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                     A S I A   P A C I F I C

           Thursday, January 28, 2010, Vol. 13, No. 019

                            Headlines



A U S T R A L I A

ORBITAL CORP: Restructures $19 Million Loan


H O N G  K O N G

IATOPIA FREEWALKER: Yeung Chi Wai Appointed as Liquidator
IATOPIA RESEARCH: Yeung Chi Wai Appointed as Liquidator
IATOPIA SYSTEMS: Yeung Chi Wai Appointed as Liquidator
IATOPIA TECHNOLOGY: Yeung Chi Wai Appointed as Liquidator
IATOWORLD LIMITED: Yeung Chi Wai Appointed as Liquidator

INTERFORM INVESTMENT: Annual Meetings Set for February 23
JC NO. 3: Philip Brendan Gilligan Appointed as Liquidator
JOINT WEALTHY: Members' and Creditors Meetings Set for February 24
JOYFUL DESIGN: Lai and Haughey Appointed as Liquidators
JWC LIMITED: Yeung Chi Wai Appointed as Liquidators

KAM TAI: Wong and Fung Step Down as Liquidators
KASON (HONG KONG): Contributories and Creditors to Meet on Feb. 8
KAUPTHING (HONG KONG): Liu and Yuen Step Down as Liquidators
KINGSWAY CORP: Contributories and Creditors to Meet on Feb. 10
KUENLOK (FAR EAST): Members' Final Meeting Set for February 26

LAM ENGINEERING: Court to Hear Wind-Up Petition on March 10
LEADKEEN INDUSTRIAL: Creditors' Proofs of Debt Due February 4
LONGWAY CONSTRUCTION: Annual Meetings Set for February 26
LOXFORD COMPANY: Wong and Fung Step Down as Liquidators
M3 STUDIO: Court Enters Wind-Up Order

MOULIN GLOBAL: Ernst & Young Settles Negligence Claim


I N D I A

JET AIRWAYS: Mulls Up to US$200 Mil. in Equity Placement


I N D O N E S I A

STAR ENERGY: Moody's Assigns Corporate Family Rating at 'B2'
TELEKOMUNIKASI SELULAR: Fitch Raises Issuer Ratings From 'BB+'


J A P A N

JAPAN AIRLINES: Mizuho Said to be Biggest Lender, Bloomberg Says
JAPAN AIRLINES: Names Masaru Onishi as Group's New President
L-JAC 3: Fitch Takes Rating Actions on Various Trust Interests
SEVEN & I: To Close Seibu Department Store This Year
SPANSION INC: Files Supplements to 2nd Amended Plan

SPANSION INC: Has Interim Nod for $450-Mil. Exit Facility
SPANSION INC: Noteholders Say Plan Outline Has Misrepresentations
SPANSION INC: Proposes Settlement With Samsung
SPANSION INC: Proposes to Settle Japan Dispute for $45-Mil.
SPANSION INC: Reports $4,329,000 Net Income for 4th Quarter

WILLCOM INC: May File for Bankruptcy Protection Next Month
* JAPAN: National Debt Sets to Rise to JPY973 Trillion in 2010


K O R E A

HYNIX SEMICONDUCTOR: No Bidders Yet for Hynix Stake
KUMHO ASIANA: Balks at Investors' Plan to Acquire Stake in Units


M A L A Y S I A

AXIS INC: Says Writ of Summons No Effect on Company's Operations
ENGLOTECHS HOLDING: Bursa to Delist Securities on February 8
HO HUP: Asks for Further Extension of Plan Filing Deadline
OCI BERHAD: Extraordinary Meeting Set for February 22
RHYTHM CONSOLIDATED: Inks Deal with Vista Jiwa on Reverse Takeover


M A L D I V E S

* MALDIVES: Economy Continue to Face Serious Challenges, IMF Says


N E W  Z E A L A N D

LANE WALKER: Receivers Have Little Progress in Paying Off Debt
MEDIA COUNSEL: Placed Into Liquidation


P H I L I P P I N E S

RIZAL COMMERCIAL: Fitch Assigns 'BB-' Rating on Senior Notes
RIZAL COMMERCIAL: Moody's Assigns 'Ba2' Rating on Senior Debt
* PHILIPPINES: PDIC Pushes for Bridge Banking for Closed Banks


S R I  L A N K A

VALLIBEL FINANCE: Fitch Affirms National Long-Term Rating at 'B+'


X X X X X X X X

* Fitch Sees Challenges for Most Asian Shipping Companies in 2010




                         - - - - -


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A U S T R A L I A
=================


ORBITAL CORP: Restructures $19 Million Loan
-------------------------------------------
Orbital Corporation Limited has reached agreement with the
Government of Western Australia, through the Department of
Commerce, to restructure the terms and conditions of the long
standing loan arrangement between Orbital and the WA Government.

The parties entered into a Development Incentives Agreement in
1989 under which Orbital was advanced $19 million, interest free,
to be repaid in one lump sum in 2014.  Under the agreed
restructure the original loan has been terminated and replaced by
a new loan of $14.35 million (being the net present value of the
old loan at 30 June 2009) with the following terms and conditions.

    * Term -- 2010 to 2025.
    * Repayments -- Commencing May 2010 at $0.2 million per annum
    * Repayments -- Increasing annually to a maximum of
      $2.1 million per annum in 2023.
    * Interest free

Keith Halliwell, Orbital's Chief Financial Officer, commented "We
are pleased that the loan has been restructured with a revised
repayment plan."

"We appreciate the support the Western Australian Government has
given Orbital for many years and look forward to the benefits that
this new financing arrangement will provide for Orbital
stakeholders and for Western Australia," added Mr Halliwell.

International Financial Reporting Standards require the
restructured loan to be initially carried at a discounted net
present value of approximately $7.6 million, which compares to the
carrying value of the loan at 31 December 2009 of $15.3 million,
and for that difference of approximately $7.7 million (which is a
non-cash item) to be accounted for as a profit.  The initially
reported profit will be reversed as an expense over the term of
the loan as Orbital will incur non-cash interest amortization
expenses of $500,000 to $100,000 per annum, and totalling $6.8
million over the term of the loan.  The present non-cash interest
amortization expense of approximately $800,000 per annum expensed
under the original loan facility will no longer be incurred.

     CONTACTS

     Mr. Terry Stinson          Telephone +61 8 9441 2311
     CEO                        Email  Info@orbitalcorp.com.au

     Mr. Keith Halliwell        Website  www.orbitalcorp.com.au
     CFO

                           About Orbital

Orbital Corporation Limited is an international developer of
innovative technical solutions for a cleaner world.  Orbital
provides innovation, design, product development and operational
improvement services to the world's producers, suppliers,
regulators and end users of engines and engine management systems
for application in motorcycles, marine and recreational vehicles,
automobiles and trucks.  Orbital's principal operations in Perth,
Western Australia, provide a world class facility with
capabilities in design, manufacturing, development and testing of
engines and engine management systems.  Headquartered in Perth,
Western Australia, Orbital stock is traded on the (Australian
Stock Exchange: OEC) and the (OTC Bulletin Board: OBTLY).


================
H O N G  K O N G
================


IATOPIA FREEWALKER: Yeung Chi Wai Appointed as Liquidator
---------------------------------------------------------
Yeung Chi Wai on January 15, 2010, was appointed as liquidator of
Iatopia Freewalker Limited.

The liquidator may be reached at:

         Yeung Chi Wai
         Lucky Building, 12th Floor
         39 Wellington Street
         Central, Hong Kong


IATOPIA RESEARCH: Yeung Chi Wai Appointed as Liquidator
-------------------------------------------------------
Yeung Chi Wai on January 15, 2010, was appointed as liquidator of
Iatopia Research Centre Limited.

The liquidator may be reached at:

         Yeung Chi Wai
         Lucky Building, 12th Floor
         39 Wellington Street
         Central, Hong Kong


IATOPIA SYSTEMS: Yeung Chi Wai Appointed as Liquidator
------------------------------------------------------
Yeung Chi Wai on January 15, 2010, was appointed as liquidator of
Iatopia Systems Limited.

The liquidator may be reached at:

         Yeung Chi Wai
         Lucky Building, 12th Floor
         39 Wellington Street
         Central, Hong Kong


IATOPIA TECHNOLOGY: Yeung Chi Wai Appointed as Liquidator
---------------------------------------------------------
Yeung Chi Wai on January 15, 2010, was appointed as liquidator of
Iatopia Technology Limited.

The liquidator may be reached at:

         Yeung Chi Wai
         Lucky Building, 12th Floor
         39 Wellington Street
         Central, Hong Kong


IATOWORLD LIMITED: Yeung Chi Wai Appointed as Liquidator
--------------------------------------------------------
Yeung Chi Wai on January 15, 2010, was appointed as liquidator of
Iatoworld Limited.

The liquidator may be reached at:

         Yeung Chi Wai
         Lucky Building, 12th Floor
         39 Wellington Street
         Central, Hong Kong


INTERFORM INVESTMENT: Annual Meetings Set for February 23
---------------------------------------------------------
Members and creditors of Interform Investment Company Limited will
hold their annual meetings on February 23, 2010, at 10:00 a.m.,
and 10:30 a.m., respectively at the 62/F, One Island East, 18
Westlands Road, Island East, in Hong Kong.

At the meeting, Stephen Liu Yiu Keung, the company's liquidator,
will give a report on the company's wind-up proceedings and
property disposal.


JC NO. 3: Philip Brendan Gilligan Appointed as Liquidator
---------------------------------------------------------
Philip Brendan Gilligan on January 15, 2010, was appointed as
liquidator of JC No.3 (H.K.) Limited.

The liquidator may be reached at:

         Philip Brendan Gilligan
         Alexandra House, 7th Floor
         18 Chater Road
         Central, Hong Kong


JOINT WEALTHY: Members' and Creditors Meetings Set for February 24
------------------------------------------------------------------
Members and creditors of Joint Wealthy Holdings Limited will hold
their annual meetings on February 24, 2010, at 9:00 a.m., and 9:30
a.m., respectively at the 62/F, One Island East, 18 Westlands
Road, Island East, in Hong Kong.

At the meeting, Stephen Liu Yiu Keung, the company's liquidator,
will give a report on the company's wind-up proceedings and
property disposal.


JOYFUL DESIGN: Lai and Haughey Appointed as Liquidators
-------------------------------------------------------
Lai Kar Yan (Derek) and Darach E. Haughey on January 5, 2010, were
appointed as liquidators of Joyful Design Limited.

The liquidators may be reached at:

         Lai Kar Yan (Derek)
         Darach E. Haughey
         One Pacific Place, 35th Floor
         88 Queensway
         Hong Kong


JWC LIMITED: Yeung Chi Wai Appointed as Liquidators
---------------------------------------------------
Liu Chi Tat Stephen and Kwan Pak Kong on January 11, 2010, were
appointed as liquidators of JWC Limited.

The liquidators may be reached at:

         Liu Chi Tat Stephen
         Kwan Pak Kong
         C C Wu Building, Rm. 1304, 13/F
         302-308 Hennessy Road
         Wanchai, Hong Kong


KAM TAI: Wong and Fung Step Down as Liquidators
-----------------------------------------------
Wong Ming Lai and Fung Tze Wa stepped down as liquidators of Kam
Tai Plastic Material Limited on January 20, 2010.


KASON (HONG KONG): Contributories and Creditors to Meet on Feb. 8
-----------------------------------------------------------------
Contributories and creditors of Kason (Hong Kong) Limited will
hold their first meetings on February 8, 2010, at 2:30 p.m., and
3:00 p.m., respectively at Unit 511, 5/F, Tower 1, Silvercord, 30
Canton Road, Tsimshatsui, Kowloon in Hong Kong.

At the meeting, Ho Man Kit Horace and Kong Sze Man Simone, the
company's liquidators, will give a report on the company's wind-up
proceedings and property disposal.


KAUPTHING (HONG KONG): Liu and Yuen Step Down as Liquidators
------------------------------------------------------------
Kenneth Lai Hang Liu and Yuen Tsz Chun Frank stepped down as
liquidators of Kaupthing (Hong Kong) Limited on January 12, 2010.


KINGSWAY CORP: Contributories and Creditors to Meet on Feb. 10
--------------------------------------------------------------
Contributories and creditors of Kingsway Corporation Limited will
hold their first meetings on February 10, 2010, at 2:45 p.m., and
3:00 p.m., respectively at Unit 511, 5/F, Tower 1, Silvercord, 30
Canton Road, Tsimshatsui, Kowloon in Hong Kong.

At the meeting, Ho Man Kit Horace and Kong Sze Man Simone, the
company's liquidator, will give a report on the company's wind-up
proceedings and property disposal.


KUENLOK (FAR EAST): Members' Final Meeting Set for February 26
--------------------------------------------------------------
Members of Kuenlok (Far East) Development Limited will hold their
final general meeting on February 26, 2010, at 10:00 a.m., at the
6/F., Greenwich Centre, 260 King's Road, North Point, in Hong
Kong.

At the meeting, Yip Ka Yui, the company's liquidator, will give a
report on the company's wind-up proceedings and property disposal.


LAM ENGINEERING: Court to Hear Wind-Up Petition on March 10
-----------------------------------------------------------
A petition to wind up the operations of Lam Engineering Company
Limited will be heard before the High Court of Hong Kong on
March 10, 2010, at 9:30 a.m.

Ngai Wah Glass & Mirror Limited filed the petition against the
company.

The Petitioner's Solicitors are:

          Ng, Lie, Lai & Chan
          Wing On Centre, Rooms 1205-7
          111 Connaught Road Central
          Hong Kong


LEADKEEN INDUSTRIAL: Creditors' Proofs of Debt Due February 4
-------------------------------------------------------------
Creditors of Leadkeen Industrial Limited, which is in members'
voluntary liquidation, are required to file their proofs of debt
by February 4, 2010, to be included in the company's dividend
distribution.

The company's liquidators are:

         Desmond Chung Seng Chiong
         Roderick John Sutton
         c/o Ferrier Hodgson Limited
         The Hong Kong Club Building, 14/F
         3A Chater Road
         Central, Hong Kong


LONGWAY CONSTRUCTION: Annual Meetings Set for February 26
---------------------------------------------------------
Members and creditors of Longway Construction Engineering Company
Limited will hold their annual meetings on February 26, 2010, at
10:00 a.m., and 10:30 a.m., respectively at the 62/F, One Island
East, 18 Westlands Road, Island East, in Hong Kong.

At the meeting, Stephen Liu Yiu Keung, the company's liquidator,
will give a report on the company's wind-up proceedings and
property disposal.


LOXFORD COMPANY: Wong and Fung Step Down as Liquidators
-------------------------------------------------------
Wong Ming Lai and Fung Tze Wa stepped down as liquidators of
Loxford Company Limited on January 20, 2010.


M3 STUDIO: Court Enters Wind-Up Order
-------------------------------------
The High Court of Hong Kong entered an order January 8, 2010, to
wind up the operations of M3 Studio Limited.

The company's liquidator is Mat Ng.


MOULIN GLOBAL: Ernst & Young Settles Negligence Claim
-----------------------------------------------------
Ernst & Young LLP Hong Kong, the accounting company that paid $200
million to creditors of its bankrupt client Akai Holdings Ltd.,
settled another negligence case involving a collapsed Hong Kong
firm, Bloomberg News reports citing the South China Morning Post.

Bloomberg relates the Morning Post said Ernst & Young Hong Kong
paid the liquidators of Moulin Global Eyecare between HK$250
million and HK$300 million to resolve the claim.

The Troubled Company Reporter-Asia Pacific reported on
September 25, 2009, that Ernst & Young settled a lawsuit over its
role in Akai Holdings Ltd and suspended a partner after the
accounting firm was accused of falsifying documents.  Liquidator
Borrelli Walsh, as cited by Bloomberg, said the firm agreed to pay
a "substantial" amount to settle claims of negligence in its
auditing of Akai between 1997 and 1999.

Based in Hong Kong, Moulin Global Eyecare Trading Ltd, a wholly
owned subsidiary of Moulin Global Eyecare Holdings --
http://www.moulin.com.hk/-- was once the world's third-largest
maker of eyeglasses until it went into liquidation in 2005.  The
primary activity of the Company was manufacturing and designing
ophthalmic goods, the Company was also engaged in distribution
and retailing of optical frames and sunglasses.

Chairman Ma Bo-kee founded Moulin on 1960 as a spectacle
workshop with 12 workers.  It listed on the stock exchange in
1993 and was ranked by Forbes Global in 1998 among the 300 best
small firms in the world.  By 2005, it had more than 5,000
workers with business in the United States and Europe.

Moulin's debt problems surfaced shortly after its auditor,
Deloitte Touche Tohmatsu, resigned in April last year.  Moulin
went bankrupt in June 2005 owing almost HKD3.6 billion, of which
HKD2.4 billion are owed from creditors in Hong Kong.


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JET AIRWAYS: Mulls Up to US$200 Mil. in Equity Placement
--------------------------------------------------------
Jet Airways is looking to raise US$150 million to US$200 million
through placement of equities to institutions, The Economic Times
reports.

Jet Airways SVP M Shiv Kumar told reporters on a conference call
that the company will be finalising the details in the next few
weeks.

Jet Airways (India) Ltd (BOM:532617) -- http://www.jetairways.com/
-- provides air transportation.  The geographic segments of the
company are domestic and international.  The company has a
frequent flyer program named Jet Privilege wherein the passengers
who uses the services of the airline become services of the
airline become members of Jet Privilege and accumulates miles to
their credit.  The company's subsidiaries include Jet Lite (India)
Limited, Jetair Private Limited, Jet Airways LLC, Trans
Continental e Services Private Limited, Jet Enterprises Private
Limited, Jet Airways of India Inc., India Jetairways Pty Limited
and Jet Airways Europe Services N.V.  On April 20, 2007, the
company acquired Sahara Airlines Limited.

                           *     *     *

Jet Airways posted a consolidated net loss of INR9614.10 million
for the year ended March 31, 2009, compared with consolidated net
loss of INR6538.70 million for the year ended March 31, 2008.
Consolidated total sales increased from INR109907.20 million for
the year ended March 31, 2008 to INR134488.60 million for the year
ended March 31, 2009.


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=================


STAR ENERGY: Moody's Assigns Corporate Family Rating at 'B2'
------------------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating to Star Energy Geothermal Limited.  At the same time,
Moody's has assigned a provisional (P)B2 rating to the proposed
senior secured notes to be issued by the company.  The outlook on
both ratings is stable.

This is the first time that Moody's has assigned ratings to Star
Energy.  The provisional status of the senior secured bond rating
will be removed upon completion of the bond issuance.

The proceeds from the issuance will refinance outstanding debt
under an existing bank facility, fund an interest reserve account
for the bond, and any excess proceeds will partially fund
developmental cost related to the proposed Unit 3 expansion.

"Star Energy's B2 rating reflects the favorable industry dynamics
for geothermal energy and strong energy demand in Indonesia.  It
also reflects the company's robust tariff structure, which
includes a take-or-pay contract with PLN (the government owned
utility, rated Ba2/Stable) expiring in December 2036, and a track
record of stable operating performance for its two operating
units, albeit one unit only came on stream this year," says
Jennifer Wong, a Moody's AVP.

"At the same time, the ratings are constrained by: (1) a history
in Indonesia of PLN renegotiating its take or pay arrangements
including with Star Energy; (2) a degree of uncertainty regarding
geothermal reserves being sufficient over the medium term to
support the power production; (3) a lack of operational
flexibility, given a one-location plant and its relatively small
capacity; (4) significant refinancing risk upon the maturity of
the bond and limited debt servicing capacity, and (5) weaknesses
in internal controls over financial reporting," says Wong.

"Furthermore, there is execution risks associated with the plan
for capacity expansion.  While Star Energy has a track record in
managing such expansion -- Unit 2 was completed two weeks ahead of
schedule and on budget -- the proposed Unit 3 expansion represents
over half of its existing installed capacity," says Wong.

Moody's takes some comfort from the fact that PLN has honored its
contractual obligations under the take or pay arrangement for the
3 years since it was amended.  However, Moody's note that the
history of restructuring around this does create uncertainty as to
how sustainable the tariff arrangement is over a long period of
time and in stressful economic conditions.

The final decision to proceed with the proposed Unit 3 expansion
will be subject to certification of geothermal resources and
receipt of additional funds.  While Moody's notes that there has
been a track record of shareholder loans to fund previous
expansion, the proposed Unit 3 expansion program has not been
fully funded and Star Energy is expected to utilize existing cash
of US$50 million and operating cash flow from its existing units
to partly fund the expansion plan.  It also has the ability under
the bond indenture to borrow additional funds or use capitalized
leases to fund the expansion.  There therefore remains a material
risk that debt will increase over the medium term, albeit this is
not the company's current plan.

The refinancing risk facing the company is not imminent but will
be substantial given all its debt will be in the form of the
bullet bonds maturing in 2015.  Furthermore, as the majority of
Star Energy's cash is being utilized to fund the expansion,
Moody's expects the company to refinance the notes when they fall
due.  The lack of a laddered maturity profile, amortization of the
debt or the building up of a cash reserve represents some weakness
in the company's rating.

Moody's notes that Star Energy is taking remedial steps to address
its internal control issues with regard to financial reporting.
Nevertheless, such internal control issues remain a concern and
could impact the rating.

Star Energy's debt-servicing capacity -- FFO/Debt of around 8-10%
and an average FFO/ Interest of 2.5-3.0x -- is appropriate for the
rating and reflects the concerns outlined above.

The stable outlook is underpinned by Moody's expectation that Star
Energy will continue to demonstrate a strong operating performance
and generate steady and predictable cash flow.

Upward pressure on the rating is unlikely in the next 12 months,
given the inherent risks associated with the company's large
expansion plan and the only recent commissioning of Unit 2.

On the other hand, negative rating pressure could emerge if 1)
there are significant cost overruns and/or delays to the expansion
plan, and which result in a materially adverse impact on Star
Energy's operational and financial profile, and impair its ability
to service the interest of the proposed bond; or 2) the company's
operational and financial performances deteriorate, such that
FFO/Debt falls below 5% and FFO/Interest below 2.0x on a
consistent basis; or 3) there is no improvement in internal
controls with regard to financial reporting, such that financial
statements are either materially restated or have a qualified
opinion from the auditors.

Star Energy Geothermal Limited is one of the largest geothermal
power stations in Indonesia with 227 MW of operational capacity.
It operates a geothermal energy resource area on the island of
Java in Indonesia.  Star Energy began commercial operations of the
power plant in June 2000 with Unit 1, a 110 MW geothermal turbine-
generator unit.  The company increased the installed generation
capacity by 117 MW in March 2009 through the commercial operation
of Unit 2, raising total installed capacity to 227 MW.  Star
Energy has right to develop and sell up to 400 MW to PLN.


TELEKOMUNIKASI SELULAR: Fitch Raises Issuer Ratings From 'BB+'
--------------------------------------------------------------
Fitch Ratings has upgraded the Long-term foreign currency Issuer
Default Ratings of PT Telekomunikasi Selular and PT Indosat Tbk to
'BBB-' from 'BB+', as well as the LTFC IDR of PT Telekomunikasi
Indonesia Tbk to 'BB+' from 'BB'.  At the same time, Fitch has
upgraded Telkomsel's Long-term local currency IDR to 'BBB' from
'BBB-'.  The Outlook on all ratings are Stable.

These positive rating actions follow Fitch's recent upgrades of
Indonesia's Sovereign ratings, where the LTFC and LTLC IDRs were
upgraded to 'BB+' from 'BB' with a Stable Outlook.  The Country
Ceiling was also upgraded to 'BBB-' from 'BB' (for more
information, please refer to "Fitch Upgrades Indonesia to 'BB+';
Outlook Stable", dated January 25, 2010).

Details of the rating actions are:

Telkomsel:

  -- LTFC IDR upgraded to 'BBB-' from 'BB+'; Stable Outlook;
  -- LTLC IDR upgraded to 'BBB' from 'BBB-'; Stable Outlook; and
  -- Senior unsecured rating upgraded to 'BBB-' from 'BB+'.

For Telkomsel's LTLC IDR (which is not exposed to foreign currency
transfer and convertibility risk), the agency maintains its view
of allowing Telkomsel to be rated higher than the sovereign's LTLC
IDR by two notches.  This is based on Telkomsel's strong credit
profile, as well as SingTel's strategic shareholding and
influence, which the agency believes provides an important
counter-balance to the Indonesian government's ownership through
Telkom.  Hence, this allows the company to be rated more toward
its standalone credit profile on local currency.

Indosat:

  -- LTFC IDR upgraded to 'BBB-' from 'BB+'; Stable Outlook;
  -- LTLC IDR affirmed at 'BBB-'; Stable Outlook; and
  -- Senior unsecured rating upgraded to 'BBB-' from 'BB+'.

After the upgrade, Indosat's LTFC IDR is no longer constrained by
the sovereign's Country Ceiling of 'BBB-'.  The ratings of Indosat
incorporate a three-notch uplift from its standalone ratings to
reflect a 'strong parent-weak subsidiary' relationship between
Qatar Telecom ('A+'/Stable), which has a 65% beneficial ownership
in Indosat.

Telkom:

  -- LTFC IDR upgraded to 'BB+' from 'BB'; Stable Outlook;
  -- LTLC IDRs upgraded to 'BB+' from 'BB'; Stable Outlook; and
  -- Senior unsecured rating upgraded to 'BB+' from 'BB'.

Given the fact that the Indonesian government holds a 52.44%
majority stake in the Telkom, it exerts significant influence on
its major business and financial decisions.  Therefore, the
company's ratings remain closely correlated with those of the
sovereign's, as demonstrated by the upgrades.


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JAPAN AIRLINES: Mizuho Said to be Biggest Lender, Bloomberg Says
----------------------------------------------------------------
Mizuho Financial Group Inc. will be the biggest lender to the
Japanese state-affiliated fund helping to restructure Japan
Airlines Corp., Bloomberg News reports citing three people with
knowledge of the matter.

Bloomberg's sources said the Enterprise Turnaround Initiative
Corp. of Japan last week agreed to borrow money from a total of
five banks in its first request for funds which will be used for
restructuring JAL.

Bloomberg says ETIC will borrow a total of JPY355 billion (US$3.9
billion) for six months starting on Jan. 28 as it prepares bridge
loans for JAL.

Earlier this month, Bloomberg recalls, the ETIC asked 39 local and
overseas banks to bid in an auction to provide government-
guaranteed loans.  The fund is arranging JPY600 billion in bridge
loans for Japan Air with Development Bank.  It is also providing
JPY300 billion in capital to the carrier, the report notes.

                             About JAL

Japan Airlines Corporation -- http://www.jal.co.jp/-- is a
Japan-based company mainly engaged in the provision of air
transport services.  The Company is active in five business
segments through its 203 subsidiaries and 83 associated companies.
JAL International Co. Ltd. is a wholly owned operating subsidiary
of Japan Airlines Corporation.

                        *     *     *

Japan Airlines Corporation, Japan Airlines International Co., Ltd.
and JAL Capital Co., Ltd., on January 19, 2010, filed petitions to
commenced corporate reorganization proceedings with the Tokyo
District Court.  The Court appointed the Enterprise Turnaround
Initiative Corporation of Japan and Eiji Katayama, Esq., as
reorganization trustees.

Japan Airlines Corp. filed a Chapter 15 petition in New York
(Bankr. S.D.N.Y. Case No. 10-10198).  The Company said debt is
$28 billion.

Bankruptcy Creditors' Service, Inc., publishes Japan Airlines
Bankruptcy News.  The newsletter tracks the Chapter 15 proceedings
and the bankruptcy proceedings in Tokyo undertaken by Japan
Airlines Corp. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)


JAPAN AIRLINES: Names Masaru Onishi as Group's New President
------------------------------------------------------------
Japan Airlines Group announced the appointments of the Group
President and Executive Vice President, who will take office with
effect from February 1, 2010.

Masaru Onishi has been elected to lead the JAL Group as the
president of the Group's holding company -- Japan Airlines
Corporation, and main air transport operator Japan Airlines
International.  He will also be assigned the role of Chief
Operating Officer (COO) for the holding company.

Mr. Onishi joined Japan Airlines in 1978 and for the 6 months
prior to his new assignment as president, was serving as the
president of Japan Air Commuter and an executive officer of Japan
Airlines International.

Hisao Taguchi, also, will be assuming the role of executive vice
president of the Group and of Japan Airlines International, after
serving as an executive officer in charge of the overall
operations of the JAL Group in the Kyushu region since April 2009.

                             About JAL

Japan Airlines Corporation -- http://www.jal.co.jp/-- is a
Japan-based company mainly engaged in the provision of air
transport services.  The Company is active in five business
segments through its 203 subsidiaries and 83 associated companies.
JAL International Co. Ltd. is a wholly owned operating subsidiary
of Japan Airlines Corporation.

                           *     *     *

Japan Airlines Corporation, Japan Airlines International Co., Ltd.
and JAL Capital Co., Ltd., on January 19, 2010, filed the
petitions to commenced corporate reorganization proceedings with
the Tokyo District Court.  The Court appointed the Enterprise
Turnaround Initiative Corporation of Japan and Eiji Katayama,
Esq., as reorganization trustees.

Japan Airlines Corp. filed for reorganization January 19 in the
Tokyo District Court and filed a Chapter 15 petition in New York
(Bankr. S.D.N.Y. Case No. 10-10198).  The Company said debt is
$28 billion.

Bankruptcy Creditors' Service, Inc., publishes Japan Airlines
Bankruptcy News.  The newsletter tracks the Chapter 15 proceedings
and the bankruptcy proceedings in Tokyo undertaken by Japan
Airlines Corp. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)


L-JAC 3: Fitch Takes Rating Actions on Various Trust Interests
--------------------------------------------------------------
Fitch Ratings has upgraded L-JAC 3 Trust's Class B trust
beneficiary interests due April 2013 and revised the Outlook on
Class C TBIs to Stable from Negative.  Full details of the rating
actions are:

  -- JPY5.6 billion*, Class A TBIs affirmed at 'AAA'; Outlook
     Stable;

  -- JPY4.0 billion*, Class B TBIs upgraded to 'AA' from 'A';
     Outlook Stable;

  -- JPY4.0 billion*, Class C TBIs affirmed at 'BBB'; Outlook
     Revised to Stable from Negative;

  -- JPY4.0 billion*, Class D-1 TBIs affirmed at 'BB-'; Outlook
     Negative;

  -- JPY1.4 billion*, Class E-1 TBIs affirmed at 'B'; Outlook
     Negative;

  -- JPY1.4 billion*, Class F-1 TBIs affirmed at 'CCC'; Recovery
     Rating of 'RR4';

  -- JPY1.5 billion*, Class G-1 TBIs affirmed at 'CCC'; Recovery
     Rating of 'RR6';

  -- JPY1.0 billion*, Class H-1 TBIs affirmed at 'CCC'; Recovery
     Rating of 'RR6';

  -- JPY0.583 billion*, Class I TBIs affirmed at 'CCC'; Recovery
     Rating of 'RR6'; and

  -- Interest (dividend)-only Class X-2 TBIs affirmed at 'AAA';
     Outlook Stable.

  * as of January 25, 2010

The upgrade of the Class B TBIs and the Outlook revision for the
Class C TBIs are based on Fitch's conservative analysis relating
to the improved credit enhancement levels caused by the recent
prepayment of one underlying loan.  In its previous analysis,
Fitch assumed this loan would default due to its relatively high
loan-to-value ratio.  This assumption was applied when the agency
took its previous rating actions on the transaction (please see
'Fitch Downgrades 8 Classes of L-JAC3 Trust, Affirms 2; Off RWN',
dated 5 October 2009 for further details).

The assumptions on which the residual underlying collaterals have
been assessed are basically the same as those applied in the
previous rating analysis, with the value of one property being
reduced slightly as the time to maturity has decreased.  Fitch
considers this property's value to be highly volatile, which is
one of the factors for maintaining Negative Outlooks on classes D-
1 and E-1.  The actual cash flows of the two underlying properties
continue to be in line with Fitch's initial expectations.

Fitch assigned ratings to this transaction in October 2006.  At
closing, the TBIs were secured by seven loans collateralized by 17
properties.  Since then, six classes of TBIs have been paid in
full and the remaining TBIs are ultimately secured by two loans
collateralized by two properties.

The ratings on the dividend-only Class X-2 TBIs only address the
likelihood of receiving dividend payments, while principal on the
related underlying assets remain outstanding.

For further information on the surveillance criteria and
methodology, please see the criteria report, 'Criteria for
Japanese CMBS Surveillance' and the special report, 'Application
and Impact of the Japanese CMBS Surveillance Criteria'.  Both
reports were published on 2 September 2009 and are available on
the agency's website, www.fitchratings.com.  Note that the reports
were published simultaneously and are intended to be read in
conjunction with each other.  The criteria report describes the
approach and framework of the methodology, and the special report
details the application and assumptions adopted for the 2009
surveillance review.

Rating Outlooks have been published for all newly issued Asia
Pacific Structured Finance tranches since June 2008, and
concurrently with rating actions for tranches issued prior to June
2008.  Unlike a Rating Watch which notifies investors that there
is a reasonable probability of a rating change in the short term
as a result of a specific event, rating Outlooks indicate the
likely direction of any rating change over a one- to two-year
period.


SEVEN & I: To Close Seibu Department Store This Year
----------------------------------------------------
Seven & I Holdings Co. plans to close the Seibu Yurakucho
department store in the Yurakucho district of downtown Tokyo later
this year due to the store's deteriorating performance, Japan
Today reports citing sources familiar with the matter.

According to Japan Today, the plan comes after the department
store division of Seven & I Holdings shut the Seibu Sapporo store
in Hokkaido Prefecture last September and booked an operating loss
of JPY2.2 billion for the nine months to last November.

Japan Today notes that the Yurakucho store, run by the holding
company's Sogo & Seibu Co unit, opened in 1984 with a 15,700-
square-meter sales floor and has competed fiercely with rivals
located in the adjacent Ginza district.


SPANSION INC: Files Supplements to 2nd Amended Plan
---------------------------------------------------
Spansion Inc. and its debtor affiliates delivered to the U.S.
Bankruptcy Court for the District of Delaware, on January 19,
2010, a supplement to their Second Amended Joint Plan of
Reorganization dated December 16, 2009.

The Plan Supplement contains copies of:

  -- the Estimate of Administrative and Priority Claims;

  -- List of Causes of Action;

  -- Rights Offering Documents:

     * Identity of Backstop Party
     * Backstop Rights Purchase Agreement

  -- Documents Related To New Notes:

     * Adjusted Plan Equity Value for Conversion Price
       Calculation 5

     * Indenture and Form of Note for New Convertible Notes 6

     * Indenture and Form of Note for New Senior Notes 7

  -- Financing Documents:

     * New Spansion Debt Documents 8

  -- Governance Documents:

     * New Governing Documents 9
     * Proposed Members of Initial Board 10

  -- Bankruptcy Documents:

     * Proposed Confirmation Order

The Debtors estimate that the potential priority claims and
administrative claims as of January 18, 2010 total:

Categories                              Low          High
----------                           ----------    ----------
Lease pymts for rejected leases      $2,561,775    $2,561,775
Potential cure amounts                3,108,679     5,125,025
Professional fees                    14,526,057    14,526,057
Professional success fee             13,155,604    13,155,604

Employee - John Kispert               1,750,000     1,750,000
Admin. tax claim - Santa Clara        1,330,420     1,330,420
Estimate for Warn Claims              7,102,000     7,102,000

Other Admin & Priority Claims           849,999     1,136,038

Interest on FRNs                      4,930,085     4,930,085
                                    ------------  -----------
                                     49,313,618    51,617,003
                                    ------------  -----------

Contingency                           5,500,000     8,000,000
                                    ------------  -----------
                                     54,813,618    59,617,003
                                    ------------  -----------
                                    ------------  -----------
Range w/o Spansion Japan              55,000,000    60,000,000
                                    ------------  -----------

Japan's Admin Claim

Due 3/31/2010                       10,000,000    10,000,000
Due 6/30/2010                       12,500,000    12,500,000
Due 9/30/2010                       12,500,000    12,500,000
Due 12/31/2010                      10,000,000    10,000,000

                                    ------------  -----------
Range w/ Spansion Japan's claim      100,000,000   105,000,000
                                    ------------  -----------

The Debtors added these actions in the definition of the term
"Causes of Action" in their Second Amended Joint Plan of
Reorganization:

  1. In the Matter of: Certain Flash Memory and Products
     Containing The Same; Spansion, Inc., Spansion LLC v.
     Samsung Electronics Co., Ltd., Samsung Electronics America,
     Inc., Samsung International, Inc., Samsung Semiconductor,
     Inc., Samsung Telecommunications America, LLC., Apple,
     Inc., Hon Hai Precision Industry Co., Ltd., AsusTek
     Computer Inc., Asus Computer International Inc., Kingston
     Technology Company, Inc., Kingston Technology (Shanghai)
     Co. Ltd., Kingston Technology Far East Co., Kingston
     Technology Far East (Malaysia), Lenovo Group Limited.,
     Lenovo(United States) Inc., Lenovo (Beijing) Limited.,
     International Information Products(Shenzhen) Co., Ltd.,
     Lenovo Information Products (Shenzhen) Co. Ltd., Lenovo
    (Huiyang) Electronic Industrial Co. Ltd., Shanghai Lenovo
     Electronic Co., Ltd., PNY Technologies, Inc., Research In
     Motion Ltd., Research In Motion Corporation, Sony
     Corporation, Sony Corporation of America, Sony Ericsson
     Mobile Communications, AB., Sony Ericsson Mobile
     Communications (USA), Inc., Beijing SE Putian Mobile
     Communication Co., Ltd., Transcend Information Inc.,
     Transcend Information, Inc. (US), Case No. 337-TA-664.

  2. Spansion, LLC v. Samsung Electronics Co. LTD., Samsung
     Electronics America Inc., Samsung Semiconductor Inc.,
     Samsung Telecommunications America LLC., Samsung
     Austin Semiconductor LLC, Case No. 08-855 (SLR).

  3. Actions relating to strict enforcement of any of the
     Debtors' intellectual property rights, including patents,
     copyrights and trademarks, including claims against third
     parties for infringement of any intellectual property
     rights or other misuse of that intellectual property.

  4. Avoidance Actions.

  5. Actions to recover money or property from customers,
     vendors or employees whether based on contract or tort.

  6. Actions brought against any Entities for failure to pay for
     products or services provided or rendered by any of the
     Debtors.

  7. Actions to recover any of the Debtors' or the Reorganized
     Debtors' accounts receivable or other receivables or rights
     to payment created or arising in the ordinary course of any
     of the Debtors' or the Reorganized Debtors' businesses,
     including claim overpayments and tax refunds.

  8. All other actions which were pending as of the Petition
     Date.

  9. All other actions, whether in law or in equity, whether
     known or unknown, which any Debtor or any Debtors' Estate
     may bring against any Entity.

A full-text copy of the Debtors' Plan Supplement is available for
free at http://bankrupt.com/misc/Spansion_PlanSupplement.pdf

Consequently, the Debtors filed with the Court, on January 22,
2010, an addendum to the Plan Supplement.  The Addendum contains
documents related to the new notes and governance documents,
full-text copies of which are available for free at:

      http://bankrupt.com/misc/Spansion_PlanAddendum1.pdf

Exhibit 10 to the Addendum discloses that pursuant to a further
agreement by and among the Debtors, the Official Committee of
Unsecured Creditors, the Senior Noteholders Informal Group, and
the Ad Hoc Committee of Convertible Noteholders, the Debtors will
file, on or before January 29, 2010, an exhibit disclosing the
identity of the Persons proposed to serve on the initial board of
directors of Reorganized Spansion Inc.

                         The Spansion Plan

Spansion's reorganization plan contemplates full payment to the
holders of $625 million in floating rate notes by giving them $158
million cash, $238 million in new notes, and $238 million in new
convertible notes.  Unsecured creditors are to split up some 46.3
million shares of stock.  The unsecured claim pool is made up of
$251 million in senior notes, $208 million in exchangeable
debentures, and claims of general unsecured creditors ranging
between $440 million and $841 million.  The Disclosure Statement
anticipates that unsecured creditors will recover between 31% and
45% from the stock.  The $7 million secured credit facility is to
be paid in full.

A hearing to consider confirmation of the Debtors' proposed plan
of reorganization is set to commence before the Court on
February 11, 2010.

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


SPANSION INC: Has Interim Nod for $450-Mil. Exit Facility
---------------------------------------------------------
Spansion Inc. and its debtor affiliates sought and obtained an
interim order from the Court authorizing them to enter into a
$450 million senior secured credit facility with Barclays
Capital, the investment banking division of Barclays Bank PLC and
Morgan Stanley Senior Funding, Inc., as joint lead arrangers, and
Barclays Bank PLC as administrative agent and collateral agent.

The Debtors' Plan of Reorganization provides the Debtors with the
option to select between two alternatives in dealing with the
claims of holders of prepetition floating rate notes.  The
Debtors can distribute cash, new senior notes in the aggregate
principal amount of $237,500,000 and new convertible notes in the
aggregate principal amount of $237,500,000 to holders of FRNs.
Alternatively, upon the satisfaction of certain conditions, the
Debtors can distribute additional cash to holders of the FRNs to
reduce in part or in full the principal amount of the New Senior
Notes and New Convertible Notes that would otherwise be
distributed to them under the first alternative.

The Debtors relate that their anticipated cash balances as of the
effective date of the Plan will be hundreds of millions of
dollars less than the amounts needed for them to exercise the
Cash Out Option to repay the FRN claims in full.  Thus, the
Debtors aver they will be in a position to exercise the Cash Out
Option only if they are able to raise a significant amount of
additional cash.

The Plan provides two mechanisms for the Debtors to raise cash:

  (i) The Plan provides for a rights offering pursuant to which
      the Debtors' unsecured creditors can acquire new common
      stock of Reorganized Spansion Inc. for an aggregate
      purchase price of approximately $109 million.

(ii) The Plan permits the Debtors to incur additional debt in
      an amount of up to $500 million though either the issuance
      of new debt securities or through a new term loan
      facility.

So long as they can consummate the Rights Offering and the New
Spansion Debt and satisfy the applicable requirements of the
Plan, the Debtors intend to exercise the Cash Out Option and
payoff the FRN claims in full.  The Debtors believe that they
will have a more sound and flexible capital structure post-
emergence from the Chapter 11 cases if they are able to exercise
the Cash Out Option, paying the FRN holders cash instead of
issuing the New Convertible Notes and the New Senior Notes to
them.

For a number of reasons, including the timeframe for securing the
New Spansion Debt, the Debtors, in consultation with the
Arrangers, concluded that the best option available to them to
attempt to secure the necessary funds to consummate the Cash Out
Option was to structure the New Spansion Debt as a secured,
syndicated term loan credit facility.

The salient terms of the Exit Financing Facility are:

  Borrower: Spansion LLC

  Joint Lead Arrangers/
  Joint Bookrunners:   Barclays Capital and Morgan Stanley

  Administrative Agent/
  Collateral Agent: Barclays Bank PLC

  Syndication Agent: Morgan Stanley

  Documentation Agent: Barclays Bank

  Term Facility: A senior secured term loan facility in an
  aggregate principal amount of up to $450,000,000

  Purpose: The proceeds of the Terms Facility will be used by
  the borrower as follows: (i) approximately $633,000,000 to
  fully discharge the claims of holders of the Senior Secured
  Floating Rate Notes due 2013, (ii) amounts necessary to pay
  Administrative Expense Claims and Priority Claims, and (iii)
  amounts necessary to pay fees and expenses related to the Term
  Facility.

  Termination: If (a) the Account Release Conditions are not met
  within 60 days of the Closing Date, (b) the Borrower, prior to
  that date, informs the Lenders in writing that the conditions
  will not be met, (c) the Term Loans are accelerated for any
  reason or (d) the Bankruptcy Court order approving fees and
  transactions contemplated is overturned, vacated or stayed,
  then a "termination date" will be deemed to have occurred and
  each Lender will be refunded directly from the Escrow Account
  its pro rata share of 100% of the aggregate principal amount
  of the Loans plus accrued interest thereon from the Closing
  Date through and including the Termination Date.  The
  remaining  balance in the Escrow Account will be distributed
  to the Borrower.

  Final Maturity and Amortization:  The Term Facility will
  mature on the date that is five years after the Closing Date,
  and will be payable in equal quarterly amounts of 1% per annum
  with the balance payable on the maturity date of the Term
  Facility.

  Counsel to the Arrangers and Administrative Agent: Dewey &
  LeBoeuf LLP

Redacted copies of the Term Sheet and Fee Letter with respect the
Exit Facility are available for free at:

   http://bankrupt.com/misc/Spansion_BarclaysFeeLetter.pdf
   http://bankrupt.com/misc/Spansion_BarclaysTermSheet.pdf

The Debtors have sought and obtained the Court's authority to
lodge the Fee Letter and Term Sheet under seal.  The Court issued
an order closing to the public those portions of the hearing
relating to the Confidential Exhibit, and directing the parties
before the Court at the hearing to not disclose the terms of the
Confidential Exhibits and to redact certain portions of the
transcript related to the hearing for approval of the Term Sheet
and Fee Letter.  The Debtors assert that the information
contained in the Confidential Exhibit is precisely the sort of
non-public, confidential "commercial information" which merits
protection under Section 107(b) of the Bankruptcy Code.  The
Confidential Exhibit includes summary of the fees associated with
the services to be provided by Barclays and Morgan Stanley under
the terms of the Fee Letter.  The Debtors relate that the
Confidential Exhibit relates to the allocation of credit risk and
collateral, and is necessary to properly incentivize Underwriters
or Arrangers to provide services in the still-recovering credit
market.  The Debtors aver that revealing the Confidential Exhibit
would put Barclays and Morgan Stanley at a competitive
disadvantage and impair their ability to effectively syndicate
the New Spansion Debt.

                         IBM Responds

Prior to the Court's entry of its interim order, the
International Business Machines Corporation filed an objection to
the proposed Exit Facility.

IBM and Spansion LLC are parties to a Patent Cross License
Agreement dated April 8, 2008.  Pursuant to the Agreement, IBM
and Spansion have granted one another a cross license in certain
of the patents which patents are defined as "Licensed Patents"
under the License Agreement.  The License Agreement provides that
neither party may assign the License Agreement except under
limited circumstances.

IBM asserted that any security interest that purports to grant a
lien encumbering Spansion LLC's license to IBM's License Patents
would constitute an assignment in violation of Section 8.2 of the
License Agreement.  IBM's second concern is that the security
interest granted in the Debtors' patents are not subject to IBM's
rights in those patents.  Therefore, any security interest, lien
or other right granted to the Lender in the Debtors' patents must
be subject to IBM's rights under the License Agreement.

IBM asserted that the Order approving the Motion must exclude the
License Agreement from the Collateral pledged to the Lender and
make all liens and security interests granted to the Lender
subject to the rights of IBM under the License Agreement.

To address IBM's objection, Judge Carey held that no security
interest will be granted in the Patent Cross License Agreement by
and between IBM and Spansion LLC or in the Debtors' other
intellectual property subject to the IBM Agreement in
contravention of the terms of the IBM Agreement.

A final hearing to consider the Motion will be held on Feb. 11,
2010.

A full-text copy of the Interim Order is available for free at:

  http://bankrupt.com/misc/Spansion_OrdBarclaysFinancing.pdf

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


SPANSION INC: Noteholders Say Plan Outline Has Misrepresentations
-----------------------------------------------------------------
The Ad Hoc Committee of Convertible Noteholders consisting of
certain holders of the 2.25% Exchangeable Senior Subordinated
Debentures Due 2016 issued by Spansion LLC asks the U.S.
Bankruptcy Court for the District of Delaware Court to:

  (a) vacate its order approving the Debtors' Disclosure
      Statement;

  (b) adjourn the confirmation hearing; and

  (c) direct appointment of trustee or examiner.

By the order of the Court dated December 18, 2009, the Debtors'
proposed Disclosure Statement was approved pursuant to Section
1125 of the Bankruptcy Code as containing "adequate information."
A hearing to consider confirmation of the Debtors' proposed plan
of reorganization is set to commence before the Court on February
11, 2010.  A hearing to consider whether to adjourn or continue
the confirmation hearing to a later date is set to be heard by
the Court on January 29, 2010.

Mark E. Felger, Esq., at Cozen O'Connor, in Wilmington, Delaware,
counsel to the Ad Hoc Committee of Convertible Noteholders,
asserts that the Disclosure Statement is replete with fundamental
misrepresentations.  Mr. Felger avers that the valuation
contained in the Disclosure Statement is not the Debtors'
valuation and, therefore, cannot be the starting point, or
initial benchmark, for a confirmation valuation trial.

"In the context of a confirmation valuation trial, it is
fundamentally unfair and improper for the Debtors to use a
valuation in a Disclosure Statement that is inconsistent with the
Debtors' managements' own valuation and underlying assumptions,"
Mr. Felger avers.  "Fundamentally, in the context of a Chapter
11, it is outrageous for a purported fiduciary not to provide a
complete and accurate picture of its financial condition and
prospects," he adds.

In addition to vacating the Disclosure Order and adjourning the
Confirmation Hearing, the Convertible Committee seeks the
appointment of an examiner pursuant to the mandatory provisions
of Section 1104(c)(2) of the Bankruptcy Code, which provides that
the Court will appoint an examiner where the Debtors' fixed,
liquidated unsecured debt exceeds $5 million.  Alternatively, the
Convertible Committee seeks an order directing the appointment of
a disinterested independent trustee.  According to the
Convertible Committee, that examiner should be charged with
investigating, among other things, the intentional
misrepresentations.

In a separate filing, the Convertible Committee seeks a Court
order authorizing them to file non-redacted version of
confidential documents under seal and directing that the non-
redacted Confidential Documents remain under seal and not made
available to anyone but the Court and the parties to the
Nondisclosure Agreement.  The Convertible Committee tells the
Court that the Confidential Documents contain information that
the Debtors provided to its advisors pursuant to a Nondisclosure
Agreement dated October 28, 2009.

                         The Spansion Plan

Spansion's reorganization plan contemplates full payment to the
holders of $625 million in floating rate notes by giving them $158
million cash, $238 million in new notes, and $238 million in new
convertible notes.  Unsecured creditors are to split up some 46.3
million shares of stock.  The unsecured claim pool is made up of
$251 million in senior notes, $208 million in exchangeable
debentures, and claims of general unsecured creditors ranging
between $440 million and $841 million.  The Disclosure Statement
anticipates that unsecured creditors will recover between 31% and
45% from the stock.  The $7 million secured credit facility is to
be paid in full.

A hearing to consider confirmation of the Debtors' proposed plan
of reorganization is set to commence before the Court on
February 11, 2010.

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


SPANSION INC: Proposes Settlement With Samsung
----------------------------------------------
Samsung Electronics Co., Ltd., and the Debtors are parties to
complex patent litigation pending in multiple courts.  In
November 2008, the Debtors commenced patent infringement actions
against Samsung in the United States District Court for the
District of Delaware and with the International Trade Commission
for alleged patent violations relating to Samsung flash memory.

The complaint in the Spansion ITC Action seeks exclusion from the
United States market of Samsung's flash memory alleging that this
memory infringes four of the Debtors' flash-memory related
patents.  The complaint in the Spansion ITC Action also seeks
exclusion from the United States market of mp3 players, cell
phones, digital cameras, and other consumer electronic devices
containing the allegedly infringing Samsung flash memory.  The
Spansion ITC Action is styled as International Trade Commission
Investigation No. 337-TA-664.

In the Delaware Action, the Debtors sought both an injunction and
damages for alleged patent violations relating to Samsung flash
memory.  The Debtors asserted six patents in the Delaware Action,
all of which are different from those at issue in the Spansion
ITC Action.

On January 16, 2009, Samsung filed an answer and counterclaims
against the Debtors in the Delaware Action.  In the Delaware
Action Counterclaims, Samsung alleged that the Debtors had
infringed and continued to infringe five Samsung patents and
sought an injunction and damages for those violations.

On January 15, 2010, the Parties entered into a stipulation,
which reflects the Parties' agreement to liquidate Samsung's
claims in the Patent Proceedings.

The Debtors believe that the Stipulation will be approved because
it provides for a consensual resolution regarding the process for
liquidating pre- and postpetition claims arising from complex
pending patent litigation and eliminates further litigation with
Samsung in the Chapter 11 cases.  To achieve this result, the
Debtors and Samsung have agreed on a reasonable reserve amount,
$75 million, for the Samsung General Unsecured Claim.  The
Debtors aver that as a result of this agreement, they will be
able to commence distributions of New Spansion Common Stock to
holders of Allowed Claims in Classes 5A, 5B and 5C under the Plan
without the need to liquidate or estimate the Samsung General
Unsecured Claim.  Furthermore, the Parties have agreed to defer
until post-Effective Date, litigation or other resolution of any
administrative claims asserted by Samsung.

Accordingly, the Debtors seek entry of an order approving the
terms of the Stipulation pursuant to Rule 9019 of the Federal
Rules of Bankruptcy Procedure, which grants the Court authority
to approve settlements of claims and controversies after notice
and a hearing.

Specifically, the Stipulation provides, inter alia:

  (i) the automatic stay pursuant to section 362 of the
       Bankruptcy Code and any other equitable injunction issued
       by the Court will be lifted  and Samsung may continue
       prosecution of its patent litigation effective as of the
       Debtors' emergence from chapter 11;

(ii) The Parties agree to exempt Samsung and its prepetition
      and postpetition claims from the releases and discharge of
      claims under the Plan to allow those claims to be
      liquidated in the Patent Proceedings;

(iii) The Samsung General Unsecured Claim and any administrative
      claims against the Debtors shall be liquidated in the
      Patent Proceedings with any recovery ultimately obtained
      by Samsung on account of the Samsung General Unsecured
      Claim being an Allowed Class 5B Claim under the Plan;

(iv) The Debtors or Reorganized Debtors, as applicable, will
      withhold and reserve shares of New Spansion Common Stock
      sufficient for distribution to Samsung in the event the
      Samsung General Unsecured Claim becomes an Allowed Claim
      in the amount of $75 million pending resolution of the
      Samsung General Unsecured Claim; and

  (v) Samsung agrees that it will not file an objection to
      confirmation of the Plan.

                    Spansion Japan Objects

Spansion Japan Limited asserts that not only does the Motion fail
to satisfy basic due process requirements of the Bankruptcy Code
and Bankruptcy Rules, the Motion is procedurally and
substantively deficient and must be denied.  Spansion Japan
maintains that the Motion conveniently overlooks the fact that
the Stay Order is presently on appeal to the United States
District Court for the District of Delaware and, thus, fails to
consider whether the Bankruptcy Court has jurisdiction to
consider the Motion in light of the pending appeal.

Furthermore, Spansion Japan avers that the Motion completely
ignores its Chapter 15 proceeding and the Stay Order in Chapter
15 proceeding.  Accordingly, Spansion Japan notes, even if the
Debtors have exercised proper business judgment in entering into
a stipulation with Samsung, they have absolutely no right to
unilaterally modify the Stay Order in Spansion Japan's Chapter 15
proceeding.

In its supplemental objection, Spansion Japan asks Samsung to
clarify its intent with respect to the ITC Action.  According to
Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., in
Wilmington, Delaware, attorney for Spansion Japan Limited,
Samsung was less than clear on whether it was its expectation
that it would be able to proceed with the Samsung ITC Action once
the conditions in the Stipulation have been met.  Ms. Skomorucha
asserts that the Stay Order doesn't stay the Samsung ITC Action
only as to Spansion Japan -- it stayed the Samsung ITC Action in
its entirety.

                    Debtors File Supplement

The Debtors relate that the Ad Hoc Consortium of Convertible
Debentures requested that any order approving the Stipulation
expressly provide that the reserve to be created in connection
with the Plan for Samsung's prepetition claims not be considered
in any valuation determination in connection with confirmation.
Moreover, the Debtors note, the Official Committee of Unsecured
Creditors expressed some concern about the amount of the Reserve
and also requested that the Stipulation be amended to permit
parties-in-interest to seek future reductions of the Reserve.

According to the Debtors, they understand that Samsung will be
proposing some language to provide for future adjustments of the
Reserve.  Even with the adjustment language, the Debtors believe
the Stipulation is reasonable appropriate and should be approved.

The Debtors tell the Court that the primary agreement reflected
in the Stipulation is that the Debtors will not attempt to
adjudicate Samsung's patent infringement claims in the Court and
in exchange, Samsung will not stand in the way of the Debtors'
efforts to reorganize and confirm the Plan.  The Debtors aver
that permitting future adjustments of the Reserve by the Court
runs counter to that primary agreement.  As to the Committee's
concerns about the size of the Reserve, the Debtors assert that
it is reasonable under the circumstances and that the Stipulation
taken as a whole satisfies the four-prong test for settlements.

The Debtors maintain that the purpose of the Reserve is four-
fold:

  (a) It puts the cap on Samsung's recovery in the Debtors'
      cases on account of its prepetition claims.  Because the
      Reserve acts as a cap on Samsung's prepetition claims, it
      was necessarily set at what the Debtors consider to be the
      high range of what damages Samsung ultimately might be
      awarded and without considering any offsetting recovery on
      account of the Debtors' claims against Samsung;

  (b) It effectively liquidates Samsung's prepetition claims for
      distribution purposes, a necessary step in the Debtors'
      ability to make distributions to creditors under the Plan
      if it is confirmed;

  (c) It obviates the need for the Court to further adjudicate
      the merits and amount of Samsung's prepetition claims; and

  (d) It ensures that Samsung will receive a recovery under the
      Plan if its claims are ultimately allowed in an amount
      that exceeds any damages awarded to the Debtors in the
      underlying patent litigations.

The Debtors assert that in the absence of the Stipulation, they
would not be able to make a distribution of New Common Stock to
holders of allowed Class 5 Claims until they have made sufficient
provision for Samsung's claims.

                      Samsung's Statement

In response to the Committee's objection, Samsung avers that
there is no basis in the Bankruptcy Code to artificially cap its
General Unsecured Claims without due process, so it would not be
possible to cap its General Unsecured Claims without liquidating
or estimating them.  According to Samsung, it is undisputed that
its General Unsecured Claims are extremely complex, and that
liquidating them could take years.  Samsung adds that an
estimation proceeding would also be complex, and thus time-
consuming, and the Debtors have acknowledged it may not yield a
result that accurately predicts the outcome of the litigation.

Samsung maintains that the Stipulation is not directed to
Spansion Japan and does not modify or vacate any stay in Spansion
Japan's Chapter 15 case.

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


SPANSION INC: Proposes to Settle Japan Dispute for $45-Mil.
-----------------------------------------------------------
Historically, Spansion LLC relied upon Spansion Japan Limited
for, among other things, (i) sales and applications support, as
Spansion Japan accounts for approximately 25% of Spansion LLC's
total global sales; (ii) wafer fabrication, as Spansion Japan's
JV3 production facility is projected to supply approximately 25%
of Spansion LLC's total wafers in the first quarter of 2010; and
(iii) research and development.  In turn, Spansion Japan relied
on Spansion LLC for 100% of its revenue and cost reimbursement,
as Spansion LLC is both the sole customer of Spansion Japan's
wafers and sort services, and the sole supplier for Spansion
Japan's distribution business.

Davis Lee Wright, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, counsel for the Debtors, says the
relationship between the parties has deteriorated dramatically
since the filing of the Debtors' Chapter 11 cases, due in part to
the competing fiduciary responsibilities confronted by the
Debtors and Spansion Japan, culminating in the rejection of the
Foundry Agreement and extensive litigation over the GE Financial
Services Corporation Administrative Expense Motion, the Spansion
Japan Administrative Expense Motion, and the Debtors' Motion to
Estimate Claims of Spansion Japan.

"Given the uncertainty surrounding the resolution of the motions
and the Spansion Japan Administrative Expense and the impact that
resolution could have on the reorganizations of the Debtors and
Spansion Japan, the parties have agreed to resolve the GE
Administrative Expense Motion, the Spansion Japan Administrative
Expense Motion and the Estimation Motion and the claims of the
parties, pursuant to a set of consensual, cooperative procedures
which provide value and promise for both of their estates," Mr.
Wright tells the Court.

The Settlement covers all aspects of the relationship between
Spansion LLC and Spansion Japan, including, entry into the new
Foundry Agreement providing for continued wafer and sort services
from Spansion Japan.  Thus, the Debtors maintain, the Settlement
provides Spansion LLC with manufacturing services and ongoing
support for its Japanese customers during this time of
transition, while simultaneously giving Spansion Japan the basis
upon which to reorganize as a standalone entity.

"Those arrangements not only are consistent with, but will also
facilitate the success of, the formation of Spansion LLC's new
subsidiary, Spansion Nihon, which will ultimately provide to
Spansion LLC critical services to ensure the Debtors' success
post-bankruptcy, the Debtors assert," Mr. Davis asserts.

Spansion LLC and Spansion Japan acknowledge that there remain
issues respecting rejection damages and Spansion LLC's plan of
reorganization.  Primarily because the parties simply have
divergent views on the potential value of Spansion Japan's
potential claims arising from the rejection of the Foundry
Agreement or the Debtors' potential rejection of the other
agreements to which the Debtors and Spansion Japan are parties,
however, the parties determined to consummate this Settlement
to preserve value through fostering customer relationships and
reserve the rejection claim issues for another day.

"For now, the Settlement allows the parties to continue to do
business in a constructive manner as well as provide a framework
for the future determination of their entire relationship," Mr.
Wright maintains.

Accordingly, the Debtors and Spansion Japan ask Court enter an
order authorizing them to enter into the Settlement reflected in
a Term Sheet, including (i) the execution of the Definitive
Agreements and (ii) the taking of all actions necessary to fund
and cause Spansion Nihon to acquire certain assets of Spansion
Japan.

The Settlement contemplates:

  (i) the continued purchase of wafers from Spansion Japan by
      Spansion LLC at a defined price, quantity and duration via
      the Foundry Agreement;

(ii) other definitive agreements to assist the parties to
      define their relationship as they both pursue a successful
      emergence from bankruptcy;

(iii) a settlement payment in lieu of the Spansion Japan
      Administrative Expense and in consideration of the various
      other benefits of the Settlement including in particular
      the License Agreement; and

(iv) the reservation of Spansion Japan's Rejection Damages
      Claim and plan confirmation challenges for the upcoming
      confirmation trial in the Debtors' chapter 11 cases.

                        Foundry Agreement

Under the Foundry Agreement, Spansion LLC will purchase from
Spansion Japan's JV3 fabrication facility at least 200,000 wafers
over the next six quarters.  Spansion Japan will continue to
provide sort services to Spansion LLC during the same period,
with a minimum floor sort revenue of $8.9 million per quarter to
Spansion Japan.  Although most of the wafers produced by Spansion
Japan can also be produced at the Debtors' Austin fabrication
facility, not all of those wafers can be produced in Austin at
this time.  This arrangement continues the relationship between
Spansion LLC and Spansion Japan.  In particular, the Foundry
Agreement permits Spansion LLC to continue its operations without
disruption to its customers while transitioning production of
wafers from Spansion Japan's JV3 Fab to Spansion LLC's Fab 25 in
an orderly fashion.  Simultaneously, the Foundry Agreement
provides Spansion Japan with time and revenue to implement
alternatives to establish its independent viability post-
bankruptcy.  This aspect of the Settlement will cost the Debtors
approximately $11 million in EBITDA during the six quarter period
-- in other words, if the Debtors instead produced these wafers
in Austin, they would achieve EBITDA savings of $11 million.
When compared against the various benefits available under the
Settlement, the Debtors view this cost as modest.

In addition, Spansion Japan has also agreed to provide certain
technical information to the Debtors, and the Debtors have agreed
to pay Spansion Japan $5 million for those technical information.
The parties had disagreements over the manner, timing and extent
to which Spansion Japan was obligated to provide technical
information to Spansion LLC.  This aspect of the Settlement
confirms that Spansion Japan will provide information reasonably
necessary to the Debtors in their ongoing business, as well as
provides needed capital for operations to enable Spansion Japan
in fact to be in a position to provide the information.

                       License Agreement

Although during the course of the litigation, the parties have
contested their rights in certain technology and intellectual
property, the License Agreement provides clarity and compromise
with respect to these issues in a way that is acceptable to both
parties for their continued business dealings.  Under the License
Agreement, Spansion Japan will continue to license from Spansion
LLC those intellectual property rights that it needs to continue
providing services to Spansion LLC.  In addition, the License
Agreement grants a license to Spansion Japan of certain other
intellectual property rights for Spansion Japan to make certain
licensed products.  The term of the License Agreement extends for
up to five years.  In addition, the parties will consider,
discuss in good faith and potentially negotiate a further
extension of that term, depending on market conditions at the
time of those discussions.  By entering into the License
Agreement, Spansion LLC and Spansion Japan establish an arm's-
length arrangement whereby Spansion Japan is able to generate
revenue from providing services to Spansion LLC, and, in turn,
Spansion LLC receives the benefit of those services, thereby
allowing the entities to establish successful independent
operations.  In addition, the License Agreement provides an
important building block to Spansion Japan in connection with its
own reorganization in the Japanese Proceeding.  Spansion Japan
would not have agreed to the Settlement but for this
important feature.

                  Transition Services Agreement

Under the TSA, Spansion LLC and Spansion Japan will continue to
provide certain crucial technology and other support to each
other during this time of transition.  Spansion Japan, for
instance, will continue to provide certain foundry-related
technical support and data to Spansion LLC that Spansion LLC
would not be able to procure easily or timely without the
assistance of Spansion Japan.  Spansion LLC, in turn, will
continue to provide basic office support to Spansion Japan that
as administrative and similar services and other services as may
be agreed to by the parties.  By way of the TSA, Spansion LLC and
Spansion Japan will provide one another with those services for a
period of time to allow both to independently establish their
alternatives for the future.  The failure to achieve this term of
the Settlement would have resulted in material disruption and
hardship to both companies.

                       Bailment Agreement

The Bailment Agreement governs the lending of probe cards needed
for testing purposes.  Certain probe cards belong to Spansion LLC
while others belong to Spansion Japan.  Each party lends probe
cards to the other, and they are thus moved frequently between
the two companies to maximize the efficiency of testing wafers.
Under the Bailment Agreement, the parties regulate these
arrangements, including the lending of additional probe cards
needed by Spansion Japan to continue providing sorting services
to Spansion LLC during the transition period.

                           Term Sheet

Under the Term Sheet, Spansion LLC will pay to Spansion Japan
$45,000,000 in consideration of the Spansion Japan Administrative
Expense and the various other benefits of the Settlement.  The
Settlement Payment will be payable over the course of 2010 in
this manner:

  * $10,000,000 on March 31, 2010;
  * $12,500,000 on June 30, 2010;
  * $12,500,000 on September 30, 2010; and
  * $10,000,000 on December 31, 2010.

Although $45,000,000 is greater than what Spansion LLC believes
would have been the allowed amount of the Spansion Japan
Administrative Expense, $45,000,000 is slightly more than 10% of
the amount sought in connection with the Spansion Japan
Administrative Expense.

Furthermore, the parties anticipated that they would require
multiple trial dates to conclude the litigation of the disputes
between them.  The Court would also take additional time to make
a decision and render an opinion.  It is unclear what impact that
delay would have on the resolution of the disputes and,
ultimately, confirmation of the Debtors' plan of
reorganization.  Accordingly, Spansion LLC and Spansion Japan
believe that $45,000,000 is a fair and reasonable amount to
achieve resolution of the issues at this time with complete
certainty, particularly when the payment timing is considered.

In addition, the Term Sheet provides for the resolution of the
substantial claims of Spansion LLC and Spansion Japan against one
another and requires that GE Financial Services Corporation
withdraw all of its claims against the Debtors.  Spansion LLC,
however, will not be entitled to any distribution on account of
the Spansion LLC Prepetition Claims.  All claims of Spansion
Japan and Spansion LLC against each other will be expunged,
released and satisfied, including, but not limited to Spansion
Japan's claims under Section 503(b)(9) of the Bankruptcy Code.
Spansion Japan will retain its Rejection Damages Claim against
Spansion LLC, and Spansion LLC will retain all rights and
defenses against those Rejection Damage Claims, including, but
not limited to, any liability that Spansion Japan may have under
Chapter 5 of the Bankruptcy Code.  Spansion Japan will retain its
rights and defenses to oppose any claim or defense to its
Rejection Damage Claims, including, but not limited to, under
Chapter 5 of the Bankruptcy Code.

Full-text copies of the Term Sheet, Foundry Agreement, Transition
Services Agreement, and Bailment Agreement are available for free
at http://bankrupt.com/misc/Spansion_TermsheetSJPsettlement.pdf


                       Kawasaki Business

Consistent with the order authorizing the formation and funding
of Spansion Nihon, Spansion LLC will fund Spansion Nihon and will
cause Spansion Nihon to purchase the Kawasaki Business.  The
purchase transitions key services from Spansion Japan to Spansion
LLC through Spansion Nihon.

Consistent with the Term Sheet, Spansion Nihon will purchase
Spansion Japan's Kawasaki business, which consists of
distribution and research and development, for $12,500,000,
payable at closing.  Certain of Spansion Japan's Kawasaki
personnel will transfer and become employees of Spansion Nihon.
By consummating this aspect of the Term Sheet, Spansion LLC,
through Spansion Nihon, retains control over those aspects of
Spansion Japan's business that are specific to Spansion LLC and
its future success, but which are not the foundation of any
future business of Spansion Japan's.  This aspect of the
settlement will also allow the Debtors to transition an ongoing
distribution business into Spansion Nihon, where, absent the
settlement, the Debtors would be required to start their
distribution business out of whole cloth.  This provides
substantial value to the Debtors in terms of their customer
relationships.  For Spansion Japan, it provides for the placement
of personnel and assets that would otherwise be superfluous to
its operations in the absence of a relationship with the Debtors.

Prior to the Debtors' filing of their request to approve the
settlement with Spansion Japan Limited, they sought and obtained
the Court's approval to extend their time to file their request,
through January 18, 2010.

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


SPANSION INC: Reports $4,329,000 Net Income for 4th Quarter
-----------------------------------------------------------
Spansion Inc. announced on January 15, 2010, operating results
for its fourth quarter and fiscal year ended December 27, 2009.
Spansion reported fourth quarter of 2009 net sales of $307.1
million and its second consecutive profitable quarter with net
income on a U.S. GAAP basis of $4.3 million, or diluted net
income per share of $0.02.  Operating income for the quarter was
$20.7 million and U.S.  GAAP gross and operating margins were
33.1% and 6.7%.

                     U.S. GAAP Comparison

                      Q4 2009         Q3 2009        Q4 2008
                      -------         -------        -------
Net sales       $307.1 million  $327.6 million   $468.0 million

Net income(loss)  $4.3 million   $1.5 million ($2,076.9 million)

Diluted net income
(loss) per share         $0.02          $0.01           ($12.90)

Operating income
(loss)           $20.7 million   $20.0 million($2,007.3 million)

Gross margin             33.1%           28.3%           (43.1%)

Operating margin          6.7%            6.1%          (429.0%)

"Spansion's core markets showed strength this quarter and helped
the company easily surpass our expectations for revenue in 2009,"
said John Kispert, Spansion president and CEO.  "With our
restructuring and reorganization activities largely behind us, we
look forward to continued strong results in 2010."

Non-GAAP net income for the fourth quarter of 2009, excluding
restructuring, reorganization, and other special charges and
credits, was $29.8 million, or net income per share of $0.17.
Reconciliation between U.S. GAAP operating results and non-GAAP
operating results is provided following the financial statements
in this release.

                       Non-GAAP Comparison

                        Q4 2009      Q3 2009      Q4 2008
                        -------      -------      -------
Net income(loss)  $29.8 million   $17.6 million ($433.0 million)
----------------  -------------   -------------  --------------
Diluted net income
(loss) per share  $0.17           $0.10         ($2.69)
----------------- -----           -----          ------

The company increased its cash position by over $61 million and
ended the fourth quarter of 2009 with $324.9 million in cash,
compared to $263.6 million at the end of the third quarter of
fiscal 2009 and $116.4 million at the end of the fourth quarter
of 2008.

"The continued margin improvement on lower net sales is a result
of Spansion's strategy to focus on embedded and targeted wireless
applications," said Randy Furr, Spansion CFO.  "The company's
sound financial management, including operational expense control
and working capital management, helped increase the cash position
over $225 million since first quarter 2009, resulting in
approximately $325 million of cash and equivalents at year-end."

                         Restructuring

Spansion's second amended disclosure statement and its plan of
reorganization were approved by the U.S. Bankruptcy Court on
December 22, 2009.  A confirmation hearing for the plan of
reorganization is scheduled for February 11, 2010.

Prior to the filing of Spansion's Annual Report on Form 10-K for
the fiscal year ended December 27, 2009, the company may settle,
in connection with the company's Chapter 11 bankruptcy
proceedings, pre-petition claims of creditors.  Consequently, the
company may be required, in accordance with U.S. GAAP, to record
adjustments related to any such settlement of pre-petition
claims.  These adjustments may change reorganization items and
net income presented in the statement of operations, and
liabilities subject to compromise presented in the balance sheet.
As a result, there could be a material change to the statement of
operations and balance sheet reported in this release.

                         Spansion Japan

On March 3, 2009, Spansion Japan Limited commenced corporate
reorganization proceedings under the Japanese Corporate
Reorganization Law (Kaisha Kosei Ho) in the Tokyo District Court.
As a result, and in accordance with U.S. GAAP, the financial
results of Spansion Japan Limited are not included in the
consolidated financial results of Spansion Inc. after March 3,
2009.  On January 8, 2010, the company announced that it reached
verbal agreements in principle with its former subsidiary,
Spansion Japan, to acquire Spansion Japan's distribution business
and to obtain foundry services, including wafer and sort
services, from Spansion Japan.  Additional details can be read in
Spansion's 8-K filing on January 11, 2010, which can be accessed
at http://investor.spansion.com.

              Use of Non-GAAP Financial Information

The non-GAAP and supplemental information provided in this press
release is a supplement to, and not a substitute for or superior
to, the company's financial results presented in accordance with
U.S. GAAP.  The non-GAAP financial measures presented by the
company may be different than the non-GAAP financial measures
presented by other companies.

The non-GAAP and supplemental information is provided to enhance
the user's overall understanding of the company's operating
performance.  Specifically, the company believes the non-GAAP
information provides useful measures to investors regarding the
company's financial performance by excluding certain costs and
expenses that the company believes are not indicative of its core
operating results.  The presentation of non-GAAP and supplemental
information is not meant to be considered in isolation or as a
substitute for results prepared and presented in accordance with
U.S. GAAP.


                         Spansion Inc.
              Condensed Consolidated Balance Sheet
                     As of December 27, 2009

ASSETS
Cash & Cash Equivalents                          $324,903,000
Auction rate securities                           100,335,000
Accounts Receivable                               129,174,000
Accounts receivable, related party                366,602,000
Allowance for doubtful accounts                   (56,408,000)
Inventories                                       141,723,000
Deferred income taxes                              13,332,000
Prepaid expenses and current assets                49,533,000
                                                --------------
Total current assets                              1,069,194,000
Property and Equipment                              322,710,000
Auction rate securities                                       0
Other assets                                         46,073,000
                                                --------------
Total Assets                                     $1,437,977,000
                                                ==============

Liabilities and Stockholders' Deficit
Current Liabilities
Notes payable                                              $0
Short term note                                    64,149,000
Accounts Payable & Accrued Liabilities            146,140,000
Accounts Payable related party                    221,211,000
Accrued compensation and benefits                  21,630,000
Income taxes payable                                   83,000
Deferred income                                    62,958,000
                                                --------------
Total current liabilities                           516,171,000
Deferred income taxes                                13,405,000
Other long-term liabilities                           9,825,000
Liabilities subject to compromise                 1,756,269,000
                                                --------------
Total liabilities                                 2,295,670,000
Stockholders' deficit                              (857,693,000)
                                                --------------
Total liabilities and stockholders' deficit      $1,437,977,000
                                                ==============

                         Spansion Inc.
             Consolidated Statement of Operations
             For Quarter Ended December 27, 2009

Net Sales                                          $307,146,000
Cost of Sales                                       205,504,000
                                                --------------
Gross Margin                                        101,642,000

Research and Development                             25,533,000
Sales, general and administrative                    41,661,000
Restructuring charges                                 1,206,000
Asset impairment charges                             12,538,000
                                                --------------
Operating income(loss)                               20,704,000
Other than temporary impairment                               0
Gain on deconsolidation                                       0
Interest and other income                             1,110,000
Interest expense                                     (8,099,000)
                                                --------------
Income(loss) before reorganization items             13,715,000
Reorganization Items                                 (9,736,000)
                                                --------------
Income(loss) before income taxes                      3,979,000
Benefit(provision) for income taxes                     350,000
                                                --------------
Net income(loss)                                     $4,329,000
                                                ==============

                           Spansion Inc.
                Consolidated Statement of Cash Flows
                For Quarter Ended December 27, 2009

Cash Flows from Operating Activities:
Net income(loss)                                     $4,329,000
Adjustment to reconcile net loss to net
cash provided by operating activities:
Depreciation, amortization                         29,620,000
Asset impairment charges                           14,045,000
Provision for deferred income taxes                     6,000
Provision for doubtful accounts                       578,000
Net loss on sale of property                        1,448,000
Compensation under employee stock plans             1,976,000
Gain on deconsolidation of subsidiary                       0
Gain on sale of Suzhou entity                      (3,885,000)
Loss from write-off rejected capital                        0
Changes in operating assets and liabilities:
  Increase in accounts receivable                  (66,724,000)
(Increase) decrease in inventories                 (4,527,000)
(Increase)decrease in prepaid expenses                660,000
(Increase)decrease in other assets                  2,833,000
Increase(decrease) in accounts payable             72,069,000
Decrease in income taxes payable                     (381,000)
Increase in deferred income                         6,663,000
                                                --------------
Net cash provided by operating activities            58,710,000

Cash Flows from Investing Activities:
Proceeds from sale property, plant, equip.            3,507,000
Purchases of property, plant, equipment             (14,066,000)
Cash proceeds from PTI                               15,539,000
Proceeds from redemption of ARS                       4,150,000
                                                --------------
Net cash provided by investing activities             9,130,000

Cash Flows From Financing Activities:
Proceeds from borrowings                                      0
Payments on debt and capital lease                   (6,491,000)
                                                --------------
Net cash used in financing activities                (6,491,000)

Effect of exchange rate changes on cash                       0
                                                --------------
Net increase in cash and equivalents                 61,349,000
Cash and cash equiv. beginning period               263,554,000
                                                --------------
Cash and cash equiv. at end of period              $324,903,000
                                                ==============

                        About Spansion Inc.

Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/--
is a Flash memory solutions provider.  Spansion is a former joint
venture of AMD and Fujitsu.

Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion
International, Inc., and Cerium Laboratories LLC filed voluntary
petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead
Case No. 09-10690).  On February 9, 2009, Spansion's Japanese
subsidiary, Spansion Japan Ltd., voluntarily entered into a
proceeding under the Corporate Reorganization Law (Kaisha Kosei
Ho) of Japan to obtain protection from its creditors as part of
the company's restructuring efforts. None of Spansion's
subsidiaries in countries other than the United States and Japan
are included in the U.S. or Japan filings.

Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A.
Posin, Esq., at Latham & Watkins LLP, have been tapped as
bankruptcy counsel.  Michael R. Lastowski, Esq., at Duane Morris
LLP, is the Delaware counsel.  Epiq Bankruptcy Solutions LLC, is
the claims agent.  The United States Trustee has appointed an
official committee of unsecured creditors in the case.  As of
September 30, 2008, Spansion disclosed total assets of
US$3,840,000,000, and total debts of US$2,398,000,000.

Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009
(Bankr. D. Del. Case No. 09-11480).  The Chapter 15 Petitioner's
counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes.  It said
that Spansion Japan had US$10 million to US$50 million in assets
and US$50 million to US$100 million in debts.

Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding
undertaken by Spansion Inc. and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)


WILLCOM INC: May File for Bankruptcy Protection Next Month
----------------------------------------------------------
Bloomberg News, citing Nikkei English News, reports that Willcom
Inc. may file for bankruptcy protection in Japan as early as next
month to reorganize debt and revive the company.

The Nikkei said that under a plan negotiated with Japan's state-
backed Enterprise Turnaround Initiative Corp. and Softbank Corp.,
Willcom's capital would be written off entirely and the company
may be split into two, Bloomberg relates.  The plan, similar to
the one being used for Japan Airlines Corp last week, may be
submitted to the Tokyo District Court, it said.

Willcom, however, said in an e-mailed statement Tuesday that the
Nikkei report is speculation and rescheduling efforts won't affect
the company's operations.

"We understand Carlyle's Willcom is considering other ways to
turnaround even after it sought an alternative dispute resolution
plan," Haruhiko Kitagawa, a Kyoto-based spokesman for Kyocera,
told Bloomberg.

Bloomberg recalls the Tokyo-based wireless carrier, which has been
losing subscribers as rivals offer faster mobile-phone services,
said in September it had been unable to agree on a revival plan
with all creditors after failing to reschedule debt payments.

Willcom had total liabilities of JPY173.3 billion, or six times
its shareholders' equity, Bloomberg discloses.

Willcom Inc. http://www.willcom-inc.com/-- provides wireless data
and voice services to corporate and individual customers
throughout Japan.  Willcom is the largest operator employing
Personal Handyphone System (PHS)technology.

Washington, D.C.-based Carlyle, owns 60 percent of closely held
Willcom, while Kyocera has 30 percent and KDDI holds 10 percent.


* JAPAN: National Debt Sets to Rise to JPY973 Trillion in 2010
--------------------------------------------------------------
Kyoko Shimodoi and Toru Fujioka at Bloomberg News report that the
Finance Ministry of Japan said the country's national debt is set
to rise to JPY973 trillion (US$10.8 trillion) by the end of fiscal
2010.

According to Bloomberg, the ministry said the total is 8% more
than the projected JPY900 trillion for the period ending March 31,
when debt grew 6.3% from a year earlier.

Bloomberg says the yield on the benchmark 10-year bond rose after
the report showed falling revenues and more spending are
exacerbating the country's debt burden, already the world's
largest.

Yasuhide Yajima, a senior economist at NLI Research Institute Ltd.
in Tokyo, told Bloomberg that Prime Minister Yukio Hatoyama, who
has pledged a JPY7.2 trillion stimulus package and record bond
sales since coming to office in September, needs to find ways to
contain debt to prevent a surge in borrowing costs.

"Hatoyama seems to be putting too much weight on spending without
plans to balance the budget," the report quoted Mr. Yajima as
saying.  "The government shouldn't underestimate the risk of
expanding debt, which could become a heavy burden even with the
slightest increase in bond yields."

Bloomberg relates the ministry said the latest projections include
outlays on bonds and financial bills.  The yield on Japan's
benchmark bonds rose one basis point to 1.335 percent in Tokyo.

Citing the International Monetary Fund, Bloomberg notes that
Japan, with a shrinking population and entrenched deflation, may
see its debt burden jump to 246% of gross domestic product by
2014.


=========
K O R E A
=========


HYNIX SEMICONDUCTOR: No Bidders Yet for Hynix Stake
---------------------------------------------------
Jung-Ah Lee at Dow Jones Newswires reports that creditors of Hynix
Semiconductor Inc. haven't yet managed to find bidders interested
in buying their stake in the chip maker ahead of a deadline that
expires Friday.

A person familiar with the situation told Dow Jones that the stake
sale process hasn't been going well with no particular company
showing an interest in the Hynix stake.

Dow Jones says the creditors may consider a block sale if bidding
fails for the second time.

As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 27, 2009, Hynix Semiconductor Inc.'s creditors re-invited
fresh bids for the sale of a combined 28% holding in the chipmaker
and receive letters of intent from potential investors by January
after Hyosung Corp. dropped its bid.

Invitational notices for South Korean companies to submit bids
went out Dec. 20.  Letters of intent to buy Hynix will be accepted
by Jan. 29, Kyodo News said.  No local company has so far shown
any interest in the offer.

The stake sale, which is estimated to be worth KRW4.5 trillion is
being managed by Credit Suisse Ltd., Woori Investment & Securities
Co. and state-run Korea Development Bank.

Hynix Semiconductor Inc. -- http://www.hynix.com/-- is an Icheon,
South Korea-based memory semiconductor supplier offering Dynamic
Random Access Memory chips and Flash memory chips to a wide range
of established international customers.  The Company's shares are
traded on the Korea Stock Exchange, and the Global Depository
shares are listed on the Luxemburg Stock Exchange.

                           *     *     *

As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 27, 2010, Moody's Investors Service changed to stable from
negative the outlook for Hynix Semiconductor Inc's B1 corporate
family and senior unsecured bond ratings.  The rating action has
been prompted by the sharp rebound in the company's operating
performance and improved liquidity profile.

Standard & Poor's Ratings Services, on Nov. 17, 2009, revised to
stable from negative the outlook on its long-term corporate credit
rating on Hynix Semiconductor Inc. following the recovery of the
DRAM market and the company's profitability.  At the same time,
Standard & Poor's affirmed its 'B+' long-term corporate and 'B'
senior unsecured debt ratings on Hynix.


KUMHO ASIANA: Balks at Investors' Plan to Acquire Stake in Units
----------------------------------------------------------------
The Korea Herald reports that Kumho Asiana Group has opposed the
plan of financial investors in Daewoo Engineering and Construction
to take over the group's affiliates, saying the proposal was
unrealistic.

"It is not clear whether this proposal will work and we see
problems involved in many aspects," the report cited Kumho Asiana
in a statement.  "So (the group) is in the position that such idea
of financial investors (in Daewoo) should not to delay
restructuring procedure supported by law."

The Herald recalls that investors in Daewoo E&C, an up-for-sale
construction unit of Kumho Asiana, said last week they are looking
to acquire controlling stakes in Kumho Industrial and two other
group affiliates in exchange for KRW2.2 trillion in fresh capital,

According to the report, Kumho Asiana Group said it is not sure
whether the Daewoo investors can secure the necessary financial
backing.

The report relates the group said the plan does include ways to
raise KRW2.2 trillion from foreign banks and the local pension
fund, but fails to show how to deliver fresh capital in detail.
The plan also does not have countermeasures to deal with possible
liquidity shortage problems before the company increases capital
by issuing new shares, the group added.

As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 4, 2010, Bloomberg News said Kumho Asiana Group agreed to
sell a controlling stake in Daewoo Engineering for KRW2.9 trillion
(US$2.5 billion) to its main creditor Korea Development Bank to
help meet a cash call from banks.  The state-owned bank will buy
50% plus one share from the South Korean conglomerate through a
private-equity fund for KRW18,000 a share.

Yonhap News said Monday financial investors of Daewoo Engineering
oppose the transfer of their stakes at the offered price, however,
suggesting they would invest around KRW2.2 trillion in Kumho
Industrial Co., the biggest shareholder of Daewoo Engineering, to
secure managerial rights to the firm.

The TCR-AP, citing The Korea Herald, reported on August 6, 2009,
that Kumho Asiana Group has been suffering from a liquidity
crisis, which observers describe as a typical case of acquisition
indigestion.  In a bid to ease a cash shortage, the conglomerate
in July decided to re-sell the controlling stakes and management
rights of Daewoo Engineering & Construction, after acquiring it in
2006 for KRW6.4 trillion.  Bloomberg said creditors including
Shinhan Bank may force the company to repay KRW3.9 trillion
(US$3.2 billion) by June if they exercise an option to sell Daewoo
Engineering shares they hold back to Kumho Asiana.

Kumho Asiana unveiled a restructuring plan on January 5 that
involves raising KRW1.3 trillion (US$1.1 billion) by selling off
assets, while cutting costs via a 20% reduction in executive
positions and wages, Yonhap reported.

According to Bloomberg data, the group's net debt was KRW2.21
trillion as of September 30, 2009 -- more than double the KRW998.5
billion it had at the end of 2005 before Kumho Asiana bought 72%
of Daewoo Engineering for KRW6.43 trillion.  Kumho Tire's net debt
stood at KRW1.71 trillion at the end of September 2009.

                        About Kumho Asiana

Established in 1946, Kumho Asiana Group is a large South Korean
conglomerate, with subsidiaries in the automotive, industry,
leisure, logistic, chemical and airline fields.  The group is
headquartered at the Kumho Asiana Main Tower in Sinmunno 1-ga,
Jongno-gu, Seoul, South Korea.


===============
M A L A Y S I A
===============


AXIS INC: Says Writ of Summons No Effect on Company's Operations
----------------------------------------------------------------
Axis Incorporation Bhd said that the current operations of the
Company are not be affected by the writs of summons it received
from various financiers, as the current operations are not
utilizing any credit facilities from these financiers.

Axis said the Company's operations are being financed by the
internal funds only.  Axis Group is not having the credit lines
available for its use after the defaults on these facilities.

However, on the financial impact, currently there will be no
financial impact to Axis Group as the default credit facilities
are part of the restructuring plan.  The outcome will only be
known after the restructuring plan will be materialized.

As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 19, 2010, Axis Inc. and Asiapin Sdn Bhd have been served with
a Writ of Summons and Statement of Claim filed by Public Bank
Berhad, OCBC Bank (Malaysia) Berhad and OCBC Al-Amin Bank Berhad
at the High Court of Malaya at Johor Bahru on December 2, 2009.

                          About Axis Inc.

Based in Johor Bahru, Malaysia, Axis Incorporation Berhad
(KUL:AXIS) -- http://www.chongee.com.my-- is principally engaged
in the business of investment holding. The company, through its
subsidiaries, is engaged in fabric knitting and dyeing, and
manufacturer of garments.  Its subsidiaries include Asiapin Sdn.
Bhd., Chongee Enterprise Sdn. Bhd. and GBC Marketing Pte. Ltd.  In
June 2008, Axis Incorporation Berhad announced the disposal of the
entire equity interest in Ganad Corporation Bhd.

On May 23, 2009, Axis Incorporation Berhad was classified as an
affected issuer under the Amended Practice Note No. 17/2005 and
Paragraph 8.14C of the Listing Requirements of Bursa Malaysia
Securities Berhad as the Company was unable to provide a solvency
declaration to Bursa Securities.


ENGLOTECHS HOLDING: Bursa to Delist Securities on February 8
------------------------------------------------------------
Bursa Malaysia Securities Berhad announced that after due
consideration of all the facts and circumstances of the matter, it
has decided to dismiss Englotechs Holding Bhd's appeal and to
delist the securities of ENGLOTC.

Accordingly, the securities of the Company will be removed from
the Official List of Bursa Securities on February 8, 2010.  The
Company is required to communicate Bursa Securities' decision to
their shareholders.

The Company's securities may remain deposited with Bursa
Depository notwithstanding the de-listing of the securities from
the Official List of Bursa Securities.  It is not mandatory for
the securities of a company which has been de-listed to be
withdrawn from Bursa Depository.

Alternatively, the Company's shareholders who intend to hold their
securities in the form of physical certificates can withdraw these
securities from their Central Depository System (CDS) accounts
with Bursa Depository, at anytime after the securities of the
company are de-listed from the Official List of Bursa Securities.
This can be effected by the shareholders submitting an application
form for withdrawal in accordance with the procedures prescribed
by Bursa Depository.

Upon the de-listing, the Company will continue to exist but as an
unlisted entity.  Englotechs will still continue its operations
and business and proceed with the Company's corporate
restructuring and its shareholders can still be rewarded by the
Company's performance.  However, the shareholders will be holding
shares which are no longer quoted and traded on Bursa Securities.

                         About Englotechs

Englotechs Holding Bhd is a Malaysia-based investment holding
company that is engaged in the provision of management services.
The Company's subsidiaries include Malwira Manufacturing Sdn.
Bhd., which is engaged in the manufacture of gloves; Best Gloves
Sdn. Bhd., which is engaged in the trading in all kinds of
industrial and household safety products; Goldendip Sdn. Bhd.,
which is engaged in the manufacture of palm coasted gloves, and
Global Gloves Manufacturing Sdn. Bhd., which is engaged in the
manufacturer of polyvinyl chloride (PVC) coated and dotted gloves.

                           *     *     *

Englotechs Holding Bhd was classified as an Affected Listed Issuer
under Practice Note No. 17/2005 (PN17) with effect from Dec. 3,
2008.  Englotechs had triggered the prescribed criteria in
paragraph 2.1(f) of PN17 in view that Englotechs has defaulted in
the payment of interest and/or principal payments of loans
pursuant to Practice Note No. 1/2001 (PN1) and failed to provide
the requisite solvency declaration in accordance with paragraph
3.1(h) of PN1.


HO HUP: Asks for Further Extension of Plan Filing Deadline
----------------------------------------------------------
Ho Hup Construction Berhad asked the Bursa Securities to extend
the period to submit proposed revised scheme for three months from
February 4, 2010 to May 4, 2010.

The details of the Proposed Revised Scheme are still subject to
finalization as the Company is currently still in negotiations
with the various parties, in particular the relevant parties for
the Proposed Core Landbank Transaction.

Ho Hup Construction Company Bhd is engaged in foundation
engineering, civil engineering, building contracting works and
hire of plant and machinery.  The company operates in three
segments: construction, which is engaged in foundation and civil
engineering, building contracting works and engineering,
procurement, construction and commissioning of pipeline system;
property development, which includes the development of
residential and commercial properties, and manufacturing, which
includes manufacturing and distribution of ready-mixed concrete
and concrete spun piles.  The company's subsidiaries include Ho
Hup Construction Company (India) Private Limited, Ho Hup
Construction Company Berhad (Madagascar Branch), Ho Hup
Corporation (Mauritius) Ltd, Ho Hup Corporation (South Africa) Pty
Ltd, Ho Hup Equipment Rental Sdn Bhd, Ho Hup Geotechnics Sdn Bhd,
Ho Hup Jaya Sdn Bhd, Mekarani Heights Sdn Bhd, Intermax Resources
Sdn Bhd and Timeless Element Sdn Bhd.

                           *     *     *

Messrs. Ernst & Young have expressed a disclaimer opinion in the
company's 2007 audited financial statements.  As a result, the
company became an affected listed issuer pursuant to paragraph 2.1
of the PN17/2005.  The auditors cited these factors that indicate
the existence of material uncertainties, which may cast
significant doubt on the ability of the group and the company to
continue as a going concerns:

   * the group and the company reported a net loss of
     MYR46.16 mil. and MYR19.04 mil. respectively during the year
     ended December 31, 2007.  As of that date, the group's
     current liabilities exceeded its current assets by
     MYR83.62 mil.  In addition, the recognition of the liability
     may increase the group's net current liabilities by
     MYR43.9 million;

   * Should the outcome of the arbitration case between the
     company and the Government of Madagascar be unfavorable to
     the company, the liquidity of the group and the company would
     be adversely affected; and

   * the Secured Bank Guarantees amounting to MYR43.41 mil. have
     been called upon by the Govt. of Madagascar from the
     Guarantor Bank following the dismissal of the company's
     application for leave to the Federal Courts on July 8, 2008.
     On July 25, 2008, the Guarantor Bank has paid MYR43.41 mil.
     to the  Govt. of Madagascar.  No provision has been made for
     the amounts of bank guarantees demanded by the Govt. of
     Madagascar but the amounts have been disclosed as Contingent
     Liabilities.  The non-recognition of the liability arising
     from the demand of bank guarantees by the Govt. of Madagascar
     is not in accordance with Financial Reporting Standards in
     Malaysia.  The  auditors were unable to perform sufficient
     appropriate audit procedures to ascertain whether the
     corresponding debit represents a recoverable amount or an
     expense in the income statement.


OCI BERHAD: Extraordinary Meeting Set for February 22
-----------------------------------------------------
M&A Securities Sdn Bhd, on behalf of the Board of Directors of OCI
Bhd, announced that the Company will hold the court-convened
meeting and extraordinary general meeting on February 22, 2010, at
10:00 a.m. and 10:30 a.m., respectively.  The meeting will be held
at Gallery 1, Level 3, Concorde Hotel Shah Alam, No. 3 Jalan
Tengku Ampuan Zabedah C9/C, 40100 Shah Alam, in Selangor Darul
Ehsan.

At the meeting, the shareholders will be asked to consider and if
thought fit to pass these resolutions:

   a) Proposed capital reduction of the existing issued and
      paid-up share capital of OCI of RM43,147,500 comprising
      43,147,500 ordinary shares of RM1.00 each in OCI to
      MYR8,629,500 comprising 43,147,500 ordinary shares of
      MYR0.20 each in OCI.  The proposed reduction of OCI's
      share capital and the reduction of the entire share
      premium of MYR3,050,594 will result in a credit of
      MYR37,568,594 to OCI's surplus accounts and will
      be utilized to reduce the accumulated losses of OCI
      ("Proposed Capital Reduction");

   b) Proposed consolidation of 43,147,500 ordinary shares of
      MYR0.20 each in OCI after the Proposed Capital Reduction
      into 8,629,500 OCI Shares ("Proposed Consolidation"); and

   c) Proposed share exchange of the entire issued and paid-up
      share capital of OCI of RM8,629,500 comprising 8,629,500
      OCI Shares for 17,259,000 ordinary shares of MYR0.50 each
      in OCI Holdings Berhad at an issue price of MYR0.50 per
      OHB Share on the basis of two (2) OHB Shares for every one
      (1) OCI Share held after the Proposed Capital Reduction and
      Proposed Consolidation.

                            About OCI Bhd

OCI Berhad manufactures adhesives used in the production of
shoes for the footwear, toy making, building/construction,
automotive, furniture and packaging industries. OCI manufactures
and markets a range of sealants and adhesives for various
consumer and industrial purposes in 70 countries around the
world.  On January 24, 2006, the Company disposed off its entire
51% equity interest in Tongyong Resin Chemical Industry Co. Ltd.

The company is an affected listed issuer as Ernst & Young
expressed substantial doubt regarding the company's ability to
continue as a going concern after having audited the company's
financial statements for the year ended June 30, 2007.  The
auditor points to the company's losses and, together with its
subsidiaries, the default on the repayment of various financial
obligations.


RHYTHM CONSOLIDATED: Inks Deal with Vista Jiwa on Reverse Takeover
------------------------------------------------------------------
Rhythm Consolidated Berhad on January 23, 2010, entered into a
Memorandum of Understanding with Vista Jiwa Sdn Bhd for the
purpose of confirming VJSB's interest in taking over the control
of RCB via a Proposed Reverse Take Over and Debt Restructuring
Exercise.

Rhythm says the Proposed Exercise among others, may include:

   -- proposed capital reduction;
   -- proposed rights issue;
   -- proposed acquisition of VJSB;
   -- proposed disposal and/or winding up of businesses
      of RCB Group;
   -- proposed write off of debts; and

   -- proposed debt settlement scheme with the creditors
      and other parties of RCB subject to the clearance
      of the advising Investment Bank and other professionals
      and the approval of the relevant authorities.

En. Ahmad Redza Bin Ahmad Khairuddin and En. Syed Idrus Bin Syed
Ali, being two Directors of RCB who have interest in RCB are
deemed interested in the Proposed Exercise by virtue of their
shareholdings in shares of RCB.  None of the other Directors
and/or major shareholders and persons connected with them have any
interest, direct or indirect, in the MOU.

Meanwhile, the Company said it has submitted an appeal to Bursa
Securities Malaysia Berhad to re-consider Bursa Securities's
rejection of the Company's application for extension of time to
submit its Regularisation Plan.

                     About Rhythm Consolidated

Based in Malaysia, Rhythm Consolidated Bhd is an investment
holding company.  The Company operates in five business segments:
publishing, trading and distribution of books, paper stationery,
printing paper and instruction manuals; manufacturing of music
books, novels, educational books and paper stationery; import,
wholesale and retail of paper products; marketing of diaries,
organizers, leather and polyvinyl chloride (PVC) folders, wallets,
bags, rain coats and others, and information and communication
technology, which includes credit cards terminal development and
solutions, and system application developer and system support.
During the fiscal year ended June 30, 2007 (fiscal 2007), the
Company acquired an additional 15% of interest in its associated
company namely, Rhythm ICT Services Sdn. Bhd., formerly known as
IQ Card Services Sdn Bhd, (ICT).  As a result, the Company owns
55% interest in ICT, and ICT became a subsidiary of the Company.

                           *     *     *

As reported in the Troubled Company Reporter-Asia Pacific on
May 1, 2009, Rhythm Consolidated Berhad was considered as an
Affected Listed Issuer under Practice Note No. 17/2005 of the
Bursa Malaysia Securities Berhad as the company was unable to
provide a solvency declaration to Bursa as per the announcement of
default in payment by Monosetia Sdn Bhd.


===============
M A L D I V E S
===============


* MALDIVES: Economy Continue to Face Serious Challenges, IMF Says
-----------------------------------------------------------------
The International Monetary Fund said that the Maldivian economy
continues to face serious challenges.

Mr. Rodrigo Cubero, IMF mission chief for Maldives, made the
following statement on Monday:

"The Maldivian economy continues to face serious challenges. In
particular, addressing the very large fiscal deficit is of
paramount importance to secure a stable economy, equitable growth,
and lasting poverty reduction.

"To this end, the Government of Maldives has put together and is
implementing a set of essential fiscal adjustment measures,
supported by a financial assistance program that the IMF's
Executive Board approved in December 2009.

"One of the primary drivers of the large fiscal deficit has been
government spending on public wages, which has more than doubled
between 2007 and 2009, and is now one of the highest in the world
relative to the size of the economy.  Thus, bringing the wage bill
back to sustainability is an essential part of the fiscal
adjustment effort, which also involves other expenditure cuts,
revenue-enhancing measures, and reforms aimed at improving social
spending and poverty alleviation.

"Measures that would substantially raise the budget deficit, such
as a reversal of previously announced wage adjustments, would also
put the program off track, jeopardizing prospects for multilateral
and bilateral international financing. A larger fiscal deficit
would drive up interest rates, deprive the private sector of the
credit it needs, and threaten growth and employment. It may also
stoke inflation and erode the purchasing power of all Maldivians,
including civil servants.  It is to avoid such undesirable
outcomes that the fiscal deficit needs to be reduced.

"We are confident, therefore, that all relevant parties will reach
an agreement consistent with the fiscal framework envisaged in the
IMF-supported program."


====================
N E W  Z E A L A N D
====================


LANE WALKER: Receivers Have Little Progress in Paying Off Debt
--------------------------------------------------------------
The Sydney Morning Herald reports that six months after the
collapse of textile manufacturer Lane Walker Rudkin, the company's
receivers have yet to make significant progress in paying back the
money the company owes.

The report, citing The Press, relates that the receivers had made
little headway in paying off the NZ$118 million the manufacturer
owed despite cutting costs measures.

These cost cutting measures include laying off 200 staff, raising
NZ$9.07 million through selling off stock and equipment and
selling one of its companies, Southern Alps Socks Ltd, for NZ$1.06
million.

The report says that out of the money raised, NZ$2 million went to
Westpac, NZ$1.06 million to former employees and NZ$333,152 went
to Inland Revenue.  The receivers paid themselves NZ$750,517 for
their work over the last six months.

According to the report, the company still owed Westpac NZ$110.27
million, unsecured creditors NZ$6.7 million, Inland Revenue
NZ$578,172 and its employees NZ$830,658.

                         About Lane Walker

Lane Walker Rudkin Industries Limited -- http://www.lwr.co.nz/--
is a diversified manufacturer of clothing and textiles with
operations in several locations in New Zealand and Australia.
Approximately 470 people were employed in textile, hosiery,
underwear and garment factories in Christchurch; garment
manufacture in Greytown and Pahiatua; a sock factory in Timaru;
and a sports apparel factory in Brisbane.  Its subsidiary Pod
comprises fabric maker Designer Textiles International, clothing
designer and manufacturer Michele Ann and Mollers Homewares, all
located in  Auckland.  The group is owned by Christchurch
businessman Ken Anderson, who purchased LWR in 2001 and Pod in
2007.

Lane Walker Rudkin Industries went into receivership in April 2009
with debt of more than NZ$50 million.  Brian Mayo-Smith and
Stephen Tubbs, partners at BDO Spicers, have been appointed joint
receivers and managers of LWR.  The appointment was made by LWR's
bankers to protect the financial position of LWR and its
subsidiary Pod while issues facing the group are resolved.  The
LWR operations are currently unprofitable and have incurred a
substantial increase in bank debt.

LWR is currently subject of a Serious Fraud Office investigation
following a complaint from the LWR group's receivers.  The
receivers claimed LWR had misrepresented its financial strength to
Westpac in order to borrow from the bank.  The company owes about
NZ$120 million to Westpac.


MEDIA COUNSEL: Placed Into Liquidation
--------------------------------------
William Mace at BusinessDay reports that The Media Counsel, an
Auckland-based advertising agency, has been placed into
liquidation by managing director Glenda Wynyard.

According to the report, Ms. Wynyard sent out an email to clients
on Tuesday apologizing for "what is about to erupt", saying
financial difficulties plaguing the company over the last year
could not be overcome.

"There are many reasons that our business faces imminent closure
but the most recent is that the purchaser we had pinned our final
hopes on offered to take over our client and staff base for free,
as at yesterday [January 25], leaving us with a financial hole
that we will not be able to pull ourselves out from," BusinessDay
quoted Ms. Wynyard as saying in the email.

Ms. Wynyard has suggested that clients can turn to other agency,
including ad agency Grey Group's MediaCom division, currently
managed by Sarah Norrie, following The Media Counsel's closure.

According to BusinessDay, Ms. Norrie said 90% of Media Counsel's
clients have already signed letters of appointment with MediaCom
and she has taken on as many of the failed company's staff as
possible.

The report notes Ms. Norrie said she has no knowledge of how much
money is owed by Wynyard or the Media Counsel.

Based in Auckland, New Zealand, The Media Counsel -- is an
advertising media agency.


=====================
P H I L I P P I N E S
=====================


RIZAL COMMERCIAL: Fitch Assigns 'BB-' Rating on Senior Notes
------------------------------------------------------------
Fitch Ratings has assigned an expected 'BB-' rating to the
Philippines' Rizal Commercial Banking Corp.'s proposed Senior
Notes.  The final rating is contingent on the receipt of final
documents conforming to information already received.

The expected rating on the Senior Notes is identical to RCBC's
'BB-' Long-term foreign currency Issuer Default Rating, as the
Senior Notes will constitute direct, unconditional and unsecured
obligations of the bank and, hence would rank pari passu with its
unsecured and unsubordinated obligations.  The purpose of the
proposed issue is for general banking and re-lending purposes.
Fitch notes that the bank has an existing USD150m Senior Notes due
24 February 2010.

RCBC's credit profile is moderated by potential impairment
pressures from its non-performing assets, particularly investment
properties and deferred charges; the latter is NPA-related
disposal losses, which instead of being recognized immediately,
are amortized over a 10-year period.  In addition, the bank's
gross NPL ratio has risen to 6.3% at end-September 2009 from 4.2%
at end-December 2008 amidst the downturn, with credit costs having
doubled to an annualized 160bp of gross loans from 80bp in 2008.
Collectively, unreserved NPAs equaled 55% of the bank's core
equity at end-September 2009 (end-December 2008: 62%).

Despite the foregoing risks and higher credit costs, RCBC's ROA
rose to an annualized 1.2% in 9M09 (2008: 0.7%), underpinned by
the sharp rebound in treasury gains.  The bank's capital buffer,
which has gradually improved over the years, and NPL reserve
coverage of 115% are also mitigating factors.  Excluding hybrid
securities, its core Tier 1 capital adequacy ratio appears high,
at 11.3% at end-September 2009, but the buffer may well be
warranted to absorb unforeseen losses.  In a stressed scenario
where loss rates on NPLs, investment properties and deferred
charges are assumed at 80%, 40% and 100%, respectively, the bank's
hypothetically-reduced core Tier 1 CAR of about 8% still appears
satisfactory relative to its current ratings.  Positively, capital
impairment risks are likely to abate in line with the improved
domestic economic outlook in recent months.  Hence, the Outlook on
RCBC's IDR is Stable.

RCBC is a mid-sized universal bank with total assets of
PHP268 billion at 30 September 2009 and has a network of 334
branches.  The Yuchengco Group of Companies majority-owned the
bank with a 66%-stake.


RIZAL COMMERCIAL: Moody's Assigns 'Ba2' Rating on Senior Debt
-------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to the US$
denominated senior unsecured debt due 2015 issued by Rizal
Commercial Banking Corporation.  The outlook is stable for RCBC's
senior unsecured debt rating.

The rating was assigned on the condition that no material changes
are made to the draft terms and conditions of the notes reviewed.

The last rating action on RCBC was taken on November 18, 2009,
when its Non-Cumulative Step-up Callable Perpetual Securities
rating of B2 was placed on review for possible downgrade.

The bank's other ratings are:

* Long-term deposit rating (foreign currency) of Ba3; stable
  outlook

* Short-term deposit rating (foreign currency) of Not Prime;
  stable outlook

* Bank Financial Strength Rating of D-; stable outlook

* Non-Cumulative Step-up Callable Perpetual Securities (foreign
  currency) rating of B2; on review for possible downgrade

Rizal Commercial Banking Corporation, headquartered in Manila,
reported total assets of P267.9 billion as at September 30, 2009.


* PHILIPPINES: PDIC Pushes for Bridge Banking for Closed Banks
--------------------------------------------------------------
The Philippine Deposit Insurance Corp. said it is introducing
bridge banking as an additional liquidation mode for closed banks
in its proposed amendments to the Charter of the Bangko Sentral ng
Pilipinas.  PDIC, as statutory receiver and liquidator of closed
banks, is authorized to undertake various modes such as purchase
of assets, assumption of liabilities and sale to liquidate closed
banks.

A bridge bank refers to a temporary bank established and operated
to acquire assets and assume liabilities of a failed bank to
facilitate its resolution.  The bridge bank will be authorized to
purchase assets, assume deposits and other liabilities and perform
banking functions.

PDIC President Jose C. Nograles said that a bridge bank as a
liquidation method will pave the way for an orderly liquidation of
the remaining assets of closed banks.  It will also ensure that
there will be no disruption in banking services hence, maintain
depositor confidence.  Mr. Nograles stressed that bridge bank is a
less costly alternative for the PDIC Deposit Insurance Fund (DIF)
than payout.  The DIF is the source of funds for payout operations
when banks close.

"The bridge bank like the other options that will be available to
us under our proposed seamless transition from closure to
liquidation (in the BSP Charter) like the purchase of assets and
assumption of liabilities or outright liquidation will be applied
on a case to case basis depending on the circumstance",
Mr. Nograles said.

Bridge banking is practiced in matured deposit insurance systems
such as in the United States, Japan, Taiwan and Korea.  These
countries have proven that bridge banking is a less costly
resolution than to undertake outright payout of deposit insurance
and liquidation.  Many proponents of the bridge bank structure
believe that the bridge bank structure will remain an integral
part of large bank failures in the future.

Under the proposed model patterned after the US Federal Deposit
Insurance Corporation (FDIC), PDIC will be granted authority to
incorporate a bridge bank either as a subsidiary or a corporation.
The bridge bank will be activated when a bank fails through a
grant of temporary bridge bank license by the BSP.  The bridge
bank then assumes the good assets and insured deposits of the
failed bank from the Receiver. In turn, the Receiver has the
responsibility to take on the bad assets and uninsured deposits of
the failed bank to undergo the normal liquidation process.

The bridge bank will operate for not more than 2 years following
the date it was granted a banking license, extendible for another
year only to conclude pending negotiations for the sale, merger or
acquisition of the bridge bank. Otherwise, the bridge bank will
also be liquidated.

The bridge bank concept originated from the US with the enactment
of the Competitive Equality of Banks Act of 1987.  The United
States, through the Federal Deposit Insurance Corporation (FDIC),
was the first to establish a bridge bank in 1987 and until 1994,
has created 32 bridge banks to resolve 114 failed banks with
estimated total assets of about billion. FDIC operates a bridge
bank for a period of three years.

Beginning in 1987, the bridge bank structure became an important
part of the FDIC's bank resolution process for large banks with
complex financial structures in danger of failing.  As in the
FDIC, Mr. Nograles said that the bridge bank authority will
provide PDIC time to take control of the failed bank's business,
stabilize the situation, and determine an appropriate permanent
resolution with respect to the failed bank.


================
S R I  L A N K A
================


VALLIBEL FINANCE: Fitch Affirms National Long-Term Rating at 'B+'
-----------------------------------------------------------------
Fitch Ratings Lanka has affirmed Vallibel Finance Ltd.'s National
Long-term rating at 'B+(lka)'.  The Outlook is Stable.

The rating of Vallibel Finance Limited factors in its relatively
small asset base, relatively weak asset quality and modest
financial profile.  Although VFL has been successful in increasing
its scale of operations while maintaining profitability, asset
quality continued to weaken between March 2007 and September 2009.
Fitch notes that as non-performing loans rise and arrearage
increases, VFL's small equity base could come under stress.

Profitability as measured by return on assets increased to 2.7% in
FY09 (financial year ended 31 March 2009) compared to 2.2% in
FY08, due to rapid loan growth early in the year driving up net
interest margins in H109.  However, higher provisions and lower
margins resulted in a lower ROA of 2.5% in H110 (though still
comparing well with the sector figure of 2.1% in H110).
Provisions/pre-provision income increased to 22% in H110
(FY08:7.7%) and could increase further as NPLs increase in
arrearage.

Despite falling deposit rates from March 2009 onwards, net
interest margins in H110 improved only marginally to 9.8%
(H209:9.7%) due to the negative effect of higher six month NPLs on
interest yields, and a gradual reduction in lending rates in Q210.
Fitch notes that interest yields could come under further pressure
in H210 as more NPLs migrate into the over six month category
where interest is suspended.  However, following VFL's reduction
in deposit rates in late-2009, NIMs could benefit from the
consequent lower cost funds, which would partly offset the impact
of lower yields.

Asset quality weakened in the period FY08-H110 driven by the
effects of a weaker credit environment on VFL's largely SME
customer segment, which is more susceptible to economic downturns.
Although nominal NPLs fell significantly at FYE09, due to
aggressive recoveries in the three to six month category prior to
year-end, there was a slippage into the higher arrearage
categories in the same period, followed by an overall increase in
NPLs in H110.  Three month and regulatory six month NPL ratios
increased to 19.0% and 3.7% at end-H110 (FYE09:10.7% and 2.9%),
respectively.  Consequently, net NPLs/equity increased to 78.5% at
H110 despite what appeared to be relatively good capital ratios
(total CAR of 19.9% at end H110).

VFL is a registered finance company accounting for 0.9% of Sri
Lanka's total RFC sector assets and is 99.99% owned by Mr.  K.D.D.
Perera through his investment holding company Vallibel Investments
Limited.


===============
X X X X X X X X
===============


* Fitch Sees Challenges for Most Asian Shipping Companies in 2010
-----------------------------------------------------------------
Fitch Ratings has said, in a just published report, that the
majority of the shipping companies it rates in Asia will continue
to face significant operating and credit challenges in 2010.

Of the seven Asian shipping companies rated by Fitch, three are
either on Negative Outlook or on Negative Rating Watch, including
Indonesia's PT Arpeni Pratama Ocean Line Tbk ('C'); the others are
PT Berlian Laju Tanker TBK (BLT, 'B'/RWN) and India's Varun
Shipping Company ('A(ind)'/Negative).  Fitch notes that weakened
earnings, high committed capex and restricted access to capital
remain challenges for a number of rated shipping companies.

The oversupply of shipping capacity will continue to exert
pressure on shipping rates and utilization levels in 2010.  The
weak fundamentals in the global shipping markets have even
affected domestic revenues of Indonesian and Indian shipping
companies that benefit from cabotage laws.  Fitch expects pressure
on earnings for BLT, Varun and Arpeni in 2010.  As for Thailand's
Thoresen Thai Agencies Public Company Limited (TTA, 'A-
(tha)'/Stable) and India's Essar Shipping Ports and Logistics Ltd
(Essar, 'F2+(ind)), the agency expects them to achieve revenue and
profit growth in 2010 but as a result of the growth in non-
shipping services.

Committed capex weighs on the liquidity of BLT, Arpeni and, to
some extent, Varun.  Weakened value of shipping assets has reduced
the headroom under loan-to-value covenants on secured bank
facilities; this is especially weak in the case of BLT.  Arpeni,
Singapore's First Ship Lease Trust ('BB-'/Stable) and Varun also
have limited LTV headroom.  High debt servicing costs remain an
issue for a number of issuers.

Financial leverage of most issuers remains high.  At end-September
2009, leverage measured by net adjusted debt to operating EBITDAR
was 8.5x for BLT, 5.7x for FSLT, more than 11x for Arpeni and
around 8x for both Essar and Varun.  Fitch views that BLT's and
Varun's leverage can increase further in 2010, whereas leverage is
expected to remain broadly stable for FSLT, TTA and Essar.

Fitch provides rating guidance based on credit metrics and other
factors.  "The headroom under the current ratings is weak or very
limited for four of the seven issuers indicating the challenges
faced by these shipping companies," notes Buddhika Piyasena,
Director of Fitch's Asia-Pacific Corporates rating team; these
include FSLT, and issuers on either Negative Outlooks or Watches.

For Arpeni and BLT main rating considerations are their liquidity,
which is quite poor.  Varun's weak earnings have already pushed
its financial leverage beyond the tolerance level for its current
rating, and sustained weak results can result in a negative rating
action.  FSLT needs to reduce its secured debt and increase
unencumbered assets to maintain its current ratings.


                         *********

Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable.   Those
sources may not, however, be complete or accurate.  The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication.  Prices reported are not intended to reflect actual
trades.  Prices for actual trades are probably different.  Our
objective is to share information, not make markets in publicly
traded securities.  Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind.  It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.

A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged.  Send announcements to
conferences@bankrupt.com

Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication.  At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled.  Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets.  A company may establish reserves on its balance
sheet for liabilities that may never materialize.  The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.


                            *********


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., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland, USA.  Valerie C. Udtuhan, Marites O. Claro,
Rousel Elaine C. Tumanda, Joy A. Agravante, Frauline S. Abangan,
and Peter A. Chapman, Editors.

Copyright 2010.  All rights reserved.  ISSN: 1520-9482.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
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without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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mail.  Additional e-mail subscriptions for members of the same
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thereof are US$25 each.  For subscription information, contact
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