/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/980821.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Friday, August 21, 1998, Vol. 1, No. 127 Headlines C H I N A & H O N G K O N G CHAOYANG JINSHAN: Closed for Illegal Futures Trading HANKO INTERNATIONAL: Requests Creditor Standstill Agreement JIEYANG JINSHEN: Closed for Illegal Futures Trading KPS RETAIL: Sifting Through Litigation Claims LAI SUN: Property Sales Moving Forward MEIXIAN HENGFU: Closed for Illegal Futures Trading MEIZHOU HUAXIANG: Closed for Illegal Futures Trading MEIZHOU HUAZIN: Closed for Illegal Futures Trading TOMSON PACIFIC: Tomson Chief's Cash Flow 'Underground' I N D O N E S I A GARUDA INDONESIA: Bleeding $1.82 Million Daily J A P A N DAIEI INC.: Accelerating Restructuring Efforts LONG TERM: Bank's Solvency & Government Intervention Unclear NISSAN MOTOR: Moody's Lowers Credit Rating to Baa3 MITSUBISHI MOTOR: Moody's Lowers Credit Rating to Baa3 SEIYU LTD.: Accelerating Restructuring Efforts K O R E A CHUNYEWON PUBLICATIONS: Starts Creditor Reconciliation Procedure DAEWOO GROUP: Korea First Contracts for Auditing DONGHWA DUTY: One of Cho Hung's Three Workout Targets DONGHWA INVESTMENT: One of Cho Hung's Three Workout Targets HAEKSHIM TELETEX: Completed Creditor Reconciliation Procedure HYUNDAI GROUP: Korea Exchange Talks to Younghwa About Auditing HYUNDAI MOTOR: Government Officials Fear Strike's Effect JINRO COORS: Creditors Can't Close Deal To Sell Jinro Coors KIA MOTORS: Today May Bring News of a Successful Bid KUNYOUNG CONCRETE: Completes Creditor Reconciliation LG GROUP: Korea First Contracts with Anjin for Auditing SAMSUNG GROUP: Hanil Contracts with Sedong for Auditing SK GROUP: Korea First Contracts for Auditing YUJIN TRAVEL: One of Cho Hung's Three Workout Targets M A L A Y S I A CITY ONE: Winding-Up Petition MERCU CEKAL: Winding-Up Petition NASJUARA DEVELOPMENT: Winding-Up Petition RC SKYLINE: Winding-Up Petition SEE HUP: Winding-Up Petition SUASA MASYHUR: Winding-Up Petition P H I L I P P I N E S PHILIPPINE AIRLINES: Acesite Hotel Claims PhP4.24 Million Due PHILIPPINE ASSOCIATED: Government May Assume Debts PHILIPPINE PHOSPHATE: Government May Assume Debts S I N G A P O R E BROADWAY INDUSTRIAL: New Funding Flows as Standstill Finalized SHOWPLA ASIA: Appoints Ernst & Young as Advisor T H A I L A N D BANGKOK UNION: Insurer's Financial Statements Suspect POWER-P PUBLIC: SET Requests Further Clarifications & Disclosures SIAM CEMENT: Will Name Restructuring Advisor Within the Month SIAM CITY: Setting-Up New Unit to Manage Non-Performing Loans THAI AIRWAYS: Management Explains Reasons for Bt4.3b 3Q Loss THAI OIL: PTT Agrees to Inject Bt4 Billion to Ease Liquidity THAI OLEFINS: Urged to Revamp its Senior Management THAI PETROCHEMICAL: Debt to Equity Swap Suggested by Creditors ================================= C H I N A & H O N G K O N G ================================= CHAOYANG JINSHAN: Closed for Illegal Futures Trading ---------------------------------------------------- The Asian Wall Street Journal reported that market regulators in Guangdong and public security officials have closed Chaoyang Jinshan Co. and four other futures firms for illegal trading of Hong Kong's Hang Seng Index futures. The firms' assets, which are operated as consulting companies, have been frozen, and the heads of the companies faces court charges. The Asian Wall Street Journal states that this move is part of an ongoing crack- down of financial market irregularities in China. Officially, the semi-convertible Chinese yuan can only be exchanged for goods and services. However, the trading in foreign exchange denominated instruments is regarded as a loop hole which some economist say is exposing the yuan to currency rate fluctuation pressures. HANKO INTERNATIONAL: Requests Creditor Standstill Agreement ----------------------------------------------------------- Hanko International Holdings Ltd announced the group is experiencing a very rough operating market conditions. With a recent downturn in business and the tightening of the credit policy fundamentals, the group is requesting its bankers and financial companies to agree a formal standstill and to restructure the group`s borrowing facilities. The group emphasized that the normal operation will not be affected. The group has appointed a financial advisor to represent it to look for interested strategic investors for a potential equity injection. As at today, the aggregate banking facilities of the group is approximately HK$157 million. Also, the group foresee a substantial provision is made for inventory and doubtful debts for receivable. No agreements has been reached between the group and the relevant banking institution. JIEYANG JINSHEN: Closed for Illegal Futures Trading --------------------------------------------------- The Asian Wall Street Journal reported that market regulators in Guangdong and public security officials have closed Jieyang Jinshen Co. and four other futures firms for illegal trading of Hong Kong's Hang Seng Index futures. KPS RETAIL: Sifting Through Litigation Claims --------------------------------------------- According to reports appearing in the South China Morning Post and the Hong Kong Standard, Video chain KPS Retail Stores, Ltd., reached a last-minute out-of-court settlement earlier this week with a disgruntled customer who was suing it for imposing a time limite on pre-paid coupons. Six others have filed writs claiming refunds of their prepaid coupons. Another of the 7 claimants rejected a settlement offer. If his claim is successful, it would open the floodgates to claims by other KPS customers. The Post also reports that a landlord has taken High Court action in a bid to force KPS out of premises in the Tai Kok Tsui Centre. Lindenford Ltd claims that more than $1.25 million is outstanding in rent, management charges, rates and licence fees from KPS Retail Stores Ltd. The owner of the 3 shopping centre units, let to KPS in 2 tenancy agreements dated January 1996, is also seeking profits earned by KPS from yesterday until the premises are vacated. LAI SUN: Property Sales Moving Forward -------------------------------------- According to the South China Morning Post and the Hong Kong Standard, Lai Sun Development has sold 20 more flats at its 50 per cent owned development The Panorama in Tsuen Wan. The selling price was as low as $3,169 per square foot according to the scmp and the average price was $3,550 per square foot according to the Hong Kong Standard. The Post recalled that the sale is part of the group's disposal plan to lower debts and increase working capital. Lai Sun has more than $9 billion debts after the recent disposal of $3 billion worth of assets. It has reduced its gearing to 49 per cent from 65 per cent with interest cover at 1.8 times. A securities firm said Lai Sun's long-term growth had already been damaged by tight liquidity. MEIXIAN HENGFU: Closed for Illegal Futures Trading -------------------------------------------------- The Asian Wall Street Journal reported that market regulators in Guangdong and public security officials have closed Meixian Hengfu Futures Co. and four other futures firms for illegal trading of Hong Kong's Hang Seng Index futures. MEIZHOU HUAXIANG: Closed for Illegal Futures Trading ---------------------------------------------------- The Asian Wall Street Journal reported that market regulators in Guangdong and public security officials have closed Meizhou Huaxiang Jinxiong Futures Co. and four other futures firms for illegal trading of Hong Kong's Hang Seng Index futures. MEIZHOU HUAZIN: Closed for Illegal Futures Trading -------------------------------------------------- The Asian Wall Street Journal reported that market regulators in Guangdong and public security officials have closed Meizhou Huazin Futures Co. and four other futures firms for illegal trading of Hong Kong's Hang Seng Index futures. TOMSON PACIFIC: Tomson Chief's Cash Flow 'Underground' ------------------------------------------------------ David Tong Cun-lin denied in court yesterday conspiracy to defraud the SFC and the takeovers committee over the Tomson Pacific takeover of Bond Corp International. He also denied offering a $26.4 million kickback, according to a report appearing in the South China Morning Post. When asked where the money came from to lend to Rivera Holdings to help associate Tomson Pacific buy shares in Bond Corp International (later named World Trade Centre Group) when he was a director of Rivera Holdings, he said that since he had not made any money in Hong Kong, the only source was remittance from Taiwan. He said companies such as Rivera were constantly looking for loans from him. The conspiracy suspect hit a losing streak on arrival in Hong Kong in 1988 and lost a lot of money. A US$5 million limit on cash being remitted from Taiwan forced Tong to rely on underground money houses in Taiwan to remit cash from his Taiwanese companies to his Hong Kong firm David Tong Co. The trial before Mr Justice Brian Keith continues. ================= I N D O N E S I A ================= GARUDA INDONESIA: Bleeding $1.82 Million Daily ---------------------------------------------- National flag carrier Garuda Indonesia is reported to be losing three billion rupiah a day because of sluggish demand and low air fares. Garuda president Robby Djohan said the airline needed to raise domestic flight fares by 30 to 40 per cent to offset the rising operational deficit. He also said the firm was in talks to pay back interest only on US$200 million in foreign debts due this year. According to the Jakarta Post, Garuda president Robby Djohan said that the airline needed to raise domestic flight fares by 35 to 40 per cent to offset the rising operational deficit. He also said the company was in talks to pay back interest only on US$200 million in foreign debt due this year. He said he expected Airbus Industrie to agree to lower monthly leasing charges to $550,000 per aircraft from the previous proposed level of $750,000. The original cost was $1.05 million per aircraft, but the company needs to generate more revenue. Garuda has raised its fares twice, first in January at an average of 35 per cent and then in May by 37 per cent following a sharp increase in the price of jet fuel. ========= J A P A N ========= DAIEI INC.: Accelerating Restructuring Efforts ---------------------------------------------- Daiei Inc. (8263) is accelerating efforts to sell group assets or liquidate affiliates. Japan's largest supermarket chain has seen earnings eroded by sluggish personal spending but hopes to attract investors by reducing liabilities, according to a report appearing in The Nihon Keizai Shimbun. Daiei will raise to 400 billion yen its target for revenue from the sale of assets and operations, from 260 billion yen. The company hopes this will get back on track its plan to reduce consolidated interest- bearing liabilities by 1 trillion yen by 2001. Daiei wants to sell its Ala Moana Shopping Center in Hawaii and two large buildings in Tokyo, and is considering a sale of various service and restaurant operations. Shares in Daiei Inc., rose 1 yen to 399 on this news, according to Bloomberg, L.P., following these announcements. Analysts surveyed by Kyodo News questioned whether the liquidation plan, which also includes two buildings in Tokyo's Ginza shopping and business district, will go smoothly in view of the flagging real estate market in Japan. Kyodo added, without citing sources, that to partially finance the debt reduction plan, Daiei also expects to raise 400 billion yen through offering shares in its subsidiary, Lawson Inc., to public trading. LONG TERM: Bank's Solvency & Government Intervention Unclear ------------------------------------------------------------ The Financial Supervisory Agency has no data indicating Long-Term Credit Bank of Japan (8303) has liabilities in excess of its assets, Commissioner Masaharu Hino told a lower house budget committee Wednesday. Hino declined further comment, saying the agency is still investigating, according to The Nihon Keizai Shimbun. Hino indicated the agency plans to probe LTCB's finances on a consolidated basis, saying it is looking at the bank's affiliates. Meanwhile, Prime Minister Keizo Obuchi again denied media reports the government intends to spend public funds to support a recently announced merger plan between LTCB and Sumitomo Trust & Banking Co. (8403). In a separate news report, however, The Nihon Keizai Shimbun reports that the Japanese government and the Bank of Japan are considering taking steps to shore up Long-Term Credit Bank of Japan (8303) to smooth the troubled bank's proposed merger with Sumitomo Trust & Banking Co. (8403), citing sources close to the discussions. According to the sources, three assistance measures are being considered: using government guarantees to support purchases of bad loans from LTCB and its affiliated nonbanks by Cooperative Credit Purchasing Co.; providing LTCB with special central-bank loans to prevent a liquidity crisis; and shoring up LTCB's capital base with injections of public funds. LTCB and Sumitomo Trust announced in June plans to prepare for a merger, a move widely seen as a rescue of LTCB. The talks have not progressed as quickly as expected, however, and in the interim, LTCB shares have fallen below their par value, and the bank has been hit with credit-rating downgrades. Sumitomo Trust, for its part, is unwilling to take over LTCB's nonperforming loans. The underlying fear inside the government and the BOJ is that if the merger talks stall, jitters over the health of the financial system would shake the financial markets. Besides providing guarantees on borrowing by Cooperative Credit Purchasing Co., the government is also discussing the possibility of having the Deposit Insurance Corp. purchase bad loans from LTCB. The BOJ, meanwhile, would tap a special-loan facility that previously has been used only for failed institutions. Uncollateralized loans can now be made available in cases that would have a significant impact on the financial system, according to Nihon Keizai sources. Shares in Long-Term Credit Bank of Japan Ltd. (8303 JP ) rose 9 yen to 56 on the news, according to Bloomberg, L.P., that the Japanese government is considering using between 500 billion yen ($3.47 billion) to 1 trillion yen in taxpayer money to bolster the bank's capital prior to its planned merger with Sumitomo Trust & Banking Co., citing the Nihon Keizai newspaper. NISSAN MOTOR: Moody's Lowers Credit Rating to Baa3 -------------------------------------------------- Moody's Investor Service lowered the credit ratings of Nissan Motor Company. Nissan's long-term debt was lowered from Baa1 to Baa3. A Baa3 rating is one notch above junk bond level. Nissan's short-term debt was also lowered from P-2 to P-3. Nissan is reportedly facing trouble in both the US and Japanese markets. Nissan's weak product lineup and reliance on incentives was suggested as the reason for poor US business performance. Nissan also reportedly has 1.5 trillion yen in debt. Notwithstanding the downgrade, shares in Nissan Motor Co. (7201) rose 3 yen to 477, Bloomberg, L.P., reports. MITSUBISHI MOTOR: Moody's Lowers Credit Rating to Baa3 ------------------------------------------------------ Moody's Investor Service lowered the credit ratings of Mitsubishi Motor Corporation. Mitsubishi's long-term debt was lowered from Baa2 to Baa3. A Baa3 rating is one notch above junk bond level. Mitsubishi is reportedly facing mounting difficulties and pressure in its effort to restore long term profitability. As the company is a truck manufacturer, it has been especially hard hit by the current recession in Japan, and in Southeast Asia. Mitsubishi also reportedly has 1.5 trillion yen in debt. Perhaps reflecting the news of the downgrade, shares in Mitsubishi Motors Corp. (7211) fell 7 yen to 282, Blooomberg, L.P., reports. SEIYU LTD.: Accelerating Restructuring Efforts ---------------------------------------------- Seiyu Ltd. (8268) is accelerating efforts to sell group assets or liquidate affiliates. The major supermarket chain has seen earnings eroded by sluggish personal spending, sending its stock price lower, and hopes to attract investors by reducing liabilities, according to a report appearing in The Nihon Keizai Shimbun. Seiyu will have liquidated Cine Saison Co., Seiyu Investment Management Inc. and seven other affiliates by the end of August. It announced Wednesday it will see 34.2 billion yen in red ink on those closures. Seiyu set aside about 19 billion yen in loss reserves for the year ended February 1998, so it expects to post a 15.2 billion yen extraordinary loss for the half year ending August. Seiyu plans to offset that with 14.4 billion yen in proceeds from a sale of stock in Tokyo department store Ryohin Keikaku Co. (7453), and forecasts an 800 million yen net profit for the half year. Shares in Seiyu Ltd. (8268) rose 5 yen to 410, according to Bloomberg, L.P., following Seiyu's announcements. ========= K O R E A ========= CHUNYEWON PUBLICATIONS: Starts Creditor Reconciliation Procedure ---------------------------------------------------------------- The Seoul District Court advertized in the Korean language Maeil Kyungje that the Chungyewon Publications company started its creditor reconciliation procedure. The creditors have until September 14, 1998 to file their claims. The company's address is 476-2 Umyun-dong, Seocho-gu, Seoul and the representatives are Mr. Kim Jin-hong and Mr. Yang Kye-bong. DAEWOO GROUP: Korea First Contracts for Auditing ------------------------------------------------ Domestic banks launched detailed investigations into the assets and liabilities of the subsidiaries belonging the five largest business groups Monday, sources at the financial institutions said Wednesday, according to the ChosunIlbo newspaper. The audits represent a major step in the government-expedited restructuring of Hyundai, Samsung, Daewoo, LG and SK. The sources said that major creditor banks including the Commercial Bank of Korea, Korea First Bank, Hanil Bank and Korea Exchange Bank had appointed a number public accounting firms for the investigations last week. As the main creditor bank for Daewoo, Korea First signed contracts for financial investigations with two accounting firms and plans to proceed with the audits according to a time schedule agreed upon by the two groups. DONGHWA DUTY: One of Cho Hung's Three Workout Targets ----------------------------------------------------- According to the Korean language Maeil Kyungje, the Cho Hung Bank has decided to place three firms, including Donghwa Duty Free Shop Co., under its workout program. Cho Hung Bank will hold a creditor meeting on August 28, 1998 to decide the suspension period of this company's bonds. DONGHWA INVESTMENT: One of Cho Hung's Three Workout Targets ----------------------------------------------------------- According to the Korean language Maeil Kyungje, the Cho Hung Bank has decided to place three firms, including Donghwa Investment Development Co., under its workout program. Cho Hung Bank will hold a creditor meeting on August 28, 1998 to decide the suspension period of this company's bonds. HAEKSHIM TELETEX: Completed Creditor Reconciliation Procedure ------------------------------------------------------------- The Seoul District Court advertized in the Korean language Maeil Kyungje that the Haekshim Teletex company completed its creditor reconciliation procedure. The company's president is Mr. Chung Chang-hun. HYUNDAI GROUP: Korea Exchange Talks to Younghwa About Auditing -------------------------------------------------------------- Domestic banks launched detailed investigations into the assets and liabilities of the subsidiaries belonging the five largest business groups Monday, sources at the financial institutions said Wednesday, according to the ChosunIlbo newspaper. The audits represent a major step in the government-expedited restructuring of Hyundai, Samsung, Daewoo, LG and SK. The sources said that major creditor banks including the Commercial Bank of Korea, Korea First Bank, Hanil Bank and Korea Exchange Bank had appointed a number public accounting firms for the investigations last week. Korea Exchange is the major creditor bank for Hyundai and has contracted the Younghwa Accounting Firm, which has yet to begin its audit. HYUNDAI MOTOR: Government Officials Fear Strike's Effect -------------------------------------------------------- South Korea warned yesterday its shaky auto industry risked losing its international competitiveness forever if crippling labour disputes at Hyundai Motor Co are further drawn out. "Hyundai's disputes, if prolonged further, will completely destroy the domestic base and international competitiveness of our overall auto industry," a Commerce, Industry and Energy Ministry official said. South Korea's auto production, once the world's fifth largest, plunged 35.4 per cent year-on-year to 1.53 million units in the first seven months of 1998, according to reports circulated by China Daily and other news agencies via Xinhua. Auto exports also suffered a 10.1 per cent drop to US$5.45 billion. "So far this year, labour disputes have cost US$550 million in auto exports," the official told China Daily. "Hundreds of auto parts makers, including Hyundai's 302 subcontractors, have already been insolvent." The three-month-long standoff at Hyundai cost the country 1.5 trillion won (US$1.1 billion), he said. Hyundai, the country's largest car maker, reportedly capable of producing some 2.4 million cars a year at home and abroad, has lost 770 billion won in production since the dispute erupted in May over a plan to sack 8,000 workers. Hyundai also suffered 540 billion won in export losses over the period, while its component producers saw revenue fall by 600 billion won. The ministry estimated, according to China Daily, Hyundai's production loss at 85,800 units over the three months and export loss at 57,200 units. "We are more concerned about parts contractors than Hyundai. Much of the country's networked parts production has already suffered incurable damage following Kia's failures," the ministry official said. JINRO COORS: Creditors Can't Close Deal To Sell Jinro Coors ----------------------------------------------------------- The Coors Brewing Company of the United States and creditor banks of Jinro Coors Brewery Company have failed to negotiate a deal on the sale of Jinro Coors Brewery. Negotiations have been on going over the past two months, however Coors Brewing has held to its position that creditors must write off 350 billion won of Jinro Coors total debt of 620 billion won as a condition of the sale. Coors suggested that the write off should be made before it could inject $100 million in capital into Jinro Coors. According to the Korea Times, one creditor was quoted as saying that court mediation would be better than handing over Jinro Coors under the conditions suggested by Coors. The sale of Jinro Coors is the first potential case of a Korean bankrupt company being sold overseas, so industry analysts believe the creditors are limited in how may concessions they can make. Jinro Coors Brewing Co. holds 20 percent of Korea's beer market and is currently operating under court receivership. It was started as a joint venture between Coors and Korea's Jinro conglomerate. However, Coors later sold its 33 percent ownership in the Jinro Coors Brewery to Jinro. KIA MOTORS: Today May Bring News of a Successful Bid ---------------------------------------------------- The government and the creditors' group of Kia and Asia Motors announced that should only one company submit a bid, that company will automatically be declared the winning bidder. At press time, none of the five invited bidders, Hyundai, Daewoo, Samsung, Ford and GM, had dropped out. The bidding deadline is today. Kia Chairman Yoo Chong-ryul added that if the winner finds a discrepancy between its own valuation of Kia and Asia Motors' assets and liabilities and the previously announced figures, the creditors' group would be willing to consider additional write- offs. KUNYOUNG CONCRETE: Completes Creditor Reconciliation ---------------------------------------------------- The Seoul District Court advertized in the Korean language Maeil Kyungje that the Kunyoung Concrete Industry company has completed its creditor reconciliation procedure. The company's address is 246-104 Kueui-dong, Kwangjin-gu, Seoul and the president is Song Jin-su. LG GROUP: Korea First Contracts with Anjin for Auditing ------------------------------------------------------- Domestic banks launched detailed investigations into the assets and liabilities of the subsidiaries belonging the five largest business groups Monday, sources at the financial institutions said Wednesday, according to the ChosunIlbo newspaper. The audits represent a major step in the government-expedited restructuring of Hyundai, Samsung, Daewoo, LG and SK. The sources said that major creditor banks including the Commercial Bank of Korea, Korea First Bank, Hanil Bank and Korea Exchange Bank had appointed a number public accounting firms for the investigations last week. The Commercial Bank signed a contract with Anjin Accounting and is in discussions with LG to determine a specific timetable for the financial inquiry. SAMSUNG GROUP: Hanil Contracts with Sedong for Auditing ------------------------------------------------------- Domestic banks launched detailed investigations into the assets and liabilities of the subsidiaries belonging the five largest business groups Monday, sources at the financial institutions said Wednesday, according to the ChosunIlbo newspaper. The audits represent a major step in the government-expedited restructuring of Hyundai, Samsung, Daewoo, LG and SK. The sources said that major creditor banks including the Commercial Bank of Korea, Korea First Bank, Hanil Bank and Korea Exchange Bank had appointed a number public accounting firms for the investigations last week. Hanil Bank, Samsung's major credit bank, contracted Sedong Public Accountants, which began looking into the groups financial reports early this week. Hanil plans to work out the restructuring measures of Samsung's subsidiaries by mid- September. SK GROUP: Korea First Contracts for Auditing -------------------------------------------- Domestic banks launched detailed investigations into the assets and liabilities of the subsidiaries belonging the five largest business groups Monday, sources at the financial institutions said Wednesday, according to the ChosunIlbo newspaper. The audits represent a major step in the government-expedited restructuring of Hyundai, Samsung, Daewoo, LG and SK. The sources said that major creditor banks including the Commercial Bank of Korea, Korea First Bank, Hanil Bank and Korea Exchange Bank had appointed a number public accounting firms for the investigations last week. As the main creditor bank for SK, Korea First signed contracts for financial investigations with two accounting firms and plans to proceed with the audits according to a time schedule agreed upon by the two groups. YUJIN TRAVEL: One of Cho Hung's Three Workout Targets ----------------------------------------------------------- According to the Korean language Maeil Kyungje, the Cho Hung Bank has decided to place three firms, including Yujin Travel Co., under its workout program. Cho Hung Bank will hold a creditor meeting on August 28, 1998 to decide the suspension period of this company's bonds. =============== M A L A Y S I A =============== CITY ONE: Winding-Up Petition ----------------------------- Ong Kim Lin had on 20.10.1998 presented a winding up petition against City One Sdn. Bhd. The petition is directed to be heard on 13.1.1999. MERCU CEKAL: Winding-Up Petition -------------------------------- MBf Finance Berhad had on 26.5.1998 presented a winding up petition against Mercu Cekal Sdn. Bhd. The petition is directed to be heard on 24.9.1998. NASJUARA DEVELOPMENT: Winding-Up Petition ----------------------------------------- MBf Finance Berhad had on 26.5.1998 presented a winding up petition against Nasjuara Development (M) Sdn.Bhd. The petition is directed to be heard on 23.9.1998. RC SKYLINE: Winding-Up Petition ------------------------------- Shan Yi Sdn. Bhd. had on 18.6.1998 presented a winding up petition against RC Skyline Pools Sdn. Bhd. The petition is directed to be heard on 17.12.1998. SEE HUP: Winding-Up Petition ---------------------------- Ready Mixed Concrete Malaysia Sdn. Bhd. had on 10.6.1998 presented a winding up petition against See Hup Engineering Construction Sdn. Bhd. The petition is directed to be heard on 24.9.1998. SUASA MASYHUR: Winding-Up Petition ---------------------------------- Insas Berhad had on 22.7.1998 presented a winding up petition against Suasa Masyhur Sdn. Bhd. The petition is directed to be heard on 16.10.1998. ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Acesite Hotel Claims PhP4.24 Million Due ------------------------------------------------------------- Hotel owner and operator Acesite (Philippines) Hotel Corp. filed a formal claim before the Securities and Exchange Commission (SEC) to compel Philippine Airlines, Inc. (PAL) to pay its unpaid hotel bills amounting to some 4.24 million Philippine pesos (PhP), according to BusinessWorld. Acesite recently filed the claim in behalf of its Holiday Inn Manila Pavilion. Acesite said PAL used Holiday Inn's facilities as part of an agreement to provide accommodations and meals for its passengers and staff on official business in the country. PAL's debt payments had been indefinitely suspended following the SEC's creation of an interim receiver committee which was tasked to draw up the airline's rehabilitation plan. Acesite's claim comes in the heels of a similar motion filed by a fellow hotel operator Pathfinder Holdings, Inc. The firm said PAL owes it PhP4.6 million for the airline's use of the facilities of Cebu Plaza Hotel in Cebu City. PHILIPPINE ASSOCIATED: Government May Assume Debts -------------------------------------------------- FINANCE Secretary Edgardo Espiritu said yesterday he supports a proposal, requiring the government to shoulder the staggering liabilities of ailing government firms, including over P70 billion debts incurred by Philippine Associated Smelting and Refining Corp. (PASAR) and Philippine Phosphate Fertilizer Corp. (Philphos), to facilitate the privatization of these losing state firms. Espiritu told the Manilla Times that, while government assumption of the liabilities will drastically increase its own debt stock, the action will remove a major drain to the government's scarce resources. According to Espiritu, if the government will not dispose these ailing enterprises, their losses will force the government to incur "continuous losses." He explained that "what we (or government officials) want to do is to cut the continuous loss because each year the government assumes additional losses" from the operations of these state-owned enterprises. Major Philippine mining firms, which serve as government's partners in Pasar, have contested in court a proposed restructuring of Pasar's P20 billion debts, which would dilute their stake in the company. Pasar is the biggest copper smelter in Southeast Asia. Pasar has huge liabilities brought about by a series of peso devaluations that bloated its foreign borrowings. PHILIPPINE PHOSPHATE: Government May Assume Debts ------------------------------------------------- FINANCE Secretary Edgardo Espiritu said yesterday he supports a proposal, requiring the government to shoulder the staggering liabilities of ailing government firms, including over P70 billion debts incurred by Philippine Phosphate Fertilizer Corp. (Philphos) and Philippine Associated Smelting and Refining Corp. (PASAR), to facilitate the privatization of these losing state firms. The former Ramos administration, the Times reported, toyed with the idea of transferring to the government the liabilities of these sick government enterprises to improve their allure to prospective buyers. But it shelved the plan, because of complicated legal, if not diplomatic, problems. For instance, the Times explained, the government could not implement Philphos' financial restructuring, because of the vehement opposition of the Republic of Nauru. The governments of Nauru and the Philippines each hold a 50 percent stake in Philphos, a firm with over P40 billion liabilities guaranteed by the Philippine government. Under the shelved financial restructuring plan, the government would convert into additional equity the bulk of Philphos' debt, but Nauru resisted it, because it would have diluted its stake in Philphos to less than 5 percent. Because of Nauru's stubborn resistance to a dilution, Ramos' economic managers thought of just writing off its exposure in the fertilizer firm. But again Ramos' advisors dropped the proposal for fear of violating the country's Anti-Graft Law. Philphos is the biggest fertilizer maker in Southeast Asia. Philphos has huge liabilities brought about by a series of peso devaluations that bloated its foreign borrowings. ================= S I N G A P O R E ================= BROADWAY INDUSTRIAL: New Funding Flows as Standstill Finalized -------------------------------------------------------------- Packaging company Broadway Industrial Group Ltd said its bankers were not going to pull the plug and were in the midst of finalising additional credit facilities. The mainboard-listed company, which posted a 1997 loss of $9.7 million, said it has been granted through wholly-owned subsidiary, Broadway Enterprises (Pte) Ltd, new short-term facilities of up to $4.8 million from DBS Bank, according to a report appearing in The Business Times. The credit is in addition to the existing facilities from DBS in conjunction with a standstill letter on its facilities from the group's major bankers. Documentation of the standstill letter is now being finalised, according to BT. In June, Broadway's auditors, Price Waterhouse, said in the company's latest annual report that "the validity of the going concern assumption . . . depends on the successful conclusion" of the negotiations. Price Waterhouse added that there were uncertainties that "may affect (Broadway's) future operations, the recoverability of (its) assets and in turn (its) ability to pay or refinance (its) debts as they fall due". Meanwhile, Broadway said it had sold loss-making and wholly-owned Viquest Engineering Pte Ltd, and that the disposal would help improve its financial position. The sale is expected to result in an extraordinary loss of about $2.8 million for the current financial year and would cause Broadway's net tangible assets per share to fall to 28 cents from 30.4 cents as at end-1997. Viquest, which has never made money, was sold for $1 to its three managers on condition that they take over Viquest's $6.4 million debt and discharge guarantees given to Viquest by other related Broadway parties, and all inter-company amounts owing between Viquest and Broadway be discharged. Broadway's investment in Viquest comes to about $7.7 million, comprising mainly shareholder's loans which are unsecured, non-interest bearing and with no fixed terms of repayment. SHOWPLA ASIA: Appoints Ernst & Young as Advisor ----------------------------------------------- Cash-strapped Showpla Asia, whose parent company is under court protection, has appointed Ernst & Young as financial adviser and is in "serious discussions" with potential investors, according to a report appearing in The Business Times. The mainboard- listed company added that some of its bankers are calling in their loans and there was "no assurance" that the banks would agree to continue its loans under terms "satisfactory" to Showpla, BT said. Its statement yesterday said that the outcome of the talks with the potential investors will be a "major factor" in its debt revamp, which Ernst & Young is helping to map out. Last Friday, Showpla's privately-held Japanese parent, Showa Plastics, filed for judicial management. It said that a $20 million debt owed to the group by its parent may not be recoverable. Showpla said yesterday that it was currently difficult to assess with certainty the impact of Showa's filing for judicial management on its business. Also, given the close relationship between Showpla and its parent, financing and other aspects of business and financial conditions may well be affected, it said. As of June 30, BT reports, Showa owed Showpla trade receivables of $14.3 million, a loan of $4.6 million, and other debts totalling $5.8 million, making a total of $24.7 million. The Showpla group in turn owed $981,857 to Showa as trade payables and $3.6 million in other payables, making a total of $4.6 million. Showpla said its cashflow constraints were due to: Showa holds a 33.07 per cent stake in Showpla, which is listed on the Singapore and Osaka stock exchanges. Showpla's chairman and managing director, Kenzo Nakagawa, is also Showa's president and representative director. The Japanese company has guaranteed the equivalent of $33.2 million in outstanding debt, denominated in Sing dollars, US dollars, yen and Hongkong dollars, owed by its Singapore-listed company. Mr Nakagawa has also personally guaranteed Showpla debt totalling US$11.2 million (S$19.7 million) and 52.4 million baht (S$2.2 million). He has also guaranteed debts owed by Showa. =============== T H A I L A N D =============== BANGKOK UNION: Insurer's Financial Statements Suspect ----------------------------------------------------- Referring to reviewed financial statements for the period ending June 30, 1998 filed by Bangkok Union Insurance Plc, BUI's auditor expressed a qualified opinion on paragraph 3 stating "...Except the fact regarding to the decreasing of securities value as stated at article 2.3 of the footnote it was not been declared in the balance sheet to comply under general accepted accounting standard". According to the Accounting Standard No.12 "Accounting for marketable securities", the carrying amount of marketable equity securities portfolio shall be the lower of its aggregate cost or market value, determined at the balance sheet date. The SET notified the company for rectification within 30 days or by September 18,1998. POWER-P PUBLIC: SET Requests Further Clarifications & Disclosures ----------------------------------------------------------------- The SET had earlier requested POWER-P PUBLIC COMPANY LIMITED (SET:PP) to give additional information regarding transactions with related companies as appeared on the company financial statements for the first quarter ended 31 March 1998. PP provided limited clarification on 29 July 1998 to the SET. However, the SET says that it requires further clarifications from and actions of PP to explain: 1. Advance paid to P. Group Holding Co., Ltd. The SET requests PP to clarify information regarding advance paid to P-group Holding Co., Ltd. amouting to Bht.24 million by including : - The cause of the advance paid - The length of time the advance remained outstanding - The reason the advance is non-interest bearing and not secured. - Terms and conditions of the advance - The reasons the company's managements decide not to make any allowance for doublful account. 2. Compliance of the SET's regulations concerning the connected transactions. The SET considers the company's transactions with related parties are subjected to its regulations concerning the connected transactions. Therefore, the SET commands PP to take the following actions: - Prepare and submit informations regarding the connected transaction. - Publicize the information in at least 1 newspaper. - Inform its shareholders in written and conduct shareholders' meeting to get rectification in engaging such transaction. - Disclose the transaction in its annual reports. SIAM CEMENT: Will Name Restructuring Advisor Within the Month ------------------------------------------------------------- Siam Cement Plc (SCC) will name a financial adviser for corporate restructuring later this month or early September, executive vice president Tawee Butsunthorn told The Nation. The present SCC management plan has been around for more than five years and has been refined continuously. Through the restructuring, assets in the cement group are estimated to be Bt3 billion, the steel group assets at Bt2 to 3 billion, and Bt5 billion for the petrochemical group. Tawee said the new management structure, that would include Japanese, American and European partners, would benefit SCC -- and is in line with what the creditors wanted SCC to do. Last Saturday, the SCC raised its cement sale price by Bt100 per tonne. In 1998, the local cement demand is expected to fall 50 per cent. He predicted that the demand would grow by 1 to 2 per cent next year depending on the government's stimulus measures. Thailand's cement exports for 1998 are expected to total 3.5 million tonnes, while domestic sales will be 4.5 million tonnes. In 1999, SCC has predicted local cement sales to reach 12 million tonnes, while 4.5 million tonnes will be exported. SCC had earlier restructured its operations by setting up a new wholly- owned subsidiary, Siam Cement Industry Co Plc, to hold shares in SCC's cement-related subsidiaries, according to SCC's filing to the Stock Exchange of Thailand. SIAM CITY: Setting-Up New Unit to Manage Non-Performing Loans ------------------------------------------------------------- Siam City Bank will set up a new unit to manage non-performing loans in an apparent attempt to freeze them at less than 48 per cent of its total loans, its president said. The move is in preparation for a planned privatisation by the government under which it is expected to be sold to new investors by the end of this year. SCIB president Sompoch Intranukul said in a press conference that an ad-hoc unit needed to be established although it would require a lot of staff. The bank's management will be restructured to focus on dealing with problem loans, which he said amounted to half of the outstanding Bt240 billion loans, according to reporters for The Nation. Phaitoon Kijsamrej, first senior executive vice president of SCIB, noted that the special unit would scrutinise these problem loans. The work will be divided according to the nature of the borrowers' businesses. The government announced last week that SCIB was required to set full provisioning of up to 8.5 per cent of risk-weighted assets before the bank could be subject to the privatisation process. SCIB is also required to seek a financial adviser for its planned privatisation by Sept 15 before the financial authorities announce the divestiture modalities for the plan fifteen days later. Sompoch said that the new unit would be divided into three or four groups managing NPLs in separate sectors such as large businesses, the real-estate sector, the agriculture sector and the commercial sector in addition to services. SCIB has classified its NPLs into four grades. Clients in grade A, whose projects are already finished, will be given conditions allowing for some compromises while those in grade B, whose projects are not yet complete, may be given a grace period for their borrowings and may need to seek new foreign partners in order to keep their businesses running. For clients in grade C, who mostly have non-performing collateral, the bank will attempt to rent out the land or buildings used as collateral in an attempt to generate income while those in grade D are not expected to be able to repay their loans and the bank will subsequently take legal action against them. Sompoch said that client classification and the monitoring of NPLs would result in stagnant growth in the bank's lendings but the bank would make a relentless effort to raise the level of deposits. Deposits are expected to rise by Bt7 billion by the end of this year. The bank's deposits now stand at Bt150 billion. According to Sompoch, SCIB's loan-to-deposit ratio is expected to fall from 177 per cent to 150 per cent by the end of this year. The Financial Institutions Development Fund (FIDF) holds a 97- per-cent stake in SCIB. The FIDF will convert Bt60 billion of debt owed to it by SCIB into equity. Such a conversion will result in the bank's equity base hitting Bt80 billion and will raise the capital-adequacy ratio to 20 per cent. The bank's reserves will also be increased from Bt30 billion to Bt70 billion. "If it converts all of that into equity, then we will have no need to raise any fresh capital to meet the requirement," Sompoch said. He added that since February SCIB had borrowed an additional Bt2 billion to Bt3 billion from the FIDF. The bank has to pay about Bt700 million to Bt800 million in interest every month to the FIDF. He said the interest burden would be alleviated when the fund converted its remaining debt into equity. As for external debt, the bank owes US$500 million in foreign currencies, mainly with long-term maturity. THAI AIRWAYS: Management Explains Reasons for Bt4.3b 3Q Loss ------------------------------------------------------------ Thai Airways International Plc (THAI) said Monday that its net loss had mushroomed to Bt4.3 billion (US$102.4 million) in the three months to June due to accounting changes and foreign- exchange losses. The result came on top of a loss of just Bt310.28 million in the same period last year, the company said in a statement to the Stock Exchange of Thailand (SET). In the nine months to June, THAI said it had recorded a net loss of Bt2.99 billion compared to a profit of Bt2.66 billion in the corresponding period of the previous fiscal year. The loss per share was Bt2.14 against earnings per share of Bt1.91 baht in the corresponding period last year. THAI shares closed the morning down Bt0.50 at Bt36 in thin trade. The company statement said third-quarter operating results had been lower than the Bt4.01 billion of a year earlier due to a change in the accounting policy for recording gains or losses on exchange rates arising from foreign loans. It said the figures had previously been listed as deferred items, then recorded in the financial statement as income or expenses. This affected the increase in foreign-exchange losses amounting to Bt6.34 billion compared to the earlier figure. Aircraft sales in the quarter generated 2.30 billion baht, the audited results showed. For the nine months to June, Thai Airways said operating results had been lower than a year earlier by 5.66 billion baht with changes in accounting policies the main factor. The changes resulted in higher losses on exchange rates amounting to 8.89 billion baht, it said. Thailand's national carrier has been hit badly by a slump in the value of the baht since its float in July last year, a move which triggered the regional financial crisis. A sharp decline in regional tourism has also harmed the airline. It has been forced to cut back on some in-flight services, such as wine and meals on certain flights. THAI OIL: PTT Agrees to Inject Bt4 Billion to Ease Liquidity ------------------------------------------------------------ The board of the Petroleum Authority of Thailand (PTT) agreed yesterday to pump four billion baht into Thai Oil to ease the liquidity problems of the country's largest oil refiner. The funds will involve an increase in the registered capital of Thai Oil, in which the state oil company already holds 49%, PTT executives told the Bangkok Post, and another four billion baht would be raised by other shareholders of Thai Oil including Shell and Caltex. A PTT source said Thai Oil's debt was much larger than its registered capital, according to the Post. The PTT board also agreed that Chow Chowkhanyun, the founder of Thai Oil, could sell his 25% stake in the refinery to US-based Coastal Petroleum. The Chowkhanyun family will now negotiate details of the sale, the Post said. THAI OLEFINS: Urged to Revamp its Senior Management --------------------------------------------------- THAI Olefins Co, which needs to urgently restructure its debts and find new partners, should reshuffle its senior management, a senior executive of the Petroleum Authority of Thailand (PTT) has said. TOC, one of Thailand's three operators of ethylene cracking facilities, was founded and is majority owned by the state-owned oil and gas enterprise PTT. "To solve TOC's problem, the company must quickly find funding partners and convince the banks to reschedule its debts. Therefore, it needs to have a new leader who has expertise in the petrochemical sector and is accepted by the industry and foreign creditors," a confidential source told a reporter for The Nation. TOC's senior vice president Adithep Bisalbutr is heading the debts and shareholder restructuring talks with banks and potential investors since the company's acting president Pala Sookawesh has no time to pursue the task. Pala is also the governor of PTT. According to the PTT executive, TOC's directors have acknowledged the firm's administrative problem but have yet to find an appropriate person to head the firm. TOC's board is chaired by the former permanent secretary of the Industry Ministry Sivavong Changkasiri. "Some board members even suggested that the best way out was for PTT to sell out its stake in TOC, citing the fact that PTT had limited funds to help the firm. But Pala did not agree with the idea since the PTT's pull-out would mean his failure since the governor is the one who heads the company," he said. With a total investment of over US$700 million, TOC has been criticised as an expensive investment by PTT which blamed the international boom in construction of new olefins production facilities at that time as the reason for the high costs. The high investment costs is attributed to TOC's competitiveness and debt problems. Lying at the heart of Thailand's second national petrochemical complex, TOC has an annual capacity to produce 385,000 tonnes of ethylene and 190,000 tonnes of propylene. THAI PETROCHEMICAL: Debt to Equity Swap Suggested by Creditors -------------------------------------------------------------- A representative of the creditor banks of Thai Petrochemical Industry plc (TPI) has floated the idea of converting the firm's huge debts into equity as part of the debt restructuring process now under negotiation between the major shareholders and 140 creditors. The official, who works for a Japanese creditor bank and spoke on condition of anonymity to The Nation, said that about 20 foreign creditors are considering this option. The 140 creditors have lent a combined US$3.2 billion to TPI. Fourteen of them, whose contribution represents 75 per cent of the amount, are on the steering committee which has the mandate to act on behalf of all the creditors. The source from the Japanese bank is understood not to be on the steering committee. Wachirabhandhu Promprasert, executive vice president of TPI, said the $3.2 billion debt will climb to $3.8 billion by the year 2003 if the company is unable to service the interest payments. TPI has suspended its interest and principal payments. Currently, the company's interest burden is around Bt10 billion or $250 million a year. "But we're trying in every way to ensure that the debt- restructuring plan will be completed by the end of this year," he said. Wachirabhandhu said that in October, creditors will be invited to consider the restructuring plan which is expected to be completed next month. The Japanese bank source said that some foreign creditors want to convert their loans into equity if TPI's cashflow position fails to show an improvement over the next four months. "We're waiting to see the performance during this four-month grace period." The creditors, who convened Wednesday in Bangkok, do not have collateral tied up in the US$3.8 billion (Bt155.8 billion) loan plus interest. The Nation's source said that if the loans are eventually to be converted to equity, the World Bank's investment arm, the International Finance Corporation, will become the intermediary in the negotiations with other foreign and local creditors. TPI is being advised by the US-based Chase Manhattan Bank. TPI group's aggregate borrowings from foreign and local institutions top $4 billion. TPI and its 60 per cent-owned subsidiary TPI Polene Plc (TPIPL) have been hit hard by the economic crisis and the devaluation of the baht against the US dollar, which has almost doubled their debt burden. TPIPL is also involved in the process of debt restructuring with US investment bank Merrill Lynch acting as its financial adviser. 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. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $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 * * *