/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/981203.MBXT 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, December 3, 1998, Vol. 1, No. 199 Headlines * C H I N A & H O N G K O N G * CONCORDIA PAPER: De-listing and declaration of insolvency HWA KAY THAI HOLDINGS: Hwa Kay Thai eyes resumption PEREGRINE FIXED INCOME: Peregrine sued over $334m swap UDL HOLDINGS: Winding-up petition adjourned WHARF (HOLDINGS): Funding woes prompt share slide * J A P A N * CHUO TRUST: Merger with Nippon set for next October JDC CORP: Collapse highlights survival battle LONG TERM CREDIT: Drops plan to forgive affiliates' debts MITSUBISHI HEAVY: Expects 59% fall in FY98 profit NIPPON CREDIT: Merger with Chuo Trust set for next October * K O R E A * HANJUNG: Announces international auction KIA MOTORS: Hyundai affiliates to help with Kia purchase POHANG IRON: Signs Y30 Bn tied-loan pact SAMSUNG MOTORS: To be swapped in big deal SEORYUNG INDUSTRY: Notice to creditors TONG-IL GROUP: More details on group workout suspension WOOSUNG TIRE: Woosung Tire liquidates * M A L A Y S I A * ACCURATE TRADING (K.L.) SDN BHD: Voluntary winding-up BLISSCO (M) SDN BHD: Voluntary winding-up COSWORTH MANAGEMENT SERVICES SDN BHD: Winding-up petition DECOPLANTS TECH SDN BHD: Winding-up petition GELIGA LAND & GENERAL SDN BHD: Winding-up petition JIAN CHENG SDN BHD: Voluntary winding-up KU AH MING & SONS SDN BHD: Voluntary winding-up MALAYSIAN AIRLINE: Tajudin assured he will stay MON CHER SDN BHD: Voluntary winding-up MUSTRALITE SDN BHD: Winding-up petition NEW STRAITS TIMES PRESS: Results announcement POLY EQUIPMENT AND APPLIANCES SDN BHD: Winding-up petition RHB-SIME BANK: Danamodal could be 49% owner of group RASHID HUSSAIN BHD: Rashid will retain control TV3: Results announcement * P H I L I P P I N E S * PHILIPPINE AIRLINES: Finance Corp. interested in stake SAN MIGUEL: Tan accused of tax evasion SERG'S PRODUCTS: SEC extends chocolate maker's debt relief * S I N G A P O R E * FIRST CAPITAL: Proposes additional rights issue SCOTTS INVESTMENTS: Placed under judicial management TAT LEE INSURANCE: Approval for takeover by Keppel Group * T H A I L A N D * ALPHATEC: AIG and Ericsson to take 80% stake BANGKOK BANK: BBC begins to draw its shutters CMIC FINANCE: Central bank accuses Suthep of irregularities CAPETRONIC: Share issue to raise B385m SAHAVIRIYA OA: Acer to purchase major stake SHINAWATRA GROUP: Revamp makes SC&C holding company SIAM AGRO: Del Monte in talks to buy Rayong plant THAI FARMERS BANK: S&P assigns 'B plus' long-term THAI OIL: PTT worries it cannot save Thai Oil ================================= C H I N A & H O N G K O N G ================================= CONCORDIA PAPER: De-listing and declaration of insolvency --------------------------------------------------------- Concordia Paper (Holdings) Limited (Nasdaq: CPLNY) was notified on November 27 that it will be de-listed from the Nasdaq Stock Market at the close of business on Wednesday, December 2, 1998. Although a self-rescue plan received initial support from most of the secured lenders and the unsecured bank creditors, the Bank of Tokyo-Mitsubishi Limited (BOTM), being the agent for the secured lenders and also the biggest single creditor of CPL, rejected the plan. On November 18, 1998, BOTM exercised its rights under the loan agreement for the term loan facility and placed CPL into receivership. "The self-rescue plan proposed by the Company's principal shareholders could have saved CPL but unfortunately it did not receive unanimous support," said Mr. Albert Cheng, the Chairman of the Company and CPL. As the holding company of CPL, the Company has guaranteed CPL's loan obligations. In May 1997, the Company entered into a guarantee and indemnity agreement with the secured lenders to guarantee CPL's US$47.2 million term loan facility. In connection with the guarantee, a fixed charge was created over all the assets of the Company in favor of the secured lenders. The charge has been registered by BOTM, as agent for the secured lenders, in Bermuda, the Company's country of domicile. In August 1998, the Company also entered into a guarantee agreement with The Hongkong and Shanghai Banking Corporation Limited ("Hongkong Bank") in connection with the extension of an unsecured working capital facility to CPL subject to a maximum liability of HK$45 million. On November 27, 1998, the Company received a letter of demand from BOTM, on behalf of the secured lenders, for repayment by the Company, as guarantor, of the total amount of US$47.2 million and all the accrued interest. On November 28, the Company received another demand note dated 21 November 1998 from Hongkong Bank demanding payment by the Company, also under its obligation as guarantor of CPL, of the total sums of HK$19,360,689.85 and US$2,946,209.33 owed by CPL. Since CPL is the Company's principal operating subsidiary, the receivership of CPL has adversely affected the financial position of the Company. The Company has no liquid assets and the only fixed asset is a paper machine (PM3) which the Company acquired in January 1995. The current written down value of PM3 is substantially less than the Company's current liabilities. At the Company's Board of Directors meeting held on November 30, 1998, the Directors determined that the Company was insolvent and was unable to pay its debts as they fell due. Following the Board of Directors meeting held on November 30, 1998, the Company notified BOTM and Hongkong Bank that it is insolvent and unable to pay the amounts demanded. The Company expects that in due course these creditors will take action to liquidate the Company's assets in partial satisfaction of the Company's outstanding debt. The Company also announced the resignation of James Grant as a Director effective on November 18, 1998 and the 7 other outside Directors effective on November 30, 1998. The Company now maintains a board of three directors after these resignations. HWA KAY THAI HOLDINGS: Hwa Kay Thai eyes resumption --------------------------------------------------- According to the South China Morning Post, Hwa Kay Thai Holdings will apply to resume trading today, after announcing a financial restructuring which will see independent third party Patrick Wong, through his wholly owned Shine United, inject $60 million for about 57 per cent of the company. Trading was suspended on Nov 23. PEREGRINE FIXED INCOME: Peregrine sued over $334m swap ------------------------------------------------------ According to the South China Morning Post, liquidators have vowed to fight a lawsuit launched by Commerzbank, which claims Peregrine Fixed Income failed to meet its payment obligations under a 73 million deutschemark swap transaction. The transaction was carried out on Jan. 9, just one working day before Peregrine filed for liquidation. Time differences between the European and New York exchanges meant that Commerzbank carried out the first leg of the swap, but Peregrine did not meet its payment due the same day in New York, it is claimed. Despite rumors in the market, it is alleged Peregrine directors were giving positive signals. Hong Kong solicitor Camille Jojo, a partner at Barlow Lyde & Gilbert, who is heading the Commerzbank action, said that the case is still at a formative stage. Both sides are in the discovery stage of exchanging the necessary documents. UDL HOLDINGS: Winding-up petition adjourned ------------------------------------------- According to the South China Morning Post, marine civil engineering firm UDL Holdings said the winding-up petition by K.Y.H. Steel against UDL Argos has been adjourned until Jan. 11, the date of the next hearing of a similar petition by Hongkong Bank against UDL. The winding-up petition against UDL Kenworth presented by Ajax Pong Machinery Leasing was adjourned until Dec 21. WHARF (HOLDINGS): Funding woes prompt share slide ------------------------------------------------- According to the South China Morning Post, Wharf (Holdings) slid 5.71 per cent to $11.55 per share after executive director John Hung revealed it has had difficulty in raising new funds amid tight liquidity in the banking industry and the depressed equity market. It is believed that Wharf is looking to issue a bond backed by second mortgages it granted on the sale of flats at its Galaxia development. Standard & Poor's and Moody's Investors Service have downgraded Wharf's credit risk to the bottom- end of the investor-grade scale. ========= J A P A N ========= CHUO TRUST: Merger with Nippon set for next October --------------------------------------------------- According to the South China Morning Post, Chuo Trust and Banking has held merger talks with the troubled Nippon Credit Bank to an alliance to survive Japan's deepening banking crisis. Trading in the two banks was temporarily suspended on the Tokyo stock exchange yesterday. Reports said the two plan to merge in October next year. The Yomiuri Shimbun said the two will look at details before the end of the year. Chuo Trust president Shozo Endoh is expected to assume the new bank's top position and both the government and the central Bank of Japan would provide support for the alliance. But analysts said a merger between the two would not bring a stronger bank without significant restructuring and large injections of public money. Chuo Trust focuses on pension fund management and the real estate business while Nippon Credit is a lender to industry and was set up in 1975 to finance Japan's post-war economic revival. Chuo Trust has said it is facing a group pretax loss of 32 billion yen this year and it would ask for just 130 billion yen while most other leading banks will take up to 500 billion yen each to prop up their capital and help speed write-offs. JDC CORP: Collapse highlights survival battle --------------------------------------------- Japan's economic and banking woes claimed another corporate victim Tuesday when medium-sized general contractor JDC Corp. sought bankruptcy protection under the weight of its 1980s "bubble era" debt, according to a Reuters report. "We are now seeing the real beginning of liquidation resulting from the bursting of the bubble," said Toshihiko Yamazaki, a director of leading credit research firm Tokyo Shoko Research Ltd. "Now is the actual start of selection of those who can survive and those who are to be eliminated." The Tokyo-based builder filed for court protection from creditors, with debts totaling 406.72 billion yen ($3.31 billion), the second-biggest ever failure in Japan's construction industry after last year's collapse of Tokai Kogyo Co. Ltd. JDC said its finances had deteriorated due to an increase in claims receivable for large projects such as golf courses and also due to failures in affiliates' investments in real estate after the collapse of the late 1980s asset bubble. JDC may have been small enough for creditor bank Mitsui Trust & Banking Co. Ltd. to let go, as it could not afford to bail out both its borrowers -- JDC and Mitsui Construction Co., he said. "The consensus here is that there are tremendous levels of excess capacity in the construction industry and that there are quite a number of companies whose existence, particularly in the current form, really is questionable," Alicia Ogawa, head of research at Salomon Smith Barney in Tokyo, told Reuters Television. Shares in JDC, listed on the Tokyo Stock Exchange's first section, were suspended from trading Tuesday. The shares, due to be delisted on March 2, had ended at 65 yen Monday. LONG TERM CREDIT: Drops plan to forgive affiliates' debts --------------------------------------------------------- According to a Kyodo News report, failed Long-Term Credit Bank of Japan (LTCB) will give up a plan to forgive 266.3 billion yen in debts of two of its three major affiliated non-bank financing companies, sources close to LTCB said Wednesday. The two non-banks are Japan Landic Corp. and Nippon Enterprise Development Corp. On Aug. 21, LTCB unveiled a plan to waive claims on the debts of the two as well as those of Japan Leasing Corp. worth 520 billion yen in closing its midterm books for the April-September half of fiscal 1998. The government defended the plan as a scheme to help many other banks with huge credits to the non-banks avoid incurring losses, as the non-banks' failures would mean huge losses for the creditors. If the non-banks fail, the government used to argue, many corporate borrowers with large debts to the non-banks would be required to repay their debts quickly, which could bankrupt them and hurt the economy. But the debt-forgiveness plan drew vehement flak in the Diet from the opposition, which blasted it as a mere bailout of the non-banks, whose accounting practices they also rapped as murky. The non-banks, which have largely depended on LTCB for resources to lend, hold huge bad real estate loans extended during the asset-inflated bubble economy that began in 1986 and collapsed in the early 1990s. MITSUBISHI HEAVY: Expects 59% fall in FY98 profit ------------------------------------------------- Nikkei English News reports Mitsubishi Heavy Industries Ltd. will likely see consolidated group net profit plunge 59% to 25 billion yen for the year through March, company sources said Tuesday. At the start of the current term the company had forecast a 22% increase to 74 billion yen. Group pretax profit is projected to fall 45% to 74 billion yen. A group net loss of 26 billion yen by Mitsubishi Motors Corp. will generate an evaluation loss of about 7 billion yen on Mitsubishi Heavy's shareholding in that firm. NIPPON CREDIT: Merger with Chuo Trust set for next October ---------------------------------------------------------- According to the South China Morning Post, Chuo Trust and Banking has held merger talks with the troubled Nippon Credit Bank to an alliance to survive Japan's deepening banking crisis. Trading in the two banks was temporarily suspended on the Tokyo stock exchange yesterday. Reports said the two plan to merge in October next year. The Yomiuri Shimbun said the two will look at details before the end of the year. Chuo Trust president Shozo Endoh is expected to assume the new bank's top position and both the government and the central Bank of Japan would provide support for the alliance. But analysts said a merger between the two would not bring a stronger bank without significant restructuring and large injections of public money. Chuo Trust focuses on pension fund management and the real estate business while Nippon Credit is a lender to industry and was set up in 1975 to finance Japan's post-war economic revival. Nippon Credit, one of Japan's two remaining long-term credit banks, has built up huge bad loans that are threatening its business. For the year to next March the bank has warned that it was facing a colossal 620 billion yen group pretax loss for the full year. It said it would write off 735 billion yen in bad loans this year. A Nippon Credit spokesman said there was no merger agreement. ========= K O R E A ========= HANJUNG: Announces international auction ---------------------------------------- Digital ChosunIlbo reports Korea Heavy Industries & Construction (HANJUNG) plans to make an announcement on the schedule for its international auction at the end of January at earliest, according to a government source Monday. General Electric of the United States has already expressed interest in taking over the state-run enterprise, and several others including Asean Brown Bovari, Combustion Engineering, and Siemens have been moving ahead with preparations to participate in the auction in consortium with Korean companies. On the local front, the Hyundai Business Group plans to enter the bidding in consortium with world-famous companies in the heavy industry sector. Samsung is eager to jump in the race in case it is forced to turn over its fledgling auto sector through the restructuring measures for nation's top five business groups. The timetable for the auction, according to a government official in charge, will be to announce the bidding in January 1999 and to conclude the bidding process by the end of June. KIA MOTORS: Hyundai affiliates to help with Kia purchase -------------------------------------------------------- According to the South China Morning Post, Hyundai Motor completed its acquisition of Kia Motors, sharing the 1.18 trillion won cost with four affiliates. Hyundai Motor will pay 40 per cent, or 471 bllion won, of the total price to buy 51 per cent of Kia and its Asia Motors affiliate. The rest will come from Hyundai Heavy Industries, Hyundai Industrial Development and Construction, Inchon Iron & Steel and Hyundai Financial Services. As part of the takeover, Hyundai agreed to assume 6.39 trillion won of Kia debts. Hyundai said it would shut down unneeded production lines and reduce Kia's 17,000-member workforce. Some analysts expect Hyundai to have a hard time absorbing Kia. According to the Hong Kong Standard, Hyundai Motor chairman Chung Mong Gyu and Kia chairman Yoo Chong Yul signed the contract yesterday with payment due in late March. Hyundai is paying 841.5 billion won for its stake in Kia Motors and 336.6 billion won for Asia Motors, the auctioning panel at Kia said. Mr Chung said Hyundai's inspection team and a foreign consulting firm are currently working on a normalisation plan which will be announced in the near future, and with the agreement signed, foreign investment will be actively sought. Several other member firms of the group are taking part in the Kia deal. Hyundai Motor will pay 40 per cent of the purchase price. Hyundai Heavy industries will pitch in 20 per cent, Hyundai Industry Development and Construction 15 per cent, Inchon Iron and Steel 15 per cent and Hyundai Financial Services 10 per cent. Lee Keun Young, president of Kia's main creditor Korea Development Bank, was required to submit repayment schedules this week. They have to be approved by Kia creditors this month. POHANG IRON: Signs Y30 Bn tied-loan pact ---------------------------------------- Digital ChosunIlbo reports Pohang Iron and Steel Corp. (POSCO) announced Tuesday that it had signed an agreement with the Export-Import Bank of Japan (JEXIM) to attract a 30-billion yen facility loan. The signing ceremony was held the same day at the JEXIM head office in Tokyo. The tied loan has an interest rate of 2.3% per annum and will be used by the steel manufacturing giant to settle payments for various equipment purchases from Japanese manufacturers until the end of March 2002. SAMSUNG MOTORS: To be swapped in big deal ----------------------------------------- The Digital ChosunIlbo reports a high-ranking official from the presidential office officially confirmed Wednesday that Samsung Motors has been discussed as part of the business swaps to take place in the restructuring of the nation's five top business groups. The official added that an affiliate of one of the five groups is moving ahead with negotiations for a merger or absorption, hinting that Samsung Business Group is willing to surrender its automobile sector in exchange of another company's business in a different line. The official did not, however, go into details of the companies involved. SEORYUNG INDUSTRY: Notice to creditors -------------------------------------- The Pusan District Court advertised in the Korean language Maeil Kyungje that the Seoryung Industry Company will hold a meeting of its creditors on January 14 in order to discuss the company's liquidation plan. The company's address is Chung 2-dong, Haewoondae-gu 1, Pusan, and the representative is Mr. Shin Cheol-gyun. TONG-IL GROUP: More details on group workout suspension ------------------------------------------------------- The Korea Herald reported that conflict between creditor banks and large shareholders lead to the ruling by the Korean government's Corporate Restructuring Coordination Committee (Kiop-kujo-jojong-uiwonhoe) to suspend the workout procedure for four Tong-il Group affiliates. The affiliates are Hanguk Titanium Company, Ilshin Stone Material Company, Ilsung Construction Company, and Tong-il Heavy Industry Company. These companies had been under a workout program since July 20, but creditor banks and large shareholders could not agree on how to provide financial assistance for these companies. This suspension of the workout procedure automatically ended the debt repayment grace period provided by the creditor banks. Hence, the group, which is owned by Reverend Moon Sun-myung and his Unification Church, had to seek court protection. Similar reports in the Asian Wall Street Journal say that of these four groups, Ilshin Stone Material Company, Ilsung Construction Company, and Tong-il Heavy Industry Company are now bankrupt in that they have failed to pay a maturing note two days in a row. WOOSUNG TIRE: Woosung Tire liquidates ------------------------------------- The Pusan District Court advertised in the Korean language Maeil Kyungje that the Woosung Tire Company would be liquidated. The company's address is 11-7 Nohyung-dong, Kangnam-gu, Seoul, and the representative is Mr. Yi Seung-chae. =============== M A L A Y S I A =============== ACCURATE TRADING (K.L.) SDN BHD: Voluntary winding-up ----------------------------------------------------- The members of Accurate Trading (K.L.) Sdn Bhd on 26/11/98 resolved to wind-up the company voluntarily. Creditors are requested to submit their claims before 30/12/98. BLISSCO (M) SDN BHD: Voluntary winding-up ----------------------------------------- The members of Blissco (M) Sdn Bhd on 23/11/98 resolved to wind-up the company voluntarily. Creditors are requested to submit their claims before 2/1/99. COSWORTH MANAGEMENT SERVICES SDN BHD: Winding-up petition --------------------------------------------------------- The Embassy of Finland on 21/7/98 petitioned for the winding-up of Cosworth Management Services Sdn Bhd. The petition is directed to be heard on 13/1/99. DECOPLANTS TECH SDN BHD: Winding-up petition -------------------------------------------- Park World Recreation Sdn Bhd on 3/11/98 petitioned for the winding-up of Decoplants Tech Sdn Bhd. The petition is directed to be heard on 25/2/99. GELIGA LAND & GENERAL SDN BHD: Winding-up petition -------------------------------------------------- Wesaw Trading Sdn Bhd on 27/11/98 petitioned for the winding-up of Geliga Land & General Sdn Bhd. JIAN CHENG SDN BHD: Voluntary winding-up ---------------------------------------- The members of Jian Cheng Sdn Bhd on 24/11/98 resolved to wind-up the company voluntarily. Creditors of the company are required to submit their claims before 2/1/99. KU AH MING & SONS SDN BHD: Voluntary winding-up ----------------------------------------------- The members of Ku Ah Ming & Sons Sdn Bhd on 26/11/98 resolved to wind-up the company voluntarily. Creditors are requested to submit their claims before 30/12/98. MALAYSIAN AIRLINE: Tajudin assured he will stay ----------------------------------------------- Singapore Business Times cites a Bloomberg report that Tajudin Ramli, executive chairman of Malaysian Airline Systems Bhd, told analysts he's not selling his controlling stake in MAS, saying he's been assured by the government that he can remain "for a long, long time". Mr Tajudin's comments came at the end of his five-minute opening remarks during an analysts' briefing at MAS' staff-training centre outside Kuala Lumpur. Mr Tajudin, who owns a 29 per cent controlling stake in MAS, barred journalists from yesterday's meeting. Yesterday's briefing comes after MAS announced on Monday a bigger-than-expected loss of 441.1 million Malaysian ringgit (S$191.1 million) for the six months ended Sept 30. The airline lost money for the second consecutive six-month period, as its foreign debts soared, compounding a drop in revenues from falling passenger traffic. Mr Tajudin has for long been talked about by analysts as a likely beneficiary of a government bailout to help him keep control of MAS, amid the airline's mounting foreign debt and financial losses. MON CHER SDN BHD: Voluntary winding-up -------------------------------------- The members of Mon Cher Sdn Bhd on 24/11/98 resolved to wind-up the company voluntarily. Creditors are requested to submit their claims before 2/1/99. MUSTRALITE SDN BHD: Winding-up petition --------------------------------------- Teknopuri Sdn Bhd on 2/11/98 petitioned for the winding-up of Mustralite Sdn Bhd. The petition is directed to be heard on 13/1/99. NEW STRAITS TIMES PRESS: Results announcement --------------------------------------------- Singapore Business Times reports once-dominant newspaper group New Straits Times Press Bhd has, for the first time this decade, plunged into the red with a pre-tax loss of 25.35 million Malaysian ringgit (S$11 million) for the year ended Aug 31, 1998. NSTP had reported profits of RM180 million a year earlier. Publishing group NSTP saw its business hit from all sides. Turnover slipped 10 per cent to RM755 million for the year. It suffered a loss at the operating level, and reported a loss per share of 13 sen, compared to an EPS of 79 sen a year ago. NSTP's management said its flagging fortunes were caused by substantial "provisions for the diminution of value of investments held by insurance subsidiaries". On an operational level, NSTP saw its operating profit margin sliced from 21.5 per cent to 4.7 per cent on the back of falling advertising revenue. But analysts said the figures do not tell the whole story: NSTP, they say, has been losing the battle to hold on to its circulation, with more people getting their news on the Internet, and with the surge in readership for Harakah, the paper published for opposition PAS members. According to one analyst, the broadsheet New Straits Times' circulation has fallen substantially from a high of 177,000 copies a day, with readership said to have been drawn away by Harakah. The latter is said to have had a five-fold increase in circulation to 300,000. NSTP's declining fortunes has had an impact on its bottomline. The numbers show that the company cannot meet the interest on its borrowings of RM82.4 million. According to an analyst, a company official has said NSTP is considering selling assets, including its overseas apartments. POLY EQUIPMENT AND APPLIANCES SDN BHD: Winding-up petition ---------------------------------------------------------- PhileoAllied Bank (Malaysia) Bhd on 23/10/98 petitioned for the winding-up of Poly Equipment And Appliances Sdn Bhd. The petition is directed to be heard on 19/2/99. RHB-SIME BANK: Danamodal could be 49% owner of group ---------------------------------------------------- Malaysia's Danamodal Nasional Bhd -- an agency set up by the government to help re-capitalise cash-strapped banks -- could eventually own between 44 and 49 per cent in RHB- Sime Bank, a government official said yesterday. According to Singapore Business Times, which cites a Bloomberg report, Danamodal on Monday bought 30 per cent of RHB Bank's parent company RHB Capital Bhd for 725.4 million Malaysian ringgit (S$314 million) cash, and bought RM1.5 billion worth of preference shares in RHB Bank. The move came as RHB founder and executive chairman Abdul Rashid Hussain ceded control of his flagship financial services company Rashid Hussain Bhd, after it reported a loss of RM935.85 million. If Danamodal converts all its preference shares, it could control 49 per cent of the country's second-largest financial services group, with up to five positions on RHB's management board, the official said. Mr Rashid will retain his chairmanship of the bank, although a new chief executive officer will be named. RASHID HUSSAIN BHD: Rashid will retain control ---------------------------------------------- Prominent financier Abdul Rashid Hussain yesterday assured fund managers that he will remain in control of the financial empire he built over the last 15 years, although he will no longer be the largest shareholder of his group, Rashid Hussain Bhd (RHB). Singapore Business Times reports in a conference call with fund managers yesterday evening, Mr Rashid said the new major shareholder -- Pahang State Economic Development Corporation (PSEDC) -- has allowed RHB's management to stay onboard. He added that the Pahang Chief Minister Mohd Khalil Yaacob said he would leave Mr Rashid and his team to provide leadership to the group. On Monday, Mr Rashid said he will remain as chairman of RHB and the executive chairman of the group's financial arm RHB Capital, and continue to lead the strategic direction of the group. However, the RHB board will appoint a new chief operating officer to manage the day-to-day operations of PSEDC's assets. Two days ago, RHB unveiled a massive 3.3 billion Malaysian ringgit (S$1.4 billion) recapitalisation plan through asset injection, issuance of new shares and other debt instruments, and the sale of a 30 per cent stake in RHB Bank to Danamodal in an attempt to address the high gearing and improve its balance sheet. The asset injection by the PSEDC worth RM530 million, in exchange for 189.3 million new RHB shares, will result in PSEDC becoming the single largest shareholder in RHB with a 29 per cent stake. RHB was hit by a RM935.8 million net loss for the year ended June 30, 1998, after taking in a loan and financing loss and provision of RM1.3 billion. RHB Capital posted a net loss of RM651.7 million for the 18 months ended June 30, 1998, after deducting provisions of RM1.3 billion. TV3: Results announcement ------------------------- TV3 suffered an operating loss of RM112 million, down from a profit of RM748,000 last year, according to Singapore Business Times. This means a loss per share of 96 sen, compared to earnings per share of 8 sen last year. Turnover fell 4 per cent to RM268.98 million. The company blamed its losses on the economic slowdown which hurt advertising revenues; rising costs and higher domestic interest rates in the first six months. Human resource costs also jumped with a one-off RM14 million transfer to a retirement scheme for staff who voluntarily retire. TV3's moves to stop the bloodletting in its finances include retiring 600 staff in July, downsizing the operations of its subsidiaries, and cutting transmission hours from 24 to 21.5 hours in August. ===================== P H I L I P P I N E S ===================== PHILIPPINE AIRLINES: Finance Corp. interested in stake ------------------------------------------------------ According to the South China Morning Post, Philippine Estrada Joseph Estrada yesterday said World Bank arm Finance Corp was interested in investing US$15 million to $23 million in PAL for an 8 to 12 per cent stake, with or without Cathay as a partner. In Cathay's latest issue of its staff newsletter, corporate development director Tony Tyler asked the airline's staff for their moral support in its bid to take control of PAL. Mr Tyler acknowledged concerns about PAL but he also said PAL will be a much smaller airline as the unprofitable routes will be cut and its debts can be restructured to make the airline a viable concern. He said the amount of investment needed was smaller than previously expected and would be funded internally. SAN MIGUEL: Tan accused of tax evasion -------------------------------------- A business brief in the Wall Street Journal says the government filed a tax evasion case against San Miguel chairman Lucio Tan. It alleges the executive owes the government hundreds of millions in unpaid taxes. Mr. Tan earlier denied the charges. SERG'S PRODUCTS: SEC extends chocolate maker's debt relief ---------------------------------------------------------- The Securities and Exchange Commission (SEC) has granted chocolate maker Serg's Products, Inc. another 30-day reprieve from its creditors. In an order issued last Friday, the SEC said it granted Serg's the additional 30- day debt relief on the basis of the firm's recent petition asking for an extension. The first 30-day debt relief granted by the SEC expired November 30. The three-man SEC hearing panel said there is a need for the SEC to act on Serg's petition seeing "the extreme urgency" in Serg's situation. The 30-day lead time, however, is short of the 60-day extension Serg's sought from the SEC. ================= S I N G A P O R E ================= FIRST CAPITAL: Proposes additional rights issue ----------------------------------------------- With 200 million preference shares due for redemption in seven months, property group First Capital Corp (FCC) yesterday proposed another issue of non-redeemable preference shares to raise $87 million to ease its heavy debt burden and tight cashflow, according to Singapore Business Times. The 87.9 million 7 per cent shares will raise $87.7 million, $26.4 million of which will be used to repay existing loans with the rest going to working capital. With a par value of S$0.01 each, the NCCPS are priced at a 99-cent premium. For the year ended June 1998, the local property developer suffered net losses of $23.2 million and is estimated to have about $1.2 billion in total borrowings. Property analysts estimate its gearing level to be 1.23 times, and generally consider it to be cash-strapped. SCOTTS INVESTMENTS: Placed under judicial management ---------------------------------------------------- Scotts Investments (Singapore) Pte Ltd, the family trust of the Jumabhoy family which founded listed serviced apartments operator Scotts Holdings (Scotts), has been placed under judicial management even as negotiations for a takeover are ongoing. The High Court yesterday appointed judicial managers Tay Swee Sze and Max Loh from Arthur Andersen for the "better realisation" of SIS' assets, which mainly are in the form of the 84 million Scotts shares or just over a third of the company's 237 million outstanding shares it owns. "The company (SIS) is in an advanced stage of negotiations with two suitors interested in purchasing all or a substantial portion of the company's shares in the capital of Scotts Holdings Ltd. The judicial managers will work towards finalising the transaction on best terms," said a statement from Arthur Andersen. The two interested parties have been identified as mainboard-listed engineering and property company Guthrie GTS and Swiss restaurant and hotel operator Movenpick, and the price being negotiated is said to be upwards of 65 cents. Scotts shares closed 1.5 cents down at 73.5 on 158,000 shares yesterday. The appointment of the judicial managers was vigorously opposed by lawyers for DBS Bank and Hong Leong Finance, who felt the move would prejudice their position as the holders of Scotts shares pledged to them by SIS, which has accumulated losses of over $50 million and bank loans totalling over $40 million. However, the High Court felt it was in the interest of SIS and all creditors that the Scotts shares were sold in a measured manner which would not depress the value of the shares. Listed shipping and hotel operator Hai Sun Hup, last week aborted a deal for a 24.9 per cent stake in Scotts following the failure of the Jumabhoys and SIS to meet its terms and acceptance deadline. HSH also felt it was being used by the Jumabhoys to push up Scotts shares which rose to over 80 cents following rumours of its interest. SIS said in June that the Jumabhoys intended to dispose of their entire 50.6 per cent stake in the mainboard-listed company. Anyone taking control of Scotts has to contend with current debts of $180 million and additional contingent liabilities of more than US$30 million (S$49 million). TAT LEE INSURANCE: Approval for takeover by Keppel Group -------------------------------------------------------- The insurance arms of the Keppel Group and Tat Lee Group have been given in-principle approval by the Monetary Authority of Singapore to merge. The proposed merger or, rather, takeover by Keppel Insurance Pte Ltd of Tat Lee Insurance Ltd is expected to be completed in the first quarter of next year, a Keppel statement said. The latest tie-up follows the merger earlier this year of their parent banks, Keppel and Tat Lee. The new entity will be called Keppel TatLee Bank. Under the terms of the proposed merger, Keppel Insurance will buy over the assets and businesses of Tat Lee Insurance for $25 million in cash. Keppel Insurance -- a joint venture between Keppel Corp (20 per cent), Keppel Bank (40 per cent) and international financial group Fortis (40 percent) -- offers a spectrum of general, life and investment-linked insurance products and services to corporate and individual clients. Tat Lee, on the other hand, is involved mainly in personal general insurance products. Several other units of Keppel and Tat Lee, including the two banks' finance and securities arms, are also being merged. Keppel Securities announced that it will pay $26.4 million for the assets and businesses of Tat Lee Securities, minus its seat on the Stock Exchange of Singapore. Keppel Corporation has also said it will be looking into injecting Tat Lee's listed property arm, TLB Land, into Keppel Land. =============== T H A I L A N D =============== ALPHATEC: AIG and Ericsson to take 80% stake -------------------------------------------- The Financial Times reports American International Group and an investment subsidiary of Sweden's Ericsson have agreed to pay $40m for an 80 percent stake in Alphatec Electronics, the Thai computer chip maker. The deal is subject to creditors' approval of a restructuring plan that calls for more than two-thirds of Alphatec's debt to be written off. The capital injection and debt restructuring were unveiled yesterday at a creditors' meeting. Some creditors, Krung Thai Bank among them, asked for amendments and the meeting was adjourned until December 8, when creditors must vote on the proposal. According to the Nation, the restructuring plan, presented to the creditors Tuesday, was completed by PriceWaterhouseCoopers together with Credit Agricole Indosuez Banque and creditors. The process took 12 months. Tuesday, PriceWaterhouseCoopers, or the planner under the new bankruptcy law, presented the plan to over 200 creditors, who requested debt repayments totalling US$373 million. The planner asked the creditors to agree on the proposed debt restructuring because the process is necessary given that Alphatec's debt to asset ratio is excessively high. While its liabilities topped $373 million, it has only $78 million in total assets. Under the corporate restructuring plan, the planner said that Alphatec could set up a holding company, which in the future could be registered in a foreign country and listed on a foreign stock market. The holding company will also own 100 per cent in a Thai company which will be established in the future. The new Thai company will transfer all assets of Alphatec after the latter reduces its capital from Bt3.7 billion to Bt370, and the new company will handle debt payments. As of June 4, the unaudited total assets of Alphatec topped Bt3.4 billion, including Bt579 million in current assets. Its liabilities reached Bt15.35 billion while the net worth is Bt11.95 billion. It is estimated that debt obligations could rise by Bt314 million. The Nation also reports three Thai banks, two of which are major creditors of Alphatec, Tuesday postponed their vote on Alphatec's debt restructuring plan for a week over concerns of alleged fraud by former company management that could involve legal action. Creditor sources said under the amended business rehabilitation law, there can be no legal recourse against alleged fraud involving personal guarantors if the rehabilitation plan is approved by the majority of creditors. The creditors will face heavy losses because only 20 per cent of the loans will be paid back. Major creditors have alleged fraud was committed by the company's former management. Sources said the creditors intend to maintain their right to pursue legal action against the alleged wrongdoers, especially personal guarantors. Under the amended business rehabilitation law, the liability of debtors and personal guarantors is limited after creditors and debtors agree to court supervised rehabilitation. For a plan to be passed, it must be approved by creditors holding at least 75 per cent of the debt and from at least half of the creditors. Alphatec owes a total of US$362 million (about Bt13 billion) to financial institutions. State owned Krung Thai Bank holds the largest debt of Bt4.23 billion, followed by Bangkok Bank's Bt1.47 billion and Union Bank of Bangkok's Bt390 million. Tuesday's meeting was the first by creditor banks. The board of Krung Thai Bank will shortly hold a meeting to discuss the bank's position. BANGKOK BANK: BBC begins to draw its shutters --------------------------------------------- The Bangkok Post reports the Bangkok Bank of Commerce formally began the process yesterday of creating a new asset-management company. Yesterday was also officially the last day of work for the institution's 4,000-plus staff. But 1,475 of them will be retained in the new asset- management company, which will be responsible for collecting and managing outstanding debts and liquidating remaining assets. The bank, which was at the centre of a huge fraud scandal two years ago, was ordered closed as part of the government's financial reform programme announced in August. Aswin Kongsiri tendered his resignation as bank president, but he remains chairman of the board. At a meeting on Monday, the board outlined the basic structure of the new company. It will have 15 divisions, the most important being asset development and management. CMIC FINANCE: Central bank accuses Suthep of irregularities ----------------------------------------------------------- According to the Bangkok Post, the Bank of Thailand yesterday filed police charges against Suthep Wongwaraseth, former president of CMIC Finance and Securities, accusing him of irregularly extending loans totalling more than 300 million baht to four borrowers. A senior central bank official confirmed that Mr Suthep, who is also a senator, was the target, although assistant governor Rattakorn Nimwatana declined to reveal the name. The central bank told financial institutions to freeze Mr Suthep's assets and asked the police and immigration authorities to bar the senator from leaving the country, the official said. Mr Rattakorn said the CMIC executive had approved loans to four companies, without collateral, between January 29, 1996 and May 10, 1997. He declined to identify the companies, but said they were on the same floor of a building in Bangkok. All four were established with registered capital of one million baht each only days before they obtained loans from CMIC. Mr Rattakorn said evidence showed that the four companies did not operate any business and were not in a position to service debt. The loans owed by the four companies totalled 318.76 million baht. In granting loans to the companies, CMIC did not seek any collateral or analyse their ability to repay, although it knew the firms were inactive, he said. The loans had been approved before the firms were legally established. Some money had been lent before the approvals and, in some cases, the funds had exceeded the authorised amounts. Mr Suthep headed what was once one of Thailand's largest finance companies. It was among the 56 permanently closed last December. The company used to tell customers that it was a subsidiary of Thai Farmers Bank. However, when it was listed among the troubled firms, the bank said it had only a minor stake in CMIC and refused to provide new funds to ensure its survival. Instead, Thai Farmers Bank invested in Phatra Thanakit. CAPETRONIC: Share issue to raise B385m -------------------------------------- The Bangkok Post reports Capetronic International plans to issue just over 89 million new shares at 4.3 baht each to raise 385 million baht to repay long-term debt and provide working capital, managing director Ma Chi Chiu said yesterday. A meeting of shareholders is scheduled on December 30 to approve the rights issue. "With our gearing substantially reduced, we believe we will be in a better position to face the challenges expected next year," Mr Chiu said. The books will close at noon on December 15 until end of the shareholders' meeting to determine rights entitlements. SAHAVIRIYA OA: Acer to purchase major stake ------------------------------------------- Citing a Bloomberg report, Singapore Business Times says the Singapore unit of Taiwan-based Acer Inc has signed an agreement to buy a major stake in Sahaviriya OA plc, one of Thailand's largest computer distributors. The investment would be through Acer Computer International Ltd, a Singapore-based retailing unit of Taiwan's biggest computer producer. The investment would "make Acer the No1 brand in Thailand's information technology market", Sahaviriya said yesterday. The size of Acer's planned investment was not disclosed. The consideration process is expected to be completed within 45 days, Sahaviriya said. Creditors' approval is crucial, as Sahaviriya is insolvent, according to its auditor, Supot Singhasaneh, of Peat Marwick Suthee Ltd. "As at Sep 30, the company and its subsidiaries had total liabilities exceeding total assets of 3.57 billion baht (S$162.9 million)," the auditor said in a report. Sahaviriya OA is controlled by the Viriyaprapaikit family, which is also the controlling shareholder of Sahaviriya Steel Industry plc. Sahaviriya Steel defaulted in July on a US$3.85 million (S$6.3 million) bond coupon payment. SHINAWATRA GROUP: Revamp makes SC&C holding company --------------------------------------------------- The Shinawatra Group yesterday announced a corporate restructuring aimed at turning its main listed company, Shinawatra Computer and Communications Plc (SC&C) into a holding company, according to the Bangkok Post. The new structure will allow SC&C to hold shares in all its subsidiaries and to focus solely on telecommunications investments. The group promoted Boonklee Plangsiri to become chairman of the group's executive board, succeeding Paiboon Limpaphayom. Mr Boonklee will also serve as president of SC&C. Mr Paiboon will become chairman of the executive board of Advanced Info Service, the group's mobile-phone subsidiary. The changes will take effect on January 1. The Shinawatra Group said in a statement that the restructuring would encourage greater flexibility in the management of all its subsidiaries. It would also introduce good corporate governance and help the group meet the challenges of future communications liberalisation. SIAM AGRO: Del Monte in talks to buy Rayong plant ------------------------------------------------- The Bangkok Post reports Del Monte Foods International is negotiating to buy Siam Agro Industry's Rayong pineapple cannery from the Thai firm's major creditor, Thai Farmers Bank, according to Niphond Wongta-ngan, director of the Public Warehouse Organisation (PWO). The result of the negotiations is expected to be known this month. If the negotiations between Del Monte and Thai Farmers Bank reached an agreement, the PWO would ask Del Monte to help process some of its pineapple stocks, Mr Niphond said. Siam Agro Industry (Saico) has suspended production at the factory because of its financial problems. The cannery can process about 200,000 tons of pineapple a year. THAI FARMERS BANK: S&P assigns 'B plus' long-term rating -------------------------------------------------------- Standard & Poor's yesterday assigned a 'B plus' long-term rating to existing 7.5 billion baht in subordinated debentures issued by Thai Farmers Bank and due in 2001. The debentures, issued in 1994, carry a coupon rate of 9.875%. The US-based agency also affirmed the bank's long-term counterparty rating of 'BB' and short-term counterparty range of 'B'. The rating outlook remained negative. "Poor asset quality and profitability continue to place all Thai banks under severe capital pressure, supporting the negative outlook assigned," S&P said. THAI OIL: PTT worries it cannot save Thai Oil --------------------------------------------- The Nation reports even though debt ridden Thai Oil Co Ltd stopped repaying its US$1.9 billion loan early last month, it will find it difficult to survive if the world crude oil price remains low. The losses that Thai Oil has accumulated will affect the financial performance of the Petroleum Authority of Thailand (PTT), which holds a 49 per cent stake in the refinery. The PTT has to pay Bt4 billion for crude oil to run the Thai Oil refinery and will receive refined oil in return, and Thai Oil will benefit from a gross refinery margin (GRM). The company earlier blamed its low capital base and the low refining margin for the company's "standstill arrangement", announced to its 124 creditors last month. The executive said the problem is made more difficult because of excess supply in the region. If the world oil market worsens, the PTT will have to reconsider its planned funding for the survival of Thai Oil. The PTT planned to reduce its interests in other refineries and acquire a larger share in Thai Oil. "PTT might offer the Thai Oil refinery to interested investors if it cannot shoulder the burden. This would be regrettable because it is the best refinery, with the lowest GRM," said the executive. 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 * * *