/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/990827.MBX T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Friday, August 27, 1999, Vol. 2, No. 167 Headlines * C H I N A & H O N G K O N G * ASEAN RESOURCES: Posts annual loss CULTURECOM HOLDINGS: Annual loss more than doubles EASYKNIT DRAGONFIELD: Posts annual loss INT'L HOLDINGS: Posts annual loss HONKO INT'L HOLDINGS: Posts annual loss HUEY TAI INT'L: Posts annual loss MAANSHAN IRON AND STEEL: Posts annual loss PRICERITE GROUP: Posts second annual loss STONE GROUP: To shut down unprofitable units THEME INT'L HOLDINGS: Posts second annual loss TIANJIN BOHAI CHEMICAL: Posts first-half loss TYSAN HOLDINGS: Posts annual loss UDL CONTRACTING: Facing petition for winding up * I N D O N E S I A * BANK BALI: Shares to trade again after audit PT SEMEN CIBONONG: President denies claims of missing money * J A P A N * TOKYO TELEMESSAGE: Court okays starting rehab * K O R E A * DAEWOO GROUP: 12 units to be put under workout program KOREA LIFE: FSC moves to preempt share issuance to Panacom * T H A I L A N D * INTERNATIONAL ENGINEERING: SEC to act on loan nondisclosure KASET THAI SUGAR CO.: To start restructure talks KULTHORN KIRBY: Restructures Bt2.2 bn debts NAKHON SAWAN INDUS.CO.: To start restructure talks OCEAN FINANCE: Closed and placed in receivership OCEAN SECURITIES: UOB may scrap purchase plans THAI CAPITAL FINANCE: Dutch bank mulls bailout possibility THAI EKALAK SUGAR CO.: To start restructure talks THAI OIL CO.: Creditor banks expected to reject rehab plan ============================== C H I N A & H O N G K O N G ============================== ASEAN RESOURCES: Posts annual loss ---------------------------------- Asean Resources recorded a loss of $533.21M for the year ended March 31, compared with a profit of $1122.86M a year ago. Diluted loss per share was 43.52 cents, against earnings per share of 11.45 cents previously. CULTURECOM HOLDINGS: Annual loss more than doubles -------------------------------------------------- Publisher Culturecom Holdings saw its net loss widen to $179.64 million in the year ended March 31, due to huge provisions for the fall in value of properties and printing machinery. The company lost $75.62 million the previous year. Financial controller Cecil Cheung Wai-keung blamed the loss -- which came mainly in the shape of a $134.62 million exceptional item -- on provisions for revaluing fixed assets. "Since ViaGold bought the company, our company has been turning itself from a publishing into an information technology company," he said. "In order to truly reflect our business value, we revalued some of the properties and printing assets, and made a one-off provision." Another $35 million of the company's net loss was attributed to its newspaper-publishing arm Tin Tin Daily Publication Development, which ViaGold has agreed to buy for $6 million. The deal is expected to be completed before the end of next month, according to Mr Cheung. Turnover slumped 29.23 per cent to $218.67 million for the period. (South China Morning Post 26-Aug-1999) DRAGONFIELD: Posts annual loss ------------------------------ Dragonfield, the leather garment manufacturing group, reported net losses of $110M for the year to March 31, compared with net profits of $7.9M as recorded for the previous financial year. It recorded a turnover of $288,3M for the year ended March 31, representing a 44.3% drop from the same period last year. But the company posted operating losses of $41.5M for the same period compared with operating profits that it registered a year ago. EASYKNIT INT'L HOLDINGS: Posts annual loss ------------------------------------------ Easyknit International Holdings has been its losses widen to $1.36B in the year ended March 31 largely due to deficit arising on revaluation of investment properties and write- off of goodwill arising on acquisition of subsidiary companies in prior year. The company said its net current liabilities amounted to about $703.89M as at March 31. HONKO INT'L HOLDINGS: Posts annual loss --------------------------------------- Honko International Holdings has narrowed its losses to $66.39M in the year ended March 31 from $382.06M a year ago. No final dividend was paid, the same as a year earlier. Loss per share was 19 cents and operating loss amounted to $66.4M. Turnover fell 71.48% to $149.41M. HUEY TAI INT'L: Posts annual loss --------------------------------- Property investor Huey Tai International suffered an attributable loss of $676.93 million for the year ended March, compared with a profit of $19.87 million for the previous year. The result included an exceptional loss of $220.72 million derived from the deemed disposal of its interest in subsidiary Asean Resources Holdings as a result of Asean's placement of new shares last year. Huey Tai's operating loss amounted to $459.75 million against an operating profit of $14.83 million previously. Turnover plunged 70 per cent from $1.18 billion to $350.9 million. It reported a diluted loss per share of 43.26 cents against earnings per share of 1.34 cents previously. No final dividend will be paid. Asean Resources recorded a loss of $533.21 million for the year, compared with a profit of $122.86 million a year ago. Diluted loss per share was 43.52 cents, against earnings per share of 11.45 cents previously. No final dividend will be paid. Huey Tai's main income sources include property development and investment, property rental, and securities trading and investment. In the previous financial year, more than 50 per cent of the company's revenue came from property development and investment while stock trading incurred a loss of $175 million. (South China Morning Post 26-Aug-1999) MAANSHAN IRON AND STEEL: Posts annual loss ------------------------------------------ Maanshan Iron and Steel plunged into the red with a net loss of 59.04M yuan, compared with a net profit of 9.1M yuan a year ago, according to exchange data. Turnover declined 5.74% to 2.96B yuan. Basic earnings per share amounted to 0.91 cents. No interim dividend will be paid. PRICERITE GROUP: Posts second annual loss ----------------------------------------- Pricerite Group saw its loss widen to $16.16M in the year ended March 31 from $15.79M a year ago. No final dividend was paid, the same as last year. Loss per share was 7.6 cents. Operating loss amounted to 18.77M, while turnover fell 17.15% to $648.05M. STONE GROUP: To shut down unprofitable units -------------------------------------------- Stone Group, the mainland's largest non-state electronics company, will shut unprofitable units and focus on its core business to regain the high-technology lustre it lost a decade ago. Stone, which makes and sells everything from computer printers to energy-saving lamps, and invests in real estate and pharmaceuticals, said it would stop selling fax machines, photocopiers and telephones. It had already cut product lines to seven from 23 since 1996. "If our various business operations aren't among the top five in China in their fields, we are going to close them down," group president Duan Yongji said. Stone does not have much choice. Sales dropped 43 per cent last year to 3.45 billion yuan (about HK$3.21 billion) as economic growth slowed, crimping demand for big-ticket products. Stone is also looking to integrated systems to replace now-obsolete word processors as the core product that gave it market edge. Stone is also eyeing the Internet. It has a 13 per cent stake in service provider Sina.com and plans to sell shares for the first time, probably on the Nasdaq during the next year. (South China Morning Post 26-Aug-1999) THEME INT'L HOLDINGS: Posts second annual loss ---------------------------------------------- Struggling retailer Theme International Holdings saw net loss improve to $218.13 million for the year ended March from $806.62 million a year earlier after realigning operations in the mainland. The realignment saw the closure of five outlets in Taiwan and 13 in the mainland, sales of office spaces and overhead reduction of $222 million. The year-to-March net loss contained an exceptional loss of $50.45 million associated mostly with disposal of interest in pantyhose-maker Fitlady Investment Holdings. Turnover tumbled 69.78 per cent to $319.24 million. Operating loss narrowed to $166.75 million from $528.94 million. On March 31, the company retained five outlets in Hong Kong and Macau, 37 in Taiwan and 75 in the mainland. (South China Morning Post 26-Aug-1999) TIANJIN BOHAI CHEMICAL: Posts first-half loss --------------------------------------------- Tianjin Bohai Chemical Industry (Group) plunged into the red to the tune of 210.64 million yuan (about HK$195 million) in the first half of the year, compared with a net profit of 1.29 million yuan in the previous corresponding period. The results came after auditors cast doubt on its ability to continue operating after it revealed in May losses of 608.05 million yuan for last year. The result is the biggest loss reported by an H share for last year. One of the mainland's largest marine chemical producers, Tianjin Bohai was hit by falling product prices and a supply glut. Turnover rose 5.51 per cent to 1.34 billion yuan. Basic earnings per share were 15.84 fen. Directors decided against paying an interim dividend. (South China Morning Post 26-Aug-1999) TYSAN HOLDINGS: Posts annual loss --------------------------------- Tysan Holdings suffered a loss of $255.46 million in the year to March 31 due to $296.97 million in provisions against property, receivables and investments in associates. The company said it was the first time it had recorded a loss since the existing management took over in 1993. It recorded a profit of $27.12 million a year ago. Tysan said the sharp downturn in the property market and the stagnant construction industry last year had eroded or wiped out its profit on many projects. The value of its properties had also been adversely affected by the market decline, the company said. No final dividend was recommended. The firm's net asset value per share fell to 90 cents from $1.31 previously. It recorded an operating loss of $37.27 million, with turnover down 23.57 per cent to $1.07 billion. The group's cash flow remained healthy, while its gearing ratio stood at 36 per cent. (South China Morning Post 26-Aug-1999) UDL CONTRACTING: Facing petition for winding up ----------------------------------------------- The Construction Industry Training Authority has filed a winding up petition at the High Court against UDL Contracting, which is a wholly-owned subsidiary under listed UDL Holdings. UDL Holdings is mainly engaged in marine engineering and other related structural engineering business and it now faces a debt restructuring. For the six months ended Sept. 30, 1998, it recorded a net loss of $220.9M. ================= I N D O N E S I A ================= BANK BALI: Shares to trade again after audit -------------------------------------------- Trading of shares in the scandal tainted Bank Bali suspended by the Jakarta Stock Exchange (JSX) may be resumed after independent investigator PriceWaterhouse Cooper completes its auditing of the high profile scandal. The scandal that involves Rp546 billion (US$ 80 million) and has been linked to a number of government officials including cabinet ministers, has drawn comments from both the Internaitonal Monetary Fund and the World Bank expressing deep concern and disappointment. The two international bodies are deeply involve in the country's struggle for recovery from the prolonged crisis. JSX President Mas Ahmad Daniri said Bank Bali share trading would be resumed after ther is guarantee that the bank would survive the scandal triggered storms. Daniri said the share trading was suspended because of the absence of transparency in the case surrounding the bank , adding that JSX is waiting for disclosure information from the bank. He assured the investors, however, that under the present condition, the interest of the investors would not be hurt. He refused to predict when trading of Bank Bali shares would be resumed saying that JSX need clear information from the bank. He said the bank has promised to provide the necessary information in two weeks. (Asia Pulse 25- Aug-1999) PT SEMEN CIBONONG: President denies claims of missing money ----------------------------------------------------------- The president of PT Semen Cibonong Tbk (JSX:SMCB), Hasim Djojohadikusumo, has issued a denial over claims that about $ US250 million in company funds are unaccounted for. "I deem it necessary to set the record straight that there are no funds missing in the amount as widely reported in several overseas and domestic press media some time ago," Hashim told reporters here yesterday. However, the company since 1997 had placed funds as deposits in several overseas banks and had officially listed on the balance sheet in the company annual report. "Up to the end of June 1999, the value of the deposits have reached more than $ US250 million, including interest," he said, without mentioning the names of the banks abroad. Hashim said that in general banking practices, the overseas banks gave credit to several business groups including companies affiliated to PT Tirtamas Majutama. With the additional equity originating from these funds, affiliated companies could invest in Bank Niaga in 1997, when at the time Bank Niaga was the seventh-biggest private bank in Indonesia, with excellent business prospects, he said. "However, investment calculations which initially were considered feasible at Bank Niaga turned out to be miscalculated, thus causing us to endure heavy losses," Hasdhim said. The worsening political and economic conditions in Indonesia have resulted in big and small banks crumbling, including liquidity problems faced by Bank Niaga. This situation, in addition to the further weakening of the rupiah against US dollar, had caused affiliated companies with PT Tirtamas Majutama to fail, serving their debt commitments to the banks abroad, he said. Consequently, the overseas banks were also affected by the economic crisis and were suffering liquidity problems, causing company deposits unable to be drawn down for a short period of time. "Nonetheless, the companies continue to endeavour to get their deposits reinstated," Hashim said. (Asia Pulse 25- Aug-1999) ========= J A P A N ========= TOKYO TELEMESSAGE: Court okays starting rehab --------------------------------------------- Beeper operator Tokyo Telemessage Inc. said Tuesday that Tokyo District Court gave it the go-ahead to begin corporate rehabilitation procedures. Tokyo Telemessage went effectively bankrupt in May when it filed for court protection from creditors under the Corporate Rehabilitation Law, saddled with liabilities of 25 billion yen. The court appointed lawyer Kiyoshi Nakamura as rehabilitation program administrator and Japan Telecom Co. Chairman Koichi Sakata as business administrator. Tokyo Telemessage, the first to go insolvent among new common carriers, will rehabilitate under the lead of major shareholder Japan Telecom, also a new common carrier. Japan Telecom said in a written statement that it will continue supporting Tokyo Telemessage's rehabilitation, in cooperation with other major shareholders Mitsui and Co. and Tokyo Electric Power Co. The period for creditors to report claims ends on Oct. 8. The first gathering of parties concerned will be held on Oct. 22. (Jiji Press Ticker Service 24-Aug-1999) ========= K O R E A ========= DAEWOO GROUP: 12 units to be put under workout program ------------------------------------------------------ The main creditor of South Korea's Daewoo Group said on Thursday it had decided to put 12 Daewoo firms under a debt workout programme, a move viewed as the only realistic way to keep the companies from folding. The decision by Korea First Bank, apparently made after consultation with other major Daewoo creditors, was to be endorsed at an expanded creditors' meeting on Thursday evening. The head of the country's financial markets regulator confirmed Daewoo creditors were meeting on Thursday to discuss the workout plan, but declined to elaborate. "Creditors will hold a meeting at six o'clock in the afternoon (0900 GMT) but I don't know whether creditors will agree on the workout plan," Financial Supervisory Commission Chairman Lee Hun-jai told reporters. The Korea First official said earlier that carmaker Daewoo Motor Co, trading and construction firm Daewoo Corp, home electronics maker Daewoo Electronics Co and nine other Daewoo firms would be put under debt workout programmes. Local financial markets had anticipated the move for most of the day. The stock market took a hit on the news but analysts said the decision would over the medium- to long- term have a positive influence on the market. "It will be a good news for the market, although financial companies may see their stocks falling at first," said Shim Choong-bo, chief strategist at Daishin Securities. The Korea Composite Stock Price Index closed down 0.32 percent or 3.12 points at 959.8 points after staying in positive territory for most of the day before the news came out. "Daewoo's debt workout news dealt a blow to financial shares and pulled down the market in general," said Park Hyo-jin, an analyst at Shinhan Securities. "It's particularly bad for banks and securities firms that hold Daewoo's debts since the debts would be frozen." Under the package, to be adopted in the form of a voluntary agreement among creditor financial institutions, creditors would take over managerial control of each company and immediately freeze debt payments for several months, he said. Foreign creditors of the ailing business conglomerate would not be called to the meeting because they are not members of an earlier agreement on which the debt workout programme was based. But creditors were expected to exclude Daewoo Securities Co., the group's cash cow and the nation's largest brokerage house, from undergoing a workout program. In a separate meeting yesterday, six creditor banks agreed to buy Daewoo's stake in the securities firm. A workout program usually involves a temporary freeze on the debts of a company while its creditor banks provide it with operational funds. Debt rescheduling or write-offs can be granted as well. Creditor bank officials said that a three-month freeze will be imposed on the debts of Daewoo units to be placed under rehabilitation programs. Domestic creditors also discussed whether to provide 2 to 3 trillion won in fresh loans to the crippled conglomerate to help overcome its credit crisis. Meanwhile, Daewoo's foreign creditors, who met yesterday to discuss the group's debt problem, reportedly opposed the domestic creditors' plan to place its units under workouts. The move by domestic creditors comes as Daewoo subsidiaries are in a serious financial fix because financial institutions are refusing to accept their promissory notes and are pressing them to repay debts. Last week, the Daewoo Group and its creditors agreed to reduce the conglomerate's units to six auto-related businesses, while spinning off and selling the remaining 19 units by the end of this year. Daewoo's debts to local financial institutions break down into 30.7 trillion won in outstanding bonds and commercial paper and 12.6 trillion won in borrowing from banks and non-bank financial firms. Collapsing under the weight of debts amounting to about 60 trillion won, Daewoo sought a bailout from its creditor banks July 19, which have already thrown it a life-line loan of nearly 4 trillion won. Foreign creditors were to meet separately on Friday with Daewoo officials, who last week asked them to refrain from calling in loans or taking legal action. Daewoo Group Chairman Kim Woo-choong on Wednesday asked President Kim Dae-jung to take swift measures to keep the group's affiliates from folding before the group's revival efforts pay off, according to a presidential office statement. Chairman Kim was attending a meeting between President Kim, his ministers, top business conglomerate owners and creditor financial institutions to reaffirm that restructuring plans by conglomerates should be completed in a swift manner. The country's second-largest conglomerate is suffering from a severe liquidity crunch after piling up some 57 trillion won ($47.6 billion) in debt, much of it short-term. (Reuters, NewsHound; Korea Times; Digital ChosunIlbo 26-Aug-1999; Korea Herald 27-Aug-1999) KOREA LIFE: FSC moves to preempt share issuance to Panacom ---------------------------------------------------------- The Financial Supervisory Commission (FSC) announced Thursday that it has filed a request with the Seoul district court for a temporary court injunction against Korea Life's move to issue 10 million new shares to U.S. investment firm Panacom. The American firm has committed itself to making an investment worth several billions of dollars into the Korean life insurance company, which has been under court supervision due to its near bankruptcy. The government had earlier announced that it would reduce to nil the outstanding shares of the ailing life insurance firm so that the government could inject state funds in order to normalize its operations as early as possible. Choi Soon-young, the major shareholder of Korea Life, however, bucked the idea of the government fund injection in a desperate move to hold on to his shares. The Korea Life chair, now in custody for misappropriation of company funds, was known to have approached Panacom for rescue funds. (Digital ChosunIlbo 26-Aug-1999) =============== T H A I L A N D =============== INTERNATIONAL ENGINEERING: SEC to act on loan nondisclosure ----------------------------------------------------------- The Securities and Exchange Commission is considering action against International Engineering Plc (IEC) on charges that it did not disclose information on its guarantee worth more than 1.2 billion baht for loans borrowed by its affiliates, M Group Plc and another subsidiary from the Krung Thai Bank. A 40-million-baht guarantee was provided on January 4, 1995, and another 1.198 billion baht on April 30, 1996, but the SEC was not aware of the deals until recently when an investor lodged a complaint with the authorities. A preliminary investigation by the SEC found significant grounds to support the complaint. The SEC therefore ordered IEC to disclose the information to the public and also clarify why it did not inform investors in due course, according to Nataya Niyomanusorn, the assistant director of the SEC's secretary-general office. If the company could not produce an acceptable explanation for its failure to disclose the guarantee deals to the public, it could be fined 100,000 baht plus 8.72 million baht in daily fines accumulative from the day it was supposed to disclose the information. IEC submitted a letter to the Stock Exchange of Thailand on Monday, disclosing the two deals, but did not submit any clarification of why it did not disclose the deals in due course, saying it needed time to gather the necessary information and would later submit it to the SET. In the letter, signed by its president Suradet Mukyangkoon, the company said it had provided guarantees for M Group Plc's 1.198 billion baht loan on April 30, 1996, and for a 40-million-baht loan by Micronetic Plc, its 90% owned subsidiary, on January 4, 1995. It said the loan of 1.198 billion baht had two more co-guarantors, namely Sondhi Limthongkul, chairman of the M Group; and Manager Media Group Plc, the parent company of both IEC and the M Group. Manager Media Group owns the M Group, and is the largest shareholder in IEC, holding 16.41% of shares. The M Group itself had pledged land and property in various locations in Bangkok worth altogether 632 million baht, as well as 40 million shares of Asia Broadcasting and Communication Network Ltd, also a subsidiary of the Manager Media Group, which were worth around one billion baht at that time, as collateral with Krung Thai Bank. IEC itself is also in financial trouble and it cannot service its US$40 million debt owed to 12 creditors. In February this year, seven of its creditors jointly filed a lawsuit with the Central Intellectual Property and International Trade Court, demanding the company repay debts owed to them. The seven creditors are Societe Generale's Bangkok International Banking Facilities, Chia Tung Bank, WestLB Asia Pacific Ltd, Hua Nan Commercial Bank, Nippon Credit Bank, the Industrial Bank of Japan and the Long-Term Credit Bank of Japan. However, the company said the suits filed by the seven creditors will not affect the company's effort to ask the creditors to restructure its loans. It has asked the creditors to reduce the company's interest burden and also allow it to reschedule its loan payments by five to eight years. (Bangkok Post 26-Aug-1999) KASET THAI SUGAR CO.: To start restructure talks NAKHON SAWAN INDUS.CO.: To start restructure talks THAI EKALAK SUGAR CO.: To start restructure talks ------------------------------------------------------- Executives of three controversy-tainted sugar mills in Nakhon Sawan are scheduled to start talks with their creditors early next month to restructure 20 billion baht in loans. But the talks could falter due to the objections of one creditor owed a mere 150,000 baht. A key element of the plan is that the three mills -- Kaset Thai Sugar Co, Thai Ekalak Sugar Co and Nakhon Sawan Industrial Co -- would have to write down their shares to one satang each. Creditors would then convert about one billion baht of the total debt into equity. However Emfield Ltd Part, which lent 150,000 baht to the three mills and also holds some Thai Ekalak shares, said it would sue the three mills' managers and creditor banks if the write-down was approved. It claimed the plan would adversely affect its loans and also its shareholding. The restructuring proposal has been drawn up by South Sathorn Planner. An Australian auditor with the company, Michael Wansley, was shot dead on March 10 in Nakhon Sawan. His murder was believed to have been connected to his discovery of irregularities on the books of Kaset Thai Sugar Co. Three executives of the mill-Pradit Siriviriyakul, the major shareholder; Boonphan Sitthiwiriwan, the human resources manager; and Somchote Sitthiwiriwan, his brother-have been charged with masterminding the murder. They deny the charges. Kaset Thai Sugar owed its creditors 6.8 billion baht directly, and was also responsible for guarantees of 2.7 billion. Thai Ekalak Sugar owed 3.6 billion baht in loans and 2.3 billion in guarantee commitments. Nakhon Sawan Industrial owed 3.8 billion baht in loans and 1.04 billion in guarantees. An executive of South Sathorn Planner, who asked not to be named, said the capital write-down to one satang was critical. "Without this element, the creditors would not agree to convert their debt into equity in the mills, because their shares are currently worth nothing." If the write-down was agreed to, then the creditors would convert one billion baht in debt into equity at the ratio of one satang for one share. The shares would be sold back to the existing owners after the three mills repaid all their debts. The remaining loans would be divided into four portions. The first portion, equivalent to 2.17 billion baht, would be repaid by using cash from the sales of the three mills' sugar stocks. The repayment would be made after the court approved the debt restructuring plan. The second portion would be equivalent to 6.85 billion baht. A new company would be set up to purchase sugar from the three mills, and it would transfer the money as loan repayments to the creditors. The repayment period would be 10 years, payable every three months, starting in June next year. The third portion would amount to 5.59 billion baht. The three mills had to transfer all cash left over from the repayment of the second portion to the creditors as repayment for this portion. They would also be required to sell its assets the settle the repayment. However, the creditors agreed not to charge interest on this portion, repayable over 10 years. The last portion would be amount to 916 million baht plus guarantee commitments. The creditors would allow the three mills to settle the repayment of this portion after the settlement of other repayments. (Bangkok Post 26-Aug-1999) KULTHORN KIRBY: Restructures Bt2.2 bn debts ------------------------------------------- Kulthorn Kirby Plc (KKC), a compressor manufacturer and exporter, has successfully restructured Bt2.2 billion debts with its 12 local and foreign bank creditors, according to a high-ranking source at the company. Of the total debts, nearly Bt500 million will be paid up- front, and another Bt500 million will come under a five- year grace period before being converted into five-year convertibles in the sixth year. Under the plan, a Bt300- million loan will remain the company's working capital for nine years. The loan will carry 1.25 per cent on the top of Singapore Interbank Offered Rate (Sibor) for the US dollar tranche and minimum overdraft rate or minimum lending rate of large-sized banks for the Thai baht portion. In addition, Bt900 million debts will be extended to 10- year term loans with a grace period of one to two years, and later, the loans will be charged interest at the rate of 6 per cent for the dollar tranche and 8 per cent for the Thai baht portion. The source said the up-front payment will come from the sale of 15 million rights issues at a price of Bt10 apiece and liquidation of its Bt280 million investment in two unnamed affiliates. "We expect that all shareholders will subscribe to the right issues," said the source but declined to explain how the sale will be achieved. A compressor producer and supplier of Mitsubishi Heavy Industry Co, Thai Compressor Co Ltd, is one among several affiliates of KKC with a 20 per cent stake. KKC share price before being suspended by the Stock Exchange of Thailand (SET) stood at Bt2. Its shares were suspended early this year as the company is likely to be delisted after its shareholders' equity plunged into negative territory. The company also plans to launch a private placement of another 25 million new shares in the future. Totally, the 35 million new shares will boost its capital to Bt500 million from Bt150 million. As part of the debt restructuring deal, KKC must convert its loans into its wholly-owned subsidiary Kulthorn Kirby Foundry Co Ltd's equity to maintain its ownership. KKC's subsidiary is on the way to raise its capital base from Bt140 million to Bt242 million. The source said KKC's financial position would be strengthened after this because the restructuring will reduce its interest burden from Bt20-30 million a month to Bt10 million monthly. KKC fell into the financial crisis because most of its loans are short-term and denominated in foreign currencies and as a result, it has failed to service its debts since September 1998. It posted a net loss of Bt146.58 million for the first half of this year against a net profit of Bt29.63 million over the same period last year. (The Nation 26-Aug-1999) OCEAN FINANCE: Closed and placed in receivership ------------------------------------------------ Regulators ordered Ocean Finance closed and placed in receivership yesterday after plans by the firm to raise new capital had collapsed. Tarisa Watanagase, assistant governor of the Bank of Thailand, said Ocean's operating licence was cancelled yesterday. Regulators said Ocean Finance, short of 400 million baht in capital funds, was ineligible to request state capital assistance under last August's financial restructuring programme. Ocean Finance has assets of 4.2 billion baht, with registered capital of 700 million and deposits of three billion baht. Non-performing loans at the company total 88% of outstanding loans. Supachai Pisitvanich, finance permanent secretary, said the decision to close Ocean Finance was approved by the finance minister on Tuesday. Official receivers were sent to the company to manage remaining assets. Mr Supachai said depositors would be fully repaid within 30 days. "Several opportunities were given for the firm to raise new capital. But, in the end, its financial position became untenable, leading to the decision to close the firm," he said. The central bank said the closure of the small, unlisted firm was unlikely to have any significant impact on the country's financial system. Ocean Finance had been negotiating with prospective foreign partners to raise new capital. The central bank said depositors with Ocean would be repaid. For deposits of less than three months, the rate would be as stipulated when the funds were lodged. For longer-term deposits, the rates would be based on average bank deposit benchmark rates plus six percentage points. Eligible creditors will be repaid principal in full by the Financial Institutions Development Fund. Interest will be paid to a maximum based on the minimum lending rates minus four percentage points, or about 4.5-5.5%. Creditors not covered by the official guarantee, such as subordinated debt holders, will be paid from proceeds after all assets are liquidated. Depositors and creditors must submit claims by November 24. Central bank officials will be present at Ocean Finance headquarters to help process claims. Questions can be directed to officials at Ocean Finance at 234-7500-4, ext. 784, or at the Bank of Thailand, 283-5962. More than 70 finance companies and credit fonciers and six commercial banks have been ordered closed over the past two years by regulators. (Bangkok Post 26-Aug-1999) OCEAN SECURITIES: UOB may scrap purchase plans ---------------------------------------------- The Overseas Union Bank (UOB), one of the four biggest banks in Singapore, may have to scrap its deal to acquire Ocean Securities for 600 million baht as the Bank of Thailand (BOT) recently closed down Ocean Finance which is the sole owner of its securities unit, according to a company source. The source added that the closure will cause a shift in majority holding of Ocean Finance from the Asakul family to the Financial Institutions Development Fund (FIDF) which lent it over 1 billion baht. This in turn would automatically cause a change in the shareholder structure of Ocean Securities as the securities unit was entirely owned by the closed down Ocean Finance. The source noted that the FIDF which is now the majority stakeholder in Ocean Securities will hold an auction to sell the securities in a bid to receive the best price and create transparency. The Overseas Union Bank has long conducted negotiation to acquire Ocean Securities which belong to the major shareholder, the Asakul family, waiting only to be approved by the Bank of Thailand (BOT). The Overseas Union Bank had once expressed an interest in buying a stake in Nakornthon Bank (NTB) before authorities intervened. BOT Assistant to the Governor Thairsa Wattanakesa said that Ocean Finance's balance sheet ending June 30, 1999 showed that its total assets exceeded 4.2 billion baht. Its non-performing loans accounted for 80 percent of outstanding loans. The company's deposits amounted to 3 billion baht from 800 accounts. (Business Day 26-Aug-1999) THAI CAPITAL FINANCE: Dutch bank mulls bailout possibility ---------------------------------------------------------- Rabobank Nederland plans to buy control of ailing Thai Capital Finance & Securities, as long as the Government provides matching funds from its finance industry rescue program, the central bank said. Thai Capital will join such firms as Tisco Finance, Siam Commercial Bank and SG Asia Credit to receive a joint bailout from foreign investors and the Government, said Tarisa Watanagase, an assistant governor at the Bank of Thailand. "Negotiations should be concluded soon," Tarisa said. Rabobank executives were not immediately available for comment. The capital injection by the Netherlands' third-largest bank will be about 2 billion baht (US$52 million), a local newspaper reported yesterday citing Supachai Pisitvanich, permanent secretary at the Finance Ministry. Rabobank currently has only a representative office in Bangkok, which is not allowed to take deposits or make loans. Thai Capital was one of four non-bank lenders whose capital was below the Thai regulatory minimum as of June 30, Tarisa said. The central bank shuttered two thirds of the country's finance companies in the past two years because they could not attract investment to put their balance sheets in order. Thai Capital survived the earlier rounds of closure. The company has found other uses. In December, the central bank filed criminal charges against the company and four executives for falsifying documents to obtain emergency loans from the central bank. (Business Day 26- Aug-1999) THAI OIL CO.: Creditor banks expected to reject rehab plan ---------------------------------------------------------- Creditor banks are expected to reject the Thai government's proposed US$2.2 billion debt-restructuring plan for Thai Oil Co, arguing that a provision of partial debt forgiveness, generally known as a haircut, is unacceptable, said a top Japanese banker. The Thai Cabinet on Tuesday approved the Thaioil plan submitted by Industry Minister Suwat Liptapanlop, which includes a US$350 million injection of fresh capital to aid the recapitalisation of the refinery by the state-owned Petroleum Authority of Thailand (PTT). But the Japanese banker who asked not to be identified told The Nation that neither Japanese or other banks would agree to the debt- restructuring proposal for Thaioil. The most unacceptable condition is the proposal for the banks to take a loss or a haircut which he described as "the biggest sin" from the bankers' point of view. "Khun Suwat is going to lose face. More than 50 per cent of the creditors will not approve it," said the banker. A PTT source said Thaioil's debt-restructuring proposal already reflects a positive intention by PTT to keep business ties with the Japanese banks. "Considering the 'clean loan' status of Thaioil, this means shareholders like PTT could simply walk away from Thaioil. But we have still proposed to provide US$350 million, which is significant money to assist Thaioil," said the source. The PTT executive said the plan will ask for "only" a 20- per-cent haircut by the banks to lower interest charges on the remaining loans to below the market rate in a bid to suit Thaioil's projected cash flow position. The banks would not get a full or immediate impact from the haircut, because it would be spread along with the new repayment terms that Thaioil proposes, which includes asking banks to extend the term to up to 15 years, he said. The 20-per-cent haircut figure provided by the PTT official did not include the debt buy-back option which he said would be offered only on a voluntary basis. According to the proposal, the US$350 million capital injection from PTT would be used to repay loans extended from the lenders who would agree to a debt reduction. This option is aimed at small lenders or some financial institutions, which due to the economic crisis or merger and acquisition, no longer exist. But the Japanese banker said that the Thai government should take more responsibility for Thaioil's problem because the company is perceived as a national refinery, though he acknowledged the fact that Thaioil is legally not a state enterprise as the government owns less than half of the firm. "That is the accusation. Thaioil has government identity. It has been managed and run by the PTT," he said. The banker also warned that the mishandling of Thaioil's debt restructuring could produce an ''indirect'' impact on Thailand since foreign banks may lose confidence and stay away from the country. Despite the obvious opposition from Japanese banks which together hold about 41 per cent of Thaioil's debts, the PTT source said he still believes that the plan would finally get approval from a majority of the banks. He said Thaioil recently decided to go through the process of the Bank of Thailand's Corporate Debt Restructuring Advisory Committee (CDRAC), which provides a limited timetable for stakeholders to conclude their debt- restructuring agreement in its bid to force the creditors to speed up decisions. Under the CDRAC process, if the creditors cannot agree to the debt-restructuring plan within a certain time-frame they have to file a lawsuit against the company. PTT knows the banks would not prefer to take over Thaioil, taking into account the state of the oil market and the lack of potential bidders for such an operation. But the Japanese banker countered that considering the nationalistic sentiments it would be politically suicidal for the government to allow foreign banks to seize control of the oil refinery. Chase Manhattan Bank and the Bank of Tokyo-Mitsubishi are the co-chairmen of the steering committee representing the 124 creditors. On the other hand, Chase is also the adviser on Thaioil's side. According to a Cabinet document, Thaioil's debt-restructuring proposal includes a US$350- million debt to equity conversion by the creditors and the injection of new money worth US$350 million by PTT, the process which would make the banks and PTT own 49.99 per cent each in the refinery. At present PTT has a 49-per-cent interest in Thaioil which has a low equity base of only Bt20 million. Thaioil also plans to sell its shares in four subsidiaries to assist the debt-reduction plan. (The Nation 26-Aug-1999) 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. 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 $575 for 6 months 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. 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