TCRAP_Public/001213.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

           Wednesday, December 13, 2000, Vol. 3, No. 242


* A U S T R A L I A *

AUSVEGAS: Gocorp throws in hand
IT&E: Re-does books, gain turns into loss
OMNI GROUP: Calls in receiver
SATELLITE GROUP: ASIC sues execs for breach
SOUTHERN EQUITY HLDGS.: To solve woes by acquisition

* C H I N A  &  H O N G  K O N G *

CHINA CYBERWORLD LTD.: Posts HK$17.95M 1H loss
GOLDEN CHINA (ASIA-PAC) LTD: Facing winding up petition
GRANDCO (HOLDINGS) LTD: Facing winding up petition
GRAND MASTER ENGINEERING CO.LTD: Facing winding up petition
GUANGZHOU INT'L TRUST: Judge blocks wind-up
KIN DON HOLDINGS: Faces winding-up petition; stock plunges
LUCKY DAY LTD: Facing winding up petition

* J A P A N *

CHIYODA CORP.: 1H group net loss seen at 4.3B yen
CHIYODA MUTUAL LIFE: Tokai unionists seek pension losses
KUMAGAI GUMI CO.: Struggles to 6-mo. loss
MITSUI CONSTRUC.CO.: Struggles to 6-mo. loss
SATO KOGYO CO.: Struggles to 6-mo. loss

* K O R E A *

FIRST FIRE & MARINE: Accused of setting up illegal fund
HYUNDAI GROUP: Close to selling Sunshine Plaza stake
MIJU STEEL MFG.CO.: Creditors OK payment rescheduling
SAMSUNG COMMERCIAL: Parts suppliers cut off supply stream
SAMSUNG COMMERCIAL: Court declares it bankrupt
SAMSUNG MOTOR: Parent group won't cover all its debt
SKM: Banks to track personal wealth of owner

* M A L A Y S I A *

MALAYSIAN AIR LINES: White knight SairGroup steps forward
PSC INDUSTRIES  Revamp proposed over five years
UNITED ENGINEERS MALAYSIA: Shares continue to fall

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

PHILIPPINE TEL.& TEL.CORP: Creditors OK debt-equity swap

* T H A I L A N D *

THAI PETROCHEM.INDUS.:  Court postpones rehab plan nod
THAI TELE.TELECOMM.: Expecting Bt4.5B annual net loss


AUSVEGAS: Gocorp throws in hand
The Federal Government's 12-month moratorium on interactive
gaming yesterday claimed its second victim as Queensland's
Gocorp indicated it would shut down its Internet casino,

GGS, Australia's main online gambling software and
equipment tester, has meanwhile formed a new company with
South Africa's Bureau of Standards to test casino systems
in that jurisdiction. Gocorp, which raised $20 million when
it listed in June, told investors yesterday it would be
"untenable" for it to continue operating its Internet
casino business given the risks associated with any breach
of the new legislation.

The bill, passed last week in the Senate, makes it an
offence to run an interactive gambling service that was not
operating before May 19 this year. Breaches will attract
punitive fines: up to $1.1 million a day for companies and
up to $200,000 a day for senior company executives.

Although Gocorp's Ausvegas site launched three days before
the cut-off date, it is understood the group has been
caught out by the legislation's fine print, which dictates
operators must have had at least one arm's-length paying
customer and kept the same name.  Ausvegas began attracting
customers only in June and originally launched under the
name SevenRed.

Gocorp indicated it would take legal action against the
Federal Government, wanting compensation for the $30
million it has spent developing its business. Any damages
claim is expected to be significant. Last week, the Federal
Group's Mr Greg Farrell said that he too was planning legal
action against the Government over the online casino his
company will be forced to close, at a cost of 20 Tasmanian
jobs and more than $20 million invested.

Gocorp, whose shares will now remain suspended until
January when a decision is made on a new direction, also
attacked the Federal Government in its statement to the
stock exchange.

"This legislation does nothing whatsoever to protect the
interests of Australian consumers," it read. "In fact, it
takes away the only consumer protection for online gamblers
that exists in cyberspace today and will only serve to
force consumers into the arms of the many potentially
unscrupulous and unregulated operators that exist."

While Gocorp chief executive Mr Paul Appleby declined to
comment on his company's future, it is understood Gocorp is
most likely to morph into an e-commerce and datacentre
software licenser. GGS's Mr Jeff Boulous said the company,
which had tested most of Australia's gaming sites for
compliance with various State Government regulations, will
now focus on South Africa, an Internet gaming-friendly

My Casino, which claims to be unaffected by the new
legislation because its online operations are run out of
Vanuatu, has nonetheless reshuffled its management team to
capitalise on the decreasing competition.

Locally listed My Casino yesterday placed managing director
Mr Gordon McIntosh in charge of a more aggressive marketing
push and handed the company's reins to chairman Mr Mike
O'Donnell. With the Australian market now closed, online
casino operators are expected to flock to South Africa; tax
havens such as Vanuatu and Gibraltar; and US Indian
reservations. (Sydney Morning Herald 12-Dec-2000)

IT&E: Re-does books, gain turns into loss
Stock in IT&e hit a new low yesterday following news the
company had incurred a $339,500 loss for the three months
ended Sept. 30, rather than a $911,670 gain as previously

IT&e also told investors that revenue for the quarter was
$14.6 million, not $14.9 million, and, in a revised
quarterly cash flow statement, reported cash reserves were
actually $4.3 million as at September 30, not $4.9 million.

Shares in the Web integrator slumped more than 35 per cent
to a low of 24c and closed down 13c at 25c on the changes,
which are the result of a review of IT&e's business
operations and financial position.  That review found that
the group's former management team was not consistent in
its accounting policies and, in particular, changed the
application of the company's cost capitalization policy,
resulting in excessive capitalisation of costs for the
September quarter.

The team also failed to apply basic accrual accounting and
expense cut-off principles, the review found; nor did it
advise the auditors of the full extent of the accounting
policies when inquiries were made before the release of the
quarter's results. As a result, the previous team, which
included recently departed chief executive, Mr Jeremy
Jilla, and the chief financial officer, Mr Andrew Rettie,
had overstated cash receipts, net operating cash flows,
cash on hand and net cash.

IT&e said yesterday that the company's earnings forecasts
for this year were unlikely to be met. (Sydney Morning
Herald 12-Dec-2000)

OMNI GROUP: Calls in receiver
Australian telecommunications company Omni Group handed
over its control to a receiver on Dec. 8. Arthur Andersen's
Mark Mentha will analyze options for the Melbourne-based
company and its operating subsidiary, Omnitel Australia.

Shares in the group, previously at $A0.08, have been
suspended from trading. Three nonexecutive directors
resigned from Omni's board the day before its Nov. 29
annual meeting. Two of them had been brought in to turn
around the fortunes of the technology company. Omni
reported a $A5.2 million loss in September.

SATELLITE GROUP: ASIC sues execs for breach
Gregory Joseph Fisher, the flamboyant founder of the
world's first listed gay company, will face Supreme Court
civil action over the collapse of the Satellite Group.

After a five-month investigation by the Australian
Securities and Investment Commission, Mr Fisher and his
business partner, discharged former bankrupt Mr Jonathon
Owen Broster, and a company associated with Mr Broster,
last night were accused of breaching their legal duties as
officers of the Satellite Group and failing to act in the
interests of shareholders.

"We allege that they used their positions to gain an
advantage for themselves at the expense of Satellite by
causing approximately $1.9 million to be paid from the
company to companies related to them personally," ASIC
chairman Mr David Knott said yesterday. "The breaches of
the law alleged by ASIC are serious enough to seek orders
against the defendants for both compensation and civil

The Satellite Group, floated in September last year, never
traded above its 50c issue price and was suspended from
trading in July at 15c following a Herald investigation
into Mr Fisher's business activities. That investigation
revealed Mr Fisher had been the subject of several
investigations by ASIC during the 1990s and had agreed to
stand aside as a director of a company that applied for a
security dealer's licence.

It further revealed he had been the subject of litigation
from a former employer for breach of promise and had
falsely claimed in the Satellite prospectus that he held
"bachelor of business qualifications."

"I finished off my schooling with the overseas school [of
the UCLA]," Mr Fisher told the Herald.

But the UCLA has no record of Mr Fisher, does not have an
overseas school and does not offer a bachelor of business
qualification. Later investigations by the Herald revealed
Mr Fisher had sold apartments in his Sydney property
developments off the plan and then taken out so many
mortgages the company was unable to transfer title to the

Many of those apartments were sold at half the price listed
in the prospectus, thereby overstating Satellite Group
assets. Mr Fisher also admitted that none of the $25
million raised in the Satellite float had been used to
retire debt on the company's property developments, despite
a written promise in the prospectus.

ASIC will be seeking orders that Mr Fisher and Mr Broster
be banned from ever being involved in the management of a
company. But the entrepreneur, who last week placed his
private company in the hands of an administrator, appeared
unmoved by yesterday's events.

"I am pleased the matter is moving to court where it can be
dealt with properly and where my part of the story can be
told," he said.

Never short of bravado, Mr Fisher also maintained that he
had nothing to do with the collapse of Satellite.
"Decisions made subsequent to my removal resulted in the
downfall of the company," he said.

Mr Knott last night said ASIC was concerned about security
given over an $800,000 loan to the two men and would
continue to investigate issues related to the float and
management of Satellite. (Sydney Morning Herald 12-Dec-

SOUTHERN EQUITY HLDGS.: To solve woes by acquisition
Southern Equity Holdings is again looking to the new
economy for salvation, planning to buy convergent media
player WorldAudio by issuing 30 million shares at 14c each
in order to raise $4.2 million.

The plan is to create a national metropolitan commercial
broadcast radio network.  Southern Equity, which had
accumulated losses of $5.5 million as of June 30 and but
$287,000 in cash, also plans to raise $4.6 million for
working capital through the public issue of 20 million
shares and 57.9 million options. Its main source of revenue
is a 50 percent stake in Queensland developer Fobuzi, which
generated $578,000 in revenue last year.

Southern Equity's previous foray into IT has involved it in
litigation as it fights to retrieve a $2 million loan from
millennium bug software company MFXR.  The legal costs
added to its $3.25 million loss last year.

Company secretary Charlie Latham said the board would seek
shareholder approval for the share issue at a date to be
determined. WorldAudio director Graeme Logan said both
companies had been discussing the venture for the past six

Sydney-based WorldAudio has 30 broadcast apparatus licences
and plans to broadcast radio via free to air, Internet and
wireless application protocol media.  Southern Equity
shares traded at 14c being suspended yesterday, well below
its 99c price of February, 1999. (The Advertiser  12-Dec-

C H I N A  &  H O N G  K O N G

CHINA CYBERWORLD LTD.: Posts HK$17.95M 1H loss
China Cyberworld Ltd., an electronics maker and property
developer formerly known as Chuang's China Investments
Ltd., recorded a net loss of HK$17.95 million for the six
months ended Sept. 30. That's a turnaround from the net
profit of HK$91.49 million it posted for the same period a
year earlier. Loss per share was 2.11 HK cents compared
with 15.3 HK cents the previous period. Revenue rose 13
percent to HK$71.67 million, however. No interim dividend
was proposed.

GOLDEN CHINA (ASIA-PAC) LTD: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing on February 6, 2001, on the
petition of Lee Yuet Fung for the winding up of Golden
China (Asia-Pac) Limited. A notice of legal appearance must
be filed on or before February 5.

GRANDCO (HOLDINGS) LTD: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing on December 20 on the petition of
Centaline Property Agency Limited for the winding up of
Grandco (Holdings) Limited. A notice of legal appearance
must be filed on or before December 19.

GRAND MASTER ENGINEERING CO.LTD: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing on January 9, 2001, on the petition
of Nan Fung Finance Limited for the winding up of Grand
Master Engineering Company Limited. A notice of legal
appearance must be filed on or before January 8.

GUANGZHOU INT'L TRUST: Judge blocks wind-up
A judge has sealed the fate of Guangzhou International
Trust and Investment Corp (Gzitic) by dismissing a petition
to wind up its Hong Kong arm - the final hurdle in a
planned restructuring of the company.

Liquidation proceedings against Guangzhou Finance filed by
a US$30 million loan syndicate had to be withdrawn in order
for the restructuring to proceed of Gzitic - the fund-
raising arm of the Guangzhou municipal government. This was
a condition laid down by 162 foreign creditors of Gzitic
who have agreed to a restructuring which will settle US$1
billion in debt owed.

Madam Justice Maria Yuen Ka-ning gave the green light
yesterday by dismissing the winding-up petition at the High
Court and removing provisional liquidators from the
company. The petitioning syndicate and supporting creditors
had agreed with the company to withdraw the winding-up

"It's very much a milestone - a big milestone in this
restructuring," explained PricewaterhouseCoopers partner
Ted Osborn, Gzitic's financial adviser. "This makes it all
possible now to take it to the next level, and to get
payments out as soon as possible."

The Hong Kong arm has debts of US$286 million and was
considered a key element of any restructuring as creditors
were keen to keep a Hong Kong entity in operation. All of
Guangzhou Finance's financial creditors and 99 per cent of
Gzitic's foreign creditors have accepted the terms of the
Gzitic restructuring agreement.

It will now be submitted for approval in China.
The Guangzhou government, the People's Bank of China and
the State Administration of Foreign Exchange must also
sanction the restructuring.  This will take a number of

The Gzitic collapse came on the heels of Beijing's ordered
closure of Guangdong International Trust and Investment
Corp (Gitic) in October 1998, Guangdong province's finance
arm.  It had failed to repay US$4.7 billion in debt,
indicative of deep-rooted financial troubles among mainland
trust and investment companies.

Creditors have agreed to a liquidation that will start
paying off 21.1 billion yuan (about HK$19.77 billion).
The Gzitic restructuring is one of several such settlements
in the itic sector, all of which depend on different
fundamentals and varying degrees of debt. Gzitic creditors
now have two options: an immediate one-off cash payment
covering 50 per cent of outstanding principal; or a 100 per
cent settlement that could extend beyond 10 years.

Funding for the restructuring will be met by a cash
allocation from the municipal government but the company
will also liquidate assets to help meet about 20 per cent
of its obligations.  According to Mr Osborn, after
creditors have made their selection, there will be a grace
period during which they can switch to the other option.

The restructuring agreement is the result of months of
negotiations.  It represents an accord between Gzitic and
the steering committee of foreign creditor banks led by
Standard Chartered Bank. (South China Morning Post 12-Dec-

KIN DON HOLDINGS: Faces winding-up petition; stock plunges
Garment maker Kin Don Holdings Ltd. shares dived up to 27.7
percent after it confirmed it faces a winding-up petition
filed by Stone Church LLC, a convertible debenture holder.

By mid morning Tuesday, the stock was the largest
percentage loser of the day, trading at 3.8 HK cents, down
19.1 percent. Turnover was HK$181,898.

The petition is scheduled to be heard by the High Court on
Feb. 28 and involves a judgment debt of US$4.4 million
(HK$34.4 million), including outstanding convertible
debentures of US$3.75 million, a 15 percent redemption
premium and interest. Kin Don reported debts of HK$135.5
million at May 31, including HK$79.7 million in secured
loans and HK$55.78 million in unsecured loans that it is
unable to settle.

On Nov. 24, the company announced that it intends to use a
credit of HK$84.6 million arising from a proposed capital
reduction and 10-for-1 stock split to eliminate part of its
accumulated losses. The company also proposes to reduce its
paid up capital and par value to 1 HK cents per share from
10 HK cents by the cancellation of 9 HK cents paid up
capital on each issued share.

LUCKY DAY LTD: Facing winding up petition
The High Court of Hong Kong SAR, Court of First Instance,
has scheduled a hearing on January 9, 2001,on the petition
of Po Sang Bank Limited for the winding up of Lucky Day
Limited. A notice of legal appearance must be filed on or
before January 8.

China Huarong Asset Management Corporation recently signed
an agreement with the Xinjiang Guanghui Enterprise (Group),
a private company based in the Xinjiang Uygur Autonomous
Region, to sell its RMB115 million (US$13.9 million) equity
rights in the Xinjiang Shiyue Contractor Manufacturing
(Group) Co Ltd to Guanghui for 5% more than the original
purchase price.

The first RMB52.9 million (US$6.4 million) has entered
Huarong's account, Huarong announced Monday. "This is the
first time for an asset management corporation to sell
their equity rights at higher-than-actual value."

The country's largest asset management company (AMC),
Huarong was created by the state last year together with
the Cinda, Great Wall and Orient AMCs, to deal with the
mounting non-performing assets of the country's four
largest state-owned commercial banks, the Industrial and
Commercial Bank of China, the China Construction Bank, the
Agricultural Bank of China and the Bank of China,

After taking over the equity rights, Xinjiang Guanghui,
with capital assets of over RMB4 billion (US$482 million)
will inject RMB200 million in Shiyue in technical upgrading
and to develop new business. Guanghui officials were
quoted in the Huarong release as saying that the new
methods will play a significant role in Shiyue's future

In addition, the Asset Management Company Provisions
recently issued by the State Council will facilitate the
reviving of non-performing assets, said a Huarong spokesman
who prefers to remain unnamed. According to the provisions,
AMCs are legally allowed to transfer their equity rights in
enterprises to investors at home and abroad or to sell the
equity rights back to the enterprises.

"The recent equity rights transfer marks a successful start
in our disposing of non-performing assets," said the

By the end of November, Huarong had made RMB860 million
(US$103.6 million) on its Shiyue Tractor Group assets, he
said. (China Web 12-Dec-2000)


CHIYODA CORP.: 1H group net loss seen at 4.3B yen
Troubled Japanese plant engineering company Chiyoda Corp.
incurred an estimated group net loss of 4.38 million yen
for the period April-September, larger than the previous
forecast of 3 billion yen.

The firm's consolidated recurring loss is estimated at
3.057 million yen for the first six months of fiscal 2000
-- more than twice the 1.5 billion yen estimated
previously. The company increased its appraisal losses on
shareholdings to 1.6 billion yen to ensure the completion
of its rehabilitation program, according to company
officials. The losses were reported as nonoperating losses.

CHIYODA MUTUAL LIFE: Tokai unionists seek pension losses
Trade unionists at Tokai Bank are demanding compensation
for potential losses on premiums they paid for pension
plans with failed Chiyoda Mutual Life Insurance Co.

Many employees at the bank took out insurance or pension
plans sold by Chiyoda Mutual because the insurer's strategy
was to sell policies to the bank's employees and corporate
borrowers.  The bank effectively encouraged pension plans
with Chiyoda by paying out "incentive money" for employees
to do so, the unionists claimed.

Chiyoda asked the Tokyo District Court on Oct. 9 to protect
its assets from creditors under the special rehabilitation
law, which gives a company time to rehabilitate itself.
Court-appointed administrators may require the insurer to
cut back on some of its insurance and pension plans while
demanding that guaranteed yields on various insurance
products -- the yield that an insurer promises to earn from
collected premiums in order to discount premiums -- be

Tokai Bank has denied any responsibility for losses that
might be incurred by employees or corporate borrowers who
took out insurance or pension plans from Chiyoda. The
unionists are members of a Tokai unit of an umbrella labor
union. (Japan Times Online 12-Dec-2000)

KUMAGAI GUMI CO.: Struggles to 6-mo. loss
MITSUI CONSTRUC.CO.: Struggles to 6-mo. loss
SATO KOGYO CO.: Struggles to 6-mo. loss
Seven out of nine struggling Japanese general contractors
posted consolidated net losses for April-September, booking
heavy losses as a result of market-based valuation for
their asset holdings.

According to results made available by Friday, Kumagai Gumi
Co. and three others suffered negative net worth on a
consolidated basis. Kumagai Gumi suffered a special loss of
414.1 billion yen, the biggest among them, after it wrote
off massive nonperforming assets.It asked Sumitomo Bank and
other creditors to forgive debts worth 450 billion yen.

Mitsui Construction Co. is poised to request a debt waiver
of 100 billion yen. Sato Kogyo Co. saw its consolidated
recurring profit nearly wiped out by 3.2 billion yen in
appraisal losses on its golf course memberships. Tobishima
Corp. racked up a consolidated net profit of 54 million yen
thanks to successful sales and rationalization efforts.
But the profit is far too small for a company with
consolidated revenue of more than 100 billion yen.

Hazama Corp., forgiven debts worth a total of 105 billion
yen by Dai-Ichi Kangyo Bank and other creditors, received
sales support from banks, with most of its order receipts
coming from clients introduced by banks. For Sato Kogyo and
Tokyu Construction Co., orders from companies introduced by
banks and group firms accounted for about 20 pct of total
receipts. (Jiji Press English News Service 08-Dec-2000)


FIRST FIRE & MARINE: Accused of setting up illegal fund
The Financial Supervisory Service is probing First Fire &
Marine Insurance Co. for charges that the nonlife insurer
has set up an illegal offshore fund worth tens of billions
of won, an FSS official said yesterday.

"First Fire & Marine Insurance is suspected of making
overseas investments out of the illicit offshore fund and
thus incurring a loss of around 10 billion won," said Lim
Jae-young, director of FSS Second Insurance Investigation

FSS inspectors are checking whether the insurance company
has violated the Foreign Exchange Control Law in the course
of managing the offshore fund and making overseas
investments, he said.  Lim said that the insurance company
had suffered the loss by investing fund money in Russian
bonds, real estate and domestic stocks.

First Fire & Marine failed to report the creation of the
offshore fund to the financial watchdog and record it on
its accounting books, the official said.  The official said
that it is not easy to confirm the charges because it
involves offshore transactions, but the watchdog will
conclude its investigation within this week.

On Nov. 28, the FSS requested the Justice Ministry to
impose an overseas travel ban on First Fire & Marine
Chairman Lee Dong-hoon and six former and incumbent
executives.  The official said that FSS investigators had
detected the loss by First Fire & Marine Insurance during a
regular audit into the company's insolvency.

He added that Chairman Lee Dong-hoon is also suspected of
embezzling part of the offshore fund. Lee is a son of Lee
Hoo-rak, former head of the Korea Central Intelligence
Agency, or the predecessor of the National Information
Service. The FSS has taken "prompt corrective action"
against the non-life insurance company due to its liquidity
crisis, under which the company is required to put forward
a rationalization plan to turn itself around.

Meanwhile, First Fire & Marine Insurance said that it had
established the offshore fund in 1996 as part of its asset
management strategy and incurred the loss due to Russia's
growing economic problems.  The offshore fund has bee set
up in accordance to due legal procedures and Chairman Lee
has not diverted any of the fund money, the company
alleged. (Korea Herald 12-Dec-2000)

HYUNDAI GROUP: Close to selling Sunshine Plaza stake
Problems at home of South Korea's largest chaebol, the
Hyundai group, are forcing its main business arm here to
sell off its stake in a property in the Central Business
District to its joint venture partner, City Developments.

Hyundai Engineering & Construction is close to selling its
40 percent stake in Sunshine Plaza at the corner of
Bencoolen Street and Prinsep Link, to listed CDL, which
already owns the other 60 per cent. The price is not known
but the total cost of the office, retail and residential
project is said to be some $200 million, including $104
million for land and $62 million for construction.

Sunshine Plaza is a mixed development on a 6,300 sq m 99-
year leasehold plot comprising four 12-storey blocks. An
office block takes up 7,100 sq m of space with retail space
taking up 3,600 sq m and 301 carpark lots taking up 12,800
sq m. It also includes three residential blocks with
160 apartments - 18 one-room units, 64 two-room units and
78 three-room units. It also has a swimming pool, a
clubhouse and a tennis court.

The apartments are said to have sold very well and so the
purchase price will have to reflect payments already
received. The Korean company, which is under intense
pressure from its creditors, to whom it owes more than
US$4.6 billion (S$8 billion), is said to have placed out
its stake in the Singapore property several months ago.
(Business Times  08-Dec-2000)

MIJU STEEL MFG.CO.: Creditors OK payment rescheduling
Creditors of Miju Steel Manufacturing Co have agreed to
reschedule payments and cut rates on the troubled company's
debt. They also will issue convertible bonds on the loans.
The actions came at a creditors meeting at Seoul Bank

Twenty-two creditors agreed to postpone the steelmaker's
debt repayment until 2003 and cut interest rates on the
loans from the current 9.5-9.7 percent per annum, by 2-3
percent. They also agreed to issue and underwrite
convertible bonds on their lending amounting to 21.7
billion won to the troubled company.

SAMSUNG COMMERCIAL: Parts suppliers cut off supply stream
A total of 226 primary parts suppliers to Samsung
Commercial Vehicles told reporters Monday that they will
suspend the supply of after-service parts to the troubled
firm, which has been taking steps to liquidate since being
identified by the government as one of the nonviable firms
to be liquidated back on November 3.

The owners of about 20,000 commercial vehicles made by
Samsung currently on the roads could be affected as a
result. The decision will also undermine the credibility of
Samsung Commercial Vehicles in overseas markets, as it will
not be able to continue to provide after-service for about
20,000 vehicles it has already shipped abroad.

Representatives of the suppliers said they decided to
suspend supply of after-service parts after realizing that
Samsung would not be compensating them for the
approximately W300 billion in losses they expect to incur
after the firm's liquidation. (Digital Chosun 11-Dec-2000)

SAMSUNG COMMERCIAL: Court declares it bankrupt
The Taegu district court has declared Samsung's commercial
vehicle operation bankrupt, selecting two bankruptcy
administrators as well.

In the bankruptcy ruling, the court said the commercial
vehicle operation was incapable of paying its debt, as its
assets were outweighed by about 11.8 billion won, and
aggregate deficits had reached 450.2 billion won. The court
also noted that the consultative body of creditor banks on
Nov. 3 designated the commercial vehicle operation as a
close-down target.

Liquidation procedures will start from March 14 next year
when creditors will call a meeting to look into provable

SAMSUNG MOTOR: Parent group won't cover all its debt
Subsidiaries of Samsung Group have reportedly decided that
they will not cover any shortfall between the donation of 4
million shares of Samsung Life that will go towards paying
off the debts of Samsung Motor and the total amount owed to

Back in June 1999, group founder and chair Lee Kun-hee
personally donated 3.5 million shares of Samsung Life,
worth W2.45 trillion, going by their estimated value of
W700,000 per share at the time of the donation. Around the
same time, Samsung Group also committed itself to
contributing an additional 500,000 shares it owned of the
insurance firm if Lee's donation did not fully cover the

Another 31 subsidiaries of the group had also committed to
covering interest payments and any other shortage if the
above total of 4 million shares failed to cover Samsung
Motor's debt, but they have, according to sources, decided
not to do so.

A high-ranking official at Samsung said the group believes
that the 4 million shares of Samsung Life should be enough
to cover the debt, adding that if the total value of the
shares does fall short of the amount of debt, creditors
should contribute to making up the difference. (Digital
Chosun 11-Dec-2000)

SKM: Banks to track personal wealth of owner
The Financial Supervisory Service yesterday ordered
creditors of SKM, a company which went bankrupt Nov. 20, to
track the personal wealth of Chey Jong-wook, its owner, and
take legal action against him.

The FSS move was based on its findings that Chey, an uncle
of SK Group Chairman Chey Tae-won, intentionally let the
company go bankrupt to avoid the obligation to repay 59
billion won owed by SKM's subsidiary Dongsan C&G.  Chey
refused assistance from the creditors - Kookmin, Korea
Exchange, Cho Hung and Korea Development banks - and
applied for court protection after defaulting on SKM debts.

Regarding Chey's behavior as a typical case of the moral
hazard problem facing an unethical company owner, the FSS
told creditors to trace his personal wealth, refer him to
the prosecution and take stern legal action against him.
The FSS said it cannot track Chey's personal wealth on its
own because it does not have to right to investigate
individual companies.

It told creditors to look into SKM's ownership of the
Century 21 Country Club and the duty free shop at the
Sheraton Walker Hill to find out whether these are actually
Chey's personal assets.  If Chey is found to have concealed
his wealth using the company as a cover, creditors will
refer him to the prosecution on charges of neglect of duty
of care.

Meanwhile, the financial watchdog issued a warning to the
creditors for their failure to detect problems at SKM when
they screened it during a comprehensive review of the
credit risk of their corporate clients in October. The
creditors did not include SKM in the list of 52 nonviable
companies announced Nov. 3.  Formerly called SK Magnetic,
SKM originated from the SK Group. (Korea Herald 12-Dec-


MALAYSIAN AIR LINES: White knight SairGroup steps forward
SWISS aviation conglomerate SAirGroup said yesterday it was
interested in a stake in Malaysian Airline System after
all, having denied such a possibility on Sunday.

"Something has changed over the weekend. We have started
the due diligence process for a financial stake in MAS,"
spokesman Urs Peter Naef said yesterday, adding this
process could take several months.

On Sunday, he had denied interest in a financial stake and
dismissed a report the airline had started a due diligence
audit of the Malaysian flag carrier. MAS sources in Kuala
Lumpur said SAirGroup was carrying out its second round
of due diligence.

"We have set up a special room for them to inspect our
accounts," said a highly-placed source.

Air France and KLM have withdrawn their interest for a
stake in MAS, which had left Australia's Qantas the only
declared willing buyer following Swissair's initial
retreat. Mr Naef declined comment on the size of the stake
SAirGroup's airline unit Swissair was willing to take in
MAS. MAS chairman Tajudin Ramli, a main shareholder, told
the New Straits Times recently that Swissair, KLM and
Qantas were "deeply interested" in his 29 per cent stake in

Swissair heads the Qualiflyer alliance and has stakes in a
range of smaller European airlines and a code-sharing deal
with AMR Corp's American Airlines. (Channel News Asia 12-

PSC INDUSTRIES  Revamp proposed over five years
PSC Industries Bhd (PSCI), with an outstanding debt of
about RM580 million has proposed a debt restructuring
scheme which will see the company with almost no gearing in
the next five years.

The company said its gearing ratio will fall to 0.15 times
with total borrowings of about RM137 million by the middle
of 2005, upon completion of the scheme which comprises cash
settlement and conversion of redeemable convertible loan
stocks (RCLS). PSCI, which is involved in the capital-
intensive shipbuilding, marine engineering and defence
industries, is in debt with 13 banks in the country.

The debt was incurred when it acquired shipbuilding
technologies, capabilities and facilities. PSCI has been
awarded the Offshore Patrol Vessel Contract of RM5.35
billion by the Government. The group has received its
initial mobilisation advance payment amounting to RM1.07

Under its debt restructuring scheme, PSCI has proposed:
* a cash settlement of about RM73.72 million to OCBC Bank
(Malaysia) Bhd;
* a conversion of about RM34.69 million to Bank Islam
Malaysia Bhd into 4.082 million new shares of RM1 each in
PSCI at an indicative price of RM8.50 per new share;
* a conversion of about RM426.668 million of bank
borrowings inclusive of interest capitalised owing to a
consortium of secured creditors into 50.196 million new
RCLS A at an indicative price of RM8.50 debt to RM1 nominal
value of RCLS;
* a conversion of about RM46.338 million of bank borrowings
inclusive of interest capitalised owing to a consortium of
unsecured creditor banks into 5.452 million RCLS B at an
indicative price of RM8.50 debt to RM1.00 nominal value of
RCLS, and
* a conversion of about RM22.259 million yield on RCLS A/B
into 2.619 million new shares of RM1 each in PSCI at an
indicative issue price of RM8.50 per new share of RM1 each
in PSCI.

The scheme will provide settlement of the PSCI group's
financial obligation to creditors on equitable terms as
they will receive full repayment in principal and interest.
"The scheme is a win-win situation for both parties and the
creditors will not experience a hair cut," PSCI said.

The proposed debt restructuring will also allow PSCI to
return to a sound financial footing. The scheme, according
to PSCI, will recapitalise the group commensurate with the
RM5.35 billion defence contract in hand.

The proposed scheme will not have any material effect on
group earnings for the financial year ended December 31
this year. It will improve the future earnings of PCSI as
the group will benefit from annual interest savings at a
minimum of RM50 million a year based on the average current
interest cost of 10 percent per annum.

Assuming the full conversion of RCLS into new shares, PSCI
said the shareholding of Business Focus Sdn Bhd and Datuk
Amin Shah Omar Shah would be diluted to 30.66 per cent from
the current 45.8 percent. PSCI will also ensure that there
are no substantial changes in the respective shareholding
structure. Therefore, it said, Business Focus and Amin Shah
would be obliged to restore their controlling to more
than 33 percent in PSCI by acquiring new ordinary shares
and/or RCLS A/B.

The company has also proposed a bonus issue of about 79.129
million new shares of RM1 each on the basis of one-for-one
to increase its capital base commensurate with the RM5.35
billion contract undertaken by the group. PSCI has also
proposed a private placement of up to 15.825 million
new shares of RM1 each in PSCI, representing not more than
10 percent of the enlarged issued and paid-up share capital
pursuant to the bonus issue.

The company said proceeds from the proposed private
placement would be used to finance working capital and to
defray the PSCI debt restructuring expenses and incidental
costs. (New Straits Times  08-Dec-2000)

UNITED ENGINEERS MALAYSIA: Shares continue to fall
United Engineers Malaysia Bhd. shares fell as much as 4.4
percent after the nation's largest builder said it accepted
its vice chairman Halim Saad's offer to defer over two
years payment for his purchase of a stake in Renong Bhd.

Yesterday, Halim offered to buy 31 percent of Renong from
United Engineers, or UEM, for 3.16 billion ringgit ($833
million), exercising an option due in February to buy the
stock of the country's most indebted group. Halim said he
will pay 300 million ringgit between February and December
next year and the rest in May 2002, effectively buying

The agreement "postpones the problem," said Terence Wong,
an analyst at GK Goh Research. UEM was supposed to have
been paid in February, he said, maintaining his
"underperform" recommendation on the stock.  UEM shares
fell for a third day, losing as much as 16 sen, or 4.4
percent, to 3.46 ringgit, its lowest level since May 17,
1999. It recently traded at 3.56 ringgit.

It has fallen 33 percent in the past month, making it the
worst-performing stock on the benchmark Composite Index as
investors steered clear of the company on concern it wasn't
protecting the rights of minority investors.  The
postponement in payment may make it difficult for UEM to
repay 8.3 billion ringgit of debt.

The company's latest announcement comes close on the heels
of its plan last month to use new shares to buy $1.76
billion in assets from parent Renong, strengthening Halim's
hold over the company at the expense of minority

The asset shuffle reinforced investor concern that UEM is
being called upon for a second time in three years to help
Renong and its controlling shareholder, Halim, strengthen
their hold on the group. The plan, along with other related
proposals, would raise Halim's stake in Renong to 69
percent from 16.5 percent. It would raise Renong's UEM
stake to 54 percent from 38 percent, while diluting
minority shareholders' stakes by a quarter.

In November 1997, UEM angered minority investors when the
company, through borrowings, bought 32.6 percent of Renong
for 2.34 billion ringgit, or 3.24 ringgit per share, at a
12 percent premium to Renong's price at that time. UEM
shares plunged 38 percent after the announcement because
investors saw it as a move to support Renong's shares.
To appease investors, UEM was granted an option to call on
Halim to buy back those shares at the same price plus
costs. That option expires on Feb. 14, 2001. (Bloomberg 12-


PHILIPPINE TEL.& TEL.CORP: Creditors OK debt-equity swap
Philippine Telegraph and Telephone Corp. (PT&T) has
increased its capital stock to accommodate creditor banks
that approved a debt-equity scheme involving one-third of
its P8.9-billion (US$177.8 million) debt. PT&T said its
board of directors has yet to determine the amount of the
capital stock hike upon the signing of the definitive debt
restructuring agreement.


THAI PETROCHEM.INDUS.:  Court postpones rehab plan nod
The battle to rehabilitate Thailand's most indebted company
-- Thai Petrochemical Industry (TPI) - will continue to be
waged awhile longer as the Central Bankruptcy Court
postponed a decision on a restructuring plan approved by

The Court said it would not consider the case until the
Supreme Court ruled on a petition filed by the firm's
management, which is seeking to have the matter heard by a
new panel of judges. TPI chief executive Prachai
Leophairat's victory was the latest in a long line of legal
manoeuvres that have caused lengthy delays in efforts to
reform Southeast Asia's largest petrochemical firm.

About 1,000 disgruntled TPI employees staged a rally
outside the court Tuesday as the bench prepared to rule on
the restructuring plan, which they fear will mean layoffs
for some of the company's 20,000 workers.

Creditors including foreign and local banks last month
approved the plan to restructure the company's 3.2 billion
dollar debt mountain, but the courts must endorse the
proposal before it can be implemented.

THAI TELE.TELECOMM.: Expecting Bt4.5B annual net loss
Thai Telephone Telecommunication Plc is expected to report
a net loss of 4.5 bln baht in 2000, a loss of 687 mln baht
in 2001 and a return to profit in 2002, said KGI Securities
One Research.

In a report the broker said the lower loss (in 2001) should
be due to the improving operations as well as a foreign
exchange gain in 2001. "However, we expect the company to
show a net profit in 2002 due to its improving financial
position mainly as a result of success in its debt
restructuring planning," it said.

It recommended a "buy" on the shares. TTNT's debt
restructuring plan is expected to be completed in December
and the broker foresees few changes to the current plan.
Under the plan, it expects TTNT to issue 1.362 bln new
shares to facilitate a debt-to-equity swap of 6.8 bln baht,
which will go to existing shareholders who are creditors,
including Jasmine International, Loxley and Ital-Thai

The plan also requires TTNT to place shares with a new
strategic partner and it is in talks with several potential
candidates, both local and foreign, the report said. The
debt to equity ratio for end-2001 should fall to 4.2 times,
down from 15.1 times in 2000, it said.

The broker forecast a 4 percent rise in subscriber numbers
year-on-year at end-2001 to 1.24 mln. "Despite tougher
competition from the Telephone Organisation of Thailand
(TOT), TTNT should be able to grow its subscriber base. In
Oct 2000, the total subscriber base was 1.19 mln.

"Our end-2001 target for the share price is 7 baht. This is
based on a net present value (NPV) with a 13 pct discount
rate. We assume the price for debt-to-equity swap at 5 baht
each (the average market price for the last 180 days). If
the swap price is 10 baht, the target price rises to 9 baht
from 7 baht. We have not factored in a new partner in our
valuation," the report said. (AFX (AP) 08-Dec-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.

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