TCRAP_Public/010130.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, January 30, 2001, Vol. 4, No. 21



HEAT EXCHANGE: Several Firms Signify Interest
W. E. SMITH: Firm's Collapse Leaves Workers Without Funds
SYDNEY STEEL:  Government Dissolves Board of Directors

C H I N A  &  H O N G  K O N G

GUANDONG ENTERPRISES:  Restructuring Underway


MENTIGA:  Disposes of Assets to Reduce RM67.6M Debt
PT GARUDA INDONESIA:  European Creditors OK Restructuring Plan
PT PANCA FINANCE:  Courts Delay Ruling


LIFE CO.: Shinsei Bank to Sell 125B Yen Loan
MYCAL:  Creditors Extend 120B Yen Loan
SOFTBANK:  Cisco Buys $200M Stake


DAEWOO MOTOR:  Confirms Sale of Polish Factories
REGENT MERCHANT:  Rescue Plan Required


TDM:  Sells Two Subsidiaries


NATIONAL STEEL:  Seeks Asset Disposal to Restart Operations
PHIL. NATIONAL BANK:  Agrees to Call Option Deal


F J BENJAMIN:  Closes Businesses; Losses Expected


BAN CHANG:  Creditors Reject Restructuring Plan


HEAT EXCHANGE: Several Firms Signify Interest
Some 25 firms responded to announcement soliciting interested
firms to invest in Heat Exchange International. Workers at its
parent company will unlikely recover entitlements worth $1.8

Mark Mentha, the receiver from Arthur Anderson, hopes to sell the
firm to these interested buyers, ABC News On Line reported on

He said Heat Exchange International parent company, WE Smith
Engineering, employees are fearful that they will lose their
benefits if they are retrenched. They are staging a walkout on
Wednesday to protest.

W. E. SMITH: Firm's Collapse Leaves Workers Without Funds
Meanwhile Paul Bastian, Australian Manufacturing Workers Union
(AMWU) state secretary, said 70 workers at W. E. Smith
Engineering at Coffs Harbour have been left in limbo after
receivers were brought in, according to the Thursday edition of
AAP News.

The company also has smaller factories in Western Australia and
Victoria, employing about 13 people.

He said the collapse was a surprise in spite of the loss of three
members of the board of directors before Christmas.

He said, "Our priority will be to work with the receiver to sell
it as a good business that was just mismanaged".

The collapse of W. E. Smith Engineering comes after a series of
manufacturing companies folded leaving workers owed millions of

The AMWU has called for the introduction of an industry trust
fund for workers' entitlements.

SYDNEY STEEL:  Government Dissolves Board of Directors
The government is seeking to dissolve the board of Sydney Steel
(Sysco) Corp. and place the company's management with receiver
Ernst & Young, the Globe and Mail reported on Friday.

Gordon Balser, Australian Economic Minister, said that with the
disbandment of the eight-member board, Sydney Steel assets would
undergo liquidation.

Only last week Duferco Group of Lugano, Switzerland, withdrew its
interest in purchasing Sydney Steel Corp., affecting more than
175 workers.

Sydney Steel was acquired to supply slab steel to Duferco's
recently acquired operation in Pennsylvania.

Nova Scotia Industry Minister Gordon Balser Duferco originally
signed an agreement last June to purchase the troubled company
for $17 million. Although the agreement was extended to January
18, a downturn in the steel industry led to the collapse. The
government believes that prolonging the negotiations will be

This is the fourth time in seven years that the company has been
unsuccessfully negotiated for sale.

C H I N A  &  H O N G  K O N G

GUANDONG ENTERPRISES:  Restructuring Underway
Allen & Overy's (A&O) Asian Practice is leading the restructuring
of Guandong Enterprises, which is believed to be the largest in
China mobilizing various professionals, according to the Monday
issue of the Lawyer.

Asian business reconstruction group Mark Sterling led the
Guandong deal, which took two years to complete and involved 100
of the firm's lawyers.  

Moira Taylor, head of the Chinese banking practice Mitchell Silk
worked for the transfer of 400 assets, 40 properties and 100
security documents.


MENTIGA:  Disposes of Assets to Reduce RM67.6M Debt
Mentiga Corp. will dispose of its oil palm plantation and
property development projects in Pahang to reduce its borrowings
of RM67.6 million within the next four to five years. Part of the
fundraising will be the sale of Mentiga Plantations Sdn Bhd
(MPSB), according to the Monday edition of the Star On Line.

Datuk Mohd Ghazali, executive chairman of Mentiga Corp., said the
group would move back to its core business in timber, plywood
manufacturing and oil palm plantation in Indonesia. He said
another fundraising exercise involves private placements of
shares and debt settlement through the issuance of new Mentiga

The fundraising exercise is projected to raise RM28.5 million, of
which RM23mil will be used to repay the balance of bank
borrowings, leaving RM4mil for additional working capital.

Next year Mentiga group's core business will be restructured,
consolidated and rationalized, especially the plywood
manufacturing operations.

PT GARUDA INDONESIA:  European Creditors OK Restructuring Plan
European Creditors Agency (ECA), representing 76 percent of total
debt excluding the government, has approved in principle a debt-
restructuring proposal from the Financial Sector Policy
Committee, according to the Wednesday issue of AFX.

Garuda owes US$610 million to ECA, US$572.2 million to the
government and state-run PT Bank Mandiri, PT Angkasa Pura I and
PT Angkasa Pura II, and US$460 million to more than 100 local and
offshore banks.

ECA requires the government to guarantee that Bank Mandiri's
US$100 million risk participation be confirmed in writing.

Garuda's remaining debt as of July 1999 was US$1.2 billion
compared to US$1.8 billion in 1998. The debts included loans to
buy and lease aircraft and commercial papers.

PT PANCA FINANCE:  Courts Delay Ruling
The Jakarta Commercial Court postponed voting on the bankruptcy
petition filed by the International Finance Corp. (IFC) against
PT Panca Overseas (POF) Finance involving $13 million in matured
debts, according to the Wednesday issue of AFX.

PT Panca shareholders had already approved the debt-restructuring
plan, which is subject topproval by its creditors until the IFC
petition halted voting because of suspected fictitious creditors.

Aside from the IFC, some 17 other foreign creditors with $67.24
million maturing debt supported the petition filed last

For its part, POF submitted to the court a list of 14 new
creditors laying claims to over Rp1.6 trillion (about US$168.42
million) in debts.

Under the 1998 Bankruptcy Law, a company survives a bankruptcy
petition if the majority of creditors -- representing at least
two-thirds in value of the debtor's outstanding debts -- vote to
accept the company's debt-restructuring proposal.

If POF fails to have the majority vote, it will automatically be
declared bankrupt.


LIFE CO.: Shinsei Bank to Sell 125B Yen Loan
Shinsei Bank wants the government's Deposit Insurance Corp. (DIC)
to buy back about 125 billion yen in loans from ailing Life Co.,
a consumer credit company, by invoking a provision in the
contract allowing such a move.

Based on the provision of contract, Shinsei is allowed to ask DIC
to buy back loans when they fall 20 percent or more in value. The
bank has said it will exercise the right if its loan claims to
Life are cut considerably, Jiji Press English News Service
reported on Friday.

Public funds will also be involved if Shinsei's Life-bound loan
becomes bigger than the amount of its loan-loss reserves. Public
funds will then be needed to fill the gap.

But before the government steps in, DIC will have to examine
Shinsei's request if the buyback conditions are met.

Last year DIC repurchased nearly 200 billion yen in Shinsei's
loans to Sogo Co. before the department store chain operator's

Life Co. submitted its rehabilitation plan last December to the
Tokyo District Court involving 47 percent in loan repayments.
Creditors are expected to vote for its approval on January 31.

MYCAL:  Creditors Extend 120B Yen Loan
Seven major creditor banks of Mycal Corp. extended 120 billion
yen in loan support to its restructuring efforts, the Jiji Press
English News Service reported on Wednesday.

The seven creditor banks are Dai-Ichi Kangyo Bank, Fuji Bank,
Industrial Bank of Japan, Mizuho Financial Group, Sanwa Bank,
Sumitomo Trust and Banking Co., Norinchukin Bank and Shinsei

Part of Mycal's debt-restructuring plan is the closing of 50
stores and selling its equity holdings in its affiliates. An
early retirement system will be instituted to reduce personnel.

The company's interest-bearing debts will be reduced to 750
billion yen by February 2004 from 1,163.6 billion yen as of the
end of August last year.

Mycal posted a group net loss of 5.9 billion yen on revenues of
1.856 trillion yen in the business year that ended in February.

SOFTBANK:  Cisco Buys $200M Stake
Cisco, the U.S. network equipment manufacturer, will buy a 1.65
percent stake in Softbank, whose stocks have been struggling for
months, the Guardian Unlimited reported on Friday.

Cisco will buy back Softbank's 12 percent share in Cisco Systems
HK and its Japanese operations for $275 million. The pair will
then jointly set up a $1.5 billion fund managed by Softbank to
have further acquisition in businesses involved in broadband,
optical, wireless and internet-based technologies.

Softhbank's share gained 16.53 percent after the news broke out.

The U.S. network manufacturer trusted Softbank to help increase
demand for Internet switching in Asia.

"Softbank has a broad experience of Asia, especially in Internet
investing, so we felt this was particularly appropriate," said
Robyn Jenkins, a Cisco spokeswoman.

For its part, Softbank chief executive Masayoshi Son said this is
one of the most significant ventures it has undertaken to date.

Cisco Japan and Softbank started doing business in 1994. The US
networking giant will become the eighth largest shareholder in

The two companies started working together in 1994, when Softbank
invested in Cisco Japan.


DAEWOO MOTOR:  Confirms Sale of Polish Factories
Daewoo Motor will sell its Polish factories to interested
investors who will get aid from the Polish government, according
to Agence France-Presse on Thursday.

"The Polish government supports the automobile industry because
it makes new investments," said Polish deputy economic minister
Edward Nowak. "It will assist the investor who takes over
Daewoo's factories in Poland." One possible buyer is South
Korea's Hyundai Motor.

The liquidation process started this month includes the disposal
of an engine parts factory in southern Poland and postponing
construction of a production line for motors in the subcompact
Matiz model.

REGENT MERCHANT:  Rescue Plan Required
Regent Merchant Bank will be required to submit a self-rescue
program to solve its liquidity problems before the Financial
Supervisory Commission allows operations to resume.

The plan must contain viable measures to secure sufficient cash
to meet customer withdrawal demands, according to the Friday
issue of the Korea Herald.

According to the due diligence audit conducted by the Financial
Supervisory Service the bank is not insolvent. The bank's assets
exceeded its liabilities by up to 30 percent and its capital
adequacy ratio was above 8 percent.

Korea On Line, a controlling shareholder, is entertaining the
option of seeking a foreign investor and a merger with other
domestic merchant banks.

Industry sources reveal that the self-help plan will enable the
company to raise capital through increased asset sales or a
merger with other industry players.


Sistem Television Malaysia will reduce its shares to raise
capital to pay a debt of 1 billion ringgit that is hurting
minority shareholders, according to Bloomberg on Monday.

Shares of Sistem Television, or TV3, fell as much as 18 sen, or
11 percent, to 1.43 ringgit, the biggest one-day decline since
January 3.

The company has headquarters in Sri Pentas and Bandar Utama. Its
core business is commercial television broadcasting.

TDM:  Sells Two Subsidiaries
Food chain TDM Bhd. will sell its two subsidiaries to Semantan
Capital Sdn Bhd to improve its cash position.

A&W Malaysia is capitalised at 7.2 million shares of RM1 each and
A&W Singapore at 46.41 million shares of S$1 each, according to
the Sunday edition of the Edge Daily.

Semantan Capital will replace the two companies' liabilities of
RM40 million with TDM's corporate guarantees of RM40 million.

In an announcement to the Kuala Lumpur Stock Exchange, TDM said
Semantan Capital would take over some RM40 million liabilities of
the two companies and then replace TDM's corporate guarantees of
RM40 million.

For the nine months to September 30 of last year, TDM sustained
net losses of RM30.97 million.


NATIONAL STEEL:  Seeks Asset Disposal to Restart Operations
The liquidator of National Steel Corporation (NSC) is seeking
approval from the Securities and Exchange Commission (SEC) for
the disposal of assets at a maximized recoverable value and
immediate reopening of business operations, Business World
reported on Friday.

Danilo L. Concepcion, NSC liquidator and former SEC associate
commissioner, proposed a four point plan for liquidation:
segregation or group of assets, asset valuation, disposition of
assets and application of proceeds.

He said the company's assets would be grouped into two categories
-- plant and other assets.

Plant assets include the firm's Iligan plant and other real
properties directly used for plant operations. All plant assets
are mortgaged to NSC's creditor banks under a mortgage trust

"The purpose of this segregation is to ensure the disposition of
the Iligan plant as an integral facility, allowing a prospective
buyer to resume its operation within a short period of time from
acquisition," Concepcion said.

This will result in an orderly disposal of assets with the
secured creditors laying claims on the Iligan plant while other
assets amounting to P700 million will take care of other
obligations including those from the employees.

Prospective partners of the secured creditors must have the
capacity to operate the most production lines within six months
to one year and mobilize workers within one to three months.

The buyers must also have an export market reach and
sufficient technical and financial capabilities to undertake
acquisition and operation of the plant.

NSC has a total obligation of P19.1 billion:  P9.59 billion owed
to secured creditors; P674 million to employees; P1.66 billion to
the government; P6.38 billion to banks and P811 million to trade
and other creditors as of September 30 of last year.

Concepcion said if the proceeds are not sufficient, it would be
included among the other unsecured creditors.

PHIL. NATIONAL BANK:  Agrees to Call Option Deal
The Philippine National Bank (PNB) and the Bangko Sentral ng
Pilipinas (BSP) have agreed to a call option deal with the
government for its P15 billion emergency loan, half of which will
be paid at market price in five to eight years.

Rafael Buenaventura, chief of Bangko Sentral ng Pilipinas, said
the rehabilitation plan calls for another capital infusion from
businessman Lucio Tan, who now owns 70 percent of the bank, the
Philippine Daily Inquirer reported on Monday.

Under the plan, the PNB will settle its P10-billion obligation
with state-owned Philippine Deposit Insurance Corp. by
transferring government liabilities to PDIC worth about P9

These liabilities include a P5-billion loan to the Bureau of
Customs and a P4.5-billion loan of a Philippine sugar trading

There will also be a reorganization of the bank's management,
reduction of non-performing loans, sale of foreclosed assets,
tightening of credit policies and rationalizing operations.

Buenaventura said if the rehabilitation plan is approved, Mr. Tan
may be forced to agree to the call option agreement.

In 1999, PNB's net loss hit P9.87 billion from P7.25 billion in
1998. As of September, the bad loan ratio peaked to 38 percent of
its total loan portfolio.


F J BENJAMIN:  Closes Businesses; Losses Expected
F J Benjamin, a retail and distribution company, will close its
DigiCard business because of weakness in the retail industry in
its key markets Singapore, Malaysia, Hong Kong, Taiwan and
Australia. The DigiCard business posted an operating loss in the

As a consequence of these factors, the group is expected to incur
an operating loss for the half-year ended December 31, 2000, and
for the full year ending June 30, 2001, according to the Monday
edition of Asia Pulse.

A net operating loss for the first half of the current year is
expected and will continue through the second half.

The weak performance was due to the opening of new stores in line
with its earlier growth strategy.

F J Benjamin opened four new retail stores in Australia in June
and July 2000 and one new store in Hong Kong in January 2000.

The anticipated strength of consumer sentiment in the Australian
retail sector post-Olympics 2000 in Sydney did not materialize
and it is unlikely to improve in view of the introduction of the
10 percent goods and services tax implemented in July 2000.

The Hong Kong store has not performed up to expectations given
the continuing weak retail sentiment in Hong Kong.


BAN CHANG:  Creditors Reject Restructuring Plan
Creditors of Ban Chang Plc. have rejected a 4.78 billion
restructuring plan despite of amendments designed to make the
plan more attractive.

The Central Bankruptcy Court has given Ban Chang the option of
entering a rehabilitation process or pressing ahead with

Sarayuth Kauphaichanon, executive director of Asian Capital &
Consultant, which drafted the plan, said even though the changes
were made in accordance with the creditors' request but was still
rejected, the Bangkok Post reported on Friday.

The amendments included an agreement to transfer assets to allow
a full repayment of debt and to give creditors the ability to sue
loan guarantors while the plan was in action.

Creditors rejecting the plan included Bangkok Bank, Bank of
Ayudhya, Thai Military Bank and Bangkok Asset Management. Only
Chanthaburi Asset Management Company, a subsidiary of Thai
Farmers Bank, voted in favor.

Some 40 unsecured creditors are owed one billion won.  A
bankruptcy order will liquidate assets, giving priority to
secured creditors of Bt200 to Bt300 million. The balance of Bt711
million in debt will be converted to equity while forgiving
accrued interest and guarantee obligations to subsidiaries.

Assets worth 274 million baht would be transferred to creditors,
with remaining debt repaid over seven to ten years.

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. Lexy Mueller, Managing Editor, James Philip P.
Jover and Maria Vyrna Nineza, Editors.

Copyright 2000.  All rights reserved.  ISSN: 1520-9482.

This material is copyrighted and any commercial use, resale
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