/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/021129.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 29, 2002, Vol. 5, No. 237 Headlines A U S T R A L I A BRAMBLES INDUSTRIES: ASX Seeks Explanation for Heavy Trading PMP LIMITED: S&P Maintains "BB+" Grade; Forecasts Dim Prospects C H I N A & H O N G K O N G CHINA DYNAMIC: High Court to Hear Winding Up Petition Next Year LAI SUN: Denies Speculations of Impending Share Issue LEUNG NGA: Creditors to Hold General Meeting December 2 MAK STEVE: General Meeting of Creditors Set for December 5 PARSTA LIMITED: Winding Up Petition Hearing Set for January TANG CHIU: Period to Prove Claim to Expire December 14 I N D O N E S I A ASTRA INTERNATIONAL: To Hold Second Creditors Meeting Next Month SALIM GROUP: Pays off IDR52 Trillion Owed to IBRA J A P A N FUJITSU LTD: Advanced Micro Nears Merger Deal IZUSU MOTORS: Develops Prototype Truck With Westport ISUZU MOTORS: Shareholder's Approve Restructuring Plan KINKI NIPPON: Cutting 1,000 Jobs by 2005 NANAO RESORT: Golf Course Applies for Rehabilitation NIPPON UNIPAC: Cutting Debt, Capacity and Jobs ORIENT CORPORATION: Plans to Liquidate Four More Units ORIENT CORPORATION: Posts H102 Net Loss of Y96.07B RESONA HOLDINGS: Dissolves Consolidated Subsidiary SEIYU LIMITED: Wal-Mart Raises Stake to 33.4% TOKYU CORPORATION: Net Balance Sinks Into Red * Weak Domestic Stock Market Impacts Japanese Life Insurers K O R E A CHOHUNG BANK: Newbridge Capital Disqualified in Bid DAEWOO SECURITIES: Hana Revives Plan to Acquire Brokerage HANBO STEEL: Facing Obstacles in Takeover Deal HYNIX SEMICON: Needs Strategic Alliances With US/European Firms HYNIX SEMICON: Creditors to Approve Restructuring in December HYUNDAI MERCHANT: KDB Concealed W400B Loan to Hyundai Unit KOREA ELECTRIC: Issues $250M FRN Due 2007 SAMSUNG ELECTRONICS: UBS Warburg Sued by a Retail Investor SEOUL BANK: Hana Bank Trading Suspended Until December 13 SEOUL BANK: Hana Shareholders Oppose Merger M A L A Y S I A JOHN HANCOCK: Voluntarily Liquidating Subsidiary RENONG BERHAD: RM400M Proposed Private Placement OK'd REPCO HOLDINGS: Plans Annual General Meeting for December 20 SJA BERHAD: Faces Winding Up Petition, RM5.1M Damage Bill SJA BERHAD: Subsidiary Faces Wind Up Due to Unpaid Debts SJA BERHAD: To Write-off Investment in Kiara Tuah Sdn Bhd P H I L I P P I N E S METRO PACIFIC: Ayala to Fund Acquisition with Cash Reserves NATIONAL POWER: Citibank NA Arranges $500M Bridge Loan PHILIPPINE TELEGRAPH: Signs P8.8B Restructuring Pact VICTORIAS MILLING: Earnings Promising After Six Years of Losses S I N G A P O R E CHARTERED SEMICONDUCTOR: US Analysts Upgrade Rating HOTEL NEGARA: Refinancing Banking Facilities ISOFTEL LIMITED: Appoints Choy Long Onn as COO L&M GROUP: Appoints HL Bank as Financial Adviser YONGNAM HOLDINGS: Issuing New Shares to Pay Debt T H A I L A N D BANGCHAK PETROLEUM: Govt to Allow Direct Sales to State Agencies - - - - - - - - ================= A U S T R A L I A ================= BRAMBLES INDUSTRIES: ASX Seeks Explanation for Heavy Trading ------------------------------------------------------------ The Australian Stock Exchange has sent Brambles Industries Ltd a letter demanding an explanation for last week's heavy trading in its shares, the Australian Associated Press said yesterday. In its letter, the ASX also asked if the company had any prior knowledge of lower forecast earnings at its CHEP Europe pallet business, the reason for the profit warning last week. Brambles had warned of operational issues, and a subsequent estimated $238 million in restructuring charges, at CHEP Europe, which was expected to deliver a 23 percent decline in the operation's earnings for 2002-03. "Please advise when the company became aware of the profit downgrade and the possibility of charges relating to CHEP Europe," the ASX letter read. "If there was no relevant earlier announcement, and the company became aware of the profit downgrade and charges relating to CHEP Europe prior to 21 November 2002, please advise why the information was not released to the market at an earlier time." According to the news agency, the company maintains that the heavy trading was precisely the market's reaction to the profit downgrade, and that it knew of no other reason. The shares tumbled below $4 late last week following the profit warning, compared to their $6.16 close on Wednesday, but have risen steadily since Monday this week. "We confirm that the company immediately made the announcement on 21 November 2002 when required to do so pursuant to its continuous disclosure obligations," Brambles said. "The announcement was made ahead of Brambles's annual general meeting on 25 November 2002 precisely because of the need for such immediate disclosure." PMP LIMITED: S&P Maintains "BB+" Grade; Forecasts Dim Prospects --------------------------------------------------------------- Standard & Poor's Ratings Services cited the difficult market conditions as reason for affirming its long-term "BB+" corporate credit rating on PMP Ltd, AFX-Asia said yesterday. "Industry overcapacity, exacerbated by a cyclical weakness in print volumes, is continuing to place downward pressure on market pricing as participants attempt to maintain print volumes," S&P said. The rating agency estimates that the headroom under the company's financial covenants could diminish in the next 12-18 months if printing volumes remain weak and the company is unable to extract expected gains in working capital and costs. "Although some cushion has been provided by recent assets sales and significant debt reduction, PMP remains exposed to further underperformance," S&P associate Paul Draffin said. S&P, however, noted significant progress in reducing costs, the successful negotiation of new print contracts, and some upturn in industry print volumes. These developments, according to the rating agency, could significantly improve PMP's cash flows and flexibility within its financial covenants in the near term. The rating agency also removed the company from CreditWatch with negative implications, where it was placed on November 11. ================================ C H I N A & H O N G K O N G ================================ CHINA DYNAMIC: High Court to Hear Winding Up Petition Next Year --------------------------------------------------------------- A petition seeking the winding up of China Dynamic International Limited is scheduled for hearing before the High Court of Hong Kong on January 8, 2002 at 9:30 in the morning. Yip Hiu Tung of Front Flat, 2/F., 408D, Des Voeux Road West, Sai Ying Pun, Hong Kong filed the petition on October 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. LAI SUN: Denies Speculations of Impending Share Issue ----------------------------------------------------- It is not true that Lai Sun Development is looking to issue new shares to pay part of its HK$6.19 billion short-term debts, The Standard newspaper has learned. "The company has currently no concrete plan to issue any new shares nor is it in formal negotiations with any parties on the issue of any new shares at this stage," Lai Sun, in a statement, said. The company was reacting to recent reports claiming that the new issue will be used to redeem its HK$965 million convertible bonds and HK$740 million exchangeable bonds due to mature by year's end and July next year, respectively. A local paper had said that bondholders were unlikely to get all of their dues as Lai Sun was strapped for cash. It's net current liabilities rose six-fold to HK$6.19 billion at the end of July while consolidated net assets stood at only HK$766 million, The Standard said. Lai Sun, which said it had initiated talks with its creditors, hoped to secure interim agreements with all creditors by year's end. However, auditor Ernst & Young, which declined to sign off on Lai Sun's latest financial statements, had said there was "significant uncertainty" as to whether these new arrangements would happen. It stated that the company's survival "as a going concern" depended on the agreement of bondholders and banks to a new restructuring plan and new financing arrangements, together with the disposal of assets, in order to generate additional cash flow. The paper says other short-term debts of the firm, which mature in the next 12 months, include HK$1.5 billion owed to associate eSun and other borrowings of HK$2.45 billion. Its total debt stood at HK$7.14 billion at the end of July. Once a rising property developer in Hong Kong, Lai Sun's troubles, and the final nail in its debt-laden coffin, stems from the almost HK$7 billion the company paid in June 1997 to buy the Furama Hotel. The company's net loss surged 62 percent to HK$1.94 billion for the year to July 31, The Standard said. LEUNG NGA: Creditors to Hold General Meeting December 2 ------------------------------------------------------- E T O'Connell, the official receiver of Leung Nga Fung Edmond, announces that the company's creditors will hold a general meeting on December 2, 2002 at 2:30 in the afternoon. The receiver will host the meeting at his office on the 10th Floor, Queensway Government Offices, 66 Queensway, Hong Kong. MAK STEVE: General Meeting of Creditors Set for December 5 ---------------------------------------------------------- E T O'Connell, the official receiver of Mak Steve Wai Kwong, announces that the creditors of the company will hold a general meeting on December 5, 2002 at 2:30 in the afternoon. The receiver will host the meeting at his office on the 10th Floor, Queensway Government Offices, 66 Queensway, Hong Kong. PARSTA LIMITED: Winding Up Petition Hearing Set for January ----------------------------------------------------------- The High Court of Hong Kong will hear on January 15, 2002 at 10:00 in the morning the petition seeking the winding up of Parsta Limited. Szeto Kwong Wan of Room 02, 25/F., High Block, Shek Yat House, Shek Lei (1) Estate, Kwai Chung, New Territories, Hong Kong filed the petition on November 1, 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. TANG CHIU: Period to Prove Claim to Expire December 14 ------------------------------------------------------ Creditors of Tang Chiu (also known as Sik Tang Chiu) have until December 14, 2002 to prove their claims, says E T O'Connel, the official receiver and trustee of the company. The company intends to declare a dividend. ================= I N D O N E S I A ================= ASTRA INTERNATIONAL: To Hold Second Creditors Meeting Next Month ---------------------------------------------------------------- Restructuring Indonesian automotive firm, Astra International, is looking at December 12 as the next date for the creditors meeting aborted earlier this week. In an interview with AFX-Asia, Finance Director John Slack said an official notice has not been posted yet, but the date is fairly fixed. Only the time and venue remain to be settled. The first meeting last Tuesday in Singapore was postponed due to a lack of quorum. Astra is seeking approval from at least 67% of creditors to its debt-restructuring proposal. Separately, Astra said in a published invitation to shareholders that the EGM to approve its planned US$100-150 million rights issue has been rescheduled to December 20 from December 16, AFX- Asia said. SALIM GROUP: Pays off IDR52 Trillion Owed to IBRA ------------------------------------------------- The Indonesian Bank Restructuring Agency announced Wednesday that the Salim Group has finally settled its 52 trillion rupiah debt, the fifth bank to have done so. One of Indonesia's biggest conglomerates, the Salim Group agreed to transfer some of its assets to the agency in 1998 to settle debts. The agency later on sold these properties. Four other major banks also availed of this arrangement. They are Bank Risyad Salim Internasional, Bank Surya, Bank Budi Internasional and Bank Danautama. According to Agence France Presse, the central bank between 1998 and 1999 injected some 138 trillion rupiah (now $15.5 billion) in emergency liquidity to dozens of banks hit by the financial crisis that began in 1997. IBRA is still trying to recover debts from many former bankers. The Salim Group, founded by Sudono Salim and now run by his son Anthony, was the agency's largest debtor, the news agency said. ========= J A P A N ========= FUJITSU LTD: Advanced Micro Nears Merger Deal --------------------------------------------- Fujitsu Limited and Advanced Micro Devices Inc., the world's No. 2 and 3 makers of flash memory chips respectively, are close to an agreement to merge their flash memory chip businesses, the Asahi newspaper reported. The two companies will discuss the ownership structure of the new joint venture and plan to reach a final decision by yearend, the paper said. "Nothing new has been decided," Fujitsu spokesman Scott Ikeda said. The merged units would not surpass Intel Corp. as the biggest producer of flash memory, according to market share data for 2001 from Dataquest Inc., a unit of Gartner Inc. About Fujitsu Fujitsu Limited has operations worldwide and products ranging from air conditioners to telephony. Its computer products include PCs, servers, peripherals, and software. The Company's computer operations and information technology services (consulting, systems integration, and support) account for more than 60 percent of sales. The Company also makes telecommunications equipment, consumer electronics, and semiconductors. Fujitsu owns Japan's top Internet services provider, Nifty, as well as US mainframe maker Amdahl and UK services firm International Computers Limited (ICL). Customers outside of Japan account for 30 percent of sales. About Advanced Micro Advanced Micro Devices (AMD) ranks #2 in PC microprocessors, far behind industry kingpin Intel. (Intel commands about four-fifths of the world processor market. AMD has eroded that market share only to see Intel strike back with steep price cuts and faster introduction of new models.) AMD is also the world's #2 maker -- again behind Intel -- of flash memory chips, key components of electronic devices including cellular phones. AMD also makes embedded processors and other chips for communications and networking applications. Company founder Jerry Sanders, the colorful leader who ran AMD for over 30 years, has retired as CEO. (M&A REPORTER-ASIA PACIFIC, Vol. No.1, Issue No. 236, November 28, 2002) IZUSU MOTORS: Develops Prototype Truck With Westport ---------------------------------------------------- Westport Innovations Inc. has agreed with Isuzu Motors of Tokyo, Japan, to develop a prototype Isuzu ELF truck powered with a Westport Cycle(TM) natural gas engine. The project has been initiated by Isuzu, which will also fully fund it. Leading the effort is Isuzu's Powertrain Engineering Division and Natural Gas Group. The development will take place at Isuzu's engine manufacturing plant in Fujisawa, Japan. Westport will support Isuzu's vehicle team in producing, testing and calibrating the prototype vehicle. Westport will retain all ownership of its Westport Cycle intellectual property, which uses high- pressure direct injection to bring natural gas into the engine cylinder. The Isuzu ELF truck will use a diesel engine in the 4-liter range that runs solely on natural gas using Westport's hot surface ignition technology. The natural gas version of the engine is expected to achieve the same performance and fuel efficiency as its diesel counterpart but with lower emissions and fuel costs. The ELF is Japan's No. 1 selling light-duty commercial truck with 32 percent of the market. Isuzu also proudly offers a natural ELF using spark-ignited engine technology, with an approximate 70 percent market share in Japan. "Demonstrating this technology in one of our most advanced diesel-based commercial trucks represents a significant milestone in our relationship with Westport," said Takashi Urata, Isuzu's Executive Officer, Powertrain Office. "We are sponsoring this initiative because we are optimistic about prospects for the Westport Cycle in Isuzu diesel engines." In June 2003, after internal testing and evaluation by Isuzu, the prototype vehicle will be demonstrated to the Japanese government, including the Ministry of Economy, Trade and Industry (METI) and New Energy and Industrial Technology Development Organization (NEDO). It will also be demonstrated to the Japan Gas Association (JGA) The natural gas-powered direct injection engine will be based on an advanced diesel engine fitted with cooled exhaust gas recirculation and common rail fuel injection. The diesel-fueled version is currently in commercial production. The light- to medium-range ELF truck, which will have a payload capacity of 2- 3 tonnes, is used for city deliveries, food services, light contracting and many other applications. Westport currently has an agreement with Isuzu to test its proprietary Westport Cycle technology in an engine intended for light and medium duty trucks. Westport and Isuzu have commenced discussions to extend the current agreement, which expires in March 2003. Isuzu is one of Japan's largest truck manufacturers and is the primary supplier of diesel engines to General Motors. In October 2002, General Motors acquired a majority stake in Isuzu's diesel-engine units in Europe and the U.S. Westport's strategy is to develop natural gas technology for diesel engines through key strategic alliances. In addition to Isuzu, Westport has strategic alliances with Ford Motor Company of Dearborn, Michigan; and MAN Nutzfahrzeuge AG and BMW AG, both of Munich, Germany. Westport has a joint venture with Cummins Inc. of Columbus, Indiana. Ailing Isuzu Motors Limited posted a group net loss of 84.23 billion yen in the first half ending September 30, versus a net loss of 23.56 billion yen in the same period a year earlier, due to weak auto sales and hefty restructuring charges, according to the Troubled Company Reporter-Asia Pacific. ISUZU MOTORS: Shareholder's Approve Restructuring Plan ------------------------------------------------------ Ailing truck maker Isuzu Motors Limited obtained approval from its shareholders for restructuring scheme featuring a 100 billion yen debt-for-equity swap by its five major creditor banks, Kyodo New reports. Under the program, Mizuho Corporate Bank will accept 81.1 billion yen in preferred shares, while UFJ Bank will accept 7.13 billion yen. KINKI NIPPON: Cutting 1,000 Jobs by 2005 ---------------------------------------- Kinki Nippon Tourist Co. unveiled a three-year business plan under which it will cut its workforce by 1,000 by the end of fiscal 2005, according to Kyodo News on Thursday. The travel agency aims to resume dividend payments in fiscal 2005 ending in March 2006 by shifting its resources to growth areas. NANAO RESORT: Golf Course Applies for Rehabilitation ---------------------------------------------------- Nanao Resort KK, which has total liabilities of 6.4 billion yen, recently applied for civil rehabilitation proceedings, according to Tokyo Shoko Research. The golf course, which has 55 employees, is located at Nanao-si, Ishikawa, Japan. NIPPON UNIPAC: Cutting Debt, Capacity and Jobs ---------------------------------------------- Nippon Unipac Holdings aims to cut its group debt to below 700 billion yen in three to four years time, according to Reuters on Thursday. The paper group is planning to raise productivity by 10 percent by way of job cuts. No specifics on how many jobs would be reduced were immediately available. The Company was created in March 2001 through the integration of Nippon Paper Industries and Daishowa Paper Manufacturing, the latest in a series of mergers over the past decade that has slimmed Japan's paper sector down to a few major players. ORIENT CORPORATION: Plans to Liquidate Four More Units ------------------------------------------------------ Ailing consumer credit firm Orient Corporation will liquidate four financial units to bolster the rehabilitation efforts of the Company, Japan Times reported Thursday. The subsidiaries to be liquidated are Tao International Co., Kagen Co., Tao Investment Co. and Orico Tama Co. The report said it is impossible for the four subsidiaries to revive their operations, which deteriorated after their mortgage-backed corporate loans became un-collectible due to the implosion of the asset-inflated bubble economy. The latest liquidation plan means that Orient will dissolve six of the seven financial subsidiaries that have pressured earnings at the parent firm. ORIENT CORPORATION: Posts H102 Net Loss of Y96.07B -------------------------------------------------- Orient Corporation incurred a group net loss of 96.07 billion yen in the first half of this year ending September, versus a profit of 22.52 billion recorded in the previous year, reports the Japan Times. The Company attributed the plunge to an extraordinary loss of 118.2 billion yen incurred by sales of real estate, liquidation of financial subsidiaries and other factors. RESONA HOLDINGS: Dissolves Consolidated Subsidiary -------------------------------------------------- Resona Holdings decided to close its consolidated subsidiary, WSR Servicing Company, Inc. (WSR), contingent on the approvals by competent authorities. 1. Reason for the Dissolution WSR was established in January 1996 as a Company that administers liquidation procedures accompanying the Daiwa Bank's withdrawal from its banking operations in the U.S. Since these procedures were almost completed, we came to a decision to close WSR. 2. Profile of WSR Office location 420 Lexington Avenue, 28th Floor, New York, NY 10170, U.S.A. Representative Jyun Okuda Capital amount U.S.$ 10,000 (100 percent owned by Daiwa Bank) Line of business Administration of liquidation procedures 3. Date of Dissolution December 31, 2002 4. Impact of the Dissolution on the Forecasted Earnings Dissolution of WSR does not affect the Resona HD's earnings forecast, which it announced on November 25, 2002. SEIYU LIMITED: Wal-Mart Raises Stake to 33.4% --------------------------------------------- Wal-Mart Stores Inc. will increase its stake in Seiyu Limited to 33.4 percent from the current 6.1 percent, acquiring new shares to be issued by Seiyu on December 27, AFX Asia reports. Wal-Mart has the option to raise its stake in Seiyu to 66.7 percent by the end of December 2007. The two firms reached an agreement to form a comprehensive tie-up in March. The report said Wal-Mart is moving closer to full entry into the Japanese market with the increase in its Seiyu stake. According to the Troubled Company Reporter-Asia Pacific, Seiyu Limited suffered an additional 29 billion yen ($235.7 million) loss from the sale of its non-bank financing unit Tokyo City Finance Co., a move aimed at trimming its heavy debt. THE SEIYU, LTD. AND SUBSIDIARIES (As of February 28, 2001) Stock Exchange Listings: Tokyo, D sseldorf, Frankfurt, and Paris stock exchanges Straight bonds are traded on the London and Luxembourg stock exchanges. Independent Certified Public Accountants: ChuoAoyama Audit Corporation Common Stock Authorized: 510,000,000 shares Issued and outstanding: 337,871,667 shares Number of Shareholders 15,561 Major Shareholders Number Share of shares ownership in thousands Sumitomo Corporation 40,000 11.83% The Seibu Department Stores, Ltd. 27,822 8.23 Credit Saison Co., Ltd. 18,181 5.38 The Chuo Mitsui Trust and Banking Company, Limited 12,452 3.68 Saison Network Inc. 12,390 3.66 Parco Co., Ltd. 10,432 3.08 The Bank of Bamuda Limited Hong Kong Branch 9,300 2.75 Seiyo Food Systems, Inc. 7,990 2.36 The Dai-Ichi Kangyo Bank, Ltd. 7,422 2.19 Goldman Sachs International 7,272 2.15 TOKYU CORPORATION: Net Balance Sinks Into Red --------------------------------------------- Tokyu Corporation posted a negative group net balance in the first half to September, due to losses from the sale of fixed assets holdings and latent losses on its real estate holdings, according to Kyodo News on Thursday. The Company booked a net loss of 12.08 billion yen for the April-September period, versus a profit of 4.52 billion yen in the same period a year ago. * Weak Domestic Stock Market Impacts Japanese Life Insurers ----------------------------------------------------------- Standard & Poor's Ratings Services said on Wednesday that falling demand for life insurance policies, the weak domestic stock market, and negative spreads on investments have continued to pressure the financial performance of Japan's major life insurers, following the release of financial results for the first half of this year. Given the low prospects for any improvement in the severe business environment in the near future, Standard & Poor's expects the downward pressure on the insurer's ratings will remain over the medium term. CREDIT QUALITY SLIPPING The credit quality of Japan's life insurers suffered under the impact of the weak domestic stock market. The top ten insurers again recorded securities-related losses (realized and mandatory evaluation losses) of more than Y900 billion for the first half of fiscal 2002 (ended Sept. 30, 2002), after Y2,400 billion securities losses in fiscal 2001 (ended March 31, 2002), largely from losses on stocks. Japanese insurers' domestic stockholdings still account for more than 10 percent of their general account assets on average, compared with an average of 3 percent-4 percent for U.S. life insurers as of December 2001. In addition, Japanese insurers frequently own the domestic stock of corporate clients (both in insurance and pensions) for business rather than pure investment purposes, making it difficult for the insurers to dispose of their stockholdings even while stock prices are falling. "Nevertheless, it makes little economical sense for life insurers to own a sizable portion of volatile stock in their general account assets, while they are assuming long-term fixed- interest rate liabilities," said Tatsuo Kurogi, an analyst at Standard & Poor's in Tokyo. "The severe stock losses for the first half of fiscal 2002 as well as fiscal 2001 pose fundamental questions for the life insurers' investment strategies," Mr. Kurogi added. With Japan's TOPIX index reaching a 19-year low of 817 on Nov. 19, 2002, an 11 percent decline from 921 on Sept. 30, 2002, virtually all the major life insurers would have recorded unrealized losses in their domestic stockholdings at that time. Life insurers can no longer count on unrealized gains on stocks to compensate for their relatively thin capital positions. In addition, the sharp decline in bank stock prices in the second half of the fiscal year, amid market speculation over possible nationalization of troubled banks through public fund injections, indicates that the probability life insurers may be forced to take additional losses as the main shareholders of domestic banks is becoming more realistic. EXCESSIVE EXPOSURE TO BANKS In a report published on Sept. 9, 2002 Capital Double Gearing Creating Concentration Risk For Japanese Financial Institutions Standard & Poor's highlighted the life insurers' excessive exposure to weak domestic banks, through capital double gearing relationships developed over a long period of time. Life insurers are now facing immediate pressure from policyholders to restructure their assets to reduce concentration risk on banks and even to rethink their capitalization strategies entirely. UNABATED SLUMP IN DEMAND Falling demand for life insurance policies and declining confidence in the industry were confirmed by the lackluster business results recorded by the insurers for the six months to September 2002. These trends will probably continue into the second half, with little prospect for recovery in the medium term. "As business in-force in the industry continues its contraction, begun in 1997, domestic life insurers can be expected to accelerate cost cutting efforts and to shift more rapidly to medical and long-term care products, to sustain their customer bases and current profitability," Mr. Kurogi said. FUTURE OF INDUSTRY SAFETY NET At the same time, concerns over the industry's Policyholder Protection Corp. (PPC), a safety net for life insurance policyholders, is increasing. The public fund of about Y400 billion will expire in March 2003, but so far, no plans for an extension of the fund have been confirmed. Most of the industry fund of about Y560 billion has already been used for failed insurers over the past three years. "Consumers are now facing a situation in which they do not know what safety net will be implemented in the next six months, while considering the purchase of 20-30 year long-term life insurance policies," Mr. Kurogi warned. Media reports have suggested that Japan's Financial Services Agency (FSA) will submit a revised legislation bill regarding the PPC to the next diet session starting in January 2003. However, if the new PPC plan fails to provide a stable long-term safety net to life insurance policyholders, there is a chance that confidence in the industry, and therefore demand for life insurance policies, will deteriorate further. RATINGS DIVERGENCE EXPECTED TO CONTINUE The business environment surrounding life insurers is expected to be severe in the medium term. However, even under such severe conditions, there are some midsize insurers that have managed their investment prudently based on seasoned asset-liability management, and have achieved steady increases in business in- force. There are also some major life insurers that have reduced their risk assets substantially, or have managed to maintain their business in-force. "Standard & Poor's expects that divergence in the ratings on Japanese life insurers will continue, based on the differences in the Company's respective management strategies and their execution in both life insurance sales and investments," Mr. Kurogi concluded. ========= K O R E A ========= CHOHUNG BANK: Newbridge Capital Disqualified in Bid --------------------------------------------------- Newbridge Capital has been disqualified to bid for Chohung Bank after presenting its bidding proposal to the government, the Korea Times said on Wednesday, citing the Ministry of Finance and Economy. The report said U.S. based Newbridge was dropped off from the list of qualified bidders because its bid for Chohung was too low. The U.S. firm still aims acquire part of shares in Chohung by forming a consortium with the four qualified bidders. In the meantime, the government plans to hold a meeting of the Public Fund Oversight Committee in December in order to discuss a planned sale of Chohung Bank. DAEWOO SECURITIES: Hana Revives Plan to Acquire Brokerage --------------------------------------------------------- Hana Bank will revive plans to acquire Daewoo Securities Co. By March, to expand its brokerage business after its merger with SeoulBank is completed in December, the Korea Financial Times and Bloomberg reported Thursday. Hana is the best candidate to acquire Daewoo over other possible buyers namely Woori Finance Holdings Co. and Kookmin Bank. According to the Troubled Company Reporter-Asia Pacific, shares of Daewoo Securities Co. fell 130 won, or 2.5 percent, to 5,080 on November 12. The brokerage, which is up for sale, posted a wider net loss of 36.7 billion won in the three months ending September 30, compared with 11 billion won loss based on preliminary figures announced in October. HANBO STEEL: Facing Obstacles in Takeover Deal ---------------------------------------------- Officials of AK Capital, which is selected to acquire the ailing Hanbo Steel, said that the two sides are in disputes regarding sales of additional land in which a thermal plant is located, reports the Maeil Business News, citing the Korea Asset Management Corporation (KAMCO). KAMCO officials said it has excluded sales of the land in its initial talks, while AK Capital demands it needs to acquire the land. However, the two sides reportedly reached agreement on other issues. Hanbo and AK Capital signed an MOU (memorandum of understanding) in March this year to sign a final deal by August. However, the agreement has been delayed due to differences on acquisition methods and size. HYNIX SEMICON: Needs Strategic Alliances With US/European Firms --------------------------------------------------------------- Hynix Semiconductor Inc. will continue talks to form a strategic partnership with three to four unidentified semiconductor firms in the United States and Europe, Asia in Focus reports. The ailing chipmaker needs strategic overseas partners in marketing, research and development and production. Financial advisor Deutsche Bank on Tuesday proposed in its draft restructuring plans creditors convert 1.9 trillion won (US$1.57 billion) of debt owned by Hynix into equity, defer repayments of interest and roll over other debts as part of a bailout package. HYNIX SEMICON: Creditors to Approve Restructuring in December ------------------------------------------------------------- Creditors of Hynix Semiconductor Inc. are moving to approve the debt-restructuring plan recommended by its financial adviser Deutsche Bank, before December 10, the Korea Herald reports. The report said the creditors are also planning hold the Hynix Creditor Council early next week, where main creditors, including Korea Exchange Bank, Woori Bank, Chohung Bank and Korea Development Bank, will discuss the proportion of debt to be converted into Hynix shares. Creditors are planning to write down capital at a more than 20 to 1 ratio, before the debt swap, as part of measures to reshape the chipmaker's capital structure. Hynix has 5.2 billion shares outstanding, whose market capitalization is roughly at around 2.4 trillion won and total debts, which is far less than its total debt of 6.2 trillion won. HYUNDAI MERCHANT: KDB Concealed W400B Loan to Hyundai Unit ---------------------------------------------------------- Moving ahead with an investigation over allegations of secret fund transfer to North Korea, the Board of Audit and Inspection (BAI) revealed that that Korea Development Bank (KDB) had concealed its 400 billion won loan in June 2000 to Hyundai Merchant Marine (HMM) from the bank's monthly operation report to the Financial Supervisory Service (FSS) in the same month in 2000, reports the Digital Chosun. BAI is expected to hand down a disciplinary measure to KDB officials who have been involved in hiding the loan to the Hyundai group's shipping unit. The FSS reported that the KDB monthly report submitted to the FSS in June 2000 omitted the bank's loans to the Hyundai group, including a W400 billion loan package to the shipping firm. The report also said KDB's cover-up indicates that the bank has been involved in hiding secret loans to the Hyundai group. Lee Sung-hun, an opposition Grand National Party member, called for the government to punish the KDB officials responsible for doctoring the operation report. KOREA ELECTRIC: Issues $250M FRN Due 2007 ----------------------------------------- The following are the terms and conditions of a floating-rate note issue offered on by Korea Electric Power Co. as follows: Issue Amount: $250 million Maturity Date: December 20, 2007 Coupon: 3 month Libor + 75 basis points Issue price: 99.8 Payment Date: December 20, 2002 Lead Manager(s): Barclays and Hyundai Securities Ratings: Baa2 (Moody's), A- (S&P), BBB+ (Fitch ) Notes Issued off the issuer's EMTN program The Korea Electric Power Corp. (KEPCO) is planning to raise $250 million in December via a five-year yen-denominated euro bonds or loan, to repay maturing yen-denominated bonds issued in 1999, the Troubled Company Reporter-Asia Pacific reports. DebtTraders reports that Korea Electric Power Corp.'s 8.250 percent bond due in 2005 (KORE05KRN1) trades between 112.504 and 113.066. For real-time bond pricing, go to http://www.debttraders.com/price.cfm?dt_sec_ticker=KORE05KRN1 SAMSUNG ELECTRONICS: UBS Warburg Sued by a Retail Investor ---------------------------------------------------------- A retail investor has sued UBS Warburg Securities over losses allegedly from investments in Samsung Electronics, AFX Asia reports. The investor is seeking 460 million won in compensation. UBS said it has formally denied the allegations, adding that it is "in the business of servicing professional domestic and global institutional clients and does not service individual clients." The report said UBS maintained a "strong buy" recommendation on Samsung Electronics from November 20, 2001 until downgrading to "hold" on May 10, 2002. It did not provide further details. TCR-AP reported in June that Samsung Electronics is aiming to use its extra cash holdings to repay US$300 million worth of foreign currency-denominated bonds ahead of maturity. The early repayment of the foreign bonds issued on November 1992 will mature in November this year. The move aims to cut the firm's debt and to improve its finances. DebtTraders reports that Samsung Electronics' 9.750 percent bond due in 2003 (SAMS03KRS2) trades between 104.493 and 104.627. For real-time bond pricing, go to http://www.debttraders.com/price.cfm?dt_sec_ticker=SAMS03KRS2 SEOUL BANK: Hana Bank Trading Suspended Until December 13 -------------------------------------------------------- Shares of Hana Bank will be suspended from trading starting November 27, until the Hana-Seoulbank merged entity lists new shares on the stock exchange on December 13. The report added that shareholders holding a 15.7 percent stake or 21.4 million shares have asked to be bought out at 17,252 won per unit as they oppose the merger with Seoulbank. "The share buyback will cost us some 370 million won, which is manageable," a Hana Bank spokesman said. SEOUL BANK: Hana Shareholders Oppose Merger -------------------------------------------- In opposition to the planned merger with Seoul Bank, about 15.7 percent of Hana Bank shareholders have requested the lender to buy back their share holdings, which would cost Hana around KRW370 billion, a report from the Korea Herald said. Earlier, about 51.6 percent of Hana shareholders have expressed their intention to exercise appraisal rights against the merger. In the meantime, Hana floated subordinated bonds worth KRW400 billion two weeks ago in order to prevent its capital adequacy ratio from falling, after the merger. The lender is also planning to raise up to $200-$300 by issuing hybrid securities early next year. KGI Securities estimated that after the share buyback, the Bank for International Settlements (BIS)-set capita adequacy ratio at the lender stands at 10.47 percent. About Seoul Bank Seoul Bank is doing some soul-searching these days. Founded as the Bank of Seoul in 1959, Seoul Bank provides trust banking, investment services, and international banking through about 300 branches in South Korea and through offices in Hong Kong, Tokyo, and New York. The bank has been foundering in debt ever since the Asian economic debacle of 1998. Initially advised by the International Monetary Fund to sell Seoul Bank to a foreign buyer, the South Korean government has since been using public funds to privatize the bank. Deutsche Bank was appointed the bank's financial adviser and helped overhaul management and initiate a restructuring plan. Hana Bank is buying Seoul Bank. (M&A REPORTER-ASIA PACIFIC, Vol. No.1, Issue No. 236, November 28, 2002) =============== M A L A Y S I A =============== JOHN HANCOCK: Voluntarily Liquidating Subsidiary ------------------------------------------------ John Hancock Life Insurance (Malaysia) Bhd would like to inform the public that its wholly owned subsidiary, John Hancock Nominees (Tempatan) Sdn Bhd, was put into members' voluntary liquidation effective November 26, 2002 and Chua Siew Chuan of Level 22, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur has been appointed liquidator of this company. JHNOM was incorporated on September 26, 1979 under the name of Associated Prime Sdn Bhd and subsequently changed its name to John Hancock Nominees (M) Sdn Bhd on April 13, 1996. On April 22, 1997, it changed its name to its present form. JHNOM's authorised and issued and paid up share capital are RM2,000,000 comprising 2,000,000 ordinary shares of RM1.00 each and RM450,002 comprising 450,002 ordinary shares of RM1.00 each respectively. Since the change of name to JHNOM, its principal activity is the provision of nominee facility. However, JHNOM has been dormant since 1988. JHNOM was originally intended to provide share registration and nominee facility services to the Company's other subsidiary, John Hancock Asset Management (Malaysia) Sdn Bhd, which was subsequently put into members' voluntary liquidation on July 1, 1999. With this, the proposed function of JHNOM has also ceased. The members' voluntary liquidation is not expected to have any operational and financial impact to the John Hancock Group. CONTACT INFORMATION: 12th Floor, Menara John Hancock 6 Jalan Gelenggang Damansara Heights 50490 Kuala Lumpur Tel: 03-255 1288/254 8055 Fax: 03-254 8139 RENONG BERHAD: RM400M Proposed Private Placement OK'd ----------------------------------------------------- The Securities Commission has approved the proposed private placement of Renong Bhd, which hopes to raise RM400 million from the exercise, The Edge Daily said Tuesday. The commission, however, required several conditions for the private placement that include the submission of a comprehensive scheme to resolve its financial difficulties and to submit the comprehensive scheme to the SC within six months. COMPANY PROFILE Renong is a project procurement and management and strategic investment company. The Group business activities span five core sectors: telecommunications and multimedia, expressways, property development, transportation and construction, and engineering. In August 2001, Syarikat Danasaham Sdn Bhd made a conditional voluntary offer (CVO) to purchase the entire shares and warrants of United Engineers (Malaysia) Berhad (UEM), which included Renong's 37.9% interests in UEM. The acceptance of this offer by Renong and other shareholders of UEM resulted in Danasaham becoming effectively a substantial shareholder of Renong by virtue of UEM's 31% stake in Renong. The success of the CVO paves the way for the restructuring of Renong's debts, beginning with the Renong SPV Bond. On March 20, 2002, Projek Usahasama Transit Ringan Automatik Sdn Bhd (PUTRA), was served with two winding-up petitions under section 218 (1) (e) of the Companies Act, 1965. The petitions were filed by Commerce International Merchant Bankers Berhad (CIMB), being the Facility Agent of PUTRA's RM2b Commercial Financing Facilities comprising RM1b Conventional Facility (principal and interest) and RM1b Islamic Facility (principal and profit) amounting to RM1.16b and RM1.18b respectively. In respect of the RM1.16b payable under the Conventional Facility, PUTRA is also required to pay further interest at the rate of 7.75% p.a. Under the Concession Agreement entered into between PUTRA and the Government dated 7.8.95 (CA), PUTRA going into liquidation as a result of the petitions will enable the Government to procure a qualifying substitute to purchase the right, title and interest of PUTRA or itself purchase all assets of PUTRA relating to the railway for a purchase price equal to the project cost. PUTRA does not intend to challenge the petitions as it had in December 2001 and January 2002, requested the Government to appoint a qualifying substitute or itself purchase the assets of the railway in accordance with the terms of the CA. Renong has also identified its non-core assets earmarked for disposal, namely, Commerce-Asset Holding Berhad, Crest Petroleum Bhd and Park May Berhad (PMB). While pursuing a structured asset disposal programme, Renong will also streamline its operations to concentrate mainly on property development. Renong's property development activities are vested in Prolink Development Sdn Bhd, whose major project is the development of Bandar Nusajaya, Johor, whilst the Group's interest in the telecommunications and multimedia sector are vested in TIME dotCom Berhad through the TIME Engineering Berhad Group. On February 18, 2002, PMB, entered into a conditional Heads of Agreement with Kumpulan Kenderaan Malaysia Berhad (KKMB) and Renong on its proposed acquisition of equity interest in nine companies ("Target Companies") from KKMB which is conditional upon, amongst others, Renong disposing of 27,437,800 shares in PMB (37.58%) at RM1.00 per PMB share via a restricted offer for sale to PMB's minority shareholders and via a private placement to placees to be identified. It is the intention of Renong to dispose of in the open market the remaining 5m PMB shares held. The Proposed PMB Disposal is to be fully underwritten. CONTACT INFORMATION: 1st Floor, MCOBA Building 42 Jalan Syed Putra 50460 Kuala Lumpur Tel: 03-2742166 Fax: 03-2743979 REPCO HOLDINGS: Plans Annual General Meeting for December 20 ------------------------------------------------------------ Notice is hereby given that the Twelfth Annual General Meeting of Repco Holdings Bhd will be convened and held at Tanjung Room 1, Shangri-La Tanjung Aru Resort, No. 20 Jalan Aru, 88100 Kota Kinabalu, Sabah on Friday, December 20, 2002 at 11.00 a.m. The original notice containing details of the said meeting may be viewed through this link http://announcements.klse.com.my/EDMS/edmsweb.nsf/ba387758ae3741 2b482568a300466fb6/482568bb00440ef448256c7e00333c8e/$FILE/RHB%2 0-%20Notice%20of%2012th%20AGM.rtf COMPANY PROFILE Repco was incorporated as an investment holding and management company over subsidiaries which comprised a diversified grouping of companies in the gaming, autoparts, timber and property sectors. The Company currently has two active subsidiaries, Everise Ventures Sdn Bhd (EVSB) and Repco (Malaysia) Sdn Bhd (RMSB). EVSB has an agreement with Sandakan Turf Club to manage and operate the 4-digit numbers forecast pools in Sabah and RMSB is involved in the marketing and distribution of autoparts and motor oils. On April 8, 1999, Special Administrators (SAs) were appointed by Pengurusan Danaharta Nasional Bhd over the Company and seven of its subsidiaries. The SAs have submitted a proposed corporate and debt restructuring scheme (workout proposal) to Danaharta to address the Company's debts. CONTACT INFORMATION: Wisma Repco 12 Lorong Tenggiling 4 Jalan Maktab Gaya, Luyang 88300 Kota Kinabalu Sabah Tel: 088-250000 Fax: 088-253007 SJA BERHAD: Faces Winding Up Petition, RM5.1M Damage Bill --------------------------------------------------------- In response to a query letter by the Kuala Lumpur Stock Exchange, SJA Bhd announced Wednesday that it is facing a winding up petition filed on September 10, 2002. "The financial impact of the winding-up proceedings on SJA group would be the payment of RM5,195,185.14 with interests accruing at 3.5% p.a. above the Bank's Base Lending Rate from April 1, 2001. The proceedings would have no operational impact on the group," SJA said in a statement. "The profit or loss arising from the proceedings would depend on the amounts realized from the disposal of the property secured on as there existed a first legal charge on the said property for an overdraft facility of RM12 million fully utilised. The Company is considering the disposal of the property for which the facility was secured on to settle the outstandings," the statement read. CONTACT INFORMATION: 39, Jalan CO Lim 10250 Penang Tel: 04-2263763/863 Fax: 04-2260663 SJA BERHAD: Subsidiary Faces Wind Up Due to Unpaid Debts -------------------------------------------------------- In response to a query letter by the Kuala Lumpur Stock Exchange, SJA Bhd announced Wednesday that its subsidiary Lim Seng Seng Bus Company Sdn Bhd is facing a winding up petition filed by Arab-Malaysian Merchant Bank Berhad on May 28, 2002. According to the company, the subsidiary had engaged Hup Lee Coachbuilders Holdings Sdn Bhd to construct and fabricate stage buses for its bus operations. The fabricating company had obtained finance through factoring with the said financial institution and assigned the liability to the said subsidiary. At the same time, Hup Lee Coachbuilders Holdings Sdn Bhd had arranged for hire purchase facilities for the subsidiary. "We presumed that Hup Lee Coachbuilders Holdings Sdn Bhd, upon receipt of funds from the hire purchase financing, would have forwarded and paid to the petitioner thereby discharging the factoring liabilities. However, we only realized that no settlement was made by Hup Lee Coachbuilders Holdings Sdn Bhd after receiving the demands from the petitioner," the company said in a statement. The Company initially disputed the claim and tried to have the judgment set aside, but failed. The petitioner verbally indicated that it is prepared to accept some form of compromised settlement but the quantum and the mode have yet to be negotiated. The judgment sum awarded to the petitioner is RM21,035,000 and interest ran at 8% p.a. from September 15, 2001 to April 4, 2002 amounting to RM931,303.01 Total investment of the company in Lim Seng is RM4,153,700. The company said the winding-up proceedings would have no operational impact on the Group as the said subsidiary had been dormant since April 1, 2000. "The said subsidiary's liabilities would far exceed the assets realized and the investment of RM4,153,700 would have to be fully written-off," the company said. CONTACT INFORMATION: 39, Jalan CO Lim 10250 Penang Tel: 04-2263763/863 Fax: 04-2260663 SJA BERHAD: To Write-off Investment in Kiara Tuah Sdn Bhd --------------------------------------------------------- In response to a query letter by the Kuala Lumpur Stock Exchange, SJA Bhd announced Wednesday that its subsidiary Kiara Tuah Sdn Bhd is facing a winding up petition filed by Arab- Malaysian Merchant Bank Berhad. According to the company, the subsidiary had engaged Hup Lee Coachbuilders Holdings Sdn Bhd to construct and fabricate stage buses for its bus operations. The fabricating company had obtained finance through factoring with the said financial institution and assigned the liability to the said subsidiary. At the same time, Hup Lee Coachbuilders Holdings Sdn Bhd had arranged for hire purchase facilities for the subsidiary. "We presumed that Hup Lee Coachbuilders Holdings Sdn Bhd, upon receipt of funds from the hire purchase financing, would have forwarded and paid to the petitioner thereby discharging the factoring liabilities. However, we only realized that no settlement was made by Hup Lee Coachbuilders Holdings Sdn Bhd after receiving the demands from the petitioner," the company said in a statement. The Company had initially disputed the claim and tried to have the judgment set aside but to avail. The petitioner had verbally indicated that it is prepared to accept some form of compromised settlement but the quantum and the mode have yet to be negotiated. The judgment sum awarded to the petitioner is RM8,185,932.70 and interest ran at 8% p.a. from September 15, 2001 to July 24, 2002 amounting to RM561,577.41. "The winding-up proceedings would result in the Group's turnover being reduced by RM8 million a year but the net loss would be mitigated by appproximately RM3.3 million a year," the company said. Total investment of the company in Kiara Tuah is RM49,592,000. "The subsidiary has net negative shareholders' fund amounting to RM21.6 million as of September 30, 2002 and so the whole investment would have to be fully written off," a company statement read. CONTACT INFORMATION: 39, Jalan CO Lim 10250 Penang Tel: 04-2263763/863 Fax: 04-2260663 ===================== P H I L I P P I N E S ===================== METRO PACIFIC: Ayala to Fund Acquisition with Cash Reserves ------------------------------------------------------------ Ayala Land Inc expects to fund its USD45 million share in the purchase of the controlling stake in Bonifacio Land Corp through existing cash reserves and secured credit lines, a disclosure to the Philippine Stock Exchange (PSE) said. The Company said the Bonifacio acquisition will not cause significant changes to its expansion plans in the middle-income residential and retail sectors. Ayala Land added it will pursue the liquidation of non-strategic assets. Over the weekend, Ayala Land and its partner Greenfield Development Corp said they had offered to buy Metro Pacific Corp's shares in Bonifacio Land by settling Metro Pacific's USD90 million debt to parent First Pacific Co Ltd. Ayala Land said its 50:50 joint venture with Greenfield reduces its financial exposure to the acquisition and at the same time gives it a partner with the same vision for development of the Bonifacio Global City, which is controlled by Bonifacio Land. Ayala Land stated the acquisition of the 150-hectare Bonifacio property, which will yield net saleable area of 55 hectares, assures the Company of "market leadership well into the future." (M&A REPORTER-ASIA PACIFIC, Vol. No.1, Issue No. 236, November 28, 2002) NATIONAL POWER: Citibank NA Arranges $500M Bridge Loan ------------------------------------------------------ The Power Sector Asset and Liabilities Management Corporation (PSALM) is expecting the Philippine National Power Corporation to secure a $250 million bridge loan for the utility's requirements. Citibank NA, Sumitomo Mitsui Banking Corp., Credit Lyonnais and Standard Chartered Bank will arrange the bridge loan. "We're shooting for signing next week," PSALM President Edgardo M. del Fonso told Dow Jones Newswires. Del Fonso said the bridge loan will likely be repaid in six months, but did not comment on the other terms of the loan. Napocor needs $750 million over the rest of the year to refinance maturing debt, but only $500 million will likely be raised by year end. PHILIPPINE TELEGRAPH: Signs P8.8B Restructuring Pact ---------------------------------------------------- The Philippine Telegraph & Telephone Inc. (PT&T) has finally signed a master restructuring agreement with 11 of its creditors involving 8.8 billion pesos in debts, the Philippine Star reports. The agreement calls for the conversion of about P4.4 billion in debts into equity and restructuring of the remaining balance over a 10-year period conversion of all lenders to secured bases, and a reorganization of the Company's board of directors. PT&T also signed a dollar facility agreement and a peso facility agreement together with the master restructuring agreement. The 11 lenders who signed the agreement include Asia Trust Bank, Bank Leumi Le-Israel BM, Development Bank of the Philippines (DBP), East Asia (AEA) Capital Corp., JP Morgan Chase, Keppel Bank Philippines Inc., Korea Telecom Philippines Inc., Penta Capital Corp., Philippine National Bank, Tomen Corp. and the United Coconut Planters Bank. This leaves 23 creditors who have yet to agree to the restructuring. PT&T's creditors include All Asia Capital & Trust Co., Allied Banking Corp., Asia Trust Bank of Commerce, Bank of the Philippine Islands, Bank Leumi, DBP, East Asia Capital, Equitable PCIBank, Government Service Insurance System (GSIS), Hanvit Bank, International Exchange Bank, JP Morgan, Keppel, Kookmin Bank, Korea Communication Engineering Ltd., Korea Telecom Phils., Land Bank of the Philippines, Lehman Brothers Asia, LG Information & Communications, Manulife Financial, Metrobank, Optimum Development Bank, Orix Metro Leasing & Finance Corp., Penta, PNB, Planters Development Bank, Premiere Development Bank, RCBC, Security Bank, Ssangyong Singapore, Tomen, UCPB, and United Overseas Bank Phils. The restructured loan amounted to P1.99 billion and $128 million covering 34 creditors. Half of the outstanding principal amount shall be converted to PT&T common shares while the remaining balance will be repaid over 10 years inclusive of a five-year grace period on principal payments. Interest rates area three- month Libor plus two percent and a maximum of eight per annum in case of the dollar-denominated loans, and 91-day T-bill plus two percent and maximum of 13 percent per year for the peso loans. VICTORIAS MILLING: Earnings Promising After Six Years of Losses --------------------------------------------------------------- The Victorias Milling Corporation (VMC) is on the path to recovery after posting gross earnings of 696 million pesos this year, the Malaya Newspaper said on Thursday. The sugar manufacturer, which is under a 15-year rehabilitation plan, will post a positive EBITDA after close to six years of losses. In 1999, Victorias suffered income loss of P55 million before returning to positive territory, posting EBITDA of P507 million. As part of its rehabilitation plan, Victorias trimmed down the number of its workforce to 1,637, even lower than the 1,700 employees required under the program. Chief Operations Officer Arthur Aguilar said a special stockholders meeting will be held to elect new officials on December 16, following the issuance of 2.5 billion pesos worth of new shares in October. The issuance, which is also part of the rehabilitation plan, effectively gave 30 creditor banks ownership of 69.5 percent of the Company. The 11-person board will comprise six representatives from secured creditors, one from the group of unsecured creditors, a strategic investor and three existing shareholders. ================= S I N G A P O R E ================= CHARTERED SEMICONDUCTOR: US Analysts Upgrade Rating --------------------------------------------------- Two U.S. analysts have upgraded the rating of Chartered Semiconductor Manufacturing (CSM) on Wednesday following a deal with IBM, Dow Jones reported on Thursday. SoundView Technology's Scott Randall raised its rating to outperform; JP Morgan's Bhavin Shah (based in HK) raised it to neutral, saying deal gives Chartered "a direction that it did not seem to have", though he didn't raise earnings estimates - "the cost of this agreement could be substantial for Chartered, as IBM is known to charge quite a bit (as much as $100 million a year) for sharing its technology." Goldman Sachs' Jonathan Ross maintained in-line rating, agreed that the IBM deal will let Chartered continue to compete with peers and could broaden customer base longer-term, but sees no near-term benefit and thinks "the shares are more likely to be driven by overall semi demand trends." HOTEL NEGARA: Refinancing Banking Facilities -------------------------------------------- Hotel Negara Limited announced that United Overseas Bank Limited has agreed to extend credit facilities totalling $29,500,000 to the Company to refinance part of the 5-year secured term loan for a principal amount of $42,000,000, which is due for repayment on 15 December 2002. The Company will be using its internal funds for partial repayment of the term loan. According to Wright Investor's Service, at the end of 2001, Hotel Negara Limited had negative working capital, as current liabilities were 42.45 million Singapore Dollars while total current assets were only 8.43 million Singapore Dollars. ISOFTEL LIMITED: Appoints Choy Long Onn as COO ---------------------------------------------- The Directors of iSoftel Limited announced the appointment of Mr Choy Long Onn, Patrick, as the Chief Operating Officer of the Company. Choy joined the iSoftel Group as Senior Vice President, Strategic Business on 1 July 2002 and will take up his new position as Chief Operating Officer with effect from 18 November 2002. As Chief Operating Officer, Choy is responsible for the day-to- day operations of the company. Reporting directly to the CEO, Mr Choy will work closely with the senior management team and subsidiaries to achieve the company goals. TCR-AP reported earlier that Isoftel revealed a net loss of S$29.062 million in the fiscal year 2001 against a profit of 294,000 in 2000. The Board of Directors announced in September 2001 that the first half-year results of the Company and Group are expected to be worse than anticipated. The businesses of the Company and Group, faced with significant slowdown in the telecommunications industry, more particularly, in the US and Asian markets, have declined substantially in the last two quarters. The Group also is facing the growing trend of delayed investments from customers who, in anticipation of the continued worsening economic situation, have opted for prudence and prefer to defer any new expansionary investment plans. L&M GROUP: Appoints HL Bank as Financial Adviser ------------------------------------------------ L&M Group Investments has appointed HL Bank as the independent financial adviser to the independent directors on the proposed debt and equity restructuring exercise undertaken by the Company. The L&M Group announced that the unsecured creditors of its unit L&M Prestressing Pte Ltd, whose claims are guaranteed or payable by the Company (the Partially Secured Creditors), have at the meeting of the Partially Secured Creditors held on October 11, 2002 unanimously approved the Scheme of Arrangement proposed by Prestressing for such creditors. By approving the Scheme of Arrangement, the Partially Secured Creditors have agreed to accept shares in the Company in full and final settlement of S$3,641,996 of debt owed by Prestressing to them (the Scheme Shares). The Scheme Shares would upon the Company obtaining all necessary approvals, be issued to these Partially Secured Creditors at 2.5 cents per Scheme Share (based on the weighted average trading price of the shares for trades done on 10 October 2002). Pending the issuance of the Scheme Shares, the Partially Secured Creditors have also agreed to a moratorium on all claims against the Company under their respective guarantees or claims. YONGNAM HOLDINGS: Issuing New Shares to Pay Debt ----------------------------------------------- Yongnam Holdings Limited have secured the support of 36 of their trade creditors to whom the Company owe approximately $16.4 million and they have given their commitment to subscribe for up to 60,000,000 new shares of par value S$0.20 in the Company at the issue price of S$0.20 per share (the Trade Creditor Shares) for which the Company would offset approximately up to S$12 million in trade credits owed to them. The balance of approximately $4.4 million in trade credits owed to them will be repayable to them over a certain number of monthly installments (varying from 6 installments to 20 installments). The commitment of the trade creditors and our obligations to issue the Trade Creditor Shares are subject to obtaining all relevant approvals, including the approval of the SGX-ST to the listing and quotation of the Trade Creditor Shares on the SGX-ST and the acceptance by the relevant authorities of the lodgment of relevant documents and/or prospectuses. The Company would be relying on the General Mandate to issue part of the Trade Creditor Shares and the EGM Mandate to issue the balance of the Trade Creditor Shares. The General Mandate refers to the Company's general mandate to issue shares given by the ordinary resolution in our Annual General Meeting of 29 May 2002. Under the General Mandate, the Company can issue up to 34,158,000 new shares, which represents 20 percent of the existing issued share capital of the Company. These 34,158,000 new shares when issued at $0.20 represent $6,831,600 of issued and paid-up share capital of the Company. The EGM Mandate refers to the mandate to be obtained at the extraordinary general meeting to be convened as soon as possible to pass a resolution to empower the Company to issue the balance of up to 25,842,000 new shares, which represents 15.1 percent of the existing issued share capital of the Company. Shareholders representing 59.6 percent of the existing share capital of the Company have given written undertakings to vote in favor of the mandate. These 25,842,000 new shares when issued at $0.20 represent $5,168,400 of issued and paid-up share capital of the Company. The Company would also be making an application to the SGX-ST for the listing and quotation of the Trade Creditor Shares, comprising the 34,158,000 new shares under the General Mandate and the 25,842,000 under the EGM Mandate. The Company estimates, barring unforeseen circumstances or delay, to complete the issue of the 34,158,000 new shares under the General Mandate before the end of December 2002 and the 25,842,000 new shares under the EGM Mandate before February 2003. Every trade creditor shall be issued shares proportionately from the General Mandate and from the EGM Mandate. The Trade Creditor Shares shall be issued in full to trade creditors but shall only be released progressively over 12 equal monthly tranches. In principle agreement with the Company's major banker Our main banker in Singapore, the UOB Banking Group has acknowledged that with the implementation of the issue of the Trade Creditor Shares they would consider a favorable debt- restructuring program for our Group. Taking these into account the Directors are of the reasonable opinion that when such arrangements are in place, the working capital available to the Group would be sufficient for present requirements. The financial performance of Yongnam Holdings Limited has been materially affected by the downturn in the construction industry and the difficult economic conditions. For the six months ended 30 June 2002, the Group incurred a loss after taxation of $13 million and our shareholders' funds has dropped to approximately $6 million. Market conditions for the second half of 2002 is expected to remain difficult and our Group has been exploring various avenues to increase our shareholders' funds. The Company's half year results announcement of 27 September 2002, the Company reported that it initiated negotiations with trade creditors to restructure our trade credits and that the Company have reached in principle settlement agreements with the majority of our creditors which will involve deferred cash installment repayments and/or acceptance of new shares in our Company to be issued at par as settlement of our trade credits owed to them. In the same announcement of 27 September 2002, the Company also reported that the Company were in negotiations with our major bankers to restructure outstanding loan obligations and to look into alternative financing arrangements. The Group has two major groups of creditors. The first group is our various bankers, which in Singapore are the UOB Banking Group, Hong Leong Singapore Finance and the Oversea-Chinese Banking Corporation with facilities totaling S$76 million. The UOB Banking Group provided us with approximately S$68 million in outstanding loans and trade facilities, secured on a fixed charge and floating charge. Hong Leong Singapore Finance and Oversea-Chinese Banking Corporation provided us with approximately S$8 million secured on our properties. In our overseas group companies, foreign banks located in the countries where the Company operates provided us approximately S$6.0 million in financing facilities all of which are secured. The second group consists of our trade creditors from whom the Company has approximately S$26 million in trade credit. Issue of up to 60 million new shares at $0.20 each to our trade creditors. According to Wright Investor's Service, at the end of 2001, Yongnam Holdings Limited had negative working capital, as current liabilities were 107.00 million Singapore Dollars while total current assets were only 53.35 million Singapore Dollars. =============== T H A I L A N D =============== BANGCHAK PETROLEUM: Govt to Allow Direct Sales to State Agencies ---------------------------------------------------------------- To stimulate competition in local oil prices and partly help ailing state-run refinery Bangchak Petroleum Plc cut its debts, the government will allow the company to sell oil products directly to state agencies beginning next year. According to Bangchak President Narong Boonyasa-nguan, the move will increase the company's revenue by five billion baht next year, a big boost to its drive to slash debts and improve operations. The company is aiming to up refining capacity next year to 100,000 barrels of oil per day from an average of 80,000 at present. Local paper Bangkok Posts says state agencies are currently encouraged to buy petrol from PTT Plc, the partially privatized oil company, which also sold fuel oil to the Electricity Generating Authority of Thailand. On Tuesday, however, the cabinet decided that Bangchak should also be allowed to sell to state agencies as well as Egat, in order to encourage price competition. In the third quarter of this year, Bangchak recorded a net loss of 186.5 million baht on revenues of 14 billion baht, Bangkok Post said. For the nine months ending September 30, net profit was 460.7 million baht, compared with a loss of 1.76 billion in the same period last year. Bangchak has debts totaling 24 billion baht and the government is currently studying proposals to assist the company. 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. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***