emerge as the most critical
factor, it predicted. But some sources close to the bidding
predicted the actual takeover price may be settled far
below the anticipated level.

"At one time, the value of Daewoo Motor was said to hover
around $5 billion to $6 billion. But the price may go down
as low as $2 billion," said one source.

The screening panel in the bidding will be composed of
seven - three each from creditors and academia, and Oh Ho-
geun, chairman of the Daewoo restructuring committee.

Meanwhile, Hyundai is pushing to announce its broad
alliance plans with the German-U.S. giant DC by June 24,
company officials said. Under the alliance package, DC may
acquire a 10-percent stake in Hyundai, while DC and Hyundai
share Daewoo Motor at a ratio of 40 percent to 19.9

In the case of Hyundai's truck-bus plant in Chonju of North
Cholla Province, a 50-50 percent joint management is said
to be under consideration.  Despite the possible alliance,
Hyundai and DC may present separate proposals to the Daewoo
creditors, due to a tight schedule for drawing up joint
proposal, said the Hyundai officials.

"The growing public aversion to a foreign takeover of
Daewoo Motor will favorably affect Hyundai's Daewoo bid,"
said a company spokesman, adding that the company is armed
with extra liquidity of more than 1 trillion won ($900
million) for use in the Daewoo bidding.  (The Korea Herald  

HYUNDAI INVEST.TRUST: Signs recap accord with FSS  
The Financial Supervisory Service said yesterday it has
concluded a memorandum of understanding (MOU) on management
improvement with Hyundai Investment Trust and Securities

According to the FSS, the MOU calls for the company to meet
capital shortfalls totaling 1.2 trillion won through
capital increases by the end of the year.  When the company
completely fails to fill the shortfalls, it is required to
dispose of the assets, including stocks in Hyundai Group
affiliates, to be put up by former Hyundai Group Chairman
Chung Mong-hun and Hyundai firms.

Chung is expected to contribute his shareholdings in
Hyundai Information Technology and Hyundai Logistics,
valued at 88 billion won, by the end of September. HITS
also promised to raise 700 billion won by selling off two-
thirds of its stake in Hyundai Investment Trust Management
to foreign investors. It intends to attract another 200
billion won by selling its own shares by November. The
remainder will come from net profits for this year
estimated at 300 billion won.

The MOU demands the company pay 1.5 billion won of excess
borrowing within this year using the 1.2 billion won raised
through capital increases and funds from other sources.
In the case HITS fails to carry out capital increase plans,
the FSS has put up 1.7 trillion won worth of stocks held by
Hyundai affiliates in the Korea Securities Depository as

The FSS has also received a written pledge from management
of HITS that they will all step down when failing to
normalize management by February next year. (The Korea
Herald  19-Jun-2000)

HYUNDAI MOTOR: Spin-off from parent unlikely soon
The Hyundai business group is unlikely to be able to
fulfill its promise to spin off Hyundai Motor in the near
future despite statements from Hyundai Motor, which has
been saying it will separate from the parent group by the
end of June.

Korea Fair Trade Commission (KFTC) head Chun Yoon-chul said
Sunday that according to fair trade regulations, members of
the Chung clan still affiliated with the larger group must
lower their current 9.6% stake in the firm to below 3%
before the auto unit could separate from the group. The
9.6% stake is made up of the 6.8% portion of Hyundai Motor
held by Hyundai founder and recently resigned honorary
chair Chung Ju-yung and the 2.8% portion held by Hyundai
Engineering and Construction (HEC), which is under the
control of Chung's son, Mong-hun, who was the former chair
of the group and currently heads Hyundai Asan.

A high-ranking official at the KFTC said the problem had
flared up recently as the elder Chung and HEC began
amassing shares in Hyundai Motor. Their massive purchasing
was likely prompted by the refusal of Hyundai Motor chair
Chung Mong-koo to provide support funds to weaker group
subsidiaries in which his younger brother Mong-hun is a
major shareholder. Mong-hun had reportedly agreed to
support the spin off of the auto unit on the condition that
it provide funds to his firms.

The same KFTC official said it was unclear whether Mong-hun
was buying up shares in the knowledge of the regulations
that could prevent the spin off of the group. The same
official said if this was the case, Mong-hun could be
making a bid to take control of Hyundai Motor.

Meanwhile, Hyundai Motor has been selling off its shares in
other Hyundai subsidiaries such as Hyundai Corp. and the
Hyundai Unicorns professional baseball team to lower its
stakes to under the 3% limit. (Digital Chosun  18-Jun-2000)


ALL ASIA CAPITAL: Cash squeeze prompts raising fresh equity
The major shareholders of All-Asia Capital and Trust Co.
have agreed to immediately raise P1.25 billion in fresh
equity in order to ease the investment house's temporary
cash problems.

A company source said All-Asia was holding negotiations
with a prospective investor, a foreign financial
institution whose identity has been kept under wraps, which
has asked for a minimum 25-percent stake in the investment
house. If the talks bear fruit, the new investor will end
up having the single biggest block in All Asia.

The source said there would be a "realignment" of the
equity structure of the company because some of its
shareholders have declined to participate in the new equity
call.  All Asia's key shareholders--the Eusebio Tanco
group, Lombard International, International Finance Corp.,
and the Alcantara group--have signified their interest of
maintaining their current holdings in the company.

Land Bank of the Philippines and Armed Forces of the
Philippines Retirement and Separation Benefits System (AFP-
RSBS) are unlikely to infuse new equity into the firm
considering the government's tight finances. It could not
be determined if Antonio Garcia of Chemphil and the Abaya
group of Cagayan Electric would also participate in the
equity call.

The market was abuzz with rumors that All-Asia's foreign
investors have demanded a complete management shakeup in
the company before putting in new money into the company.
The company source denied that the foreign shareholders
made such demands.  All-Asia encountered cash problems
after Urban Bank collapsed which prompted a number of
investors to liquidate their holdings in other investment

The source said the equity infusion from investors would
put All-Asia back on its feet while the entry of a new
foreign partner would make it an even stronger player.
All-Asia has an attractive portfolio of assets which a
number of firms have been coveting in the past few years.
With its urgent need for cash, All-Asia has become more
open to cutting a deal on its assets.

For example, All-Asia has a firm offer for its insurance
business from at least three foreign companies but it has
refused to let it go because it wanted to maintain majority
control of this unit.  But since being hit by a cash
squeeze, All-Asia has considered retaining only a minority
interest in the insurance business which could lead to a
major deal in the coming weeks.

Aside from insurance, All Asia has interests in stock
brokerage, venture capital fund, strategic investments,
mutual funds, and utilities (All Asia Anglian Water Corp.).
(Philippine Daily Inquirer  19-Jun-2000)

MONDRAGON INT'L: In final talks with white knight
Mondragon International Philippines, Inc. is nearing
completion of talks with a prospective white knight willing
to take a 40% stake in the debt-laden resort operator for
$100 million to $200 million.

A company official said the management, led by Mondragon
chairman and chief executive officer Antonio Gonzalez, is
in the thick of negotiations with a consortium of local and
foreign investors and will announce the buy-in before the
end of the month.  The source said Mondragon was supposed
to announce the entry of the investors last month. However,
both parties are still finalizing the terms of the buy-in
although the source hinted that investors are interested to
acquire shares in the cash-strapped firm for $100 million
to $200 million equivalent to 40% shareholdings.

At the stock market last Friday, Mondragon shares closed at
0.92 Philippine peso (PhP), 6.97% higher from PhP0.86 on
speculations that the management will soon announce the
entry of an investor.  An analyst from a local brokerage
house said a $150-million equity injection would be more
than enough to settle Mondragon's PhP5.439-billion
(US$127.6 million at PhP42.611:US$1) debt to government
agencies and creditors.

"In terms of book value, that would translate to PhP1.97
per share, assuming Mondragon will not issue new shares to
cover the equity infusion. If we assume (the) new
investor's entry price would be at PhP1 par, Mondragon
might have to issue approximately 6.3 billion shares and
translate to book value of PhP0.19 per share.

"On the other hand, if we were to include our PhP552-
million net loss forecast this year on top of the new
equity injection and issuance of new shares, Mondragon's
conservative book value would be at PhP0.11," the analyst

Earlier, Mr. Gonzalez told BusinessWorld the company has
been in talks with foreign gaming firms based in Hong Kong,
the UK, and Australia as well as a number of local firms
that have expressed interest to purchase its casino
business under Mimosa Leisure and Resorts Corp. (MLRC).

The management is also in discussion for a PhP600-million
bridge financing arrangement to meet short-term
obligations.  Other investors also reported to be
interested in the casino business include businessman Dante
Tan of controversial gaming firm BW Resources Corp.,
presidential adviser for overseas workers William
Gatchalian, and an investment client of the Bank of

Mondragon owes government-owned Clark Development Corp.
(CDC) some PhP325 million in rental fees. CDC inked a lease
agreement with Mondragon in 1994 for the development of
Mimosa Estate.  The company also has to pay around PhP105
million to state gaming regulator, Philippine Amusement and
Gaming Corp. and the Bureau of Internal Revenue.

Last year, Mondragon posted a net loss of PhP995.22 million
which was a slight improvement from its PhP1.132-billion
net loss incurred the previous year. The drop in the
company's revenues to PhP523.74 million from PhP1.61
billion was attributed to the takeover of certain operating
units of the Mimosa Estate including its golf and hotel
operations.  (Business World 19-June-2000)

Philippine tycoon Lucio Tan is willing to sell his
controlling interest in the ailing Philippine Airlines
(PAL) but the buyer must assume the carrier's debts of over
US$2 billion (HK$15.6 billion), Finance Secretary Jose
Pardo said yesterday.

"He said he would sell all of his stake for US$200
million," Mr Pardo told reporters. "Also the buyer, has to
assume PAL's debts."

Mr Pardo said Mr Tan wanted to unload his PAL shares to put
to rest allegations about special treatment he received
from the government due to his close links with President
Joseph Estrada. Mr Tan had previously said he would sell
his shares in the flag carrier for US$800 million but that
the price was negotiable.  The tobacco and beer tycoon had
said he was in talks with several airlines, including
Germany's Lufthansa to sell his stake but that nothing had
been finalised.

PAL announced last week that it had made a financial
comeback after six years of losses by posting an unaudited
net income of 44.2 million pesos (HK$8.1 million) for the
financial year ended March 31.  It started a 10-year
restructuring programme to be able to repay debts totalling
US$2.2 billion last year.  The airline, which briefly
closed down operations in 1998, incurred the loans to
finance an ambitious re-fleeting programme before the Asian
financial crisis struck in 1997.  (Hong Kong iMail 19-Jun-

PHILIPPINE NAT.BANK: Re-bidding set in 30-60 days
The government said Friday it is planning to re-bid within
the next 30 to 60 days its 30-percent stake in the
Philippine National Bank (PNB) to avoid a proposed stock
rights offering from diluting the stake.

Bangko Sentral ng Pilipinas (BSP) governor Rafael
Buenaventura said the BSP wants business taipan Lucio Tan
to instead draw up a plan that would rehabilitate PNB and
make it financially healthy, rather than introduce a P10-
billion capital build-up program through a stock rights

Tan holds a 46-percent stake in PNB, making him the largest
owner of the financially ill bank.  Buenaventura said the
stock rights offering would dilute the government's stake
in PNB by 15 to 20 percent, since stock rights prices are
made lower than the prevailing market share price to
encourage subscription.

"We have asked Tan to submit a rehab plan that would tell
us that the amount of capital call, the level of
provisioning, expense control, loan growth. In other words,
they need to tell us how to make PNB viable again," said

However, finance secretary Jose T. Pardo said Tan must be
ready to "subordinate" his revival plan to that of the
government, if a longer time for re-bidding is necessary.
At the moment, Buenaventura said the finance department's
concern is to sell its stake in PNB at a reasonable price
at the soonest possible time.

"The priority right now is really to strengthen the bank
and make it viable. We do have a year to stay with PNB
after the World Bank approved the extension (of the
bidding) but Secretary Pardo wants to get out sooner rather
than later." Buenaventura said.

Last June 9, the bidding for the joint PNB stake of
government and Tan failed after one of the two bidders
missed complying with pre-qualification requirements.
Only Rizal Commercial Banking Corporation had pre-qualified
in the bidding after Filipino-American businesswoman Loida
Nicolas-Lewis failed to find a local bank partner that
would allow her to pre-qualify for the PNB sale.

PNB led all commercial banks in terms of non-performing
loans, with such loans reaching 33% as of April from 29% at
the end of 1999. (ABS/CBN News Channel  19-Jun-2000)

PRIME SAVINGS BANK: PDIC seeks buyers for branches
The Philippine Deposit Insurance Corp. (PDIC) is still
looking for a buyer for the 32 branches of closed Prime
Savings Bank to pay off the bank's creditors and

PDIC president Norberto Nazareno said over the weekend that
since they have already exhausted all efforts to look for
an investor to rehabilitate Prime Bank, they would have to
dispose of the branches which can be sold at not less than
P10 million each.  He said they have waited for months for
a rehab plan to be submitted but nothing came.

"We have exhausted all possibilities. Left are just the
assets so we will be selling these," he said.

Manila Banking Corp. initially expressed interest to buy
Prime Savings, but the negotiations bogged down for unknown
reasons. In 1997, MbF Holdings Berhad of Malaysia was
reported to be eyeing Prime Bank, but just the same, the
talks collapsed.

"The money which will be raised in selling the branch
franchise of Prime Bank at approximately P32 million will
be used to pay off the bank's uninsured depositors,"
Nazareno said.

He said they are finalizing the criteria for the sale of
the franchise and will submit it to the Monetary Board, the
policy making body of the Bangko Sentral ng Pilipinas
(BSP), for approval in two to three weeks time. He added
PDIC is also reviewing the possibility of pursuing criminal
charges against the officials of Prime Bank.

"Since I'm new in the position, I have to take a look at
that," he said, when asked if they intend to go after the
officials that allegedly abused their DOSRI (directors,
officers, stockholders, and related interests) privileges.

PDIC took over Prime Bank in January 2000. Prime Bank has
61 branches nationwide and a head office in Greenhills, San
Juan. Total deposit liabilities were estimated at P3.2
billion. (Philippine Star  19-Jun-2000)

URBAN BANK: SMC,Meralco,Petron to swap stakes for equity
Some of the biggest depositors and investors of the closed
Urban Bank such as San Miguel Corp. (SMC), Manila Electric
Co. (Meralco) and Petron Corp. have agreed to convert at
least 30 percent of their deposits and investments into
equity in the bank, industry sources told The STAR over the

"They (SMC, Meralco and Petron) have signed a memorandum of
agreement with Bank of Commerce to convert part of it
(deposits/private placements) into equity. I think at least
30 percent of the deposits would be converted into equity,"
sources said.

Sources said the three firms have at least P3 billion in
deposits and investments in Urban Bank and Urbancorp
Investments Inc., its investment house subsidiary. For
instance, SMC, though its Retirement Fund, has P1.3 billion
in private placements with Urban Bank while Meralco and
Petron each has over P1-billion deposits with the bank.

The Cojuangco-controlled Bank of Commerce is one of two
banks vying for Urban Bank and its subsidiaries. The other
is Asia United Bank. Monetary authorities are expected to
announce this week which of the two banks got the go-signal
to buy Urban Bank.

Sources said Bank of Commerce has an edge over Asia United
Bank since it was able to get the support of Urban Bank's
depositors, investors, and even its shareholders. Bank of
Commerce president Raul De Mesa said two-thirds of Urban
Bank's stockholders have already signed a separate MOA with

"From all indications, it looks like Bank of Commerce would
get Urban Bank," sources said. "It's not yet formal and it
has not yet been announced that they got it."

Bank of Commerce said it would raise P1.6 billion to P2
billion in additional capital to revive Urban Bank of which
P300 million would come from the bank's shareholders and
P600 million from the Social Security System (SSS). Another
P1 billion to P2 billion would come from the depositors
through conversion of their funds into preferred shares.

Among Urban Bank's shareholders who have agreed to help
Bank of Commerce rehabilitate the bank are SSS, who has
P150-million equity investments in the bank and holds two
board seats, the groups of its chairman Arsenio Bartolome
and its president Teodoro Borlongan. (Philippine Star  19-

URBANCORP INVESTMENT: SEC pushing criminal case vs execs
Top executives of troubled Urbancorp Investments, Inc.
(UII) may soon have more than just the firm's ailing
coffers in their hands, as the Securities and Exchange
Commission (SEC) gets ready to pursue criminal cases
against those who may have had a direct hand in the
investment house's collapse.

A fact-finding investigation by the SEC's brokers and
exchanges department (BED) showed several criminal
violations committed by UII executives, which are set to be
forwarded to the SEC's prosecution and enforcement
department and the multi-agency task force tasked to
investigate Urban Bank's collapse.

For one, the BED said despite the written approval of the
Bangko Sentral (Central Bank of the Phils.), it is against
the law for UII and Urban Bank to have the same set of
directors and officers since the latter does not have
majority control over the investment firm. UII is 40% owned
by Urban Bank.

Although UII has complied with the minimum paid-in capital
requirement of 300 million Philippine pesos (PhP) (US$7
million at PhP42.611:US$1), the BED cited several
violations of the rules governing short-term commercial
papers when UII borrowed funds from various retirement

Under the rules, the borrowings (from corporate retirement
plans) are considered exempt only if they are approved by
the Bureau of Internal Revenue (BIR). Only one of the
corporate retirement plans -- Philippine Rural
Reconstruction Movement -- has the approval of the BIR.

"We consider other borrowing issues as illegal sourcing of
funds in violation of the RSA (Revised Securities Act) for
having been issued without the prior registration from the
commission," the BED said.

Moreover, the BED findings showed RSA violations in the
transactions of UII-Trust Department involving the trading
of receivables of various customers of Urban Financial
Services, Inc. (UFSI), a financing company affiliate of
Urban Bank. The trade receivables of UFSI's customers such
as GMA Network, Jaka Properties and Investments, One
McKinley Place, Rustan Commercial Corp. were assigned to
UII, which in turn, sold these receivables to various
clients on a without recourse basis thru confirmation

"The selling of the trade receivables is considered a form
of sourcing funds without prior registration in violation
of the RSA," the BED said.

Under the law, "no securities ... shall be sold or offered
for sale or distribution to the public unless such
securities shall have been registered and permitted to be

Meanwhile, the BED said UII violated MB Resolution No. 1004
which requires investment houses to derive at least 25% of
its gross income from underwriting and other fee-based

"It is apparent that UII has not complied with MB
Resolution in view that its income has been eaten up by its
losses from its equity investments," the BED said.

A breakdown of UII's income from operations shows that only
PhP1.12 billion ($26.3 million) is generated from
underwriting and other fee-based activities while over
PhP9.44 billion ($221.5 million) is lost from its equity

The Bangko Sentral also said it will filed criminal charges
against several top executives of Urban Bank. Bangko
Sentral Gov. Rafael B. Buenaventura earlier said a multi-
agency task force tasked to investigate the bank's collapse
is in the final stages of gathering data to strengthen the
government's case. "Definitely, there will be charges that
will be filed against the parties responsible," he said.

The task force is composed of officials from the Bangko
Sentral, the SEC, the Philippine Deposit Insurance Corp.
and the Department of Justice. Businessworld sources
earlier said the Bangko Sentral is investigating possible
violations in the bank's prudential limits on loans to
directors, officers, shareholders and related interests
(DOSRI). Banking laws cap a bank's DOSRI loans to 15% of
its unimpaired capital or 100% of total deposit base.

The official, speaking on condition of anonymity, said the
bank and its investment house subsidiary, UII, may be
liable for representing its investment instruments as bank
deposits. "Initial reports indicate that they were
accepting investments through the Urban Bank branches," the
official said.

While Urbancorp has a trust license from the central bank
to operate a mutual fund-type vehicle, it does not have a
quasi-banking license that will allow it to accept deposits
from clients. Both DOSRI and misrepresentation cases may be
lodged as criminal charges depending on the severity of the

In a related development, Philippine Deposit Insurance
Corp. (PDIC), the state deposit insurer, said it is not
closing its doors to other parties who might still be
interested in submitting rehabilitation plans for the Urban

"We will consider (other proposals) so if there would be
other rehabilitation plans that can give us something
better in terms of servicing the depositors, we will also
be open to that," PDIC president Norberto C. Nazareno said
during a forum at the Hotel Inter-Continental last Friday.

The PDIC chief said interested parties can still submit
their proposals before June 30,the internal deadline PDIC
set for the reopening of Urban Bank.

"This is not like bidding for a government asset where you
have a deadline and you are limited to whoever expressed
interest. As a receiver our role in PDIC is to evaluate
what is the best rehabilitation plan for all the parties
that are affected especially the depositors. If we have
time to evaluate it on a faster basis, we will also
evaluate it," he said.

Meanwhile, state pension fund Social Security System (SSS)
said it may agree to Bank of Commerce's proposal to infuse
PhP600-million ($14 million) equity for the rehabilitation
of troubled Urban Bank.  SSS currently has a PhP171-million
($4 million) investment in Urban Bank and holds two board
seats. It originally invested PhP286.65 million ($6.7
million) for its 15% stake in the bank, representing 2.1
million shares at PhP136.50 per share bought in 1998.

In an interview with BusinessWorld last Friday during a
convention for real estate developers, SSS chairman and
president Carlos A. Arellano said discussions are still
going and the pension fund has not yet signed any binding
agreement with Bank of Commerce since the two parties have
not yet agreed on the two conditions stated by SSS.

"The offer of Bank of Commerce to us was to put in PhP600
million in convertible preferreds but that would be subject
to certain terms and conditions, of course whether it's a
good rate that we're getting on the preferreds and whether
the conversion rate would be god for SSS," Mr. Arellano

"Number two, it must also cover our exposure in Urban Bank
proper. To what extent it can be covered in the new
arrangement, that remains to be discussed but that has been
made part and parcel of the arrangement," he added.
(Business World  19-Jun-2000)


ASIA FINANCIAL SYNDICATE: FRA to pay creditor claims
SCF FINANCE AND SECURITIES: FRA to pay creditor claims
SIAM CITY CREDIT: FRA to pay creditor claims
SIAM CITY SYNDICATE: FRA to pay creditor claims
The Financial Sector Restructuring Authority has
transferred seven billion baht in funds to the Legal
Execution Department following a ruling by the Central
Bankruptcy Court to clear creditor claims lodged against
four defunct finance companies.

The department will allow the Financial Institutions
Development Fund to have first claim on the funds before
other creditors are paid, according to Manit Sutaporn,
deputy permanent secretary for Justice.  The FRA, which was
set up in 1997 to oversee the liquidation of 56 defunct
finance companies, filed suit for bankruptcy against four
finance companies earlier this year.

In March, the court placed Asia Financial Syndicate, SCF
Finance and Securities, Siam City Syndicate and Siam City
Credit in receivership.  The department will now have
responsibility for settling claims for creditors.

The FRA was forced to file the bankruptcy suit after
several creditors had filed separate civil suits against
the companies, despite having agreed earlier to abide by
the authority's liquidation procedures.  To prevent the
creditors from taking an unfair advantage of others, the
FRA sought an automatic stay by the bankruptcy court to
allow equal consideration of all claims.

The department has given creditors of the four finance
companies until the end of the month to file their claims.
Mr Manit said the Financial Institutions Development Fund,
as preferred creditor, would gain first right to the funds
raised during the liquidation of assets of the four firms
by the FRA. But the development fund would have to file a
legal claim similar to other creditors first, he added.

As of May, Asia Financial Syndicate had outstanding claims
of 9.19 billion baht, Siam City Syndicate 5.89 billion, SCF
Finance 1.2 billion and Siam City Credit 2.79 billion.
The settlement process could take up to 18 months, given
that nearly 200 civil cases remain pending against former
borrowers from the finance companies. Mr Manit said the
department has established a new team specifically tasked
with handling cases dealing with the 56 defunct finance
companies, although staffing problems have led to delays.

Meanwhile, the FRA is awaiting a final ruling by the
Council of State before it begins the process of settling
claims for other creditors of the finance companies. As of
June, the FRA said it had completed reviewing claims for 49
out of the 56 finance companies, or 87.5% of the 45,099

Overall, claims totalling 630 billion baht have been
screened, or 68% of the total 919.4 billion in claims
originally filed with the FRA. The FRA has raised 186.5
billion baht from its asset auctions to date. (Bangkok Post  

S U B S C R I P T I O N  I N F O R M A T I O N

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

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