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/raid1/www/Hosts/bankrupt/TCRAP_Public/021115.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Friday, November 15, 2002, Vol. 5, No. 227 Headlines A U S T R A L I A AMP LIMITED: Unveils Multifaceted Reform Agenda COLES MYER: First Quarter sales up 7.3% COLES MYER: Watchdog Keeps Neutral Stance in Latest Spat HIH INSURANCE: Liquidator Files Claims Against Government NEW TEL: Operations Division First Casualty in Redundancy Plan WATER WHEEL: Defense Claims ASIC Failed to Prove Case C H I N A & H O N G K O N G CK LIFE: Burgeoning Net Losses Expand 63% in Last Nine Months PRO-SUCCESS TRADING: November Hearing on Wind Up Petition Set I N D O N E S I A BANK DANAMON: Next on Auction Block as Parliament OKs Stake Sale BANK NIAGA: CAHB's Acquisition of Majority Stake Complete J A P A N ASAHI KASEI: Revised Pension Fund Accounting Causes Huge Loss SOFTBANK CORPORATION: Wants Local Investors to Retain Majority K O R E A HYNIX SEMICONDUCTOR: Lack of Funding May Cause Factory Closure HYNIX SEMICONDUCTOR: Date for Creditors Meeting Still Unknown M A L A Y S I A KEDAH CEMENT: Posts Entitlement Notice KUB MALAYSIA: New CEO to Use Renowned Methods to Revamp Firm SOUTH MALAYSIA: Regulator Grants Extension on Corporate Exercise TENAGA NASIONAL: Ups Bond Issue to US$350M Due to High Demand P H I L I P P I N E S NATIONAL STEEL: Investors, Creditors Come to Terms on Debt Plan T H A I L A N D BANGKOK BANK: Recovers THB2 Billion Assets from Ex-treasurer TPI POLENE: Petition for Prachai's Removal Boasts Huge Support - - - - - - - - ================= A U S T R A L I A ================= AMP LIMITED: Unveils Multifaceted Reform Agenda ------------------------------------------------ AMP announced yesterday the first set of initiatives resulting from its review of activities and costs, in line with the company's five-point reform agenda. The five point reform agenda involves: * Addressing low return channels and product lines; * Focusing short term growth ambitions on core businesses; * Increasing quality and transparency of disclosure; * Tackling sacred cows and embedded behaviours; and * Role modelling strong leadership. New CEO Andrew Mohl said the strategic review of AMP was continuing, but that some early decisions had been reached. Strategic decisions relate to AMP Bank and the Corporate office, which will both be significantly restructured. In addition, a number of structural changes have been made in Australian Financial Services (AFS) to improve efficiency and competitiveness. The review is ongoing, particularly in the UK, and a number of issues are yet to be determined. Further announcements on strategy and the financial implications of proposed strategic changes will be made when available. Chief Executive Officer Andrew Mohl said the review was undertaken because of increasingly difficult and competitive market conditions. "Tough times call for tough measures. The business needs to change to become more efficient, more productive, more competitive and more cost effective," he said. "Our focus is simple: doing the basics really well. When we've done that, we will have the platform to pursue a more aggressive growth strategy. "All these changes are aimed at turning around AMP and improving returns to shareholders." Changes to date include: 1. AUSTRALIAN FINANCIAL SERVICES (AFS) AFS has made a number of changes across the business to become even more operationally efficient and competitive, further enhancing its financial strength. "Under the direction of new Managing Director Craig Dunn, AFS has taken a completely fresh look at its operations and is positioning itself for the next stage of growth," Mr Mohl said. Changes being made include the integration of AMP Direct into other parts of AFS, as the Direct business is not large enough to be profitable as a stand-alone operation. In addition, there are aggressive cost saves across support functions as well as lower spending on IT. The changes are expected to reduce the AFS cost base by 10 per cent, or A$60 million, in 2003. As a result of expense savings, the value of new business is expected to rise slightly in 2002 with strong growth in 2003. The changes in AFS are expected to result in a reduction of approximately 550 roles, which includes around 90 contract positions. Redundancy costs are expected to be around A$30 million. Details of other restructuring costs and the financial impacts of these decisions will be made available when finalised. Mr Mohl said that initiatives undertaken in AFS this year had released over A$1 billion in capital. However some of this capital had been retained in the business, reflecting current market conditions. 2. BANKING The review of AMP Banking considered a number of options, including outright sale. It has been determined that the best approach is for the Bank to be significantly restructured to ensure it operates only in profitable areas where it can leverage its strong brand name. Mr Mohl said AMP remained committed to providing Australian retail deposits and mortgages, where it has achieved strong growth in recent years. In the Australian retail financial services market, these core banking products account for more than 50 per cent of revenues and more than 60 per cent of profits. "The Bank currently operates in a number of different geographies and product areas - and we have realised that we cannot afford to be all things to all people," he said. "Our review has shown that if we focus on our strengths primarily distribution and packaging we can more effectively compete and grow a profitable, high-return banking operation. "This is a smart solution, enabling AMP to play to its strengths and reduce the balance sheet risk." As a result, AMP will: * Continue to provide retail deposits and mortgage products to Australian customers but use securitisation programmes to minimize capital invested in the business, and potentially outsource set-up and servicing functions to external providers; * Exit manufacturing of banking products in New Zealand and the United Kingdom; * Exit manufacturing of credit card products in Australia and New Zealand; * Exit the property finance business in Australia and New Zealand; and * Offer products on a targeted basis in alliances with external manufacturers in the UK and New Zealand. These changes are expected to enable AMP to reduce the amount of capital supporting the Bank by around A$500 million by the end of 2003, while allowing it to grow its banking volumes at a faster rate than previously. AMP aims to have its new banking structure in place by December 2003. Banking will then form part of AFS as one of the product streams being offered to customers. By the end of 2003, less than A$100 million in capital will be required. By 2005, return on capital is expected to be well above the cost of capital. Employee numbers in banking will depend on the sale process and potential outsourcing of various functions. If the outsourcing proceeds, it is expected AMP Banking will have less than 100 employees by the end of 2003 (compared with about 600 currently). AMP will undertake a structured sale process over the next few months for the sale of the property finance, as well as the UK and New Zealand mortgage businesses. AMP has already entered exclusive discussions with American Express over the credit card portfolio in Australia and New Zealand. The UK and New Zealand savings deposits will either be wound back or transferred to other banks. AMP-branded credit cards will still be distributed in Australia. Mortgages and deposits will be offered in New Zealand and the UK through distribution agreements. 3. CORPORATE OFFICE The Corporate office has also been significantly cut back and its role redefined. "Our review found that Corporate office was not focused on the essentials. It will now be refocused on strategy and governance and work more closely in partnership with individual business lines," Mr Mohl said. "This new 'partnership' approach will facilitate cost reductions and deliver better business results." A number of changes relate to the former AMP International (AMPI) operations, reflecting the renewed focus on core businesses. Changes include the closure of the AMPI corporate centre; the closure of AMP New Ventures; and a winding back of AMP Asia including the closure of the Singapore office, a reduction in Sydney-based development activities and the scaling back of the Beijing office. Other areas of AMPI remain under review. As previously announced, the Global IT function has been closed. The changed focus of the Corporate office, as well as the scaling back of AMPI, means a number of structural changes can be made. The number of corporate roles in Australia and the UK has been reduced by about 160 to a total of 215, or about 40 per cent. About 40 of these 160 roles will be transferred to Business Units. Cost savings of A$40 million are expected in 2003 with run-rate savings of A$50 million by the end of 2003. Redundancy costs are expected to be around A$20 million. Details of other restructuring costs and the financial impacts of these decisions will be made available when finalised. 4. UK CONTEMPORARY FINANCIAL & LIFE SERVICES These UK businesses are still undertaking their review with more details expected to be available in early December. However some changes have already been made including the disbanding of the European development team and the outsourcing of a number of IT functions. In addition, the AMP UK brand campaign has been scaled back. Mr Mohl said that AMP was continuing to determine the impact of the change in strategic direction on previously announced cost reduction programmes. "We remain on track with the cost saves already announced. However, we believe the changes we are making to the UK businesses will enable us to achieve greater cost savings than those previously disclosed," he said. 5. OVERALL CHANGES Mr Mohl said that AMP's new senior management team was moving quickly and decisively to implement changes, all aimed at creating a more successful organisation. "Many of the decisions we have had to make are difficult because they affect people. We are committed to managing the impacts of these decisions on our employees as well as we possibly can," he said. "In a more benign market environment, we would have managed this transformation differently for example, through natural attrition. "Unfortunately, we do not have the luxury of time to do it this way given AMP's recent performance and the current tough market conditions. "We have a pretty tough road in front of us to realise the potential of this company. But I am confident that we have the skills, expertise and capability inside AMP to enable us to deliver on our reform agenda. "Once we get the basics right, we'll be in a much stronger position to grow in the future." CONTACT INFORMATION: MEDIA INQUIRIES Karyn Munsie 61 2 9257 9870 0421 050 430 Matthew Coleman 61 2 9257 2700 0421 611 138 INVESTOR INQUIRIES Mark O'Brien 61 2 9257 7053 COLES MYER: First Quarter sales up 7.3% --------------------------------------- Highlights * Q1 2003 sales up 7.3%(1) * Solid growth in Food and Liquor * Target and Kmart gain simultaneous momentum * MGB rebuild continues * Strong Q1 earnings improvement - EBIT margins up across Food & Liquor and all GM&A brands * Effect of shareholder discount reduction within expectations Coles Myer Ltd (CML) announced first quarter sales of $6.3 billion, an increase of 7.3% for the 13-week quarter ended 27 October 2002. CML CEO, John Fletcher, said the Food & Liquor division had delivered a solid sales increase of 7.3% in a very competitive environment. Sales in General Merchandise and Apparel (GM&A) were up 6.6%, with Target and Kmart continuing to simultaneously gain momentum. CML's comparable store sales rose by 4.2% on last year. The effect on sales of the first reduction in shareholder discount rates, which were introduced on 31 July, has been within expectations. FOOD & LIQUOR * Sales up 7.3% in an aggressive promotional environment * Market share gains * EBIT margins continue to improve year on year * Store expansion plans on track Alan Williams, Chief Operating Officer, Food & Liquor, said sales growth in the division was in line with our expectations in the current competitive market. "Despite intensifying competition across all businesses during the quarter, we continued to grow market share(2)," Mr Williams said. "Top line growth includes the effect of both the current competitive promotional environment and the first reduction in shareholder discount rates, which has been marginally lower than anticipated. We continue our strategy of reinvesting the savings into driving improved value for all customers. (1) Excluding Red Rooster and Myer Direct (2) Source: AC Nielsen "Our customers have responded well to our promotional offer however the aggressive use of petrol promotions by our major competitor has affected the rate of our sales growth. We are well down the track of reviewing a fuel offer for the Food & Liquor businesses, with a decision anticipated prior to Christmas." Mr Williams said the FY2003 store expansion program was on schedule, with the majority of the projected 34 new and 10 acquisition supermarkets, along with 40 liquor store openings to occur during the second half of the year. "This quarter we opened six new supermarkets, plus five acquisition supermarkets, and five liquor stores. "EBIT margins continue to improve year on year, as a result of our ongoing initiatives to improve the quality of our earnings. "Sales growth will strengthen in the second half due to the contribution of additional new stores. Top line growth for the year is forecast to be in the high single digits in line with strategy. "We continue our strategy of delivering a balanced approach between sales growth, market share gains and margin improvement." GENERAL MERCHANDISE & APPAREL (GM&A) * Sales up 6.6% * Continuing progress in Target and Kmart * Rebuild underway at MGB * EBIT margin improvement in all brands The General Merchandise and Apparel (GM&A) Group includes Target, Kmart, Myer Grace Bros (MGB), Megamart and Officeworks. Warren Flick, Chief Operating Officer, GM&A, said sales and margins in Target and Kmart continued to grow strongly, reflecting the effective consumer positioning of each brand. Myer Grace Bros sales were slightly lower in the quarter than last year, affected, as anticipated, by the temporary closure for redevelopment of our Bondi store, the permanent closure of a GoodBuy clearance store and the initial reduction in the shareholder discount rate. MGB achieved good margin improvement during the quarter as the brand rebuild develops. "Inventory management continued to improve as stockturns increased by approximately 10% across GM&A brands. "The strategic plan for the GM&A Group calls for mid-single digit sales growth and strong EBIT margin expansion over the year. The trend this quarter reflects that improvement in quality." Target lifted sales by 12.1% for the quarter. "New ranges in womenswear, childrenswear, manchester, intimate apparel and footwear are performing well. Home and entertainment sales are improving with new assortments being well received by customers," Mr Flick said. "Our focus remains on delivering on-trend, high quality ranges and achieving rapid sell-through within each season. "We are very pleased with the customer reaction to this direction, especially our revamped catalogues with an increased emphasis on items versus total departmental percentage off sales," Mr Flick said. Kmart sales, including Officeworks, increased by 9.4%. "Kmart performed strongly, particularly in the areas of entertainment, books, cosmetics and consumables. "Our promotional activity continues to focus on item and price, while the trend to regular price merchandise has intensified and underscores the successful repositioning of the brand. Customers are responding well to our lowest price guarantee positioning. "Late in the first quarter four new stores were opened, including two new Kmart stores, one Kmart Tyre and Auto store and a Garden Supercentre. A further six new stores will open in FY03, including two new Kmart stores, one Kmart Tyre and Auto store and three Garden Supercentres." Officeworks continues to show strong improvement with an on- going focus on range, price, cost controls and new store rollouts. Myer Grace Bros and Megamart combined sales were down slightly, but EBIT margins improved in line with our expectations. "The work to rebuild MGB and return the brand to its heritage as Australia's leading department store is underway," Mr Flick said. "Our priority is to return to a traditional department store focus, building our range of national, international and private brands which will be supported by a comprehensive new marketing program. Our strategy includes a promotional and events driven program, which will be balanced with gift-giving occasions such as Christmas and fashion themed events. "While we are encouraged by customer response to our improved offer, this will be our first Christmas under the turnaround strategy. Further enhancements to product ranges, service quality and store environments will continue through 2003. "Megamart opened its first store in Sydney during the quarter to a very positive response from customers. We have plans to open two additional stores nationally by the end of FY03." EMERGING BUSINESSES Sales in the Emerging Businesses division (formerly known as e.colesmyer) increased by 44% to $61 million, led by strong growth in Harris Technology. Mr Fletcher said Emerging Businesses continued to deliver valuable learnings in the evolution of new business channels, technologies and ideas. EARNINGS UPDATE Mr Fletcher said the company achieved a strong earnings improvement in the first quarter, in line with our expectations. Importantly, EBIT margins improved across Food & Liquor and all GM&A brands. Full year earnings guidance will be given at the Annual General Meeting on 20 November 2002. FINANCIAL ANALYSIS QUARTER 1 (13 WEEKS) BUSINESS GROUP SALES 2002 2003 CHANGE (EXCL RED ROOSTER, MYER DIRECT) $M $M % Food & Liquor 3,741 4,015 7.3% General Merchandise & Apparel 2,096 2,235 6.6% Myer Grace Bros & Megamart 700 693 (1.0%) Kmart & Officeworks 865 947 9.4% Target 531 595 12.1% Emerging Businesses 43 61 43.8% Intra-group sales -4 -8 94.4% Total sales 5,876 6,304 7.3% Comparable store sales growth 4.2% Exited businesses Red Rooster 56 - Myer Direct 13 - Total Exited Businesses 68 - Note - Officeworks Direct is now reported within Officeworks, having previously been reported in Emerging Businesses. The prior year has been restated accordingly. For more information, contact Scott Whiffin (Media) 03 9829 5548 or Amanda Fischer (Analysts) 03 9829 4521 COLES MYER: Watchdog Keeps Neutral Stance in Latest Spat -------------------------------------------------------- David Knott, Chairman of the Australian Securities and Investments Commission (ASIC), confirmed Thursday that Solomon Lew has provided ASIC with a copy of the letter he wrote to Coles Myer Limited on November 12, 2002. In his letter Mr. Lew requested Coles Myer to release a copy of his letter to its shareholders. ASIC understands that Coles Myer has responded to Mr. Lew that some of the material contained in his letter is inaccurate and misleading. "ASIC does not believe that there is anything in the letter that would require its release under Australian Stock Exchange (ASX) Listing Rule 3.1," Mr. Knott said. "Nevertheless, I understand that the ASX is independently monitoring the company's compliance with its disclosure requirements. "ASIC continues to believe that Coles Myer shareholders would benefit from disclosure of all material information relevant to their decision at the upcoming Annual General Meeting. "However, ASIC recognizes that the parties must observe the requirements of the law generally, and defamation specifically, and that it is not for ASIC to make judgments on these issues. That is a matter for the independent judgment of the parties and their legal advisers. It is for Mr. Lew to decide whether to publicly release his letter," Mr. Knott said. "ASIC will continue to closely monitor compliance by the company and its directors with the Corporations Act in relation to the AGM. Unless some public response is necessary to address non- compliance, ASIC will continue to discharge its functions in confidence. "ASIC has no intention of becoming embroiled in electioneering by or on behalf of any director or directors of Coles Myer," he said. HIH INSURANCE: Liquidator Files Claims Against Government --------------------------------------------------------- HIH liquidator, Tony McGrath, of the accounting firm KPMG, has filed a claim against the Federal Government and the Australian Prudential Regulation Authority (APRA) alleging negligence and seeking a hefty damage bill, Sydney Morning Herald said yesterday. Aside from the government, Mr. McGrath also filed Wednesday similar claims against the auditor of HIH and FAI, Arthur Andersen, and the HIH actuary, David Slee. McGrath claims that negligence attended the insurance regulator's decision to approve HIH's takeover of FAI four years ago. "How much Mr. McGrath will be able to retrieve of the AU$5 billion in losses sustained by HIH creditors will depend on the dates from which he can prove negligence," the paper said. The report says the claim against Andersen specifies its audits from 1998 to 2000. As Andersen has now been absorbed by its rival Ernst & Young, the defendants will be the 115 or so individuals who were partners when those audits were signed off, and the defunct firm's professional indemnity insurers. The claims against Mr. Slee and the government bodies are less time-specific. Mr. Slee advised HIH about how much money it needed to set aside to meet future claims from 1980 until it collapsed in March 2001, the paper said. On his claim against the government, Mr. McGrath anchors his argument on the knowledge of APRA and its predecessor, the Insurance and Superannuation Commission, about the poor health of FAI, which they supervised from the introduction of insurance licenses in 1974. The suit claims that APRA's approval of the HIH's mooted takeover of FAI had a "material bearing" on HIH's decision to proceed and seeks redress for "consequential losses leading" to HIH's collapse. The suit is heavily influenced by evidence submitted to the HIH royal commission, including an independent report by an outside expert, John Palmer. During the commission's probe into HIH's collapse, Mr. Palmer said that from the time insurance licenses were introduced in 1974, "it seems likely that the FAI companies should not have been allowed to carry on an insurance business in Australia." Mr. McGrath told the paper Wednesday that the government claim had been filed but would not be served until after the royal commission ends its probe in February next year. NEW TEL: Operations Division First Casualty in Redundancy Plan -------------------------------------------------------------- Troubled Perth-based telecom, New Tel, unveiled recently a plan to outsource its operations in order to stave off administration. Managing director Peter Malone announced Wednesday that a majority of the firm's operational roles would soon be handled by Sydney-based independent fixed-wire services group, RSL Com Partners Pty Ltd, and Optus' mobile offshoot, RSL Com Mobile. The two unrelated companies, which separately took fixed and floating charges over New Tel's assets last week, will provide operational services and infrastructure for the company. Despite its sweeping outsourcing of its telecommunications operation, Mr. Malone claimed in his statement that the company was continuing its strategic program as a full service telecommunications carrier. The West Australian says it is not clear whether New Tel will maintain its own sales team to continue to sell products with the New Tel brand. Most of its 206 operational staff are based in Sydney, with four based in Perth and six or so in both Melbourne and Brisbane, the paper said. New Tel has about 14 staff at its Osborne Park headquarters in corporate, finance, administrative and secretarial roles. In other developments, West Perth-based financier Ledge Finance lodged a fixed and floating charge over New Tel's assets on Monday. Details of the debt secured by the charge were not yet available, The West Australian said. Ledge chief Phil Botsis refused to discuss his company's relationship with New Tel. WATER WHEEL: Defense Claims ASIC Failed to Prove Case ----------------------------------------------------- The trial of businessman John Elliott and former Water Wheel managing Bernard Plymin ended Wednesday with the resting of the case by the defense. According to The Age newspaper, Michael Wyles, who represents Mr. Elliott in the case, told the Victorian Supreme Court in his closing submissions that the Australian Securities and Investments Commission had failed to prove its case. In addition, he also pointed out that corporate regulator did not have the constitutional power to prosecute the insolvent trading case in Victoria. Misters Elliott and Plymin are accused of allowing the company to trade after mid-September or early October 1999 when, according to ASIC, the stockfeed and grain milling group could no longer meet its debts. ASIC wants the directors banned from managing companies, fined and ordered to pay about AU$5 million compensation to unsecured creditors. The landmark civil prosecution took three months to complete, says the paper. Water Wheel was placed into administration on February 16, 2000. The paper did not say when the decision will be due. ================================ C H I N A & H O N G K O N G ================================ CK LIFE: Burgeoning Net Losses Expand 63% in Last Nine Months ------------------------------------------------------------- Net losses at Li Ka-shing's biotechnology arm, CK Life Sciences International (Holdings), swelled 63.51% year on year in the nine months to September 30. CK Life Sciences, which listed on the Growth Enterprises Market in July, reported a net loss of HK$60.44 million, up from HK$36.96 million over the same period last year. Loss per share was 1.11 HK cents, compared with 0.72 HK cents previously. Turnover amounted to HK$1.88 million. The company said Wednesday sales of its only commercial product, the fertilizer NutriSmart, to Australia, its biggest market, generated revenue of HK$949,000, followed by sales to Malaysia totaling HK$721,000. The company generated sales of only HK$11,000 in Hong Kong. Staff costs climbed 140.78% to HK$49.02 million from HK$20.35 million a year ago. However, the company said its net loss for the three months to September 30 had narrowed to HK$11.07 million from HK$14.64 million for same period last year. PRO-SUCCESS TRADING: November Hearing on Wind Up Petition Set ------------------------------------------------------------- The High Court of Hong Kong will hear on November 27, 2002 at 9:30 in the morning the petition seeking the wind up of Pro- Success Trading Company Limited. Lai Kai Wun of Room 1425, Leung Chi House, Leung King Estate, Tuen Mun, New Territories, Hong Kong brought the petition on September 25, 2002. Tam Lee Po Lin, Nina represents the petitioner. Creditors and other interested parties are encouraged to attend the hearing. They only need to notify in writing Tam Lee Po Lin, Nina, which holds office at the 27th Floor, Queensway Government Offices, 66 Queensway, Hong Kong. ================= I N D O N E S I A ================= BANK DANAMON: Next on Auction Block as Parliament OKs Stake Sale ---------------------------------------------------------------- The government has approved the plan to sell Bank Danamon's majority stake, a requirement tied to the US$5 billion loan program granted by the International Monetary Fund, Reuters said Wednesday. "Commission Nine and the government have agreed on the divestment of Danamon. The mechanism is up to the government," said Max Moein, head of the parliamentary commission in charge of the country's financial affairs, during a hearing early this week. According to Syafruddin Tumenggung, head of the Indonesian Bank Restructuring Agency, the commission has suggested that the government first sell a 51% stake through a strategic sale before holding an initial public offering. Only a maximum of 20% of the company should be offered through the IPO, he said. IBRA took hold of 99.36 percent of Danamon following a government-led bailout of the bank in the wake of the Asian financial crisis in the late 1990s. Mr. Tumenggung said the sale will be completed by March 2003. The agency had originally planned to sell a maximum stake of 79.4 percent, but the commission only approved a ceiling of 71%. IBRA did not say why the parliament approval was smaller. The approval of Danamon's sale follows the recently completed 51% takeover by Commerce Asset-Holding Bhd of mid-sized Bank Niaga. The Malaysian investor paid US$115 million for the stake. Proceeds of the sale of Danamon and Niaga will be used to plug the government's burgeoning budget deficit. BANK NIAGA: CAHB's Acquisition of Majority Stake Complete --------------------------------------------------------- Commerce Asset-Holding Berhad (CAHB), one of the leading financial conglomerates in Malaysia, signed a Sale and Purchase Agreement with the Republic of Indonesia, acting through the Badan Penyehatan Perbankan Nasional (the Indonesian Bank Restructuring Agency, (IBRA) to acquire approximately 51%, of the issued and paid-up capital of PT Bank Niaga Tbk (Niaga). Under the proposed terms, CAHB will pay IDR26.5 per Niaga share, valuing the 51% stake at IDR1,057.35 billion or US$120 million, equivalent to a P/BV multiple of 1.48x based on Niaga's June 2002 unaudited financials. The shares will be acquired by CAHB free from all liens, pledges, charges, mortgages and other encumbrances and with all rights attached thereto on the date of the SPA. Company officials view the transaction as a groundbreaking development that will enhance greater economic integration and inter-dependence among ASEAN members, especially with the onset of AFTA. The transaction is the first cross-border financial institutions acquisition in Asia involving majority control in 2002. It is also the first acquisition of an Indonesian bank by a financial institution after the 1997-1998 Asian financial crisis. CAHB was advised by JPMorgan and CIMB for the transaction. CAHB's acquisition of Niaga is expected to create one of the leading financial institution platforms in both Malaysia and Indonesia. With a strong platform and cultural affinities, the new franchise will be positioned to take advantage of future growth in the retail and consumer sectors as well as in inter-ASEAN trade flows. "As the ASEAN region liberalizes and member nations move towards greater economic integration and interdependence, we expect a significant increase in trade and investment flows in the region," said Dr. Rozali Mohamed Ali, director of CAHB and the Managing Director/Chief Executive Officer of Bumiputra-Commerce Bank. "At this juncture it is important to position CAHB strategically to be an integral part of the region's recovery and growth. "Indonesia offers us a burgeoning retail and consumer market where we can apply our experience gained in Malaysia, while Niaga offers us a superior customer franchise with high brand recognition and a reputation for service and stability." Niaga is the ninth largest bank in Indonesia with assets of over US$2.7 billion as of June 30, 2002. It has a distribution network of 144 branches as well as 186 ATMs. Niaga's attractive franchise and solid operating platform widely recognized and the bank has been accorded Far Eastern Economic Review's award for one of "Asia's Leading Companies" as well as AsiaMoney's award for one of Asia's "Best Managed Companies". Niaga was also awarded the "Leading Good Corporate Governance Award" from the Jakarta Stock Exchange in 2001. "The Niaga acquisition is a truly unique opportunity. Through progressive two-way knowledge-transfers and the increased integration of the two franchises, CAHB will be able to realize significant revenue enhancements and cross-selling opportunities. The acquisition will position CAHB with strong foundations in two of the region's most important markets, with a recognizable focus on customers and quality," Dr. Rozali added. The acquisition of the Niaga franchise is an attractive proposition for CAHB from both a strategic and financial perspective. CAHB's investment in Niaga represents 5.4% of CAHB's market capitalization and 6.9% of CAHB's total equity as of June 30, 2002. . Nevertheless, Niaga is expected to have a positive financial impact on CAHB. About CAHB: CAHB is a leading financial conglomerate and the second largest banking group in Malaysia. CAHB has a market capitalization of over US$2.2 billion as at November 8, 2002, and is among the fifteen largest listed stocks on the Kuala Lumpur Stock Exchange. With total group assets of almost US$21 billion (as at June 30, 2002), the CAHB Group comprises almost 15% of the total assets in the Malaysian banking sector. In addition, the CAHB Group has offices in most major global and regional financial centers including London, Tokyo, Hong Kong and Singapore. Here are some highlights of the acquisition that is expected to create leading regional banking franchise in Southeast Asia: * CAHB will acquire 51% of PT Bank Niaga for Rupiah 1,057 billion (about US$120 million). * Platform and cultural affinities will make the enlarged company one of the leading banking groups in Indonesia and Malaysia, a groundbreaking development which positions CAHB attractively to benefit from greater economic integration and inter-dependence among ASEAN members. * The acquisition is a landmark cross-border deal in 2002. * The acquisition is the first cross-border financial institutions acquisition in Asia in 2002 involving majority control. * It is the first acquisition of an Indonesian bank by a financial institution after the 1997-1998 Asian financial crisis. * CAHB was advised by JP Morgan and CIMB. * CAHB is positioning itself as a leading player in the Southeast Asian financial sector, well placed to play an integral part of the region's recovery and growth. * Indonesia offers a growing retail and consumer market where CAHB can apply its experience gained in Malaysia. * PT Bank Niaga offers a customer franchise with high brand recognition and a reputation for service and corporate governance. FACT SHEET PT BANK NIAGA TBK Headquarters: Graha Niaga, Lt. 5, Jl. Jend. Sudirman Kav 58, Jakarta 12190 Website: http://www.bankniaga.com Principal Executives: --------------------- Prof. Sukanto Reksohadiprodjo, President Commissioner Gunarni Soeworo, Vice-President Commissioner Peter B. Stok, President Director Total Assets (June 2002) (Unaudited): Rp. 23,896 bn (US$ 2.7 bn) Total Loans (June 2002) (Unaudited): Rp. 8,690 bn (US$ 997 mm) Total Deposits (June 2002) (Unaudited): Rp. 20,171 bn (US$ 2.3 bn) Fiscal Year Net Profits ----------------------- (June 2002, annualized) Unaudited: Rp.112.8 bn (US$ 13.0 mm) Total NPL/Gross Loans (June 2002) Unaudited: 6.60% Total Capital Adequacy Ratio (June 2002) Unaudited: 17.03% Principal Affiliates -------------------- * Niaga Securities * Niaga Asset Management * Niaga Finance * Saseka Gelora Finance * Niaga International Factors Total Staff (June 2002): 3,413 Date of Establishment: September 26, 1955 Profile ------- Niaga is the 9th largest bank in Indonesia by assets and a leading retail institution with an extensive network of approximately 144 branches and service outlets across the country. Niaga has set several key milestones in its history. These include pioneering the use of ATMs in Indonesia in 1987 and developing the "Niaga 2001" operating system in 1997; "Niaga 2001" has been fully implemented since 1999 and currently acts as the technological and operating backbone of the Bank. CONTACTS: COMMERCE ASSET-HOLDING BERHAD AZNAM SHAHUDDIN ASSISTANT GENERAL MANAGER, CORPORATE AFFAIRS PHONE: (+603) 2093-5333 E-MAIL: AZNAM@COMMERZ.COM.MY ========= J A P A N ========= ASAHI KASEI: Revised Pension Fund Accounting Causes Huge Loss ------------------------------------------------------------- Leading chemical company Asahi Kasei reported Wednesday group net losses of 40.28 billion yen in the fiscal first half to September 30 due to a 126.00 billion yen in pension-related one- time losses. The latest figure reverses the profit of 3.06 billion yen recorded a year earlier. The company blamed changes in accounting calculations on pension liabilities as primary reason for the negative figure. SOFTBANK CORPORATION: Wants Local Investors to Retain Majority -------------------------------------------------------------- Softbank Corp is considering giving up some of its shareholdings in Aozora Bank so that domestic shareholders will retain a majority stake in the successor to the failed Nippon Credit Bank. "We want to find a settlement which not only buyers but also the Financial Services Agency (FSA) and other shareholders can generally accept," Softbank President Masayoshi Son told Japan Today on Wednesday. In September, the company floated three foreign firms -- French bank BNP Paribas, U.S. investment fund Cerberus Group and U.S. private equity fund Loan Star Fund -- as possible stake buyers. The move would lessen the Company's stake in Aozora to less than 20 percent compared to the current 48.8 percent. It will remain the top shareholder in the bank, ahead of Orix Corp. and Tokio Marine & Fire Insurance Co., which both own 14.9 percent. Softbank expects proceeds of 35 billion yen from the deal. The bank initially considered unloading its entire investment to cut massive debts and put aside funds for its mainstay Internet- related businesses. But the Financial Services Agency took issue with the proposed sale because the government sold Aozora Bank shares on the condition they are held over a longer period. Softbank has agreed to hold its shares in Aozora Bank for at least two years. The Company posted a net loss of 88.76 billion yen in the year ended in March, versus a profit of 36.63 billion yen a year earlier, because of soured overseas investments and the steep costs of setting up its ADSL business. Moody's recently affirmed its "B1" long-term debt rating. ========= K O R E A ========= HYNIX SEMICONDUCTOR: Lack of Funding May Cause Factory Closure -------------------------------------------------------------- Problems in obtaining fresh funding may force creditors of Hynix Semiconductor Inc to halt the company's production of chips at several outdated fabrication lines, Yonhap news agency said, citing an unnamed creditor official. Hynix currently has five plants producing DRAM chips, five producing non-memory system ICs and three both memory and non- memory chips, it reported. Of the total, two have not been operating normally, and one or two others are outdated. "Some outdated fabs need fresh investments, but it's difficult to expect new loans from creditors. We are cautiously considering suspending (some outdated fabs) as it's difficult to produce normally without creditors' fresh aid," the official was quoted as saying. HYNIX SEMICONDUCTOR: Date for Creditors Meeting Still Unknown ------------------------------------------------------------- There's still no date set for the creditors meeting where the restructuring plan drafted by the Deutsche Bank will be presented and discussed. Earlier, Yonhap news agency cited an unidentified creditor bank official as saying that the KEB will brief creditors on details of restructuring plans drawn up by financial advisor Deutsche Bank next week. "We have yet to fix the date for the meeting, though we are trying to hold a meeting by the end of the month," a spokesman for Korea Exchange Bank told AFX-Asia early this week. KEB is Hynix's largest creditor. =============== M A L A Y S I A =============== KEDAH CEMENT: Posts Entitlement Notice -------------------------------------- EX-date: November 28, 2002 Entitlement date: December 2, 2002 Entitlement time: 05:00:00 PM Entitlement subject: Others Entitlement description: Share Exchange under the KCHB Scheme of Arrangement where pursuant to Section 176 of the Companies Act, 1965, in consideration of the payment of RM216,683,488 from Malayan Cement Berhad, EON Capital Berhad (ECB) shall allot and issue 94,787,685 new ordinary shares of RM1.00 each in ECB (ECB Shares) at RM2.58 per ECB Share credited as fully paid-up to the KCHB Shareholders other than M-Cement Sdn Bhd (KCHB Minority Shareholders) on the basis of one (1) new ECB Share for every one (1) KCHB Share originally held by the KCHB Minority Shareholders Period of interest payment: to For year ending/Period ending/ended: Share transfer book & register of members will be closed from (both dates inclusive) for the purpose of determining the entitlements: December 2, 2002 to December 2, 2002 Registrar's name ,address, telephone no: Securities Services (Holdings) Sdn Bhd, Level 22, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur Tel. No.: 03 2095 7077 Payment date: (a) Securities transferred into the Depositor's Securities Account before 12:30 pm in respect of ordinary transfers: December 2, 2002 (b) Securities deposited into the Depositor's Securities Account before 12:30 pm in respect of securities exempted from mandatory deposit: November 28, 2002 (c) Securities bought on KLSE on a cum entitlement basis according to the Rules of the KLSE. Number of new shares/securities issued (units) (If applicable): Entitlement indicator: Ratio Ratio: 1:1 KUB MALAYSIA: New CEO to Use Renowned Methods to Revamp Firm ------------------------------------------------------------ Che Khalib Mohamed, the new CEO of struggling KUB Malaysia Bhd is expected to announce sweeping changes in the coming months, say analysts, citing his reputation for cutting excess from floundering companies. Analysts, interviewed by The Edge Daily recently, believe that Mr. Che Khalib will likely trim a number of KUB's loss-making subsidiaries. This may include its virtual university, which has yet to generate profits; its plantation unit, a business that is totally alien to the company; its manufacturing arm, which has incurred losses since day one; and its liquid petroleum gas unit. They believe that the businesses likely to be kept and turned around are the fast food unit, its telecommunications division and its steel pipe manufacturing works. The observers say Mr. Che Khalib is known for his quick clean-up jobs in organizations such as Renong Bhd. They believe the sweeping changes will be announced after the Hari Raya celebrations. Sources say there may be a lot of casualties when he starts the cleanup. The paper says KUB has been reporting losses since it was listed in 1997, except for 1999 when it received a cash pile of RM800 million for its stakes in Sime Bank Bhd and RHB Bank Bhd. Of the RM800 million in cash and deposits, Mr. Che Khalib is now only left with about RM115 million to work with. The remnants of that hoard are also being whittled away fast, with KUB declaring a wider pre-tax loss for the first half ended June 30. For the six months, the company's pre-tax loss widened to RM37.4 million from RM22.1 million. Its turnover was RM198.74 million, way off its optimistic forecast of RM600 million. Mr. Che Khalib's appointment follows the mass resignation of the company's directors. Industry pundits blame the company's flawed diversification plan for its woes. "Not one of KUB operations is a market leader in its own right, some may require more capital injection," one analyst told The Edge Daily. In the telecommunication sector, its KUB Fujitsu Telecommunications Sdn Bhd had incurred pre-tax losses of RM3.3 million. Its main job, a contract with Telekom Malaysia Bhd, is almost completed and there are no signs of new contracts coming in. The paper says the firm's 60 percent unit Tele Dynamic Sdn Bhd has experienced falling sales due to intense competition and slower demand from computer products. Losses in KUB's telco divisions have been exacerbated, as the company has maintained staff strength despite lack of work. In the LPG business, intense competition and increasing prices have caused major setbacks for the company. Although losses narrowed to RM700,000 as at the end of June 30, marketing costs would eat up future profits, the paper said. SOUTH MALAYSIA: Regulator Grants Extension on Corporate Exercise ---------------------------------------------------------------- Further to the announcement on October 4, 2002 made by Alliance Merchant Bank Berhad on behalf of South Malaysia Industries Bhd, the bank is pleased to announce that the Securities Commission, via its letter dated November 11, 2002, has approved the extension of time for the completion of Corporate Exercises to December 31, 2003, as proposed. This Corporate Exercise consists of a bond and debt restructuring component, including replacement of warrants. COMPANY PROFILE The Company, which was originally engaged primarily in the manufacture and trading of assorted metal wire and zinc sheets, began diversifying its activities in 1984. In 1989, the manufacture of galvanised iron sheets was terminated due to continued shortages of raw materials and escalating import costs. The manufacture of wire-mesh also ceased. The principal activity of SMI thereafter changed to that of property development with the acquisition of Perantara Properties Sdn Bhd and Kuchai Entrepreneurs Park in 1993. In 1994, the Company entered into various JVAs in China, dealing mainly with the leisure and entertainment industry. This helped launch SMI into the international scene. In the process of expanding its entertainment business, the Company acquired a 70% equity stake in UA Cineplex Holdings Sdn Bhd (UA). In November 2000, the Company unveiled its comprehensive debt restructuring and capital raising exercises. The proposals were revised on February 16, 2001 to incorporate a share premium reduction exercise and restructure, additional loan and liquidated damages. BNM and FIC approved the proposals on January 22, 2001 and February 19, 2001 respectively. Currently, approvals from its lenders, shareholders, the High Court and the SC are still pending. CONTACT INFORMATION: 2G Bangunan Foh Chong Jalan Ibrahim 80000 Johore Bahru Tel: 07-2241088 Fax: 07-2238988 TENAGA NASIONAL: Ups Bond Issue to US$350M Due to High Demand ------------------------------------------------------------- The US$350 million, five-year guaranteed exchangeable bonds of Tenaga Nasional Bhd have been oversubscribed two times, says The Edge Daily. In an interview with the paper, Tenaga Chairman Datuk Jamaludin Jarjis disclosed Wednesday that the base deal size was upsized from US$300 million to US$350 million due to the strong demand. He said over 50 investors representing outright, fixed income and convertible bond investor types participated in the deal, with a geographical split of 20 percent to Asia, five percent to the US and 75 percent to Europe. "Robust demand from Malaysian offshore accounts took up a large part of the Asian demand," Mr. Jamaludin told a press conference. The issue is attached with a coupon rate of 2.625 percent per annum payable semi-annually in arrears. The paper says the bonds could be exchanged for Tenaga shares at RM10.15, being a 16 percent premium to the five-day volume weighted average share price to November 12 of RM8.76. The exchange price will be adjusted once on August 20, 2005. Assuming full conversion, the bonds will represent about five percent of Tenaga's enlarged equity. As announced earlier, the maximum dilution to existing shareholders upon full conversion and exchange of the guaranteed exchangeable bonds and the ringgit-denominated convertible securities is 9.09 percent. The paper says Tenaga has also granted the joint book-runners, JP Morgan and Commerce International Merchant Bankers Bhd (CIMB), the option to purchase an additional US$50 million of the guaranteed exchangeable bonds. The proceeds will be used to pay down Tenaga's foreign currency debt maturing from 2004 onwards. Upon conversion, it will be able to reduce its overall gearing as well as increase its free float and liquidity, the report says. ===================== P H I L I P P I N E S ===================== NATIONAL STEEL: Investors, Creditors Come to Terms on Debt Plan --------------------------------------------------------------- Shareholders and creditors of National Steel Corporation (NSC) are believed to have concluded debt-restructuring negotiations in Kuala Lumpur Wednesday, says Business Times. According to the paper, majority shareholder, Hottick Investment Ltd, a Malaysian-controlled company based in Hong Kong and creditors like the Philippine National Bank were among those present during the agreement signing in Malaysia. Citing an unnamed official Pengurusan Danaharta National Bhd, the trustee of NSC's majority shares owned by Hottick Investment, the paper said the agreement will slash NSC's debt to a more manageable PHP2 billion from PHP18 billion pesos through a debt-to-equity swap. Danaharta is said to have agreed that Hottick reduces its stake in NSC to 20 percent from 82.5 percent to allow creditor banks led by Philippine National Bank to take control. In exchange, Danaharta will have a say in the disposal of major assets of NSC that will be sold at less than 80 percent of their appraised value, the paper said. Business Times says Danaharta is a creditor to Hottick after the latter defaulted on loans worth RM3.1 billion taken from four Malaysian banks -- Bank Bumiputra and Bank of Commerce (now known as Bumiputra-Commerce Bhd), Malayan Banking Bhd and RHB Bank Bhd. The loans were later absorbed by Danaharta in its move to restructure the country's corporate debt following the 1997 Asian financial crisis, the paper said. The restructuring is expected to pave the way for the re-opening of the steel mill, which was closed in 1999 due to losses arising from competition and high interest expenses, the paper said. NSC has liabilities totaling PHP19.1 billion, of which PHP9.59 billion were owed to secured creditors and PHP6.38 billion to other bank creditors. The national steel-maker also owes the Philippine Government PHP1.7 billion, its employees PHP675 million and other creditors PHP811 million. Besides PNB, the other NSC creditors are Allied Banking Corp, Land Bank of the Philippines, United Overseas Bank Philippines, Global Banking Corp, Bank of Commerce, China Banking Corp, Equitable PCI Bank, Rizal Commercial Banking Corp, Traders Royal Bank, United Coconut Planters Bank, Urban Bank, Credit Agricole Indosuez and Wise CITCO, the report said. =============== T H A I L A N D =============== BANGKOK BANK: Recovers THB2 Billion Assets from Ex-treasurer ------------------------------------------------------------ Bangkok Commercial Asset Management (BAM) has seized a total of THB2 billion worth of properties from the former treasurer of failed Bangkok Bank of Commerce, Rakesh Saxena, the Bangkok Post reported recently. BAM president Bunyong Visatemongkolchai said the assets, recovered thus far, include nearly 100,000 shares (a 10% stake) in Movenpick Co, a hotel and food firm. BAM is now in the process of auctioning the shares. "The stake in Movenpick was found from the investigative process, not from the pledged collateral. However, as the size of the stake accounts for almost 10% in Movenpick, it is important for us to consider the best timing to sell the asset so that the price of the asset will not be adversely impacted," he said. The market price is now about 500 Swiss francs per share, down from 700 Swiss francs in the previous year, the paper said. The second asset is an apartment in Cannes along the French Riviera, which had an appraised value of 63.58 million French francs. The apartment is being offered for sale or rent, with the deal to be sealed by the end of next year, the paper added. A third asset is cash worth 70-80 million baht gained from enforcing bills of exchange. BAM is in the process of taking transfers of the cash, the paper said. Mr. Saxena, who is fighting extradition to Thailand in Canada, was accused of embezzling billions of baht from the BBC, which collapsed and was taken over by the government in 1996. TPI POLENE: Petition for Prachai's Removal Boasts Huge Support -------------------------------------------------------------- About 80% of creditors are allegedly in favor of ousting Prachai Leophairatana as chief executive and restructuring plan administrator of TPI Polene, Business Day said Wednesday. The creditors are expected to formally inform the Central Bankruptcy Court about their decision in a letter that will be submitted within the week. "All the necessary procedures are expected to be completed [Wednesday] and we hope to send the letter to remove Prachai soon thereafter," said an unnamed creditor in an interview with Business Day. Mr. Prachai is currently managing the company's restructuring efforts, which consists of US$1.2 billion of debts owed to various creditors. The paper says creditors have been waiting for the implementation of the restructuring process, which involves equity raising by the company of at least US$180 million. Mr. Prachai earned the ire of the creditors when he cancelled a memorandum of understanding to sell a 77 percent stake in TPI Polene to Siam City Cement, Thailand's second largest cement producer. The bidder, partly owned by Switzerland-based Holcim, had offered US$375 million for the stake. In defending his decision, Mr. Prachai has maintained that the deal was not fair and said that he would rather go for a public offering and sell shares to general public than to sell to a strategic investors. Creditors, who have been waiting for years to get their money back, said they were not happy with the delaying tactics used by Mr. Prachai and therefore decided to remove him from office. 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, Larri-Nil Veloso, Maria Cristina Pernites-Lao, Editors. Copyright 2002. 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. 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