/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/010503.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 Thursday, May 3, 2001, Vol. 4, No. 87 Headlines A U S T R A L I A EISA: Administrators To Abandon Action Against Ex-CEO MACQUARIE CORP: PowerTel Becomes Substantial Holder MACQUARIE CORP: Welcomes PowerTel As Substantial S-Holder WALKER CORP: Court Rebuffs Evidence I N D O N E S I A PACIFIC GRANITAMA: FSPC Approves Restructuring SUMATRA TIMBER: FSPC OKs Debt Restructuring J A P A N FUJITSU LIMITED: Will Sell US R&D Unit KYOTO KOGIN: Declared Insolvent MITSUI & CO: Liquidation Scheduled For Two Units K O R E A DAEWOO MOTOR: Gov't Braces For GM Withdrawal HYNIX SEMICON: Creditors Still Disagree Over New CBs HYUNDAI ENGINEERING: In Default SHINHAN BANK: S-Holders Support Creating Holding Firm M A L A Y S I A KUALA LUMPUR INDUSTRIES: Firms Up Workout Bids LANDMARKS BERHAD: Interest In Mont Kiara Aquired MENANG CORP: Enters Into Extension Agreement LANDMARKS BERHAD: Reports Added Info TECHNO ASIA: Reports Prod Figures For March TECHNO ASIA: Workout Proposal In Progress P H I L I P P I N E S BAYAN TELECOMS: Talks With Investors On Hold S I N G A P O R E ASIA PULP: S&P Lowers Rating On Guar'd US$500-M Notes INNO-PACIFIC: Bids For Capital Reduction T H A I L A N D ITALIAN-THAI: Halts Interest Payments SIAM SYNTECH: Posts Group Net Loss - - - - - - - - - - ================= A U S T R A L I A ================= EISA: Administrators To Abandon Action Against Ex-CEO ----------------------------------------------------- Ferrier Hodgson, appointed administrators of Eisa, have decided to drop legal action against former Eisa CEO Damien Brady, as a means to safeguard creditors from further legal expense, which will not likely be recovered, The Herald Sun reported. According to Ferrier Hodgson partner Andrew Love, Brady no longer has assets to compensate for expense incurred by the case. Love said: "It's unlikely that continuance of the present legal proceedings would result in any commercial recovery for Eisa, without substantial further expense to creditors. However, Ferrier Hodgson will continue to co-operate with the investigations of regulatory bodies and law enforcement agencies." Ferrier Hodgson's motion was approved by the creditors committee, representing Eisa's creditors, and including Telstra, Cable & Wireless Optus and Primus. The legal action was raised by the liquidator on charges Brady incurred expenditures on his motorcycle team using around $233,000 of company funds without authorization. Eisa's downfall, the report said, started in September 2000 after it failed to close its purchase of OzEmail involving a sum of $325 million. In 1999, Eisa conducted a public share offering which was able to generate $57 million. Brady, 34, Eisa's former CEO, quit July 21, 2000, at the height of the controversy accusing him of misappropriating company funds. MACQUARIE CORP: PowerTel Becomes Substantial Holder --------------------------------------------------- PowerTel Limited today announced that it has become a substantial shareholder in Macquarie Corporate Telecommunications Holdings Limited. PowerTel's total interest in Macquarie is 20,370,000 shares representing 10 percent of the issued share capital of Macquarie. Stephen Butler, CEO of PowerTel, commented that PowerTel has made neither decisions nor proposals, at this stage, regarding the acquisition of further shares in Macquarie. PowerTel acknowledges that Macquarie is controlled by David and Aidan Tudehope and any future transaction would require their involvement and support. PowerTel, however, believes there are substantial potential benefits to be gained for both companies by Macquarie and PowerTel working together. Accordingly, PowerTel is keen to work with the Macquarie Board and the Tudehopes to see how a proposal could be developed in the best interests of the shareholders of both Macquarie and PowerTel. JP Morgan, PowerTel's advisor, has made preliminary contact with Macquarie's advisor, Allco Fell, to express interest in working together toward that end. About Powertel PowerTel is the third largest facility based provider of broadband telecommunications services to the corporate and wholesale market in Australia. Its 2,417 km fiber optic network links Brisbane, Gold Coast, Newcastle, Sydney, Canberra and Melbourne and extends to Adelaide and Perth through leased lines, providing end-to-end connectivity and covering an estimated 70 percent of typical corporates' telecommunications patterns. PowerTel is listed on the Australian Stock Exchange (PWT) and has a market capitalisation of around $400 million. Its two major shareholders are the Williams Communications Group, Inc and the Downtown Utilities consortium, which together own 73 percent of the company's ordinary shares on a fully diluted basis. Williams Communications is US based and owns and operates the largest new generation fiber optic network in the US, deploying more than 45,000 kms of fiber cable by the end of 2000. Williams' Southern Cross cable link provides end-to-end connectivity between Australia and the US. The Downtown Utilities consortium comprises Energy Australia (Sydney), Citipower (Melbourne) and Energex (Brisbane). The consortium members provide PowerTel right of way access through energy ducts for its fiber optic network, resulting in significant cost and service speed advantages. PowerTel Limited (PowerTel) became a substantial shareholder in Macquarie Corporate Telecommunications Holdings Limited on April 30, 2001 with a relevant interest in the issued share capital of 20,370,000 ordinary shares (10 percent). MACQUARIE CORP: Welcomes PowerTel As Substantial S-Holder --------------------------------------------------------- Macquarie Corporate Telecommunications (Macquarie) welcomed PowerTel's Tuesday announcement that it has become a substantial shareholder in Macquarie. John Priest, Chairman of Macquarie, commented that he looks forward to having PowerTel as a shareholder and is encouraged by their investment in the company, which clearly recognizes the value of Macquarie's businesses. Macquarie has clear business strengths including its solid base of corporate customers that has grown from 815 customers at the end of June, 1999 to in excess of 1500 customers to date. Macquarie has a strong balance sheet and has recently completed its capital expenditure program with no plans for significant capital expenditure in the coming year. Priest said Macquarie looks forward to working with its shareholders and suppliers, including PowerTel, to create value for all of Macquarie's shareholders. WALKER CORP: Court Rebuffs Evidence ----------------------------------- Supreme Court Judge Robert Hunter rejected Lang Walker's evidence Friday last week in the case involving the A$170- million Broadway Shopping Development in Sydney, which is owned by Walker Corporation, Australasian Business Intelligence reported Monday. It was found that Walker Corporation, owned by Walker, owes A$17.5 million in liquidated damages to Walter Construction Group (WCG). Formerly, WCG was known as Concrete Constructions during the construction of the project. The liquidated damages were incurred as a result of the breach of contract. ================= I N D O N E S I A ================= PACIFIC GRANITAMA: FSPC Approves Restructuring ---------------------------------------------- The proposed debt restructuring of granite mining company PT Pacific Granitama has received the approval of the Financial Sector Policy Committee (FSPC), Jakarta Post reported Tuesday, citing a FSPC media statement. The exercise will involve foreign debts of US$17.37 million, including US$5.98 million owed to the Indonesian Bank Restructuring Agency. According to the committee's media release, under the plan, Pacific will repay the principal every four months over a span 7 years ending December 31, 2008. Payment will be made at an interest rate of 3 percent above Sibor for domestic lenders. In addition, the plan will require personal guarantees from Pacific's shareholders. SUMATRA TIMBER: FSPC OKs Debt Restructuring ------------------------------------------- The Financial Sector Policy Committee (FSPC) has given plywood exporter PT Sumatra Timber Utama Damai (STUD) permission to proceed with the restructuring exercise of its debts totaling US$75.5 million owed to foreign creditors and the Indonesian Bank Restructuring Agency (IBRA), Jakarta Post reported Tuesday, citing a media statement issued by the FSPC panel. Of the total amount, US$27.8 million is owed to IBRA. According to the panel, the Jakarta Initiative Task Force (JITF) facilitated the restructuring, which calls for debt repayment extended over a 5- to 7-year period at an annual rate of 3.5 percent above the Singapore interbank offering rate (Sibor). ========= J A P A N ========= FUJITSU LIMITED: Will Sell US R&D Unit -------------------------------------- In a move to shift gears in its global research and development bases, Fujitsu Limited is working to sell its subsidiary in the United States, HAL Computer Systems Incorporated, Asian Wall Street Journal reported yesterday, citing a report by Nikkei Net Interactive. The shift is towards the Internet and will likely veer away from broadband communications networks. The shutdown of HAL, will move between 30 and 60 engineers to another US laboratory, while the rest HAL's 300 engineers will be terminated. In addition, all equipment in HAL will be assumed by the Fujitsu R&D base in Japan. As a result of the planned liquidation, Fujitsu expects to incur an estimated loss of up to Y2 billion on its consolidated account for this fiscal year. Fujitsu closed its US units engaged in producing IBM-compatible mainframe computers last year, and spun off to create information services for Sun Microsystems Inc's Unix servers and Intel Corp's servers. KYOTO KOGIN: Declared Insolvent ------------------------------- Kyoto Shogin has been declared bankrupt, Yomiuri Shimbun reported yesterday. This aroused urgency regarding the state of these credit unions, making the South Korean government wary about its plan to infuse funds into the new bank to be formed by the merger of the 18 South Korean-linked Japanese credit cooperatives. The South Korean government fears the 17 others could go bankrupt once the merger happens. Following the South Korean government's reaction, the Association of Korean Credit Cooperatives in Japan (Kanshinkyo) announced Tuesday it would ditch a plan to create a new entity out of the merger of these troubled credit unions. Meanwhile, pro-Seoul Korean Residents Unions in Japan (Mindan) are considering an idea to assume the plan to establish a new bank with this proposed merger. This group needs to draw up a concrete merger plan before spring next year. MITSUI & CO: Liquidation Scheduled For Two Units ------------------------------------------------ Mitsui & Company is going to liquidate two of its subsidiaries in the United States and the Netherlands, respectively. The branches set for sale are United Ammonia Incorporated, which sells ammonia products, and Mitsui Uzbekistan Development BV, an investment company for Uzbekistan mining ventures, Asia Wall Street Journal reported Tuesday. ========= K O R E A ========= DAEWOO MOTOR: Gov't Braces For GM Withdrawal -------------------------------------------- The Korean government and Daewoo Motor's creditors are already working out contingency measures in the event that General Motors will withdraw its bid to takeover the troubled Korean automaker, The Korea Herald reported yesterday, citing Lee Keun- young, chairman of the Financial Supervisory Commission (FSC). Lee said, "Following GM's possible pullout from the Daewoo negotiations, the government and creditors will be fully prepared to take emergency measures." Industry watchers are speculating the possibility is high for GM to back out of negotiations for takeover. However, last week, The Herald reported, GM Korea Vice President Lee Ki-sup dismissed such speculations, assuring that GM is up to its takeover bid, and keeps its commitment to finish its due diligence report and pre-merger studies. "GM has traditionally allocated sufficient time in mergers and acquisitions to minimize investment risks. But such a careful approach, exceptional by Korean standards, has created enormous misunderstanding among some Korean people, leading them to question GM's actual intentions in the sale of Daewoo," Lee said. GM's takeover proposal is expected to be released by the end of June. HYNIX SEMICON: Creditors Still Disagree Over New CBs ---------------------------------------------------- Creditor banks of Hynix Semiconductors Company remain divided as to the guarantee amount for the convertible bonds (CB) to be purchased by Daehan Credit Guarantee Fund, The Digital Chosun reported yesterday. The CBs are to be issued to defray corporate bonds scheduled to mature in the first half of 2002. Korea Exchange Bank, which already has high exposure to Hynix, argued that the guarantee amount to be required should go up to 40 percent of the total worth of the CBs, while other creditor banks are pushing for the 70 percent ratio. HYUNDAI ENGINEERING: In Default ------------------------------- Hyundai Engineering and Construction failed to fulfill its obligations concerning the put-back options undertaken on April 20 by financial firms holding bonds with warrant (BW), placing the construction giant in technical default, The Korea Herald reported yesterday, citing officials of the Financial Supervisory Service (FSS). An official at FSS told Herald, "Five domestic financial firms own some $50 million worth of Hyundai Construction BWs. Some of these firms exercised their options and talks are underway between them and Hyundai on payment terms." The overseas issuance of BWs was lead-managed by Deutsche Bank. "If the two sides fail to reach the best solution, we have no idea how Hyundai's creditor banks will resolve the problem," said the FSS official. SHINHAN BANK: S-Holders Support Creating Holding Firm ----------------------------------------------------- The restructuring of Shinhan Bank gets a boost as shareholders of the bank agree to set up a financial holding unit to take on Shinhan's insolvent subsidiaries, The Digital Chosun reported yesterday, citing the bank's spokesperson. Shareholders residing in Japan, who hold a combined interest of 28 percent, have agreed to the conversion of their shares into equity in the planned holding company. The spokesperson said, "President Lee In-ho of the bank visited Japan last week and received tacit support from the shareholders there for the bank's plan to set up a financial holding company for the first time in Korea." The proposed financial holding firm will be set up once Shinhan Bank closes a deal with a foreign strategic partner. The new holding firm, which will embrace six affiliates, is expected to be launched sometime in July. =============== M A L A Y S I A =============== KUALA LUMPUR INDUSTRIES: Firms Up Workout Bids ---------------------------------------------- The Special Administrators of Kuala Lumpur Industries Holdings Berhad are currently in the process of finalizing the workout proposals of the company and four affected subsidiary companies for submission to Pengurusan Danaharta Nasional Berhad. Further announcements shall be made to the Exchange upon approval of the workout proposals by the relevant parties in due course. Background A property and construction company, Kuala Lumpur Industries Holdings (KLIH) is currently under the control of Special Administrators who were appointed by Pengurusan Danaharta Nasional Bhd on June 30, 2000. The Special Administrators are to prepare a workout proposal for the company. Meanwhile, a 12-month moratorium is in effect from the date of their appointment during which no creditor may take action against the company. On January 18, 2001, the company entered into a Memorandum of Understanding (MoU) with Taman Equine (Malaysia) Sdn Bhd in relation to the participation of Taman Equine in KLIH's proposed corporate and debt restructuring. The restructuring would involve a reduction of the issued and paid-up capital of KLIH, application to transfer the listing status of KLIH to a new company (NewCo), debt restructuring, acquisition of Taman Equine by NewCo, and fund raising by NewCo. The MoU provides an exclusivity period of 12 months from the date of the MOU for a formal SPA to be entered under which NewCo would purchase the entire issued and fully paid-up capital of Taman Equine subject to finalization of a due diligence review on Taman Equine. LANDMARKS BERHAD: Interest In Mont Kiara Aquired -------------------------------------------------- Landmarks Berhad announced Point Merge Sdn Bhd (PMSB), a Landmarks wholly owned subsidiary, entered into a Share Sale Agreement and a Shareholders Agreement with Consolidated Bond (M) Berhad (CB) on March 22, 2001 to acquire a 50 percent plus one share interest in the share capital of Mont Kiara Specialist Center Sdn Bhd (MKSC). MKSC's current share capital comprises 31,372,748 ordinary shares of RM1 each. MKSC will restructure its share capital so that the share capital shall comprise 14,781,999 ordinary shares of RM1 each and 16,590,749 preference shares of RM1 each. The preference shares shall have no rights to dividends or repayment of capital. PMSB will acquire 7,391,000 ordinary shares representing 50 percent plus one share of the ordinary share capital for a cash consideration of RM8.15 million and will have an irrevocable option to buy 50 percent of the preference share capital for an aggregate nominal consideration of RM1 only. Paravation Sdn Bhd also a wholly owned subsidiary of Landmarks has a Hospital Management Agreement with MKSC to provide technical services in connection with the design, construction and commissioning of the hospital and management services in connection with the operation and conduct of the hospital for a duration of 10 + 5 years. Background On CB CB is a company incorporated in Malaysia and is the registered and beneficial owner of 31,372,748 MKSC ordinary shares of RM1.00 each representing the entire existing issued and paid-up share capital of MKSC. The shareholders of CB comprises mostly of doctors/specialists. Background On MKSC And The Hospital MKSC is the owner and developer of a piece of land on which is proposed to be developed a hospital to be known as "Mont Kiara Specialist Centre" (Hospital). The land measures 3.09 acres and is freehold land. Some piling works, substructure works and earthworks have been completed. The Hospital is to be completed 30 months from the date of the Agreement or if later 24 months after shareholders of MKSC have agreed on the funding of the Hospital and MKSC receiving requisite approvals to build and operate the Hospital. While the size of the Hospital has not been finalized and is subject to shareholders of MKSC inter alia agreeing on the funding, the Hospital is expected to be a 250 to 300 bed tertiary hospital which would require an estimated RM100 million expenditure. PMSB shall be entitled to appoint the contractor for the construction of the Hospital. The funding for building the Hospital is expected to come from a combination of equity/shareholders' contribution and/or advances and project borrowing. The equity/shareholders' portion is expected to come substantially from Landmarks. Landmarks proposes to fund the equity/shareholders' portion through equity funding and/or internally generated funds. Consideration The consideration for the Acquisition is RM8,150,000 and is based on the revalued net tangible assets of MKSC as of April 30, 2000 on the basis that the land is valued at RM100 psf. The consideration is to be satisfied as follows: a) The payment of RM100,000 as refundable earnest deposit prior to the date of the Agreement. (This was paid when the MOU was signed). b) The payment of RM715,000 as refundable earnest deposit within seven business days after the date of the Agreement (payment date). c) The payment of RM7,335,000 on the completion date ( one month after the Acquisition becomes unconditional). Payments (a) and (b) are made to CB's stakeholder. Additionally, Landmarks is obligated to make the following advances to MKSC: a) On payment date a sum equivalent to 50% of the outstanding interest under a loan facility of RM4,200,000 granted by Overseas Union Bank (M) Berhad (OUB) to MKSC (the Loan), but in any case not exceeding RM100,000. This advance is recoverable in the event the Acquisition is terminated. Note that the money would be paid to OUB directly. The balance outstanding interest would be advanced by CB to MKSC from the 10 percent deposit paid as per paragraph 4.2(a) and (b) above. b) On the business day falling one month from the date of Agreement and on the business day falling after every month thereafter for a maximum period of 11 months, a sum equivalent to interest for one month on the principal outstanding under the Loan at the rate of interest charged by OUB or Malayan Banking Berhad's base lending rate plus 2 percent whichever is lower calculated on monthly rest. The obligation to advance terminates when the Acquisition is completed or terminated. In the event of a termination other than due to CB's fault, the amount advanced is forgiven. All conditions under the Agreement are to be satisfied within 9 months from the date of the Agreement or such other date as may be agreed upon between the parties. Rationale For Acquisition The proposed Acquisition is consistent with the Group's strategy of developing healthcare as the third core business of the Group the other two being hotels and properties. The project is in a prime location and has a pool of doctors/specialists committed to its success. Source of Financing Landmarks proposes to fund the Acquisition through equity funding and/or internally generated funds. Financial Effects The proposed Acquisition will not have any material effect on the issued and paid up share capital of Landmarks. The proposed Acquisition will not have any material impact on the earnings of the Group for the year ending December 31, 2001. The proposed Acquisition will not have any material impact on the net tangible assets of the Group. None of the directors and substantial shareholders has any interest, direct or indirect, in the Acquisition and the Management Agreement. The Board of Directors considers the Acquisition to be in the best interest of the Company and Group. The Acquisition is subject to the following approvals: a) approval from all relevant authorities for the construction, development and operation of the proposed hospital; b) approval, or no objection, of the Foreign Investment Committee to the acquisition of the shares; c) approval of the Securities Commission, Kuala Lumpur Stock Exchange and shareholders of Landmarks in the event that the acquisition is to be funded through issuance of shares. MENANG CORP: Enters Into Extension Agreement -------------------------------------------- Further to the announcement on December 20, 2000, on behalf of Menang Corporation (Malaysia) Berhad, Arab-Malaysian Merchant Bank Berhad wishes to announce that both Titian Hartanah (M) Sdn Bhd (i.e. the vendor of the development land under the Proposed Acquisition) and Menang, the purchaser, on April 30, 2001 entered into a Fourth Extension Agreement. The extension will mutually extend the period for securing the conditions precedent set out in the Sale and Purchase Agreement dated October 19, 1999 (SPA) from April 30, 2001 (as extended by the Third Extension Agreement) to July 31, 2001. All the other terms and conditions as stated in the SPA, and the First, Second and Third Extension Agreements remain unchanged. Profile Menang was involved in the manufacture and sale of jute bags, twine, ropes, tarpaulin and canvas from 1969 to 1975. It disposed of this business in 1978 due to high operating costs and lack of demand for its products. Subsequently, in July 1982, the company embarked on property development after undergoing a restructuring exercise wherein it acquired Menang Development (M) Sdn Bhd. In August 1998, the company and its two subsidiaries were granted a restraining order by the High Court pursuant to Section 176 (10) of the Companies Act, 1965 against certain classes of creditors. The restraining order has since expired on October 11, 2000 after three extensions. In October 1999, Menang had unveiled its proposed restructuring scheme which involves a scheme of arrangement with creditors, capital reconstruction exercise, issue of warrants, and acquisition of freehold development land. On August 17, 2000, Menang obtained approval from the SC on its corporate proposals, save for a proposed exemption for the Company's major shareholders and related parties from extending a mandatory general offer (MGO). Subsequently, scheme creditors' approval was received on August 30, 2000. The proposed MGO exemption will only be considered upon receipt of shareholders' approval at an EGM to be convened. LANDMARKS BERHAD: Reports Added Info ------------------------------------ Landmarks Berhad furnished the following additional information: 1. The net tangible assets and net loss of Mont Kiara Specialist Center (MKSC) based on the latest audited accounts for year ended June 30, 2000 are as follows: Net Tangible Assets RM29,796,469 Net Loss RM490,732 2. No person connected to the directors and substantial shareholders has any interest, direct or indirect, in the acquisition. 3. MKSC has a term loan facility of RM4.2 million (the Facility). The outstanding interest for the Facility as at the date of the announcement is approximately RM0.2 million. Upon completion, MKSC becomes a subsidiary of Landmarks. Therefore accounts of MKSC would be consolidated into the Group's accounts. Accordingly, Group debt would increase. Notwithstanding, Landmarks is not obliged to guarantee the Facility pursuant to the Share Sale Agreement and Shareholders Agreement. 4. We were informed that the original cost of the investment by the vendor for 100 percent equity interest of MKSC is RM10,618,500. The investment was made between January 29, 1996 and November 29, 1997. TECHNO ASIA: Reports Prod Figures For March ------------------------------------------- Techno Asia Holdings Berhad (TAHB) announced the March 2001 production figures of TAHB as follows: Crude Palm Oil 2554 metric tons FFB 6022 metric tons Palm Kernel 848 metric tons Profile The company carried on the business of cultivating and processing oil palm in its early days, under the name of Central Oil Palm Industries Sdn Bhd. The company later evolved into an investment holding company with subsidiaries involved in property development, investment holding, oil palm plantations, power generation and hotel operations. The company changed its name to Techno Asia Holdings to better reflect its current activities and business as an investment holding company with diversified business. The oil palm operations are based in Teluk Intan, Perak and Lahad Datu, Sabah. The main property development activity is in the 1,276-acre Taman Mount Austin in Johor Bahru comprising light industrial, commercial and residential development. Overseas, TAHB is involved in the supply of electricity to Mombasa in Kenya, Ecuador, Bangladesh and Dominican Republic. In July 2000, TAHB appointed a merchant bank as adviser to a proposed restructuring exercise which is presently still under discussion. In September 2000, TAHB received a requisition from 11 shareholders to convene an EGM to remove five of the directors pursuant to the powers conferred by Section 144(3) of the Companies Act 1965. Following an EGM on November 21, 2000, the directors were removed and six new directors were appointed. TECHNO ASIA: Workout Proposal In Progress ----------------------------------------- Pursuant to Section 24 of the Pengurusan Danaharta Nasional Berhad Act, 2000, Lim Tian Huat and Chew Cheng Leong of Arthur Andersen & Co were appointed the Special Administrators of the company on February 2, 2001 and have accordingly taken control and possession of the company's assets and records. The Special Administrators are in the midst of assessing the financial position of the company for the purpose of developing a workout proposal which must be examined by an Independent Adviser, whose role is to review the reasonableness of the proposal, taking into consideration the interests of all creditors (whether secured or unsecured) and shareholders. This workout proposal shall provide in some detail Techno Asia's plans to regularize its financial condition to the relevant authorities for their approval. The assessment of Techno Asia's financial position also covers a review of its subsidiary companies' viability. The subsidiaries are Mount Austin Properties Sdn Bhd, Litang Plantations Sdn Bhd, Cempaka Sepakat Sdn Bhd, Ganda Plantations (Perak) Sdn Bhd, Ganda Edible Oils Sdn Bhd, Wisma Dindings Sdn Bhd and Techno Asia Venture Capital Sdn Bhd. ===================== P H I L I P P I N E S ===================== BAYAN TELECOMS: Talks With Investors On Hold --------------------------------------------- Negotiations for the entry of foreign and local strategic partners in Bayan Telecommunications Incorporated (Bayantel) have been put on hold while the plan to restructure debts of about $500 million is still being finalized, The Philippine Daily Inquirer reported yesterday, citing a top Bayantel official. "We have to fix the restructuring first. So far, Bayantel is in negotiations with Globe (Telecom) and PLDT (Philippine Long Distance Telephone Co.) for possible partnerships," according to a Bayantel official. The debt restructuring plan is expected to be completed once Bayantel's financial adviser, Bank of America, tenders the proposal. Bayantel is in dire need of fresh investments, either from foreign or local investors, to ease its financial burden, which resulted from the steep depreciation of the peso against the US dollar, not to mention the 1997 Asian financial slump. ================= S I N G A P O R E ================= ASIA PULP: S&P Lowers Rating On Guar'd US$500-M Notes ----------------------------------------------------- Standard & Poor's lowered Tuesday its rating on the US$500 million convertible notes due April 30, 2003, issued by APP Finance (VII) Mauritius Ltd. and guaranteed by Asia Pulp & Paper Co. Ltd. (APP), to `D' from double-`C'. The rating is removed from CreditWatch, where it was placed with negative implications on January 19, 2001. The rating action follows the failure of APP to make scheduled April 30, 2001, interest payment of about US$8.8 million on the note issue. The interest payment is not expected to be made within its grace period of five business days as a result of the cessation of all group payments of interest and principal on outstanding debt. With the standstill in all debt repayments, defaults will continue within the group over the near term. Standard & Poor's will lower to `D' the ratings on the guaranteed subsidiaries of APP's operating subsidiaries, PT Indah Kiat Pulp & Paper Corp Tbk and PT Pabrik Kertas Tjiwi Kimia Tbk, when they fail to meet their interest or principal payments on the due date. INNO-PACIFIC: Bids For Capital Reduction ---------------------------------------- Inno-Pacific Holdings Ltd (IPH) is proposing a capital reduction be carried out by IPH to reduce the par value of each ordinary share in the capital of the company from $0.20 to $0.01 and to reduce the share premium account of IPH from $40,903,456.42 to $22,277,018.91. An application to the Singapore Exchange Securities Trading Limited (SGX-ST) has been made for its approval for the Proposed Capital Reduction. Details of the Proposed Capital Reduction If approved, the Proposed Capital Reduction will be carried out pursuant to Section 73 of the Companies Act, Chapter 50 of Singapore whereby the company's resultant issued and paid-up share capital will be reduced from $62,520,153.80 divided into 312,600,769 ordinary shares of $0.20 each to $3,126,007.69 divided into 312,600,769 ordinary shares of $0.01 each and the company's share premium account will be reduced from $40,903,456.42 to $22,277,018.91. The effect of the Proposed Capital Reduction will be as follows: a) the nominal amount of all Shares, both issued and unissued, will be reduced from $0.20 to $0.01 each; b) in relation to (a) above, the paid-up share capital will be cancelled by an amount of $0.19 on each of the 312,600,769 Shares which have been issued and are fully paid-up, or credited as fully paid-up; c) canceling an amount of $18,626,437.51 standing to the credit in the share premium account of the company; and d) forthwith upon the Proposed Capital Reduction taking effect: (i) an amount equal to $78,020,583.62, being the credit arising on the Proposed Capital Reduction taking effect be applied in writing-off the accumulated losses of the company as of December 31, 2000. The Proposed Capital Reduction would have the effect of reducing the authorized share capital of the Company from $120,000,000.00 to $6,000,000.00; and (ii) the authorized share capital of the company will be increased to its former capital of $120,000,000.00 by the creation of an additional 11,400,000,000 $0.01 Shares. There will be no change in the number of Shares held by shareholders of the company immediately after the Proposed Capital Reduction nor will the Proposed Capital Reduction entail the distribution of any assets to shareholders. Rationale for the Proposed Capital Reduction For financial year 2000, IPH incurred a loss of approximately $19.9 million out of which approximately $18.7 million resulted from write-down in the carrying value of investments in and amounts due from the subsidiaries and associates of the company and the balance of approximately $1.2 million was attributable to operating losses for that year. The accumulated losses of IPH, based on the audited accounts as of December 31, 2000 amounted to approximately $78.0 million. The cancellation of a substantial part of the share capital of the company no longer represented by available assets would rationalize the company's balance sheet. The Board of Directors are committed to carrying out a reconstruction scheme for the Group and have been exploring various ways in which the Company can raise funds and undertake acquisitions of new businesses that would help augment the profitability of the Group and re-capitalize and strengthen its balance sheet. It is, in the opinion of the Directors, in the interests of the company that the Proposed Capital Reduction be effected upon the terms set out in this announcement as soon as practicable so that the Company can take advantage of opportunities when they arise. Financial effects of the Proposed Capital Reduction The Proposed Capital Reduction has no impact on the number of issued shares, earnings per share, net tangible assets per share and gearing of the Company as of December 31, 2000 as the Proposed Capital Reduction is an accounting procedure that cancels the portion of the value of the issued and paid-up share capital which is lost or unrepresented by unavailable assets. Approval of the Proposed Capital Reduction The Proposed Capital Reduction is subject to, inter alia: (a) the in-principle approval from the SGX-ST; (b) approval of Shareholders at an extraordinary general meeting (EGM) to be convened at a later date; and (c) the confirmation of the High Court of the Republic of Singapore. The above-mentioned approvals may be subject to conditions, which may vary the terms of the Proposed Capital Reduction as set out herein. A circular to Shareholders setting out details of the Proposed Capital Reduction and the notice convening the EGM will be dispatched to shareholders once the relevant approval from SGX- ST has been obtained. =============== T H A I L A N D =============== ITALIAN-THAI: Halts Interest Payments ------------------------------------- Since October last year, Italian-Thai Development Public Company Limited has suspended its interest payments on unsecured debts amounting to Bt8.5 billion and debentures worth Bt3 billion, as another round of debt restructuring is being worked out, Asian Wall Street Journal reported Monday. For the current year, Italian-Thai projects revenues higher than the previous year's Bt15.2 billion, but will not exceed the Bt20-billion mark, as the company is working to augment its overseas operations amid the government's move to reduce expenditures on infrastructure. Revenues from Italian-Thai's foreign ventures are expected to account for 40 percent of total revenues. Meanwhile, Italian-Thai is considering disposing of its non-core assets to ease its cashflow. The next casualty will be the 25.5 percent of its entire holdings in Lao Brewery whose value is estimated at Bt500 million. Other non-core assets include a 10 percent stake in Thai Telephone & Telecommunication PCL and a 10.5 percent stake in Bangkok Mass Transit System PCL. Assets that have been disposed of are the following: 13 percent stake in Thai LNG Power Ltd, sold to Electricity Generating PCL for Bt46.8 million; and 20 percent stake in Royal Orchid Hotel (Thailand) PCL to a local unit of Starwood Hotels & Resorts Worldwide for Bt500 million. SIAM SYNTECH: Posts Group Net Loss ---------------------------------- Siam Syntech Construction Public Company Limited posted a consolidated net loss of Bt814.44 billion for the half-year period ended December 31, 2000, as opposed to the consolidated net loss of Bt7.196 billion recorded for the same period in the preceding year. At the end of the same period the group's current assets stood at Bt577.694 million, as opposed to its total liabilities of Bt9.301 billion. During the year 2000 and 1999, Siam Syntech and its subsidiaries have incurred significant loss from their operations, and, as of December 31, 2000 had current liabilities in excess of current assets and a capital deficit of a significant amount. In addition, due to a liquidity squeeze, Siam Syntech and certain subsidiaries have been unable to repay their debts and interest thereon to a number of financial institutions when due and have been unable to comply with certain covenants and conditions as required under loan agreements. Siam Syntech has also defaulted on interest payments to the holders of its convertible bonds and has outstanding tax liabilities payable to the Revenue Department. The company has submitted an application for rehabilitation and the Central Bankruptcy Court has issued an order for the rehabilitation of the company. Currently, a rehabilitation plan has been approved by a majority of its concerned trade and financial institution creditors and in the process of approval by the Central Bankruptcy Court. The outcome of this cannot be determined at this stage. The above factors raise substantial doubt as to the ability of Siam Syntech and its subsidiaries to continue as a going concern. However, the accompanying financial statements have been prepared under the going-concern basis and, accordingly, do not include any adjustments relating to the classification and valuation of assets and liabilities, which might be required in the event the company and its subsidiaries were unable to continue as going concerns. Short-Term Investments As of December 31, 2000, Siam Syntech and its subsidiaries pledged their fixed deposits of approximately Bt10 million and Bt23 million, respectively (June 30, 2000: Bt8 million and Bt22 million, respectively), with the banks to secure credit facilities and letters of guarantee as granted by those banks. Profit Guarantee During 1996, the company together with other overseas parties succeeded in listing the ordinary shares of Plantation & Development (Malaysia) Berhad (P&D) on the Kuala Lumpur Stock Exchange. To satisfy one of the listing conditions imposed by the Securities Commission of Malaysia, the company, in the capacity of one of the major shareholders of P&D, together with another Malaysian company having participated in the listing scheme, entered into a Profit Guarantee Agreement with P&D, under which the company and the other company guarantee to P&D that the consolidated profit before tax of P&D and its subsidiaries for the financial years ended December 31, 1996, 1997 and 1998, shall not be less than RM32,543,100, RM31,189,500 and RM31,189,500, respectively. Under the Agreement, the company and the other companies agree to pay to P&D the difference between the audited profits before tax and the Guaranteed Profits for the corresponding year. The company's extent of liability shall be limited to RM17,475,600, RM22,051,400 and RM22,051,400 respectively for the financial years ended 31 December 1996, 1997 and 1998. As security against the aforementioned guarantee, the company has deposited the total of 12,270,000 ordinary shares in P&D with another Malaysian company as stated in the Agreement. Recognizing that the company had entered into the Agreement for the benefit of all the previous shareholders of Invescor Ventures Sdn Bhd, all the other shareholders of Invescor entered into an agreement with the company to indemnify against the liability of the company arising from the Agreement, in proportion to the number of shares previously held in Invescor. The percentages of the shareholdings in Invescor previously held by the company and the other shareholders were 48.18 percent and 51.82 percent, respectively. As the result of the indemnity provided by the other shareholders, the company's liability is herefore limited to RM8,419,744, RM10,624,365 and RM10,624,365, respectively for the three financial years stated earlier. The company has no liability in respect of the Guaranteed Profits for the year ended 31 December 1996 since the consolidated profit before tax of P&D for the year ended December 31, 1996 exceeded the corresponding Guaranteed Profits. However, during the fiscal year ended December 31, 1997 and 1998, as the consequence of economic crisis in his region, P&D experienced an operating loss of substantial amount and hence the actual operating result for the year fell short of the respective Guaranteed Profits. The management believes that, at the company's request lodged to P&D in March 1998, the undertaking would eventually be waived or deferred by P&D. However, for prudent reason, in 1998 and 1999 the Company has set aside a provision for liability of RM21,248,730 (equivalent to approximately Bt245 million) in respect of the guaranteed profit undertaking for the aforementioned years as current liabilities in the balance sheets under the heading "Provision for loss under profit guarantee agreement". However, in 2000, the company received the claim of P&D from the Central Bankruptcy Court requesting for the payment of approximately RM44,102,800 (equivalent to approximately Bt508 million) for liability in respect of the guaranteed profit undertaking for the year 1997 and 1998. The company is currently under negotiation with P&D, the outcome of which could not be determined at this stage. Option Agreement In 1997, the company entered into an Option Agreement with Pasifik Pelana Sdn. Bhd. (PPSB) whereby the company granted a call option by which PPSB was entitled to purchase 19 million P&D shares from the company at RM 7 each within 15th August, 1999. PPSB undertook to exercise the option of up to 7.6 million shares (40 percent of the total option shares). Under the Option Agreement, PPSB was required to pay to the Company 4 installments of RM3,325,000 each within 9 months from the agreement date, which amount is regarded as a part payment of the option price. PPSB has already paid the installment of RM6.7 million or equivalent to approximately Baht 69.5 million to the company. However, due to a breach of contractual obligations by PPSB, in March 1998, the company served a notice of termination of the Option Agreement on PPSB and forfeited the whole amount of the part payment of Bt69.5 million already paid by PPSB. Under the said notice of termination, the Company reserves its rights, claims and/or remedies available under the Option Agreement. During the three-month period ended September 30, 1999, the company disposed of 5,184,000 P&D shares to other parties resulting in a loss of approximately Bt41 million, which was shown as "Loss on sales of investments in available-for-sales securities" in the earnings statements. Property, Plant And Equipment The land and office condominium of the company and a subsidiary company, carrying a net book value as of December 31, 2000 of Bt72.8 million (June 30, 2000: Bt74.4 million) and Bt30.0 million, respectively (June 30, 2000: Bt34.2 million) have been mortgaged with the creditor and the bank to secure credit facilities obtained from that creditor and that bank. Included in the consolidated balance as of December 31, 2000 was the factory and office building of a subsidiary company with a net book value of Bt5.5 million (June 30, 2000: Bt5.8 million), which are situated on the land leased from an outsider in the name of a subsidiary's shareholder. The duration of the lease is 20 years as from the year 1986. During the year 1996, the shareholder filed a lawsuit claiming of Bt700,000 per month for the lease right until the subsidiary return the right. The case is being considered by the court of law. However, the management believes that the subsidiary company is the beneficial owner of the lease right and expects the case to be amicably settled. In addition, some machinery and motor vehicles of the Company have been acquired under a financial lease agreement and the ownership of those assets will be transferred to the Company when the obligations have fully been settled. Bank Overdrafts and Loans From Banks And Financial Institutions Bank Overdrafts and Loans From Banks And Financial Institutions (Unit: Thousand Baht) CONSOLIDATED THE COMPANY ONLY December 31 June 30 December 31 June 30 2000 2000 2000 2000 Bank overdrafts 217,591 214,549 125,345 122,011 Loans from financial institutions 2,333,478 2,315,883 2,058,266 2,040,672 Trust receipts 32,477 29,734 1,359 1,260 Total 2,583,546 2,560,166 2,184,970 2,163,943 Consolidated bank overdrafts and loans from banks and financial institutions as of December 31, 2000 totaling approximately Bt961 million (June 30, 2000: Bt1,018 million) and of the company only of Bt618 million (June 30, 2000: Bt680 million) were secured by letters of guarantee issued by the Company and the Company's directors and assignment of proceeds receivable from certain construction projects. Loans from financial institutions as at December 31, 2000 and June 30, 2000 included US dollar loan from various overseas financial institutions of USD 23 million, which was not hedged against foreign exchange risk. Long Term Loans Long Term Loans (Unit: Thousand Baht) CONSOLIDATED THE COMPANY ONLY December 31 June 30 December 31 June 30 2000 2000 2000 2000 Long-term loans 1,288,057 1,208,137 1,280,990 1,201,070 Less : Current portion (1,288,057) (1,208,137) (1,280,990) (1,201,070) Long-term portion - - - - The balance represents long-term loans from overseas and local financial institutions as follows: A US dollar syndicate loan of USD 25 million (June 30, 2000: US$25 million) obtained from a group of overseas financial institutions. This loan, which is not hedged against foreign exchange rate risk, carries interest at the rate equivalent to SIBOR plus 1.20 percent per annum and will be repayable in July 1999. Under the loan agreement, the company is required to maintain certain financial ratios. However, since June 1998, the company has been unable to maintain such ratios and unable to repay the amount of loan when due. Long-term loan from a local commercial bank with no outstanding balance as at December 31, 2000 (June 30, 2000: Bt24 million). This loan carries interest at MLR and is payable in 4 quarterly installments, commencing from December 1998. The loan is guaranteed by the company's directors and secured by an assignment of proceeds receivable from a construction project. A long-term loan from a local financial institution of Bt70 million (June 30 2000: Bt70 million). This loan carries interest at the rate equivalent to MLR plus 2.0 percent per annum. This loan is payable in nine quarterly installments, commencing April 1998. The loan is secured by an assignment of proceeds receivable from a construction project. Under the loan agreement, the Company is required to maintain certain financial ratios. However, since April 1998, the Company has been unable to maintain such ratios and unable to repay the loan when due. A long-term loan from another local financial institution of Bt100 million (June 30, 2000: Bt100 million). The loan carries interest at the rate of 12 percent per annum. The loan is payable in five semi-annual installments, commencing December 1997. The loan is settled by an assignment of proceeds receivable from a construction project undertaken for that financial institution. However, since December 1997, company has been unable to repay the full amount of loan when due. A long-term loan from a local company of approximately Bt25 million (June 30 2000: Bt25 million). This loan carries interest at 15 percent per annum and is payable in 42 quarterly installments, commencing payment of interest and principal from February 2000 and August 2000, respectively. The loan is guaranteed by mortgage of the company's office condominium. However, to date, the company has been unable to repay the loan when due. A long-term loan from another local commercial bank of approximately Bt7 million (June 30 2000: Bt7 million) obtained by a subsidiary company. The loan carries interest at the rate of 18 percent per annum and was due for repayment in June 1995. This loan is guaranteed by the subsidiary's shareholders and secured by a mortgage of its machinery. However, due to unfavorable business situation, a subsidiary submitted a letter to the bank requesting for a moratorium of loan repayment. But, to date the subsidiary has been unable to repay the loan. Financial Lease Payable Financial lease payable represents the financial lease obligations in connection with acquisition of machinery and motor vehicles, of which repayment schedules are between 24 and 60 months. The assets acquired under the financial lease agreements were recorded at fair value. Their net book value as of the balance sheet date was approximately Bt55 million (June 30, 2000: Bt63 million). In 1994, the Company issued convertible bonds totaling US$40 million in the overseas markets. The bonds, carrying interest of 4.5 percent p.a. (net of applicable withholding tax), have a maturity and conversion period of 8 years after issuance and redeemable at the amount of Baht equivalent at the fixed rate of Bt25.45 per US$1. Since the Company had defaulted on payment of interest on these convertible bonds, in fiscal year 1999, the bondholders' trustee thus issued a notice to the Company that the bonds together with all accrued interest were immediately due and repayable. Therefore, the Company has translated the value of the bonds into Baht using the exchange rate ruling on the balance sheet date. During the three-month periods ended September 30, 2000, the Company adjusted accrued project construction cost and related income of previous accounting period due to incorrect calculation. The prior period's financial statements, as presented herein for comparative purpose have therefore been restated. The adjustment resulted in a decrease of loss for the year ended June 30, 2000 of approximately Bt404 million and the same amount was adjusted against the beginning balance of retained earnings of current period. Financial Risk Management and Policies The Company and its subsidiaries are exposed to risks from changes in market interest rates and in currency exchange rates. However, they do not hold or issue derivative instruments for speculative or trading purposes. Interest Rate Risk The interest rate risk is the risk that future movements in market interest rates will affect the results of the Company and its subsidiaries' operations and their cash flows. The Company and its subsidiaries' exposure to interest rate risk relates primarily to their deposits with banks, bank overdrafts and loans. However, deposits with bank, bank overdrafts and loans carry floating interest rate, the Company and its subsidiaries therefore do not use derivative financial instruments to hedge such risk. (The details of long-term loans are set out in Note 10). Foreign Currency Risk The Company and its local subsidiaries' exposure to foreign currency risk relates primarily to its loans which are denominated in foreign currencies. The Company and the subsidiaries do not use any financial instruments to hedge such risk. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable. However, due to the large number of entities comprising the Company and its subsidiaries' customer base, the Company and its subsidiaries do not anticipate material losses from its debt collection and believe that the maximum exposure to credit risk is the carrying amount of trade accounts receivable less provision for doubtful debts as stated in the balance sheets. Fair value As the majority of financial assets are short-term and loans carry floating interest rate, the management believes that their fair value do not materially differ from their book value. Guarantees As of December 31, 2000, there were outstanding bank guarantees of Bt609 million and Bt383 million, respectively (June 30, 2000: Bt617 million and Bt398 million, respectively) issued by the banks on behalf of the Company and its affiliates in respect of certain performance bonds as required in the normal course of business of the Company and its affiliates. As of December 31, 2000, there were guarantees of Bt645 million (June 30, 2000: Bt666 million) issued by the Company to the banks to secure credit facilities granted by the banks to its affiliates companies and the guarantee of Bt56 million (June 30, 2000 : Bt56 million) issued by the Company to the bank to secure joint credit facilities granted by the bank to the Company and its affiliates. Rehabilitation Plan On June 21, 2000, the Central Bankruptcy Court issued an order for the reorganization petition of the Company and appointed Siam Syntech Planner Co., Ltd. to be the planner as proposed. During July to August 2000, trade and financial institution creditors submitted claims for payment totaling approximately Bt17.068 billion to the Central Bankruptcy Court. The total balance of these claims differ from the Company's records including guarantee obligations by approximately Bt8.098 billion mainly as a result of penalties imposed for delays in work and payments, defaults of interest payment, damage claims and guarantee liabilities. The Planner is to verify the correctness of such claims and dispute the amounts considered incorrect and the Company has therefore not yet recorded the differences in the books of account. The rehabilitation plan has significant contents include capital increase by way of conversion of debt to equity, close of loss- making subsidiaries and related companies. The rehabilitation plan was approved by a majority of its trade and financial institution creditors and in the process of approval by the Central Bankruptcy Court. During the three-month and six-month periods ended December 31, 2000, the Company's and its subsidiary companies' operations involve virtually a single industry segment i.e. construction business which are carried on in the single geographic area in Thailand. As a result, all of the revenues, operating losses and assets as reflected in these consolidated financial statements pertain to the aforementioned industry segment and geographic area. These interim financial reports have been approved by the Company's directors. 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. Lyndsey Resnick, Ronald Villavelez, 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 301/951-6400. *** End of Transmission ***