TCRAP_Public/000713.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                             A S I A   P A C I F I C

             Thursday, July 13, 2000, Vol. 3, No. 135

                                    Headlines


* A U S T R A L I A *

DELTA GOLD: Foreign takeover target?
JOY MINING MACHINERY: Debt rehab has workers fearing worst
KGRIND: Looking for $20M white knight
LIHIR GOLD: Foreign takeover target?
NEWCREST MINING: Foreign takeover target?
NORMANDY MINING: Foreign takeover target?
SATELLITE GROUP: Asset freeze after axing


* C H I N A  &  H O N G  K O N G *

HAINAN INT'L TRUST AND INVEST.: Defaults on yen bonds
KEL HOLDINGS LTD: Rehab scheme approved by court
TSE SUI LUEN JEWELRY: Mainland outlets avoiding debt action
UDL HOLDINGS: Last-ditch bid to derail its rescue plan
UDL KENWORTH ENGIN.: Rehab scheme approved by court
UDL KENWORTH GROUP: Rehab scheme approved by court
ZHENGZHOU COAL INDUSTRY: To resolve $117M in bad debts


* J A P A N *

ISHIKAWAJIMA-HARIMA HEAVY INDUS.: Moody's downgrades
KAWASAKI HEAVY INDUSTRIES: Moody's downgrades
MITSUBISHI HEAVY INDUSTRIES: Moody's downgrades
SOGO CORP.: Cost of failure could cost Gov't more
SOGO CO.: Filing for court rehab, dropping bailout plan


* K O R E A *

DAEGU BANK: Facing holding firm operation in Oct.
HANVIT BANK: Facing holding firm operation in Oct.
HYUNDAI MOTOR: Suspected of instigating stock hoarding
KOREA EXCHANGE BANK: Facing holding firm operation in Oct.
KWANGJU BANK: Facing holding firm operation in Oct.
KYONGNAM BANK: Facing holding firm operation in Oct.
SEOUL BANK: Facing holding firm operation in Oct.


* M A L A Y S I A *

MALAYSIAN GENERAL INVEST.CORP.: To change core business
TIME ENGINEERING: Signs share deal with gov't agency
TIME ENGINEERING: Creditors begin voting process


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

NATIONAL DEVELOP.CORP.: P3.7B writeoff of bad investments?
NATIONAL STEEL CORP.: Gets extension on debt pact
NATIONAL STEEL CORP.: Another creditor bucks rehab plan
PHILIPPINE NAT.BANK: Gov't stake draws 4 prospects
URBAN BANK: Big depositors to sign conversion deal today


* T H A I L A N D *

AROMATICS THAILAND: Gov't approves rehab plan
THAI OIL: Sells subsidiaries for $70M to pay down debt
THAI OLEFINS: Gov't approves rehab plan



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

DELTA GOLD: Foreign takeover target?
LIHIR GOLD: Foreign takeover target?
NEWCREST MINING: Foreign takeover target?
NORMANDY MINING: Foreign takeover target?
-----------------------------------------
The head of Australia's largest gold mining company has
suggested that the gold industry could be ripe for foreign
takeovers in the coming months due to a weak currency and
the prevalence of low share prices.

Normandy Mining chairman Robert Champion de Crespigny would
not comment as to whether his company might be such a
target, whether for South Africa's AngloGold or another
foreign miner.
He did offer that "With a weak Australian dollar and a
sector that's had difficulties ... you are bound to get
some reorganisation."

Rising from historically low levels in the past two weeks,
Australian gold prices climbed as the result of a number of
North American mining mergers triggered speculation that US
and South African companies were considering future bids.
Contributing to the speculation is the fact that the
Australian dollar has fallen nearly 10 percent against the
US dollar this year, making Aussie companies even cheaper
for acquisition-minded foreign bidders.

The index of 31 gold stocks on the Australian Stock
Exchange has risen more than three percent this month, in
large part upon speculation that such companies as
Normandy, Lihir Gold, Delta Gold and Newcrest Mining were
potential takeover targets.
Gold prices, however, have dropped about two percent during
the same period.

South African AngloGold -- the world's biggest gold
producer - is considering foreign acquisitions on the basis
that such assets are cheaper to exploit than deposits at
home, where costs rank among the highest in the world.
AngloGold's US$209 per ounce average cost of production
pales in comparision to Normandy's US$198 an ounce.

JOY MINING MACHINERY: Debt rehab has workers fearing worst
----------------------------------------------------------
Joy Mining Machinery workers were yesterday sent packing
from the Sydney offices of an American bank which unions
claim is financing a company restructure that will leave
workers jobless.

The Southern Highlands workers had gone to Sydney to meet
the heads of the Chase Manhattan Bank, which has lent Joy's
US-based parent company $750million to restructure. Joy is
part of mining company Harnischfeger Industries, which has
filed for Chapter 11 bankruptcy in the United States.

The 73 workers at Joy were locked out of their factory more
than three months ago over a pay claim and company moves to
shut unions out from pay talks. Australian Manufacturing
Workers Union state secretary John Parkin said the
delegation yesterday tried to find out more about the
restructure from Chase Manhattan, but were thrown out of
the bank's Sydney offices.

"You think about the kind of money Harnischfeger has got
out of this bank; well then, why is Joy locking you out for
a pittance of a pay claim you have got against them for
improving an enterprise agreement?" he said.

South Coast Labour Council secretary Arthur Rorris said it
was appalling that Chase Manhattan was propping up
industrial thuggery.  Joy worker Pat Woodward said he was
furious at the company's tactics.  The father of two said
he had worked for the company for nine years and did not
know what the future held.

"We've been living off donations; it's hard but we have to
learn to budget on that money and that's all there is to
it," he said. (Illawarra Mercury  08-July-2000)

KGRIND: Looking for $20M white knight
-------------------------------------
ly investors in cash-strapped KGrind are on the trail of a
saviour for the fledgling broadband content group, with
reports they have approached potential buyers including the
Seven Network's online spin-off I7, Cable & Wireless Optus
and Telstra.

Led by the Macquarie Technology Investment Bank, the
investors - who include Australian Mezzanine Investments
and Acer Computer Australia - have been searching for a
solution to KGrind's dire funding troubles since last week.

KGrind, which has more than 100 staff, is understood to
have been burning through cash at a rate of $1 million a
month for the past 10 months.  It needs of close to $20
million to stay alive in the medium term, but its plight
has not been helped by capital markets drying up after the
recent shake-out in tech valuations and rising doubts over
the long-term viability of many dotcom start-ups.

Company founder Jon Peters has not returned media phone
calls, and a spokeswoman for the company said it was bound
not to talk because of confidentiality agreements.  Among
the possible outcomes being discussed by the early
investors are a break-up of the company into separate
content and technology divisions, a merger with a fellow
dotcom, or a fire sale.

An announcement on the future of KGrind will be made as
soon as the end of this week.  Telstra executives were
reported to have entertained representatives from MTIB
yesterday, while internet radio pioneer Chris Murphy, whose
company DigitalOne is part-owned by i7, confirmed he had
been approached.  Other companies said to have been
doorknocked by MTIB last week are web publisher
Terraplanet, operator of the Juice.net youth portal, and
music e-tailer Chaos Music.

Sources at Austar, which operates the Chello broadband
service, could not confirm whether it had also been
approached by MTIB.  A spokeswoman for C&W Optus said the
second-ranked local telco a content partnership with KGrind
but could not say whether a bail-out of KGrind had been
discussed.

"We have an agreement with KGrind from which we get feeds
of their youth content and extreme sports, and it's been
extremely popular," she said. "We would have regular
contact with them as a result of that relationship, but we
don't discuss rumour or speculation in the marketplace."
(Australian IT  12-July-2000)

SATELLITE GROUP: Asset freeze after axing
-----------------------------------------
Sacked Satellite managing director Greg Fisher has had more
than $4 million worth of assets including his luxury harbor
cruiser, a $200,000 black Porsche and his $600,000
Darlinghurst apartment frozen for an investigation by the
corporate police.

Mr Fisher is due to appear in the NSW Supreme Court this
morning for a hearing to decide whether his personal assets
should be placed in receivership and distributed to
Satellite shareholders.  The move, instigated by Satellite
chairman Kerryn Phelps, comes after Mr Fisher was forced to
resign last week as chief of the world's first listed gay
and lesbian company.

But Mr Fisher told friends yesterday he intended to wrest
back control of the troubled group.  It is understood Mr
Fisher, who retains a 17 per cent stake in Satellite, has
secured support of the company's largest shareholder the
Millennium Group, run by Hong Kong's Savio Kwong Chi Shing.

Together they would command almost 37 per cent of
Satellite.  But that remains theoretical while Mr Fisher's
shares remain frozen by the court after an interim order
brought by the Australian Securities and Investment
Commission. The assets include Satellite shares and options
worth $2.25 million.

But Mr Fisher said last night the move to freeze the assets
could mostly hurt Satellite shareholders, because many of
Satellite's property assets were secured by mortgages
personally guaranteed by him.  If his assets were
dissolved, mortgagees would be within their rights to call
in loans on Satellite assets, he said.

A defiant Mr Fisher said he had "done nothing wrong",
despite admitting he had borrowed $500,000 from The
Satellite Group's accounts without formally informing the
board.  "There may have been a technical breach there but
in any event I have the money and can repay it," he said.
(The Advertiser  12-July-2000)


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

HAINAN INT'L TRUST AND INVEST.: Defaults on yen bonds
-----------------------------------------------------
China said yesterday it was studying how to repay holders
of a Samurai bond after a provincial-level trust defaulted,
raising old fears about the quality of Chinese credit.

Officials from other Chinese trust firms said their fund-
raising could be hurt, but the immediate market effect was
muted as bond traders waited to see how the situation
played out.  The Hainan International Trust and Investment
Corp (Hitic) missed the deadline for making an interest
payment on a 14.5 billion yen (HK$1.06 billion) Samurai
bond on Monday, technically putting the debt in default,
Japanese underwriters said.

An official of Hainan province, which owns the trust, said
it was considering how to pay bondholders but he could not
say when the firm could meet its obligations.

"There will be a policy on how to repay, whether to repay
in batches," he said from Haikou, capital Hainan province.
"It's not clear yet. We are in the process of studying
this."

Meanwhile, the Japan Credit Rating Agency (JCR) downgraded
the trust's credit rating yesterday to its lowest grade of
single D from triple C, which means the bond is in default
by JCR's definition.

"Discussions between the pay agent and the issuer are still
going on and there is a possibility that Hitic may meet the
coupon payment obligation in the future, but at this stage
the outlook is still uncertain," the ratings agency said.

The seven-year bond bearing a coupon of 5 per cent, was
issued on December 26, 1994. Under the original terms,
Hitic was due to make the payment on June 26 and was
technically in default 14 days after that date. The pay
agent for the issue, Shinsei Bank, must formally announce
the default for it to be official, Japanese market sources
said.

Officials from other Chinese trust firms said Hainan's
problems could hurt their fund-raising, still suffering
from the collapse of the Guangdong International Trust and
Investment Corporation (Gitic), which filed for bankruptcy
in January 1999 with some US$4.7 billion (HK$36.66 billion)
in debt, causing foreign investors to slash their exposure
to China.

"This will have a negative impact," said an executive with
the Shanghai International Trust and Investment
Corporation.

But bond traders said the news had little immediate impact
on other China-related credit yesterday, as it had been
expected by the market.

"Anyone who is surprised by that and hasn't written that
bond down to zero needs some help," said Steve Plampin,
director of credit trading at Barclays Capital in Hong
Kong.

Hong Kong-based bankers with loans to Chinese corporates
agreed Hitic's missed payment was hardly a surprise, since
nearly all Chinese trusts had been struggling to repay debt
since the collapse of Gitic.  Even so, said a loan
syndications manager at a French bank, to "a certain extent
it dealt another blow to the already quite dampened
market."

"For the China sovereign bonds, I don't think there will be
any impact on the bond price or future payment ability,"
said Merrill Lynch fixed income analyst Linda Bui. "But in
terms of starting to lend new money to those second-tier or
lower-quality credits, I would think most of the banks
would still be very cautious in the near term."

As for Hitic, the Hainan official said it had halted
business and was undergoing "internal restructuring," but
had not gone bankrupt. "After rectification, there will be
a payment scheme to come out," he said, without specifying
Hitic's problems.  (Hong Kong iMail  12-July-2000)

KEL HOLDINGS LTD: Rehab scheme approved by court
UDL KENWORTH ENGIN.: Rehab scheme approved by court
UDL KENWORTH GROUP: Rehab scheme approved by court
---------------------------------------------------
The schemes of arrangement of KEL Holdings Limited and its
two subsidiaries, UDL Kenworth Group Limited and UDL
Kenworth Engineering Limited, were sanctioned by the Court
on July 11 conditional upon (i) the approval of the
Restructuring Proposal; and (ii) relevant approvals having
been granted by the Listing Committee of The Stock Exchange
of Hong Kong Limited as detailed in the Company's circular
dated 26th June 2000.

Further announcement will be made in due course in respect
of the timetables for (i) the Capital Reorganisation and
(ii) the issue of Warrants and the relevant circulars will
be dispatched to shareholders accordingly. (Hong Kong Stock
Exchange  12-July-2000)

TSE SUI LUEN JEWELRY: Mainland outlets avoiding debt action
-----------------------------------------------------------
Mainland franchise holders of Hong Kong's Tse Sui Luen
Jewelry will probably not be affected by the founder's debt
problems, the Shanghai Daily said, citing officials with
the company's mainland outlets.

"To date, our business in Chinese mainland is steady and
remains unchanged," an official with a Tse Sui Luen outlet
in Beijing said. "Our status will remain the same, even if
the Hong Kong court eventually declares Tse Sui Luen, the
company founder, bankrupt."  

The mainland outlets operate under a franchise from the
Hong Kong jewellery giant, which is considered an overseas
company.  Under China's regulations, overseas firms are not
permitted to sell jewellery, especially gold ornaments, in
the domestic market. But they are permitted to provide
management training and jewellery design instruction.
Hong Kong's leading jewellers, like Chow Sang Sang, Chow
Tai Fook and Tse Sui Luen, have all entered the mainland
market through franchises.

"Our finances are separate from Hong Kong's Tse Sui Luen,"
said the official with the Beijing outlet.

Of the 30 Tse Sui Luen outlets on the mainland, six are in
Shanghai.  The Hong Kong and Shanghai Banking Corporation
(HSBC) earlier filed a civil lawsuit demanding the
company's founder and chairman, Tse Sui Luen, pay a debt of
500 million yuan (about HK$470.7 million). The bank later
withdrew the lawsuit, however.

A similar lawsuit filed by another creditor, Suez Asia
Holding, a French investment bank, is being reviewed by
High Court in Hong Kong. (South China Morning Post  12-
July-2000)

UDL HOLDINGS: Last-ditch bid to derail its rescue plan
------------------------------------------------------
An 11th-hour attempt is being made to derail the rescue of
UDL Holdings and its subsidiaries amid accusations of
vanished assets and audit discrepancies.

The company incurred substantial losses in a short period
of time that were not accounted for and warranted the
immediate appointment of an independent liquidator to
launch a probe, it was argued yesterday.  New evidence has
emerged showing glaring discrepancies between the audited
account of the company, and the management's account, it is
claimed.

The arguments were put before the companies judge by
Japanese firm Nishimatsu Construction yesterday.
However, Mrs Justice Doreen Le Pichon refused to allow the
new evidence to be admitted.  However, an appeal against
her judgment sanctioning a scheme of arrangement for UDL
Holdings and the 25 subsidiaries will be heard in November
at the Court of Appeal.

Mrs Justice Le Pichon gave the green light to a
restructuring in April which will give unsecured creditors
a recovery of 11.41 HK cents - plus 0.17 new shares - per
dollar of scheme debt.  This was to discharge debts of
about HK$1.7 billion.

The rescue bid came against the backdrop of strong
objections from some camps, however. It had been argued by
some creditors that when it came down to voting for the
scheme, the classes of creditors had not been properly
constituted.  They claimed that a meeting held to gauge
support was unrepresentative, and that creditors with
vested interests sought to take advantage of others.

Internal creditors were allowed to vote in the same class
as the other unsecured creditors.  The scheme barely met
the statutory threshold of 75 per cent support, moreover,
with 75.87 per cent voting in favour.  Nishimatsu, a
disputed creditor, was unable to vote either way and has
HK$343 million in claims against the company.

Yesterday, counsel for Nishimatsu, barrister Paul Carolan
told the Court of First Instance: "The information
[relating to the accounts] is so vastly different from that
in the company's management account. On that alone,
investigation is called for. That is the foundation for the
concern .. It's not appropriate there be a sanction that
would avoid the opportunity for a liquidator to
investigate."

However, the judge refused to allow the evidence to be
admitted at such a late stage.

"You can't come in, try to derail . . . take everyone by
surprise," she said. She thus sanctioned the three
subsidiaries' scheme of arrangement. "The creditors voted
to keep the company alive. You are the only one from day
one that wants it wound up."  

The judge concluded: "It's just creating havoc with the
court's diary and the smooth hearing of cases." (South
China Morning Post  12-July-2000)

ZHENGZHOU COAL INDUSTRY: To resolve $117M in bad debts
------------------------------------------------------
It may be in the most primitive of industries, but
Zhengzhou Coal Industry Group, a state-owned energy and
manufacturing concern, is at the cutting edge of efforts to
resolve China's bad-debt problems.

About 970 million renminbi ($117 million) of the troubled
firm's nonperforming loans from three state banks have been
handed over to a state-run loan-recovery agency, making
this one of China's biggest debt workouts.

Under a plan that awaits approval from Beijing, the
recovery agency, Cinda Asset Management, will swap the bad
debts for a majority stake in a new company to be mined out
of the best bits of Zhengzhou Coal. What's left of the
group will have eight years to turn its fortunes around and
buy the stake back. If it doesn't, the shareholding will be
sold to private investors, including foreigners.

A lot is on the line. Zhengzhou Coal has a payroll of
42,000 at its seven mines and 30-odd subsidiaries in Henan
province in central China. Protests by workers have been
common in recent years because the company has failed to
pay wages on time, according to local press reports. What
happens at Zhengzhou Coal is also being closely watched by
three other coal-mining companies in the province that have
transferred 1 billion renminbi in bad debt to Cinda.

Assuming the plan goes ahead, China's economy could be a
big winner, as capital long tied up in unprofitable
operations is released for better uses. But the case will
test how far Beijing is willing to tolerate the
privatization of core state assets in return for solving
the country's horrific bad-debt problem. Debt-for-equity
swaps by the four loan-recovery agencies that Beijing
set up last year have so far been limited to about 500
companies nationwide.

Beijing hopes those equity stakes can be kept in state
hands, either through future buy-backs or by sales to other
state firms. But a more likely outcome is massive
downsizing of stricken firms and disposal of the most
valuable bits to private investors.

"Our aim is to buy the equity stake back. But to be honest
there's little hope of that," says Li Guoan, the chairman
of Zhengzhou Coal.

Unlike hard-nosed debt workouts in the United States, where
creditors delight in making debtors sweat, the Zhengzhou
Coal workout has been mostly perspiration-free. Under a
deal signed with Cinda in April, the company stopped
paying interest on its bad debt, saving itself 80 million
renminbi a year. By earmarking the debt for equity
conversion, the deal effectively lowered the firm's debt-
to-assets ratio to 30% from 50%.

"We got lucky," says Chairman Li with a chuckle. "This is a
good thing for us."

Cinda has also refrained from demanding changes in the way
the company is managed. "When we first met, they were
really afraid of me," says Zhang Heyun, head of Cinda's
office in Zhengzhou. "But after a while they realized I was
here to help them survive."

Under the plan, Zhengzhou Coal will put 10 of its best
subsidiaries, including coal mines, power plants and cement
factories, into a new company called Zhengxin Energy.
Cinda's claims on Zhengzhou Coal will be converted into
a 51% stake in Zhengxin Energy, which will be given a new
executive team and board of directors. In effect, Cinda
will be converting debt in a wobbly company into equity in
a stronger one.

All the retired workers, schools, hospitals and other parts
of the "little society" that drag down so many state
enterprises in China will be taken over by the provincial
government. "The government is giving us a lot of support
on this," says Zhengzhou Coal's finance chief, Zhang
Yudong, flourishing an official "red letter document," the
most authoritative kind, from the provincial government
containing a promise to relieve the new company of its
welfare burden.

What's left of Zhengzhou Coal, however, will be a shadow of
its former self. The assets shovelled into the new company
accounted for about half of Zhengzhou Coal's 1.5 billion
renminbi in revenues last year, and about the same share of
its net assets. But they employed only 12,000 staff -- less
than a third of the group total.

Left behind will be a loss-making, bloated collection of
run-down assets.  These include a sprawling collection of
companies engaged in agriculture, consumer products,
tourism and industrial manufacturing, as well as the least-
profitable concerns related to the core coal business, such
as rail transport and mining equipment.

That makes it unlikely that the company will recover the
Cinda stake in Zhengxin after the eight years elapse.
Indeed, company officials say a more likely outcome is that
Zhengzhou Coal will be forced to sell down its own stake
in Zhengxin as it struggles to raise money to pay wages and
close money-losing subsidiaries.

"We'll have to close down some of the subsidiaries or get
the local governments to take them over," says finance
chief Zhang. "That won't be cheap."

Company officials expect Cinda to list Zhengxin on a
domestic stock exchange so that the agency's holding can
eventually be sold to private investors. If markets like
the stock, which plans for the new company aim to ensure,
Cinda may end up recovering more than the original debt. A
listing will also make it easier for Zhengzhou Coal to
raise money by selling down its stake in Zhengxin.

In 1998, the same incentive led it to offer shares worth
430 million renminbi in Zhengzhou Coal & Power, a
profitable subsidiary comprising two mines and a power
station, in a listing on the Shanghai stock exchange.
Shares in Zhengzhou Coal & Power, which was given a five-
year tax holiday by Beijing, have increased by more than
five times since then.

That has provided a much-needed source of cash for
Zhengzhou Coal, which can borrow against the shares or sell
them. Little wonder that Chairman Li says of the expected
listing of Zhengxin Energy: "This will be good for us. We
used to have just one listed company. Now we'll have two."

While the overall plan has Beijing's blessing, final
approval is being held up by a tussle between Zhengzhou
Coal's creditor banks and the central government's main
overseer of state industry, the State Economic and Trade
Commission. The SETC originally wanted at least 1.2 billion
renminbi of Zhengzhou Coal's nonperforming loans to be
taken over by Cinda instead of the 970 million renminbi now
planned.

But the three bank creditors are resisting, according to
finance chief Zhang. (The banks are the State Development
Bank, a concessionary-finance arm for domestic development,
and two commercial institutions, China Construction
Bank and the Industrial and Commercial Bank of China.)

The creditor banks' resistance stems from the fact that
they have been given a fixed quota for the amount of bad
loans that they can hand over to the salvage companies.
They would naturally prefer to part with only their most
hopeless cases. Since loans to Zhengzhou Coal still pay
some interest and represent claims on an asset-rich
company, the banks want to hold on to as many of them as
possible.

On average, Zhengzhou Coal's long-term loans carry an
interest rate of 8%, says finance chief Zhang. That
contrasts with the niggardly rate of 2.25% that banks earn
from 10-year state-backed bonds they are given by Cinda.
Delays in getting the plan approved, however, represent
precious time lost for Zhengzhou Coal, which is under
orders from the SETC to turn a profit by 2002. "If they
don't approve the plan soon, we won't be able to straighten
out our own situation," says Zhang. (Far Eastern Economic
Review  13-July-2000)


=========
J A P A N
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ISHIKAWAJIMA-HARIMA HEAVY INDUS.: Moody's downgrades
KAWASAKI HEAVY INDUSTRIES: Moody's downgrades
MITSUBISHI HEAVY INDUSTRIES: Moody's downgrades
----------------------------------------------------
Moody's Investors Service said yesterday it downgraded its
ratings on Japan's three major heavy machinery makers
because of their slow profit recovery.

The US ratings agency lowered its long-term debt rating of
Japan's top machinery maker Mitsubishi Heavy Industries
(MHI) from A1 to A2.

"The rating action reflects Moody's view that it may take
longer than expected for MHI to recover sufficient
profitability and cash flow," the agency said in a
statement.

Mitsubishi Heavy's rating outlook is negative, Moody's
said.  

"The A2 rating for MHI recognizes its leading market
position in many of its businesses and its important role
as one of the world's few integrated builders of
infrastructure," it said.  "However, MHI's profitability
has weakened in recent years because many of MHI's domestic
business areas are mature and expenditures for heavy
machinery in Japan are curtailed."

Moody's also downgraded its long-term debt rating of
Kawasaki Heavy Industries (KHI) from Baa1 to Baa2, citing a
slow recovery of the company's profitability and cash flow.
Kawasaki's profitability has "significantly weakened in the
last few years, reflecting poor performance of the
shipbuilding and industrial machinery divisions," the
agency said.

"KHI's business portfolio is too diversified, making it
difficult for the company to concentrate resources on
business areas where it has a competitive edge."

Kawasaki's rating outlook was stable, it said.
Ishikawajima-Harima Heavy Industries' long-term debt rating
was cut from Baa1 to Baa2, and its rating outlook was
negative, Moody's said.  Moody's also cited Ishikawajima-
Harima's slow profit recovery and excessively diversified
business portfolio.

"The outlook is negative because profitability of the aero-
engine and space operations division - IHI's core profit
generator - will not be strong enough to sustain the
overall profitability of the company," it said.

IHI's purchase of Nissan Motor's aerospace division would
initially cause a financial strain, Moody's said.  The
purchase would "require debt financing, putting further
pressures on the balance sheet," it said. (Business Day  
12-July-2000)

SOGO CORP.: Cost of failure could cost Gov't more
-------------------------------------------------
Revised government estimates show that the burden on
Japanese taxpayers could be 23 billion to 43 billion yen
greater if the government allows Sogo Co. to fail, versus
granting a controversial debt waiver.

The revised estimates were revealed by the Financial
Reconstruction Commission and Deposit Insurance Corp. (DIC)
at a meeting of senior ruling Liberal Democratic Party
lawmakers. DIC has decided to buy back Sogo loans worth
197.6 billion yen from Shinsei Bank (formerly Long-Term
Credit Bank of Japan). DIC also plans to forgive 97 billion
yen of the loans at public expense.

About 100 billion yen in loan-loss reserves already has
been set aside, thereby no additional public burden is
expected to emerge any time soon. Comparitively, if Sogo
were to file for corporate rehabilitation, DIC's loss would
total 123 billion yen, which is not covered by the
reserves, there multiplying the public burden, according to
FRC and DIC officials.  If the distressed department store
operator goes bankrupt, the public burden could rise to as
much as 43 billion yen, they estimated.

SOGO CO.: Filing for court rehab, dropping bailout plan
-------------------------------------------------------
Crippled Japanese department store chain Sogo Co. Ltd. is
filing for court-mandated rehabilitation and abandoning its
controversial bailout plan, a report said Wednesday.

"Sogo gave up restructuring on its own and applied to the
Tokyo District Court for court rehabilitation today," said
Japan Broadcasting Corp. "Under the court-administered
management, Sogo will rehabilitate."

"The rescue plan was scrapped," NHK said. "It did so
because of strong public opposition to the use of public
money for its restructuring."

The government's approval of the use of public money in a
bailout of Sogo attracted criticism from analysts and some
in the ruling Liberal Democratic Party for undermining
corporate restructuring in Japan.  Under a new law which
took effect in April, Japanese companies can apply for
court rehabilitation as a preventive measure which stops
short of a full bankruptcy application.  (Agence France
Presse  12-July-2000)


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

DAEGU BANK: Facing holding firm operation in Oct.
HANVIT BANK: Facing holding firm operation in Oct.
KOREA EXCHANGE BANK: Facing holding firm operation in Oct.
KWANGJU BANK: Facing holding firm operation in Oct.
KYONGNAM BANK: Facing holding firm operation in Oct.
SEOUL BANK: Facing holding firm operation in Oct.
---------------------------------------------------------
In line with a deal between the government and an umbrella
bank union, the government will normalize operations of
banks deemed unable to stand on their own by placing them
under financial holding companies in October.

In addition, the government will not force bank mergers in
the process of a second-phase banking overhaul and will not
intervene in bank management, Financial Supervisory
Commission Chairman Lee Yong-keun said yesterday.  
According to the agreement announced yesterday morning,
nationalized banks as well as other banks with a capital
adequacy ratio of less than 8 percent will be required to
present self-rescue plans to the government by the end of
September.

An eight-member evaluation committee independent of the
government will be set up to determine the feasibility of
the self-help plans, while the task force will be comprised
of "neutral and objective" members.  If their plans are
considered unfeasible, the government will inject public
funds to clean up their bad loans and to raise their
capital adequacy ratios to 10 percent before placing them
under financial holding companies.

Banking sources estimate that five to six banks, including
provincial banks, had capital adequacy ratios below 8
percent as of the end of June, judging from their potential
losses announced late last month.  The Financial
Supervisory Service disclosed June 30 that the nation's 24
commercial and special-purpose banks had 3.93 trillion won
in combined potential losses from nonperforming loans as of
the end of March this year.

Among national banks, Hanvit had the largest potential loss
of 776.9 billion won, followed by Seoul Bank with 767
billion won and Korea Exchange with 583.7 billion won.
Kwangju Bank reported the biggest potential loss of 171.9
billion won among provincial banks, trailed by Daegu Bank
with 111.1 billion won and Kyongnam Bank with 96.2 billion
won.

Despite the consolidation of nonviable banks in financial
holding companies, the government will not seek forced
mergers of them, while decisions on layoffs and other cost-
cutting measures will be made after negotiations between
bank management and labor leaders.  The agreement also
stipulates that the government should minimize its
interference in the banking sector and eliminate "excessive
and unnecessary regulations as soon as possible."

Banks, in which the government has its largest stakes, will
be guaranteed managerial autonomy thoroughly with their
boards of directors taking charge of all managerial
affairs.  Instead of issuing verbal instructions to banks,
the government will implement its financial policy measures
transparently and according to due procedures, including
documentation of their orders.

Partial guarantee of bank deposits will be implemented next
year in line with a government plan, while the government
will try to pay banks their loans to troubled merchant
banks. Starting next year, up to 20 million won per account
will be covered by a state deposit guarantee mechanism in
case banks and other financial institutions go belly-up.

The government will also determine at the earliest date
possible how and when it will pay banks loans against which
it has promised payment guarantees, including bank loans
worth around $1 billion extended to Russia in 1991.  After
five rounds of prolonged negotiations, the government and
the Korea Financial Industry Union struck the deal Tuesday
night, ending the first-ever strike by bank employees.

Since the agreement has removed the biggest stumbling block
to second-phase banking reform, some analysts predicted
that the overhaul of the banking sector is expected to gain
faster ground in coming months.  FSC Chairman Lee said that
as soon as a financial holding company law passes the
National Assembly, the government will push for
restructuring the banking sector in order to boost its
competitiveness.

Others, however, doubted how the government will be able to
normalize operations of shaky banks without reducing jobs
and branch offices, thus boosting their competitiveness.

"The agreement runs counter to the goal of financial
restructuring," an analyst said. "It is not designed to
force shaky banks out of the market but keep troubled banks
above water by injecting taxpayer money." (The Korea Herald  
13-July-2000)

HYUNDAI MOTOR: Suspected of instigating stock hoarding
------------------------------------------------------
Hyundai Motors management is suspected of attempts to
secure shareholders who support the current management by
encouraging minor shareholders to collect Hyundai shares.

Several parts suppliers have already stockpiled shares in
Hyundai Motor, Korea's largest automaker. In early June,
Chung Ju-yung, the founder of Hyundai Group, announced that
he, along with his two sons, Mong-koo, Chairman of Hyundai
Motor, and Mong-hun, Chairman of Hyundai Business Group,
would resign from their posts together. However, Mong-koo
has refused to step down as disputes between them continue.

Hwashin, a major parts supplier for Hyundai, said Wednesday
it purchased 180,680 shares or 0.07% of Hyundai total
stocks at W2.6 billion. Hwashin said the firm used 19.74%
of its capital for the purchase of Hyundai Motors shares.
The company said the purchases were made for the sole
purpose of investment.

Another parts supplier, Donghae Jonjang, announced earlier
that it purchased 340,890 shares or 0.12% of Hyundai stocks
at W5.63 billion, which is equivalent to 62% of the
company's capital. Sung Woo High Tech said that on July 5
that it spent W1.46 billion to purchase Hyundai Motors
100,000 shares.

The motives behind these purchases are under suspicion,
according to market analysts, since, firstly, they all
purchased Hyundai shares at about the same time, secondly,
these companies supply their products solely to Hyundai
Motor, and thirdly, they spent more than 10% of their
capital on the purchases. The analysts, therefore, claim
that Hyundai management is behind the share purchases in
order to gain additional management-friendly shareholders.

It was also revealed that Hyundai Motors management has
been asking its employees and its affiliate Kia Motors
employees to purchase additional Hyundai Motor shares.
Despite being offered several benefits for such purchases,
many employees complained that they were pressured to make
the purchases. (Digital Chosun  12-July-2000)


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

MALAYSIAN GENERAL INVEST.CORP.: To change core business
-------------------------------------------------------
Debt-laden Malaysian General Investment Corporation Bhd
(MGIC) which is riding on a debt of RM85 million is
considering manufacturing and property as its new core
business.

The company is in the midst of evaluating proposals for the
acquisition of two to three manufacturing and property
companies and expects the negotiations to be completed by
end of this month.

"We are negotiating with three parties in Klang Valley. The
manufacturing company is involved in plactic moulding.
We hope to complete the deals soon," executive chairman and
chief executive officer Datuk Mohd Ghazali Mohd Khalid said
in an interview.  "If all goes well, MGIC will buy these
companies, subject to creditors and shareholders approval."

The acquisition of these assets will be satisfied through
share issues.  MGIC is involved in money and futures
broking, stockbroking, property development, investment
holdings, resorts and plantation.  Mohd Ghazali is
confident that the new assets soon to be injected into MGIC
will see the company returning to the black next year.

"There should be a turnaround next year. These new
businesses will contribute immediately to the company's
earnings. In addition, the stockbroking business which has
been making substantial losses would have been disposed of
by then," he said.

MGIC, which was badly hit by the financial crisis in 1997
and 1998 has posted pre-tax losses of RM320.14 million,
RM7.85 million and RM48.49 million in 1997, 1998 and 1999,
respectively. The losses in 1999 were due to the collapse
of its stockbroking business which recorded a pre-tax loss
of RM22.53 million.

The company's RM85 million debt excludes those of its
stockbroking arm, MGI Securities Sdn Bhd which is in the
process of being disposed of to Avenue Assets Bhd. MGIC has
five secured creditors and six partially secured and
unsecured creditors.

In June 1998, MGIC obtained a High Court stay under section
176(10) of the Companies Act 1965 against its creditors
from proceeding with any action against the company.
MGIC's proposed restructuring scheme involves a proposed
acquisition of 70 per cent of the issued and paid-up share
capital in Selat Bersatu Sdn Bhd, which owns 90 per cent of
PT Rebinmas Jaya, a company incorporated in Indonesia.

PT Rebinmas is the owner of 25,000 hectares of oil palm
plantations.  However, the proposed acquisition of Selat
Bersatu was aborted recently as it was rejected by MGIC's
major shareholders, Yayasan Pahang and the Pahang State
Government.  MGIC is 49 per cent owned by Yayasan Pahang
and Mohd Ghazali holds 15 percent of the company's shares.
(The New Straits Times  10-July-2000)

TIME ENGINEERING: Signs share deal with gov't agency
----------------------------------------------------
The Malaysian government's investment arm has signed an
agreement to take a stake in a debt-ridden conglomerate
after a deal with Singapore Telecommunications
Ltd. fell through, it was announced Monday.

Time Engineering Bhd. said in a statement that it would
give details later of its agreement signed Saturday with
investment arm Khazanah Nasional Bhd.  The Star newspaper
said Khazanah would pay three ringgit a share to take a
29.99 percent stake in Time's telecommunications
subsidiary, Time dotCom Bhd, at an estimated cost of 2.2
billion ringgit (579 million dollars).

This was based on a 7.35 billion ringgit valuation for Time
dotCom, slightly lower than the 8.3 billion ringgit that
Singtel was willing to pay for a 30 percent stake in the
company, the daily said.  The government has denied
persistent speculation that the Singapore deal was aborted
in May for political reasons. Relations between Malaysia
and Singapore are often prickly.

Trading in Time Engineering was suspended early Monday at a
last traded price of 3.76 ringgit pending an announcement
later on its deal with Khazanah.  Analysts said the
Khazanah pact was a breakthrough for Time and would pave
the way for creditors' approval of its debt restructuring
scheme at a meeting Wednesday.

Time Engineering reportedly had debts of about 4.8 billion
ringgit (1.26 billion dollars) at the end of last year. But
Time dotCom's assets include a 3,600 kilometre (2,250 mile)
fibre-optic and 1,600km submarine cable network spanning
peninsular Malaysia.

Its restructuring scheme, announced in January, entails the
issuing of warrants, bonds and irredeemable convertible
unsecured loan stocks, as well as Time dotCom's listing.
After its failed deal with Singtel, Time's board also
rejected an alternative bid from local telecommunications
group Sapura, a major creditor. It then announced it had
started talks with Khazanah.

Prime Minister Mahathir Mohamad said this was not a bailout
since Time had good potential and "a solid asset" in the
fibreoptic networks. Time and its parent company Renong
Bhd. are closely linked to Mahathir's ruling United Malays
National Organisation.  Analysts said Khazanah may
eventually sell part or all of its stake to a strategic
partner.

"I'm sure the creditors of Time Engineering will be
reassured by Khazanah signing on for a stake in Time
dotCom," said a senior analyst at a local brokerage, quoted
byaffiliate AFX-Asia.

But the issue of a strategic technological partner, seen as
critical to Time dotCom's listing, has not been resolved,
he said.  France Telecom was among those touted as a
possible suitor, the analyst said.  One telecommunications
analyst at a foreign brokerage said a foreign partner would
likely probably pay more than three ringgit per share for
Time dotCom.

"Time dotCom is looking for a technological partner, it
will probably be foreign, and they will have to pay more
than what Khazanah is believed to have paid," he said.
(Agence France Presse  10-July-2000)

TIME ENGINEERING: Creditors begin voting process
------------------------------------------------
Creditors of Time Engineering Bhd started the court
convened voting exercise for its debt restructuring scheme
at 9am Wednesday morning.

An hour later, five sets of creditors with about RM351mil
owing to them had voted in favour of the scheme. Total debt
was estimated at RM5bil.  The whole exercise is expected to
be completed by 5pm Wednesday.

Time Engineering needs the consent of 75% of the creditors
for the restructuring scheme to go through.  The next batch
of creditors includes the EPF whose loans to Time is about
RM500mil.  The Sapura group, which is also a major creditor
of Time, will exercise its rights in the afternoon.  The
voting exercise is coordinated by Time and the Corporate
Debt Restructuring Committee (CDRC). (The Star Online  12-
July-2000)


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

NATIONAL DEVELOP.CORP.: P3.7B writeoff of bad investments?
----------------------------------------------------------
The National Development Co. (NDC) may write off P3.7-
billion worth of bad investments and loans to such
companies as the controversial First Centennial Clark
Corp., National Steel Corp. and the Philippine National
Construction Corp.

Trade and Industry Secretary Manuel Roxas II told reporters
yesterday that the NDC has contracted SGV & Co. to conduct
a review and revaluation of the company's investments to
isolate problem accounts and possibly write off some of its
investments and receivables.  Roxas said the review of
NDC's assets is part of the effort to sell more government
assets held by NDC as the state investment arm cleans up
its book of accounts.

"We are just recognizing reality here," Roxas said. "NDC
has investments and receivables that are, at best, on shaky
grounds and we want to be able to isolate these problem
accounts."

However, Roxas said the review would not include the P5-
billion proceeds from the Economic Recovery through
Agricultural Productivity (ERAP) bonds since this fund is
covered by a guarantee by the National Government.
Excluding the ERAP bonds proceeds, NDC's assets stood at
P9.8 billion while its total liabilities based on unaudited
financial reports, stood at P5.9 billion. These liabilities
include obligations from various foreign and domestic
creditors.

However, Roxas said NDC has also questionable receivables
such as a P609-million receivable from the First Centennial
Clark Corp. which he said could be considered "shaky."
Another one, he said, was a P410-million receivable from
the Philippine National Construction Corp. (PNCC)
representing a loan extended to the state-owned company.

"There are also items in the NDC books which are non-
performing equity investments," he said.

These equity investments include P1.819 billion
representing the company's remaining equity in National
Steel Corp. (NSC), now under receivership and awaiting new
investors after two failed bids. NDC also has P900 million
in equity representing government's 60-percent interest in
the bankrupt First Centennial Clark Corp.

First Centennial, which had to shut down after incurring
huge operational losses, owes up to P1.4 billion.
Government spent P390 million last year to service these
loans and another P420 million is expected to be spent on
debt servicing this year.

"We might as well assume that we won't be getting this
value when these holdings are privatized, assuming they can
still be sold," he said, adding that the NDC might have to
make a provision for these receivables and investments to
reflect their true value.

At the same time, Roxas said NDC is still in possession of
vast land assets that were grossly undervalued. He said
these properties have to be reassessed to determine their
benchmark market value based on current prices.

"In the NDC books, these assets have a book value amounting
to only P211 million," he said. "By now, these properties
have to be worth much more than the book value. This is
what we also want to find out.

"The credibility of a company is reflected by the
credibility of its financial records," Roxas added. "This
is what we are trying to establish but let me assure that
NDC is sufficiently liquid and solvent." (Philippine Star  
12-July-2000)

NATIONAL STEEL CORP.: Gets extension on debt pact
-------------------------------------------------
The Philippine Securities and Exchange Commission has
extended the suspension of debt payments by National Steel
Corp. to July 16, documents obtained Monday showed.

The commission previously allowed the company to suspend
debt payments until May 17 to give its creditors time to
review and comment on its rehabilitation plan.

In its plan, National Steel proposed to restructure nine
billion pesos ($204.5 million) in debt, which is 55% of the
company's total long-term debt of 16.5 billion pesos. The
plan also called for the entry of a strategic investor,
preferably a slab producer. The commission didn't indicate
when it was expected to approve the company's proposal.
(The Asian Wall Street Journal  11-July-2000)

NATIONAL STEEL CORP.: Another creditor bucks rehab plan
-------------------------------------------------------
Security Bank and Trust Corp. (SBTC), another creditor of
National Steel Corp. (NSC), is opposing the proposed
rehabilitation plan of the steel firm.

Submitting its comment on the recovery strategy espoused by
NSC, SBTC said it is clear that the proposal does not
contain a definitive plan of action that will demonstrate
how the company can make a turn towards recovery.

"It is much too dependent on premises and conditions that
are highly speculative and unrealistic, such as government
intervention to prevent dumping; guaranteed long-term
supply of slabs; technical rehabilitation and preventive
maintenance and massive reduction of debts," SBTC said.

SBTC said the rehabilitation plan is flawed because the
"scenario being depicted is the ideal state of business
condition... NSC should instead work out a plan that is
responsible or attuned to hard facts and conditions and
come out with a plan that is feasible and implementable."

As a result, SBTC said the rehabilitation plan does not
project a confident or viable scenario sufficient to lure
or attract investors to invest in NSC.  The bank added that
the repayment scheme is not acceptable.

"Considering that the long term commercial papers have been
booked by NSC under current liabilities, and there appears
to be a definite, immediate and concrete sourcing of funds
to pay current liabilities, it would be more to the
advantage of NSC to pay off these loans so as to release
its other properties which secure its obligations to the
LTCP holders, decreasing its current liabilities and making
other assets unencumbered and free for disposition and/or
utilization."

SBTC is also objecting to the proposal to convert part of
NSC's loans to equity and other portions to long-term
payment scheme over a long period of time.

"Once approved, it is arbitrary and inequitous in the sense
that unwilling creditors are compelled to be come equity
holders in a business not of their liking and competence,
and worse to contravene, unwittingly, existing rules and
regulations of the banking industry. Also it violates the
freedom of contract in that it amounts to an amendment of
the original terms of the loan against the will of the
creditors," the SBTC added. (Philippine Star  12-July-2000)

PHILIPPINE NAT.BANK: Gov't stake draws 4 prospects
--------------------------------------------------
US investment group Chase Manhattan is one of four
prospective bidders expressing interest in buying or
finding a buyer for the government's 30-percent stake in
Philippine National Bank.

Government sources said the investment bank found
attractive the payment package designed by the government
for its stake in PNB that is scheduled to be auctioned off
on July 19. Chase Manhattan, said sources, believed that at
P85 per share on a cash basis, the bank could generate
sufficient investor interest.

In another development, Rizal Commercial Banking Corp., the
only qualified bidder in the failed June 9 auction for PNB,
is renewing its bid for the 30-percent block in the bank.
Just how serious is the Yuchengco-controlled bank in
getting the block next week? Very serious, sources said, if
the recent appointment of former PNB chief operating
officer Valentin Araneta as the new RCBC president was to
be taken as an indication.

RCBC will compete with the group of businesswoman Loida
Nicolas Lewis, US-based investment house JP Morgan and
Chase Manhattan for the 30-percent block held by the
government.  Sources disclosed that the government has
asked PNB director Washington Sycip to "peddle" the bank to
tycoons Henry Sy of Banco de Oro, George Go of Metrobank
and Alfonso Yuchengco of Rizal Commercial Banking Corp.
Sycip, founder of SGV & Co., is the representative of the
private sector in PNB.

Finance Secretary Jose T. Pardo, however, expressed doubts
yesterday that any of the tycoons would buy into PNB.
The finance secretary had confirmed that at least three
groups have expressed interest to bid for 30 percent of PNB
on July 19 even as he stressed that the government needs
only one bidder to close a sale.

"We need only one who could pay P85 per share on a cash
basis and P100 per share on installment payable in 18
months," said Pardo.

The finance official stressed that buying the government's
30 percent stake makes sense given an assurance that the
bank would have at least P10 billion in new capital by
September, a commitment of Tan's group to the government.
The fresh capital would be raised through a stock rights
offering and Tan's group had committed to buy shares from
the rights issue if there would be no takers.

"PNB with a clean balance sheet is obviously a profitable
enterprise. The buyer could turn around and sell after a
year and make profits," said Pardo.

He was talking about the bank's more than 300 branches and
a large deposit of the government and foreign overseas
workers.  Pardo said that if the July 19 auction would also
fail , the government would have no other choice but to
hold on to its stake and hope that it could make up for a
foreseen dilution to 15 percent through a projected
increase in PNB's share price once the rehabilitation is
under way.  (Philippine Daily Inquirer  12-July-2000)

URBAN BANK: Big depositors to sign conversion deal today
--------------------------------------------------------
Bank of Commerce is set to sign today an agreement that
would allow it to convert deposits of three big companies
in failed Urban Bank Inc. into equities.

In a news briefing yesterday, Finance Secretary Jose Pardo
said Bank of Commerce owner Antonio "Tonyboy" Cojuangco
told him an agreement with San Miguel Corp., Petron Corp.
and the Manila Electric Co. would be signed today.
These companies said earlier they were not willing to
convert their deposits in Urban Bank into equity as part of
the bank's rehabilitation.  Their statements came after
Bank of Commerce won the rights to buy the failed lender.

Bank of Commerce wants corporate depositors owed the most
by Urban Bank to accept equity instead of the funds
themselves.  Meralco officials said they were not
considering the proposal while Petron said the arrangement
was still being discussed and that no agreement had been
signed.

It is unclear whether Bank of Commerce requires the three
companies' agreement to proceed with the purchase.
A combined P750 million in deposits from Meralco, Petron
and San Miguel would be converted into equity in the bank,
Pardo said last week.  The medium-sized Urban Bank declared
a bank holiday due to massive withdrawals in April and was
later ordered closed by the Bangko Sentral ng Pilipinas on
April 26.

On Thursday, the central bank approved a proposal to
rehabilitate Urban Bank. The rehabilitation plan, however,
has yet to be approved by bank depositors, investors and
creditors.  Pardo said the plan called for P1.65 billion in
fresh equity, the bulk, or P600 million, of which would
come from part owner, state pension fund Social Security
System.

Big depositors would convert P750 million into equity while
unlisted Bank of Commerce would infuse P300 million in
Urban, Pardo said.  Urban Bank, slated to re-open on Sept.
4, is expected to merge with Bank of Commerce.  Shares of
the bank were last traded on April 26, when it closed at
P72. (Philippine Daily Inquirer  12-July-2000)


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

AROMATICS THAILAND: Gov't approves rehab plan
THAI OLEFINS: Gov't approves rehab plan
---------------------------------------------
The Petroleum Authority of Thailand (PTT), the country's
state energy utility, is to buy US$149 million-worth of
shares in Aromatics (Thailand), its petrochemical arm, as
part of the restructuring of the unit's $389 million debt.

After the share purchase, PTT's holding in Aromatics,
Thailand's largest maker of paraxylene chemical material,
will rise to more than 50 percent from 44 percent, said
government spokesman Akrapol Sorasuchart after a meeting of
the Thai cabinet.

The government today agreed to allow PTT to invest new
equity capital in Aromatics after creditors approved the
debt plan.  The plan also requires Aromatics' other main
shareholders, such as Siam Cement and Banpu and Crown
Property Bureau, the investment arm of the Royal Family, to
invest another $61 million in the company.

Creditors such as Sanwa Bank of Japan, the Export-Import
Bank of Japan and Krung Thai Bank in April agreed to allow
a delay in repayment of Aromatics' debt for another two
years to 2009, provided the state utility and other main
shareholders invest more in the company.

The government today also approved a plan to restructure
$359 million of delinquent debts owed by Thai Olefins
another petrochemical unit of PTT. The debt proposal asked
creditors to extend debt repayment for another two years
from five years.

Under the plan, PTT and other main creditors will also lend
another $191 million to Thai Olefins which will be used to
fund production capacity expansion.

"PTT, as raw material supplier to the two companies, can
aid them even more by extending the payment period from the
already agreed 30 days, if requested," said Viset Jupibarn,
PTT Governor.

Aromatics and Thai Olefins have been seeking to revamp the
terms of existing debt after the baht devaluation in 1997
magnified foreign debt values. (Business Day  12-July-2000)

THAI OIL: Sells subsidiaries for $70M to pay down debt
------------------------------------------------------
Thai Oil announced it has secured US$70 million from the
sale of two subsidiaries in order to help pay off debts, as
required by the debt restructuring plan approved by
bankruptcy courts.

According to the debt plan, Thai Oil is required to sell
off its non-core businesses to curb expenditure and
simplify business operations.  Chulchit Boonyakatu,
Managing Director of Thai Oil, said the company
had sold its 40 percent stake in Thai Carbon Products
(TCP), one of two secondary businesses, to an existing
shareholder - Tokai group - for $15 million, which he said
was higher than expected.

Among other requirements of the plan, Thai Oil is obliged
to reduce its ownership of Thai Paraxylene (TPX), diluting
its share from 62 percent to 17 percent, with the Petroleum
Authority of Thailand's (PTT) share increasing to 34
percent. Meanwhile, Japan's Nippon Mitsubishi Oil agreed to
boost its ownership from 38 percent to 39 percent and also
pledged to bring in Japanese investors to buy a further 10
percent stake in TPX.

"Cash from the sale will boost company cash flow and enable
it to resume plant construction," said Chulchit.

Because of the unavailability of funds, TPX ceased plant
construction last year.  As a part of PTT's stake increase,
the firm agreed to pay $41 million for preferential shares
which guarantee PTT the right to take profit before others
should Thai Oil achieve net profit.  As a result of the
company's ownership reorganization, Chulchit said
Thai Oil would gain $55 million from the deal. New stake
holders are required to provide an additional $5 million to
Thai Oil for use as an emergency fund.

Two Thai Oil creditors, Industrial Finance Corporation of
Thailand (IFCT) and Bank of Ayudhya, have also agreed to
extend $80 million of credit to TPX, as well as stretching
debt repayment terms from 10 to 12 years with a two year
grace period attached.  Next in Thai Oil's financial agenda
is restructuring its Thai Lube Base $55 million debt as
well as arranging for the sale of Thai Oil Power shares to
new buyers.

Chulchit said the current profit margin of $1.50 per barrel
would likely continue into the next three to four years,
adding that the rate is sufficient for Thai Oil to
financially survive during the period.  Thai Oil has the
capacity to refine 220,000 barrels of crude oil daily. The
Central Bankruptcy Court in May released Thai Oil from
financial supervision because it had fulfilled the
financial restructuring commitments as required by the
court. (Business Day  10-July-2000)


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

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                    *** End of Transmission ***