TCRAP_Public/001006.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, October 6, 2000, Vol. 3, No. 195


* A U S T R A L I A *

LIBERTYONE: Suitors line up while stock falls again
SURF DIVE `N SKI: Owner skips on creditors
WAKEFIELD TRINITY: Rugby club earns voluntary standstill
WOMEN'S HEALTH BIOTECH: Prospectus gets interim stop order

* I N D O N E S I A *

PT ASTRA INT'L: Makes debt payment ahead of schedule
PT BANK OF BALI: Rights issue unsuccessful, IBRA to own
PT MUSTIKA NIAGA NUSANTARA: Court declares bankrupt
PT NUSAMBA GROUP: Signs MOU on debt rehab with IBRA

* J A P A N *

DAIMLERCHRYSLER JAP.HLDGS.: Found to have hidden income

* K O R E A *

DAEWOO TELECOM: To be sold for W330B to foreign firm
DONG AH CONSTRUCTION: In need of fresh funds
HANBO IRON & STEEL: Creditors to file suit vs. Nabors group
HYUNDAI PETROCHEMICAL: Reform at standstill

* M A L A Y S I A *


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

MONDRAGON INT'L PHIL.: 3 largest creditors yet to OK rehab
PHILIPPINE NAT.BANK: Gov't approves rehab plan in principle

* S I N G A P O R E *

SOUNDTEX SWITCHGEAR & ENG.: $339K judgment issued against

* T H A I L A N D *

CHALLENGER SUPERSTORE: Closes outlet owing rent
ITALIAN-THAI DEVELOPMENT: Debenture rating lowered
NAWARAT PANANAKARN: Creditors convert debt to equity
SINO-THAI ENGINEERING: Court approves rehab plan
THAI MILITARY BANK: To issue debentures to offset NPLs


LIBERTYONE: Suitors line up while stock falls again
Buyers for all or part of LibertyOne are beginning to
emerge as the wounded Internet media group limps into the
second phase of a restructuring process.

LibertyOne's share price yesterday hit a new low of 6.6c,
after it issued a statement saying it did not have enough
working capital "to achieve an appropriate long-term return
for shareholders."  As a result, it was considering "all
options", it said.

LibertyOne is entertaining offers for what Mr Chris
Photakis, a LibertyOne corporate adviser from KPMG, termed
its "viable assets" - Web designer Zivo, digital download
business Satellite Music Australia and a 49 per cent
interest in healthcare software venture Monet Asia Pacific.
LibertyOne has already exited interests in Hong Kong e-
commerce outfit HT HyperNet, online marketer Persona Asia
Pacific and auction site uBid, which will shut down on
October 27.

Yesterday it also disposed of its 70 per cent interest in
Greg Norman Interactive to Great White Shark Enterprises,
reducing expenditure by $600,000. Speculation has centred
on a number of local Web developers as potential suitors,
but US Internet holding company the Qixel Capital Group is
understood to be among the most likely.

Although Qixel is based in the US, most of its Internet
interests are in the Asia-Pacific region. It has seven e-
commerce properties which last year generated more than $51
million in revenue.  These include a stake in listed New
Zealand Web developer Advantage Web Services which recently
bought Sydney Web service provider Whitewolf Online for
$7.5 million.

Qixel is understood to be interested in listing on the
Australian Stock Exchange and sees a takeover of LibertyOne
as a quick means of making its debut. Just months ago,
Qixel and LibertyOne were close to a merger in which
Advantage would have been folded into LibertyOne's New
Zealand Web integration division Clearview, giving
LibertyOne the lion's share of the market for Web services
in New Zealand.

Another party believed to be interested in Zivo is locally-
listed Internet group IT&e. Sources close to the company
yesterday confirmed IT&e chief executive Mr Jeremy Jilla
was seeking to expand the Melbourne company's Sydney
presence and several former Zivo employees had joined the
company in recent months.

Meanwhile Mr Adam Radly, chief executive of online
education provider Isis Communications, confirmed he was in
discussions with LibertyOne regarding business
opportunities but said the talks did not necessarily
pertain to Zivo. Isis, at its last general meeting, flagged
its desire to acquire fellow listed Web companies as their
value dropped and is in the process of buying online
information provider Market Faxts.

It is also building a series of online communities and
needs Web development expertise. But as parties willing to
pick up the LibertyOne's pieces circle, Zivo, its most
precious asset, continues to bleed. Sources close to the
company said yesterday staff numbers in Zivo's Sydney
office were now as low as 20, from 100 previously, and
employees were leaving weekly.

The founding directors have departed and Zivo's long-
serving business development director, Mr Anthony James, is
expected to resign this week. LibertyOne's share price
peaked at $2.70 in December, but then began a steep decline
as investors realised the diversified Internet investor
lacked any real focus. It lost 1.3c yesterday to finish at
6.6c.  In July US e-commerce provider Cybersentry made a
takeover offer at 30c per share, but was unable to win
approval from LibertyOne's board and withdrew the offer a
month later. (Sydney Morning Herald  05-Oct-2000)

SURF DIVE `N SKI: Owner skips on creditors
The mysterious businessman behind a financially troubled
group of retail stores and luxury properties has fled the
country owing bankers and other creditors tens of millions
of dollars.

Lux Daswani, a 50-year-old Gold Coast businessman and owner
of surf retailer Surf Dive 'n Ski outside NSW, left
Australia on Sunday with his wife Adriana and daughter
Nina, 18, after the extent of his losses were uncovered.
Mr Daswani is believed to be in Hawaii and is travelling on
a US passport.

Sources close to the investigation into his affairs said
the FBI had been called in to assist the Australian
Securities and Investment Commission and the Australian
Federal Police in tracking him down.  "We are aware of the
situation and the complaints that have been made and are
looking into it," an ASIC spokeswoman said.

The amount involved is yet to be determined after three
separate administrators -- Arthur Anderson, Ferrier Hodgson
and Sims Lockwood -- were appointed on Monday to take
control of Mr Daswani's retail empire and luxury properties
in south-eastern Queensland and NSW.

Mr Daswani owned 15 Surf Dive 'n Ski stores outside NSW,
eight Ozmosis surfing shops, seven Bowbleau children's
shops, five Coco childwear stores, two La Trump jewellery
stores in Surfers Paradise and at least 16 luxury
properties in Queensland and NSW.  Surf Dive 'n Ski stores
in NSW are separately owned and are not connected with Mr
Daswani's group.

Mr Daswani's Bentley and two Aston Martins have been
repossessed. Sources close to the investigation said
financial institutions including the Hong Kong Bank, the
National Australia Bank, the Bank of Bendigo, the Bank of
Queensland, AXA, GIO, St George Bank and Avco are owed

Administrator Ferrier Hodgson was appointed at the request
of ANZ Bank after the retailer defaulted on a $12million
commercial loan.  Mr Daswani took over the Surf Dive 'n Ski
group less than a year ago. The chain, owned by Ganesh
Australia, a member of the Daswani group of companies based
in Surfers Paradise, will be sold along with the other
retail outlets.

Mr Daswani's daughter, Nina Lakshmi Daswani, is the sole
shareholder and director of Ganesh Australia, according to
the ASIC.  Administrators were last night assessing how
many creditors there were, but they were expected to
include major clothing suppliers.

"We are still piecing together the financial snapshot. We
are speaking to creditors as we go along," said David
Lockwood, administrator at Sims Lockwood.

One major supplier, surfwear company Billabong, cut ties
with Mr Daswani's company five months ago.  "We ceased
doing business with him. We terminated a supplier agreement
in May and ceased supplying him," a Billabong spokesman
said.  A meeting of creditors was to be be held in
Melbourne this morning.  (The Advertiser  06-Oct-2000)

WAKEFIELD TRINITY: Rugby club earns voluntary standstill
Wakefield Trinity's immediate future is assured after their
major creditors agreed to wait for the money they are owed.

Trinity, who have debts of around 4 million pounds and
sacked half their squad as a cost-cutting measure, have
persuaded SCG Rovacabin, who built a hospitality stand at
Belle Vue, and the local council to enter into a Creditors'
Voluntary Agreement that will give them breathing space.

"It's excellent news," said the club's chief executive,
Stuart Farrar. "The creditors accepting the CVA proposals
will enable the club to continue to operate."

One of the players released by Trinity, Martin Masella, has
joined Warrington, paying tribute to the Rugby League for
removing him from the overseas quota as a compassionate
measure.  Wigan's coach, Frank Endacott, has taken the
unusual step of not allowing any of his players to watch
the video of their 54-16 defeat by St Helens in last
Friday's play-off match.

Wigan, who are preparing for their second bite of the
cherry against Bradford on Saturday, would normally study
their previous performance in detail, but Endacott has
decided to keep this particular video nasty off the screen.
"It would have been the wrong thing to do if I wanted to
keep them in a positive frame of mind," he said.

Endacott has added Simon Haughton, Wes Davies and David
Hodgson to the 17 who lost to Saints, but drafting Haughton
on to the bench is the only likely change. The Bulls'
coach, Matthew Elliott, will also select from 20. "I'm
going to have to give the bad news to three people," he

St Helens, who will meet the winners of the match in the
Grand Final at Old Trafford on 14 October, have high hopes
of having Paul Newlove fit, despite a knee ligament injury
sustained early in the victory over Wigan. The Australia
coach, Chris Anderson, has perplexed many in his own
country by claiming that a merged code of rugby "makes

Anderson, currently preparing his side for the Test against
Papua New Guinea on Saturday, was described as a "lone
voice" by the chief executive of the National Rugby League,
David Moffett, himself a convert from the NZRU.  The Rugby
League Council has confirmed that Lancashire Lynx, to be
known once more as Chorley, will be in a 19-club Northern
Ford Premiership, the fixtures for which will be announced
this weekend.  (The Independent-London  05-Oct-2000)

WOMEN'S HEALTH BIOTECH: Prospectus gets interim stop order
The Australian Securities & Investments Commission has put
an interim stop order on Women's Health Biotechnologies'
prospectus as a committal hearing of a key adviser to the
company started in Melbourne yesterday.

Jerome Nugent-Smith, 54, a consultant to Women's Health
Biotechnologies, is defending a charge of receiving a
secret commission, allegedly totalling $50,000, while an
agent of Organic Balance in 1997.  Clive Wilson and Ralph
Wilson, who ran a pharmaceutical business, Pharm
Essentials, are defending a charge of paying Mr Nugent-
Smith the commission.

It is alleged the commission was paid to Mr Nugent-Smith by
Clive and Ralph Wilson as a reward for placing orders with
Pharm Essentials for the supply of a product called
ProBalance.  WHB is seeking to raise $30 million from the
public to research women's health issues. Among the board
members are former Seekers star Judith Durham and Mr
Nugent-Smith's wife, Carmel Nugent-Smith.

WHB has previously said it was pleased with the response to
its offer, which opened in mid-September and was due to
close on October 31.  If the company meets its minimum
subscription target of $25 million, it expects to list on
the Australian Stock Exchange on November 14.  ASIC said
yesterday it had issued a interim stop order but was in
discussions with the company.

An interim stop order prevents a company from promoting its
prospectus or issuing securities for 21 days.  It is
understood that it is not ASIC's policy to issue an interim
stop order unless it intends forcing a company to allow
investors the choice of withdrawing their funds following
the disclosure of information deemed by ASIC to be relevant
to investors.

The committal hearing is being heard before Magistrate
Jillian Crowe in the Melbourne Magistrate's Court.
The court yesterday heard evidence from a former director
of Organic Balance, now in liquidation, Jennifer Cochrane.
Ms Cochrane said Mr Nugent-Smith joined Organic Balance
after his resignation from a company called Aqua

Ms Cochrane alleged Mr Nugent-Smith encouraged the
directors of Organic Balance to place orders with Pharm
Essentials "well in excess of what we needed".
However, Patrick Tehan QC, for Clive and Ralph Wilson,
questioned whether the orders were being brought forward to
cover production lead time.  (The Advertiser  06-Oct-2000)


PT ASTRA INT'L: Makes debt payment ahead of schedule
PT Astra International reports paying a portion of
principal on debts totaling US$66.7 million (66.3 billion
rupiah) before the due date under its approved
restructuring agreement of 1999.

"The prepayment of debts were possible amid a manageable
cash-flow position in the last nine months," the company
said in a writtenstatement, noting that the debt was
scheduled to mature in December 2000.

With the payment, the company's series I debt has been
reduced to US$133 million and 133 billion rupiah, both of
which will mature in 2001.  Astra corporate secretary
Aminuddin also reported that almost all of Astra's
subsidiaries had completed the restructuring of their
respective debts. PT United Tractors, for example, signed
an agreement with creditors on September 20 to restructure
debts worth US$278.5 million and 147 billion rupiah. PT
Tjahja Sakti Motor, meanwhile, is expected to complete
restructuring debts worth US$55 million.

PT BANK OF BALI: Rights issue unsuccessful, IBRA to own
PT Bank Bali reports 99-for-one rights issue raised only
Rp41 billion (US$4.68 billion), far lower than the Rp5.356
trillion needed to recapitalize the ailing bank.

"Therefore, IBRA as a standby buyer of the rights issue
will take up the rest of the issue, and will become a
majority shareholder with stake totaling 98.23%," Bank Bali
spokesperson Sylvia Sihombing said, referring to the
powerful Indonesian Bank Restructuring Agency.

The rights issue involved 66 billion new shares with prices
standing at Rp80.5 per share.  Previously controlled by
Rudy Ramli, Bank Bali has been at the center of a scandal
surrounding illegal campaign funding and rent-seeking
practices which involve the Golkar Party and the inner
circle of former President BJ Habibie.

Central Bank Governor Sjahril Sabirin is facing trial over
the Baligate scandal.  Bank Bali said in a statement
yesterday that PT Sarijaya Wirasentosa, controlled by the
Ramli family, did not exercise its rights.  The capital
market watchdog has prohibited Clearstream Banking AG,
previous majority shareholder of Bank Bali, from exercising
its rights.

The German clearing house, previously called Deutche Boerse
Clearing AG, had successfully launched a takeover bid
through a shady share accumulation.  Bank Bali said the
government plans to issue bonds to finance the bank's
recapitalization this month.

"With the completion of the recapitalization program, the
management of Bank Bali will be handed over to a new team
which will be appointed in the upcoming extraordinary
general shareholders meeting," the bank said. (Mandiri On
Line  05-Oct-2000)

PT MUSTIKA NIAGA NUSANTARA: Court declares bankrupt
The Jakarta Commercial Court has declared Ongko Group unit
PT Mustika Niaga Nusantara bankrupt after it failed to get
approval for the restructuring its 82 billion rupiah in
matured debts from its major creditor, the Indonesian Bank
Restructuring Agency (IBRA).

Judge Joedijono said Mustika previously proposed to IBRA a
debt restructuring involving a 30-year rescheduling with a
5-year grace period. IBRA rejected that proposal,
describing the rescheduled time period as "too long" and
"commercially nonsense."

PT NUSAMBA GROUP: Signs MOU on debt rehab with IBRA
The Indonesian Bank Restructuring Agency (IBRA) confirms
it signed a memorandum of understanding on Sept 28 with PT
Nusamba Group to restructure debts worth 498.77 billion
rupiah and US$87.39 million.

PT Nusamba Group was founded by former president Suharto's
associate Mohammad "Bob" Hasan. IBRA said in a statement a
portion of the rupiah-denominated debts has been settled
using proceeds from the sale of Hasan's stakes in PT
Astra International, but did not elaborate further.

IBRA further said the U.S. dollar-denominated debts will be
settled by the company within two years, partly with
proceeds from the sale of Nusamba's remaining stakes in
Astra, Nusamba's other assets and Hasan's assets, which
have been offered as a "personal guarantee" for settlement
of the company's debts.


DAIMLERCHRYSLER JAP.HLDGS.: Found to have hidden income
The Japanese unit of car giant DaimlerChrysler hid income
worth 15 billion yen (S$241.8 million) by shifting the
earnings to its headquarters in Germany, a report said

Tokyo's taxation authority discovered the 15 billion yen
hidden transaction in foreign-exchange income that should
have been registered by the subsidiary, the Mainichi
Shimbun said.  DaimlerChrysler Japan Holdings, which
imports Mercedes and other luxury vehicles for the German-
US giant, was ordered to pay five billion yen in extra tax,
the newspaper said.

DaimlerChrysler Japan spokesman Koji Ogawa declined to
comment on the report.  The Tokyo Regional Taxation Bureau
imposed the additional tax as it judged that
DaimlerChrysler Japan had failed to declare 15 billion yen
in income, the Mainichi said.  Officials at the tax bureau
declined to comment.

DaimlerChrysler, the world's fifth-biggest car maker, will
take a 34 per cent stake in Japan's No 4 car maker,
Mitsubishi Motors.  The German car maker will pay a 63 per
cent premium for 500 million shares of the tokyo-based

Mitsubishi Motors and DaimlerChrysler said they will co-
operate globally in designing, development, purchasing,
production and marketing for passenger cars and small
commercial vehicles.  (Straits Times  06-Oct-2000)


DAEWOO TELECOM: To be sold for W330B to foreign firm
Daewoo Telecom's information and technology unit, a
subsidiary of fallout Daewoo Group, is expected to be sold
to the City Venture Capital Asia Pacific Consortium for 330
billion won, a Hanvit Bank source said yesterday.

Hanvit Bank and other creditors of Daewoo Telecom will
approve the sale of the company's information and
telecommunications unit to the consortium as early as
tomorrow, he said.  Creditors are expected to also receive
an additional 40 billion won from the foreign investor
after 2002, if earnings at Daewoo Telecom exceed their
expectations, he added. Market observers expect the sale
would help Daewoo Telecom resolve its cash problems. (Korea
Times  05-Oct-2000)

DONG AH CONSTRUCTION: In need of fresh funds
Dong Ah Construction, which has been on a work-out program,
has been experiencing rough times and is on the verge of
requesting another funds injection from its creditors.
The company already has received 1 trillion won from its
creditors and is preparing to ask for another 460 billion
won (US$ 413 million) in fresh loans to bridge its current
fiscal woes.

HANBO IRON & STEEL: Creditors to file suit vs. Nabors group
Vexed by the Nabors consortium's unilateral termination of
the contract for the takeover of Hanbo Steel, the ailing
steel maker's creditors have decided to file a suit against
the U.S. firm for appropriate compensation.

In an emergency meeting at the Bankers Club in Seoul, the
creditors, led by the Korea Asset Management Corpo. (KAMCO)
also decided to conduct a new bidding for the insolvent
Hanbo, but decided not to make haste with the process
The creditors' move, however, is expected to face a hurdle
due to lack of stipulations for punishment, in case of
cancellation of the contract.

Further, Nabors appears inclined to mount a counter- action
against the Korean side, citing the protracted carrying out
of the contract contents, daunting the move by the Korean
concerns.  Nabors notified late Tuesday that it would
withdraw its bidding for the Hanbo takeover, saying that
the Korean side had failed to fulfill the three-point
pledged requirements regarding the exclusive use of the
Tangjin Port, discount of bonds worth 200 billion won and
the approval of the new corporate reform plan by the court.

Creditors, however, criticized Nabors for having come up
with the reasons in an adroit attempt to cut the purchase
price by more than $100 million.  "The related government
authorities and the creditors agreed to endorse the said
three requirements in a meeting late last month," they

"It is true that the decision on the three issues has been
delayed due to the need to clear the problematic points
from a legal and policy perspective. But the government and
the creditors already reached agreement on the matter last
month ahead of Sept. 30 set as the deadline," said a KAMCO

Hanbo Steep went bust Jan. 23 in 1997 as a result of lack
of transparent financial operations, heavy dependence upon
external loans and excessive facility expansion without
considering the market supply and demand.  The Hanbo issue
partly led the nation to invite the bailout program by the
International Monetary Fund (IMF) and has been a burden on
the national economy for the past three years and eight

Nabors and the creditors signed a main contract March 8
last year for the Hanbo takeover, with the former agreeing
to buy the steel firm at $48 million in total.  Hanbo
creditors are poised to force through another bidding for
the steel firm to find a new purchaser.

"The Hanbo case is different from the one involving Daewoo
Motor in that Hanbo will require no additional financial
cost as it has been put under the court receivership
program," said the official.

Against this backdrop, the creditors will take enough time
and find the appropriate purchaser, according to the
official.  Hanbo currently operates its A-district lines,
registering 276.3 billion won in total output last year. It
is expected to see 300.8 billion won in sales volume this
year. It has 965 employees.

"What is of concern, however, is that the creditor may have
difficulties in finding the new buyer, as the world steel
makers have been reducing the production amount due to the
excessive supply of related goods," said a market observer.
(Korea Times  04-Oct-2000)

HYUNDAI PETROCHEMICAL: Reform at standstill
The corporate restructuring of the petrochemical industry
has hit a snag, although the government and the related
parties earlier pledged to wrap up the "big deal" program,
designed to realize the swap among major conglomerates, by
the end of September at the latest.

Samsung General Chemicals and Hyundai Petrochemical, have
failed to make any progress despite their earlier pledge to
carry through their own reform.  In the wake of the aborted
deal aimed at resolving the excessive and overlapped
investment, the two companies have been focusing on
inducing foreign capital, spinning off subsidiaries and
reducing debts, but to no particular avail.

The two have come under criticism for having reneged on
their flamboyant promise of attracting the foreign capital
from early this year.  Samsung strived to improve its
financial condition by increasing its capital by 200
billion won and selling 300 billion won worth of assets.
It pledged to reduce its net loans amounting to 2.3
trillion won at the end of 1997 to 1.3 trillion won until
the end of this year, while lowering the debt-equity ratio
to the 190 percent level.

Samsung officials said the firm had yielded 46 billion won
in current profits during the first half of this year and
is expected to see more than 100 billion won in profits
next year.  Hyundai has recently called on its creditor
banks including Korea Exchange Bank to extend the deadline
for the repayment of loans until the end of the year from
the end of September, wary of its failure in bids to induce
foreign capital.

Since the credit issue of Hyundai erupted, overseas
concerns have come up with too complicated requirements,
inflicting a severe setback in attempt to attract the much-
needed foreign investment, said a Hyundai official.
He went on to say that the firm would press ahead with the
plan to induce the foreign capital.  Market observes
ascribe the failure in bringing in foreign investment to
the foreign companies' shunning of investment, due to the
huge amount of debts incurred by the relevant firms which
amount to 2 to 3 trillion won.

"The tremendous amount of debts for the petrochemical
companies had been due to the excessive investment in the
past and the foreign concerns maintain a cautious attitude
in acquiring them," according to a company insider. "The
two firms have begun to seek ways for survival through
attraction of foreign capital. But their efforts toward
that end appear to face various difficulties as seen during
the hitherto process." (Korea Times  04-Oct-2000)


Technology Resources Industries Bhd's counter continued to
be battered as the company awaits for a bond revamp meeting
with its creditors scheduled this month.

Analysts said the selldown of TRI stocks was in line with
the lacklustre performance of the telco stocks which moved
in line with the technology stocks which are staging a poor
performance.  "Fund managers no longer think that it is
attractive to hold on to telco counters," one analyst said.

However, he said the restructuring of its eurobonds was
definitely an additional factor for the selldown of TRI.
TRI counter fell 27 sen to end trading at RM2.64 yesterday.
On Friday, it dropped 35 sen to RM2.91.

TRI said it would have a meeting with its creditors to
approve the restructuring of its US$375 million (RM1.425
billion) Euro Convertible bonds by the end of this month.
The largest mobile phone operator had defaulted on its
US$200 million of bonds in October 1999 and another US$175
million in November.

Some analysts said investors do not favour the
restructuring plan for the bonds.  "They're just buying
time. It will not address the debt for the time being,"
said another analyst.

But he said creditors and bondholders had no choice but to
approve the company's plans for the bond revamp. Another
analyst said the bond revamp would see TRI easing its
financial strain. "The restructuring will give them
breathing space," she said, hoping the extension of the
bond will provide enough time for TRI to recapitalise
itself. "The debt will still be there but the extension of
the date will not strain their cashflow."

TRI's borrowings stand at about RM4 billion.  She forecasts
TRI's net loss to reduce to about RM30 million for the year
ending December 2000 from a loss of RM345 million last
year. For the six months to June this year, TRI posted a
loss of RM39.6 million.

On Friday, TRI said its members of an informal committee of
bondholders had agreed to terms proposed by financial
advisers Chase Manhattan (SEA) Ltd. It has also received
positive response from owners of 90 per cent of the bonds.
TRI said the restructuring plans put the company a step
closer to resolving its debt woes, placing it in a better
position to fend off rivals such as Telekom Malaysia Bhd,
Time Engineering Bhd and Maxis Communications Bhd. (New
Straits Times  03-Oct-2000)


MONDRAGON INT'L PHIL.: 3 largest creditors yet to OK rehab
The three largest creditors of cash-strapped Mondragon
International Philippines, Inc. have yet to give their go-
signal on the terms of the casino firm's debt restructuring
even if the government, through Clark Development Corp.
(CDC) and Malaca¤ang, have already approved its

A well-placed source told BusinessWorld yesterday that
Mondragon's largest creditor banks -- Metropolitan Bank &
Trust Co., Far East Bank & Trust Co., and United Coconut
Planters Bank -- have yet to okay the proposal.  Almost all
of Mondragon's 25 creditor banks have given their nod on
the proposed terms of the restructuring to pay off the
company's debt worth six billion Philippine pesos ($128.85
million at PhP46.566=$1).

"It's just the three banks which have not agreed. Most of
the banks are okay (with the terms). We'll be sitting down
with them again to discuss the restructuring," the source

The approval of the creditor banks is a condition set by
PentaCapital before it infuses the PhP650-million ($13.96
million) bridge financing to pay off debts owed to CDC, the
Bureau of Internal Revenue and the Philippine Amusement and
Gaming Corp. (Pagcor). The CDC and the Office of the
President have ruled in favor of PentaCapital over the
proposal of businessman Antonio "Tonyboy" Cojuangco, who
owns Bank of Commerce and former head of the industry giant
Philippine Long Distance Telephone Co., to handle the
rehabilitation of the ailing casino operator.

PentaCapital's funds would have to be in place as soon as
possible to re-open Mimosa Leisure Estate in Clark Field,
the former US military base in Pampanga. The investment
house said it is targetting to reopen the casino complex by
November this year in time for the Christmas season.

The casino has been shut since 1998 when the government
took away the firm's gaming license after it failed to pay
rental dues.  The infusion of PhP650 million would also
stop Mondragon chairman and chief executive officer Jose
Antonio Gonzales from getting other investors who want him
to be retained at the helm of the resort operator.

PentaCapital has asked the banks for a moratorium on debt
payment until Mondragon has started generating profits.
The financial adviser has also asked the creditors to give
the company between eight-and 10-year period to pay its
debts with interest of about 8%. It has also negotiated for
an equity conversion as well as partial dacion en pago
arrangement or asset-for-share involving some of the
Mondragon group's assets together with properties owned by
Mr. Gonzales.

However, the creditor banks said earlier they will bargain
for shorter repayment schedule, preferably to five years,
as well as higher interest rates. "It's (the term is) too
long... They will have to support the proposal with a cash
flow projection," a banking source said.

The proposed 8% interest rate is also deemed "too low" and
should be pegged at least a few percentage points over the
prevailing 91-day Treasury bill (T-bill) rate. Of
Mondragon's 25 creditor banks, about 20 are unsecured or
semi-secured by equipment, country club and golf club
shares. The semi-secured and unsecured creditors have a
combined PhP1.9 billion ($40.80 million) exposure.

The group's PhP6-billion debt consists of secured and
unsecured loans owed to 25 creditors and investment houses.
Last year, the creditor banks sought control of the company
after 54% of Mondragon was allegedly offered as collateral
for its debt. However, the Securities and Exchange
Commission prevented them from taking over the firm.
(Business World  05-October-2000)

PHILIPPINE NAT.BANK: Gov't approves rehab plan in principle
The policy-making Monetary Board (MB) of the Bangko Sentral
ng Pilipinas (BSP) yesterday approved in principle the
rehabilitation plan for Philippine National Bank (PNB)
drafted by the group of tycoon Lucio Tan.

The approval came on the heels of Tan's official
communication to the BSP that he would inject the P10-
billion fresh capital into PNB today, acting BSP Governor
Armando Suratos disclosed.

"This is a welcome move since the capital infusion will
provide the much needed momentum for the sustained
strengthening of the PNB," he said, noting that both the
BSP and Tan agreed to pursue the rehabilitation, which
includes the re-capitalization.  "The BSP reiterates its
earlier continuing commitment to support and provide
liquidity to PNB when necessary to the extent permitted by

Deputy Governor Alberto V. Reyes on the other hand said
that with the fresh capital, PNB's capital adequacy ratio
(CAR) would effectively move up to 11 percent from
approximately six percent at present, which is below the
minimum 10-percent level prescribed by the monetary

CAR is an important barometer of a bank's ability to
withstand risks inherent to its business operations.
Reyes said that it might no longer be necessary for the
Filipino-Chinese tycoon to put in another P10 billion in
additional equity by January next year, to be raised via
another stock rights offering, the mode used in raising the
first money.

However, Reyes said that they would continue to operate
PNB's closely. A comptroller observer will be assigned, he
said.  "Any follow-up is no longer critical," he said of
the results of their review of PNB's capital. "But if Mr.
Tan puts in more, so much the better. He is welcome to do

Tan earlier committed to invest a total of P20 billion in
PNB in line with his aim of making PNB a global bank.
The government, meanwhile, has opted to hold on to its
remaining 16-percent stake in PNB and would only dispose of
the shareholdings if market conditions improve, Finance
officials said.

Its holdings were diluted from 30 percent to the present
level when it chose not to exercise its preemptive rights
during the recently concluded rights issue.  "Staying in
PNB is one of the options we are looking at. There are no
interested buyers yet and the value of the shares is still
low at about P39. We will probably only give up the shares
when the price has improved," an official said. "The IMF
(International Monetary Fund) and the World Bank are not
opposed to this."

Tan was supposed to have acquired the 30 percent last July
19. But he cancelled the investment to avoid additional
losses. He and the government have yet to arrive at an
agreement regarding the P5.6-billion balance on the
acquisition price of P6.2 billion.

The balance was to be secured by a letter of credit to be
fully paid within two years.  The other features of the
rehab are: prohibition of the so-called sweetheart deals or
political loans which partly caused PNB's woes the past
years, reduction of non-performing loans, continuous
training of personnel, and expenditure cuts.  (Manila Times


SOUNDTEX SWITCHGEAR & ENG.: $339K judgment issued against
SMB United's subsidiary Soundtex Switchgear & Engineering
has been ordered to pay $339,176 plus cost as compensation
in a High Court suit with Hunter Manufacturing. It intends
to appeal the assessment.


Hongkong Shanghai Banking Corporation's (HSBC) deal to
acquire Bangkok Metropolitan Bank may collapse if the UK-
based bank and Thai banking authorities fail to settle a
tax dispute, sources at the Bank of Thailand said.

The dispute has spurred the board of the Financial
Institution Development Fund (FIDF), which controls nearly
100 per cent of Bangkok Metropolitan Bank, to call a
meeting for Monday to sort out the problem.  According to
sources, HSBC has not reached an agreement with the Thai
authorities on whether it will need to pay tax in its
acquisition of the Thai bank, and it also has yet to
finalise the loss-sharing agreement on the management of
the bank's bad debts.

"We have to really look at the stance of HSBC as to whether
it is really committed to buying the bank. The tax question
is very critical because it is quite a huge amount of
money. As to whether HSBC will sign the deal or not, we'll
know for sure before the end of this month," said a central
bank source.

Earlier the banking authorities had announced that the
Bangkok Metropolitan Bank deal could be completed by
October 9 before being passed on to the Cabinet for final
approval by the middle of the month. However, the deal is
now coming under time pressure as the government may
announce the dissolution of Parliament on October 21.

"If the government sets October 21 as the date for the
dissolution of Parliament, the FIDF will need to propose
the model for selling off Bangkok Metropolitan Bank to HSBC
as quickly as possible," said Chaktip Nitibhon, general
manager of the FIDF.

He added that he hopes the matter can be submitted to the
Cabinet for approval by October 17, the date of the final
Cabinet meeting under the Chuan government.  At present,
the FIDF is waiting for word from the Revenue Department,
which is consulting the revenue codes as to whether HSBC
needs to pay tax in its acquisition of Bangkok Metropolitan

The last two banking deals - Standard Chartered Bank of the
UK's acquisition of Nakornthon Bank and United Overseas
Bank of Singapore's buyout of Radanasin Bank - did not run
into any tax problems. Also, the amount of bad debt at both
Nakornthon Bank and Radanasin Bank was at least one-third
lower than at Bangkok Metropolitan Bank, making the two
lenders more attractive to the foreign banks.

In a preliminary agreement HSBC agreed to acquire Bangkok
Metropolitan Bank for Bt36.6 billion, more than half of
which will be paid in cash and the rest in promissory
notes. Both Standard Chartered Bank and United Overseas
Bank paid for their purchases of the Thai banks in cash.

By selecting to pay for part of its acquisition in
promissory notes, HSBC has introduced the possibility that
it will need to pay tax. After HSBC's cash payment, Bangkok
Metropolitan Bank will have to undergo a capital reduction
until its capital falls to Bt10 billion.

There are three main contractual agreements in the Bangkok
Metropolitan Bank deal. The first agreement covers the
shareholder agreement. The second is the share purchase
agreement, which involves conditions for HSBC's buyout of
the Thai bank.  The third is the loss- and gain-sharing
agreement, which covers damage incurred from bad debts.
(The Nation  06-Oct-2000)

CHALLENGER SUPERSTORE: Closes outlet owing rent
Challenger Superstore (Thailand), the Singapore-based
discount retailer of information technology (IT) products,
has closed its outlet at the Ploenchit Centre Building
after running into cash flow problems.

The 4,800-square-metre store had fallen six months behind
on its rent to shopping complex operator Makasan Real
Estate Co Ltd, the landlord said.  The realtor served the
company a warning notice last month, general manager Wisit
Suthatheerarat said.

"But it did not respond as to what it would do about the
Bt6 million that had gone unpaid since April," Wisit said.

Wisit said Makasan had done everything it could to support
the company in terms of arranging promotional activities to
lure traffic to the store.  Challenger last month started
moving its products and other equipment from the building
without giving the building's operator a clear answer about
the unpaid rents, he said.

However, Challenger chief executive Loo Leong Thye, who was
in Bangkok yesterday, maintains that the realtor did
nothing to support the store.  Makasan even cut the
electricity and stopped providing other basic support
services, he said.

"We invested Bt50 million in fixed assets here and we don't
have any intention of stopping business. I wanted to
temporarily delay the rent payments in order to allocate
the money to marketing activities to lure traffic and
generate more sales," Loo said.

Challenger will file a lawsuit against Makasan for loss of
business and damage to the company's image, he said.
Challenger last year launched the Ploenchit outlet, its
first store outside Singapore, with an investment of Bt90
million, he said. Since then, it has opened other outlets
in Brunei and Indonesia, he added.

"But business was quite slow, with less than 100 customers
buying products daily," he said.  (The Nation  06-Oct-2000)

ITALIAN-THAI DEVELOPMENT: Debenture rating lowered
Thai Rating Information Services Co Ltd (TRIS) yesterday
announced that it has lowered the rating of Italian-Thai
Development Plc (ITD)'s Bt3.5-billion senior debentures,
due in 2005, to "C" from "BBB-".

The action follows TRIS' issuance of a "CreditAlert with
negative implication" on September 29.  TRIS said the
downgrading reflects the high possibility that ITD will ask
its debenture holders to adjust the debenture's obligations
to include less favourable terms and conditions.

ITD management informed debenture holders on September 29
that it was unable to make interest and principal payments
due to some lenders in September and that it was
negotiating a new restructuring package, the statement
said.  The same day the company informed the debenture-
holders' representative that it would not be able to make
interest payments on its debentures due on October 11.

TRIS said it would monitor the situation and take the
appropriate rating action. It also pointed out that ITD's
lower-than-expected internal cash flow and its failure to
dispose of non-core assets as planned had caused liquidity
problems.  The country's sole credit rating agency's
highest rating is "AAA". The lowest is "D", which is given
to debt instruments in default  (The Nation  06-Oct-2000)

NAWARAT PANANAKARN: Creditors convert debt to equity
Nawarat Pananakarn reports that its existing shareholders
would retain a 10-per-cent stake in the company after its
creditors have fully converted its debts into equity, a
major component in the construction firm's debt-
restructuring plan.

Under the plan, the company has issued to its creditors 65
million common shares and another 135 million shares for
the conversion of convertible debentures.  Each convertible
debenture, carrying a 10-year maturity, will be able to be
converted into 10 common shares in 2005. The plan also
features the transfer of collateral assets to settle
Bt104.4 million in debts and the rescheduling of short-term
to long-term debts.  (The Nation  06-Oct-2000)

SINO-THAI ENGINEERING: Court approves rehab plan
Sino-Thai Engineering has confirmed that the Central
Bankruptcy Court had approved the debt-restructuring plan
on September 4.

The firm said Stecon Administrator Co will administer the
plan in which a total of 55 million shares would be issued
at Bt10 par. The company will increase its registered
capital from Bt550 million to Bt850 million by selling five
million shares to major shareholders at Bt20 apiece and
another 50 million shares to creditors at Bt70 apiece in
accordance with its debt-restructuring plan.

The sale of five million shares to major shareholders will
raise Bt100 million while another 50 million shares will be
converted into equity at Bt70 per share or a total of Bt3.5
billion.  The share sale and conversion of debt into equity
will be completed in 60 days after the Court's approval, by
November 3.  The measures will reduce the company's debt to
a level which is more consistent with income generation and
debt servicing. (The Nation  05-October-2000)

THAI MILITARY BANK: To issue debentures to offset NPLs
Thai Military Bank (TMB) is hastily getting its non-
performing loans in order and raising tier two capital as
it positions itself to begin lending to small and medium-
sized enterprises (SMEs).

The bank has been crippled by non-performing loans, with
latest figures showing an increase in NPLs, and a capital
base insufficient to spur lending growth.  Yesterday the
bank's president, Somchai Sakulsurarat said the bank will
issue bonds worth six billion baht to beef up tier two
capital, in an effort to strengthen its capital base.

Somchai said the bank may increase the issue to eight
billion baht.  The bank's tier one and two capital stands
at about 13 percent but with the increase it is expected to
reach 14 to 15 percent. Somchai said the bank is hoping to
extend about five billion baht in loans to SMEs over the
next two years.

With NPLs crippling new lending, the state has moved to
help SMEs. The Industry Ministry has set a budget of 46
billion baht to lend to SMEs this year, on top of last
year's figure of about 35 billion baht. SMEs are considered
to have suffered the most from the credit crunch, as banks
refuse to lend.  In addition to beefing up its capital
base, TMB is also in the process of transferring its NPLs
to its asset management company (AMC), with a transfer
target of 50 billion baht in two months.

Currently, TMB has NPLs of about 70 billion baht or 26.40
percent of total outstanding loans. The bank's July figure
was about 25.75 percent. Somchai credited the increase in
NPLs to restructured loans returning to NPL status, and to
reclassifications of some old loans to NPL status.
(Business Day  05-Oct-2000)

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

Troubled Company Reporter -- Asia Pacific is a daily
newsletter co-published by Bankruptcy Creditors' Service,
Inc., Trenton, NJ USA, and Beard Group, Inc., Washington,
DC USA. Darryl Henning, Managing Editor, James Philip P.
Jover and 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 ***