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

      Wednesday, January 6, 1999, Vol. 2, No. 3

                    Headlines


* C H I N A   &   H O N G   K O N G *

GUANGDONG INTERNATIONAL: Ruling to set creditor benchmark


* I N D O N E S I A *

GARUDA INDONESIA: Receives six new aircraft


* J A P A N *

NISSAN MOTOR: DaimlerChrysler might face Renault for Nissan


* K O R E A *

DAEWOO: Concern over new owners of Korea First Bank
HANBO IRON & STEEL: Inchon keen on purchase
HYUNDAI ELECTRONICS: FKI proposes alternative merger plan
KOREA FIRST BANK: Newbridge will begin takeover in Jan.
LG SEMICON: FKI proposes alternative merger plan

LG SEMICON: To file suit against ADL
SEOULBANK: Negotiations resume to sell SeoulBank
TAEBAEK FURNITURE CO: Taebaek Furniture Co. liquidates


* M A L A Y S I A *

HONGKONG BANK MALAYSIA BHD: Long term rating downgraded
KEWANGAN BERSATU: Central bank takes over finance firm
MBF FINANCE: Central bank takes over management
OCBC BANK (MALAYSIA) BHD: Long term rating downgraded


* P H I L I P P I N E S *

METRO PACIFIC: Stock up on talk of Ayala tie-up
PHILIPPINE AIRLINES: Regulator threatens shut down
PHILIPPINE AIRLINES: US Eximbank rejects PAL survival plan


* S I N G A P O R E *

ELECTRO-MAGNETIC: Questions into lack of progress on rehab
SONICA: Fu Yu loses legal tussle with Sonica, plans appeal
VIKAY INDUSTRIAL: Questions into lack of progress on rehab


* T H A I L A N D *

CAPETRONIC INTERNATIONAL: Shareholders approve increase
MODERNHOME DEVELOPMENT: To sell four affiliates
SAMAKKHISARN DOKYA: Shareholders hope for new capital
STA GROUP: To be delisted
THAI OIL: PTT says it will merge downstream units


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

GUANGDONG INTERNATIONAL: Ruling to set creditor benchmark
---------------------------------------------------------
According to the South China Morning Post, the mainland
government is expected to hand down a landmark decision on
the repayment of its estimated US$3 billion debt after
three months gathering creditors' claims, the majority of
which are from Hong Kong banks.

Whether the credit squeeze facing mainland corporates
extends will depend on how the repayment scheme for Gitic's
creditors works out.

Some estimates put Gitic's foreign debts at US$3 billion
while Hong Kong Monetary Authority figures show Gitic and
its Hong Kong subsidiaries owed about HK$11 billion to
local and foreign banks in Hong Kong.

Creditors of Gitic Hong Kong (Holdings) and Guangxin
Enterprises, both of which were put under voluntary
liquidation, may recoup as little as 6.6 per cent of money
owed.

Clifford Chance China group partner, Stephen Harder, said
lenders to the Hong Kong branch of Gitic might look to the
Gitic parent in Guangdong, since the branch did not
constitute a legal corporation. However, creditors of
subsidiary corporations of Gitic registered as companies in
Hong Kong would generally have no direct legal claim
against the Guangdong parent.

He said the flexibility provided with the administrative
order to close Gitic rather than opting for a court-run
bankruptcy allowed the authorities to protect the interests
of law-abiding creditors while punishing those which did
business against the rules. He said that the People's Bank
of China was proceeding in a prudent and considered fashion
that is in the interest of Gitic's creditors and that
bankruptcy proceedings are unlikely to result in a better
outcome for foreign creditors than which the central bank
could arrange with funds earmarked from the state budget.


=================
I N D O N E S I A
=================

GARUDA INDONESIA: Receives six new aircraft
-------------------------------------------
Agence France-Presse Business Day (Thailand) says
Indonesian airline Garuda Indonesia has received six new
Boeing 737 airplanes worth US$198 billion, the Bisnis
Indonesia daily said yesterday.

"The addition of the six planes is part of a package to
provide 17 airplanes signed in the 1996 Indonesia Airshow
with Boeing Commercial Airplane Group," Garuda Indonesia
Director Abdulgani was quoted as saying by the paper.

Abdulgani rose from advisor to president of Garuda in
November. He has since cancelled contracts believed to have
been clinched through corruption and also cut down on the
company's staffing. Company vice president for asset
management Wahyudo said payment for the 11 leased planes,
each worth $33 million, would use a bridging lease payment
scheme of $220,000 a month.

Garuda Indonesia has been forced to cut its international
routes following the cash difficulty it has been facing as
its rupiah's income was quickly eroded by its dollar-
denominated operational costs.


=========
J A P A N  
=========

NISSAN MOTOR: DaimlerChrysler might face Renault for Nissan
-----------------------------------------------------------
According to the Wall Street Journal, one of
DaimlerChrysler AG's top executives said his company is
still in talks with Nissan Motor Co. amid intensifying
speculation that Japan's No. 2 auto maker will fall into
another's arms.

DaimlerChrysler has been openly interested for months in
acquiring Nissan's diesel truck unit. DaimlerChrysler
Chairman Juergen Schrempp had predicted a decision by the
end of 1998.

The creation of DaimlerChrysler has increase pressure on
some of the global auto industry's smaller and weaker
players to find partners, industry executives say. Because
of losses in five of the past six years, eroding sales in
its two biggest markers, and a $22 billion debt load,
Nissan has been considered badly in need of help.

Among others, France's Renault SA has increasingly been
mentioned as a candidate to take an equity stake in Nissan.
Renault could gain access to US and Asian markets, where it
is weak or absent. A Sunday report in Britain's Observer
newspaper said Renault and Nissan were in negotiations. A
Renault spokesman declined to comment, according to Dow
Jones Newswires.


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

DAEWOO: Concern over new owners of Korea First Bank
---------------------------------------------------
The Korea Times mentioned in an article about the new US
based ownership of the Korea First Bank (KFB) that it would
be naive to expect inherently harsh foreign bankers to show
mercy to corporate borrowers in distress. The article
pointed out that KFB is the prime creditor of the Daewoo
and SK groups, two of the nation's five largest family
owned conglomerates (or chaebols). A bank analyst in Seoul
was quoted as saying that there is a lot of interest in
seeing whether or not KFB will move to collect loans
from Daewoo, which has occasionally been rumored to be
struggling with cash flow problems.  

The Financial Supervisory Commission announced last week
that the government (which now holds a 93.75 percent stake
in the KFB) had exchanged a memorandum of understanding
with a US consortium led by Newbridge Capital and GE
capital for its acquisition of a controlling 51 percent
stake in the Korea First Bank.  

Newspaper reports in September listed the debt to equity
ratio of the Daewoo Group as 369.4 percent, and that of the
SK group as 329.3 percent.

Reports in November also mentioned that Japan's Nomura
Securities Company has published a report stating that the
Daewoo Group was likely to face liquidity problems. The
report was quoted as saying "with little sources for future
financing and a slim chance of assets being sold, the
Daewoo Group is likely to face serious liquidity problems."


HANBO IRON & STEEL: Inchon keen on purchase
-------------------------------------------
The Digital ChosunIlbo reports Inchon Iron & Steel, a
subsidiary of Hyundai Business Group, is known to be
showing interest in acquiring Hanbo Steel Co., said an
official from one of Hanbo's creditor banks on Monday. They
are now proceeding with talks with Inchon, he said.

Another bidder for Hanbo, Dong Kuk Steel Mill Co. Ltd., had
offered to purchase the bankrupt Hanbo for W1.72 trillion.
While one high-ranking official at Inchon Iron & Steel
confirmed Inchon's interest in Hanbo, he added that all
Korean steel manufacurers are interested in acquiring
Hanbo. However, only last month, Hyundai Business Group had
ruled out the steel sector as one of Hyundai's core
businesses.


HYUNDAI ELECTRONICS: FKI proposes alternative merger plan
---------------------------------------------------------
According to the Digital ChosunIlbo, with the talks for the
Hyundai Electronic-LG Semicon merger deadlocked, the
Federation of Korean Industries has come up with a new
proposal in which the research and development (R&D)
operations of the two teams would merge first, with a
complete merger to follow once the production cycle of 256
MHz DRAM chips -- in which both companies have invested
heavily -- is over.

The new proposal combines aspects of American-style
mergers, which result in bigger companies, and Japanese-
style mergers, with their emphasis on strategic alliances
and cooperation. One high-ranking FKI official said that
the new proposal guarantees that both companies will reap
returns on their investment within three years. The FKI
said it would propose this alternative plan when the merger
talks it is mediating between Hyundai and LG recommences on
January 4.


KOREA FIRST BANK: Newbridge will begin takeover in Jan.
-------------------------------------------------------
An article in the Korea Herald concerning the fate of
SeoulBank gives more details concerning the takeover of
Korea First Bank by US investment consortium Newbridge
Capital.

Newbridge Capital, which has partnerships with General
Electric (GE) Capital, BankAmerica, Merrill Lynch, and Met
Life, will begin its takeover process this month, which
will include evaluations of assets and debts held by Korea
First Bank. This will enable the consortium to conclude a
formal contract in April or May, they said. The government
has promised to shoulder the full responsibility for losses
arising in the first year after takeover and a portion of
non-performing loans arising in the second year.

In addition, Newbridge was given full managerial
independence but it will not be allowed to sell its stake
without prior governmental approval for two years. The
government plans to retain its 49-percent stake with the
option to subscribe to any new Korea First shares issued up
to the equivalent of an 11-percent stake. The deal also
called for the government to transfer Korea First's bad
assets and debts to a newly established "bad bank" so that
the troubled bank could keep clean books. At the request of
Newbridge, the government will write off minority stakes in
Korea First Bank after purchasing shares held by minor
shareholders.

Meanwhile, Newbridge plans to put in place a new line-up of
foreign managers at Korea First Bank, FSC officials said.


LG SEMICON: FKI proposes alternative merger plan
------------------------------------------------
According to the Digital ChosunIlbo, with the talks for the
Hyundai Electronic-LG Semicon merger deadlocked, the
Federation of Korean Industries has come up with a new
proposal in which the research and development (R&D)
operations of the two teams would merge first, with a
complete merger to follow once the production cycle of 256
MHz DRAM chips -- in which both companies have invested
heavily -- is over.

The new proposal combines aspects of American-style
mergers, which result in bigger companies, and Japanese-
style mergers, with their emphasis on strategic alliances
and cooperation. One high-ranking FKI official said that
the new proposal guarantees that both companies will reap
returns on their investment within three years. The FKI
said it would propose this alternative plan when the merger
talks it is mediating between Hyundai and LG recommences on
January 4.


LG SEMICON: To file suit against ADL
------------------------------------
LG Semicon, displeased with a recent recommendation
suggesting Hyundai Electronics Industries (HEI) be given
the controlling interest in their joint company, will be
filing a suit against Arthur D. Little (ADL) late this week
at the earliest.

The Korea Herald reports LG officials said all preparations
for suing ADL for its "biased" evaluations of the projected
merger have been completed. The suit is to be filed in
Massachusetts where ADL's main offices are located.

LG also said negotiations with HEI for the formation of a
joint company will proceed.

"We have appointed lawyers who will be handling the case
and the suit will be filed with the U.S. court early next
week at the latest," an LG official said.

He said LG is not only seeking the nullification of the
evaluations but demanding compensation for material and
psychological damages.

ADL managing director Chung Taesoo said in a recent meeting
with reporters that his company is making the necessary
preparations to answer LG's charges and that ADL has never
lost such a case. One pending issue in this case is that
ADL has been arguing that both LG and HEI have handed in
written documents allowing ADL a free hand at conducting     
its evaluations, although LG has denied ever having done
so.


SEOULBANK: Negotiations resume to sell SeoulBank
------------------------------------------------
Following the sell-off of ailing Korea First Bank to a U.S.
investment consortium, led by Newbridge Capital, the Seoul
government will resume negotiations with several foreign
financiers to sell SeoulBank this week. The Korea Herald
reports Lee Hun-jai, chairman of the Financial Supervisory
Commission (FSC), said over the weekend that negotiations
for the sale of Seoul Bank to foreign investors will begin
with several U.S. and European banks, including British
banking giant HSBC Holdings Plc., which was removed from
bidding to buy Korea First Bank.

The Chase Manhattan Bank is reportedly among those
interested in taking over SeoulBank. Commenting that the
bidders are widely known to have completed their financial
assessments regarding SeoulBank, Lee said the FSC hopes to
select a final winner by later this month.

Buoyed by the successful sell-off of Korea First Bank, the
sale of SeoulBank is expected to be completed by the end of
the month, the deadline for the sales previously agreed
between Korea and the International Monetary Fund (IMF),
FSC officials said.


TAEBAEK FURNITURE CO: Taebaek Furniture Co. liquidates
------------------------------------------------------
According to the Korean language Maeil Kyungje's Business
Brief Section, the Taegu District Court approved the
Taebaek Furniture Company's liquidation plan.


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

HONGKONG BANK MALAYSIA BHD: Long term rating downgraded
-------------------------------------------------------
Rating Agency Malaysia downgraded HongKong Bank Malaysia
Bhd's long term rating from AA1 to AA2.


KEWANGAN BERSATU: Central bank takes over finance firm
------------------------------------------------------
According to the South China Morning Post and the Hong Kong
Standard, Bank Negara Malaysia has taken control of ailing
finance companies: MBf Finance, one of Malaysia's biggest
finance companies, and Kewangan Bersatu, and has appointed
new managers.

The central bank did not give reasons for taking over
Kewangan but said MBf needed new capital. Nor did it
mention merger and partnership talks involving the two
companies.

Kewangan Bersatu was to merge with Hong Leong Finance -- a
unit of Hong Leoung Bank.


MBF FINANCE: Central bank takes over management
-----------------------------------------------
A front page story in the Asian Wall Street Journal
reported that the Malaysia central bank has taken control
of the management of MBf Finance Bhd. The central bank
issued a statement claiming MBf Finance was "a solvent
concern" and needed an unspecified amount of  
recapitalization in order for its capital base to meet
minimum levels required by Malaysian regulators. Banking
analysts cited in this report stated that Mbf Finance has
more than 4 billion ringgit in bad loans, and needs 1
billion ringgit in new capital.  

MBf Finance was described as one of the most aggressive
lenders in the 1990s. It was controlled by the family of
Tan Sri Loy Hean Heong, a tycoon who died in 1997, via MBf
Capital Bhd. Mbf Finance has reportedly been struggling
since the Asia crisis hit, as it lent heavily to finance
property and stock purchase transactions. The company is
currently capitalized at 1.01 billion ringgit, but as of
June, about 30 percent of its entire loan portfolio was
non-performing.


OCBC BANK (MALAYSIA) BHD: Long term rating downgraded
-----------------------------------------------------
Rating Agency Malaysia downgraded OCBC Bank (Malaysia)
Bhd's long term rating from AA1 to AA2.


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

METRO PACIFIC: Stock up on talk of Ayala tie-up
-----------------------------------------------
According to Singapore Business Times, Metro Pacific Corp
shares surged as much as 11 per cent on speculation it will
bury the hatchet and tie up with rival Ayala Land Inc, the
Philippines' No 1 real estate company, to complete its Fort
Bonifacio project. An alliance between Metro Pacific, the
Philippine flagship of Hongkong's First Pacific Co, and
Ayala, which turned swampland into the nation's Wall
Street, could allow Metro Pacific to reduce debts.


PHILIPPINE AIRLINES: Regulator threatens shut down
--------------------------------------------------
Agence France-Presse and RP-Business News report the
Philippine capital market regulator warned Monday it will
permanently shut down Philippine Airlines (PAL) if a
rehabilitation plan for the debt-ridden carrier proves
inadequate.

Securities and Exchange Commission (SEC) chairman Perfecto
Yasay noted that some creditors had objected to the 150-
million-dollar plan submitted by PAL management to the SEC
in December.

"This is an issue that the SEC ultimately has to decide on.
We will have to listen to the comment and position taken by
the creditors to find out if it is meritorious and if it
is, we will not hesitate to deny the rehabilitation plan
and then order the closure of PAL," he said.

An SEC review panel is expected to come out with a ruling
"within a week or so," Yasay said.


PHILIPPINE AIRLINES: US Eximbank rejects PAL survival plan
----------------------------------------------------------
According to the South China Morning Post and the Hong Kong
Standard, the US Export-Import Bank (Eximbank), one of the
9,000 creditors and lessors of Philippine Airlines, has
objected to the rehabilitation plan which PAL submitted to
the Securities and Exchange Commission (SEC).

The SEC gave PAL's creditors until December 22 to submit
their comments but some requested a five-week extension of
the deadline.

A law firm representing Eximbank said in a letter to the
SEC that the plan is unfair to international secured
lenders because it eliminates contractually agreed rights,
fails to cure defaults and fails to follow the procedures
described by the interim rehabilitation receiver of PAL.

The rehabilitation plan calls for grace periods on
repayment of principal to creditors, debt forgiveness on
default interest and extensions of most loans. Eximbank's
lawyers said the waiver on default interest would prejudice
the US bank and transform it from a fully secured creditor
to a partially secured creditor. In its letter to SEC, the
law firm representing Eximbank said that instead of
treating Eximbank as a significant and fairly compensated
creditor in any rehabilitated PAL, the plan effectively
compels Eximbank to bear a substantial risk of the
rehabilitation while receiving inadequate compensation in
return.

PAL's European creditors had earlier rejected the airline's
survival plan because they said it lacked two fundamental
elements -- a strategic partner and the infusion of US$200
million in new equity.

Eximbank said the rehabilitation plan contains no strategy
for attracting the investment of a strategic partner, and
the reduced amount of capital infusion to $150 million from
$200 million that PAL is seeking after the collapse of
talks to secure a strategic partner is also insufficient to
permit the airline to operate on realistic projections.

The report on the South China Morning Post said that PAL
asked the SEC to order three of its lessors to renew the
expired certificate of airworthiness of three of its Boeing
737-300 aircraft used for domestic operations. It said its
operations had been hampered by the refusal of three of the
lessors -- GPA Group, Airplanes Finance and General
Electric Capital Corp -- to renew the certificates.


=================
S I N G A P O R E
=================

ELECTRO-MAGNETIC: Questions into lack of progress on rehab
----------------------------------------------------------
An opinion piece in Singapore Business Times reflects on
the lack of progress in the rehabilitation of Electro-
Magnetic Ltd. (EML). It has been more than two years since
video tape manufacturer EML was placed under judicial
management.

In the case of EML, the article says, its judicial managers
from Price Waterhouse had actually introduced to the press
a potential white knight in the form of Indonesian-born
businessman Joseph Gondobintoro in December of 1996. Mr
Gondobintoro was to have injected $185 million worth of   
assets into EML through his investment trading company,   
Panwell Pte Ltd, and guaranteed annual profits of at least
$15 million for three years. The assets were to include the
GMG Building in Robinson Road and rubber plantations in the   
Cameroons and the Ivory Coast in West Africa.

Bailout package: The package was to have allowed existing   
shareholders to bail out at at least 16.8 cents a share   
compared to the shares' pre-suspension price of 19 cents.

Panwell was supposed to have firmed up its agreement to   
take over EML by the end of January last year, but as yet   
shareholders have not been informed of any developments on   
that front since December 1996.

The judicial managers had assured shareholders that should   
the agreement deadline not be met, Panwell would forfeit a   
deposit of $8 million in the form of a letter of credit.
Again no official word on the matter.

But now that bailout appears to be in jeopardy as Mr   
Gondobintoro himself appears to have his hands full because   
the regional economic contagion is adversely affecting many
of his Indonesian assets. Even his GMG Building in
Singapore would be worth considerably less than its value
two years ago. The grapevine has it that Mr Gondobintoro is
now negotiating a deal that would value EML at a price far
lower than the 16.8 cents a share that he had valued the
company in December 1996.


SONICA: Fu Yu loses legal tussle with Sonica, plans appeal
----------------------------------------------------------
The main board's Fu Yu Manufacturing has lost its recent
legal tussle with computer monitor maker Sonica Industries
and was ordered by the High Court last week to provide
Sonica with an $8.2 million banker's guarantee by Jan 15.

Singapore Business Times says the judgment is the
culmination of a two-month long legal battle in which
Sonica sued Fu Yu for $8 million in damages. Fu Yu
executive director Steven Ho, however, said yesterday the
plastic injection moulding firm will appeal against the
decision. "We believe we have a strong defence and are
waiting for further advice from our lawyers," he said.

Sonica brought its action in November, claiming Fu Yu
failed to deliver 87,500 units of a particular model of
computer monitor. Because of this, Sonica was unable to
fulfil other contractual obligations, which meant
forfeiting a net profit of $8 million.

Fu Yu counterclaimed, citing breaches of contract. It
alleged that cheques issued by Sonica were dishonoured,
which led it to cease deliveries to Sonica. It also pointed
out that at the time, Sonica was facing a winding-up
petition by seven creditors, including the CPF Board. This
petition, however, was withdrawn last month.

For the first six months of 1998, Fu Yu's earnings plunged
90 per cent to $482,000 and turnover dropped 9 per cent to
$78.9 million.


VIKAY INDUSTRIAL: Questions into lack of progress on rehab
----------------------------------------------------------
An opinion piece in Singapore Business Times reflects on
the lack of progress in the rehabilitation of liquid
crystal display maker Vikay Industrial. It has been more
than a year since Vikay was placed under judicial
management.

Vikay's judicial managers from the auditing firm of KPMG   
have also divulged little about the LCD maker's white
knight. In April of last year, it was reported that at
least 10 firms were interested in rescuing the debt-laden
firm which suffered a bottomline loss in 1997 of $31
million. In September the list was narrowed down to "at
least two parties" with former Morgan Grenfell merchant
banker Lim Ah Doo, who now runs management consultancy Asia   
Partners, as the most likely candidate to salvage the firm.

Vikay, whose last traded share price was at 19 cents a
share, owes two dozen financial institutions some $114
million and was placed under judicial management in
December.

The company's judicial managers were supposed to have   
finalised their $80 million deal for Vikay's four LCD   
manufacturing and electronics factories in Malaysia and
China as well as a majority equity stake in Vikay with its
white knight at the end of last year. Shareholders must be
anxiously awaiting the outcome.


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

CAPETRONIC INTERNATIONAL: Shareholders approve increase
-------------------------------------------------------
The Nation reports Capetronic International (Thailand) Plc
reported to the Stock Exchange of Thailand that its
shareholders had approved an increase in the company's
registered capital to Bt4.23 billion from Bt912.686
million.

The company will offer 89.58 million shares to existing
shareholders at the ratio of every three existing shares
for one new share at the offering price of Bt4.3 per share.
Another 1.7 million shares will be reserved for holders of
the company's warrants.


MODERNHOME DEVELOPMENT: To sell four affiliates
-----------------------------------------------
The Nation reports Modernhome Development Plc said the
business performance of MLD Co, Modernhome Center 1991 Co,
Sukhumvit 77 Real Estate Co and Sukhumvit 49 Estate Co --
in which it holds majority shares -- have not been
satisfactory. As a result, the company decided to sell its
investments in the four companies to BS and King Business
Co Ltd.

Modernhome Development said it had transferred 97.99 per
cent or 20.58 million shares in MLD Co to BS and King
Business.

BS and King Business also received 80 per cent shares in
Modernhome Center, 99.99 per cent shares in Sukhumvit 77
Real Estate and 99.99 per cent shares in Sukhumvit 49
Estate from Modernhome Development.


SAMAKKHISARN DOKYA: Shareholders hope for new capital
-----------------------------------------------------
The Nation reports the future of Thailand's largest book-
store operator, Samakkhisarn Dokya Plc, which has been
suffering severe liquidity problems for the past year, is
hanging in the balance as major shareholders hope to get
new foreign partners.

Meanwhile 60 stores with the Dokya franchise have resorted
to buying books directly from publishers as Samakkhisarn
Dokya's credit has been cut off.

In addition to these 60 outlets, Dokya operates its own 20
outlets, most in Bangkok.

Narongsak Tantipinijwongs, the company's managing director
and major shareholder, was rumoured to have fled to the
United States amid financial problems.

In a written statement Monday, Narongsak said he was in the
US to negotiate a business loan and strategic partnership
for an undisclosed amount of funds.

Earlier he was set to raise the firm's capital from Bt150
million to Bt300 million for sale to the Shinawatra Group
and Japan Asia Investment Co. However, negotiations
collapsed in November last year.

Industry sources estimate the market for Thai-language
pocket books is worth Bt1 billion annually. The firm is
said to control 20 per cent of the market. The firm is not
listed, so official sales figures are not available.

Narongsak said he had approached two or three unnamed firms
for equity partnership but did not elaborate. He expected a
decision to be made within the next few months.

Owing to liquidity problems, the company was unable to pay
back suppliers after a large number of books were not sold
last year.

He said two publishers, Ngandee Co, a unit of the Thai-
language daily Matichon, and the publishing firm Prapunsarn
Co, had moved to take action against him by seeking his
arrest following cheques which had bounced.

The action prompted Narongsak to go into hiding in late
November, his statement said.

Other publishers had agreed to compromise, the statement
said.

The amount owed to suppliers is around Bt90 million. Nearly
Bt45 million has been paid back. He said the company
intended to repay all of its debts but full repayment would
take more time.

Samakkhisarn had planned to allocate 15 million new
registered capital-increase shares to the Shinawatra Group
and Japan Asia Investment Co.

Apart from the debt to suppliers, the company also owes
around Bt500 million to financial institutions, according
to figures filed with the Commerce Ministry for the period
ended June 1998.


STA GROUP: To be delisted
-------------------------
The Stock Exchange of Thailand said it had scheduled the
last share-trading period of STA Group (1993) Plc (Staco)
between Jan 4 and Feb 3, 1999. Staco will be delisted from
the exchange on Feb 4.


THAI OIL: PTT says it will merge downstream units
-------------------------------------------------
Reuters and Business Day (Thailand) report state-owned
Petroleum Authority of Thailand (PTT) said yesterday it
planned to merge its downstream oil business with its
refining unit, Thai Oil, and then float shares in the new
entity. The president of PTT Oil, Prasert Bunsumpun, said
the reorganization was a "long-term plan" and would
probably take three to four years to complete.

The newspaper quoted Prasert as saying the merger of his
company with Thai Oil would create a "lean and mean"
organization and strengthen its competitiveness. It said
the new Thai downstream company would have combined assets
of about 140 billion baht ($3.85 billion) and would benefit
from reduced costs and less duplication.

PTT has been searching in recent months for a way to
improve the efficiency of the operations of debt-ridden
Thai Oil, in which it has a 49 percent stake.

In November, Thai Oil declared a moratorium on repayments
on the principal of its $1.85 billion debt and PTT has
since said it wishes to inject $300 million to $400 million
into the firm and swap some debt for equity with strategic
partners. Thai Oil, which runs the country's biggest oil
refinery with a capacity of 220,000 barrels per day, is 25
percent owned by private Thai group Chowkwanyun, 15.5 by
the Royal Dutch/Shell Group and 4.75 percent by Caltex - a
joint venture between Chevron and Texaco.

Prasert said the merger depended on three things:  "First
PTT as a whole must be listed on the SET (Stock Exchange of
Thailand), which is expected in the year 2000.

"Second Thai Oil will have to complete its financial
restructuring. And third, after PTT as a whole is listed,
we will split PTT Oil and will merge it with Thai Oil," he
said.

The US-based firm Hay Consultant, an adviser to PTT, had
suggested the merger for long-term competitiveness, it
said.

PTT Oil has about 1,500 retail gasoline stations and assets
of 35 billion to 40 billion baht. Thai Oil's assets are
estimated at about 100 billion baht.



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 1999.  All rights reserved.  ISSN: 1520-9482.  

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