/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/990426.MBX T R O U B L E D C O M P A N Y R E P O R T E R =20 =20 A S I A P A C I F I C =20 Monday, April 26, 1999, Vol. 2, No. 79 Headlines * C H I N A & H O N G K O N G * GUANGDONG INTERNATIONAL: Creditors see restructuring hopes dashed GUANGDONG INTERNATIONAL: Gitic 'grossly negligent' PACIFIC PORTS: Results announcement PEREGRINE INVESTMENTS: Peregrine case inspector needed * I N D O N E S I A * PT BANK BALI: UK bank helps bail out Jakarta firm PT PERSERO DANAREKSA: Creditors agree to $366m restructuring deal=20 SALIM GROUP: Goldman a potential buyer of UIC stake=20 * J A P A N * MITSUI MUTUAL LIFE: Moody's downgrades rating to Baa3=20 MITSUKOSHI: Results announcement NOMURA SECURITIES: Seen posting its biggest loss ever SUMITOMO LIFE: Moody's downgrades rating to Baa2=20 SUMITOMO REALTY: S&P downgrades Sumitomo Realty from BBpi to Bpi=20 TOKYO MUTUAL LIFE: Moody's downgrades rating to B2=20 * K O R E A * ASUNG SPECIAL PAPER: KAMCO props up promising non-viable firms DAECHANG MACHINERY: KAMCO props up promising non-viable firms DAEWOO HEAVY: General strike costing Daewoo $US10m a day DONGWHA BANK: Heads of defunct banks investigated=20 HANIL MACHINERY: KAMCO props up promising non-viable firms HWASUNG PAPER: KAMCO props up promising non-viable firms HYUNDAI GROUP: Hyundai to shed 55 units=20 HYUNDAI GROUP: Units in trouble for share price manipulation LG SEMICON: Hyundai, LG conclude share swap deal NEW WORLD FURNITURE: KAMCO props up promising non-viable firms * P H I L I P P I N E S * MANILA BANK: Manila Bank to pay P10.7 B debts before it reopens=20 PHILIPPINE AIRLINES: SEC says Tan can revamp PAL management PHILIPPINE ASSOCIATED: Senate threatens to stop bid for firm=20 PILIPINO TELEPHONE: SEC orders another dep't to probe Piltel * S I N G A P O R E * SUNRIGHT LTD: Sunright interim profit falls 83% * T H A I L A N D * BANCHANG: Delisted for not following guidelines JULDIS DEVELOPMENT: Delisted for not following guidelines RAJDAMRI HOTEL: Goldman Sachs consortium trumps RGR Rajdamri bid=20 SIAM CITY CEMENT: Lenders favor SCCC's restructuring plan=20 STAR BLOCK: Delisted for not following guidelines SUNSHINE: Delisted for inability to rehabilitate=20 THAI GRANITE: Delisted for not following guidelines UNIVEST LAND: Delisted for not following guidelines WATTACHAK: Delisted for not following guidelines =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D C H I N A & H O N G K O N G =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D GUANGDONG INTERNATIONAL: Creditors see restructuring hopes dashed ----------------------------------------------------------------- The liquidation committee of Guangdong International Trust &=20 Investment Corp (Gitic) yesterday dashed any hopes for a=20 restructuring of the insolvent fund-raising arm of the Guangdong=20 provincial government. Zeng Yijun, a partner at Kingson Law Firm,=20 a mainland company advising the committee on domestic legal=20 issues, said: "According to mainland bankruptcy law, there is a=20 chance for restructuring only when it is the creditors who=20 initiate the bankruptcy proceedings." The shelving of the proposal was one of many disappointments for=20 foreign bankers attending the first creditors' meeting for Gitic,=20 held yesterday at the Guangdong Higher People's Court. A Guangzhou-based European banker said: "I'm inclined to believe=20 this borders on criminal behaviour." Given the unlikely event of a restructuring, bankers said they=20 could only hope for more favourable repayment methods, such as=20 priority being given to debts registered with the State=20 Administration of Foreign Exchange (SAFE). Louie Choi, partner at=20 KPMG Peat Marwick Huazhen, said the committee had not discussed=20 registered and unregistered debts. Some bankers also hoped the recovery rate would improve if=20 guarantees and letters of comfort were removed because=20 replacements were found to assume the guarantor's=20 responsibilities or letters of comfort obligations were=20 ineligible for claims. It is understood liquidators are studying=20 whether liabilities relating to letters of comfort, which are not=20 legally binding, were eligible for repayment. Gitic's liabilities=20 relating to guarantees amounted to 15.77 billion yuan (about=20 HK$14.66 billion) and for letters of comfort at 3.04 billion=20 yuan. Bankers also expressed concern about the lack of transparency at=20 yesterday's proceedings -- creditors were not allowed to ask=20 questions -- and the probable result of asset auctions, fearing=20 assets would be unloaded cheaply. That may be particularly true=20 of Gitic's strategic investments, where only specified companies=20 may be allowed to make buy-outs. Ultimately, the cost of=20 professional advice to Gitic's liquidation team may pull=20 creditors apart. Gitic's liquidator has appointed KPMG Peat Marwick Huazhen,=20 Kingson Law Firm and Johnson Stokes & Master as advisers and=20 intends to employ two or three international valuers to handle=20 the liquidation. The chaotic accounting and lack of transparency at Gitic would=20 make bankers back away from lending to mainland companies, a Hong=20 Kong-based banker said. Another banker said: "The mainland=20 lending concept is dead. We originally thought there could still=20 be mainland business if we only lend with SAFE approval." However, news that SAFE-registered debts might not be given=20 priority made such business even more unattractive, he said. (South China Morning Post 23-Apr-1999) GUANGDONG INTERNATIONAL: Gitic 'grossly negligent' -------------------------------------------------- Reckless management and gross negligence are at the centre of the=20 mainland's largest bankruptcy since the founding of the People's=20 Republic, a liquidation committee to Guangdong International=20 Trust & Investment Corp (Gitic) has reported. At the first=20 meeting of Gitic creditors convened at the Guangdong Higher=20 People's Court in Guangzhou yesterday, company liquidators said=20 only 6.5 billion yuan (about HK$6.05 billion) from 21.29 billion=20 yuan in company assets were likely to be recovered. Gitic's liabilities amounted to 38.77 billion yuan -- about 2.63=20 billion yuan above the company's estimated debt at the time of=20 its bankruptcy in January. "The management [of the firm] was out of control," said Louie=20 Choi, a partner with liquidation advisers KPMG Peat Marwick=20 Huazhen. According to the liquidation committee's findings, 32.01 billion=20 yuan of Gitic debt was held by 167 overseas institutions, with=20 the balance held by 153 domestic creditors. About half of Gitic=20 debt stemmed from guarantee obligations and letters of comfort=20 for projects of undetermined status. However, if projections=20 stand Gitic creditors are likely to see repayment of about 16=20 cents on the dollar. In its report, the liquidation committee also cited negligent=20 business practices in areas of lending and investment management=20 as a primary cause of the firm's failure. "The degree of disorganisation was shocking," said T.K. Chang, a=20 partner with Coudert Brothers, representing foreign creditors.=20 "It remains to be seen what the line is between legitimate=20 business activities and activities involving fraud, embezzlement=20 and criminal behaviour." Recovery rate on all lending was estimated at 35 per cent, or=20 3.97 billion yuan from 11.3 billion yuan. Significantly, about=20 half of all outstanding loans on company books -- amounting to=20 5.29 billion yuan -- was more than five years overdue. Gitic's overseas operations also were in disarray. Gitic's Thai,=20 United States and Australian subsidiaries were all described as=20 "seriously insolvent" by the liquidation committee. Company liquidators believed the winding-up process would=20 probably take several years to complete. Mr Choi compared Gitic's bankruptcy with that of the failed Bank=20 of Credit and Commerce International, saying that the liquidation=20 would probably last "several years". Key sticking points for company liquidators included identifying=20 and contacting Gitic's debtors. Company records showed 268=20 debtors, yet only 90 had responded to the liquidation committee's=20 notification. Gitic was plaintiff in 32 debt-recovery legal actions involving=20 about US$62 million. At yesterday's meeting, the liquidation committee also announced=20 the establishment of a nine-member creditors' steering committee,=20 said to be comprised of a cross-section of Gitic's largest=20 creditor institutions. They are the Industrial & Commercial Bank=20 of China, the Bank of China, Guangdong Finance, Hang Seng Bank,=20 Dai-ichi Kangyo Bank, Sakura Bank, Union Bank of Switzerland,=20 Citibank, and a representative of holders of Gitic's US-issued=20 yankee bonds. (South China Morning Post 23-Apr-1999) PACIFIC PORTS: Results announcement ----------------------------------- Pacific Ports plunged to a $237.05 million net loss last year,=20 hit by an alleged theft of $81 million by its former chairman,=20 John Chan Boon-ning. The company, which made a profit of $12.84=20 million in 1997, recorded an exceptional loss of $169.83 million. This included a provision of $102.8 million against amounts due=20 from Mr Chan and "certain former related companies". Mr Chan was=20 arrested and charged with stealing $81 million in three cheques=20 in March last year but the charges were dropped in June after a=20 police investigation failed to make sufficient progress. He=20 stepped down as chairman shortly after his arrest. Pacific Ports filed writs claiming $130 million against Mr Chan=20 last year, accusing him of stealing and misusing company funds=20 and breaching his fiduciary duties. The company said yesterday it=20 was "actively pursuing litigation" against Mr Chan. Separately, Mr Chan had to face a lawsuit in the United States=20 from financial institution Credit Bancorp following public=20 statements made last month. Credit Bancorp had asked the federal=20 court in Kentucky to assert that Mr Chan defamed the institution. It strongly denied that it had sold shares in Fairyoung Holdings=20 pledged as collateral for personal loans in the market.=20 Fairyoung, of which Mr Chan was chairman, yesterday insisted that=20 his March statement was "substantially correct". It said Mr=20 Chan's company Angklong had applied for an injunction in Hong=20 Kong to prevent Credit Bancorp selling his shares in Fairyoung. Credit Bancorp was not defending the action, it said. "Angklong has not received notice of any proceedings allegedly=20 commenced by Credit Bancorp in the US," Fairyoung said. (South=20 China Morning Post 23-Apr-1999) PEREGRINE INVESTMENTS: Peregrine case inspector needed ------------------------------------------------------ Evidence gathered so far on the Peregrine collapse leaves "no=20 doubt whatsoever" that an inspector should be appointed, a judge=20 has ruled. Mrs Justice Doreen Le Pichon told the court yesterday=20 that: "In the light of evidence that has been filed, I have no=20 doubt whatsoever that the public interest would be served by the=20 appointment of an inspector." The Government made an application to appoint an inspector --=20 Richard Farrant, formerly with Britain's Financial Services=20 Authority -- to probe Peregrine Fixed Income and Peregrine=20 Investments Holdings. The two companies were not represented in=20 court yesterday. However, one of the former directors, Alan=20 Mercer, was seated in the public gallery. Submissions made to the court on behalf of the Government=20 included an affidavit from Financial Secretary Donald Tsang Yam- kuen and a report from the Securities and Futures Commission,=20 which was presented to Mr Tsang in May last year. The judge said there were "valid reasons" for the appointment of=20 an inspector. "The shareholders are entitled to know as well as the public=20 exactly what went wrong that caused Peregrine Investments=20 Holdings and Peregrine Fixed Income to collapse." It is in Hong Kong's interest, the judge stressed, "that concerns=20 as to the failure of Peregrine should not be left unanswered".=20 Costs have been reserved. (South China Morning Post 23-Apr-1999) =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D I N D O N E S I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D PT BANK BALI: UK bank helps bail out Jakarta firm ------------------------------------------------- British-based Standard Chartered Bank PLC agreed to take control=20 of Indonesia's third-largest private bank, PT Bank Bali, adding=20 life to a government bank-recapitalization program starved for=20 foreign funds. The purchase is the first by a major financial player in an=20 Indonesian bank since the economic crisis broke in 1997. The sale=20 "represents a landmark transaction in terms of structure and=20 process," said Farid Harianto, deputy chairman of the Indonesian=20 Bank Restructuring Agency, or IBRA. Bank Bali is one of Indonesia's leading consumer retail banks,=20 with 10 trillion rupiah ($1.15bn) in assets. It has nonperforming=20 loans of around 50%; in the overall banking sector, nonperforming=20 loans stand at about 70%. The bank's management is considered=20 relatively strong in two regards: It's credited with developing=20 one of the strongest local brand names, and has been innovative=20 in bringing new technology to the market. Standard Chartered will inject $56 million into Bank Bali for a=20 20% stake under the terms of the agreement. These funds represent=20 the 20% needed to raise Bank Bali's capital reserve to the level=20 required by the bailout plan. The government will provide the=20 rest through the issuance of bonds. The government also agreed to=20 cede management control to Standard Chartered. Standard Chartered then holds the right to purchase the remaining=20 80% of Bank Bali through a call option on the government's=20 remaining shares. Standard Chartered plans to wholly own Bank=20 Bali in three to five years, said David Hawkins, the British=20 bank's chief executive officer in Indonesia. In all, eight banks entered into the government's bailout program=20 Thursday. Among these are PT Bank Lippo and PT Bank Internasional=20 Indonesia, respectively the banking arms of Indonesia's Lippo and=20 Sinar Mas groups. (Wall Street Journal 23-Apr-1999) PT PERSERO DANAREKSA: Creditors agree to $366m restructuring deal=20 ----------------------------------------------------------------- The Asian Wall Street Journal reported that PT Persero Danareksa=20 signed an agreement with its creditors to restructure $366=20 million in foreign debt, in an agreement that will take effect at=20 the end of April. Under the agreement, according to the paper, Danareksa cut its=20 debt load to $196 million. The remaining debt -- mostly short- term promissory notes -- has been split into two portions, one of=20 which was extended for three years and the other for eight years. The eight year tranche of $148.5 million will be repaid at the=20 three-month London interbank offer rate (LIBOR) plus a varying=20 margin, starting at 2 percent and ending at 6 percent for the=20 final two years of the loan maturity. The three-year tranche of=20 $47.5 million will be initially repaid at an interest rate of 75=20 percent points (or one hundredths of a percentage point) above=20 the three-month LIBOR. The rate will escalate to 100 basis=20 points over LIBOR by the end of the third year.=20 The agreement also includes limitations on government ownership reduction and options for Danareksa to pay back debt faster than planned, provided it compensates the banks for interest loss. However, this deal also involved 40 percent of Danareksa's=20 creditors losing half of their original investments. Over the=20 past year, Danareksa has repurchased $136 million in debt from=20 creditors at an average price of 49.5 cents on the dollar.=20 The company's remaining 563 billion rupiah obligations to local=20 creditors and $45 million to another Indonesian company are=20 outside of this restructuring agreement, although this agreement=20 has provisions to ensure that these Indonesian creditors do not=20 get any preference in repayment.=20 SALIM GROUP: Goldman a potential buyer of UIC stake=20 --------------------------------------------------- Goldman Sachs has emerged as a potential buyer of the 23% stake =20 held by KMP United Ventures, a unit of Indonesia's Salim group,=20 in Singapore-listed United Industrial Corp (UIC), the Singapore=20 Straits Times reported yesterday, quoting sources.=20 KMP had earlier tried to sell the UIC stake to HKR International=20 of Hong Kong, but the latter backed out after the fall in UIC's=20 1998 net profit exceeded 35%, breaching a condition of the=20 proposed deal. (AFX and The Star Online 23-Apr-1999) =3D=3D=3D=3D=3D=3D=3D=3D=3D J A P A N =20 =3D=3D=3D=3D=3D=3D=3D=3D=3D MITSUI MUTUAL LIFE: Moody's downgrades rating to Baa3=20 ----------------------------------------------------- The Asian Wall Street Journal reported that Moody's Investors=20 Service Inc. said Thursday it downgraded its insurance financial=20 strength ratings on Mitsui Mutual Life from Baa2 to Baa3. Further, the paper reported that Moody's considers the rating=20 outlook for the insurer to be negative. Moody's said that the=20 downgrade reflects a weak capital base, low profitability, asset=20 quality issues and the effect those factors will have on the risk=20 profile for the company. Moreover, the market was just recently=20 exposed to competition, making for an unsettled business=20 environment for all Japanese life insurers, which also=20 contributed to the downgrade, according to the paper. MITSUKOSHI: Results announcement -------------------------------- Mitsukoshi, a leading Japanese department store, yesterday=20 announced an Y11.4bn ($92.2m) group net loss for the 1998 fiscal=20 year, a 70.5 per cent improvement on its Y38.8bn loss for the=20 year before. But Mitsukoshi said it recorded a group pre-tax loss excluding=20 exceptionals of Y4.6bn compared with a Y4.1bn profit in fiscal=20 1997. Its group sales were also down 4.3 per cent from Y1,018bn=20 to Y974bn. The retailer blamed the severe economic environment and the=20 collapse in consumer demand for its weak results. (Financial=20 Times 23-Apr-1999) NOMURA SECURITIES: Seen posting its biggest loss ever ----------------------------------------------------- Nomura Securities Co, set to report its biggest full-year loss=20 ever today, is striving to leave its problems behind as it faces=20 financial deregulation and a host of new rivals. Japan's biggest=20 broker will likely post a group net loss of as much as 510=20 billion yen (S$7.3 billion), as it bails out a lending affiliate=20 at home and covers bond trading losses overseas, analysts said.=20 Nomura said last month it will book a 348 billion yen charge to=20 cover bad loans at an affiliate. (Bloomberg and Singapore=20 Business Times 23-Apr-1999) SUMITOMO LIFE: Moody's downgrades rating to Baa2=20 ------------------------------------------------ The Asian Wall Street Journal reported that Moody's Investors=20 Service Inc. said Thursday it downgraded its insurance financial=20 strength ratings on Sumitomo Life from Baa1 to Baa2. Further, the paper reported that Moody's considers the rating=20 outlook for the insurer to be negative. Moody's said that the=20 downgrade reflects a weak capital base, low profitability, asset=20 quality issues and the effect those factors will have on the risk=20 profile for the company. Moreover, the market was just recently=20 exposed to competition, making for an unsettled business=20 environment for all Japanese life insurers, which also=20 contributed to the downgrade, according to the paper. SUMITOMO REALTY: S&P downgrades Sumitomo Realty from BBpi to Bpi=20 ---------------------------------------------------------------- The Asian Wall Street Journal reported that Standard & Poor's=20 Rating Group lowered its public information, or "pi," rating on=20 Sumitomo Realty & Development Co. from BBpi to Bpi. According to the paper, the downgrade reflects rising business=20 and financial risks in the operating environment for Japanese=20 companies, as well as the company's weak financial profile and=20 high debt burden. Sumitomo Realty is one of Japan's leading diversified real estate companies, but sluggish demand, potential oversupply, and =20 declining property values in Japan have lead to intense pressure,=20 the Asian Wall Street Journal reported. Moreover, the=20 homebuilding segment of the company has generated operating=20 losses for the five years to March 1998. TOKYO MUTUAL LIFE: Moody's downgrades rating to B2=20 -------------------------------------------------- The Asian Wall Street Journal reported that Moody's Investors=20 Service Inc. said Thursday it downgraded its insurance financial=20 strength ratings on Tokyo Mutual Life from B1 to B2. Further, the paper reported that Moody's considers the rating=20 outlook for the insurer to be negative. Moody's said that the=20 downgrade reflects a weak capital base, low profitability, asset=20 quality issues and the effect those factors will have on the risk=20 profile for the company. Moreover, the market was just recently=20 exposed to competition, making for an unsettled business=20 environment for all Japanese life insurers, which also=20 contributed to the downgrade, according to the paper. =3D=3D=3D=3D=3D=3D=3D=3D=3D K O R E A=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D ASUNG SPECIAL PAPER: KAMCO props up promising non-viable firms -------------------------------------------------------------- The Korea Asset Management Corporation (KAMCO) announced Friday=20 that it has decided to allow five non-viable firms, including=20 Hwasung Paper, Hanil Machinery, New World Furniture, Daechang=20 Machinery Industries and Asung Special Paper to repay their debts=20 over a five-year interest-free period. The government=20 organization said the five were chosen from 166 businesses whose=20 debts to creditor banks had turned into non-performing loans=20 which were then sold to KAMCO. The 166 businesses are all=20 currently in operation or ready to resume operations. KAMCO's=20 assistance of the five firms is the first time it has stepped in=20 help such businesses. KAMCO said it has purchased non-performing loans from the=20 creditor banks of 3,000 businesses, saying that it plans to=20 select 300 of those businesses for similar support programs.=20 (Digital ChosunIlbo 23-Apr-1999) DAECHANG MACHINERY: KAMCO props up promising non-viable firms ------------------------------------------------------------- The Korea Asset Management Corporation (KAMCO) announced Friday=20 that it has decided to allow five non-viable firms, including=20 Hwasung Paper, Hanil Machinery, New World Furniture, Daechang=20 Machinery Industries and Asung Special Paper to repay their debts=20 over a five-year interest-free period. The government=20 organization said the five were chosen from 166 businesses whose=20 debts to creditor banks had turned into non-performing loans=20 which were then sold to KAMCO. The 166 businesses are all=20 currently in operation or ready to resume operations. KAMCO's=20 assistance of the five firms is the first time it has stepped in=20 help such businesses. KAMCO said it has purchased non-performing loans from the=20 creditor banks of 3,000 businesses, saying that it plans to=20 select 300 of those businesses for similar support programs.=20 (Digital ChosunIlbo 23-Apr-1999) DAEWOO HEAVY: General strike costing Daewoo $US10m a day -------------------------------------------------------- Korea's Daewoo Heavy Industry's shipbuilding unit from Tuesday=20 was costing the company 12 billion won (US$10 million) in lost=20 turnover per day, the Commerce, Industry and Energy Ministry said=20 Thursday. Daewoo's total losses had thus far reached about 36=20 billion won, a ministry source said. The strike, which followed=20 the Monday announcement of the planned sale of the shipyard, is=20 expected to delay the May delivery of three ships under=20 construction valued at US$155 million, hindering the company's=20 export target of $1.51 billion this year. (Asia Pulse=20 22-Apr-1999) DONGWHA BANK: Heads of defunct banks investigated=20 ------------------------------------------------- The prosecution announced Friday that it arrested Lee Jae-jin,=20 the former president of Dongwha Bank, which was one of the five=20 domestic banks liquidated last year, on allegations that Lee=20 illegally approved loans to non-viable firms. Although they were=20 found not to have accepted bribes, others booked without=20 detention on related charges include the directors in charge of=20 Dongwha's loan operations, for negligence of duty. This is the=20 first time the prosecutor's office has gone after bank executives=20 for dereliction of duty. Officials at the prosecutor's office said that former executives=20 of the other four liquidated banks -- Daedong Bank, Dongnam Bank,=20 Kyonggi Bank and Chungchon Bank -- are also under investigation.=20 It is a high possibility that executives of 17 financing firms=20 which have either been liquidated or have had their operations=20 suspended, will also be investigated. Sources say the prosecution's move will likely see bank=20 presidents divesting themselves of the power to make decisions=20 around loans, giving loan committees a greater say in approving=20 loans. Bank lending activities are also anticipated to decline in=20 the future, as loans will be granted to applicants on the basis=20 of their creditability. (Digital ChosunIlbo 23-Apr-1999) HANIL MACHINERY: KAMCO props up promising non-viable firms ---------------------------------------------------------- The Korea Asset Management Corporation (KAMCO) announced Friday=20 that it has decided to allow five non-viable firms, including=20 Hwasung Paper, Hanil Machinery, New World Furniture, Daechang=20 Machinery Industries and Asung Special Paper to repay their debts=20 over a five-year interest-free period. The government=20 organization said the five were chosen from 166 businesses whose=20 debts to creditor banks had turned into non-performing loans=20 which were then sold to KAMCO. The 166 businesses are all=20 currently in operation or ready to resume operations. KAMCO's=20 assistance of the five firms is the first time it has stepped in=20 help such businesses. KAMCO said it has purchased non-performing loans from the=20 creditor banks of 3,000 businesses, saying that it plans to=20 select 300 of those businesses for similar support programs.=20 (Digital ChosunIlbo 23-Apr-1999) HWASUNG PAPER: KAMCO props up promising non-viable firms -------------------------------------------------------- The Korea Asset Management Corporation (KAMCO) announced Friday=20 that it has decided to allow five non-viable firms, including=20 Hwasung Paper, Hanil Machinery, New World Furniture, Daechang=20 Machinery Industries and Asung Special Paper to repay their debts=20 over a five-year interest-free period. The government=20 organization said the five were chosen from 166 businesses whose=20 debts to creditor banks had turned into non-performing loans=20 which were then sold to KAMCO. The 166 businesses are all=20 currently in operation or ready to resume operations. KAMCO's=20 assistance of the five firms is the first time it has stepped in=20 help such businesses. KAMCO said it has purchased non-performing loans from the=20 creditor banks of 3,000 businesses, saying that it plans to=20 select 300 of those businesses for similar support programs.=20 (Digital ChosunIlbo 23-Apr-1999) HYUNDAI GROUP: Hyundai to shed 55 units=20 --------------------------------------- Hyundai Business Group announced Friday that the concept of=20 "business group" or "chaebol" will no longer apply to what is=20 currently the nation's largest conglomerate as of 2003. By that=20 time, Hyundai plans to have spun off all its businesses into five=20 core units specializing in the areas of automobiles, electronics,=20 heavy industries, construction and financing services. Hyundai=20 had earlier committed to complete a similar reorganization of its=20 many business units by 2005. To focus on these core units, Hyundai said it will sell off its=20 subsidiaries in other sectors, including 13 units in the=20 petrochemicals and steel areas, such as Hyundai Oil Refineries,=20 Hyundai Petrochemical and Inchon Iron and Steel. Hyundai said=20 that its automotive division, which is made up of Hyundai Motor=20 and Kia Motors, will become an independent entity by next year,=20 one year ahead of schedule.=20 Hyundai said that its restructuring efforts would result in the=20 shedding of 55 subsidiaries by the end of the year, down from the=20 79 recorded as of September 1998, leaving only 26 as the Korean=20 business giant enters the new millennium. Hyundai also said that=20 it will lower its debt-to-equity ratio down to 199.1% by the end=20 of the year by reducing its debts from W79.27 trillion down to=20 W45.368 trillion through rights offerings. (Digital ChosunIlbo=20 23-Apr-1999) HYUNDAI GROUP: Units in trouble for share price manipulation ------------------------------------------------------------ The Korea Herald and Korea Times reported that the Financial=20 Supervisory Commission (FSC) filed a formal complaint with=20 prosecution officials against the heads of Hyundai Heavy=20 Industries Co. and Hyundai Merchant Marine Co. for attempting to=20 manipulate the share prices of Hyundai Electronics Industries=20 Company (HEI). For this alleged illegal intervention in stock=20 trading, if proven guilty, the two senior Hyundai members would=20 be sentenced to up to 10 years imprisonment and possible fines of=20 20 million won.=20 Hyundai Heavy Industries was reported to have paid 188.2 billion=20 won for 8.1 million HEI shares, while Hyundai Merchant Marine=20 bought 885,000 HEI shares worth 25.2 billion won last June.=20 According to the Korea Herald story, the alleged manipulation=20 represents the first time that one of the nation's top five=20 groups has been accused of share price manipulation. As a result=20 of the price rigging, the paper reported, Hyundai Electronic=20 share prices rose from a 14,000 won level in the first half of=20 last year to a 32,000 won range in the second half. LG SEMICON: Hyundai, LG conclude share swap deal ------------------------------------------------ South Korea's Hyundai and LG Groups concluded Thursday a landmark "big deal," or business swap or merger, by agreeing on=20 the takeover price of LG Semicon's stocks at 2.56 trillion won.=20 Under the agreement, Hyundai will buy a 59.98-percent stake in LG=20 Semicon, held by the LG Group's main shareholders and executives=20 for 2.56 trillion won (US$2.1 billion). (Asia Pulse 22-Apr-1999) NEW WORLD FURNITURE: KAMCO props up promising non-viable firms -------------------------------------------------------------- The Korea Asset Management Corporation (KAMCO) announced Friday=20 that it has decided to allow five non-viable firms, including=20 Hwasung Paper, Hanil Machinery, New World Furniture, Daechang=20 Machinery Industries and Asung Special Paper to repay their debts=20 over a five-year interest-free period. The government=20 organization said the five were chosen from 166 businesses whose=20 debts to creditor banks had turned into non-performing loans=20 which were then sold to KAMCO. The 166 businesses are all=20 currently in operation or ready to resume operations. KAMCO's=20 assistance of the five firms is the first time it has stepped in=20 help such businesses. KAMCO said it has purchased non-performing loans from the=20 creditor banks of 3,000 businesses, saying that it plans to=20 select 300 of those businesses for similar support programs.=20 (Digital ChosunIlbo 23-Apr-1999) =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D P H I L I P P I N E S=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D MANILA BANK: Manila Bank to pay P10.7 B debts before it reopens=20 --------------------------------------------------------------- The Manila Banking Corp. (Manila Bank), one of the country's=20 largest banks before it was closed 12 years ago, said it will pay=20 some P10.73 billion in total liabilities, including P573 million=20 in deposits, before the bank reopens on June 27. Bangko Sentral=20 ng Pilipinas (BSP) Governor Gabriel Singson yesterday said the=20 immediate payment of all its obligations was one of the=20 conditions imposed by the Monetary Board, the policy-making body=20 of the BSP, for its reopening. Payment of the debts would start=20 on April 30 or almost two months ahead of its scheduled=20 reopening. The bank was closed on May 27, 1987. Manila Bank will=20 reopen as a thrift bank with head office in Ayala Avenue, Makati. "The Manila Bank can now operate as a thrift bank with safety to=20 creditors and depositors and will be among the largest=20 capitalized thrift banks in the country," he said. Of its total obligations, the bank owed P8.6 billion to the old=20 Central Bank, representing emergency loans and advances it=20 extended several years ago. The banks also owed BSP, P584.123=20 million; Philippine Deposit Insurance Corp., P873.589 million;=20 and Citibank, P62.55 million. After the payments of its obligations, the bank would be left=20 with a smaller capital of P1.8 billion, just enough to meet the=20 capital requirement for a thrift bank operating in Metro Manila.=20 The bank used to be a universal bank. However, the capital=20 requirement for a unibank has gone up to P4.5 billion. Its liquid=20 assets amounted to P1.2 billion. It would be among the biggest=20 thrift banks in the country when it reopens, he said. The Puyat family would still have a controlling interest in the=20 bank. The bank's seven-man board of directors will include=20 Angelina Puyat and Luis Puyat. The others are real estate=20 developer Andrew Tan of Megaworld Properties; Franklin Velarde;=20 Alexander Tantoco; Benjamin Palma-Gil; and, Benjamin Yambao. The bank was closed on May 27, 1987. Ten years later or in May=20 1997, the Puyat family submitted a rehabilitation plan for the=20 reopening of the bank as a commercial bank with a proposed=20 capital infusion of P1.525 billion. The Monetary Board approved=20 the plan and the bank was supposed to open that year. However, the proposed capital infusion did not take place since=20 most of its stockholders then were engaged in real estate=20 development. The prolonged currency crisis, however, depressed=20 property prices, causing these developers to incur huge losses. In December 1998, he said the Puyat Group again submitted a=20 revised rehabilitation plan to reopen the bank, this time, as a=20 thrift bank with a new set of stockholders. (Manila Times=20 23-Apr-1999) PHILIPPINE AIRLINES: SEC says Tan can revamp PAL management ----------------------------------------------------------- The Securities and Exchange Commission yesterday upheld tycoon=20 Lucio Tan's right to overhaul the management setup in Philippine=20 Airlines and reassume full control over the ailing flag carrier.=20 SEC chairman Perfecto Yasay threw his support behind Tan days=20 after PAL's major creditors objected to the taipan's return as=20 PAL executive officer. Tan earlier relinquished the post to=20 pacify creditors who demanded a shake-up in PAL's management=20 before they would approve the airline's rehab program.=20 PAL, which has $2.2 billion in loans, used its planes as=20 collateral so it can get the loans. Thus, its survival hinges on=20 getting the support of these secured creditors. Yasay said Tan's decision to revamp PAL's management setup did=20 not violate the airline's by-laws, nor did it run counter to the=20 Corporation Code. "Being majority owner of PAL, Tan has the prerogative to effect=20 whatever changes in management he may deem in the best interest=20 of the company," Yasay declared. "The return of Tan to PAL does=20 not require the approval and confirmation of the SEC." Yasay=20 said. Yasay, however, said Tan has limited powers in managing the=20 assets of his distressed airline. The taipan likewise cannot=20 alter the composition of the airlines' interim rehabilitation=20 receiver committee.=20 But Yasay appealed to the creditors to stop imposing conditions=20 in approving the rehabilitation plan for PAL, saying this does=20 not serve any purpose in government's bid to save the ailing=20 airline. The creditors, led by the US Export-Import Bank, earlier=20 threatened to withdraw their support to the rehab plan to=20 dramatize their resentment over PAL's management shake-up.=20 (Manila Times 23-Apr-1999) PHILIPPINE ASSOCIATED: Senate threatens to stop bid for firm=20 ------------------------------------------------------------ The Senate is poised to block the planned privatization of debt- saddled Philippine Associated Smelting and Refinery Corp. (PASAR)=20 even as government officials vowed to push for its sale to=20 interested buyers. Senator Juan Ponce Enrile, government=20 corporations committee chairman, yesterday said the privatization=20 would be disadvantageous to the government, whose exposure to the=20 firm has reached 17.604 billion Philippine pesos (PhP). During a=20 Senate hearing, Finance Undersecretary Joel Ba=A4ares admitted that=20 the government would continue to shoulder PASAR's foreign loan=20 obligations of about $194 million.=20 "The government guarantee (on the loans) will remain. In effect,=20 the government is only reducing the carrying cost (of the firm),"=20 Mr. Ba=A4ares told the committee.=20 PASAR has an outstanding debt of PhP25.72 billion, PhP17.604=20 billion of which are advances from the National Treasury. This is=20 apart from the more than PhP10 billion foreign loan obligations=20 which the government has guaranteed. The government, in a bid to=20 shield itself from further losses, has scheduled the=20 privatization on May 3 on an "as is where is basis."=20 Pasar officials said at least three firms have expressed=20 interest, including plastics king and presidential friend William=20 Gatchalian.=20 The plant, however, continues to incur some PhP2.1 billion in=20 losses, putting the government at the losing end. Trade and=20 Industry officials said PASAR's sale would insulate the=20 government from further losses. (BusinessWorld 23-Apr-1999) PILIPINO TELEPHONE: SEC orders another dep't to probe Piltel ------------------------------------------------------------ The Securities and Exchange Commission (SEC) has ordered its=20 money market operations department (MMOD) to undertake a further=20 investigation into the violations by the ailing Pilipino=20 Telephone Corp. of SEC's rules of full disclosure and on=20 registration of securities. A top SEC official, who requested=20 anonymity, said the order came even after a three-man=20 investigative team has recommended the imposition of P50,000 fine=20 for each violation of the commission's rules. The team also=20 suggested additional daily fine of P500 counting from the date a=20 disclosure should have been made until the day of compliance. However, the SEC official supported the team's findings and=20 penalty recommendations. "I think that Piltel should be fined for=20 its failure to comply with our disclosure rules to be fair to=20 other errant companies."=20 Earlier, the SEC also ordered its prosecution and enforcement=20 department (PED) to undertake a separate investigation on=20 Piltel's possible misrepresentation on the disclosure reports it=20 filed with securities regulators. The PED was to look into the=20 contents of Piltel's disclosures whether these have fully=20 complied with the commission's requirements. The penalties were=20 for violations of the pertinent provisions of the Revised=20 Securities Act which, among others, requires the full and=20 accurate disclosure to the public of every material fact=20 affecting the trading of the shares of listed companies. The SEC examiners also discovered that Piltel failed to justify=20 the increase of its liabilities to P34.9 billion from P27.04=20 billion, its loss of P4.1 billion last year and the capital=20 infusion of P2 billion by its parent company Philippine Long=20 Distance Telephone Co. (Manila Times 23-Apr-1999) =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D S I N G A P O R E =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SUNRIGHT LTD: Sunright interim profit falls 83% ----------------------------------------------- Sunright Ltd yesterday reported an 83 per cent slide in net=20 earnings to $1 million for the six months to Jan 31, saying that=20 drastically reduced capital expenditures from Dynamic Random=20 Access Memory (DRAM) manufacturers resulted in excess testing=20 service capacity and delays in equipment orders for the group.=20 Contributions from associates helped cushioned the fall in=20 turnover and pre-tax profit, but Sunright directors blamed the=20 worse-than-expected global chip slump for its poor performance.=20 (Singapore Business Times 23-Apr-1999) =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D T H A I L A N D=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D BANCHANG: Delisted for not following guidelines ----------------------------------------------- The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers.=20 JULDIS DEVELOPMENT: Delisted for not following guidelines --------------------------------------------------------- The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers. (Business Day [Thailand] 23-Apr-1999) RAJDAMRI HOTEL: Goldman Sachs consortium trumps RGR Rajdamri bid=20 ---------------------------------------------------------------- The takeover war in Rajdamri Hotel (RHC) between Royal Garden=20 Resort (RGR) and a group led by Goldman Sachs (Asia) heats up as=20 Goldman Sachs (Asia) decided to make a countermove, raising its=20 tender offer price to a range between 38 and 43 baht. According=20 to the company's statement, the group led by Goldman Sachs will=20 offer 43 baht for each RHC shares if the tendered shares does not=20 exceed 15 percent of total share outstanding. If more than 15=20 percent of the total outstanding shares are tendered, each seller=20 will receive a weighted average price between 38 baht and 43 baht=20 per share depending on number of shares tendered.=20 Under RHC's shareholders structure, 32.3 percent is held by=20 Goldman Sachs (Asia), 24.72 percent by RGR, 15 percent by Thai=20 Farmers Bank and the Crown Property Bureau, and 28 percent by=20 retail shareholders.=20 Asset Plus Securities President & CEO Kongkiat Opaswongkarn said:=20 "In contrast to the competing offer from Royal Garden Resort, the=20 Goldman Sachs offer allows shareholders to both receive a higher=20 price for their shares and to sell as many shares as they want.=20 Royal Garden offer, however, is restricted to only 10 percent of=20 the company's shares." Asset Plus is the financial advisor of=20 Goldman Sachs, while Jardine Fleming Thanakom represented RGR.=20 "The maximum value of the Goldman Sachs offer is approximately=20 1.7 billion baht compared to around 189 million baht in the RGR's=20 offer," he said. Charn Issara Group Managing Director Songkran=20 Issara said: "This offer is consistent with the friendly=20 approach. We have taken all along to this investment,..., Goldman=20 Sachs and Bangkok Hotel Holding intend to work with the current=20 management team to further build shareholder value and we have no=20 intention of changing the management team." (Business Day=20 [Thailand] 23-Apr-1999) SIAM CITY CEMENT: Lenders favor SCCC's restructuring plan=20 --------------------------------------------------------- About 97 percent of creditors of Siam City Cement (SCCC) have=20 already approved the firm's $542 million debt restructuring plan.=20 The creditors gained confidence in the future of SCCC from the=20 fact thatSwitzerland-based Holderbank Financiere Glarus had=20 purchased a 25 percent stake in SCCC from the founding Ratanarak=20 family last year. According to Beat Malacarne, SCCC Senior Vice=20 President for Finance and Administration, the restructuring plan=20 asks for a grace period for debt payment from now until 2001. =20 SCCC expects to repay all its loans within 2006. About half of=20 the total debt is denominated in dollar term, 30 percent in yen,=20 and the rest in baht.=20 The interest rate to be charged during the debt restructuring=20 period will be based on the London Internbank Offered Rate=20 (LIBOR) plus 2.75 percentage points for dollar and yen loans,=20 while the lending rate on the baht-denominated loans will be=20 based on the average minimum lending rate (MLR) of the country's=20 top five banks.=20 SCCC's major creditors, including the Industrial Finance=20 Corporation (IFC), Citibank, Bank of Ayudhya, and Industrial=20 Finance Corporation of Thailand (IFCT), already endorsed the debt=20 restructuring plan, said Malacarne, adding that most of total 67=20 creditors are Japanese banks.=20 Malacarne said only part of the total $542 million will go under=20 the restructuring process. SCCC will initially reduce its debt to=20 $370 million, raising fund through a sale of new shares to=20 existing shareholders.=20 The fund will be mobilized through the issuance of 100 million=20 new shares priced at 60 baht apiece.=20 SCCC plans to allocate its cash-in-hand to pay debt with the=20 target to further reduce its liability to $280 million by the end=20 of this year, he said. "After the restructuring of the debt, SCCC=20 will be one of the best balance sheet firm in Thai cement=20 industry," said SCCC Managing Director Paul Heinz Hugentobler.=20 Holderbank in August last year acquired 24.99 percent in SCCC=20 from its founder, the Ratararak Family.=20 SCCC is under negotiation with investors to entirely offload its=20 50 percent stake in Gulf Electric, which owns 40 percent of an=20 independent power producer (IPP) project in the south of=20 Thailand. SCCC is also looking to sell its 20 percent interest in=20 its mining arm, Lanna Lignite, which is listed in the Stock=20 Exchange of Thailand as well. (Business Day [Thailand]=20 23-Apr-1999) STAR BLOCK: Delisted for not following guidelines ------------------------------------------------- The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers. (Business Day [Thailand] 23-Apr-1999) SUNSHINE: Delisted for inability to rehabilitate=20 ------------------------------------------------ The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. In the case of Sunshine, SET=20 President Singh Tangtatswas said the company's stock would be=20 delisted from the market because the SET realized its inability=20 to rehabilitate after being on the verge of removal since March=20 of 1997. "Sunshine has no clear rehabilitation plan, and its=20 financial position has worsened as seen by the 2.34 billion baht=20 accumulated loss and 1.49 billion baht loss in shareholders'=20 equity. Additionally, its business outlook continues to be poor,"=20 said Singh.=20 To provide an opportunity for retail shareholders to sell their=20 shares, their stocks will resume trading from April 29 to May 28=20 before being delisted. (Business Day [Thailand] 23-Apr-1999) THAI GRANITE: Delisted for not following guidelines --------------------------------------------------- The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers. (Business Day [Thailand] 23-Apr-1999) UNIVEST LAND: Delisted for not following guidelines --------------------------------------------------- The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers. (Business Day [Thailand] 23-Apr-1999) WATTACHAK: Delisted for not following guidelines ------------------------------------------------ The Stock Exchange of Thailand (SET) has decided to delist seven=20 stocks effective from June 1. They are Wattachak (WAT), Banchang=20 (BCHANG), Star Block (STAR), Univest Land (UNIVES), Juldis=20 Develop (JULDIS), Thai Granite (GRANIT) and Sunshine (SS).=20 SET President Singh Tangtatswas said the first six stocks would=20 be delisted because they had failed to submit their financial=20 statements since the first quarter of 1998. The six delisted=20 firms were the first companies to be removed from the bourse for=20 having not submitted their financial statements for four=20 consecutive quarters. It was noted that four of the six companies=20 were property developers. (Business Day [Thailand] 23-Apr-1999) S U B S C R I P T I O N I N F O R M A T I O N=20 Troubled Company Reporter -- Asia Pacific is a daily=20 newsletter co-published by Bankruptcy Creditors' Service,=20 Inc., Princeton, NJ USA, and Beard Group, Inc., Washington,=20 DC USA. Debra Brennan and Lexy Mueller, Editors. Copyright 1999. All rights reserved. ISSN: 1520-9482. =20 This material is copyrighted and any commercial use,=20 resale or publication in any form (including e-mail=20 forwarding, electronic re-mailing and photocopying) is=20 strictly prohibited without prior written permission of=20 the publishers. Information contained herein is obtained=20 from sources believed to be reliable, but is not=20 guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months=20 delivered via e-mail. Additional e-mail subscriptions for members=20 of the same firm for the term of the initial subscription or=20 balance thereof are $25 each. For subscription information,=20 contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *