/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/000714.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 Friday, July 14, 2000, Vol. 3, No. 136 Headlines * A U S T R A L I A * CARTER HOLT HARVEY: To close loss-making NZ paper mill EMAIL: Job cuts 'no surprise,' union says FARNELL AND THOMAS: Out of time, yields to administrators GRUBB FINANCE: Finance crook blames drugs, bad paperwork NORTH LTD: Japanese steel mills turn up heat on Rio * C H I N A & H O N G K O N G * GUANGDONG INT'L TRUST: Officials arrested over bankruptcy JOYCE BOUTIQUE HLDGS.: Wheelock costs may climb to $307M RICK PLEACE LTD: Facing winding up petition TABLEWARE KONCEPTS LTD: Facing winding up petition * I N D O N E S I A * PT INDOLAND: To seek payment suspension * J A P A N * ISHIKAWAJIMA-HARIMA HEAVY INDUS.: Moody's downgrades KAWASAKI HEAVY INDUS.: Moody's downgrades KISARAZU SOGO CO: Files for bankruptcy MITSUBISHI HEAVY INDUS.: Moody's downgrades NAGANO SOGO CO.: Files for bankruptcy SEIYU LTD.: To post 2.1B yen extraordinary loss SNOW BRAND MILK PRODUCTS: Food poisoning sours future SOGO CO.: Seeks court protection as Gov't pulls plug * K O R E A * HYUNDAI CONSTRUCTION: Raises target of self-rescue fund * M A L A Y S I A * ARAB-MALAYSIAN CORP.: Auditor questions its viability LIEN HOE BHD: RAM reaffirms shaky rating for loan stocks TIME dotCOM: Sapura seals stake deal TIME ENGINEERING: Creditors agree to repayment scheme * P H I L I P P I N E S * ASB GROUP: Roxas advances blamed for debt woes CAPITOL WIRELESS:Creditors want asset list before debt deal PILIPINO TELEPHONE CORP.: PLDT bails it out VICTORIAS MILLING CO.: Creditor bank pair OK rehab plan * T H A I L A N D * AROMATICS (THAILAND) PLC: Reports debt rehab plan to SET RAIMON LAND PLC: Reports rehab plan progress to SET ================= A U S T R A L I A ================= CARTER HOLT HARVEY: To close loss-making NZ paper mill ------------------------------------------------------ Carter Holt Harvey, New Zealand's largest forest owner, said it will close its loss-making Mataura paper mill, which accounts for 3% of its production, because of rising pulp prices and competition from imported papers. Carter Holt, which 50.2% owned by International Paper, will shut the Mataura mill on August 18. The mill employs 155 workers in the south of New Zealand's South Island. Carter Holt will take a one-time NZ$20.5M charge in the current quarter for the closure. "It has got to the point where it is unfeasible for us to continue production," said chief executive Chris Liddell. He said Matuara was "20 to 30 times smaller" than comparable plants elsewhere. EMAIL: Job cuts 'no surprise,' union says ----------------------------------------- The Australian Workers Union (AWU) says the announcement that 130 jobs will be shed at the company's refrigerator factory at Orange, in the NSW central-west, comes as no surprise. A mass community rally was held in Orange last week amid fears of downsizing and the rumoured closure of the company's Orange factory under a takeover. Email's general manager Len Kosharek says the job cuts will allow the company to remain competitive and ensure its future. AWU central-west organiser Anne Kelly says unions expected the announcement but workers were shocked. "The unions have been predicting cuts to the employee level for quite some time and we've been told we've been scaremongering, but obviously we've been justified in this case," she said. The job losses will occur in production support, maintenance and tool making, with the company assuring direct factory workers will not be affected. Mr Kosharek says the workers will be offered redundancy packages. "This is a step to get this factory highly competitive in a global community," he said. "This makes us more competitive in the international market, gets us very competitive in domestic markets and it's another step that ensures that we'll be here for many years to come, so I think it should be a positive." (ABC News Online 13- July-2000) FARNELL AND THOMAS: Out of time, yields to administrators --------------------------------------------------------- Troubled Brisbane light engineering group Farnell and Thomas has finally succumbed to voluntary administrators. After months of uncertainty following the total collapse of its British parent group, Transtec, shares in the group were suspended on the Australian Stock Exchange on 11 July 2000. The company had hoped to halt its slide into insolvency with a $A2.5m cash injection from investors and the sale of its foundry businesses in Victoria and Queensland. The company has appointed Arthur Andersen Consulting Group administrator Mark Mentha. Mentha says he will seek a cash injection with a number of interested parties before administration. He says the company's operations in France, Singapore and the United States will proceed but the future of its Australian subsidiaries, including Farley Cutting Systems Australia, Southpac Metals Manufacturing, Factory Automation and Robotics, and Qutec, are uncertain as they, too, have been placed in administration. (The Courier Mail 12-July-2000) GRUBB FINANCE: Finance crook blames drugs, bad paperwork -------------------------------------------------------- A businessman on fraud charges has bared his soul -- Graeme Grubb, the man at the centre of the Western Australian finance-broking fiasco -- spoke about the tangled mess of his finance company before an official inquiry on July 10. His firm, Grubb Finance, was made bankrupt in 1999. It has lost around $A22 million of investors' money. Most investors were self-funded retirees. Grubb has already pleaded guilty in the District Court and is awaiting sentence. Grubb had a raft of excuses and talked freely. However, his silence was deafening when it came to one key question. He refused to answer the question relating to where the money went. He claimed to have no money left. (The Australian 11-July-2000) NORTH LTD: Japanese steel mills turn up heat on Rio --------------------------------------------------- Japan's steel mills have threatened to terminate iron-ore contracts with Rio Tinto unless the company withdraws its $2.8 billion takeover bid for North Ltd. With the prospect of a white-knight counterbid for North unlikely, the Japanese have resorted to threatening to stop buying Rio Tinto's iron ore in an attempt to thwart the takeover offer. The latest edition of the daily newsletter The Tex Report said the Japanese were discussing the prospect of not renewing a 5.5-million-tonne contract, which is due to expire in March. Negotiations for the renewal of the contract for a blend of fines and lump ore were due to get under way soon but had been delayed because of Rio Tinto's bid. "In an attempt to block Rio Tinto's takeover bid in some way or another, a serious discussion is going on among Japanese steel mills," the report said. The threat comes just days after the Japanese offered additional contracts for North's new $1 billion West Angelas project as an enticement for a white-knight counterbidder for the company. The mills, particularly Mitsui, are incensed about the prospect of a concentration of Australian iron-ore production from three suppliers down to two. But securities analysts noted that what the Japanese were threatening to do was no different from what they were opposing in Rio Tinto's bid. Rio Tinto appeared unfazed by the news, with a spokesman saying the threat was not "an unexpected response" to the company's takeover move. So keen are the Japanese to stop Rio Tinto's $3.80-a-share cash offer that they have even canvassed Brazilian iron-ore giants CVRD and Caemi in the hope of luring a counterbid. But the lack of interest there and unsuccessful approaches to London-based groups Billiton and Anglo American had forced the contract threats, analysts said. Rio Tinto is due to formally release its bidder's statement to North shareholders today. North shares are trading at $3.84, four cents above Rio Tinto's offer, while Rio Tinto has gained half a cent to $26.05. Meanwhile, North's uranium mining subsidiary, Energy Resources of Australia, expects to increase uranium production by about 20 per cent in 2000-01 to meet increasing demand. ERA - which is 68.4 per cent owned by North - said production for 1999-2000 was in line with its expectations. The quarterly production and exploration report to June 30 shows full-year output was 4144 tonnes of uranium, which was ahead of the company's target of 4000 tonnes but down from the 1997-98 total of 4375 tonnes. Production for the quarter was 911 tonnes of uranium compared with 736 tonnes in the corresponding quarter last year. The company said production for 2000-01 was expected to increase to around 5000 tonnes, in line with expected sales. The spot price for uranium has fallen from $US10.30 a pound in June 1999 to $US8.10 now. ERA shares finished five cents lower at $2.10 and North added one cent to $3.84. (The Age 13-July-2000) ============================== C H I N A & H O N G K O N G ============================== GUANGDONG INT'L TRUST: Officials arrested over bankruptcy --------------------------------------------------------- The mainland has arrested three former officials of a trust firm over events leading to its bankruptcy under a mountain of foreign debt, the Securities Times reported yesterday. Guangdong International Trust and Investment Corp (Gitic), the overseas fund-raising arm of the southern Guangdong province, filed for bankruptcy in January last year with US$4.7 billion in debts, putting a large dent in the ability of such firms to borrow overseas. Huang Yantian, former Gitic chairman, Li Ji, former general manager of Gitic's Shenzhen branch and Du Shizuo, former vice-general manager of the branch, had been arrested and handed over to provincial prosecutors, the newspaper said. Two other former Gitic officials were still under investigation, it said without elaborating. Officials at Guangdong provincial government and the procuratorate declined to comment. None of the accused could be reached for comment. Gitic's collapse spooked foreign investors and led foreign banks and other creditors to limit their mainland exposure. Report of the arrests follows closely on the heels of more bad news about the troubled international trust industry. Hainan International Trust & Investment Corp (Hitic) missed an interest payment deadline on a 14.5 billion yen (about HK$1.05 billion) Samurai bond on Monday, technically putting the debt in default, underwriters said. Analysts said Hitic's failure to meet its obligations had dealt another blow to the sector and other mainland trusts said their fund-raising could be hurt. The Securities Times quoted a display at an exhibition on "achievements of a crackdown on corruption by the Guangdong provincial government." (South China Morning Post 13-July-2000) JOYCE BOUTIQUE HLDGS.: Wheelock costs may climb to $307M -------------------------------------------------------- Wheelock & Co's costs in its takeover bid of Joyce Boutique could jump to HK$307 million from HK$205 million because of a required general offer to all shareholders of the company. Wheelock will need to offer 25 HK cents for each of the 780 million shares issued by troubled Joyce Boutique Holdings. The company would need to pay out HK$195 million if all shareholders accept its offer. However, Joyce's major shareholder - Ma family-owned J.W. Mark - has said it would not accept Wheelock's offer for its 47.2 per cent stake. If J.W. Mark holds on to its stake, Wheelock would need to pay HK$102 million for the general offer. In addition to the general offer, Wheelock last month said it would need to pay another HK$205 million to subscribe to 820 million new shares of Joyce at the same price, pushing the total cost for Wheelock in the deal up to HK$307 million. Since the new share subscription would result in Wheelock holding 51.3 per cent of Joyce's expanded capital, under the Takeovers Code Wheelock must make a general offer to all Joyce shareholders unless it applies for a waiver. It has not sought a waiver. (South China Morning Post 13- July-2000) RICK PLEACE LTD: Facing winding up petition ------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing on August 30 on the petition of Chow Man Yuen for the winding up of Rick Pleace Limited. A notice of legal appearance must be filed on or before August 29. TABLEWARE KONCEPTS LTD: Facing winding up petition -------------------------------------------------- The High Court of Hong Kong SAR, Court of First Instance, has scheduled a hearing on July 26 on the petition of Suen Miu Yin for the winding up of Tableware Koncepts Limited. A notice of legal appearance must be filed on or before July 25. ================= I N D O N E S I A ================= PT INDOLAND: To seek payment suspension --------------------------------------- Ongko Group property unit PT Indoland is to seek payment suspension next week on its 3.3 bln rupiah debt to the Indonesian Bank Restructuring Agency, company lawyer John K. Azis said. Azis said the company is seeking suspension because the company still has receivables from its customers and its business is still operational. He was speaking after the first hearing on the company's bankruptcy case, which was filed by IBRA with the Jakarta Commercial Court against four Ongko Group companies including Indoland. Azis said the company also has debts to Bank Bali and Sanwa Bank worth 100 bln rupiah. The 3.3 bln rupiah debts were transferred from Bank International Indonesia to IBRA. (AFX News Limited 13-July-2000) ========= J A P A N ========= ISHIKAWAJIMA-HARIMA HEAVY INDUS.: Moody's downgrades KAWASAKI HEAVY INDUS.: Moody's downgrades MITSUBISHI HEAVY INDUS.: Moody's downgrades ---------------------------------------------------- Moody's Investors Service Inc reports that it has downgraded the long-term unsecured debt ratings of three major heavy machinery makers. Mitsubishi Heavy Industries Ltd.'s long-term debt rating was lowered from A1 to A2 and given a negative rating outlook. The rating agency also downgraded the rating for Kawasaki Heavy Industries Ltd from Baa1 to Baa2. The agency said the domestic market for heavy machinery had been sluggish, due mainly to lower capital investment by power companies. Profitability has also deteriorated as companies overseas have demanded costly alterations to orders already placed, the agency said. Ishikawajima-Harima Heavy Industries Co had its rating lowered from Baa1 to Baa2, and its rating outlook also downgraded to negative. IHI's overall profitability is not likely to improve greatly, Moody's said, as the company relies too heavily on low profit businesses such as shipbuilding and plant engineering, although the aircraft engine division is expected to continue posting a profit. KISARAZU SOGO CO: Files for bankruptcy NAGANO SOGO CO.: Files for bankruptcy -------------------------------------- Kisarazu Sogo Co Ltd and Nagano Sogo Co Ltd, affiliates of Sogo Co Ltd, which filed for court protection yesterday, filed today for bankruptcy, Teikoku Databank Co Ltd said. Kisarazu Sogo, which has debt of 22.4 bln yen, launched the application with the Chiba district court, while Nagano Sogo, with debt of 8.8 bln yen, filed the petition with the Nagano district court, it said. At the end of February this year, Kisarazu Sogo had an accumulated loss of 9.9 bln yen, while Nagano Sogo had an accumulated loss of 5.0 bln yen, it said. Teikoku Databank said the number of corporate failures linked to the Sogo group now amounts to 26. Separately, Industrial Bank of Japan Ltd, the main bank for Sogo, said in a written statement that it will make the "utmost efforts" to help revive the Sogo group by extending "necessary funds" and allocating its "human resources within the scope of" the newly enacted low. IBJ said it has a combined exposure of some 237 bln yen to the Sogo group and added that the expected write-off will not affect its earnings outlook. (AFX News Limited 13-July-2000) SEIYU LTD.: To post 2.1B yen extraordinary loss ----------------------------------------------- Seiyu Ltd. has reported that it expects to incur a 2.1 billion yen extraordinary loss for the year ended February 2001. The loss is due primarily to the September liquidation of its affiliated Ginza Saison Theater. The company confirms that the loss already has been included in its earnings estimate for the year. SNOW BRAND MILK PRODUCTS: Food poisoning sours future ----------------------------------------------------- The future of top dairy firm Snow Brand Milk Products is in doubt as cancelled orders pile up after the nation's worst food poisoning outbreak. Leading retailers said Snow Brand products would stay off their shelves until the disgraced company could restore its reputation. More than 14,000 people around the western city of Osaka suffered symptoms, including nausea and diarrhoea, after drinking Snow Brand's bacteria-tainted milk, health officials said. Fifteen people were still in hospital after drinking the milk from Snow Brand's Osaka factory, said an official for the Osaka government's health promotion division. "We have never seen such a widespread outbreak of food poisoning," the official said. "People take milk for granted and Snow Brand has completely lost the trust of its consumers." Snow Brand is suspending production at all 21 of its milk factories from yesterday for at least one week, pending checks by independent inspectors, in a desperate bid to restore consumer confidence. But the fiasco raised big question marks over the company's future amid reports that police were preparing criminal charges. Snow Brand's share price dived 24 yen or 5.9 per cent to 382 yen, and Moody's Investors Service threatened to downgrade the firm's A3 long-term debt because of the damage to its image. Leading retailer Ito-Yokado, which runs 8,200 Seven-Eleven convenience stores, halted sales of Snow Brand's 117 products. "We will stop selling Snow Brand products until we are fully convinced that they are safe," Ito-Yokado spokesman Kazuko Itakura said. Daiei, which runs 314 supermarkets across Japan and another 7,436 shops through Seven-Eleven rival Lawson, has also pulled the blue-and-white Snow Brand cartons off its shelves. "Since Snow Brand has a high share in the milk and milk- related markets, it's difficult to secure replacement products," said Daiei spokesman Toshiyuki Mori. Local distributors for Snow Brand, usually contractually obliged not to sell any other brand of milk, are also feeling the pinch as the company's sales slump. (South China Morning Post 13-July-2000) SOGO CO.: Seeks court protection as Gov't pulls plug ---------------------------------------------------- Debt-laden Japanese department store Sogo Co. filed for court protection after the government pulled the plug on a proposed 198 billion yen ($1.8 billion) taxpayer-funded bailout. The Tokyo District Court today accepted Sogo's request for protection under the Corporate Revitalization Law, said Kyoichi Yamada, president of the Osaka-based retailer, which opened for business in 1830. Sogo's group liabilities totaled 1.87 trillion yen as of Feb. 29, making it Japan's second-largest failure after Japan Leasing Corp., which collapsed under 2.2 trillion yen of debt in 1998. Shizuka Kamei, policy council chairman of the ruling Liberal Democratic Party, had asked the department store to retract its request for a debt waiver from the government, Yamada said. The government's turnaround came after a public outcry at its plans to rescue Sogo, and signals the LDP-led coalition, which was returned to office with a reduced majority at elections last month, will be more mindful of an electorate disillusioned by a decade of economic stagnation and rising debt. "In July, our group sales plunged 86 percent on the year, especially in clothing," said Yamada. "We decided we won't be able to survive without the confidence of the general public. We understood that the voice of the parliament was the voice of the people." (Bloomberg 12-July-2000) Additionally, the Tokyo Stock Exchange Wednesday said it will delist Sogo Co. from the First Section on Oct. 13. Trading in Sogo stock will be conducted in the adjustment post for three months beginning Thursday. ========= K O R E A ========= HYUNDAI CONSTRUCTION: Raises target of self-rescue fund ------------------------------------------------------- Hyundai Engineering and Construction said Thursday that it has raised the target of its self-rescue fund from the original 545.4 billion won to 1.5 trillion won (US$1.34 billion). The company will create the fund designed to erase its liquidity problem by selling stocks, bonds and domestic and overseas real estate, including a cement factory in Bangladesh, by the end of this year. Hyundai submitted an additional self-rescue plan to that effect to main creditor Korea Exchange Bank Wednesday, a Hyundai official said. The original plan was to sell 341.3 billion won worth of stocks and bonds and 204.1 billion won worth of real estate. Under an additional plan to repay credits, Hyundai will additionally sell 285 billion won worth of bonds, 100 billion won worth of real estate and its cement factory in Bangladesh for $50 million. Moreover, it will sell unpaid bonds worth 140 billion won issued by Iraq and issue 200 billion won in bonds for its reclaimed land in Sosan, South Chungchong Province. In a related development, Hyundai will change the usage of the Sosan reclaimed land from the current agriculture to bio- engineering for herbs and gardening. To that end, it is consulting with Japanese and Dutch investors. (Asia Pulse 13-July-2000) =============== M A L A Y S I A =============== ARAB-MALAYSIAN CORP.: Auditor questions its viability ----------------------------------------------------- Arab-Malaysian Corporation (Amcorp), ultimate parent of the Arab-Malaysian banking group, last night provided a detailed explanation of its auditor's qualification of its results for the year ended March 2000, which included a statement that certain factors raised "substantial doubt as to whether the group and the company will be able to continue as a going concern." These factors include possible "impairment" to Amcorp's development properties and development expenditure of RM229.1 million (S$105 million) and RM477.8 million respectively due to uncertainties in the economy, and the property and construction sectors. However, its auditor said no provision has been made as the extent of the damage could not be "ascertained with reasonable certainty". Another uncertainty is the huge amount of RM648.9 million owed by its subsidiaries to Amcorp. Similarly, Amcorp has not made any provisions. The auditor said: "The qualification by the auditors is in view of the Restraining Order. Due to the volatility and uncertainties in the Malaysian stock and property markets, the qualification also reflects the auditors' concern on the impact as to the carrying values of the company and group's investments and the recoverability of certain balances." The auditor was referring to the court order obtained by Amcorp in July 1998 to stave off creditors who were owed almost RM2 billion. The group has since pledged to dispose of certain assets -- including 17 per cent of its 43 per cent holding in listed AMMB Holdings -- to repay creditors in an orderly fashion. But the string of disposals over the last two years was not enough. Analysts said Amcorp is still in dire straits as the company has been slow in selling down its stake in AMMB despite a string of suitors, including the Government of Singapore Investment Corporation and US-based Advent International. Although it had promised to sell 68.2 million AMMB shares, Amcorp is estimated to be still holding about 66.4 million of the shares. (Business Times 13-July-2000) LIEN HOE BHD: RAM reaffirms shaky rating for loan stocks -------------------------------------------------------- Rating Agency Malaysia Bhd (RAM) has reaffirmed the C1 rating on Lien Hoe Bhd's redeemable secured loan stocks (RSLS) of RM53.82 million. In a statement issued today, RAM says the rating reflected Lien Hoe's cash-generating capability, which may not be adequate to support the group's total debt. Going forward, the group may incur large development costs for upcoming projects that could increase its borrowings. RAM also says that while the business fundamentals of the group have begun to show improvement, its balance sheet remains weak with debt totaling more than RM290 million. A restructuring exercise proposed by Lien Hoe is expected to be finalised only in November and hence, will not be in time to redeem outstanding RSLS amounting to RM43.82 million that will mature on Aug 17. Apart from the timing gap, RAM says the total proceeds from the exercise would be insufficient to fully redeem the outstanding RSLS. Although Lien Hoe has indicated that it plans to secure a bridging loan to refinance the outstanding RSLS upon maturity, no funding line is in place yet. Lien Hoe has obtained the Securities Commission's approval for a proposed restructuring exercise involving capital reduction, share consolidation, debt restructuring, rights issue of warrants as well as a restricted offer for the sale of shares and irredeemable convertible unsecured loan stocks. (The Edge 12-July-2000) TIME dotCOM: Sapura seals stake deal ------------------------------------ Malaysian telecommunications group Sapura said Thursday it had sealed a deal with the government's investment arm to acquire a stake in Time dotCom, a subsidiary of debt-ridden Time Engineering Bhd. In a statement, Sapura said it would sell to Khazanah outstanding loans of 469.89 million ringgit (124 million dollars) that Time's telecommunications arm Time dotCom owes the company. In return, Sapura will receive 250 million ringgit cash, shares in Time dotCom and Time Engineering bonds which are exchangeable for shares in Time dotCom. Sapura said the deal would raise its stake in Time dotCom to five percent, including shares that it would receive as a major creditor under Time Engineering's debt restructuring scheme. "The joint participation of Sapura and Khazanah in the Time Group will allow both Sapura and Khazanah to collaborate with Time in future incursions into telecommunications and IT," it added. Khazanah holds 30 percent of Time dotCom under a pact signed with Time on Saturday. Time earlier rejected an alternative bid from Sapura following a failed deal with Singapore Telecommunications Ltd. Time and nine of its subsidiaries Wednesday secured creditors' approval to restructure debts totalling 4.8 billion ringgit (1.26 billion dollars). The scheme, announced in January, entails the issuing of warrants, bonds and irredeemable convertible unsecured loan stocks, as well as the listing of Time dotCom, whose assets include a 3,600 kilometre (2,250 mile) fibre-optic and 1,600 km submarine cable network spanning peninsular Malaysia. Analysts said Khazanah may eventually sell part or all of its stake to a strategic foreign partner. The Star newspaper quoted Sapura chief executive Shahril Shamsuddin as saying Thursday that the company had a separate arrangement to buy more Time dotCom shares from Khazanah's stake. "But we must give first preference to the strategic partner (in Time dotCom) ... the foreign partner comes first but if they do not want it, we will take up the stake," he said. (Agence France-Presse 13-July-2000) TIME ENGINEERING: Creditors agree to repayment scheme ----------------------------------------------------- Two years after seeking protection from its creditors, Time Engineering yesterday managed to get them to support its debt work out scheme to repay RM4.8 billion (S$2.2 billion). "We are very happy and really relieved as the results, (the creditors) met our expectations," Time's chairman Shamsir Omar told reporters after the meeting. He also said that on an average, each of the 22 schemes presented to various groups of creditors yesterday got more than 90 per cent approval. Time started its meetings with creditors at 9 am yesterday morning, with the last ending late in the afternoon. Emerging from their respective meetings, most of the creditors or their representatives declined comment, but those who did speak said they voted for the schemes because it was a way to get their money back. The Employees Provident Fund, Time's single largest lender, who is owed RM502 million, approved the scheme shortly before lunch, while the Sapura Telecommunications group, as the next largest creditor after the EPF, was among the last group of creditors to give their approval yesterday. Time's other main creditors include Malayan Banking (owed RM131 million) and Norway's Nokia Oyj (owed RM 77.7 million). Other creditors include Telekom Malaysia, RHB Bank, Bank of Commerce, Standard Chartered Bank and Goldman Sachs. Time's next step will be getting shareholders' approval for its scheme in a month's time, a hurdle which will not be too difficult to cross, said Lim Thian Siu, corporate finance director for Commerce International Merchant Bankers Bhd, Time's advisers. Before its listing, Time has to establish a strategic alliance with a partner who can provide technical expertise and add value to Time dotCom's telecom business and its extensive fibre-optic network. National investment company Khazanah agreed over the weekend to pay Time a total of RM2.2 billion for a 20 per cent stake in Time dotCom, and another 10 per cent worth in three-year exchangeable secured bonds (ESB). The money paid by Khazanah will be used to redeem in part the RM3.99 billion in promissory notes that Time is issuing its creditors under its debt restructuring plan, whereby all creditors will be repaid in cash upon Time dotCom's listing. (Business Times 13-July-2000) ===================== P H I L I P P I N E S ===================== ASB GROUP: Roxas advances blamed for debt woes ---------------------------------------------- Individual creditors of debt-laden ASB Group of Companies will not take the blame for the property group's financial downturn, alleging that the firm's liquidity problems were due primarily to the unaccounted advances by ASB's principal stockholder, Luke Roxas. In a recent letter to ASB interim receiver, Fortunato B. Cruz, the Individual Creditors' Committee umbrella organization of over 150 of ASB's 700 creditors disputed the realty firm's claim that "massive withdrawals" by individual creditors contributed to the Group's liquidity problems. "Comparing the total four billion Philippine pesos (PhP) (US$89.15 million at PhP44.866:US$1) held by the ASB Group for individual creditors or private lenders, to the total of PhP200 million ($4.45 million) in withdrawals over a three-month period can hardly be considered as a massive withdrawal," the Committee said. In its petition for rehabilitation filed with the Securities and Exchange Commission (SEC) last May, ASB attributed its financial woes to the massive withdrawal by individual creditors, coupled by the glut in the real estate market, the severe drop in the sale of real property and decreased investor confidence. For its part, the Creditors' Committee, represented by comptroller Elias U. Cosme, alleged that the "ASB Group's liquidity problems is primarily due to the net unaccounted advances by its principal stockholder, Mr. Roxas, of PhP5.06 billion ($112.78 million). In the said letter to Mr. Cruz, Mr. Cosme also pointed out several inconsistencies and "outright misrepresentations" by the ASB Group in relation to financial information about its member companies. For one, Mr. Cosme said the ASB Group failed to include in its inventory of assets, the 651,449 Development Bank of Singapore (DBS) shares owned by Mr. Roxas, despite the fact that ASB had admitted owning 7.66 million of the bank's shares, inclusive of Mr. Roxas' stake. Moreover, Mr. Cosme said that considering the Group's admission that Mr. Roxas is its principal stockholder, "the magnitude of related party transactions reveals that Mr. Roxas has more than PhP5 billion of the ASB Group's money under his control." "The bottom line appears to be that Mr. Roxas...has received a net unaccounted advances totaling at least PhP5.06 billion from the ASB Group. This amount is net of and exceeds the funds reinvested in the ASB affiliates, leading to the conclusion that these amounts were retained by Mr. Roxas personally," Mr. Cosme said. The individual creditors are also pressing for the presentation of a full accounting of the said amount of money allegedly held by Mr. Roxas. The Creditors' Committee asked both the interim receiver and the SEC to allow individual creditors to conduct their own independent audit and due diligence of the ASB Group of Companies, the cost of which should be shouldered by the Roxas-owned Group. Meanwhile, the SEC extended the ASB Group's debt moratorium until September 1. The property group filed for debt suspension after failing to service liabilities amounting to over PhP12.7 billion ($283.06 million). In its bid for rehabilitation, ASB said at least 712 creditors, 317 contractors and suppliers and over 492 condominium unit buyers will be "prejudiced by the disruption of the operations of (ASB)." The ASB Group has between eight billion pesos and ten billion pesos ($178.3 million and 222.88 million) in "direct borrowings" to individuals and creditor banks. Of the amount, about three billion pesos to four billion pesos ($66.86 million to $89.15 million) are owed to three to four hundred mostly Chinese-Filipino investors. So far, creditors Philippine National Bank (PNB), Equitable PCI Bank (EPCIB), EPCIB Trust Department, UCPB, Metrobank, Rizal Commercial Banking Corp., Union Bank, Prudential Bank and Solidbank have already filed separate motions with the SEC, asking for the denial of the firm's proposed rehabilitation plan. The ASB group is composed of ASB Holdings, Inc., ASB Realty Corp., ASB Development Corp., ASB Land, ASB Finance and its allied companies - Makati Hope Christian School, Bel-Air Holdings Corp., Winchester Trading Inc. VYL Development Corp., Gerick Holdings Corp., and Neighborhood Holdings, Inc. (Business World 13-July-2000) CAPITOL WIRELESS:Creditors want asset list before debt deal ----------------------------------------------------------- Capitol Wireless, Inc.'s (Capwire) high hopes for the conclusion of the debt restructuring arrangement fizzled out after its creditor-banks asked for additional documents ensuring loan collateral as well as debt repayment. The international gateway operator was supposed to sign the final agreement for the restructuring of its 938-million- Philippine peso (PhP) (US$20.90 million at PhP44.866:US$1) debt with the banks last June 27 but was delayed as the latter demanded for additional Mortgage Trust Indenture (MTI) and suretyship commitment of parent firm, Republic Telecommunications Co., Inc. (Retelcom). MTI consolidates all the companies' assets that will be used as collateral in a single document while a suretyship gives creditors the guarantee of loan repayment in case of a shortfall. In this case, parent firm Retelcom will be the one guaranteeing for Capwire. Capwire senior vice- president and chief financial officer Joel C. Aguilar could not immediately say when the debt talks will conclude. "We are still discussing execution copies with the lawyers for the final wordings of the deal (likewise) the drafts are being reviewed," Mr. Aguilar told BusinessWorld. He added one of their creditors Development Bank of the Philippines initiated last-minute changes that should be incorporated in the final draft. Mr. Aguilar explained that initially, the banks wanted to expand the MTI to include other assets of the company to accommodate the other creditors. However, the Capwire official said DBP recommended it would be better to have an additional MTI for that purpose. "Although the concept has not changed, there will definitely be changes as far as documentation is concerned,' said the official. "We are really targeting the June 30 date, however the company has to accommodate the last-minute changes by DBP," said Mr. Aguilar. He added the company's banks, together with creditor banks and their respective lawyers are set to sit down sometime this week for the second draft of the terms' final copy. The banks also wanted clear commitment from Retelcom on the guarantee of Capwire's debts. Retelcom's suretyship on Capwire initially was only for a one-year period, but the banks wanted the guarantee to last until the payment scheme is finished. Under the final terms and conditions signed by Capwire with creditors last February 7, the company's 938-million-peso debt will be paid in two tranches. The first tranche amounts to PhP703.5 million or 75% of the total while the second tranche involves the remaining 25% or PhP234.5 million. The repayment schedule is eight years for the first tranche with a two-year grace period on the principal payments, while the second tranche has a nine-year repayment with a three-year grace period on the principal. Capwire, despite a PhP13 million ($289,751) losses as of end-1999, will be relying on internally generated funds for debt repayment. After restructuring, it will be focusing on strengthening relationships with international long distance partners and add new switching capacities for its gateway business. (Business World 13-July-2000) PILIPINO TELEPHONE CORP.: PLDT bails it out ------------------------------------------- Dominant carrier Philippine Long Distance Telephone (PLDT) has signed a subscription agreement with Pilipino Telephone Corp. (Piltel), officially starting the telecoms giant's financial assistance to its cash strapped cellular subsidiary. PLDT said the subscription agreement provides for PLDT to subscribe to P800 million (US$18.35 million) worth or 800,000 Piltel preferred shares. "This is part of the support that PLDT is providing Piltel. Until the restructuring is complete, Piltel will need financial assistance," said PLDT group spokesperson Ramon Isberto. Since PLDT will be subscribing to preferred shares, it would not entail an increase in ownership in Piltel. PLDT, currently owns a 50.1 percent stake in Piltel. According to the disclosure to the Philippine Stock Exchange (PSE), 25 percent of P800 million was paid upon subscription, while the remaining P600 million will be paid in three equal quarterly installments. PLDT has committed financial assistance to Piltel even during the talks for Piltel's restructuring. PLDT will be infusing up to a maximum of $150 million to assist Piltel's rehabilitation and debt repayment. Piltel has a total of P34.9 billion in debt, P13 billion of which was recently restructured upon approval of creditor banks. The rest of the loans is with the bondholders and Japanese supplier Marubeni Corp. It will be noted that PLDT's strategic partner Nippon Telegraph and Telephone Corp. (NTT) put a $150 million cap to the financial assistance PLDT will extend to Piltel. NTT holds 15 percent of PLDT through fully owned subsidiary NTT Communication Co. (Asia Pulse 11-July-2000) VICTORIAS MILLING CO.: Creditor bank pair OK rehab plan ------------------------------------------------------- Two more creditor banks have given their go signal to the alternative rehabilitation plan (ARP) of debt-saddled sugar miller Victorias Milling Co. (VMC), while the Bank of the Philippine Islands (BPI) pressed for the dismissal of the same. In separate motions filed with the Securities and Exchange Commission (SEC), Land Bank of the Philippines and Asiatrust Development Bank sought the approval of the ARP prepared by the firm's management committee (mancom). Under the ARP submitted by the VMC mancom, clean creditors are required to install an acceptable management team and to raise the P300-million cash requirement within 120 days from the date the debt-to-equity conversion and the appointment of the new board of directors. Such requirement from the clean creditors, according to the mancom, provides adequate safety net against the VMC mancom's ARP encountering the same unfortunate fate as that of the approved rehab plan. Five other creditors-the Government Service Insurance System, Citibank, N.A., East West Banking Corp. (EWBC), Security Bank and Equitable PCI Bank-earlier turned in their formal approval of the said ARP. Earlier, EWBC alleged the ARP prepared by the firm's management should be dismissed since it is the mancom that has the legal authority to draft the said plan. Moreover, the bank blamed VMC stockholders for the "failure" of the original rehabilitation plan. "The only conceivable reason (for the failure of the original plan) is the delay caused by representatives of stockholders who unreasonably demand to avail of their preemptive rights over the new shares to be issued in order to allow a new investor to provide the needed cash infusion," EWBC said. For its part, Equitable PCI Bank stressed that its approval of the ARP is dependent on a number of conditions, among which is the installation of a professional management team within 120 days from the date the commission approves the ARP. Moreover, Equitable said the implementation of the ARP would also depend on the infusion of the P300-million additional cash within a 120-day period, as provided for in the mancom-prepared rehabilitation plan. "Should the two above listed qualifications not be met, within the said 120-day period, then - any further rehabilitation efforts will prove fruitless as the previous attempts, and therefore, no further attempt to rehabilitate VMC should be made and the company listed instead be dissolved," Equitable said. For its part, BPI is asking the commission to dismiss the cash-strapped sugar miller's ARP, challenging the viability and the fairness of the said plan. According to the bank, the proposed conversion to equity of all accrued interest and part of the principal due to clean creditors "unduly elevates (the said creditors') status to a preferred one." Moreover, citing provisions from the SEC rules on corporate recovery, Allied Bank said all creditors shall stand on equal footing "and not anyone may be given preference by receiving payment ahead of the others." "With the proposal to convert all the accrued interests and part of the principal loan of the clean creditors into equity and convertible notes, the latter are effectively paid ahead of all other creditors, specifically those - who are left to contend with a restructuring scheme which spans 15 years," Allied Bank said. Upon implementation of the new plan, the new VMC board will be composed of three existing VMC shareholders, one secured creditor, six creditors with debt conversion and one representative from the joint venture partner. Allied Bank argued further that "there has been no assurance presented that the much needed capital infusion of P300 million will ever be attained. Moreover, it is even doubtful whether the amount of P300 million is enough to cause significant ripple in the corporation's financial situation." (Business World 12-July-2000) =============== T H A I L A N D =============== AROMATICS (THAILAND) PLC: Reports debt rehab plan to SET -------------------------------------------------------- Aromatics (Thailand) Public Company Limited has reported that it has successfully reached a debt restructuring plan and agreement with creditors. On October 27, 1994, The Aromatics (Thailand) Public Company Limited (ATC), entered into a loan agreements to the amount of US$453.3 million with a group of 14 banks and financial institutions, where Sanwa bank Limited and Siam Commercial Bank were appointed as Lead Lender and Security Agent, respectively. During the following period, which witnessed the 1997 Asian economic crisis, and the dramatic drop in the global aromatics prices, the combined forces resulted in severe financial liquidity difficulty for ATC. As a result, ATC, along with its strategic shareholders (The Petroleum Authority of Thailand (PTT), The Siam Cement Public Company Limited, Banpu Public Company Limted, and Bureau of The Crown Property) unanimously agreed to enter into discussion with the creditors for re-capitalization of ATC outstanding debt, in the efforts to enhance its long team profitability. Today, ATC is pleased to announce that the negotiation have been concluded and includes the following terms: 1. Group of Lenders: 1.1 Agree to defer the schedule loan payment of US$ 53 million and give an additional US$ 72 million in new loan, for the purpose of loan repayment to the EXIM Bank. This represents a total amount of US$ 125 million in loans debt restructuring from the group of 14 banks and financial institutions. 1.2 Agree to the deferral of all the outstanding loan amount due during the 24 months period of the year 2000 to the year 2002, for a period of 2 years, thus resulting in the maturity of the total outstanding debt being postponed to the year 2009, an increase of 2 years from the original maturity in the year 2007. 1.3 The US$ 125 million in support, put forth by the group of 14 creditors, as mentioned in point 1.1 above, will incur an interest change considered normal in the market. The US$ denominated portion of the loan will incur an interest charge of LIBOR + 1.5 percent per year, while the Thai Baht portion of the loan will incur an interest charge of MLR, annually. In addition, in deferring the outstanding loans for an additional 2 years, other than the specified interest charges stated above, ATC will not be charges any other interest or fee charges. 2. Strategic Shareholders: 2.1 The four (4) strategic shareholders of ATC must give additional financial support totaling US$90 million, in accordance to the original Shareholders Support Agreement. Immediately, ATC is to receive an amount of US$ 37.5 million, in addition to the US$ 17.5 million, to be injected in 3 semiannual installments, whereby the last injection will occur within July 15, 2001. 2.2 Should ATC continue to experience financial difficulty, PTT will provide additional Contingency Support to ATC, whereby a specified maximum limit of US$ 90 million trade credit will be imposed. 2.3 PTT agrees to extend the credit terms on feedstock and products to either until the year 2009, or until another year equivalent to the maturity date, as stated in the refinance loan agreement. With the completion and implementation of ATC's debt restructuring plan, regardless of the any forthcoming economy downturn, the company is expected to generate sufficient liquidity in order to achieve full debt service ability. Moreover, this restructure plan will enable ATC to decrease its current portion of the foreign currency debt by 10-15 percent of total debts, thus, resulting in a favorable effect on the foreign exchange fluctuation risk. (Stock Exchange of Thailand 13-July-2000) RAIMON LAND PLC: Reports rehab plan progress to SET --------------------------------------------------- Raimon Land Public Company Limited, through Director Nigel J. Cornick, has reported to the Stock Exchange of Thailand that due to time delays on the part of some creditors in obtaining approval of the company's debt restructuring plan by their boards of directors, the company has had to reschedule the Debenture Holders Meeting to July 10. Additionally, the first vote of the Holders under CDRAC will not take place until 14 July 2000, shortly after which, the company will file a petition for Rehabilitation under the Bankruptcy Act. The company is therefore requesting that the SET extend the period for the company to implement its Rehabilitation Plan until 31st December 2000. S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Darryl Henning, Managing Editor, James Philip P. Jover and Cristina Pernites, Editors. Copyright 2000. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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