TCRAP_Public/000728.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 28, 2000, Vol. 3, No. 146

                                   Headlines


* A U S T R A L I A *

NATIONAL AUSTRALIA BANK: Shares slide over damages claim
PURFEX DISPLAY MODELS: Under new ownership
RIO TINTO: Japanese steelmakers warns North reprisals
TELSTRA: Staff cuts to cost cuts


* C H I N A  &  H O N G  K O N G *

GUANGDONG INVESTMENT LTD: Goldman buying stake
HAINAN INT'L TRUST: Promises to pay overdue bond coupon


* I N D O N E S I A *

PT DHARMALA SAKTI SEJAHTERA: Curator cites irregularities
PT DHARMALA SAKTI SEJAHTERA: Canadian firm eyes stake
PT KALTIM PRIMA COAL: Risks buyer loss after mine closure
PT PAMAPERSADA NUSANTARA: To restructure debt
PT UNITED TRACTORS: To restructure debt


* J A P A N *

LAWSON INC: Shares lower on its TSE debut
NIPPON CREDIT BANK: Japan to discuss NCB sale
SOGO CO.: Court to launch rehabilitation process
SOGO CO.: Court OKs rehabilitation plans


* K O R E A *

HYUNDAI ENG'G & CONST: Hyundai Motor will not assist
HYUNDAI ENG'G & CONST: Banks to ease Hyundai crisis
HYUNDAI GROUP: Stocks hit by liquidity crunch
HYUNDAI HEAVY INDUS: Engaged in illegal foreign acts
SEOUL GUARANTEE INSURANCE: Public fund injection near


* M A L A Y S I A *

GADEK BHD: DRB-Hicom to sell listing status
GADEK CAPITAL BHD: DRB-Hicom to sell listing status
MALAYSIAN RESOURCE CORP: Confident of settling debt
PERUSAHAAN OTOMOBIL NASIONAL: Q1 loss widens
SAPURA TELECOMMS.: Sapura may write back RM247M in debt
SISTEM TRANSIT ALIRAN RINGAN: To see debts reorganised
TIME ENGINEERING: Manging director resigns
TRANSWATER CORP: Mulling RM70M debt-restructuring plan


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

ALL ASIA CAPITAL: SEC plans to issue cease order
CORPORATE INVEST.PHILS.: Catholic Church's firm in debt
PHILIPPINE NAT.BANK: Investment pull-out triggered


* T H A I L A N D *

SAHAVIRIYA OA: Reduces capital to Bt2 billion
SIAM CEMENT: Posts Q2 loss on inflated foreign debt


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

NATIONAL AUSTRALIA BANK: Shares slide over damages claim
--------------------------------------------------------
Shares in Australia's biggest bank, National Australia Bank
(NAB), were hammered yesterday as NAB went to court for the
second day to contest one of the world's biggest damages
claims.

The bank, which faces a claim for A$50.6 billion (US$30
billion), has seen its shares fall by more than 11 percent
this month. Yesterday the stock fell 60 cents, or 2.4
percent to $24.76.  NAB shares fell 20 cents on Monday when
the case started in the Supreme Court of New South Wales.

The bank has been accused of wasting lucrative e-commerce
opportunities through poor management and a failure to take
advantage of the globalization of the financial services
sector.

"We've got clients who are saying they're worried about NAB
because they've got a lot of money in [the stock] and they
just want to sell," said Peter Addison, associate director
at Intersuisse.  "I think we'll see NAB under a lot of
pressure over the next two weeks as the opposition puts
their case to the court and NAB can't respond yet. People
are a bit wary."

The legal action, which could run for up to two years, is
the first in which a court has been asked to value lost e-
commerce opportunities.  Two companies, Idoport and Market
Holdings, allege NAB breached agreements over the purchase
and development of a financial planning system, AUSMAQ,
which it acquired in 1996.

The companies, owned by systems developer John Maconochie,
blame the bank and eight other parties for having
"squandered and lost a golden e-commerce opportunity by not
developing and exploiting AUSMAQ."   NAB is expected to
argue that the system had many shortcomings and needed
major improvements before it could be marketed outside
Australia.

But Idoport counsel, John Garnsey, QC, told the court
yesterday that any enhancements or modifications could have
been easily made.  "We say the bank should have funded the
system to do just that," he said.

The primary purpose of AUSMAQ'S sale to NAB was to obtain
funding to develop the system along those lines, he said.
"NAB knew that at all times," he said.  The stock market
slide comes in spite of the fact that the NAB is expected
to show a rise of up to 20 percent in net profit when it
releases its third quarter results tomorrow.

Analysts were forecasting this week a net profit for the
three months to June 30 of around $816 million, compared to
$697 million in the same quarter last year - an increase of
17 percent. One Melbourne-based analyst said the result was
unlikely to have any real impact on NAB's share price as
the market was focused on the Supreme Court litigation.

"At the very best they'll come out with negative
publicity," he said. "It will be lose-lose, but the degree
of the loss is anyone's guess." (Business Day Thailand, AFP
26- July-2000)

PURFEX DISPLAY MODELS: Under new ownership
------------------------------------------
Purfex Display Models has been purchased by Glen Wilkin-
Holland and Fraser Moreton.

The company was placed into receivership early in 1998.
The company will operate as Purfex 1998 Limited. Wilkin-
Holland worked for Purfex Display Models for 18 years and
was production manager for the company prior to it entering
receivership. Moreton has also worked for the company.

The company's headquarters will still be in Newmarket,
Auckland. Five former staff members have been employed by
the new company.  (West Clip, ABIX - Australasian Business
Intelligence: Apparel  25-July-2000)

RIO TINTO: Japanese steelmakers warns North reprisals
-----------------------------------------------------
Just as Rio Tinto receives Australian government approval
for its proposed US$1.6b hostile takeover of North Limited,
Japanese steel companies are supporting rival Anglo
American's bid for North.

The Japanese companies have warned Rio of reprisals if it
pursues its takeover bid of North.  Nippon Steel Corp,
Mitsui and Sumitomo Metal Mining have threatened to
terminate a multi-million-dollar contract with Rio if it
goes ahead with the purchase of the iron ore producer.

Under the US$137-million contract, Rio supplies 5.5 million
tonnes of iron ore to the Japanese companies. Japanese
companies presently own 47 percent of North's iron
division, and they fear that a takeover will leave Rio and
Broken Hill Proprietary with control of the ore supply.

Reports coming out from Australia are suggesting that the
Japanese contract could be big enough to deter Rio from
pursuing its takeover bid for North.  (Channel News Asia
26-July-2000)

TELSTRA: Staff cuts to cost cuts
--------------------------------
Telstra took its first step towards slashing 10,000 jobs
from its workforce when it announced a package of reforms
yesterday that would see 2650 staff stripped out of its
services division.

The plan, part of a package of reforms Telstra said would
save $128 million annually, helped the leading telco's
share price rise 8c to $7.12.  The managing director of
Telstra's service wing, Michael Rocca, said the reforms
would lead to savings equivalent to 9 per cent of the
division's recurring operating costs in 2000-2001.

"This program underpins revenue growth from both the retail
and the wholesale markets," he said.

Telstra said $45 million of the savings would be achieved
through fault minimisation and changes in staff deployment.
The company had allocated $100 million for maintenance and
rehabilitation of the network, to achieve this objective.
Mr Rocca said the planned job cuts would bring the service
group's total workforce down to 14,850.  He said a key
priority for the group going forward was to upgrade the
network to meet new customer growth.

The managing director of Global Connect, Phil Hastings,
said Telstra would increase the proportion of spending on
infrastructure investment to enable future revenue growth
in Internet, packet data, and next generation technologies.
Mr Hastings said that during the past year, the completion
of mobile networks had seen investment fall off at the same
time as the period spent by consumers on mobile phones grew
by 28 per cent.  The company would spend about $350 million
on infrastructure work this financial year. (The Advertiser
26-July-2000)


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

GUANGDONG INVESTMENT LTD: Goldman buying stake
----------------------------------------------
Goldman, Sachs & Co. plans to buy a 3 percent stake in
Guangdong Investment Ltd., the Hong Kong-traded unit of the
investment arm of the Guangdong provincial government in
China, the Ming Pao Daily News reported, citing
unidentified bankers.

Goldman will pay $20 million for the stake, the paper said.
Also, GDI will reach a debt restructuring agreement with
creditors at the end of September, the paper said.
Guangdong Investment said on July 4 it delayed its $1.8
billion purchase of an 81 percent stake in Dongshen, which
supplies water to Hong Kong from a river in Guangdong
province, to Sept. 30 from June 30. (Muzi News  27-July-
2000)

HAINAN INT'L TRUST: Promises to pay overdue bond coupon
-------------------------------------------------------
China's Hainan International Trust and Investment Corp
(HITIC) confirmed on Wednesday it would make an overdue
payment on a 14.5 billion yen (US$133 million) Samurai
bond, easing fears of a default.

"This is a fact. We will pay in a few days," a HITIC
official said. He declined to comment further.

Japanese bankers also said they had received word a payment
was imminent, adding the Chinese government had too much
face to lose if it let the provincial government trust go
into default. But they remained sceptical about whether the
heavily indebted HITIC would be able to meet future
obligations, including hundreds of millions of dollars in
loans extended by big Japanese banks.

"It would be an embarrassment for the Chinese government to
let HITIC's publicly placed Samurai fail," a Japanese
banker said.  "But even if it manages to meet this Samurai
payment, another coupon payment will fall due in September
for a different Samurai. We have to closely watch how the
central government and the provincial government handle the
HITIC issue in the future."

HITIC has two outstanding Samurai bonds, or yen bonds
issued by non-Japanese entities in Japan. Wednesday marks
exactly one month since HITIC missed a Samurai interest
payment date, stirring worries about the credibility of
China's financial institutions, which have lingered since
Guangdong International Trust and Investment Corp's
bankruptcy in January 1999 with some $4.7 billion of debt.

Bankers said HITIC did not specify exactly when the payment
would be made, saying only that it would come soon. But
that was enough to reassure them.  "After weeks of silence
and a lack of progress, there was finally a major
development this week," one Japanese market source said.

A 14.5 billion yen Samurai bond, issued by HITIC in 1994
and maturing in December 2001, went into de facto default
on July 10, the end of a 14-day grace period that followed
the missed payment date.  No official default has been
declared, however, and such a move would require a meeting
of bondholders.

Shinsei Bank, the lead trustee bank for the Samurai issue,
declined to comment on the matter.  This week's promise of
payment came just a week after remarks by China's central
bank governor Dai Xianglong indicating that HITIC may be
shut down.

"A small number of trust and investment firms will be
closed after rectification, and the repayment of this part
of international debt should be subject to consultations
between creditors and debtors," he told a news conference
last Wednesday.  "If the negotiation fails, after applying
for central bank approval they can go through the
bankruptcy procedure in accordance with the law."

Banking sources said the Chinese central government may be
playing a leading role in solving the payment problem,
since HITIC's Samurai bond was publicly placed. But even if
HITIC manages to meet the overdue coupon payment, it will
face another coupon payment in two months for its other
Samurai, a 14 billion yen, 3.4 percent seven-year bond
maturing in September 2004. (China Daily, Reuters 27-July-
2000)


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

PT DHARMALA SAKTI SEJAHTERA: Curator cites irregularities
---------------------------------------------------------
PT Dharmala Sakti Sejahtera curator Lucas said he has
resigned over alleged irregularities in the liquidation of
the company.

Lucas said that during the liquidation process there were
"matters that were against the bankruptcy law."

He added there were also indications that certain creditors
were planning to sell Dharmala Sakti Sejahtera's 40 pct
stake in Manulife Indonesia far below expectations -- at
160 bln rupiah, instead of the expected 600 bln rupiah."

He said because of his objections some creditors wanted him
to be replaced, which led him to resign.  Judge Syansudin,
who acted as supervisor of the company's liquidation,
said Lucas was the second curator to resign on the case.
Syamsudin said the case is "quite complicated" as one of
the creditors is Manulife, a partner of joint-venture
insurance firm Dharmala Manulife.  (AFX News Limited  26-
July-2000)

PT DHARMALA SAKTI SEJAHTERA: Canadian firm eyes stake
-----------------------------------------------------
Manulife Financial of Canada, foreign partner of joint
venture PT Asuransi Jiwa Manulife Indonesia (AJMI), has
placed a Rp 160 billion (US$17.7 million) bid to acquire
now insolvent PT Dharmala Sakti Sejahtera's (DSS) 40
percent stake in the joint venture, a source said.

A representative from one of DSS's creditors said on
Wednesday that the Canadian firm, currently holding 51
percent stake in AJMI, was ready to finance the acquisition
to increase its stake AJMI to 91 percent.

"Their bid is well above the latest appraised value on the
company by an independent firm," he said.

The value of the 40 percent stake of AJMI according to an
appraisal conducted by independent firm Deloitte and
Touche's in early 1999 stood at between Rp 109 billion and
Rp 145 billion.  AJMI is currently owned by Manulife
Financial of Canada, 51 percent, the World Bank's private
investment arm International Finance Corporation, 9
percent, and DSS, 40 percent.

DSS was declared bankrupt in early June this year at the
Jakarta Commercial Court, following the company's failure
to repay its matured debts.  Trying to recoup their money,
the creditors -- following DSS's bankruptcy status --
decided to liquidate the valuable assets of the insolvent
company and distribute all the sale proceeds
proportionately among the creditors.

The process of selling the assets of the bankrupt company
and distributing them among the creditors, according to the
1998 Bankruptcy Law, must be conducted under the court's
supervision by an independent party called a "court
receiver".

In DSS's case, the liquidation process did not go smoothly
as creditors disagreed with the commercial court on who
should serve as the court receiver.  But, the commercial
court-appointed receiver, Lucas from Lucas & Partners law
firm, finally had to resign from his position following the
creditors' strong demand to maintain the right to appoint a
court receiver on their own.

The creditors of DSS voted on Thursday to appoint Ari Ahmad
Effendi from AAE & Associates as the new court receiver to
replace Lucas.  Lucas claimed that he had done his job as a
court receiver for DSS professionally, but had to pull out
as he saw there were unhealthy intentions among the
creditors. Lucas did not elaborate.

Another representative from one of the creditors said that
nothing was wrong with Lucas, saying, "We just have to have
a court receiver that is appointed by ourselves, not by the
court."

The creditors' right to appoint their own court receiver is
clearly backed by a clause in the 1998 Bankruptcy Law, he
added.  A court receiver, under the supervision of the
commercial court and the concerned creditors, should work
for the creditors' interests by striving to reach the
highest possible price in selling the insolvent company's
assets and proportionately distributing the proceeds among
the creditors.

A court receiver, as stipulated by the 1998 decree of the
then minister of justice, receives a progressive commission
fee of between 1.5 percent and 6 percent of the assets
sold.  DSS owns 11 affiliated companies, which include
AJMI, as well as publicly listed companies PT BBL Dharmala
Finance, PT ABDA and PT Maskapai Reasuransi Indonesia.

The above representative of DSS's creditor estimated that
the court receiver would receive a commission fee of about
Rp 17 billion from selling DSS assets. (Jakarta Post  27-
July-2000)

PT KALTIM PRIMA COAL: Risks buyer loss after mine closure
---------------------------------------------------------
Coal mining company PT Kaltim Prima Coal (KPC) might lose
some of its customers following the closure of its coal
mine in the Sanggata regency, East Kalimantan, a company
executive said on Wednesday.

KPC representative for Jakarta Bambang Susanto said that
several buyers began to question KPC's reliability due to
the suspension of the coal supply.

"Our buyer from South Korea has already canceled one
shipment," Bambang told The Jakarta Post without
elaborating on the details of the shipment.

Although the cancellation was only temporary, he said, KPC
risked losing South Korea if it could not assure the
country of its reliability.  "Buyers from the United States
and Japan have also expressed their worries," he added.

Bambang said that Japan, South Korea and Taiwan were the
company's largest buyers.  However, he could not tell what
proportion of KPC's sales were made up by these customers.
He said that although the U.S. represented a minor market,
it was nonetheless an important one as it was difficult to
penetrate.

KPC had to shut its operation twice in five weeks because
of faltering negotiations with the striking workers. The
workers demanded among other things a 15 percent salary
increase and the reinstallment of daily allowances.

Although only 150 workers of around 2,600 workers were on
strike, the striking workers occupied important mining
production facilities that prevented KPC from operating.
KPC has said that during the nearly five-week blockade, the
company lost around US$1.4 million a day, or the equivalent
of 50,000 tons of coal.

With its operation suspended and its coal stockpile running
out, the company was unable to load ships with coal and was
forced to declare force majeure last month.  But KPC lifted
its force majeure status earlier this month on signs of
resumed negotiations.

At present the company is operating again as workers agreed
on Saturday to end the strike and lift the blockade.
Bambang said that KPC's customers wanted assurance that
such incidents would not happen again.

Customers, he said, were worried of the uncertainty of
KPC's operation that had become apparent with the strike.
"We cannot provide any guarantees, we are just a company
and such incidents are often beyond our control," he said.

According to him, the government should help KPC regain the
confidence of its customers.  KPC has signed contracts to
sell its coal to major power plants such as the Taiwan
Power Company, Japan's Hokuriku, Chubu and Tohoku power
plants, Malaysia's Tenaga Nasional Berhad and AES in
Hawaii.

Aside from coal fired power plants, KPC supplies steel
mills such as Japan's Nippon steel, Nisshin, NKK, Kobe and
Kawasaki. Other steel mills include Posco in South Korea,
Hoogovens in the Netherlands and CSN in Brazil.
In addition the company also supplies coal to customers in
Japan, Chinese Taiwan, Philippines, India, the U.S.,
Germany, Italy and Portugal under different contract
arrangements.

Throughout 1999 KPC has shipped 14 million tons of coal to
29 customers worldwide.  President of KPC's parent company
PT Rio Tinto Indonesia Noke Kiroyan confirmed that buyers
might retreat because of KPC's lacking reliability.

"Using business logic, the possibility is there," he told
reporters on the sideline of a conference on good corporate
governance.

He said that buyers might divert their coal supply to other
countries, as coal mining companies here offered different
qualities of coal.

"If we're looking abroad, it's clearly Australia that
buyers will turn to," he said.
Noke further said that KPC's dispute with its workers might
also affect the divestment process of Rio Tinto's stake in
that mining company.  Under its contract, KPC must
gradually divest its shares up to 51 percent. KPC is a
joint venture between Anglo-Australian mining firm Rio
Tinto and British-American oil and gas company Beyond
Petroleum (BP), formerly known as BP Amoco.

Noke said that a joint team appointed by Rio Tinto and BP
would negotiate with a government appointed team on the
value of KPC's shares to be divested.  (Jakarta Post  27-
July-2000)

PT PAMAPERSADA NUSANTARA: To restructure debt
PT UNITED TRACTORS: To restructure debt
---------------------------------------------
PT United Tractors, the heavy equipment subsidiary of
Indonesia's largest automaker, PT Astra International, said
its construction and engineering units have restructured
$41 million of debt.

Of this total, mining construction unit, PT Pamapersada
Nusantara, restructured $38.7 million in debt, and
engineering unit, PT Pandu Dayatama Patria, which assembles
imported engines and parts for Astra, restructured $2
million of debt.

"With this, Pama has the opportunity to concentrate more on
business," said Pamapersada's director, Cleos Harryanto.

As Indonesia crawls out of its deepest recession in three
decades, and after two years of relative inaction, more
Indonesian companies are reaching agreements with creditors
on restructuring debt. In May, PT Satellite Indonesia, the
country's No. 2 cellular phone company, rescheduled $583
million in debt with 46 creditors.

Pamapersada's nine creditors include Dai-Ichi Kangyo Bank
Ltd., Fuji Bank Ltd., Sakura Bank Ltd. and Daiwa Bank Ltd.
Sanwa Bank Ltd. is a creditor for both Pamapersada and
Pandu. Sanwa is Pandu's only creditor.  United Tractors
shares fell 35 rupiah, or 1.7 percent, to 2,065 rupiah on
the Jakarta Stock Exchange yesterday. (Bloomberg  27-July-
2000)


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

LAWSON INC: Shares lower on its TSE debut
-----------------------------------------
Major convenience store operator Lawson Inc. made a poor
debut on the Tokyo Stock Exchange on Wednesday, ending the
day's trading at 5,520 yen, sharply down from its initial
public offering price of 7,200 yen but in line with the
recent downward trend on the Tokyo stock market.

No trading was conducted in Lawson shares in the morning
session because sell orders by far surpassed buy orders.
Shortly after the start of the afternoon session, it first
traded at 6,000 yen but lost ground toward the close.

"The retail sector has remained weak in the aftermath of
the collapse of Sogo Co. and uncertainty over earnings of
convenience stores is growing now," said Muneyuki Ichihara,
investment information manager at Nomura Securities Co.

Sogo, a department store operator, filed with the Tokyo
District Court July 12 for protection from creditors under
a new law to allow firms facing imminent collapse to jump-
start their rehabilitation.  Brokers said it was not a good
time for Lawson to be listed because market sentiment has
deteriorated.

Lawson's debt-swamped parent company, Daiei Inc., also
closed lower Wednesday, falling 4 yen to 321 yen.  After
the day's trading was over, Lawson President Kenji Fujiwara
told a news conference that he would make further efforts
to raise the firm's value in the eyes of investors.

Fujiwara said he had expected a better performance, but
noted that it was only the first day of trading.  Of the
funds raised by the stock listing, Lawson plans to invest
50 billion yen for IT-related investments, he added. Lawson
"will shortly hand down a decision" on whether to implement
a management proposal to install automatic teller machines
in its retail outlets, he said.

The parent Daiei group, for its part, has earned 73.3
billion yen through the sale of its holdings of Lawson
stocks. Daiei said it will not change its earnings forecast
for the current business year because the profit will be
offset by the cost of restructuring, such as the closure of
unprofitable outlets.  (Japan Times Online  27-July-2000)

NIPPON CREDIT BANK: Japan to discuss NCB sale
---------------------------------------------
Japan is to delay the planned sale of Nippon Credit Bank to
a consortium led by Softbank, the internet investment
group, due to a political dispute over the treatment of bad
loans.

In particular, the government said on Wednesday it wants
the sale contract to be debated by parliament when it holds
a special session early next month. The NCB sale had been
expected by August 1, but is now scheduled for September 1.

The delay has been triggered by growing political criticism
of the contract that was used to sell Long Term Credit Bank
- now renamed Shinsei - to Ripplewood, a US private equity
group, last year.  This contract, which has formed the
basis for the proposed NCB deal, allows Shinsei to return
any loans to the government that lose more than 20 per cent
of their value during three years.

However, some politicians argue that model should not be
used for NCB since it is too generous towards the buyer,
and is encouraging bankruptcies. This criticism intensified
after Sogo, a retailer, asked Shinsei for loan forgiveness
and Shinsei then passed these loans to the government. The
government refused loan forgiveness, prompting Sogo's
collapse.

Softbank on Wednesday said it "will continue to make utmost
efforts to carry out" the deal. However, officials in the
consortium have warned they may abandon the deal if the
government tries to change the contract. In particular, the
consortium has warned it will not accept a lower level of
protection against bad loans.

The other members of the consortium include Tokio Marine
and Fire, the insurance group, Orix, the leasing company,
regional banks and some foreign investors including Lehman
Brothers.  Kimitaka Kuze, head of the Financial
Reconstruction Commission, the body in charge of banking
reform, on Wednesday said he did not think the FRC would
change the contract significantly.

"Because of the complex nature of the sales transfer
scheme, I thought it was necessary to gain the public's
understanding through parliamentary discussion," he said.

Some investment bankers believe the FRC has called for the
delay because it wants the political row to die in August,
which is a Japanese holiday.  However, if any more
bankruptcies occur, they would fuel the political
opposition to the deal.  (Financial Times 27- July-2000)

SOGO CO.: Court to launch rehabilitation process
------------------------------------------------
The Tokyo District Court has decided to launch the
rehabilitation process of department store chain Sogo Co.

Saddled with debts totaling some 1.87 trillion yen, Sogo
applied to the court July 12 for protection from creditors
under a new law allowing firms facing imminent collapse to
jump-start their rehabilitation.  The Tokyo court decided
to accept reports from creditors on their loans to Sogo and
21 group companies until Aug. 30, and require the retail
group to submit a rehabilitation plan by Oct. 25.

The new law requires creditors to submit reports on claims
within a court-determined period of time. A company
protected under the law must submit a rehabilitation plan
within two months of the end of the period.

Meanwhile, Sogo said it will invite Shigeaki Wada, former
chairman of Seibu Department Stores Ltd., as a special
adviser with an eye toward promoting him to president.
Wada, 66, is known for his leadership in pulling Seibu out
of financial difficulties as president and chairman during
the 1990s.  (Kyodo News Service  26-July-2000)

SOGO CO.: Court OKs rehabilitation plans
------------------------------------------
The Tokyo District Court decided Wednesday to launch the
rehabilitation process of department store chain Sogo Co.

Sogo filed with the court July 12 for protection from
creditors under a new law to let firms facing an imminent
collapse jump-start their rehabilitation.  Sogo is saddled
with debts totaling some 1.87 trillion yen.

Meanwhile, Sogo will invite Shigeaki Wada, former chairman
of Seibu Department Stores Ltd., to become its president,
Sogo officials said.  (Asia Gateway News  27-July-2000)


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

HYUNDAI ENG'G & CONST: Hyundai Motor will not assist
----------------------------------------------------
One top Hyundai motor executive said Wednesday that Hyundai
Motor will not extend any financial support to its sister
firm, Hyundai Engineering and Construction (HEC), even if
the construction arm suffers from a severe fund shortage.

He noted that the automotive unit is unable to support HEC
financially as collaboration between the two sister
companies has been few and far between due to recent
disputes between Chung Mong-koo, Chair of Hyundai Motor,
and Chung Mong-hun, former Chair of HEC.

The same official underscored that Hyundai Motor has fully
removed its payment guarantees for Hyundai subsidiaries
placed under the control of Mong-hun recently, and the two
have become independent.  (Digital Chosun  26-July-2000)

HYUNDAI ENG'G & CONST: Banks to ease Hyundai crisis
---------------------------------------------------
South Korean banks yesterday took emergency steps to help
the Hyundai group ease its liquidity crunch as a family
feud within the country's largest conglomerate intensified.

At an urgent session, the chiefs of ten commercial banks
and two other state-run institutions agreed to extend the
maturity of loans to Hyundai Engineering and Construction
(HEC).

"Banks decided to extend the maturity of their loans to
HEC," Choi Un-kyu, a spokesman for the Korean Federation of
Banks, said.  "At the same time, HEC's commercial paper and
bonds will be rolled over immediately."

In return, HEC unveiled a programme to raise 1.5 trillion
won (about HK$10.47 billion) by the end of this year by
selling non-essential properties at home and abroad. The
company promised to reduce its debt to 4.1 trillion won by
December from 5.2 trillion won a year earlier.

HEC is one of the main units of the Hyundai group, which
has been dogged by a prolonged family feud and cash-flow
problems. The feud took a new twist yesterday after Hyundai
Heavy Industries (HHI), the group's shipbuilding unit,
threatened to take legal action against two other group
units over debts.

HHI said it was preparing to sue Hyundai Electronics
Industries (HEI) and Hyundai Securities to retrieve US$220
million it had repaid a Canadian bank on behalf of the two
companies.  Industry analysts said the feud came as HHI is
seeking to separate itself from the group. HHI is
controlled by Chung Mong-jun, a son of the group's founder,
Chung Ju-yung, while the electronics unit is controlled by
another son, Chung Mong-hun.

HHI said it had bought back 13 million shares of the
investment trust company from the Canadian Imperial Bank of
Commerce (CIBC) last month for US$220 million because it
was bound by a debt repayment guarantee.  Hyundai
Securities allegedly acted as a go-between for HEI in
borrowing money from CIBC and in obtaining a debt repayment
guarantee by HHI.

Three years ago, the electronics unit borrowed US$220
million from CIBC, providing shares in Hyundai Investment
Trust as collateral.  After repaying the bank, HHI urged
the two other units to buy back the shares from it for the
same price, but to no avail. Hyundai Electronics Industries
said it had no obligation to buy back the shares.  (South
China Morning Post, AFP 27- July-2000)

HYUNDAI GROUP: Stocks hit by liquidity crunch
---------------------------------------------
Stockholders of Hyundai business group are being shaken by
after-effects reignited by the liquidity crisis of Hyundai
Engineering & Construction, one of the conglomerate's
affiliates it was learned Wednesday.

The result was a downturn in prices of almost all
affiliates, including Hyundai Engineering & Construction,
Hyundai Heavy Industry, Hyundai Merchant Marine Co. and
Hyundai Corporation by 3.16%, 2.70%, 1.46% and 0.94%
respectively. Only Hyundai Electronics, Hyundai Motors and
Hyundai Steel Pipes showed stability.

Stock analysts said, however, that it was a good sign for
the Hyundai group because stocks of the group's major
affiliates had been hitting their daily permissible bottoms
consecutively since the end of May.

"Although measures for a full settlement of the Hyundai
affair are not fully developed, it seems that the current
predicament is in its interim resolution stage. In a
situation in which all the bad news about the has been
exposed, the conglomerate seems to be regaining market
confidence," Kim Kyung-shin, senior managing director of
Daeyu-Regent Securities, said.

The Head of Kyobo Securities' investment analysis team said
that "it is a good sign for the Hyundai business group that
its stock prices are moving in accordance with the market
movement, and this is indicative of a widespread perception
that what Hyundai is facing now, after all, is everyone's
problem."

But some point out that it is too early to assume that the
Hyundai affair is in its first stage of resolution. They
say that the Hyundai affair is still in a "progressive
form" and that everyone should watch how the self-rescue
plan of Hyundai Engineering & Construction is realized
(Digital Chosun  26-July-2000)

HYUNDAI HEAVY INDUS: Engaged in illegal foreign acts
----------------------------------------------------
As media reports had it Tuesday, Hyundai Heavy Industries
(HHI) had extended a payment guarantee to its sister-firm,
Hyundai Electronics Industry (HEI), for the latter's
attraction of US$175 million foreign loan, consequently,
revealing that the chaebol group had resorted to illegal
means of borrowing money from abroad, following the 1997
financial crisis.

According to the Ministry of Finance and Economy (MOFE)
Wednesday, the electronic arm of Hyundai borrowed money
from the Canada-based CIBC bank in June 1997, on the
pretext that the company attracted foreign capital, which
was much needed at the time. HEI said that the loan was
achieved on the collateral of 13 million shares of Hyundai
Investment and Trust (HITC).

Out of urgency to bring in funds, HEI signed a secret
agreement with the Canadian bank, setting forth that HHI
buy back the shares at CBIC's request when the loan matures
in three years, but at the time of the announcement of the
deal to bring in the foreign capital, HEI said the loan
agreement was made on HEI's own credit.

The secret agreement was unveiled, however, when the
Canadian bank demanded that HHI buy back the shares of HITC
in early July, when the loan matured. Honoring the secret
agreement, HHI paid US$220 million to CBIC on July 20,
however, to recoup the payment, HHI filed a lawsuit against
Hyundai Electronics.  (Digital Chosun  26-July-2000)

SEOUL GUARANTEE INSURANCE: Public fund injection near
-----------------------------------------------------
The government will inject public funds in the amount of
1.2 trillion won into the ailing Seoul Guarantee Insurance
Co. by the end of next month, the Ministry of Finance and
Economy said yesterday.

Ministry officials added that of the total, 700 billion won
will be injected in the next few days, while the remaining
500 billion will be infused sometime next month.  The funds
are part of the 3.4 trillion won the government has
committed to reviving the failing institution, of which 700
billion won has already been provided in March.

In addition to the 2.6 trillion won in public funds
scheduled to be injected into Seoul Guarantee Insurance by
next year, the government estimates total funds needed to
save the company at 6 trillion won, which includes the 1.25
trillion won already invested by the government in June
last year.

"Seoul Guarantee Insurance has been suffering from
difficulties in its ability to honor payments as a result
of its substantial exposure to substandard Daewoo bonds," a
finance ministry official said. "In addition, given the
company's influence as the sole privately-run guarantee
institution unto the financial sector, the government is
committed to saving the company and bring back confidence
levels."

The official added that in the event that state-run Korea
Deposit Insurance Corp. (KDIC) is unable to provide some
700 billion won in relief funds to Seoul Guarantee
Insurance, that the government is considering injecting 1.2
trillion won directly by next month. He also said that the
remaining funds would be injected gradually by the end of
the year, depending on the maturity dates of the Daewoo
bonds.

Minister of Finance and Economy Lee Hun-jai told reporters
Tuesday that the government would accelerate its efforts
reviving the troubled institution.  Despite having halted
guarantee operations of corporate bonds since the financial
crisis, Seoul Guarantee Insurance is slated to commence
partial guarantees of secured commercial papers (CPs) and
risk-pooling of asset backed securities (ABS) in
conjunction with LG Securities next month.  (Korea Herald
27-July-2000)


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

GADEK BHD: DRB-Hicom to sell listing status
GADEK CAPITAL BHD: DRB-Hicom to sell listing status
---------------------------------------------------
DRB-HICOM Bhd is said to be negotiating with several
parties the sale of the listing status of its subsidiaries
Gadek (M) Bhd and Gadek Capital Bhd for about RM80mil.

Sources said DRB-Hicom could get RM40mil for each of the
two subsidiaries as this was about the going premium for
listed companies without any assets.  For listed companies
with assets, the going rate is said to range from RM50mil
to RM200mil.

Only the listed status of Gadek and Gadek Capital is for
sale. Their operations together with those of Hicom
Holdings Bhd would be retained by the group. The buyers
would be expected to inject assets into Gadek and Gadek
Capital.

Earlier this year, the DRB-Hicom group had embarked on a
RM6bil merger and consolidation exercise which would see
DRB taking over Gadek, Gadek Capital and Hicom via share
swaps.  The new DRB-Hicom group would focus on three core
areas--automotive & transportation, property & construction
and services.

Gadek, Gadek Capital and Hicom would be delisted from the
KLSE following completion of the exercise in August or six
months thereafter, if their listing status could not be
sold before then.  DRB-Hicom officials, when contacted,
declined comment.

However, the group had earlier made it clear that it would
attempt to maximise returns on the listing status of Hicom,
Gadek and Gadek Capital.  It is unclear if the group has
found a buyer for the Hicom listing status, but for Gadek
and Gadek Capital, a source said "they had been booked."

According to the source, the proceeds from the sale of the
listing status of Gadek and Gadek Capital may be used for
the group's new venture, that is, the setting-up of a Honda
manufacturing plant in the country.  DRB-Hicom last week
entered into an agreement with Oriental Holdings Bhd and
Honda Motor Co Ltd of Japan to manufacture and distribute
Honda cars.

DRB-Hicom will have a 36% interest in a joint-venture
company called DRB-Oriental-Honda Sdn Bhd, which will have
an initial paid-up capital of RM500mil. Oriental will have
a 15% stake and Honda Japan 49%.

Through its merger exercise, the DRB-Hicom group expects to
eliminate RM3bil in long-term debts within a year. This
would be done mainly with the proceeds from the sale of
Perusahaan Otomobil Nasional Bhd (Proton), Edaran Otomobil
Nasional Bhd (EON), Usahasama Proton DRB-Hicom Bhd (USPD)
and Credit Corp (M) Sdn Bhd. The sale of EON would also
include EON Bank Bhd.

The remaining portion of the group's debts would be paid
off with earnings from its current business.  Currently,
the sale of the Proton stake to Petroliam Nasional Bhd
(Petronas) is still pending, while USPD has been sold to
Proton.  But talks to sell EON to Proton have stalled.
Instead, Khazanah Nasional Bhd is expected to buy the EON
stake from DRB-Hicom.  (The Star  27-July-2000)

MALAYSIAN RESOURCE CORP: Confident of settling debt
---------------------------------------------------
Malaysian Resources Corporation Bhd (MRCB) is confident of
meeting the July 31 deadline to repay its RM1.14 billion
debt, according to the company's executive vice-president
Datuk Zahari Omar today.

"I should say so," said Zahari, but he did not want to
elaborate, when asked how MRCB was to repay the loans
before the deadline on July 31.

MRCB was granted a six-month extension on the RM1.14
billion loan repayment in January this year. Speaking to
reporters after the launch of two hotel projects at the
Kuala Lumpur Sentral site, he also expressed optimism of
MRCB completing the proposed disposal of its entire 22.7-
per cent stake in Malakoff Bhd to Restu Budi Sdn Bhd for
RM744.09 million cash or RM12 per share.

As to when it would be finalized, Zahari replied: "We will
make an announcement soon."

The Securities Commission had on April 26 given its go-
ahead for MRCB to dispose of its stake in Malakoff. The
disposal would enable MRCB to realize an exceptional gain
of about RM408.08 million and RM230.62 million at company
and group level respectively for the financial year ending
August 31. The original cost of the investment in Malakoff
in MRCB's books is RM336 million.

However, MRCB surprised the market when it said earlier
this year it was proposing to build, own and operate a new
combined cycle power plant.  The two hotel projects at the
Kuala Lumpur Sentral development site are the US$130
million Hotel Kuala Lumpur Sentral and US$100 million Le
Meridien hotels. (The Edge  26-July-2000)

PERUSAHAAN OTOMOBIL NASIONAL: Q1 loss widens
--------------------------------------------
Perusahaan Otomobil Nasional Bhd shares fell initially
after the biggest carmaker in Malaysia said its loss
widened in the first quarter.

Proton, which makes six out of every 10 cars sold in the
country, said its loss for the first quarter ended June 30
widened to RM7.7 million (S$3.5 million), or RM1.42 a
share, from RM5.2 million, or 96 sen, a year ago.

"This was below our expectations," said Joseph Au, an
analyst at OSK Securities Bhd. "Their R&D costs remain
high, which is one of our concerns."

The stronger yen made imported auto parts more expensive,
eroding Proton's earnings. The ringgit bought 27.9 yen on
June 30, as against 31.8 yen a year ago. Proton's imported
parts, mostly from Japan, account for more than one-fifth
of its total production costs.

Proton spent about RM1 billion in the past three years
designing its own car, which it unveiled in May. It plans
to roll out another version of the car next year, which
would raise its research & development costs, he said.

Mr Au cut his recommendation on the stock to "neutral" from
"buy" after the results were released. He said he didn't
lower the recommendation further as Proton may get
government approval to raise car prices later this year.
Yesterday Proton closed unchanged at RM5.70. (Bloomberg,
Business Times  27-July-2000)

SAPURA TELECOMMS.: Sapura may write back RM247M in debt
---------------------------------------------------------
Sapura Telecommunications Bhd could see a writeback of up
to RM246.7 million (S$113.2 million) from debt provisions
after it receives the cash portion of its repayment from
Time Engineering Bhd (TEB), Sapura managing director
Shahril Shamsuddin said yesterday.

The repayment, and a writeback, if any, is expected to be
made before Sapura's current financial year ends in January
2001. Earlier this month, Sapura announced that it had
entered into an agreement with national investment company
Khazanah Nasional Bhd to swap the RM467 million due to it
from TEB for cash and shares which would give Sapura RM250
million in cash and a stake in TEB's telecommunications
subsidiary Time dotCom.

Speaking to reporters after Sapura's annual general meeting
yesterday, Mr Shahril said that the company would
eventually hold the group's 5 per cent stake in Time
dotCom, which is to be listed by the end of this year, and
also have one seat on Time dotCom's board.

While he did not discount the possibility of cashing in on
Time dotCom's shares if market conditions at the time of
listing were favourable, Mr Shahril told shareholders at
the AGM that the company was more likely to want to retain
its stake.

"We will be very happy if the share price appreciates, but
we have to look at the situation at the time. It is hard to
say now," he told reporters later.

Sapura has in fact an option to take up any of Khazanah's
27 per cent in Time dotCom which is not taken up by the
telco's strategic partner, when one is eventually found.
Sapura is counting on Time to boost its bid to become a
one-stop specialist company for telecommunications and IT.

To that end, the company is looking to invest up to RM180
million in technology-related businesses by the end of this
year, Mr Shahril said.  Mr Shahril also evaded questions on
whether Sapura is interested in taking over Metrovision,
one of three private TV networks in Malaysia, saying only,
"It's a rumour. They (Metrovision) are talking to
everybody."

Sapura has said that its private holding company, Sapura
Holdings Sdn Bhd, was in talks with Metrovision, in reply
to a stock exchange query.  Sapura closed lower by 15 sen
to RM6.95 yesterday, and its major shareholder Uniphone
Telecommunications was lower by two sen to RM3.92.
(Business Times  27-July-2000)

SISTEM TRANSIT ALIRAN RINGAN: To see debts reorganised
------------------------------------------------------
Sistem Transit Aliran Ringan Sdn Bhd (Star), one of the two
light rapid transit (LRT) operators in the country, hopes
to see its RM3.1 billion debt woes settled by the Corporate
Debt Restructuring Committee (CDRC) as early as next month.

The restructuring plan is likely to see Star involved
solely in the business operations while its assets are
turned over to the Government.

"At the operational level, we have been able to breakeven
but this does not include capital expenditure. Interest
alone on our project financing comes up to RM20 million a
month, which we cannot support with our current passenger
volume," says chief executive officer Zainal Abdul Ghani at
a press conference today. "We had already asked for help
from the CDRC in 1999. They are now finalizing the details
and we expect a proposal to be finalized within the next
month. Under the plan, it is likely that the assets will be
passed back to the government while the private company
will just operate the business."

Industry watchers say a government-owned special purpose
vehicle (SPV) named Syarikat Prasana will be set up to take
over the assets of Star-LRT and the other LRT operator,
Projek Usahasama Transit Ringan Automatik Sdn Bhd (Putra-
LRT), leaving the companies to operate the businesses.

This move will remove an estimated RM6.5 billion in debt
from the books of both operators. Analysts estimate that
Star-LRT will likely transfer some RM2.5 billion of debts
to the SPV while the Putra-LRT portion will be about RM4.5
billion.

Despite talks that both operators with be merged under the
Renong Bhd-led consortium after the restructuring move,
Zainal, however, said Star-LRT had not been informed on
this matter so far.  Star-LRT has been financing its
projects through RM675 million of equity, RM2 billion of
commercial loans and RM680 million in government support
loans.
The fully privatized operator of some 27km of track running
across the eastern suburb of Ampang to Sri Petaling and
Sentul was formed in 1991 and granted a 60-year concession
to build, own and operate the first LRT in the country.

Zainal says that the company has not been able to service
the hefty monthly interest since 1997. Although the total
project costs amounting to RM3.3 billion was below the
budgeted RM3.5 billion, passenger volume has not hit the
critical mass.

Star-LRT currently receives a daily passenger volume of 82,
000 per day, which is far short of its full capacity of
600,000 per day.  Zainal attributes the low volume to the
"mindset" of the local population who still prefer to use
their personal vehicles rather than public transport.

Nevertheless, the recovery of the economy has seen
passenger volume on Star-LRT increasing steadily to about
58 per cent currently from the average daily of 52,000 in
mid-1999.  (The Edge  25-July-2000)

TIME ENGINEERING: Manging director resigns
------------------------------------------
Time Engineering Bhd's managing director Pang Shyue Ming
has resigned from his post, Time dotCom Bhd managing
director Tan Sri Halim Saad confirmed today.

Pang is said to have handed in his resignation three months
ago. He is now on leave. He was appointed managing director
on Mar 23, 1998.  Halim said the group has yet to appoint a
new managing director for Time Engineering. Time dotCom is
a fully-owned subsidiary of Time Engineering.

However, sources said it is unlikely the group would
appoint a new managing director after announcing last
Friday that Koh Lai Huat was appointed the new chief
operating officer. (The Edge 27- July-2000)

TRANSWATER CORP: Mulling RM70M debt-restructuring plan
------------------------------------------------------
Transwater Corporation Bhd expects to finalise its RM70
million debt-restructuring plan by the end of the year,
says its executive director K L Kong.

Speaking to reporters after the company's annual general
meeting in Kuala Lumpur today, he says Transwater is
looking at options for the debt-restructuring exercise.

"We have every intention of paying our creditors," says
Kong, adding that it is still too early to say whether it
would ask for the assistance of the Corporate Debt
Restructuring Committee.

He also says the debt of RM70 million took into
consideration the RM40 million due from Idris Hydraulic
Bhd, arising from the sale of 11.4 million shares in Prime
Utilities Bhd as one of the liabilities.  Transwater has
filed an appeal after its winding-up petition on Idris was
dismissed on March 24.

Its creditors include RM36.62 million in unsecured loans,
overdrafts, bankers' acceptance and revolving credit, and
RM8.50 million in secured short-term loans. Kong says the
group is confident of returning to the black in the next
financial year ending Feb 29, 2002, after having been in
the red for several years.

Transwater posted a 2.5 per cent decline in turnover to
RM115 million for the financial year ended Feb 29, 2000,
compared with the RM118 million previously. Its pre-tax
losses rose RM4.9 million compared with the previous
RM700,000.  The group's net loss totalled RM5.66 million
compared with the RM1.43 million previously. The
accumulated net loss, which includes losses brought
forward, amounts to RM18.67 million.  (The Edge 25-July-
2000)


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

ALL ASIA CAPITAL: SEC plans to issue cease order
------------------------------------------------
In an effort to clean up the controversy-marred dealings of
local investment firms, the Securities and Exchange
Commission (SEC) is considering the issuance of a cease-
and-desist order (CDO) against investment firm All
AsiaCapital and Trust Corp.

Documents obtained by Businessworld showed the investment
house reportedly violated provisions of the Bangko
Sentral's (Central Bank of the Philippines) implementing
guidelines on the "prescribed capital adequacy ratios for
investment houses" as prescribed under Presidential Decree
129.  Based on the Commission's audit, All AsiaCapital's
receivables from its affiliate, All Asia Trust Company-
Financing, exceeded more than 25% of its net worth.
All AsiaCapital was also found to have violated the single
borrower's limit (SBL) of the Bangko Sentral.

Documents showed that liabilities of the investment firm's
commercial paper issuers, Reynolds Philippine Corp. and
Mondragon International Philippines, was held for more than
180 days and exceeded 5% of its net worth beyond the normal
applicable SBL.

Moreover, the beleaguered investment firm allegedly issued
short-term promissory notes and sourced funds of over five
million Philippine pesos (PhP) (US$111,042 at
PhP45.028:US$1) from various corporate entities without
prior approval of the commission for the issuance of such
commercial papers.

Sources at the SEC, who spoke on the condition of
anonymity, said All AsiaCapital will be ordered to cease
from acting as an investment house until the said
violations are cleared by the commission.  Officers of All
AsiaCapital have also been directed to appear for a hearing
before the SEC's brokers and exchanges department in the
first week of August, and asked to show cause why the CDO
should not be made permanent.

Coming from the Commissioners' offices last Tuesday, All
AsiaCapital president Eleuterio Coronel said, he is
confident "the company will come out of this...clean." He
declined to comment further on the CDO, which he said he
has not yet received.  Meanwhile, existing shareholders of
All AsiaCapital are said to be willing to infuse fresh
equity into the company. The firm needs about one billion
pesos ($22.2 million) in new capital to pay off investors.
Although it remains solvent, assets are tied up in real
estate and long-term commercial papers.

All AsiaCapital's shareholders include government bank Land
Bank of the Philippines; International Finance Corp., the
World Bank's private investment arm; Lombard Asian Private
Investment Co.; Chemical Industries of the Philippines; the
Manila Bay Group of Companies; Cagayan Electric Power and
Light Co; Alcantara and Sons, and the Armed Forces of the
Philippines Retirement and Separation Benefits System.

Banking sources earlier said All AsiaCapital has been hit
by preterminations of placements since last month. But
while it remains solvent, sources said it is having
difficulty meeting these preterminations. All AsiaCapital
officials were not immediately available for comment.

Most of All AsiaCapital's assets are reportedly in real
estate and long-term commercial papers (LTCP) which are
difficult to liquidate under prevailing market conditions.
All AsiaCapital has been trying to generate fresh funds
from strategic investors for more than a year now, but
negotiations have been stuck on the issue of control.
(Business World  27-July-2000)

CORPORATE INVEST.PHILS.: Catholic Church's firm in debt
-------------------------------------------------------
Corporate Investments Philippines Inc. (CIPI), an
investment firm owned by the Catholic Church, has asked the
Securities and Exchange Commission (SEC) for a 60-day debt
reprieve involving P867 million.

In a petition filed by the CIPI on Wednesday, it said that
it defaulted on payments after its corporate borrowers
failed to pay off their obligations to the CIPI in the
previous months.

"Failure of CIPI to receive payments of principal and
interest from the defaulted accounts has led to liquidity
problems and CIPI has not only not been paid its interest
income on the loans which it has extended, it is now also
unable to service its own obligations to its lenders and
meet the capital requirements of its operations," the CIPI
said.
CIPI's petition sought to hinder its creditors from
pursuing foreclosure proceedings to avoid paralyzing CIPI's
operations.  The beleaguered investment firm also said
P128.25 million of its total debts came from creditor-
banks, while the rest are from retirement funds including
Coca-Cola Bottlers Philippines Retirement Fund and various
individual creditors.

CIPI said it needs to draft a rehabilitation plan to
recover and meet all its debts since its P1.02 billion
worth of assets is more than enough to cover its
obligations.  The Catholic Church's firm has P422 million
in receivables which are part of the firm's assets.

CIPI's operations involve receiving money placements from
certain individuals and corporate funders, then lend the
funds to borrowers.  The CIPI earns interest from these
transactions through a spread imposed on CIPI's borrowers.

Meanwhile, the SEC has appointed a three-member oversight
committee to protect the assets of CIPI.  The committee is
composed of a representative from the secured creditors,
Enrique Gana; a representative from unsecured creditors,
Rolando Goco; and Atty. Romeo dela Cruz, the SEC accredited
receiver, as the CIPI representative.

The SEC has set a hearing on August 10, 10 a.m., to discuss
the proposed rehabilitation plan involving a freeze on
employment and salary increases to conserve cash. CIPI
intends to repay its debts through dacion en pago, sale of
assets, and conversion of debt into equity.

The investment firm said it also needs a fresh capital
infusion of P500 million to finance its operations and
repay maturing debts.  Business taipan Lucio Tan is
reportedly interested in investing in CIPI to complement
its banking operations.  (ABS/CBN News Channel  27-July-
2000)

PHILIPPINE NAT.BANK: Investment pull-out triggered
--------------------------------------------------
Foreign fund managers warned the government Wednesday of an
impending pull-out of portfolio investments due to
controversies on the government's alleged protection of
perceived cronies of President Estrada.

Hongkong and Shanghai Banking Corporation (HSBC) treasurer
John McGowan said the sentiment raised by Templeton Asset
Management Ltd. is now starting to affect the Philippine
market, with most of the foreign investors indicating a
shift of their interest to Asian counterparts.

"Overseas investors see better gains in the Singapore,
Taiwan, and Korean markets, and I think whether there is
truth to the Templeton story, it would have an impact on
investments, they would double think first before putting
in their money," said McGowan.

Earlier, Templeton president Mark Mobius criticized the
acquisition by known Estrada ally Lucio Tan of the
government's 30-percent stake in Philippine National Bank.
The acquisition increased the taipan's stake from 46% to
76%, making him the ailing bank's majority owner.

The Committee on Privatization (COP) and the Bangko Sentral
ng Pilipinas' (BSP) Monetary Board (MB) approved the sale
of the government's holdings in PNB to Starbuck Equities
Corporation, Tan's newly formed investment company. This,
amid allegations the government maneuvered the sale in
Tan's favor. However, the MB quickly denied them, saying
the terms of Starbuck's bid complied with existing banking
rules.

The government added that Templeton was just trying to
protect its sale to Citibank of the Templeton Emerging
Markets Group and its entire portfolio which includes PNB
shares.  Tan, a tobacco and airline magnate, was the lone
bidder who offered P6.3 billion to buy the government's
stake in the troubled bank.

The volume of trading in the Philippine Stock Market
plunged to a daily average of $20 million in June, from $50
million from January to May of this year, McGowan said.
The volume is much lower compared to the $81-million it had
maintained in 1999.  The local stock market has lost more
than 20% of its value since the start of the year.
"It has been very quiet and what we see have been bits and
pieces only. You do not have to be a rocket scientist to
know there had been a substantial outflow", said McGowan.

He said that HSBC is likewise not seeing any substantial
inflow in the Philippines. HSBC is a custodian bank and
could monitor the movements of funds in and out of the
country.  Other fund managers including the International
Monetary Fund (IMF) also point to the unresolved stock
market issues, starting with the BW scandal this year, to
have triggered foreign investors' pull-out from the
Philippines.

"Investors are pointing to lack of transparency, lack of
protection of shareholders rights, and better returns from
other Asian markets as among the reasons why the
Philippines is not getting its fair share of investments,"
said McGowan

McGowan said that although some of the Philippines'
problems are regional in nature, as what Thailand and
Indonesia are experiencing, the government must get itself
quickly out of these controversies before they create more
damage in the capital market.

"Templeton could simply be sourgraping but at the end of
the day, it is not a plus story for the Philippines", said
McGowan.

Early this year, the Philippine Stock Exchange was rocked
by the scandal involving price manipulation of BW Resources
Corporation shares.  The gaming firm's share price rose
more than 5,000% from less than two pesos in March to as
high as P110 in October last year.  (ABS/VBN News Channel
27-July-2000)


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

SAHAVIRIYA OA: Reduces capital to Bt2 billion
-------------------------------------------
Sahaviriya OA said the Central Bankruptcy Court has
permitted it to decrease capital from Bt2 billion (200
million shares) to Bt500 million as part of its debt-
restructuring plan. The decrease was implemented on Monday.
(Business Times  27-July-2000)

SIAM CEMENT: Posts Q2 loss on inflated foreign debt
---------------------------------------------------
As expected, Siam Cement (SCC), Thailand's largest
industrial group, has reported second quarter losses,
despite increasing sales, as the declining baht magnified
its foreign debt in local currency terms.

SCC lost 1.07 billion baht, or 8.88 baht per share, in the
three months to June 30. The company, whose core products
are building materials, petrochemicals, steel, pulp and
paper, earned 3.36 billion baht, or 29.97 baht per share,
in the same period last year.

The company said if it excluded its 1.51 billion baht loss
in currency and other "special items," it would have made a
profit of 780 million baht. The baht fell 3.4 percent
against the US dollar and 3.8 percent against the euro
during the quarter, ballooning SCC's $1.2 billion foreign-
currency debt.

A weaker baht did help sales, though, as it increased
revenue from exports, usually priced in US dollars, when
converted back to baht. Consolidated revenue rose 24
percent to 36 billion baht.  Export sales rose 65 percent
from a year earlier, while domestic sales increased 13
percent.

"Though the sales revenue increased this year, expenses
rose due to higher interest expenses," Siam Cement
President Chumpol Na Lamlieng said.

Commenting on the baht's slide, he said if it remains at
this level (41.3) or continues to weaken, it could hurt the
economic recovery and thus the industrial sector by raising
the production costs of many goods, adding that the cost of
transportation is especially susceptible to a weaker baht,
as Thailand imports most of its crude oil.

"About 30 percent of the cost of making cement is energy-
related," he said.

Among the best performing units was Siam Pulp & Paper, a
publicly traded manufacturer in which Siam Cement plans to
take full control. Siam Pulp saw second-quarter profits
rise 28 percent to 783 million baht, as sales increased 27
percent to 6.9 billion baht. Siam Pulp's performance was
powered by rising domestic demand for paper as well as
rising prices.

Interest expenses for Siam Pulp also fell as the company
used earnings to pay debt.  Siam Cement's own interest
expenses rose in the second quarter, though, as the company
shifted about two-thirds of its foreign debt into local-
currency debt through the sale of baht bonds, which carry a
higher interest rate than US dollar loans.

Siam Cement saw interest expenses rise 14 percent from a
year earlier, to 3.8 billion baht. The company should see
interest expenses rise by about that pace through to the
year's end, according to Capital Nomura Securities. Siam
Cement shares recently traded down 1.1 percent at 348 baht,
their lowest since October 1998. The Stock Exchange of
Thailand Index has also fallen to a 21-month low.
(Bloomberg, Business Day  27-July-2000)


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