TCRAP_Public/990907.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

    Tuesday, September 7, 1999, Vol. 2, No. 173


* C H I N A  &  H O N G  K O N G *

BEIJING CEMENT: Signs debt-restructuring agreement
RESOURCES: Posts first-half loss
PILKINGTON GLASS: Shares transfer part of restructuring

* I N D O N E S I A *

PT MAS MURNI INDONESIA: In legal fix for missing deadline
PT PUTRA SURYA MULTIDANA: In legal fix for missing deadline
PT PUTRA SURYA PERKASA: In legal fix for missing deadline
PT TIMOR PUTRAL NASIONAL: House members oppose dissolution

* J A P A N *

CREDIT SUISSE BANK: Bank pays $31M tax penalty

* K O R E A *

DAEWOO GROUP: Foreign bank sues, seizes 60,000 cars
DAEWOO GROUP: Facing fines for in-house trading
HYUNDAI GROUP: Facing fines for in-house trading
HYUNDAI GROUP: Four more units implicated in scandal
HYUNDAI GROUP: Debts soar to 69 trillion won
KOREA LIFE: FSC gives 7 days to submit rehab plan
LG GROUP: Facing fines for in-house trading
SAMSUNG GROUP: Facing fines for in-house trading
SEOUL BANK: Government declares it insolvent
SK GROUP: Facing fines for in-house trading

* M A L A Y S I A *

FABER GROUP: Gets standstill agmt, working on restructure
HUME INDUSTRIES BHD: Dissolves two of its units
PILECON ENGINEERING: Reprimanded and fined
SANDA INDUSTRIES BHD: To settle subsidiary's debt

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

MONDRAGON LEISURE AND RESORT: Creditors reject rehab plan

* S I N G A P O R E *

FALMAC: Posts first-half loss

* T H A I L A N D *

NAKORNTHON BANK: It's confirmed - Stanchart the buyer
QUALITY HOUSES: Creditors accept debt plan
RADANASIN BANK: Buyer found, to be announced next week
SIAM CEMENT: To sell shares to pay debt
THAI FARMERS BANK: Phatra Thanakit to get only Bt4.5 bil.
THAI FARMERS BANK: Destined for new management team

C H I N A  &  H O N G  K O N G

BEIJING CEMENT: Signs debt-restructuring agreement
China Cinda Asset Management, charged with reducing the bad
loans in China Construction Bank's portfolio, has signed
its first debt-restructuring agreement with a borrower,
Beijing Cement Plant.

The agreement involves 900 million yuan (HK$844.29 million)
debt owed to China Construction Bank, one of the mainland's
four main state-owned lenders, a Cinda official said
yesterday.  An undisclosed proportion of that debt is
expected to be swapped for equity, and Cinda will assume
the debt in return for a stake in the bank, the official

Cinda may later list the shares, sell the equity to the
company or a third party, according to the general
principles for debt-equity swaps reported in the mainland
press.  Cinda and Beijing Cement have been working on the
debt-equity swap since late May, in what state media have
touted as a pilot project for similar deals in the future.
According to some local reports, mainland lenders could
eventually convert up to 300 billion yuan of bad debt into

Some observers have questioned the effectiveness of this
solution because it allows state-owned companies to rid
themselves of debt without actually paying any money.
Still, swaps are expected to play an important role for
asset-management companies soon to be established for other

Bank of China plans to set up its own asset-management firm
before the end of this month. State banks Industrial and
Commercial Bank of China and Agricultural Bank of China are
expected to follow suit soon.  (Bloomberg, Hong Kong
Standard  03-Sep-1999)

MAGICIAN INDUSTRIES: In restructuring talks                
Debt-ridden plastic and metal household products maker,
Magician Industries (Holdings) is in talks with creditor
banks to restructure $210 million of debt.

The company is selling a majority interest in its plastic
packaging materials arm to fund operations.  Financial
controller Jason Lee said the company had been "overly
optimistic on (its) turnover growth estimation" before it
embarked on its expansion plan. "We have therefore over-
expanded our production capacity, both in plant and
machinery," he added.

The company has entered into a legally binding agreement to
sell its 54 per cent stake in Great East Packaging Holdings
for $50 million, much lower than its net asset value of
about $190.8 million as of March 31, last year.  Great East
accounted for 15.2 per cent of the group's total turnover
in the last financial year.

The sale, subject to creditor banks approval, will result
in a $71 million provision for the fall of Great East's
value in the accounts for the year to March 31.  Mr Lee
said Magician had also sold properties recently to raise
about $20 million.

"Proceeds from both sales will be used to boost working
capital," he said, adding the company was negotiating with
banks on a formal debt repayment standstill and
rescheduling agreement.

Magician also said it was in talks with potential investors
about possible fund-raising.  The group, excluding Great
East, had total bank borrowings of about $372 million as of
July 31, of which about $366 million was repayable within a
year.  (South China Morning Post  03-Sep-1999)

MANDARIN RESOURCES: Posts first-half loss
With an exceptional loss of $1.03M, Mandarin Resources
recorded a $6.8M net loss for the six months to Dec. 31,
1998.  An operating loss of $3.28M was recorded during the
period on a 58.46% slide in turnover to $92.56M.

PILKINGTON GLASS: Shares transfer part of restructuring
Shanghai Yaohua Pilkington Glass said yesterday one of its
major shareholders had transferred a 16.7 per cent stake in
the listed entity to another firm free of charge.

China Building Materials Technology Equipment transferred
81.40 million institutional shares it owned in Yaohua
Pilkington to China Inorganic Materials Technology
Industry, Yaohua said in a statement published in the
Shanghai Securities News.

China Inorganic Materials became one of Yaohua's biggest
shareholders after the transfer, the statement said.
Both companies in the asset transfer are state-owned and
the move was aimed at paving the way for Yaohua Pilkington
to restructure its assets, it said.

The statement gave no further details and company officials
declined to elaborate on Yaohua's possible asset
restructuring.  Yaohua Pilkington, a Sino-British joint
venture that produces glass products, has both hard
currency B shares and domestic A shares listed on the
Shanghai stock exchange.  Britain's Pilkington has 8.35 a
per cent stake in the Shanghai-listed company.

Shanghai Yaohua saw its results deteriorated sharply in the
past few years due to fierce competition in China's glass
market.  It recorded net profits of 16.91 million yuan
(HK$15.8 million) last year, down sharply against 38.63
million yuan in 1997.  (Reuters, Hong Kong Standard  04-


PT MAS MURNI INDONESIA: In legal fix for missing deadline
PT PUTRA SURYA MULTIDANA: In legal fix for missing deadline
PT PUTRA SURYA PERKASA: In legal fix for missing deadline
The Indonesian Bank Restructuring Agency (IBRA) announced
that three firms have failed to meet debt restructuring
deadlines and now face legal action as a result.

The three companies in question are property firm PT Putra
Surya Perkasa with debts amounting to Rp1.03 trillion ($
US0.15 billion) and $ US35 million, finance firm PT Putra
Surya Multidana with debts of Rp1.54 trillion, and hotel
and partment firm PT Mas Murni Indonesia with debts of
Rp122.3 billion and $US24.10 million. Their deadline was
August 31.

"There are four options with regard to firms failing to
meet their deadline, including filing bankruptcy suits,
taking action according to bank regulations and taking the
case to court via the state auction agency," Eko S  
Budianto, deputy chairman of IBRA, told the Indonesian

IBRA said another 89 firms have been allowed an extra month
to meet debt restructuring requirements. The new deadline
for those firms is September 30.  The agency also said that
it has made further progress in the restructuring of Rp47
trillion in the debts of 63 large corporate debtors, 32% of
its current Rp150 trillion debt portfolio.

"The 63 companies represent 3.7% of 1,689 debtors with
outstanding amounts of more than Rp5 billion per obligor,"
he said, adding that the 63 debtors were mostly from the
petrochemical industry (23%).

The others are from the trade sector, including holding
companies (14%); automotive (12%); property (11%); and toll
roads (7%).  Eko said the listed cement maker PT Semen
Cibinong, PT Bimantara Citra and PT Bakrie & Brothers were
among the 63 companies in the restructuring progress.

"Nineteen of the 63 companies are in the negotiation stage
with IBRA, while another 10 have submitted business plans
and restructuring proposals. The other 34 are still under
due dilligence," Eko said.

The remaining corporate debtors are in the process of
inter-creditor discussion, financial audit, appointment of
financial advisors, and formulating the restructuring
proposal.  (Asia Pulse  02-Sep-1999)

PT TIMOR PUTRAL NASIONAL: House members oppose dissolution
A number of House members have said automaker PT Timor
Putra Nasional (TPN) should not be dissolved, as this would
only harm Indonesia in facing Asean free trade area (AFTA)
scheme in 2002.

Indonesia constitutes the largest automotive market in
Asia, and for this reson TPN must not be dissolved merely
for political reasons. This was the conclusion of a number
of House Commission members at the close of an on the
spot visit of Timor's assembly plant in Krawang, West Java
yesterday.  Members felt that in order to face AFTA in
2002, Indonesia must create an automotive industry starting
now, if it does not want to be overrun by oether

"By 2002, all foreign automotive industries can enter
Indonesia without any barriers in terms of tariffs and
taxes. Indonesia with a population of more than 200 million
becomes a potential and profitable market for overseas
automotive products. Are we satisfied by just importing
cars?" they inquired.

One of the members, Oedyanto, asked if TPN were considered
to have tax arrears with the government, whether it would
be possible to reschedule the payment. Later when TPN was
operational, unpaid taxes could be collected.

"If company debts can be restructured, why should TPN debts
be hampered?" he said.

He further hoped that a solution of the TPN problem must be
taken as objective as possible, and should not be related
to politics, since TPN ws owned by Tommy Soeharto (former
President Soeharto's youngest son).

"If from serious study and analysis TPN turned out to be
unlikely to survive, then we had better kill it right away.
But if there is still a chance and good prospects, why
should it not be maintained, without linking it to
political considerations?" they said.  (Asia Pulse  02-Sep-


CREDIT SUISSE BANK: Bank pays $31M tax penalty
Credit Suisse Trust Bank has been forced to pay two billion
yen (S$30.8 million) of back tax and penalties to the Tokyo
tax bureau after an inspection found that the group had
under-reported its Japanese profits between 1996 and 1998.

CS refused to comment on the details of the case, the first
high-profile tax penalty imposed on a foreign bank. It said
it had settled the tax problem in July and denied that the
case was connected to an inspection by the Financial
Supervisory Agency, Japan's banking watchdog, into the
group.  (Financial Times, Straits Times  04-Sep-1999)


DAEWOO GROUP: Foreign bank sues, seizes 60,000 cars
Bank Brussels Lambert, the second largest financial concern
in Belgium, has filed a lawsuit against Daewoo Group to
secure the repayment of its $10 million loan to the group's
overseas motor sales firm.  The Belgian bank seized 60,000
Daewoo cars in lieu of its loans Daewoo Motor Sales Europe,
after the company had failed to repay the principal amount
of the debt.

This is the second confirmed case of foreign creditors
taking legal action against the troubled conglomerate in a
bid to secure debt repayments.  The first legal action was
taken by French Netexis Banques Populaires against Daewoo's
overseas subsidiary in Hong Kong for the amount of $10
million on July 17.

The Financial Supervisory Commission, an organization
overseeing Daewoo's corporate restructuring, said that it
has no intention of repaying the group's overseas debts for
the time being.  The FSC added that the government will
decide upon appropriate policies after hearing the final
outcome of the lawsuits.

Despite the government's efforts to convince Daewoo's
foreign creditors to comply with the creditor-led forced
restructuring plan, a number of banks have already taken
legal action against Korea's second largest chaebol in a
bid to secure debt repayments, according to a foreign
banking source in Seoul.

The major European creditor bank of Daewoo said that more
than 10 banks have now taken legal steps over the group's
inability to repay its overseas debts.  Amid Daewoo's slow
recovery, the FSC decided to put 12 major subsidiaries of
the group under immediate "corporate workout" schemes.
Daewoo firms are now undergoing debt for equity swaps, debt
rescheduling and reductions, resulting in losses to
creditor banks as well as to major shareholders of the

However Daewoo's 240-plus foreign creditors have not
endorsed the government's one-sided decision, saying the
international banking community is not prepared to share
losses resulting from the forced restructuring process.
(Korea Times  03-Sep-1999)

DAEWOO GROUP: Facing fines for in-house trading
HYUNDAI GROUP: Facing fines for in-house trading
LG GROUP: Facing fines for in-house trading
SAMSUNG GROUP: Facing fines for in-house trading
SK GROUP: Facing fines for in-house trading
The government is expected to impose fines of the heaviest
amount ever on the top five chaebol for alleged in-house

According to officials of the Fair Trade Commission (FTC),
state trust busters, yesterday, the five conglomerates were
found to have cross-subsidized among affiliates to the tune
of a record 8 trillion won in its ongoing third probe.

"The FTC plenary session will convene soon to decide on the
amount of fines," an FTC official said. "However, the
amount of fines will likely be the largest ever."

Thus far, the largest fines the FTC has ever imposed on the
top five amounted to 70.4 billion won following the wrap-up
of its first probe into chaebol subsidization, which found
Hyundai, Daewoo, Samsung, LG and SK provided 4 trillion won
in subsidies for affiliates last year.  Although the amount
of subsidies found in the third probe doubles that in the
first probe, it is not likely that the fines will be twice
in that chaebol has provided short-term subsidies through
their financial arms and therefore the amount of fines may
be lower than expected.

A pertinent FTC regulation has it that if one subsidiary
borrows 1 trillion won from another affiliate at a lower
interest rate and this helps it save interest payment of 10
billion won due to lower interest rate, the "illegal"
portion that will be fined will be 10 billion won in unpaid
interest, although 1 trillion won is designated as in-house
trading. This often means that the longer the lending term,
the more fines to be imposed.

Therefore, the fines will not always be imposed in
proportion to the volume of in-house trading, according to
FTC officials.

"We believe that the amount of fines as the result of the
third probe would not surpass the combined sum of 91.3
billion in the first and second probes, considering the
short term of in-house subsidization," an FTC official
said. "But nonetheless, the fines would reach a significant

Also putting pressure on the FTC to minimize the fines is
that many of Daewoo affiliates are undergoing workout
corporate restructuring so the amount of fines on Daewoo
Group will likely be reduced. Under the FTC regulations,
fines are not to surpass a 2 percent ceiling of total in-
house trading volume.

Meanwhile, the FTC yesterday concluded that a civic group's
accusation of LG Group holding Dacom shares in subsidiaries
was not true in its probe of 28 suspected companies. (Korea
Times  03-Sep-1999)

HYUNDAI GROUP: Four more units implicated in scandal
In its ongoing investigation into the Hyundai stock
manipulation scandal, the Seoul District Prosecutor's
office said Friday that it has discovered that four group
subsidiaries, including Kangwon Bank and Hyundai Pipe are
newly implicated in the case.

Prosecutors announced that it had tracked cash flow within
ten subsidiaries of Hyundai group, along with stock prices,
and concluded that the four, in addition to Hyundai
Securities, had been involved in stock manipulation.
The prosecution said it would announce the charges against
the four subsidiaries when they make the results of their
investigation into the manipulation of Hyundai Electronics
stock prices public.

The prosecutor's office did say, however, that the
contribution of each subsidiary is likely to be under W10
billion each. The prosecutors also brought in for
questioning that day, Hyundai Motor President Lee Kye-ahn,
who is head of the entire group's restructuring efforts.

Lee and Noh Chung-ik, who is in charge of the group's
strategic management team, were both questioned on whether
Hyundai Heavy Industries (HHI), Hyundai Merchant Marine
(HMM) and Hyundai Electronics conspired to put up W223.4
billion to artificially raise the stock prices of Hyundai

The prosecution also plans to question HHI chair Kim Hyung-
byuk and HMM chair Pak Se-young September 6-7. Hyundai
Securities chair Lee Ik-chee, who is wanted on suspicion of
stock manipulation, is also due to be brought in around
September 8. According to the prosecutor's office, while
Hyundai Securities chair Lee Ik-chee is believed to be at
the center of the scandal, the firm itself appears to be
only implicated insofar as its booths were used as drop off
points for the money to finance the stock purchases.

It added that investigation was ongoing and could be
expanded. Rumors abound that group owner Chung Ju-yong must
have known about the manipulation as up to W223.4 billion
was used to buy up stock and five subsidiaries operating
through two different channels were involved.  (Digital
ChosunIlbo  03-Sep-1999)

HYUNDAI GROUP: Debts soar to 69 trillion won
Hyundai Groups's debts have soared to 69 trillion won
($58.5 billion) after South Korea's biggest conglomerate
took over a failing auto firm and a debt-laden electronics
company, the finance minister said on Thursday.

But Hyundai will not follow in the footsteps of fellow
chaebol Daewoo Group and collapse under a heap of debt,
Minister of Finance and Economy Kang Bong-kyun said in an
interview.  Kang also said that banks and investment trusts
would be able to absorb loan losses stemming from the
disintegration of Daewoo without an injection of public
funds because of robust profits in the first half and
better loan loss provisioning requirements.

Kang dismissed any notion Hyundai was in the same boat as
Daewoo after absorbing Kia Motor (00270.KS ) and its
affiliates and semiconductor manufacturer LG Semicon
(29890.KS) this year.  Kia Motor added seven trillion won
to Hyundai's debt burden and LG Semicon another five
trillion won.

That caused total group debts to soar from 61.5 trillion
since the end of last year and 64.9 trillion at the end of
June at a time when the chaebol were supposed to be cutting
debt, not adding to it.  Kqang said the five trillion won
debt of LG Semicon would be booked into the group for the
second half, giving the latest official picture of
Hyundai's debt burden.

But Kang said both Kia Motor and LG Semicon were making
profits now and these two "big deals" had the blessing of
the government.  

"Unlike Daewoo, Hyndai has retained the faith of domestic
financial markets. I don't think it will follow in the
steps of Daewoo," Kang said.

Hyunda's debt/equity ratio was 438 percent last year. But
if asset revaluations are excluded, the ratio was 828
percent against 421 percent for Daewoo at the end of 1998.
Analysts agree Hyundai is in much better shape to manage
its debt than Daewoo because comparatively little of it is
short-term and the group has greater fund-raising abilities
than Daewoo.

Hyundai is planning to raise 4.5 trillion won this year
through asset sales and another 15 trillion in various
equity issues, including this week's listing of Hyundai
Heavy Industries.  

Daewoo is another story.  Twelve core units of the group
were put under a debt workout programme that essentially
took the keys to his empire out of the hands of Daewoo
Chairman Kim Woo-Choong.  Kim remains chairman but has
little wiggle room, Kang said.

"Creditor banks are overseeing all the decision-making
processes," Kang said. "It's a very strict and restrictive

Kang said Korean banks hold nine trillion won in loans and
six trillion in repayment guarantees. They are provisioning
about 20 percent of that, or three trillion won, in loan
losses.  Daewoo has total debts of 57 trillion won,
including 26 trillion won held by investment trusts and
non-banking institutions and some $5 billion held
by foreign creditors.

"As far as financing goes, Korean banks are expected to
make sizeable profits this year, so they'll do it through
their profits," Kang said.

Banks starting this year came under more stringent loan
provisioning requirements, meaning they've already had to
set aside money for bad debt, he said.

"I don't think an injection of public funds will be likely
due to the banks profits and the new loan loss provisioning
requirement," Kang said, adding that a buoyant stock market
will help investment trust companies (ITC) ride out the
Daewoo storm. "This ultimately means that the ITCs'
performance depends on stock prices.

The finance minister said he thought the market environment
was supportive.  Profits of listed companies should be
healthy this year and next, underpinned by strong economic
growth. The government will do its part as well, he added.

"I can say very clearly, the government has a strong will
to maintain low inflation and low interest rates," Kang

He said he did not think Daewoo's collapse would have much
of an impact on the real economy, despite the fact the
group accounts for 10-15 percent of total exports.  Kang
said the government was providing export financing to key
companies like Daewoo Motor, Daewoo Electronics and Daewoo
Heavy Industries.  He said the government was basically
happy with the won's stability on the foreign exchange

"From early this year, if the won/dollar rate can be
maintained at 1,200,  that's alright," the finance minister

The won closed at 1,190.50 to the dollar on Thursday.

"That's thanks to the strong yen and if the yen keeps to
110 to 120 (to the dollar), then we'll be happy."

Korea, which competes head to head with Japan on such key
exports as automobiles, ships, semiconductors and home
appliances, wants to keep its currency relatively weak
against the yen.  (Reuters, NewsHound  02-Sep-1999)

KOREA LIFE: FSC gives 7 days to submit rehab plan
South Korea's Financial Supervisory Commission (FSC) has
formally asked the management of Korea Life Insurance to
submit a restructuring plan within seven days in order to
get the procedures right and avoid another court battle.

"We have consulted our lawyers before coming up with the
decision. The FSC believes seven days are enough for Korea
Life to submit its recovery plan. Besides, allowing extra
seven days will make the FSC's position legal," said a
senior FSC member.

The local financial regulatory body added that it will
implement the nationalization of Korea Life immediately
should the proposal fail to satisfy the requirements set
out by the government.  The FSC will dismiss Korea Life's
restructuring plan if it is not feasible and get on with
its own plan of designating the life insurer insolvent,
ordering a capital decrease and injecting public funds.  
This time, the commission said it will do things by the
book, informing the government's measure in advance and
giving the restructuring target a chance to present an
alternative plan within seven days.

The FSC lost a court case Monday brought up by Korea Life's
management under Shindongah Group Chairman Choi Soon-young
because it skipped such procedures.  Choi will have to come
up with a feasible restructuring measure within the next
seven days or comply with the government's plan. But
watchers say Choi may run to the court again, protesting
that seven days are not enough in a ploy to gain more time.

Local lawfirm Yoon & Partners says that Korea Life will
consider taking another legal action shortly against such
irrational measure of the financial regulatory authority.

"The FSC should stop making such unreasonable demands.
Allowing a week for the recovery plan for such huge life
insurance company is nonsense," said a lawyer of Yoon &
Partners.  "We are considering to file another law suit to
point out the irrationality of the FSC policies," he added.
(Asia Pulse, Korea Times  03-Sep-1999)

SEOUL BANK: Government declares it insolvent
The government yesterday declared Seoul Bank insolvent and
ordered the injection of public funds to normalize its

The Financial Supervisory Commission (FSC) ordered the bank
to write down its capital for recapitalization and
requested the Korea Deposit Insurance Corp. (KDIC) to
inject public funds into it.

"It is inevitable to inject public funds to get the bank to
normal as early as possible," said Nahm Sang-duck, the
FSC's director general for banking. "Delayed normalization
will lead to more public money being needed.  We estimate
that some 4.5 trillion won ($3.8 billion), including 1.1
trillion won in repurchased bad loans, will be needed to
boost its capital adequacy ratio to 10 percent as required
by the Bank for International Settlement (BIS)," he

He said the public funds will be infused in about two
weeks.  At the end of June, Seoul Bank had a total of 27
trillion won in assets and 27.3 trillion won in
liabilities. Its BIS capital ratio stood at minus 10
percent.  Nahm said more money, if deemed necessary, will
be injected to meet conditions for future sale or tougher
standards for asset soundness classification.

He added that the government will look for an
internationally recognized banker to manage the bank, and
Morgan Stanley is currently working on a detailed
timetable.  Minority shareholders will see their shares
scrapped but can exercise the appraisal rights, while the
government's shares will be merged at an appraised price,
according to the FSC official.

The capital-decrease ratio and the appraisal price will be
determined at a board of directors' meeting early next
week, he said.  Currently, the government owns 93.4 percent
of Seoul Bank with a 46.7-percent stake held by the
Ministry of Finance and Economy and another 46.7-percent
held by the KDIC.

Back in January 1998, when the nation was mired in a severe
financial crisis, the government nationalized the ailing
bank by providing 2.6 trillion won in the form of new
capital and repurchased bad debt in order to keep it
afloat.  During the drawn-out course of the now failed deal
with HSBC, however, the bank's balance sheet deteriorated
so much that it had to be bailed out, according to the FSC.
Meanwhile, the financial watchdog said talks with U.S.
investment institution Newbridge Capital on the takeover of
Korea First, another nationalized commercial bank, are
still going on.  (Korea Herald  04-Sep-1999, Digital
ChosunIlbo  03-Sep-1999)


FABER GROUP: Gets standstill agmt, working on restructure
The Faber Group Bhd announced yesterday that most of its
secured and unsecured bank creditors has entered into a
standstill agreement with the group under the auspices of
the Corporate Debt Restructuring Committee (CDRC).

Commerce International Merchant Bankers Bhd (CIMB) said in
a statement on behalf of Faber Group that the group
proposed to issue RM1.23bil nominal value of five-year zero
coupon redeemable convertible secured bonds to the secured
bank creditors.

As for unsecured bank creditors of and unsecured creditors
of Faber Group, Faber Hotels Holdings Sdn Bhd and Subang
Jaya Hotel Development Sdn Bhd (SJHD), the group proposed
the issuance of up to RM330mil nominal value of five-year
zero percent irredeemable convertible unsecured loan stocks
(Iculs) to them, said CIMB.

In addition, Faber Group also proposed a 50% capital
reduction of its ordinary share capital, cancelling RM0.50
from every Faber Gruop share of RM1.00 each, CIMB said.
The reduction of Faber Group share capital to RM162.017mil,
comprising 324.033 million shares of RM0.50 each, from
RM324.033mil, comprising 324.033 million shares of RM1.00
each, would give rise to RM162.017mil credit which would be
utilised to reduce the company's accumulated losses, CIMB

Subsequent to the proposed capital reduction, CIMB said in
its statement that the issued and paid-up share capital of
Faber Group would be consolidated, with two ordinary shares
of RM0.50 each constituting one ordinary share of RM1.00

Faber Group, Faber Hotels and SJHD intend to apply to the
High Court of Malaya for a date to hold the court convened
creditors meetings to consider the proposals.  It will also
obtain a restraining order under Section 176 of the
Companies Act 1965 to implement the proposals, CIMB said.  
(Star Online  03-Sep-1999)

HUME INDUSTRIES BHD: Dissolves two of its units
Hume Industries Bhd said in a statement that two of its
dormant units have been struck off the register of
companies and duly dissolved.  The companies are Hume
Premix (Sarawak) Sdn Bhd and Hume Building Panels Research
Centre Sdn Bhd.  (Star Online  03-Sep-1999)

PILECON ENGINEERING: Reprimanded and fined
Pilecon Engineering Bhd has been reprimanded and fined
RM100,000 by the KLSE for breaching its listing
requirements in relation to a decision to reject an
extension of the company warrants.

"Pilecon was found to be in breach of Section 335 of the
main board listing requirements (MBLR) for failing to make
an immediate announcement in respect of its shareholders'
decision not to approve the proposed extension of the
duration and exercise period of the Pilecon warrants at the
EGM, which concluded on the morning of May 31, 1999," the
KLSE said in a statement yesterday.

Section 335 of the the MBLR states that a public listed
company is required to make an immediate public disclosure
of all material information concerning its affairs, except
in exceptional circumstances.  The public reprimand and
fine was imposed pursuant to Section 392 of the MBLR after
having considered all relevant circumstances and after
consultation with the Securities Commission (SC).

"The exchange views the above contravention very seriously
and hereby cautions the board of directors of Pilecon on
their responsibility and accountability in order to achieve
greater disclosure and transparency to its shareholders and
the investing public," the KLSE said.

The price of Pilecon warrants plunged 74% on June 2 to 14
sen from 53.5 sen after news filtered through the market
that shareholders had rejected the proposal to extend the
warrant's exercise period by five years to July 6, 2004.
The SC had on June 4 said it would take action against any
issuer of warrants or other options should there be any
evidence of misconduct or unfair practices even though the
issuer may have complied with procedural requirements.

That warning was followed up by the KLSE on June 11 which
said it would examine the circumstances in which Pilecon
shareholders recently rejected the proposed extension of
the company warrants.  A few days after that, SC boss Ali
Abdul Kadir said the SC was investigating three possible
breaches of its regulations by Pilecon.

One of these possibilities, Ali said, was the non-timely
dissemination of information resulting in a manipulated
market.  Control of Pilecon changed hands in April last
year when Singaporean property developer Tan Hock Keng
purchased a 20.02% stake in the company via Tradefast
Properties Ltd. The shares were sold by Pilecon founder
chairman Hong Lee Pee, who has since assumed the role as
adviser, while Tan took over as executive chairman.  (Star
Online  04-Sep-1999)

SANDA INDUSTRIES BHD: To settle subsidiary's debt
Sanda Industries Bhd has received the approval-in-principle
from Pengurusan Danaharta Nasional Bhd on its proposal to
settle the debt owned by Sanda Plastics Sdn Bhd amounting
to about RM14.5mil as at March 31, 1999.  Commerce
International Merchant Bankers informed the KLSE on behalf
of Sanda Industries that the debt would be settled via an
issuance of new Sanda Industries' shares of RM1.00 each at
par.  (Star Online  03-Sep-1999)


MONDRAGON LEISURE AND RESORT: Creditors reject rehab plan
Unless a white knight comes to its rescue, it will be
lights out for hotel and casino operator Mondragon Leisure
and Resort Corp. (MLRC).  Though it offered a dacion en
pago arrangement to repay its creditors, the proposal was
immediately turned down.

And to make matters worse, the creditor banks also opted
not to extend additional loans to MLRC, BusinessWorld
learned.  Meanwhile, the Philippine Stock Exchange (PSE)
yesterday said trading on Mondragon shares will resume
today.  The exchange had to halt its trading yesterday
after its price fell 40% to 1.22 Philippine pesos
(US$0.0307 at PhP39.77=US$1) following the Supreme Court's
inaction on the firm's proposal for an extension of its
loan payment to Clark Development Corp. (CDC).

Unders its rules, the PSE suspends trading on a particular
stock when its share price rises by 50% or declines by 40%,
based on its last closing price.  MLRC has said its debts
have reached more than PhP7 billion ($176 million),
including payables to the Bureau of Internal Revenue (BIR),
the Philippine Amusement and Gaming Corp. (Pagcor) and CDC.
MLRC and CDC are presently locked in a legal joust over a
PhP325-million ($8.17 million) back rental payable to the
state agency.

CDC is demanding a "voluntary turnover" of the 235-hectare
Mimosa Leisure Estate in Clarkfield, Pampanga after MLRC
failed to pay PhP50 million ($1.26 million) representing
its initial payments, and instead asked for an extension of
its deadline.

"We regret to inform that we have been advised by Far East
Bank & Trust Co. that its executive committee denied any
further release of any amount for the account of MLRC.
AsianBank Corp., on the other hand, has still not been able
to get the approval of its executive committee."

"In view of the foregoing, we regret to advise that we
cannot enter into any dacion arrangement with you," United
Coconut Planters Bank first vice-president Enrique L. Gana
told MLRC in a letter, a copy of which was obtained by

Aside from the three MLRC creditors, parent company
Mondragon International Philippines, Inc. also has
outstanding loans with Metropolitan Bank & Trust Co., the
Philippine Banking Corp., TA Bank and Dao Heng Bank.
Metropolitan Bank lent the company PhP820 million ($20.6
million), while UCPB has a PhP500-million ($12.57 million)
loan exposure.

Pending the resolution of their legal tussle, CDC president
and chief executive officer Rufo Colayco said the next move
would be to look for an investor who will operate Mimosa as
well as pay MLRC's loans. MLRC, on the one hand, is said to
be negotiating with a yet unnamed foreign investor which
will help it raise $175 million in fresh capital.

Documents obtained by BusinessWorld showed the company has
been restructuring its loans since April 1998, converting
these to longer-term loans in the wake of the regional
financial crisis.  Earnings from its hotel and casino
operations dropped, following a steep decline in occupancy
as well as the temporary closure of the casino due to an
earlier dispute with CDC. The casino is MLRC's major
revenue contributor.

Based on its financial statement, MLRC incurred a net loss
of PhP982 million ($24.69 million) last year, resulting in
a deficit of PhP490 million ($12.32 million). Its current
liabilities exceeded its current assets by PhP2.75 billion
($69.15 million).  Parent firm Mondragon International was
in the consumer products business, but divested in 1997 to
focus on the leisure and gaming business.  (Business World  


FALMAC: Posts first-half loss                              
Sesdaq-listed Falmac has cut its group net loss for the
half-year ended June 30 to $2.25 million from $3.4 million
a year earlier.

The knitting machine maker attributed the 35 per cent
reduction largely to cost-cutting efforts and smaller
interest costs arising from lower operating expenses.  
Turnover shrank 7.5 per cent to $10.4 million as machine
sales fell 11 per cent and spare part sales plunged 30.5
per cent, due mainly to more prudent management credit
control, Falmac said.

Loss per share dropped to 3.75 cents from 5.73 cents while
net tangible assets per share retreated to 23.03 cents from
29.13 cents.  No interim dividend has been declared.  
Falmac's directors expect better results for the second
half.  (Straits Times  04-Sep-1999)  


Thai banking authorities will announce Standard Chartered
Bank of the UK as bid winner for the Nakornthon Bank at
noon today, followed next week by another announcement that
United Overseas Bank of Singapore has clinched the deal for
the Radanasin Bank, sources said.

Sources said shareholders of Nakornthon Bank will meet
today at 1 pm to approve the takeover proposal, which will
result in a change of name from the Nakornthon Bank to
StanChart Nakornthon Bank. The price tag for Nakornthon
Bank, which used to be controlled by the Wanglee family,
has not yet been disclosed. But one source indicated that
the price for Nakornthon Bank that Standard Chartered Bank
is going to pay will be higher than that offered for the
Radanasin Bank by United Overseas Bank.

Standard Chartered Bank signed an agreement with the
banking authorities on Aug 11, which gave the UK bank a
right to buy out Nakornthon Bank if other bidders do not
make a better offer. It is understood that three bidders
have been shortlisted and conducted due diligence for the
Nakornthon Bank takeover.  The Nakornthon Bank selling
committee met on Wednesday evening to decide.

Kiatchai Sophastienphong, director of the Financial
Institutions Policy Department, only said that the central
bank would announce the bid winner for Nakornthon Bank
today and for Radanasin next week. But he declined to
disclose the identities of the bid winners.

This series of announcements caps the privatisation of the
nationalised banks by the authorities, who are keen to push
the burden of having to hold on to the troubled banks of
their chest. The move is also part of the liberalisation of
the Thai banking industry aimed at creating more
competition in the future.

In the previous deal, Standard Chartered offered an
injection of about Bt6.2 billion into Nakornthon Bank after
the Financial Institution Development Fund put in Bt13
billion to write off the bad debts of the bank.  The deal
would give the Standard Chartered about 60 to 70 per cent
interest in the bank, compared to 20 per cent for the FIDF
and about 8 per cent for the Wanglee family and other
minority shareholders.

This plan was rejected by the authorities because the
burden was passed almost wholly to the authorities while
the Wanglee family would still manage to keep their stake.
The lack of an open bidding also made it impossible for the
authorities to agree to the Standard Chartered Bank
proposal leading to a nationalisation of Nakornthon Bank
and a subsequent open bidding.  (The Nation  03-Sep-1999)

NAKORNTHON BANK: It's confirmed - Stanchart the buyer
Standard Chartered Bank officially won the contest to
acquire Nakornthon Bank yesterday.  The United Kingdom-
based bank will purchase a 75% stake in Nakornthon from
regulators for 12.375 billion baht, the Bank of Thailand

Payment would be made to the central bank's Financial
Institutions Development Fund next Friday.  The bank's name
was changed to Standard Chartered Nakornthon at a
shareholders' meeting yesterday.  Salinee Wangtal,
Nakornthon president, said that of several bids, Standard
Chartered's was the highest.  "I think the price that we
have received is quite satisfactory."

Standard Chartered would bring in its own management team
and appoint five new directors to Nakornthon's nine-member
board. Two others will represent the Fund, with two
remaining spots for independent directors.  Mrs Salinee
said Standard Chartered had agreed not to delist Nakornthon
from the Stock Exchange of Thailand.

To protect smaller investors, shareholders yesterday
approved a change in Nakornthon's articles of association
so that a future sale, merger, capital change or delisting
would require 86% approval from shareholders.  This
effectively prevents Standard Chartered, even with a 75%
stake, from implementing dramatic changes without the
approval of regulators.

Kietchai Sophastienphong, director of the Financial
Institutions Policy Department, said the Fund would sell
additional shares to retail investors, reducing its stake
to 10% from 24.99%.  He said the sale was equivalent to 23
baht per share, giving the Fund a "more than 100% premium"
on its seven-billion-baht investment.

Mrs Salinee said Nakornthon, with seven billion baht in
registered capital, would not need additional capital for
several years.  Standard Chartered will split losses and
profits arising from non-performing loans with the central
bank over the next five years. There were no conditions
attached in terms of whether Standard Chartered would close
any of Nakornthon's 67 branches or lay off staff.

As of June 30, the bank's loan-loss provisions were 8.37
billion baht, 42% of its estimated provisioning needs.
Total assets at the end of June were 57.7 billion baht,
with loans of 52.5 billion and deposits of 50.29 billion.
Bad loans stand at 56% of total loans.

The bank lost 5.9 billion baht in the first half, compared
with losses of 3.1 billion the same period last year.
Nakornthon, founded in 1933 as Wanglee Chan, is the second
oldest bank in the country after Siam Commercial Bank.
Regulators took over the bank in July and called for bids
after earlier talks with Standard Chartered collapsed.
Standard Chartered employs 26,000 people in 500 offices in
over 40 countries, and opened its first branch in Thailand
in 1894.

Vincent Milton, associate director at credit rating agency
Fitch IBCA, said Standard Chartered had the potential to
"quickly restore NTB's financial strength and significantly
improve its operating performance and banking franchise
over the medium term".

He said foreign entry would be positive for the Thai
banking sector, with customers benefiting from better
services at lower costs.  The deal would also help boost
foreign investor sentiment in Thailand, Mr Milton said.
Paiboon Ratniyom, marketing head of ABN-Amro Asia
Securities, agreed investor sentiment should improve.
Leading Thai banks, such as Bangkok Bank and Thai Farmers
Bank, were not necessarily at a disadvantage to new foreign
entrants, Mr Paiboon said.

The large banks had a solid client base, branch networks
and forward-looking management, he said. Prospects overall
for the banking sector remained promising for investors in
the medium and long term.  The central bank, meanwhile, is
expected to announce United Overseas Bank as the winning
bidder for a majority stake in Radanasin Bank next week.
The Singaporean bank edged US giant Citibank by offering
better terms on how bad loans would be split.  (Bangkok
Post  04-Sep-1999)

QUALITY HOUSES: Creditors accept debt plan
About 90 per cent of Quality Houses (QH) Plc's creditors
have accepted a Bt9.31-billion debt-restructuring plan
after five of the listed 30 real-estate firms recently
completed their debt restructuring.

Under the plan, creditors of QH, affiliate of Land and
House Plc, would reschedule most of the debt payments by
another seven to 10 years, and convert part of the debt
into equity while QH will also issue 760 million new shares
to raise capital from Bt2.71 billion to Bt10.31 billion.
Proceeds from the capital increase will be used to repay
part of the debts and for working capital with 150.4
million shares accounting for around 20 per cent of new
shares to be sold to foreign investors, and the rest to
existing shareholders and reserves for warrants.

The debts restructured under this plan include an amount of
Bt4.4 billion with collateral, which are projects under
development and have future income generating prospects.
Under the plan, the firm will pay back 15 per cent of this
amount with securities or cash within a specified period.
The remainder of this amount will be paid back according to
the old contract and interest will be serviced on a monthly

Secondly, another principal amount of Bt1.84 billion is
covered by collateral which are projects not yet developed.
Of this amount, 15 per cent will be paid back first while
the rest will be paid back at the end of the fifth year of
the plan.  Thirdly, another principal amount of Bt809
million is not covered by collateral. Of this, 15 per cent
will be paid back first and the rest paid back within the
next even years. The first two years are a grace period for
principal repayment, but QH agrees to service interest on
this loan immediately.

Fourth, 15 per cent of another principal of Bt1.02 billion
under a swap contract will be paid back first, while the
rest will be settled within 10 years, with a grace period
of two years. Interest will be serviced on a monthly basis.
Fifth, the principal amount of Bt1.17 billion in debentures
with no collateral will be paid back when the debentures
are redeemed according to an old contract, while the unpaid
interest will be paid within the time-frame of the debt-
restructuring contract. Interest payments will resume on a
monthly basis.

Unpaid interest on the first, second, third and fourth
amounts of principal debts will be paid back in monthly
instalments, starting from Jan 2000 to Dec 2002 with no
penalty.  QH was up Bt0.25 to close at Bt13 yesterday.

Earlier completion of debt restructuring among real-estate
firms included Golden Land (Bt2 billion), Sansiri (Bt1.95
billion), Krisdamahanakorn (Bt17 billion), Noble
Development (Bt2.5 billion) and LPN Development (Bt3
billion).  Rescheduling repayment periods and allowing
foreign investors to become the company's largest
shareholders are included in the deals of Golden Land,
Sansiri and Noble Development.

According to the Bank of Thailand as of July problem debts
of Bt95 billion in the property sector were restructured.
As of the same date, Thai corporations had restructured a
total of Bt628 billion in problem debts.  Another 10 listed
property and construction firms are negotiating with their
creditors to restructure debts.  (The Nation  04-Sep-1999)

RADANASIN BANK: Buyer found, to be announced next week
Thai banking authorities will announce next week that
United Overseas Bank of Singapore has clinched the deal for  
the purchase of Radanasin Bank, sources said. One source
indicated that the price for Nakornthon Bank that Standard
Chartered Bank is going to pay will be higher than that
offered for the Radanasin Bank by United Overseas Bank.

Kiatchai Sophastienphong, director of the Financial
Institutions Policy Department, declined to disclose the
identities of the bid winners.  In the case of the
Radanasin Bank, Citibank is also another strong bidder. But
it is understood that the United Overseas Bank's bid is
more attractive to the authorities in terms of pricing and
loss sharing. It was earlier reported that United Overseas
Bank proposed to buy Radanasin Bank at about US$900

"We regret that we are unable to comment as the outcome of
our bid is still pending with the authorities," a UOB
spokesman told Dow Jones in Singapore.

The central bank also hopes to sell two other nationalised
banks, Siam City Bank Plc and Bangkok Metropolitan Bank
Plc, later this year.  (The Nation  03-Sep-1999)

SIAM CEMENT: To sell shares to pay debt
Siam Cement, Thailand's largest producer of building and
industrial materials, said shareholders approved its plan
to sell new shares for the first time in 20 years to help
pay debt.

Siam Cement, which produces about two-fifths of the
nation's cement, as well as paper, chemicals, glass and
auto parts, said it plans to sell 40 million new shares, or
a quarter of its enlarged capital. Of the new shares, 30
million are expected to be sold privately to foreign
investors and the rest to employees.

Shareholders also approved increasing the limit for foreign
shareholdings to 40 percent from 25 percent, implying that
most of the new shares will be sold to foreigners. No other
details, such as the sale date and pricing, have been
decided.  The sale would raise 23.4 billion baht (US$601
million) based on the current price of Siam Cement's local

If the 30 million shares earmarked for private sale are all
sold to foreigners at the current price of foreign-
registered shares, the sale will generate 33.1 billion baht
The move is a reversal for the company, whose president
repeatedly said in the past two years after Thailand fell
into recession.  (Business Day  03-Sep-1999)

THAI FARMERS BANK: Phatra Thanakit to get only Bt4.5 bil.
The Financial Institutions Development Fund (FIDF) will
inject only Bt4.5 billion into Phatra Thanakit Plc, Thai
Farmers Bank's ailing finance unit, not Bt6 billion as
previously estimated.

MR Chatu Mongol Sonakul, governor of the Bank of Thailand,
said yesterday that Phatra Thanakit would need to set aside
a 100 per cent loan provision as a first step in the rescue

"Due to the provisions, Phatra Thanakit's equity will
immediately become negative by Bt4.5 billion and the FIDF
will give it the sum," he added.

Phatra Thanakit's good assets would be transferred to Thai
Farmers Bank and its bad ones to an asset-management
company (AMC). Under the agreement, the AMC will be wholly-
owned by the bank.  According to the central bank's
governor, Phatra Thanakit will have to return its finance
licence to the central bank. Its business will then be
restricted to receiving the proceeds from the management of
the bad assets.

"This plan is designed to reduce the burden for Thai
Farmers Bank which would otherwise need to raise huge
short-term funds," Chatu Mongol said. "The central bank
will need to plug the hole."

He added that Thai Farmers Bank would need to take care of
the bad asset management. If the AMC recorded any profits
from the management, they would be split equally between
the FIDF and the bank. But any losses would have to be
carried by the bank.

"This plan needs the final approval from Finance Minister
Tarrin Nimmanahaeminda before the central bank signs the
agreement with the bank," Chatu Mongol said. More details
are to be announced on Monday.  (The Nation  04-Sep-1999)

THAI FARMERS BANK: Destined for new management team
The Financial Institutions Development Fund plans to
recapitalise Phatra Thanakit and set up a new management
team to oversee the firm's bad assets, according to M.R.
Chatumongol Sonakul, governor of the Bank of Thailand.

Phatra's former 49% stake in Phatra Securities and 30.27%
stake in Thai Farmers Asset Management would also be
revalued under a compromise deal worked out between
regulators and Thai Farmers Bank.  Thai Farmers took over
Phatra Thanakit last year in a tender offer that included
the sale of the company's shareholdings in Phatra
Securities and Thai Farmers Asset Management to the bank.
Earlier this week, TFB president Banthoon Lamsam said the
bank could no longer provide financial support for Phatra.

On Wednesday, Thai Farmers Bank and regulators agreed to
share responsibility for losses incurred at Phatra, where
non-performing loans now stand at 80% of its total
portfolio of 55 billion baht. M.R. Chatumongol said that
depositors and shareholders of Phatra and Thai Farmers Bank
would not be affected.

Closing the finance company would result in additional
damage in the future, he said. Instead, regulators sought
to maximise opportunities to rehabilitate ailing assets.
Phatra has capital funds of about 10 billion baht, M.R.
Chatumongol said. However, if full provisions for bad loans
were made, funds would be about six billion baht in the

As an interim step, performing and bad assets would be
split, and regulators would inject about one billion baht
in new capital into Phatra, allowing the firm to continue
operations.  M.R. Chatumongol said that while Thai Farmers
Bank was unable to inject funds into Phatra now, the bank
would share responsibility for losses in the future.
M.R. Chatumongol said it could take three to five years to
rehabilitate Phatra, which has a substantial amount of
assets in property-based loans.  (Bangkok Post  03-Sep-

S U B S C R I P T I O N  I N F O R M A T I O N

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