/raid1/www/Hosts/bankrupt/TCRAP_Public/980406.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, April 6, 1998, Vol. 1, No. 33
Headlines
C H I N A & H O N G K O N G
CHINA MOTOR: Loses Contract Providing 100% of Turnover
CLIMAX INTERNATIONAL: Official Response to Press Reports
LEADING SPIRIT: Conrowa Share Trading Resumes
LEADING SPIRIT: Desirous of Standstill Agreement with Banks
MANSION HOLDING: Symphony, et al., Complete Due Diligence
PAM & FRANK: Outlines Restructuring Plan
S. MEGGA: 1997 Operating Results
SUI CHONG: 1997 Operating Results
WINFOONG INTERNATIONAL: 1997 Operating Results
J A P A N
YAMAICHI SECURITIES: Commission Recommends Penalties
K O R E A
KIA MOTORS: KDI Suggests Alternatives for Rescue
M A L A Y S I A
SIME BANK: Moody's Gives RHB E+ Rating on Sime Bank Merger
SIME BANK: Timing of Acquisition Announcement
WING TIEK: Court Grants Moratorium on Creditors
T H A I L A N D
EARTH INDUSTRIAL: SET Delists Securities
KIATNAKIN FINANCE: Outlines Rehabilitation Plan
PREMIER ENTERPRISE: Faces Delisting from the SET
C H I N A & H O N G K O N G
CHINA MOTOR: Loses Contract Providing 100% of Turnover
------------------------------------------------------
China Motor Bus Company, Limited disclosed last week that
it has been notified by the Government today that the
franchise to operate public bus services on 59 Hong Kong
Island routes and 29 cross harbour routes has been awarded
to New World First Bus Services Limited and that Affluent
Dragon Island Limited, a joint venture established by the
Company and Stagecoach Holdings plc, is unsuccessful in its
tender. Accordingly, the Company will cease to carry on its
franchised bus operations upon expiry of its existing
franchise on 31 August 1998.
As stated in an announcement issued by the Company on 17
February 1998, the Company's business includes substantial
non-bus operations comprising interests held through its
associates in property developments and investments in
addition to its franchised bus operations. The non-bus
business is already a significant part of the Group's
income, profits and assets.
With reference to the Company's audited accounts for the
year ended 30 June 1997, while the bus operations generated
100% of the turnover in that year, net assets of the Group
attributable to bus operations comprised only 7.4%. of the
Group's net assets and operating profit attributable to
bus operations comprised only 25.8% of the Group's
operating profit for the year. The Company will continue to
expand its non-bus operations, and will use this
opportunity to concentrate on these activities.
(SHEK 01-Apr-1998)
CLIMAX INTERNATIONAL: Official Response to Press Reports
--------------------------------------------------------
Climax International Company Limited, responding to:
(1) a recent press report in relation to the
Company;
(2) the progress of the Company's discussions
with its bankers;
(3) current financial information regarding
the Company; and
(4) information in relation to the transactions
involving Capital Building, Wanchai, Hong
Kong,
related the following information in a written statement
released Friday:
A. Recent press report in relation to the Company
In relation to certain statements made in a recent
press report regarding a purported issue of new Shares by
the Company, the Board wishes to state that the Company is
in preliminary discussions with its bankers regarding the
rescheduling of its indebtedness but that no definitive
proposals have been formed. However, the Company is
considering various means of fund raising.
B. Discussions with the Company's bankers
Further to the announcement made by the Company on
23rd March, 1998, the Board wishes to state that following
discussions between the Company and its bankers, a
Committee has been formed which comprises eight of the
Company's bankers. As at today, no standstill agreement has
been reached by the Committee regarding the outstanding
bank loans and other borrowings of the Group. During a
meeting of the Committee held on 23rd March, 1998, the
Committee requested the Company to prepare and submit to
them a proposal setting out the way in which the Company
would like its bankers to continue their support for the
Company. A further meeting of the Committee took place on
31st March, 1998 at which preliminary discussions were held
between the Company and the Committee to discuss certain
elements of a proposal to be submitted to the Committee,
including various means of fund raising. The Company is in
the process of finalising the proposal which would be
submitted to the Committee as soon as possible.
C. Financial information regarding the Company
The Board also wishes to state that, as at 27th
March, 1998, the total outstanding bank borrowings of the
Group amounted to approximately HK$590 million, comprising
approximately HK$395 million in short term indebtedness
(i.e. indebtedness repayable within one year) and
approximately HK$195 million in long term indebtedness
(i.e. any indebtedness other than short term indebtedness).
The Group currently does not have any outstanding unused
banking facilities and the total amount of bank loans which
have been demanded for immediate repayment amounts to
approximately HK$131 million. In addition, as at 27th
March, 1998, the cash resources of the Group amount to
approximately HK$15 million.
D. Transactions involving Capital Building,
Wanchai, Hong Kong
Reference is made to the announcements made by the
Company on 27th February, 1997, 27th August, 1997 and 19th
December, 1997. Under the Rise Path Agreement, Billion
Profit agreed to sell, and Rise Path agreed to purchase,
the Rise Path Property for an aggregate consideration of
HK$72,750,000. Rise Path is an independent third party not
associated with any substantial shareholders, directors,
chief executives of the Company or any of its subsidiaries
or any of their respective associates (as defined in the
Listing Rules). Pursuant to the Rise Path Agreement, the
Rise Path Completion was scheduled to take place on 25th
August, 1997.
However, on the same date, Billion Profit and Rise
Path varied the terms of the rise path Agreement by
entering into the Rise Path Supplemental Agreement,
pursuant to which the Rise Path Completion was extended to
25th October, 1997 and that any further postponement and
extension of the date of the Rise Path Completion would be
subject to the payment by Rise Path of an additional amount
of HK$2,000,000 per month as compensation. The Rise Path
Completion did not take place on 25th October, 1997 and on
the same date, Rise Path paid an additional sum of
HK$2,000,000 to Billion Profit as compensation for a
further extension of time for the Rise Path Completion to
25th November, 1997. However, the Rise Path Completion did
not take place on 25th November, 1997.
As at the date hereof, Billion Profit has received
from Rise Path an aggregate amount of HK$14,550,000 as
deposit and part payment of consideration under the Rise
Path Agreement and HK$2,000,000 under the Rise Path
Supplemental Agreement.
Further, as detailed in the announcement made by
the Company on 28th May, 1997, pursuant to the Global Fly
Agreement, Billion Profit agreed to sell, and Global Fly
agreed to purchase, the Global Fly Property for an
aggregate consideration of HK$82,000,000. Global Fly is an
independent third party not associated with any substantial
shareholders, directors, chief executives of the Company or
any of its subsidiaries or any of their respective
associates (as defined in the Listing Rules). Pursuant to
the Global Fly Agreement, the Global Fly Completion was
scheduled to take place on 20th February, 1998.
The Global Fly Completion did not take place on
20th February, 1998 and no extension to the date of
completion of the Global Fly Completion has been agreed. As
at the date hereof, Billion Profit has received from Global
Fly an aggregate amount of HK$16,400,000 as deposit and
part payment of consideration under the Global Fly
Agreement. The Board wishes to state that Billion Profit
is currently considering, in conjunction with its legal
advisers, various options available to it in relation to
its rights and obligations and the taking of any action
against Rise Path and Global Fly under the Rise Path
Agreement and the Global Fly Agreement respectively.
E. Resignation of Mr. Fung Kin Yuen,
Kenneth and the appointment of Mr. Fung
Kwong Yan as chairman of the Company
The Board also announces that Mr. Fung Kin Yuen,
Kenneth has resigned as chairman and as a director of the
Company with effect from 27th March, 1998. Mr. Fung Kwong
Yan was elected as chairman of the Company by the Board on
30th March, 1998. (SEHK 03-Apr-1998)
LEADING SPIRIT: Conrowa Share Trading Resumes
---------------------------------------------
Trading in securities issued by Leading Spirit Conrowa
Electric Company Limited resumed Friday with the permission
of the Securities and Futures Commission. The SFC halted
trading in the Company's securities on 21st November, 1997.
The SFC has now withdrawn that direction. The Stock
Exchange has agreed to allow trading to begin again but the
SFC suspects that the price of the Company's shares has
been manipulated and that certain traders hold large number
of shares. The Company has been told that the SFC is
continuing with its investigation into the trading in the
Company's shares pursuant to Section 33 of the Securities
and Futures Commission Ordinance.
The directors indicated in a statement released Friday that
they have undertaken to the Stock Exchange to ensure that
not less than 25% of the Company's issued share capital
will be held by the public, and will use their respective
best endeavours to procure the sale or place down as soon
as practicable within 3 months if the 25% public float
requirement is not met. Leading Spirit (Holdings) Company
Limited ("Holdings"), the controlling shareholder, has also
undertaken to the Stock Exchange that whenever the 25%
public float requirement is not met, it will not buy
additional shares in the Company or increase its percentage
of shareholding. (SEHK 03-Apr-1998)
Sharply contrasting performances marked the return of car
parts trader Leading Spirit (Holdings) and its television-
making subsidiary Leading Spirit Conrowa Electrics (LS
Conrowa) to stock market trading yesterday. Leading Spirit
surged 115 per cent to 14 cents after announcing a $150
million share placement to a Beijing-based investor to ease
its total debt burden of $1.11 billion. LS Conrowa,
however, fell 86 per cent to 23 cents after it said major
shareholder and chairman Wong Shi-ling had used most of his
3.7 per cent stake in the firm as collateral for his
personal investments. Brokers said LS Conrowa was dumped by
Japan's Daiwa Securities which is suing Mr Wong for failing
to repay a $104 million loan relating to margin trading.
(South China Morning Post 03-Apr-1998)
LEADING SPIRIT: Desirous of Standstill Agreement with Banks
-----------------------------------------------------------
Trading in the shares of Leading Spirit (Holdings) Company
Limited on The Stock Exchange of Hong Kong Limited was
suspended at the request of the Company on 16th January,
1998, following public announcements concerning:
(1) demands by various bank creditors for repayment
of certain loans under various banking
facilities (other than the US$68 million Term
Loans referred to below) (the "Banking Facilities")
made to the Company and its subsidiaries (the
"Group") including Leading Spirit Conrowa Electric
Company Limited ("Conrowa") and its subsidiaries
(the "Conrowa Group"),
(2) the inability of the Group to repay all the loans
which became due and payable under the Banking
Facilities constituted an event of default under
the US$38 million syndicated loan facility (the
"Syndicated Loan") and the US$30 million bridging
loan facility (the "Bridging Loan") granted to the
Group (collectively referred to as the "US$68
million Term Loans") and
(3) a further event of default which has occurred under
the Bridging Loan when the shareholding of Mr. Wong
Shi Ling ("Mr. Wong"), a controlling shareholder of
the Company, fell below 51% of the total issued
share capital of the Company as a result of the
enforcement of security by parties that have
extended credit to Mr. Wong personally on security
of his shares in the Company.
Although neither the Company nor Conrowa has received
formal notices or demands from the relevant lending banks
in respect of the US$68 million Term Loans, events of
default have occurred under the US$68 Million Term Loans
and banks are entitled to demand repayment at any time.
The Company has appointed Deloitte Touche Tohmatsu,
certified public accountants in Hong Kong, as the Group's
independent accountant, to carry out an independent review
of the financial position of the Group for the six months
ended 31st December, 1997 (the "Financial Review") in light
of the above. A draft report, by the independent accountant
on the Financial Review was completed recently. Any
material relevant information or findings, if any, from the
Financial Review not already contained in this announcement
will be announced when the Financial Review is finalised.
As at 4th March, 1998, the Group had total bank borrowings
of approximately HK$1,117 million which includes the US$68
million Term Loans. The total bank borrowings (excluding
the US$68 million Term Loans) as at 4th March, 1998 was
approximately HK$590 million out of which approximately
HK$496 million has become due and payable immediately as a
result of banks serving formal notices or demand letters
for early repayment.
Out of the total bank borrowings (excluding the US$68
million Term Loans), approximately HK$346 million was
utilised by the Group (excluding the Conrowa Group) and
approximately HK$244 million was utilised by the Conrowa
Group with approximately HK$202 million out of this HK$244
million being guaranteed or co-guaranteed by the Group
(excluding the Conrowa Group). Therefore, if the Conrowa
Group is unable to pay its debts, the total indebtedness to
be borne by the Group (excluding the Conrowa Group) will
amount to approximately HK$548 million comprising
approximately HK$346 million representing the Group's
indebtedness as borrower (excluding the Conrowa Group); and
HK$202 million representing its indebtedness as the
guarantor of the Conrowa Group. The Company is in
discussions with the Group's lending banks for a standstill
agreement and a repayment schedule for settling all the
outstanding borrowings of the Group has been submitted to
the Group's lending banks for consideration. No formal and
binding standstill agreement has been reached. If the
standstill agreement cannot be reached, the Group will not
be in a position to repay its outstanding debts that are
due and payable. The Group's financial position may
further deteriorate and in such event, the Company may be
forced into liquidation. (SEHK 03-Apr-1998)
MANSION HOLDING: Symphony, et al., Complete Due Diligence
---------------------------------------------------------
Chan Ting Chuen, Search Asia Pacific Limited and Symphony
Holdings Limited have given written notification to Mansion
Holdings Limited that they are satisfied with their due
diligence review on the Mansion Group. Mansion's
restructuring proposal will proceed subject to, among other
things, approval of the proposal by the Bank Group and the
entering into of the final agreements (on terms and
conditions satisfactory to all parties to the Heads of
Agreement) on or before 30th April, 1998. (SEHK 01-Apr-
1998)
PAM & FRANK: Outlines Restructuring Plan
----------------------------------------
Pam & Frank International Holdings Limited, assisted by
Pacific Challenge Capital Limited its financial advisor,
announced Friday that all the necessary documentation
for completion of the Restructuring Agreement was executed
and dated 31st March, 1998 and placed into escrow.
Pending receipt of the Outstanding Documents, the
documentation for completion of the Restructuring
Agreement will be released from escrow which is
expected to occur on or before 2nd April, 1998. The
Outstanding Documents comprise confirmations from the
Coordinator that it has received
(i) confirmation from one of the Lenders as to the
form of Completion which is technical in nature; and
(ii) a working capital facility letter from one of
the Lenders.
Completion will then be effective as of 31st March, 1998.
As stated in an announcement made on 17th February, 1998,
Hoi Fat informed the Directors that due to the recent
downturn in the financial markets, the financial
institutions which previously agreed to finance the
purchases of Property A and Property B were reassessing
the security arrangements with the purchasers and thus
Completion was delayed. The Directors have been informed
by Hoi Fat that certain short term financing arrangements
to finance the purchasers of Property A and Property B to
complete the purchases (the `Arrangements') were entered
into between Hoi Fat and the Lenders on 31st March, 1998
which will enable Completion to take place in accordance
with the terms of the Restructuring Agreement. The
relevant financing documents were placed into escrow.
Pending receipt of the Outstanding Documents, the financing
documents will be released from escrow which is expected
to be on or before 2nd April, 1998. The financing
documents will be effective as of 31st March, 1998.
The Arrangements involve the Lenders providing a six-
month short term loan on Completion to the purchasers of
Property A and Property B, for the purpose of completing
the purchases, with Hoi Fat acting as the guarantor. The
security provided to the Lenders for the loans comprises
various legal charges and debentures on Property A,
Property B and 305 million Shares (out of 505 million
Shares) to be issued to Hoi Fat on Completion. Further
details will be contained in the press announcement which
the Directors expect to release on or before 7th April,
1998.
If any of the Outstanding Documents are not received
from the relevant Lenders on or before 2nd April, 1998,
unless the parties to the Restructuring Agreement
otherwise agree for further extension, Completion will not
occur and the Restructuring Agreement will lapse.
Necessary steps have been taken by the relevant parties to
obtain the Outstanding Documents and the Directors expect
that the Outstanding Documents will be obtained shortly.
(SEHK 03-Apr-1998)
S. MEGGA: 1997 Operating Results
--------------------------------
For the period from January 7, 1997 through December 31,
1997, S. Megga International Holdings Limited reports a net
loss of HK$52.1 million on turnover of HK$291.3 million.
This compares to a net profit of HK$1.7 million on turnover
of HK$433.6 million for the corresponding 1996 period.
(SEHK 01-Apr-1998)
SUI CHONG: 1997 Operating Results
---------------------------------
For the period from January 7, 1997 through December 31,
1997, Sui Chong Holdings Limited reports a net loss of
HK$12 million on turnover of HK$56 million. This compares
to a net profit of HK$2 million on turnover of HK$394
million for the corresponding 1996 period. (SEHK 01-Apr-
1998)
WINFOONG INTERNATIONAL: 1997 Operating Results
----------------------------------------------
Winfoong International Limited reported a net loss of
HK$101 million on turnover of HK$394 million for the 1997
calendar year. This compares to a net profit of HK$2
million on turnover of HK$496 million for the 1996
calendar year. (SEHK 01-Apr-1998)
J A P A N
YAMAICHI SECURITIES: Commission Recommends Penalties
----------------------------------------------------
The Securities and Exchange Surveillance Commission on
Thursday recommended to the finance minister that Yamaichi
Securities Co. be slapped with administrative penalties for
transferring loss-making portfolios and illegally disposing
of them as off-the-book losses, a commission official said.
The ministry is expected to soon mete out a harsh penalty
to the firm. The commission's investigation also revealed
that Yamaichi tried to attract clients by offering yield
guarantees, in violation of the Securities and Exchange
Law. Off-the-book Tobashi losses of failed Yamaichi
Securities Co. are 26.6 billion yen more than the initial
estimate and reached 291.4 billion yen as of Nov. 30 last
year, the Finance Ministry said Thursday. The initial
estimated losses were 264.8 billion yen.
The Finance Ministry said the main reason for the increase
is that some losses that the firm and its clients were
disputing have finally been deemed the brokerage's
responsibility. Yamaichi must also cover the operating
expenses of a new company set up to deal with the losses,
and some of its stock holdings have dropped in value.
However, it is unlikely that the company's liabilities will
exceed its assets, and therefore all client assets are
expected to be returned, the ministry said. Yamaichi has
already returned 99 percent of its client assets a ministry
official said. (Yomiuri Shimbun 03-Apr-1998)
K O R E A
KIA MOTORS: KDI Suggests Alternatives for Rescue
------------------------------------------------
On the heels of President Kim Dae-jung's recent order to
speed up disposal of Korea's ailing conglomerates, the
government is planning to release a final plan to dispose
of the three -- Kia Motors Corp., Hanbo Iron & Steel Co.,
and Halla Engineering & Heavy Industries Ltd. -- before the
end of this month, government officials said yesterday.
The Korea Development Institute (KDI) has suggested three
ways to put Kia Motors back on track in a report developed
at the request of the Ministry of Finance and Economy. The
state-run institute proposed three ways to effect
normalization -- an increase in paid-in capital and
management renovation, sell-offs to a third party after
converting the Korea Development Bank's loans into the
bank's capital investment, and public sales through the
issuance of new shares after capital reduction.
The government will select one of the three ways to
normalize Kia Motors before the end of the month, they
said, adding that public sales through the issuance of new
shares are currently regarded as the best option. Saying
that this option is the best means through which Kia Motors
can achieve normalization through its self-rescue efforts,
they added that Kia's failure to do so would lead to
government intervention and the sale of the ailing motor
company to a third party through a capital reduction and
the issuance of new shares.
However, the government's plan to sell off Kia Motors to a
third party is bound to face resistance from Kia employees
and Ford Motor Co. of the United States, its largest
foreign shareholder, they said. (Korea Herald 04-Apr-1998)
M A L A Y S I A
SIME BANK: Moody's Gives RHB E+ Rating on Sime Bank Merger
----------------------------------------------------------
Moody's Investors Service yesterday slapped RHB Bank with
an E+ rating, citing fears that future bank mergers were
likely to impair the bank's asset quality.
The E+ rating is the lowest on the rating agency's scale
and signals very weak financial strength. Moody's said the
new rating "includes the risk that the bank will have to
absorb other relatively large institutions, with severe
capital deficiencies during the current crisis". News of
Moody's rating surprised financial circles here, and led
RHB Bank to quickly issue a statement to rebut these
claims.
The bank said the rating "essentially reflected the rating
agency's overly pessimistic views on the local economy and
the banking sector". Moody's took issue with RHB Bank's
merger with Sime Bank -- which recently announced losses of
1.57 billion Malaysian ringgit (S$678.7 million).
It said it was not clear where the additional capital
required to recapitalise Sime Bank would come from. "RHB's
own internal capital resources are limited and its reliance
on external sources is a source of uncertainty in the
current environment."
In its response, RHB Bank said that the "concerns about the
capital deficiency of the banking sector overlook the
ongoing efforts to recapitalise the sector and increase the
transparency of the banking sector". It said "all the
challenges anticipated in any merger would have to be
appropriately addressed, and the interest of RHB Bank Bhd
will have to be protected at all times and any merger
undertaken will have to be beneficial to the long-term
viability of the bank". The RHB group will soon disclose
the terms of the new financial holding entity that will
hold the merged RHB-Sime banks and its merchant bank, and
how funding issues will be resolved.
Meanwhile, Reuters reported yesterday that RHB Bank had
successfully placed out one billion preference shares to
raise funds for the acquisition of Sime Bank. Quoting
investment brokers, Reuters also said RHB planned to raise
RM374 million through the issue of 78 million new shares at
RM4.80 per share, representing 20 per cent of its share
capital. Brokers said the issue, if approved, would likely
be taken up by state investment funds -- the Employees'
Provident Fund and Permodalan Nasional Bhd -- and Mr
Rashid. (Singapore BusinessTimes 03-Apr-1998)
SIME BANK: Timing of Acquisition Announcement
---------------------------------------------
Deputy Prime Minister and Finance Minister Datuk Seri
Anwar Ibrahim said Rashid Hussain Bhd should be allowed to
decide when to announce details of its acquisition of Sime
Bank Bhd.
"Let them finalise (the deal) ... let them decide," he told
reporters after opening a two-day forum on Kosova, the
troubled Serbian province.
RHB was scheduled to make an announcement about two weeks
ago. On March 10, it announced that it would acquire the
entire share capital of Sime Bank Bhd for RM852.24 million
from Sime Darby Bhd and KUB Holdings Bhd.
On concerns that the Employees' Provident Fund (EPF) might
pull out of the deal between RHB Bank and Sime Bank Bhd,
Anwar merely said: "The EPF already has an 11 per cent
stake in Sime Bank."
There had been talk that the provident fund would be asked
to help Rashid Hussain Bhd in taking over of Sime Bank.
(The Star Online 03-Apr-1998)
WING TIEK: Court Grants Moratorium on Creditors
-----------------------------------------------
Malaysian steelmaker Wing Tiek Holdings and its
subsidiaries have obtained a three-month moratorium from
being wound up by creditors seeking more than M$250 million
(S$113.9 million) from it. The High Court recently ordered
banks to hold their hand and not start or continue legal
action, including winding-up proceedings. This is to allow
the listed company to put together a plan to reconstruct
the debts, issue new shares and reduce its capital.
The restraining order will give Wing Tiek a break from a
slew of lawsuits and letters of demand.
Checks by The Straits Times show that four banks --
Bumiputra Merchant Bankers, Bank Bumiputra, Deutsche Bank
and BSN Merchant Bank -- had started legal action to recoup
more than M$30 million. At least 15 other institutions had
sent letters threatening legal action.
Faced with the possibility of being wound up, the company
and its subsidiaries -- Wing Tiek Steel Pipe, Wing Tiek
Metal Industries, Wing Tiek Ductile and Wing Bee Hardware
-- sought a restraining order to keep more than 30 creditor
banks at bay.
On March 23, the High Court granted the order, which is
effective for three months. During that period, Wing Tiek
Holdings, whose managing director is businessman-politician
Datuk Joseph Chong, will attempt to get its creditors to
accept a scheme of payment.
A study by auditors Arthur Andersen showed that the banks
can only expect an average return of 83 sen on each M$1
while other creditors will get even less, 39 sen on each
M$1. Therefore, liquidation of any entity in the group will
result in lower returns to the creditors and will not be in
their interest, lawyers for Wing Tiek contended.
Under the scheme, Wing Tiek Holdings will reduce its
capital by cancelling 75 sen of the par value of existing
shares. Subsequently, it will consolidate four ordinary
shares of 25 sen into one ordinary share of M$1. The
company also proposes to issue 58,333,000 new ordinary
shares of M$1 at an issue price of M$1.20 per new share. It
hopes to raise M$70 million from the issue, which will be
available to Westmont Holdings and/ or Datuk Kamarudin
Jaafar and/or Datuk Padil Harun. Datuk Kamarudin is
executive chairman of Wing Tiek Holdings. (Straits Times
03-Apr-1998)
T H A I L A N D
EARTH INDUSTRIAL: SET Delists Securities
----------------------------------------
Earth Industrial was ordered delisted, after failing to
submit a credible financial statement and failing to
implement a rehabilitation plan. The company has changed
managing directors five times, and lacks determination to
address the financial problems, the SET said. Management
also lacked transparency in operations, and failed to
consider the interests of shareholders, it said.
Trading in the company will resume for 30 days, starting on
Wednesday and ending on May 18. Afterward, the company will
be delisted. An investigation will be launched into
directors and management, with legal action taken if any
illegal actions are discovered.
The SET board also ruled yesterday that starting on
December 31, delays in the submission of financial
statements would be permitted only in extraordinary
circumstances, such as natural disasters. (Bangkok Post
03-Apr-1998)
KIATNAKIN FINANCE: Outlines Rehabilitation Plan
-----------------------------------------------
Kiatnakin Finance and Securities Public Company Limited
announced that, in the event of the capital increase by the
existing shareholders, it will implement a four-part
rehabilitation plan:
1. Plan to Maintain the Proportion of Equity to Risk
Assets at No Less than 15 Per Cent in the first year, no
less than 12 percent in the second year, and no less than
10 per cent in the third year, or as required by the
authority.
The Company's Rehabilitation Plan was approved by the
Financial Sector Restructuring Authority (FRA) on December
8, 1997 requiring the capital increase in the amount of
Baht 1,886 M in order to maintain the ratio of capital to
risk assert at no less than 15 per cent as required. The
Company thus accordingly issues 175,797,968 capital
increased ordinary shares at par value of Baht 10. The
detail is as follows:
A. By major shareholders Baht 1,109 M (98,135,819
shares)
B. By existing shareholders (minority)/ financial
institutions Baht 777 M (77,662,149 shares)
2. Plan to Repay the Financial Institutions Development
Funds
After an approval is granted for the resumption of
business, the Company will repay the FIDF for the
outstanding balance as of February 28, 1997 worth Baht
5,026 M every 6 months in 15 installments ( 8 years ).
The first to the fourteenth installments will be made in
the amount of Baht 335 M each. The payment of Baht 336 M
will be made in the fifteenth. The first installment
payment will be made 12 months after the day it resumes its
operation.
3. Plan to Manage Liquidity
The Company's both short term and long term liquidity
management plans are detailed as follows :
3.1 MANAGING EXISTING LIABILITIES BY EXTENDING THEIR
MATURITIES
The Company has been working to extend the maturity terms
of the following groups.
1. Public deposits : 6, 18, and 24-month extension
depending on deposit balance. As for KTB NCDs, 6, 30, and
60-month extension are implemented as required by the
authority.
2. Local and foreign institutional creditors : 18, and 24-
month extension
3. Holder of KK Debenture #1: 18 month extension
After the extension, the Company is supposed to follow the
below repayment scheme.
Cash Outflow 1998 1999 2000
Public borrowings 517 1,610 1,119
Local/Foreign
Institutional Creditors 417 2,425 35
FIDF - 670 670
KK Debenture #1 - - 1,200
Total 934 4,705 3,104
* Cash Outflow after business resumption
3.2 Acquiring cash inflow from the repayment of loans and
from the liquidation of the investments
The Company has cash inflows from repayments of hire
purchase loans, of commercial loans, of margin loans as
well as from the liquidation of parts of bonds and liquid
securities in the SET. Compared with the Company's cash
outflow of the same period, net cash flow is positive,
that is the Company has quite considerable amount of
net cash resulting in increased liquidation and decreased
risk in the withdrawal of public borrowings once it is
re-opened.
However, the Company expects to regain public confidence.
As for the remaining net cash, the Company will use it in
the operations that generate satisfactory return at low
risk.
Cash Inflow 1998* 1999 2000
Beginning Cashflow 2,871 4,799 3,934
Cashflow between accounting
periods
- Repayments of hire
purchase loans,
of commercial loans, of
margin loans 2,871 3,666 2,726
- Liquidation of bonds 52 261 173
and investment
Total Cash Inflow between 2,842 3,860 2,887
accounting periods
Accumulated Cash Inflow 5,713 8,639 6,821
Total Cash outflow (934) (4,705) (3,104)
Net Cashflow 4,779 3,934 3,717
*Cash Inflow after business resumption
Summary of Liabilities Structure after Business Resumption
The Company's liabilities structure after business
resumption mainly comprises long-term liabilities, as a
matter of fact, the fluctuation resulted from short-term
liabilities is decreased, enabling the Company to develop
effective asset and liabilities management plan.
Liabilities Million(Baht) %
Borrowings
from public 4,159 26.23
from SET/financial
institutions 579 3.65
from abroad 2,313 14.58
from FIDF 5,276 33.27
Unsecured/Senior Debentures 2,323 14.65
Convertible Bond 955 6.02
Other liabilities 253 1.60
Total 15,858 100.00
4. COMPANYS MANAGEMENT REFORMATION & FUTURE BUSINESS PLAN
The Company has been operated by a professional management
team equipped with broad range vision and long time
experiences. In addition, the Company's policy has been
strictly adhered to conservatism as well as business ethic.
It is also clearly stated that risky business is to be
avoided at all costs. Details of the Company's management
reformation and future business plan are provided below:
4.1 SEPARATION OF FINANCE BUSINESS and SECURITIES BUSINESS
The Company has undertaken the separation of finance
business and securities business to generate management
efficiency. At present, the approval granting process from
the SEC and the SET is under way. The Company plans to
upgrade itself to be a Super Finance after merging with
the Strategic Partner.
4.2 STRATEGIC PARTNER
The Company has planned to acquire strategic partner in
order to bring about contributions in new technology and
management skills to increase expertise in new business
areas. It is also for a purpose of business expansion,
namely, Currencies Exchange, Project Loan, foreign
institutional securities customers. Moreover, the
strategic partner will help strengthen the Company's
Financial Structure.
4.3 FOCUSED BUSINESSES
Finance Business
1. Concentration on consumer financing: The focus
will be on an enhancement of capability to
compete in automobile hire purchase business.
2. Concentration on high quality lending: The Company plans
to reduce the size of commercial lending and to conduct
commercial lending business on a selective basis only to
low risk industry.
Securities Business
1. Concentrating on retail securities business by
expanding the customer base
2. Concentrating on foreign institutional customers
after the merger
4.4 Asset and Liabilities Management
The Company has matched its asset and liabilities
management plan with duration and interest rate emphasizing
an acquisition of source of fund, monetary instruments, and
the following categories of loans:
1. Long/MediumTerm Liabilities with Long Term Loan, Project
loan, and Housing Loan
2. Medium Term Liabilities/Securitization with Hire
Purchase Loan, Medium Term Loan
3. Short Term Liabilities with Short term Loan
4.5 MAINTENANCE OF ASSET QUALITY
The Company's policy is to maintain high quality asset at
low risk level.
1. Loan Quality -- The Company has set up standard in
selecting high quality borrowers and in maintaining its low
risk lending to highly expert business such as Hire
Purchase loan. At the same time the proportion of high risk
loan has been decreased such as Real Estate Loan and Margin
Loan
2. Investment in Securities -- Invest in low risk
securities yielding acceptable return
3. Percentage of Accrued Interest to that of Total
Loans and Percentage of NPL to that of Total Loans Not
exceeding the average of the leading finance institutions
4.6 Cost cutting and work efficiency boost
This will be done by reducing the Company's size, cutting
down costs, and boosting work efficiency by enhancing the
capital of its computerized system.
* * *
Phatra Securities Company serves as Financial Advisor to
Kiatnakin Finance and Securities Public Company Limited and
will assist the company in a presentation about the
Companys Rehabilitation Plan and its operational results to
be held for the Stock Exchange of Thailand Officers,
analysts, and interested parties, on April 7, 1998 from 2
p.m. to 4 p.m., at the Grand Ballroom, Grand Hyatt Erawan
Bangkok. (SET 02-Apr-1998)
PREMIER ENTERPRISE: Faces Delisting from the SET
------------------------------------------------
The Premier Enterprise Public Company Limited (SET:PE) has
submitted its audited financial statements for the year
ended 31 December, 1997 to the SET. The company's
financial statements shows a net loss of 7,703.15 million
baht and net tangible assets of (4,858.71) million baht.
This means NTA are equal to (607.34) percent of the
company's 800 million baht paid-up capital.
As a result, the company faces possible delisting from the
SET. The SET has directed Premier to appoint a financial
advisor and prepare a rehabilitation plan to propose to its
shareholders by August 3, 1998.
(SET 03-Apr-1998)
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., Princeton, NJ USA, and Beard Group, Inc., Washington,
DC USA. Debra Brennan and Lexy Mueller, Editors.
Copyright 1998. All rights reserved. This material is
copyrighted and any commercial use, resale or publication
in any form (including e-mail forwarding, electronic re-
mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR -- Asia Pacific subscription rate is $875 per month
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial
subscription or balance thereof are $25 each. For
subscription information, contact Christopher Beard at
301/951-6400.
* * * End of Transmission * * *