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T R O U B L E D   C O M P A N Y   R E P O R T E R     
  
             A S I A   P A C I F I C      

       Thursday, May 14, 1998, Vol. 1, No. 59

                    Headlines


C H I N A   &   H O N G   K O N G

CHINA EVERBRIGHT: Chairman Says He will not Depart
DICKSON CONCEPTS: Denies Closures Signal Trouble
EASY CONCEPTS: Negotiations with Investor Collapse
KPI COMPANY: 1997 Results Announcement
SINOCAN HOLDINGS: 1997 Results Announcement


J A P A N  

FUJITSU LTD: Semiconductor Division Pulls Net Down 87%
JAPAN AIRLINES: Moody's Downgrades Long-term Debt


K O R E A

DONG AH: Engineering Subsidiary Goes Bankrupt
EXPORT-IMPORT BANK OF KOREA: Moody's Slashes Bank's Ratings
INDUSTRIAL BANK OF KOREA: Moody's Slashes Bank's Ratings
KIA MOTORS: Former Chairman Jailed
KOREA DEVELOPMENT BANK: Moody's Slashes Bank's Ratings
KUONGHYANG: Construction Company Goes Bankrupt


T H A I L A N D

ALPHATEC ELECTRONICS: Files Rehabilitation Petition
CP GROUP: Investors Interested in Lotus
SIAM MOTORS: President Eager to Sell, Even to Foreigners
THAI ASAHI GLASS: Closes New Plant Amid Slumping Sales


=================================
C H I N A   &   H O N G   K O N G
=================================

CHINA EVERBRIGHT: Chairman Says He will not Depart
--------------------------------------------------
The high-profile chairman of China Everbright Group, Zhu
Xiaohua, yesterday tried to dispel market rumours of his
imminent departure from Hong Kong, vowing to stay at the
helm of the diversified conglomerate for at least four more
years. Frequent rumours that Beijing is planning to
transfer Mr Zhu to another job in Beijing have recently
caused falls in the shares of China Everbright's listed
subsidiaries in Hong Kong.

He defended the performance of the listed companies and
other units of the group, saying his restructuring plan had
produced early results. He admitted the group's listed
flagship, China Everbright Ltd, had faced cash-flow
difficulties because of its heavy bank borrowings. But Mr
Zhu insisted the company's profitability was on the rise as
its partly controlled assets - Everbright Bank of China,
International Bank of Asia and National Mutual Asia - would
contribute considerable earnings this year.
(South China Morning Post 13-May-1998)


DICKSON CONCEPTS: Denies Closures Signal Trouble
------------------------------------------------
Upmarket retailer Dickson Concepts (International) has
confirmed it will close some loss-making stores in the
region, but the number will be insignificant, according to
chairman Dickson Poon. Mr Poon yesterday moved swiftly to
squash rumours the company would launch a big shutdown of
mainland and regional outlets as a result of the tourism
and retail slump. Analysts have generally expressed
pessimism about its performance this year after upscale
stationery distribution subsidiary ST Dupont recorded
disappointing fourth-quarter sales due to the Asian
financial crisis.

"We plan to shut down a single-digit figure out of an
existing 300 outlets in Southeast Asia," Mr Poon said.
"However, the plan is part of our constant review of the
performance of individual stores. It has nothing to do with
the financial turmoil."

Brokerage reports estimate the retailer will make at least
$100 million in provision for the closures. Mr Poon refused
to comment on the provision, but said Dickson would adopt a
prudent accounting policy.
(South China Morning Post 13-May-1998)


EASY CONCEPTS: Negotiations with Investor Collapse
--------------------------------------------------
Subsequent to the joint announcement of Easyknit
International Holdings Limited (`Easyknit') and Easy
Concepts Limited (`Easy Concepts') dated 16th April, 1998
in relation to the Transactions (as defined below), the
boards of Easyknit and Easy Concepts (the `Boards') wish to
inform that the principal terms in respect of the
Transactions have not been agreed between the potential
investor and Mr Koon Wing Yee (`Mr Koon'). Therefore,
negotiations on the Transactions have been terminated.

The Boards have been informed by Mr Koon, the President and
Chief Executive Officer of Easyknit and Easy Concepts, that
the principal terms in respect of the proposed sale of Mr
Koon's entire interest of approximately 35.1% in Easyknit
(the `Easyknit Transaction') and the proposed purchase of
Easyknit's entire interest of approximately 75% of the
issued share capital in Easy Concepts by Mr Koon (the `Easy
Concepts Transaction') (together, the `Transactions'), have
not been agreed with the potential investor. Therefore,
negotiations on the Transactions have been terminated.

The Boards also wish to clarify that there is no other
approach in relation to the sale of interest in Easyknit
and Easy Concepts for the time being. However, as a normal
part of their corporate activities, Easyknit and Easy
Concepts together with their directors will continue to
assess any approach received in relation to the sale of
interest in Easyknit and Easy Concepts.

Investors are advised to exercise extreme caution when
dealing in the shares of Easyknit and Easy Concepts.

Further announcement will be made as and when necessary.

By Order of the Board
Easyknit International Holdings Limited
Koon Wing Yee
President and Chief Executive Officer

By Order of the Board
Easy Concepts Limtied
Koon Wing Yee
President and Chief Executive Officer

Hong Kong 11th May, 1998

(SEHK 12-May-1998)


KPI COMPANY: 1997 Results Announcement
--------------------------------------
For the nine-month period April 1, 1997 to December 31,
1997, KPI Company Limited reports a net loss of
HK$23,478,000 on turnover of HK$2,328,633,000. This
compares to a net profit of HK$758,000 on turnover of HK$
3,952,427,000 for the twelve-month period of April 1, 1996
to March 31, 1997. The Board of Directors has resolved to
change the Company's financial year end date from 31st
March to 31st December each year in order to make the
Company's financial year coterminous with those of the
Company's major subsidiaries and associated companies, as
already disclosed in our interim results dated 11th
December 1997. The exceptional item relates to specific
provision against doubtful debts.
(SEHK 12-May-1998)


SINOCAN HOLDINGS: 1997 Results Announcement
-------------------------------------------
For the period January 1, 1997 to December 31, 1997,
Sinocan Holdings Limited reports a profit of HK$117,272,000
on turnover of HK$600,952,000. This compares to a profit of
HK$213,912,000 on turnover of HK$551,878,000 for the
corresponding 1996 period.
(SEHK 12-May-1998)


=========
J A P A N  
=========

FUJITSU LTD: Semiconductor Division Pulls Net Down 87%
------------------------------------------------------
Fujitsu Ltd. calculates consolidated net profit of about 6
billion yen for the year ended March, an 87% slide, company
sources said Tuesday. The plunge reflects a poor bottom
line for the semiconductor division after payment for the
goodwill of Amdahl Corp. as well as foreign-exchange losses
on Southeast Asian revenue.

Group sales are seen as up 10% to about 5 trillion yen, on
strong corporate system operations and shrinking losses on
personal computers. Falling memory chip prices aggravated
operating losses in the semiconductor-related division.
Consolidated operating profit is up 6% to about 190 billion
yen.

Japan's largest computer maker forecasts group net profit
will rise to about 80 billion yen in the year through March
1999, from an estimated 6 billion yen in fiscal 1997.
Consolidated operating profit is projected to increase 26%
to 240 billion yen, on sales of about 5.6 trillion yen, up
12%.
(The Nihon Keizai Shimbun 13-May-1998)


JAPAN AIRLINES: Moody's Downgrades Long-term Debt
-------------------------------------------------
Japan Airlines, the country's main international carrier,
was yesterday downgraded by Moody's, the credit ratings
agency, and put on watch for possible further downgrades.
Moody's downgraded JAL's long-term debt rating to Baa2,
citing a challenging operating environment and high cost
structure, and adding that further losses at subsidiaries
could weaken JAL's financial position, which is already
highly leveraged.
(Financial Times 13-May-1998)


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

DONG AH: Engineering Subsidiary Goes Bankrupt
---------------------------------------------
Dong Ah Engineering Co., a subsidiary of the ailing Dong Ah
Construction Group has gone bankrupt. Dong Ah Engineering
is the first Dong Ah subsidiary to go bankrupt. Korea First
Bank said that it refused to pay bills worth 6 billion won
presented at its POSCO branch last Friday as Dong Ah failed
to settle its accounts with the bank. Dong Ah Engineering
had barely escaped a default of 4 billion won last
Wednesday as Daehan Invest Trust Co. postponed the
repayment of bills it circulated.

Dong Ah Group chairman Choi Won-suk last week announced
that he will give up his management right in Dong Ah Group
in order to keep the cash-strapped construction group alive
in the face of the potential bankruptcy of subsidiaries in
the chain.
(Korea Times 13-May-1998)


EXPORT-IMPORT BANK OF KOREA: Moody's Slashes Bank's Ratings
-----------------------------------------------------------
Moody's Investors Service yesterday downgraded the credit
ratings of South Korea's three biggest state banks, casting
doubts on a government drive to restructure a banking
sector plagued with snowballing bad loans. The US credit
rating agency cut its long-term debt rating on Korea
Development Bank, Export-Import Bank of Korea and
Industrial Bank of Korea. Moody's attributed "continuing
deterioration in the financial condition of the Korean
Government's main policy banks" for its move.

It said it had lowered the long-term debt ratings of the
Korea Development Bank from Ba1 to Ba2, the Korea Export-
Import Bank from Ba1 to Ba2 and the Industrial Bank of
Korea from Ba1 to Ba3. The agency's downgrades affected
about US$52.7 billion of debt.

The government is reviewing rehabilitation plans submitted
by 12 commercial  banks with capital of less than 8 per
cent of assets - the capital adequacy ratio set by the Bank
for International Settlements. Those whose plans are deemed
implausible will be merged or shut from as early as July.
(South China Morning Post 12-May-1998)


INDUSTRIAL BANK OF KOREA: Moody's Slashes Bank's Ratings
--------------------------------------------------------
Moody's Investors Service yesterday downgraded the credit
ratings of South Korea's three biggest state banks, casting
doubts on a government drive to restructure a banking
sector plagued with snowballing bad loans. The US credit
rating agency cut its long-term debt rating on Korea
Development Bank, Export-Import Bank of Korea and
Industrial Bank of Korea. Moody's attributed "continuing
deterioration in the financial condition of the Korean
Government's main policy banks" for its move.

It said it had lowered the long-term debt ratings of the
Korea Development Bank from Ba1 to Ba2, the Korea Export-
Import Bank from Ba1 to Ba2 and the Industrial Bank of
Korea from Ba1 to Ba3. The agency's downgrades affected
about US$52.7 billion of debt.

The government is reviewing rehabilitation plans submitted
by 12 commercial  banks with capital of less than 8 per
cent of assets - the capital adequacy ratio set by the Bank
for International Settlements. Those whose plans are deemed
implausible will be merged or shut from as early as July.
(South China Morning Post 12-May-1998)


KIA MOTORS: Former Chairman Jailed
----------------------------------
South Korean prosecutors yesterday arrested former Kia
Group head Kim Sun-Hong on charges of embezzling company
funds to retain his managerial rights of the insolvent
conglomerate. Kim was sent to prison following a court
hearing at which judges compared his testimony with charges
brought by prosecutors. He was accused of embezzling 52.3
billion won (S$61.3 million) between 1994 and 1997.  

Prosecutors also charged Kim with misfeasance for allegedly
causing enormous losses to Kia Motors Corp by diverting its
money into cross-payment guarantees for other group
subsidiaries. They blamed Kim for aggravating South Korea's
financial crisis by rejecting a government move to sell Kia
Motors when the group went belly-up in July last year under
heavy debts.
(The Straits Times 13-May-1998)


KOREA DEVELOPMENT BANK: Moody's Slashes Bank's Ratings
------------------------------------------------------
Moody's Investors Service yesterday downgraded the credit
ratings of South Korea's three biggest state banks, casting
doubts on a government drive to restructure a banking
sector plagued with snowballing bad loans. The US credit
rating agency cut its long-term debt rating on Korea
Development Bank, Export-Import Bank of Korea and
Industrial Bank of Korea. Moody's attributed "continuing
deterioration in the financial condition of the Korean
Government's main policy banks" for its move.

It said it had lowered the long-term debt ratings of the
Korea Development Bank from Ba1 to Ba2, the Korea Export-
Import Bank from Ba1 to Ba2 and the Industrial Bank of
Korea from Ba1 to Ba3. The agency's downgrades affected
about US$52.7 billion of debt.

The government is reviewing rehabilitation plans submitted
by 12 commercial  banks with capital of less than 8 per
cent of assets - the capital adequacy ratio set by the Bank
for International Settlements. Those whose plans are deemed
implausible will be merged or shut from as early as July.
(South China Morning Post 12-May-1998)


KUONGHYANG: Construction Company Goes Bankrupt
----------------------------------------------
Kyonghyang Construction Company said in a public notice,
"Kyonghyang became insolvent as a result of its failure to
pay 2,292 million won worth of bills it issued Monday." As
a result, the Korea Stock Exchange put shares of Kyonghyang
on the regulatory list and will resume trading of its
shares from today.
(Korea Times 13-May-1998)


===============
T H A I L A N D
===============

ALPHATEC ELECTRONICS: Files Rehabilitation Petition
---------------------------------------------------
Creditors of Alphatec Electronics Plc have filed a
rehabilitation petition with the Bangkok Central Civil
Court, the first such filing since the new bankruptcy law
came into effect last month.

"It is critical to the survival of the company that the
rehabilitation process be started as soon as possible, both
from a cash flow and customer standpoint. There can be no
question that this company has a very bright future, once
the restructuring has been approved," Alphatec chief
executive officer Robert Mollerstuen said.

The filing was made under the new bankruptcy law by six
banks that form part of the Creditors Steering Committee --
Bangkok Bank, Credit Agricole Indosuez, ING Bank,
Nakornthon Bank, Standard Chartered and Sumitomo Bank. The
law firm Kanung & Partners was engaged to file the
petition.

Alphatec and the Creditors Steering Committee have been
working on various proposals for the company's financial
restructuring since September. They have agreed to
rehabilitate the company, a process that has been kicked
off with the filing of the petition.

According to a statement issued Tuesday by the Creditors
Steering Committee, the petition proposed Price Waterhouse
Corporate Restructuring Ltd as the planner.

"It is understood that keen interest exists among a number
of investors, provided the financial restructuring of the
company is approved," the statement said.

Due to its inability to finance its debts, Alphatec came
under the control of the six creditors in July last year.

The committee said in the statement that Price Waterhouse's
association with Alphatec Electronics commenced in July
when it was engaged by the company's board to complete a
financial review.

"This leaves them with considerable knowledge of working
with Alphatec Electronics and, in addition, they have a
core group of people who are very experienced in the
process of corporate restructuring,'' the statement said.

The Steering Committee has appointed Credit Agricole
Indosuez (Indosuez WI Carr Securities Ltd) to advise it on
what form the financial restructuring should take to ensure
it is acceptable to new equity investors, and then to
source such investors.

"It is understood that keen interest exists among a number
of investors, provided that the financial restructuring of
the company is approved," the statement said.

Both the company and the petitioning banks are hopeful of a
speedy passage through the courts. The company said it has
managed to survive since August thanks to the efforts of
employees, management and suppliers and the loyalty and
patience of customers. But both time and patience are
running out.

This petition will be the first major rehabilitation sought
under Thailand's new bankruptcy law, and is expected to be
a test case for other major restructurings in future.
(The Nation 13-May-1998)


CP GROUP: Investors Interested in Lotus
---------------------------------------
A number of foreign investors have offered to buy Lotus
Supercentres from the Charoen Pokphand Group, which needs
quick cash to prop up its financial position, according to
an industry source. The group, one of Thailand's largest
conglomerates, is seeking investors for its entire range of
businesses covering agriculture, satellites, retailing and
petrochemicals.

Chairman Dhanin Chearavanont told the press earlier that CP
had to sell interests in Thailand and China because it
needed cash to maintain its core businesses. Retail
flagships on offer are CP 7-Eleven Co, the convenience
store chain, Lotus Supercentre and Sunny Supermarket.
Although Mr Dhanin earlier set a condition that CP would
maintain control of each enterprise, that is no longer the
case.

"The offer to sell only a minority stake of up to 35% will
not attract foreign buyers," said the source. "It will be
extremely difficult to sell anything at the moment now that
it's a buyers' market."

In the case of Lotus Supercentre, which now has 13
branches, the best offer has come from a European investor,
who is ready to pay about 10 billion baht for the entire
operation, the source said. The Financial Times reported
from London that Britain's Tesco supermarket chain had made
CP an offer of 150 million pounds (9.6 billion baht) for
Lotus.

Where 7-Eleven is concerned, the group plans to get the
chain listed on the Stock Exchange of Thailand in order to
get a better selling price.

CP's need for cash reflected, among other factors, a recent
report that its Hong Kong-listed affiliate, C.P. Pokphand
Co, could default on a debt repayment. C.P. Pokphand Co
wants holders of its floating-rate notes to agree to delay
redemption, which means the company needs about US$92.8
million plus interest of about $3.5 million in cash.

The CP Group also wants to quickly close its restaurant
operation in China. The business, located in booming
Shenzhen, has been suffering losses since Zhu Rongji became
Premier of China. "Most Chinese government officials have
stopped dining out, causing restaurants to suffer," said
the source, referring to Mr Zhu's crackdown on waste.

CP in Bangkok is now trying to find out how to repay the
debt the restaurant owed to Thai Farmers Bank in China.
Although the restaurant operation was not big, the plan to
close it reflects the fact that the group cannot afford to
lose more and more money.

The source added that all companies in the CP group had
been instructed to help themselves as much as possible and
not to create any financial burdens for the parent firm.

The sale of the restaurant is in addition to CP's plan to
sell its 35% stake in Shanghai Mila Brewery Co to its
partner, Heineken MV of the Netherlands. Also up for sale
is its stake in PetroAsia, a joint petrochemical venture
with the Petroleum Authority of Thailand and the Chinese
Government.

TelecomAsia, one of CP's major investments, recently
announced plans to raise money by issuing 777 million new
shares at 10 baht par. The goal is to raise capital from
2.22 billion to 3.3 billion baht; all but 200 million of
the new shares will be placed privately, and that means
foreigners are dead certain to move their ownership of
TelecomAsia from 48.7% to well above 50%. CP owns 22% of
TelecomAsia, which lost 26.63 billion baht last year.
(Bangkok Post 13-May-1998)


SIAM MOTORS: President Eager to Sell, Even to Foreigners
--------------------------------------------------------
Phornthep Phornprapha, chief executive officer and
president of Siam Motors Co, said he would not regret it if
his family's automotive businesses, founded 46 years ago by
his father Dr Thaworn, were taken over by foreigners. The
Phornprapha family is the last Thai frontier in the
automobile industry, where most of the major players in the
market are now owned and run by the brand owners
themselves, in particular the Japanese car companies.

Phornthep said up to now Siam Motors has maintained its
majority ownership in its subsidiaries but noted that those
firms require a huge capital increase. Phornthep claimed
all of his brothers and sisters have agreed on his
philosophy of not sticking to a majority-ownership
mentality if it makes more sense to sell the businesses.
Siam Motors will remain Thai following its recent adoption
into a holding investment company for the Phornprapha
family, but the family's core automobile business is a
different story.

An auto analyst said Japan's Nissan Motor Co could take
over the Thai family's Nissan car distribution and
manufacturing businesses by acquiring Siam Nissan
Automobile (SNA), the manufacturing company that also owns
the entire stake in the distribution company Siam Motors
and Nissan Sales Co (SMNS). Nearly four months ago the
Japanese daily Nihon Keizai Shimbun quoted a Nissan
spokesman as saying that Nissan will increase the capital
of SNA and raise its stake in the venture to more than 40
per cent from the current 25 per cent ''and may eventually
increase it to 49 per cent''.

Phornthep refused to elaborate on the SNA capital increase,
saying that Nissan has asked to take charge of publicising
the news. At present, Siam Motors holds 75 per cent in SNA.

The Siam Motors Group has a combined debt of about US$5
billion. But liabilities lie on the project companies, not
Siam Motors, which is acting only as the holding company.
Phornthep said without the new structure that lifted Siam
Motor into a holding company, he would certainly now have a
big headache. In the globalisation era, support from
foreign partners is necessary for local companies.
Phornthep said Siam Motors' subsidiaries, which are mostly
joint ventures, can adjust to the economic crisis with help
from their Japanese partners. Beginning in late 1997,
Phornthep said Siam Motors completed capital increases
totalling about Bt3 billion for 10 subsidiaries. Thanks to
its decision a few years ago to sell off its auto hire-
purchase portfolio at Bt5 billion to SITCA Investment and
Securities Plc, he said, Siam Motors has retained earnings
to cover the capital increases and thus maintain majority
ownership in the subsidiaries.

Siam Motors Group includes Siam-Hitachi Elevator Co,
Bangkok Machinery and Parts, Siam Kiki Co, Siam Motor Parts
Co, NSK Bearings (Thailand) Co, Siam Daikin Sales Co,
Bangkok Motor Works Co, Siam Motors Industries Co, and Siam
GS Battery Co.
(The Nation 13-May-1998)


THAI ASAHI GLASS: Closes New Plant Amid Slumping Sales
------------------------------------------------------
Thai Asahi Glass Plc, facing its toughest year since it was
founded 35 years ago, closed its new three-billion-baht
plant last month after recording its first-ever loss in
1997. After years of profit, the Thai-Japanese joint
venture firm is reducing its costs in response to the
nation's worst economic downturn since the 1940s.

Chaikiri Srifuengfung, managing director of Thai Asahi
Glass, said domestic glass consumption this year was
expected to slump by 35% to about four million cases
because of the decline in the construction and automotive
sectors.

Mr Chaikiri said the company's Japanese partner, Asahi
Glass, was also helping to weather the crisis. Although the
parent firm is facing its own domestic difficulties, it is
willing to import glass from its Thai subsidiary to help
absorb the oversupply. The Japanese firm also offered to
act as guarantor on loans if the company needed to borrow,
said Mr Chaikiri, adding that the assistance from Asahi
Glass would also help improve the company's cashflow.

Thai Asahi Glass's sales revenue in 1997 fell by 17% to
1.587 billion baht, compared to 1996. It recorded a net
operating loss of 1.877 billion baht, manly due to a
foreign exchange loss of 1.783 billion baht on the
construction of the Rayong plant. The loans consisted of
US$53 million and 6.255 billion yen, carrying interest
rates average 6.4% and 1.4% respectively.

"We are still honouring outstanding debt agreements but for
those we can't, we are negotiating for rescheduling and
rollover," Mr Chaikiri said.
(Bangkok Post 13-May-1998)


S U B S C R I P T I O N   I N F O R M A T I O N

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