TCRAP_Public/000905.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                             A S I A   P A C I F I C

             Tuesday, September 5, 2000, Vol. 3, No. 172


* A U S T R A L I A *

BROKEN HILL PROPRIETARY: Unit sale proceeds to go to debt?
EVANS DEAKIN INDUS.: Posts full-year net loss
QCT RESOURCES: Posts annual loss
WATER WHEEL: Creditors paid 30 cents on dollar

* C H I N A  &  H O N G  K O N G *

DVN HOLDINGS LTD.: Posts 1H net loss
GOCHINAGO.COM: 50 jobs sliced to cut costs
GUANGZHOU INT'L TRUST: Ordered to pay 5.5% of debt
PETROCHINA: To cut 50,000 employees over next 5 years

* I N D O N E S I A *

BANK INDONESIA: To sell loss-making subsidiary
PT HOLDIKO PERKASA HOLDIKO: To sell assets to pay debt
PT KREASI SUPRADINAMIKA: Bankrupty suit filed vs. it
PT SUMBER KERAMIK KHARISMA: Facing bankruptcy suit
PT WIDIAMULIA PRIMA: Has bankruptcy suit filed against it

* J A P A N *

DAI-CHI MUTUAL: Ripplewood eyeing
KUMAGAI GUMI: Seeks 450B yen debt waiver
MITSUBISHI HEAVY INDUS.: To slash 20% of jobs
SNOW BRAND MILK PRODS.: S&P downgrades to junk-bond status

* K O R E A *

HYUNDAI MOTOR: To go it alone
KOREA MERCHANT BANKING CORP.: Suspended 3 mos.-loan default
SAMSUNG ELECTRONICS: Share price plunges
SAMSUNG MOTORS: Sale to Renault finalized

* M A L A Y S I A *

RASHID HUSSAIN BHD: Posts 1H net loss

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

MONDRAGON LEISURE & RESORTS: CDC to decide who takes over
NATIONAL POWER CORP.: Renegotiation may lower debts
NATIONAL STEEL CORP.: Has P500M in back taxes to pay
UNIWIDE GROUP: Casino taking it over finally

* S I N G A P O R E *

PARKWAY HOLDINGS: To sell loss-making hospital unit

* T H A I L A N D *

BANK OF AYUDHYA: Fitch lowers long-term rating
DIGITAL PHONE CO.: Plans to recapitalize to pay debts
MODERN HOME DEVELOPMENT: Court accepts rehab petition
WONGPAITOON GROUP: SET reclassifies shares `in rehab'


BROKEN HILL PROPRIETARY: Unit sale proceeds to go to debt?
Broken Hill Proprietary Co reports projected earnings of
$932 million in cash from the spinoff of its OneSteel unit
in October, the proceeds from which will either be
reinvested or used to pay off debt.

OneSteel is due to begin trading on the Australian Stock
Exchange on October 23.  BHP is halving the size of its
steel division, selling assets worth $3 billion as part of
its effort to rid itself of unprofitable units that don't
fit with the company's main oil and minerals businesses.

"The spin-out delivers more value to BHP shareholders than
other divestment options and provides shareholders with an
opportunity to participate in the upside potential of the
OneSteel business," Chip Goodyear, BHP's chief financial
officer, said in a statement. (Sydney Morning Herald,
Bloomberg 01-Sept.-2000)

EVANS DEAKIN INDUS.: Posts full-year net loss
Heavy engineering company Evans Deakin Industries posted a
full-year net loss of $A27.15 million ($US15.57 million).
The loss represented a $A64 million ($US36.7 million)
turnaround for the worse from last year's posted profit of
$A36.97 million ($US21.2 million). It was the first time in
12 years the company recorded a net loss.

The after-tax operating profit, before extraoridinary
expenses, was down 57 percent from the previous year,
totaling $A11.812 million ($US6.77 million). The company
attribed the turnaround mainly due to losses on the Te Rapa
Co-generation project in New Zealand and on a fall in gains
in the Ralph M Lee electrical contracting business.

QCT RESOURCES: Posts annual loss
QCT Resources posted an annual operating loss of $31.85
million for the year ended June 30, compared with a $28.82
million profit for the previous year.

The loss was after pre-tax abnormal losses of $64.2 million
($9.11 million loss previously). The after-tax abnormal
loss was $41.1 million, which was for a writedown and
accelerated depreciation at the group's South Blackwater
mine. A final dividend was not declared (1.5 cents a share

Sales revenue for the year was down from $877.87 million to
$769 million due to a reduction in United States dollar
sale prices and reduced production. Operating costs were
down by $43.7 million due to lower production and cost
reductions at all of the group's mines, except the Kenmare

Meanwhile, the Queensland coal producer yesterday hit out
at the $830 million hostile bid for the group from the BHP
and Mitsubishi partnership. QCT said the $1.20-a-share
offer undervalued the intrinsic and strategic value of its
assets and the recent and likely future improvements in the
coal market.  The sharemarket continued to provide some
support to that view, holding QCT's share price at $1.30.
The premium of QCT's share price to the bid was despite the
company's dismal profit report for year.

Net debt remained near steady at $385 million (gearing 38.4
per cent). The key to success in the BHP/Mitsubishi bid is
the attitude of the oil and gas group Santos. It holds a 36
per cent stake and has said it is was holding "discussions
with a number of parties" on its future.

QCT holds a 32.37 per cent interest in the BHP managed and
majority controlled Central Queensland Coal Associates
(CQCA) and Gregory coal joint ventures. It also owns the
South Blackwater coal mine. The remaining interest in CQCA
and the Gregory joint venture is held by BHP (52 per cent
and 64 per cent respectively) and Mitsubishi (15 per cent
and 3.49 per cent respectively).

The mines under the joint ventures are among the best in
the world.  QCT's total coal output for the June year was
15.5 million tonnes of coal. Its average selling price was
$49.45 a tonne, down from $55.25 a tonne the year before.
Hedging remains an issue for QCT as its average exchange
rate for the year was high at 67 US cents. It had $US335
million ($A582 million) hedging at the end of June at an
average rate of 66.8 US cents. (The Age 01-Sept.-2000)

WATER WHEEL: Creditors paid 30 cents on dollar
Creditors of failed grain milling company Water Wheel
Holdings were likely to receive up to 30 cents on the
dollar on the $21 million owing to them, according to the
company's joint voluntary administrator.

Voluntary administrator Christopher Daly of
PricewaterhouseCoopers said creditors of the Water Wheel
Mills Pty Ltd trading subsidiary company would receive 12
cents to 13 cents on the dollar.  However, creditors of
Water Wheel Holdings Ltd would receive about 30 cents on
the dollar after the trading company repaid up to 13
percent of $9.5 million it owed to the parent company in
inter-company loans.

"That's my realistic estimate at this time," he said.
Mr Daly said the group owed about $21 million to unsecured
creditors, including the inter-company loans, and up to $13
million to trade creditors, having already repaid a $5.5
million loan to the ANZ Bank.

Water Wheel also owed employee entitlements of about
$600,000, he said.  Water Wheel was placed in voluntary
administration and suspended from stock exchange listing in
February after revealing a $6.84 million net loss for the
year to December 3, 1999.

Mr Daly told shareholders at the company's annual meeting
in Melbourne that the administrators had now disposed of
the company's three rice, stockfeed and flour mills for an
undisclosed price.  He said administrators were still
pursuing some debts and expected to have the administration
completed by the end of the calendar year.

The company could be handed back to directors once a final
residual payment was made on one of the mills in April
2001, he said.  Chairman William Harrison said the company
might then be able to realise some residual value for

"The only possibility is at the end of the administration;
if a company wishes to backdoor list . . . then the
existing shareholders may, in a very diluted way, continue
with that company," he said.

He said the value would roughly equate to the cost of
listing a company on the Australian Stock Exchange,
indicating a range of $500,000 to $1 million.  "There would
be no cash. It would be purely the value of the
shareholding," he said.

Mr Daly said it appeared that in the six months leading up
to voluntary administration, there had been "undue
preferences" in payment to some creditors, whose accounts
were paid "out of sync."

He also flagged the possibility that the company had traded
while insolvent during 1999 - a crime under the
Corporations Law - but said it was not part of his
responsibility as administrator to investigate either
issue.  High-profile businessman John Elliott is an 11 per
cent shareholder of the company and a former director.
Other high profile stakeholders include Ron Brierley and
cardboard box king Richard Pratt. (The Australian 01-Sept.-

C H I N A  &  H O N G  K O N G

Casil Telecommunications Holdings Ltd., maker of switching
equipment and GPS/ITS(global positioning system/intelligent
transportation system) application products, posted a net
loss of HK$11.7 million for the six-month period ended June
30, down from a HK$18.2 million net loss for the same
period a year ago. Loss per share was 1.63 HK cents, almost
half the 3.04 HK cents for the same half-year period last
year.  Revenue rose 72.6 percent, however, to HK$62.1
million. Nonetheless, no interim dividend will be

DVN HOLDINGS LTD.: Posts 1H net loss
DVN (Holdings) Ltd., a digital broadcasting service
provider formerly known as DVB (Holdings) Ltd., recorded a
HK$29.6 million net loss for the first half of this year
ended June 30, down substantially from a HK$382 million
loss for the same period last year. Loss per share was 13
HK cents compared with HK$2.29 for the same period the
previous year. Revenue shrank 88.4 percent to HK$31.6
million. No interim dividend will be distributed.

GOCHINAGO.COM: 50 jobs sliced to cut costs
Fifty employees were laid off by a subsidiary of Li Ka-
shing's in the latest of a wave of job losses from
Internet companies.

The layoffs, announced yesterday, comprise all but 10 of
the Hong Kong staff at iTravel Limited's
They follow 80 layoffs last month by and bring to
almost 700 the number of sackings in the Internet industry
in recent months. cited a "focus to develop
the China market" and need to "take advantage of the
mainland's lower operational costs" as reasons for the

This rationale echoed reasons given by the parent company
for the earlier redundancies. All staff laid off yesterday
will receive a month's pay in lieu of notice, pro-rata
bonus pay and annual leave. Those with six months' service
will get an extra month's salary in severance pay, while
those who have worked less than six months will get 15
days' salary.

Company spokeswoman Helen Lam said the compensation
packages were better than those required by labour laws.
Affected staff would be referred to affiliated companies
according to their abilities. The executive officer of the
Hong Kong Information Technology and Network Engineering
Employees' Association, Fan Kwok-fai, said a dozen
discontented workers had called the union.

"The employees were informed of the layoffs at 2pm
yesterday. Most were dissatisfied with the company's sudden
closure and that it had said Hong Kong workers were too
expensive," he said.

Mr Fan said the company was being unfair to local workers.
"It is earning our money, why doesn't it employ Hong Kong

He said the firm had set a bad precedent and might affect
the Net business development of Hong Kong if other
companies followed suit by shifting their operations to the
mainland.  As one of's six travel website
investments, has 60 employees in Hong Kong
and 90 on the mainland.

Set up with an investment of $16.7 million, it was owned
55per cent by and 45per cent by Union Travel
Network. (Hong Kong IMail 01-Sept-2000)

GUANGZHOU INT'L TRUST: Ordered to pay 5.5% of debt
A unit of collapsed Guangzhou International Trust &
Investment Corp., an investment arm of the Guangdong
government, was ordered by a Shenzhen court to pay 5.5
percent of the debt it owes to 128 creditors, the Guangzhou
Daily reported.

Gitic's Shenzhen unit owes a total of 3.5 billion yuan
(US$424 million) and has cash enough to repay 194.2 million
yuan, or 5.5 percent of its total debt, the paper said. In
Hong Kong, creditors of bankrupt Guangdong International
Trust & Investment Corp. reportedly expect to receive less
than 3 percent of their claims when liquidators issue the
first repayment dividend in October. (Quamnet News 1-

PETROCHINA: To cut 50,000 employees over next 5 years
The mainland's biggest oil company, PetroChina, plans to
slash its workforce by a minimum of 10,000 annually over
the next five years as part of a major cost-cutting

Vice-chairman Huang Yan said the energy giant's workforce,
which last year numbered 480,012, had been cut by 7,203 in
the first half of the year. Mr Huang said while finding and
exploration costs were below or equal to international
levels, lifting costs in the first half had been higher
than that of major foreign oil firms.

"We will focus on cutting costs here," he said.

Mr Huang said talks were proceeding smoothly with BP Amoco
with a view to signing a framework agreement between the
two companies. The British oil firm has a 2 per cent
interest in PetroChina. He said they were likely to co-
operate initially in launching a "small retail company" and
later expand their co-operation to other areas.

The two companies reportedly hope to jointly operate over
800 petrol filling stations in Guangdong province and to
form a joint venture for natural gas distribution in the
Yangtze River delta.  Mr Huang said several foreign firms
had expressed a keen interest in co-operating with
PetroChina on its planned 40 billion yuan (HK$37.6 billion)
pipeline to bring natural gas from the west of the country
to the eastern coastal areas.

He said PetroChina expected to make a minimum return of 12
per cent on the pipeline. Mr Huang said though there might
be some asset swapping with other mainland oil companies,
this would be on a small scale. PetroChina reported a hefty
net profit of 23.07 billion yuan for the first half of
2000, up 49 per cent on the 15.48 billion yuan profit of a
year ago.

The increase in profitability was mainly the result of
increases in the prices of crude oil products, helped by
increases in sales and prices of refined products and
petrochemicals and cost cutting. (Hong Kong IMail 01-Sept.-

Home appliance maker Universal Appliances Ltd. posted a net
loss of HK$197.4 million for the first six months of this
year ending June 30, up from a HK$24.5 million loss for the
same period a year earlier. Loss per share was 7.61 HK
cents, six times the loss per share of 1.39 HK cents for
the previous period.

Revenue fell 88.3 percent to HK$62.7 million, down from
HK$536.7 million for the first half last year. No interim
dividend was declared.


BANK INDONESIA: To sell loss-making subsidiary
Bank Indonesia, says is planning to sell its subsidiary,
Bank Indover, which has continued to post losses. The
Netherlands-based bank was recently reported to have
suffered a potential loss of US$ 200 million because of
mismanagement, according to a report in Media Indonesia.

PT HOLDIKO PERKASA HOLDIKO: To sell assets to pay debt
PT Holdiko Perkasa Holdiko is ready to sell some of the
assets pledged by the Salim Group in repayment of its debt
to the government, according to the Indonesian Bank
Restructuring Agency (IBRA).

Holdiko was established by IBRA as a holding company for
100 companies pledged by the Salim Group, the country's
largest conglomerate to repay a debt of about Rp51 trillion
(US$ 6.4 billion) owed by its bank, Bank Central Asia, to
the government.

PT KREASI SUPRADINAMIKA: Bankrupty suit filed vs. it
Comfort Group Ltd filed a bankruptcy lawsuit against PT
Kreasi Supradinamika Multicorpora, a unit of Ongko Group,
alleging its failure to repay US$ 17.950 million in
promissory notes that came due Sept 23, 1997. The
application was filed by laywer Titus Rimo from Bernard,
Titus and Partners law firm.

PT SUMBER KERAMIK KHARISMA: Facing bankruptcy suit
Parkaway Trading Ltd filed a bankruptcy lawsuit at Jakarta
commercial court against Ongko Group unit PT Sumber Keramik
Kharisma alleging its failure to repay US$ 42.6 million in
promissory notes that matured on Sept. 18, 1997.

PT WIDIAMULIA PRIMA: Has bankruptcy suit filed against it
Gingo Investment Ltd has filed a bankruptcy suit against PT
Widiamulia Prima Multicorpora of the Ongko Group over
unpaid promissory notes worth US$ 16.5 million.

The notes reportedly matured on Oct 16, 1997. The
application was filed by Bernard, Titus & Partners law
firm, which previously filed a bankruptcy application
against another Ongko Group unit PT Metrotama Dunia.


DAI-CHI MUTUAL: Ripplewood eyeing
US private equity group Ripplewood Holdings, which acquired
Japan's Shinsei Bank, appears to be close to making a
second acquisition in Japan's financial sector. The US
group has lodged a serious bid for Dai-ichi Mutual Fire and
Marine, a medium sized non-life insurance group, which
collapsed in May.

The administrators for Dai-Ichi on Thursday stressed that
no final deal had been struck yet, and that negotiations
could continue for some time. "(We are) making every effort
to reach a conclusion as early as possible, with priority
given to protecting policyholders," they said.

However, some officials involved in the discussions have
indicated that Ripplewood was now a key candidate to buy
Dai-ichi, which was the first non-life insurance group to
have collapsed in Japan for 50 years.  Ripplewood is
understood to be particularly keen to purchase Dai-ichi
since it is looking for ways to boost the retail business
of Shinsei, particularly into new areas of consumer finance

Shinsei, which was formerly known as Long Term Credit Bank,
has traditionally focused on providing loans to corporate
customers, and had almost no retail base. However, it is
now seeking to expand into the retail sector, partly
because the traditional business of corporate loans is not
very profitable.

Masamoto Yashiro, Shinsei president, is best known within
Japan's financial circles for his retail banking expertise.
Before joining Shinsei he headed the Tokyo operation of
Citibank, effectively building its retail operations.
He has indicated in recent weeks that he is keen to explore
acquisition ideas.

Shinsei recently attempted to buy Tokyo Sowa, a failed
regional bank. However, it was beaten in the contest by the
WL Ross group, another US private equity group.  In the
past year there have been several sales of collapsed life
assurance groups to foreign investors. These include the
sale of Toho Mutual to GE Capital.

However, Dai-ichi is saddled with a very large capital
deficit. Consequently, the government would need to inject
funds into the insurer, via an industry association
protection scheme, before sale. It remains unclear what
level of funds the industry association is willing, or able
to provide, and this is expected to be a key negotiating
point before any deal is finally struck.

Separately, Shinsei has been aggressively seeking to expand
its operations in the capital markets and investment
banking areas. Earlier this week it announced it had hired
a team of securitisation experts, from Bear Stearns.
(Financial Times  31-Aug-2000)

KUMAGAI GUMI: Seeks 450B yen debt waiver
Financially troubled contractor Kumagai Gumi Co. is asking
creditors to forgive a combined 450 billion yen ($4.2
billion) of loans.

If approved, it would constitute the largest debt waiver
given a Japanese construction company, according to the
Nihon Keizai newspaper, which also wrote that as a
condition for receiving the debt waivers and other help,
Kumagai will eliminate 2,000 jobs within the next five

The 450 billion yen represents about 40 percent of the
company's total outstanding debt. Kumagai's five biggest
lenders are Sumitomo Bank Ltd., Shinsei Bank Ltd., Sumitomo
Trust & Banking Co., Tokai Bank Ltd., and Sakura Bank Ltd.

Reportedly, Kumagai is also will discuss the purchase of
its shares by Japan's largest contractor, Kajima Corp.
Kumagai Gumi shares were suspended for an hour after the
newspaper article appeared, the Tokyo Stock Exchange saying
it was uncertain about the validity of the report.

MITSUBISHI HEAVY INDUS.: To slash 20% of jobs
Mitsubishi Heavy Industries plans to cut a fifth of its
6,000 shipbuilding workers over the next six years in an
effort to lower costs and regain market share from South
Korean rivals.

"We need to cut costs and one area is personnel," said
Mitsubishi Heavy executive vice-president Naochika Namba.

The comments come after the company said in July that it
would cut 500 workers from the unit by March 2004. Japan's
largest ship- and machinery maker will reduce the workforce
by about 1,000 employees, said Mr Namba. The reduction will
be achieved through natural attrition such as retirement
and resignations, he added.

Mitsubishi Heavy, like other Japanese shipbuilders, faces
stiff rivalry because increased costs and a strong yen have
dulled their competitiveness. That has prompted the
Japanese government to push the shipbuilders to consolidate
and reduce capacity.

Yet some analysts say the workforce cuts fall short of what
is needed to overhaul the unit. "It shows they are thinking
about restructuring, but if it doesn't go
further it will be tough," said Mr Minoru Kawahara, a
senior analyst at Morgan Stanley Dean Witter Japan.

Three of Japan's major shipbuilders, Ishikawajima-Harima
Heavy Industries, Kawasaki Heavy Industries and Mitsui
Engineering & Shipbuilding, are already in talks to form a
shipbuilding alliance.  Kawasaki Heavy and Mitsui
Engineering said on Wednesday that they would build on an
existing partnership and start making ships together.
(Bloomberg, Straits Times  01-Sept.-2000)

Mitsubishi Motors Corp. (MMC) is telling investors it
expects to suffer a non-consolidated net loss of as much as
47 billion yen for the six-month period that will end
September 30. It did not project a half-year estimate on
the consolidated level.

The Japanese automaker is spending about 7.5 billion yen on
vehicle recalls after confessing to concealing customer
complaints about defective vehicles for decades. Its
downward profitability and recall disaster comes at a
sensitive time, just as MMC is on the verge of completing
an alliance with DaimlerChrysler.

The Ministry of Transport and Tokyo metropolitan police are
investigating MMC for alleged violation of the Road
Vehicles Act, which requires auto manufacturers to report
defective vehicles within days of discovery. Mitsubishi
admitted recently, however, that it concealed such
information for over 30 years and initiated the recall.

The company has been in financial distress for two out of
the past three years prior to the recall scandal. In May,
it was projecting a 70 billion yen loss for the year ended
March 31, 2001. Shares have fallen 30 percent since mid-
August, another 3.4 percent on Thursday alone, closing at
340 yen.

SNOW BRAND MILK PRODS.: S&P downgrades to junk-bond status
Standard and Poor (S&P)'s Thursday downgraded Snow Brand
Milk Products Co. Ltd.'s debt to junk-bond status/

The move is the lastest blow to the dairy firm, already
reeling from guilt and responding to causing Japan's
largest food-poisoning outbreak. S&P noted it was dropping
Snow Brand's rating to a predominately speculative BB from
the minimum investment grade. The rating is based on
information made public by Snow Brand, not Standard and
Poor's independent study of the company's books.

The downgrade came only a day after police raided Snow
Brand offices in Tokyo and Osaka, looking for causation in
the food poisoning of more than 14,000 people who fell ill
in late June after drinking the firm's milk.

"Recent food poisoning incidents, illustrating Snow Brands
inferior quality control and risk-management systems, have
undermined consumer confidence in the company and dented
its brand image," the agency said in a written statement.
"Standard and Poors believes that the company will record
operating losses during the current fiscal year and will
face significant challenges in the near term in restoring
its earnings to previous levels."

Only two weeks ago, Snow Brand reported its first losses in
five decades. It reported a sales drop of 20.4 percent for
the four months ending July to 147.4 billion yen. Debt is
mounting as a result, particularly as revenue is declining
from a consumer boycott of its products, S&P noted.

"Short-term bank borrowings by the company climbed to 16.5
billion yen as of July 2000 from 3.5 billion yen as of
March 2000," the S&P statement said. "Nonetheless, as Snow
Brand plans to extend its bank credit lines to about 100
billion yen, it has ample liquidity for the short term."

Snow Brand's Osaka plant has been closed indefinitely since
suspicion pointed to its bacteria-tainted milk produced
under unhygienic conditions. The suspicions spread to a
second plant at Taiki in Hokkaido, northern Japan, when
government officials last week found traces of harmful
bacteria in skim milk produced at the plant and supplied to
the Osaka dairy.

The Hokkaido discovery "could have a severe impact on Snow
Brands earnings as it is likely to cause a further decline
in sales of the companys products as a whole, including
high-margin products such as cheese," Standard and Poor's
said.  "Further delays in the recovery of Snow Brands
earnings will worsen the impact on its financial profile."


HYUNDAI MOTOR: To go it alone
Hyundai Motor on Thursday received government approval to
separate from the Hyundai group in the first step towards
the break-up of South Korea's largest conglomerate.

Analysts said the spin-off of Hyundai Motor will increase
investor confidence in South Korea's biggest carmaker. "Its
credit rating will improve because it will no longer have
to give financial support to the Hyundai group's weak
businesses. Hyundai Motor can now concentrate on improving
shareholder value," said David Cotterchio, an analyst with
Nomura Securities in Seoul.

Businesses owned by Korea's big conglomerates have
traditionally subsidised troubled group units through loan
guarantees and cross-holdings. The separation of Hyundai
Motor underscores recent efforts to restructure the Hyundai
group, which has suffered a liquidity crisis this year.
Another main unit, the shipbuilder Hyundai Heavy
Industries, is expected to be spun off by June 2002.

Besides Hyundai Motor, the new car group includes Kia
Motors, Hyundai Precision & Industry, Hyundai Pipe, Inchon
Iron & Steel and several smaller businesses. Hyundai
Motor's separation comes as the carmaker reported record
net profits of Won310.4bn ($280m) in the first half. It
also recently concluded a strategic alliance with

But some analysts remain cautious about the prospects of
Hyundai Motor because its management is dominated by Chung
Mong-koo, the estranged son of the Hyundai founder.

"There are doubts about corporate transparency at the new
auto group. There are several junk companies in the group,
including Hyundai Pipe and Inchon Iron & Steel, and that
raises concerns that these weak businesses will be
subsidised by Hyundai Motor," said Mark Barclay with
Samsung Securities.

Hyundai Pipe and Inchon Iron & Steel have formed the
centrepiece of plans by Chung Mong-koo to establish a large
steel business, despite investor doubts.  Analysts believe
that DaimlerChrysler, which will acquire 10 per cent of
Hyundai Motor this month, will try to block these ambitions
through its representation on the board.

There are also concerns about Hyundai Motor's recent offer
of a generous 10-year warranty on some car models sold in
the US in an effort to boost sales. "The long-term effects
of the warranty are incalculable since it exposes Hyundai
Motor to substantial future financial liabilities," said
Henry Morris, with Seoul-based Industrial Research &

However, Richard Pyo, an analyst with Credit Suisse First
Boston in Seoul, believes the financial impact will be
limited since the warranty applies to only 40 per cent of
the 250,000 cars that Hyundai is expected to sell in the US
during this year. Hyundai has reached a preliminary
agreement to sell its ailing financial units to a group of
US investors for $1 billion.

This was followed by the resignation of the head of Hyundai
Securities, who was blamed by the government for financial
mismanagement. The Fair Trade Commission approved the
separation of Hyundai Motor after Chung Ju-yung, the
Hyundai group founder, last week sold most of his stake in
the carmaker, removing its last link to the group.

Officials said they had found no evidence that Mr Chung had
transferred his stake to friendly shareholders in an effort
to maintain management influence, as earlier suspected.
(Financial Times  31-Aug-2000)

KOREA MERCHANT BANKING CORP.: Suspended 3 mos.-loan default
Korea Merchant Banking Corp., one of the nation's troubled
merchant banks, failed to honor its maturing debt of 14
billion won yesterday, receiving a three-month business
suspension from financial regulators.

"The Financial Supervisory Commission decided on the
business suspension as the merchant bank was finally
declared insolvent after defaulting on the maturing debt
for the second consecutive day yesterday," an FSC official

Earlier Wednesday, Korea Merchant Banking failed to honor
the bills which came due at Cho Hung Bank. A company
becomes bankrupt in the nation if it defaults on a maturing
loan for two straight days.  Under the sanction, Korea
Merchant Banking's operations will be suspended for three
months starting Sept. 1, while its executives will be
barred from performing their duty, the official said.

Due to talk of a default, the Korea Stock Exchange also
suspended stock trading of the merchant bank earlier
yesterday afternoon.  Korea Merchant banking has been going
through a cash crunch recently and has submitted a business
improvement plan to the Financial Supervisory Commission.
The financial watchdog initially reviewed the merchant
bank's self-rescue plan Tuesday and was to hold another
review session next Monday.

The merchant bank, in which Hana Bank holds a stake, has
been teetering on the verge of insolvency following the
collapse of Nara Banking Corp. from which it has acquired
promissory notes, only to see them go sour.  Hana, which
extended 178 billion won in financial aid to Korea Merchant
Banking in June this year, said that it will not make
additional loans to the embattled merchant bank.

Meanwhile, Central Banking Corp., another cash-strapped
merchant bank, yesterday failed to make a capital increase
of 50 billion won as promised earlier. The companies issued
a public notice that it will postpone the planned capital
increase till the end of this month.

"We decided on the delay as prospective investors didn't
send promised money," a company official said. "Chairman
Kim Suk-ki is now on an overseas business trip, while other
executives remain tight lipped on future plans."

If the merchant bank submits a revised management
improvement plan, the financial watchdog will review it and
then decide how to deal with the embattled company,
officials said.  Unless Central Banking files the upgraded
plan, the FSC will first suspend its business and then the
Korea Deposit Insurance Corp. is likely to take it over,
they added.

In a special shareholders' meeting Aug. 17, Central Banking
agreed on a capital reduction of 181.4 billion won and
decided to increase its capital by 50 billion won Aug. 31.
(Korea Herald  01-Sept.-2000)

SAMSUNG ELECTRONICS: Share price plunges
A string of managerial irregularities and immoralities by
Samsung Group Chairman Lee Kun-hee and his family are
combining to wreak havoc on the share price of Samsung

Analysts report that disillusioned foreign investors are
dumping Samsung Electronics shares in large blocs. Those
investors yesterday net-sold shares in Samsung Electronics
by more than 510,000 shares for the fourth consecutive day.
That sent the stock crashing below 300,000 won to 270,000
won ($243).

Meanwhile, local civic activists are stepping up calls for
the prosecution of chairman Lee and his son Jae-yong on
charges of embezzlement and tax evasion connected with
transfers of their wealth. The increasingly negative if not
hostile sentiment toward the company is likely to continue
indefinitely, some analysts speculate, as the Lee family
and Samsung management stubbornly defy government demands
for decision-making and accounting transparency and
protection of minority shareholder interests.

SAMSUNG MOTORS: Sale to Renault finalized
French automaker Renault on Friday completed its
acquisition of South Korea's Samsung Motors Inc., Samsung
Group and creditor banks transferring the company's assets
to Renault.

With the moves, Renault Samsung Motors Inc. was officially
launched, according to a spokesman of Renault Samsung

Renault agreed to pay a total 615 billion won (554 million
dollars) to buy Samsung Motors. Under the joint venture and
asset purchase agreements, Renault eventually will control
70.1 percent in Renault Samsung Motors, Samsung Group will
take a 19.9 percent stake and Samsung Motors' creditor
banks the remaining 10 percent.

Renault acquired insolvent Samsung Motors in April. It is
the first foreign firm to acquire an auto factory in South
Korea, a traditionally closed market. Per the agreement,
Renault Samsung Motors has purchased the operating assets
of Samsung Motors, including its plant in the southern port
of Pusan, a research and development center in Seoul and a
local sales network.

The new company will seek a 15 percent share of South
Korea's auto market by 2005, setting a goal of selling
150,000 to 200,000 vehicles in the country.


RASHID HUSSAIN BHD: Posts 1H net loss
Rashid Hussain Bhd posted a 64.288 million ringgit loss for
the first six months of 2000, compared to a loss of 598.201
million ringgit for the same period last year.

Sales for the period totaled 3.768 billion ringgit,
compared to 3.914 billion for the same period in 1999.
The company's loss per share (basic) for the first-half
period was 18.86 sen, down substantially from 154.0 sen for
the first half last year. Loss per share (fully diluted)
was 7.64 sen for the first half of this year, 128 sen for
the same period last year. No final dividend was declared.

Rashid Hussain said it incurred a tax charge of 208.292
million ringgit in the first half to June, versus 49.278
million in the first half 1999

Rashid Hussain said it has plans to make the group more
efficient, including reducing borrowings, to improve its


MONDRAGON LEISURE & RESORTS: CDC to decide who takes over
The 214-hectare world-class Mimosa leisure estate here,
which the government-owned Clark Development Corp. (CDC)
seized from the Mondragon Leisure and Resorts Corp. (MLRC)
in December last year, will be fully in private sector
hands even before Christmas.

Bases Conversion Development Authority (BCDA) chairman and
concurrent CDC president Rogelio Singson said yesterday
that the CDC will decide by next week who between Bank of
Commerce (of Antonio `Tonyboy' Cojuangco) or the Penta
Capital Investment Corp. (PentaCapital) will take over the
estate, including the Mimosa Regency Casino which the CDC
shut down in December, 1998.

"The two firms have already submitted their proposals which
we are now evaluating. We will have the decision in the
coming week," Singson said in an interview with newsmen

Singson said that the proponents have invited MLRC's
creditor banks in their joint-venture takeover proposals.
"This move will save us from legal battles," Singson said
amid earlier demands from the banks to take over the
estate amid the failure of MLRC to settle its debts to them
after the CDC seized control of Mimosa.

The MLRC-backed PentaCapital reportedly has the Sultan of
Brunei as bankroller. A few months ago, the sultan's
brothers identified as Jeffrey and Ganni were reported to
have visited Mimosa. The firm, with a capital investment
estimated at P500 million, has been reported to be
finalizing a deal with several of MLRC's creditor banks for
a P650-million bridge financing for Mimosa.

MLRC reportedly owes its creditor banks some P6 billion.
Some of the banks include the Malaysian TA Bank, Philippine
Banking Corp., Dao Heng Bank, Far East Bank, United Coconut
Planters Bank, and AsianBank.  On the other hand,
Cojuangco's group announced earlier it is ready to infuse
no less than P400 million in fresh capital into Mimosa.

"The CDC has been at Mimosa too long. We want to turn it
over to private hands soonest," Singson said as he noted
that the CDC lacks the expertise to maintain Mimosa. "I
must admit some deterioration at Mimosa which has to be
handled by a really professional group."

He said the decision of which firm will be accepted for the
Mimosa takeover will have to be made by the CDC board, and
then sent for approval by the Office of the Government
Corporate Counsel (OGCC) and Malaca¤ang. "Mimosa will be
taken over by either of the two proponents way ahead of
Christmas," he said.

The CDC cancelled MLRC's leasehold rights over Mimosa in
December 1998 after the latter's failure to settle its land
rental dues worth over P400 million. Last year, MLRC also
failed to comply with a new compromise agreement with
the CDC setting the rental dues at P325 million, prompting
the CDC to fully take over the estate last December.
(Philippine Star  01-Sept.-2000)

NATIONAL POWER CORP.: Renegotiation may lower debts
National Power Corp.'s (Napocor) $9-billion net obligations
to 34 independent power producers (IPP) may be reduced to
$7.2 billion if the government succeeds in renegotiating
these contracts.

The government can save $900 million if it can renegotiate
even just the top five power purchase agreements (PPA).
Credit Suisse First Boston (Hong Kong Ltd.) and SGV/Arthur
Andersen (CSFB-SGV/AA) made these observations during its
report to the Senate energy committee Wednesday. CSFB
managing director Matty Vengerik noted that the top five
contracts constitute almost 50% of Napocor's net

Under the contracts, Napocor agreed to pay for the power,
regardless of whether it is actually produced or consumed,
at an average price of $76 per megawatt hour.  Senators
have sought for the renegotiation of the deals, which
allegedly inflict huge financial burden on the public and
extend undeserved enrichment in favor of private IPPs.

Senator John R. Osme¤a, committee chairman, told reporters
yesterday that PPA contracts would likely be grouped into
five to be managed by a government-owned and -controlled
corporation.  The corporation will be tasked to minimize
losses from the power deals and pursue renegotiation.

The lawmaker also claimed Congress is inclined to have the
government retain Napocor's liabilities instead of passing
these on to consumers.  This means the debts will be paid
by the government over a 20- to 25-year period. Napocor is
already collecting a PPA adjustment charge from customers
to reflect the cost of IPP obligations. As of May 2000,
this component represented PhP0.59/kWh or 20% of the total

Mr. Osme¤a claimed this charge may be deducted from monthly
bills as soon as Congress legislates the power
restructuring bill.  CSFB-SGV/AA estimates Napocor's net
liabilities arising from IPP obligations at $9 billion.
Gross obligations from IPP contracts amount to $19.5-
billion, broken down into $9.4 billion in capacity payments
and $10.1 billion in marginal costs.

The gross obligation is offset against revenues from energy
sales of about $10.5 billion. CSFB-SGV/AA advised the
government against abrogating existing PPAs, which
it said could damage the country's reputation in both the
international financial and political arena.

However, the government may offer incentives to IPPs to
encourage these to renegotiate the power deals. Aside from
direct negotiations with IPPs and the active management of
PPAs, CSFB-SGV/AA also recommends the replacement of
Napocor obligations with sovereign credit as well as
privatization-related incentives to reduce liabilities.

The consultancy firm wants the government to retain the
debts through a board of liquidators instead of assigning
these to generating companies (genco) that will be
privatized.  Assigning a fixed level of debt to each genco
may send a strong signal of expected valuation, which could
lower investor interest.

CSFB-SGV/AA also claims this will result in protracted
negotiations since the government will have to seek the
consent of each lender to transfer the debts to the gencos.
The groups also proposes the creation of an independent IPP
administrator attached to the liquidators board, which will
manage proceeds from the sale of IPP assets.

Senators and congressmen earlier deferred proposed reforms
in the power sector in the absence of a clear privatization
plan for Napocor.  Members of the bicameral conference
committee agreed to delay the restructuring and
privatization measures until September, when CSFV-SGV/AA
will have finished its study. (Business World  01- Sept.-

NATIONAL STEEL CORP.: Has P500M in back taxes to pay
Even before a group of local banks could make a move to
foreclose on National Steel Corp., the National Government
will make sure that it collects its taxes first.

According to Finance Secretary Jose T. Pardo, he has
instructed the Bureau of Internal Revenue (BIR) to begin
proceeding against NSC for the collection of some P500
million in back taxes.  Pardo said that the BIR would issue
a seizure order on assets of NSC for the payment of unpaid
sales and income tax.

Pardo said that while he agrees with the proposal of Bangko
Sentral ng Pilipinas Governor Rafael B. Buenaventura to
liquidate NSC and later reincorporate it, the government
should first be able to collect back taxes owed by NSC to
the government.  Buenaventura had earlier proposed that 14
creditor banks of NSC should try to finally resolve the NSC
debt problem by foreclosing on the steel firm, liquidating
its assets and later reincorporating the company enabling
it to operate on a clean book basis.

Buenaventura made the suggestion as a solution to the debt
problem saddling the banking system.  NSC owes about P16.5
billion to a consortium of local banks, the biggest of
which is the Philippine National Bank.  The P16.5 billion
debt, Buenaventura said, is a "drag" on the banking sector
resulting in the system's double digit non-performing loan
(NPL) level.

If the NSC debt problem is resolved, Buenaventura said it
would immediately improve the banking system's NPL
position.  The NSC and the consortium of local banks are
having a difficult time agreeing to a debt restructuring
plan because of the refusal of the majority owner of NSC to
be diluted or to infuse additional cash into the ailing
steel firm.  The Malaysian Hottick group owns 82 percent of
NSC, while the government still holds a minority 12.5
percent.  (Philippine Star  01-Sept.-2000)

UNIWIDE GROUP: Casino taking it over finally
Framce-based retail giant Casino Guichard-Perrachon will
finally take over control of the cash-strapped Uniwide
group this month after a long-drawn negotiation to
restructure its debts.

Industry sources said the French retailer was scheduled to
chair Uniwide's Sept. 22 shareholders meeting and was
expected to take over businessman Jimmy Gow's shares via a
cross transaction at the Philippine Stock Exchange before
the day of the meeting.  Casino is prepared to infuse P3.57
billion ($86 million) to acquire 89.2 percent of Uniwide
Holdings Inc. (UHI).

It was supposed to take over UHI in July but the group
still had to convince UHI creditors to provide a 20-percent
debt discount.  The sources said the French retailer was
also the same group that would bring in a third party
investor to acquire a 60-percent equity in Fil-Franco
Realty and Resources Inc. (FFRRI), a real estate unit spun
off as part of the Uniwide group's rehabilitation.

FFRRI's task is to handle the land banking activities of
the Uniwide group. It is one of the two debt-free
subsidiaries being established to separately handle UHI's
retail and realty interests.  The other subsidiary, Fil-
Franco Store Systems Inc. (FFSSI), will operate the
warehouse operations of the group.

Analysts said the market was now looking forward to the
Sept. 22 stockholders meeting but noted that the question
now was how the market would value UHI shares after the
Casino takeover.  "A lot of people are driving up the
prices thinking that Uniwide's operations, after Casino's
takeover, will go back to its 1997 level but that will not
happen," an analyst from a foreign brokerage said.

The Uniwide group had sought relief from payment of P10
billion worth of debts to various creditor-banks.  The
Casino Group is the second largest listed retailer in
France and ranks among the top seven retailers in the
world. Net sales in 1998 exceeded US$13 billion with the
operation of 112 hypermarkets, 473 supermarkets and 2,230
convenience stores.

Operations are not limited to Europe but also extend to the
United States and South America. The Casino group recently
rehabilitated the Big C group in Thailand and is now
Thailand's largest retailer (Philippine Daily Inquirer  01-


PARKWAY HOLDINGS: To sell loss-making hospital unit
Singapore's largest owner of private hospitals, mainboard-
listed Parkway Holdings, plans to sell its loss-making
Heart Hospital in Central London.


BANK OF AYUDHYA: Fitch lowers long-term rating
Bank of Ayudhya's (BAY) long-term rating was downgraded to
B-plus from BB-minus by international credit rating agency
Fitch IBCB, due mainly to concerns it has insufficient
capital to cover needed provisions. The bank's outlook
remains negative.

BAY's capital position is not sufficient to fund the level
of additional provisioning that might be needed, Fitch
said. It acknowledged the bank's loan portfolio might
differ in some way from its peers, with less syndicated
lending or possibly a higher level of collateral.

But Fitch said it found it difficult to understand how BAY,
of all the Thai banks, could have avoided the asset quality
problems to the extent implied by its low level of
provisioning.  "The lowering of BAY's long-term rating
reflects the agency's concern over its reserve and capital
levels and the difficulties the bank is likely to face in
raising capital," it said.

At the end of the first half, the bank had 100 per cent of
the required loan loss reserve. However, Fitch said such a
reserve seemed inadequate compared with the provision set
by other major banks. Thai Farmers Bank (TFB)'s
provisioning at the first half rose to 171.85 per cent,
while Siam Commercial Bank (SCB) has conservatively
increased its reserve by Bt1 billion to Bt2 billion every
quarter on top of its current reserve of about 130 percent.

Banking analysts believed BAY needed at least Bt10 billion
in new capital. According to the bank's earlier statement,
its first-half capital adequacy ratio stood at 10.5 per
cent, of which 6.8 per cent was tier-1 capital.  "One door
open to BAY is the Ministry of Finance's capital support
scheme, but this is due to expire on November 1 and BAY has
so far declined such support," Fitch said.

The bank's stock price yesterday closed unchanged at Bt6 a
share.  Most banks have made large write-offs on their
worst non-performing loans, but Fitch expected several
banks would need to make more provisions to cover further
drops in the collateral values backing the bad loans.

In terms of gross reserve coverage, including write-offs
and losses on bad loan transfers, DBS Thai Danu Bank
(DTDB), Bangkok Bank (BBL), TFB and Krung Thai Bank (KTB)
had the highest loss coverages, equal to about 40 per cent
of gross impaired loans. The agency believed these four
banks should be approaching an adequate level of reserves.

SCB's and Thai Military Bank (TMB)'s reserve coverages were
about 30 per cent of gross impaired loans, while BAY had
the lowest reserve coverage at about 20 per cent. The
agency expected additional large provisions for SCB and to
a lesser extent TMB, which would result in significant
losses, but which were within the banks' capacities to
absorb.  (The Nation  01-Sept.-2000)

DIGITAL PHONE CO.: Plans to recapitalize to pay debts
Digital Phone Company (DPC), an 1800-MHz cellular operator,
will raise Bt5 billion from its major shareholders as part
of a recapitalisation plan to pay its debts and expand its
network, company officials said yesterday.

DPC chief executive Arak Chonlatanon said the shareholders
on Wednesday approved a plan to double its registered
capital to Bt10 billion.

"The amount will be injected by our existing shareholders,
Telekom Malaysia International and Shin Corps Plc. Telekom
Malaysia will pour in US$60 million [Bt2.4 billion], while
the remainder will be contributed by Shin Corps," Arak

Telekom Malaysia owns 49 per cent of DPC, while Shin Corps
holds 45 percent. Other shareholders are Total Access
Communication Plc, which owns 5 percent, and the
Communications Authority of Thailand and its employees,
who hold the remaining 1 per cent. Arak said the
shareholders would meet again to confirm the
recapitalisation plan. Telekom Malaysia and Shin Corps have
agreed to acquire the new shares to maintain their stakes
in DPC, he said.

"This should be evidence enough to ensure that Telekom
Malaysia will stay with us, as opposed to the rumour that
it plans to withdraw its investment from Thailand," he

Of DPC's Bt5 billion in capital, only Bt3.89 million is
paid up. The new money would be used to retire Bt4 billion
in debt, including $50 million owed to Nortel, its Canadian
supplier, Arak said. The debt clearance will allow DPC to
proceed with a plan to expand its network, which has been
prevented by its deal with Nortel.

The agreement prohibits DPC from creating additional debt
before completely retiring the Nortel debt. DPC
shareholders also approved a plan to seek a $100-million
domestic loan for the network expansion, Arak said. DPC is
expected to sign a $100-million deal with Nokia to increase
the number of its 1800-MHz cell sites from 320 to 600,
which would cover the entire Bangkok metro area.

After the project is completed, DPC plans to expand its
cellular service into the provinces through a roaming
agreement with Advanced Info Service Plc, a Shin Corps
subsidiary and the country's largest cell phone operator.
DPC has 150,000 subscribers and expects to reach 230,000 by
the end of this year. (The Nation  01-Sept.-2000)

MODERN HOME DEVELOPMENT: Court accepts rehab petition
The Central Bankruptcy Court has accepted a petition by
Modern Home Development Plc to restructure its business.
The company owes some 7.1 billion baht to about 300
creditors. A hearing was scheduled by the court for Sept.
25. Objections to the rehabilitation must be filed at least
three days before the hearing.

WONGPAITOON GROUP: SET reclassifies shares `in rehab'
Due to Wongpaitoon Group (WFC)'s coming under its business
rehabilitation rule, the Stock Exchange of Thailand will
reclassify its shares as "Companies Under Rehabilitation"
(REHABCO) as of September 5, as a result of its negative
shareholders' equity.

The action could lead to WFC being delisting if the company
fails to remove the causes of its financial problems.
Trading in WFC shares will be discontinued unless the
company asks for trading under the REHABCO category,
according to the SET. Such a request may be filed if the
company has completed the restructuring of no less than 50
percent of its total debt, and its business rehabilitation
plan is accepted by the Central Bankruptcy Court.

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 Maria Vyrna Ni¤eza, 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.  Information contained herein is obtained from
sources believed to be reliable, but is not guaranteed.

The TCR -- Asia Pacific subscription rate is $575 for 6
months delivered via e-mail. Additional e-mail
subscriptions for members of the same firm for the term of
the initial subscription or balance thereof are $25 each.
For subscription information, contact Christopher Beard at

                   *** End of Transmission ***