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/raid1/www/Hosts/bankrupt/TCRAP_Public/990929.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 Wednesday, September 29, 1999, Vol. 2, No. 189 Headlines * C H I N A & H O N G K O N G * HUEY TAI INT'L.: Paying down debts PEARL ORIENTIAL HOLDINGS: Posts first-half loss YUE XIU ENTERPRISES: Audit done, debt rehab plan to follow * I N D O N E S I A * PT DUTA ANGGADA REALTY: Seeking restructure agreement * J A P A N * MINEBEA CO.: Posts first-half loss * K O R E A * DAEWOO ELECTRONICS: Sale still up in the air DAEWOO GROUP: No preference to foreign creditors reiterated DAEWOO GROUP: 4 subsidiaries to resume activities HAITAI BEVERAGE: To be sold for $255 million ORACLE KOREA: Fined 110 million won for unfair trading * M A L A Y S I A * ARAB MALAYSIAN BANKING GROUP: Paying down debts CHASE PERDANA: Posts first-half loss FORMOSA PROSONIC INDUSTRIES: Proposes restructuring PARIT PERAK HOLDINGS: Posts annual loss PENGKALEN HOLDINGS: Shrinks first-half loss * P H I L I P P I N E S * MONDRAGON INT'L PHILIPPINES: Foreclosures beginning PHILIPPINE LONG DIST.TEL.: Facing 3 billion peso loss * S I N G A P O R E * KOBE STEEL: Restructuring organization LC DEVELOPMENT: Net worth drops 75 percent MEDIARING: Loss-producing company to be listed NETWORK FOODS INT'L.: Shrinkgs first-half loss PENTEX-SCHWEIZER CIRCUITS: Posts annual loss * T H A I L A N D * LAND & HOUSES: To sell shares, swap debt for equity THAI TEL.& TEL.: Y2K woes on top of debt restructuring WATTACHAK GROUP: To seek restructuring next month ============================== C H I N A & H O N G K O N G ============================== HUEY TAI INT'L.: Paying down debts ---------------------------------- Ailing property development and investment company Huey Tai International has reduced its debts by more than $300 million since the end of March, according to executive director Stanley Wong Kam-cheong. The company repaid $300 million of debts by selling its Canadian securities recently, incurring a slight exchange loss. Last month, the company raised a further $300 million by issuing a second batch of convertible redeemable bonds to majority shareholder Chow Tai Fook Jewellery. These will be used to repay holders of the previous batch of the same amount which are due within the next year. Mr Wong said the company's remaining debts were not due within the next year. It had about $100 million in cash on hand. At the end of March, Huey Tai owed $1.5 billion to banks and other creditors. It plunged to a net loss of $677 million last year from a net profit of $20 million previously. Mr Wong said Huey Tai received a revised premium offer from the Government to increase the plot ratio of its luxury residential development at 35 Island Road from 0.45 to 0.75. The company has also entered into an agreement with New World Development to jointly redevelop the latter's plot at 33 Island Road. (South China Morning Post 28-Sep-1999) PEARL ORIENTIAL HOLDINGS: Posts first-half loss ----------------------------------------------- Pearl Oriental Holdings' net loss in the first half of the year widened to HK$90.71 million from HK$68.98 million in the previous period, partly due to a provision for the fall in value of completed properties for sale. The company said it planned to move away from property to technology business. In view of the future direction, directors have decided to change the company's name to Pearl Oriental Cyberforce. Chairman Wong Kwan said millions would be invested in the move and the funds would probably be raised in the market. Mr Wong said the company would apply to the government for a licence in wireless fixed telecommunications services before the end of the month. It would also seek to list Stockonline, in which Pearl Oriental has a controlling stake, on Nasdaq in the United States within six months by issuing new shares, he said. Stockonline might invite strategic investors to join the company before the Nasdaq listing. Stockonline's revenues last year were US$4.5 million. Pearl Oriental would also focus on broadband networks and data transmission services. During the period, Pearl Oriental suffered from the poor situation in the property market. The operating loss expanded from last year's HK$60.84 million to this year's HK$74.77 million while exceptional losses grew to HK$16.9 million from HK$8.18 million. Exceptional losses included a HK$14.6 million provision for diminution in value of completed properties for sale and a HK$2.3 million provision for fall in value of long-term investments. Directors said no interim dividend would be paid. (South China Morning Post 28-Sep- 1999) YUE XIU ENTERPRISES: Audit done, debt rehab plan to follow ---------------------------------------------------------- An auditor's report has been completed for mainland-backed Yue Xiu Enterprises (Holdings) and a debt restructuring plan should be floated in mid-October, according to banking sources. The Hong Kong-based conglomerate, backed by the mainland's Guangzhou municipal government, appointed four major banks in June to arrange a refinancing to convert all of Yue Xiu's unsecured debt into one master secured facility. The firm commissioned PricewaterhouseCoopers (PWC) to prepare a due diligence report on existing assets, as well as on three assets to be injected by the Guangzhou government, namely Guangzhou City Construction & Development Holdings, Dong Fang Hotel Group and Mingquanju holiday resort. Banking sources said they had been invited to collect the report from PWC's office this week. Bankers said they did not exp ect many surprises in the report, which they hoped would show that Yue Xiu's finances were in a relatively good state. Bankers earlier estimated Yue Xiu's debts stood at about HK$5.5 billion, which was far less than the US$3.9 billion liabilities at Guangdong Enterprises (Holdings), another mainland enterprise in restructuring negotiations. Yue Xiu ran into debt-servicing difficulties after the unexpected closure of the Guangdong International Trust and Investment Corp (Gitic) in October led to a virtually universal tightening of credit to mainland firms. The four arrangers of the refinancing, Bank of China, Bank of East Asia, HSBC and SG, collectively hold more than 40 per cent of Yue Xiu's debts. (South China Morning Post 28-Sep- 1999) ================= I N D O N E S I A ================= PT DUTA ANGGADA REALTY: Seeking restructure agreement ----------------------------------------------------- Publicly listed PT Duta Anggada Realty (JSX:DART) is seeking to secure an agreement from its 70 creditors to restructure its debt of $ 329.6 million. The company operating in land acquisition, office building and housing construction, had offered alternatives to settle its debts, its finance director Ventje Suandana said Thursday. (Asia Pulse 24-Sep-1999) ========= J A P A N ========= MINEBEA CO.: Posts first-half loss ---------------------------------- Minebea Co. (TSE: 6479) announced Wednesday it calculates 5 billion yen in consolidated net loss for the half-year through Sept. 30, compared with a profit of 2.5 billion yen in the same period last year. The large-scale miniature ball-bearing maker will mark 22 billion yen in loss on the sale of its group credit firms. Minebea plans to sell its domestic credit firm to Texas- based Lone Star Fund for 3.5 billion yen. The company also plans to liquidate its three overseas credit firms within a year. On a parent-only basis for the half-year, Minebea calculates a 42.1 billion yen extraordinary loss and a 22.5 billion yen net loss, compared with a net profit of 3.1 billion yen for fiscal 1998 first-half. The firm, however, will not alter its plans to pay an interim dividend of 7 yen. For the full year through March 2000, consolidated pretax profit is expected to rise 14% to 23 billion yen and consolidated net profit is forecast at 1 billion yen. (Asia Pulse 24-Sep-1999) ========= K O R E A ========= DAEWOO ELECTRONICS: Sale still up in the air -------------------------------------------- The sale of Daewoo Electronics to a foreign buyer, which had been expected to be the first of many Daewoo unit sell- offs to overseas investors, remains up in the air. Daewoo had announced last month that the firm would be sold to U.S. investors, including Walid Alomar, for US$3.2 billion and that the main sales contract would be signed September 9. According to Daewoo Tuesday, however, no progress has been made in the deal and U.S. investors are still reviewing documents pertaining to the assets of the firm. The local creditor group of Daewoo Electronics is expected to review the sell-off plan as the delay has dealt a heavy blow to their effort to improve the financial status of the firm before the end of the year. (Digital ChosunIlbo 28-Sep-1999) DAEWOO GROUP: No preference to foreign creditors reiterated ----------------------------------------------------------- Korea's top financial official stressed again that Daewoo Group's foreign creditors will not be given preferential treatment in the repayment of the group's $10 billion overseas debt. Minister of Finance and Economy Kang Bong-kyun said during a meeting with reporters Tuesday that there will definitely be no incentives offered to Daewoo's foreign creditors, meaning that the government has no intention of extending guarantees for the group's foreign liabilities. "I have had a number of discussions with foreign finance ministers and company heads, and the most frequently asked questions involve the Daewoo case. In regard to Daewoo's foreign debt, I have stated my position firmly that there will be no incentives provided to foreign creditors," said Kang who is visiting the United States to attend the 54th annual IMF-World Bank meeting at Marriott Hotel. The top official added that Daewoo's foreign creditors should work in close cooperation with local creditor banks. "Daewoo's overseas creditors must be more actively involved with the forced restructuring process. The government will promise equal treatment to foreign creditors," Kang said. The minister added that he expressed the same view during his meetings with the chairmen of Chase Manhattan Bank and Tokyo-Mitsubishi Bank, stressing that a global status does equate to preferential treatment. Yet Kang's controversial statement runs counter to President Kim Dae-jung's assurances which were issued earlier in the week. President Kim said during an interview with a foreign press that he will make sure Daewoo's foreign creditors not incur any loss from the corporate failure. He said it is necessary to protect the interests of Seoul's international community by keeping the nation's sovereign rating and reputation unharmed. Local financial regulators, who lead the forced restructuring process for Daewoo, and the group's some 240 foreign creditors have been in a serious confrontation for the last two months. The foreign creditor group has demanded the government's assurance on the group's overseas liabilities while the local financial authorities have argued that they cannot guarantee private sector deals. On the issue of Korea's remarkable comeback from the crisis, Kang said that the government is concerned with sustaining the growth. "Korea is no longer focused on increasing the growth level. We now need to sustain it," he said. The nation, which thrived on expansion and growth for the past 30 years, contracted by 5.5 percent in 1998, following the most severe financial crisis in Korea's history. But the economy quickly bounced back this year, with the IMF forecasting that Korea's economy will grow by 6.5 percent supported by a low interest rate policy, lack of immediate inflationary pressure, and stable currency. Signaling an early graduation from IMF stewardship, Korea's year-on-year GDP growth posted 9.8 percent in the second quarter of this year after it had registered a 4.6 percent increase in the first quarter. Regarding the recent proposal from the "Group of Twenty (G-20)" to join others in helping heavily indebted poor countries (HIPCs), Korea will soon contribute to the cause. "Korea will provide a total of $10 million to the G-20 to help poor parts of the world. The total financial package created by 20 IMF member nations will be around $27.4 billion," Kang said. He said it is highly likely that Korea will be a member country of the G-20 with a recommendation from his Canadian counterpart Paul Martin who is to assume leadership of the group. Ministers of 20 nations agreed to more rapid debt relief in fostering sustainable development and poverty reduction among the HIPCs. They will meet in Germany in December to mark the official inauguration of the group. (Korea Times 28-Sep-1999) DAEWOO GROUP: 4 subsidiaries to resume activities ------------------------------------------------- Financial Supervisory Commission (FSC) spokesperson Kim Young-jae said Tuesday that out of the 12 Daewoo subsidiaries that have been place under workout programs, four will be able to resume issuing company bonds and commercial papers. Kim said that as a result, Daewoo Heavy Industries (DHI), Daewoo Electronics, Daewoo Telecom and Orion Electric are planning to make issues worth an estimated combined amount of W10 trillion next month. These four units have been in better financial shape that other Daewoo subsidiaries and will be allowed to issue new bonds at 70-80% of the book value of existing bonds and commercial papers. Various financial institutions have agreed to guarantee the new bonds. The spokesperson added that the proceeds from the new issuance would go towards paying off a W10-trillion portion the total W28-trillion worth of corporate bonds and commercial papers previously issued by Daewoo. According to Kim, the move will help to ease the chill on the local bond market. According to local financial regulations, the four subsidiaries have had room in their financial structure to newly issue W12.8 trillion in bonds as of the end of June. (Digital ChosunIlbo 28-Sep-1999) HAITAI BEVERAGE: To be sold for $255 million -------------------------------------------- Haitai Beverage Co., a major unit of the insolvent Haitai Group, will be sold to Clarion Capital of Hong Kong for 308.9 billion won ($255 million), Haitai's main creditor Cho Hung Bank said yesterday. Cho Hung said it will sign a formal contract with the Hong Kong investment company on the sale of Haitai Beverage today, wrapping up month-long negotiations. The sale price is composed of 246.3 billion won for Haitai's assets and 62.6 billion won for the acquisition of some of Haitai's debts. After designating Clarion as a "priority negotiator" Aug. 18, Cho Hung had been in talks with the Hong Kong firm on the terms of Haitai's sale. Haitai Beverage, a prime soft- drink company, will be handed over to Clarion 60 days after the contract is signed, Cho Hung said. Clarion thinks highly of Haitai Beverage's growth potential and plans to turn it into one of the best beverage makers in Asia, Cho Hung said. The sale of Haitai Beverage is expected to speed up creditors' handling of the Haitai Group, which went belly- up in November 1997. On Sept. 15, creditors of Haitai Confectionery Co., the flagship of the troubled group, agreed to convert the firm's debt of 800.82 billion won into equities. The debt-equity swap is scheduled to be completed around the end of November, while creditors will determine what to do with other Haitai subsidiaries, including Haitai Electronics at the end of next month, Cho Hung said. (Korea Herald 29-Sep-1999, Digital ChosunIlbo 28-Sep- 1999) ORACLE KOREA: Fined 110 million won for unfair trading ------------------------------------------------------ The Fair Trade Commission said yesterday that it has imposed 110 million won in fines on Oracle Korea for unfair trading. According to the commission, the company engaged in illegal activity in the process of bidding for a database management system (DBMS) project at the Seoul National University Hospital in September last year. Oracle Korea produced and used documents that could make the client erroneously perceive products from its rival firm, Sybase, as substantially inferior to its own, it said. The company collected articles from other publications that depict its rival unfavorably. The documents also portrayed Sybase's product as liable to problems without offering detailed explanations, according to the commission. Oracle Korea compared the two products on 11 points, offering distorted data for Sybase's product and crediting the wrong data to reliable industry watchers, it said. The commission said the company's activity constitutes an attempt to lure customers by means which are defined as illegal in the law on fair trade. The commission also ordered the company to publicly announce its violation of the law. Oracle Korea is a Korean operation of Oracle Corp. of the United States, one of the leaders in the global DBMS market. (Korea Herald 29-Sep-1999) =============== M A L A Y S I A =============== ARAB MALAYSIAN BANKING GROUP: Paying down debts ----------------------------------------------- The Arab-Malaysian Banking Group is paying off its debts because the group is now profitable again, according to Mohd Idris Mohd Isa, executive director of Arab Malaysian Merchant Bank Bhd. Idris said the debt payment would not impair the group's capital adequency ratio. "We are paying our debts as we think that we do not need the recapitalisation from the CDRC (corporate debt restructuring committee), as we are back on the profit track," he said after signing agreements related to the listing of Pharmaniaga Sdn Bhd yesterday. (Star Online 28-Sep-1999) CHASE PERDANA: Posts first-half loss ------------------------------------ Chase Perdana incurred a pre-tax group operating loss of RM43.43mil for the six months ended June 30, 1999, as against RM30.13mil loss in the same period last year. Group turnover improved to RM286.66mil from RM280.49mil. (Star Online 28-Sep-1999) FORMOSA PROSONIC INDUSTRIES: Proposes restructuring --------------------------------------------------- Formosa Prosonic Industries Bhd has proposed a restructuring scheme which includes proposed increase in authorised share capital, bonus issue, rights issue, acquisition of industrial land, special issue, employees' share option scheme and transfer to the KLSE main board. The proposals, which were announced on June 30 and Aug 12, were approved by shareholders at an EGM held on Sept 23. (Star Online 28-Sep-1999) PARIT PERAK HOLDINGS: Posts annual loss --------------------------------------- Parit Perak Holdings Bhd has incurred a group pre-tax loss of RM169.9mil for the year ended June 30, 1999, a decline of 36.4% from a loss of RM267.2mil in 1998. Turnover fell 62% to RM49.4mil from previously. (Star Online 28-Sep- 1999) PENGKALEN HOLDINGS: Shrinks first-half loss ------------------------------------------- Pengkalen Holdings Bhd, whose core business is in stockbroking, has reduced its group pre-tax loss by 76.9 percent to RM154.5 million ($ US40.65 million) for the half year ended June 30, 1999 from RM668.9 million ($ US 176 million) in 1998. In its unaudited results released here Thursday, Pengkalen Holdings said the reduced losses were mainly due to substantially lower provision for doubtful debts recovery and foreign exchange gain. Pengkalen Holdings said the provision for doubtful debts made in the period under review was mainly made by broking houses and in accordance with the new guidelines on the suspension of interest and provision for bad and doubtful debts. As for its turnover, the group turnover declined to RM244.5 million from RM312.2 million in 1998, due mainly to trading restrictions imposed on the Broking Houses. Loss per share for the period under review was 78.2 sen from 279.1 sen previously. Pengkalen Holdings did not recommend any interim dividend for the half year. (Asia Pulse 24-Sep- 1999) ===================== P H I L I P P I N E S ===================== MONDRAGON INT'L PHILIPPINES: Foreclosures beginning --------------------------------------------------- Creditor banks of Mondragon International Philippines, Inc. (MIPI) have reportedly begun foreclosure proceedings against MIPI's ousted chairman Jose Antonio Gonzalez for inability to pay some two-billion-peso (US$50 million at PhP40.713:US$1) worth of loans incurred for its 235-hectare Mimosa Leisure Estate in Clarkfield, Pampanga. "We have foreclosed some of his personal properties such as some furnitures, equipment and real estate properties," AsianBank senior vice-president George S. Chua told BusinessWorld in a phone interview. Mr. Gonzalez has mortgaged his shares, or 54% of the company's total stocks, to AsianBank Corp., Far East Bank & Trust Co. (FEBTC) and United Coconut Planters' Bank. Mr. Chua adds that the banks already "have some investors in mind," but would rather begin negotiations only after the book of the company is opened. The Securities and Exchange Commission (SEC) is set to hear today the petition filed by Mr. Gonzalez to prevent the newly elected MIPI board from holding office and taking control of MIPI's Mimosa Leisure Estate in Clarkfield, Pampanga. "As far as we are concerned, they're out. The temporary restraining order they're seeking will settle the issue," Mr. Chua said. A special stockholders meeting was held last September 20 at the Mondragon House in Makati City by the creditor banks. Elected were Eduard S. Go, president and chief operating officer of AsianBank as chairman of the board while elected president was Mario B. Palou, first vice- president of FEBTC. AsianBank senior vice-president George S. Chua was elected treasurer. Earlier, sources said Mimosa is being considered by Macau casino tycoon Stanley Ho who has reportedly teamed up with businessman Dante Tan, owner of listed gaming firm BW Resources Corp. (BWRC). Messrs. Ho, Gonzalez and Tan were seen at the leisure estate compound two weeks ago. Aside from Mimosa, Mr. Ho is also planning to invest into BWRC. The listed gaming firm yesterday said negotiations are going on for the entry of Mr. Ho into the company. Mr. Ho plans to initially acquire a board seat then move on to become chairman of the company. "Negotiations for Stanley Ho's possible investment and chairmanship in BWRC has been held and are ongoing. However, no definite agreement has been reached on these matters as of this day," BWRC corporate secretary Jose Salvador M. Rivera. Jr. informed the Philippine Stock Exchange (PSE). Mr. Tan recently bought Armstrong Holdings, Inc. (AHI) from Tony King given plans to convert the listed firm into the holding company of his businesses. It is not yet known, however, whether Mr. Tan would divest from BWRC with the entry of Mr. Ho. As this developed, BusinessWorld sources said Mr. Tan has reportedly obtained a one-billion-peso (US$24 million) loan from the Philippine National Bank (PNB). Part of the loan will allegedly be used to support the projected appreciation of his company's stock. BWRC has consistently increased its stock value, having reached PhP42.50 per share last Friday from as low as Php2.55 per share in March. PNB cannot be reached for comment. An analyst at a local brokerage firm added that should all the PhP1-billion fund be used to purchase BWRC shares, that would put additional acquisition between 35 million and 40 million shares. Earlier, BWRC announced it has increased its authorized capital stock to PhP15 billion (US$368 million) from PhP450 million (US$11 million) in preparation for future investments as well as accommodate its share- for-asset swap deal with real estate developer Megaworld Corp. The gaming firm has been consistently on the lookout for possible strategic partners to help fund its expansion. Under the setup, Megaworld will have a minority stake in BWRC through 1.2 billion shares to be swapped with the Sheraton Marina Complex being developed by the listed property firm. The property will have a nine- to 10-story entertainment mall to house a gaming area, corporate offices and a bingo central drawing site. Within the marina complex, a 320-room deluxe-class hotel which will be managed by hotelier Sheraton Hotel and Resorts will be put up. The 50,000-square meter complex will also be the site for a casino to be operated by state gaming firm Philippine Amusement and Gaming Corp. An additional 15,000 square meters would also be allocated for Caesar's casino owned by Starwood Sheraton aimed at foreign high rollers and junket tours. Another 15,000 square meters of the property will be used for bingo games once BW's purchase into on-line bingo operator Best World Gaming and Entertainment Corp. is completed. The completion of the marina complex by 2001 is seen to turn in earnings of PhP3.5 billion (US$86 million) on the first year of operations. (Business World 28-Sep-1999) PHILIPPINE LONG DIST.TEL.: Facing 3 billion peso loss ----------------------------------------------------- It seems it has been one headache after another for businessman Manuel V. Pangilinan since he took over as chief executive and president of dominant carrier Philippine Long Distance Telephone Co. (PLDT) late last year. Aside from PLDT's lackluster financial results, he is also faced with the loss of three billion Philippine pesos (PhP) (US$74 million at PhP40.713:US$1) yearly due to illegal toll bypass operations, PLDT's ongoing catfight with Globe Telecom GMCR, Inc. on text messaging interconnection, as well as a chancy investment in a satellite phone service. Mr. Pangilinan, however, said PLDT is quietly but surely putting in place reforms to address problems now facing the company. On the issue of the toll bypass, he said although PLDT doesn't want to make waves at this time, if the situation continues as well as the resulting financial loss on PLDT's part, the company might just sit up and say "enough is enough." Under existing rules, he said anybody using PLDT's system should compensate the company. "We should respect the law. Pero ngayon hindi kami binabayaran, hindi naman tama iyon. (But now, although they are using our system, they are not paying us as prescribed by laws.)" He said PLDT has identified firms illegally bypassing PLDT switches. He wouldn't give out the names of the illegal operators but said "more than one" local carrier has been observed to be bypassing PLDT's toll switches. Toll bypass allows international simple resale (ISR) operators using high-tech gadgets to disguise international long-distance calls as local calls, resulting in huge losses on the part of international gateway operators like PLDT. Long-distance calls are the main profit-generating revenue source of telecom firms, Mr. Pangilinan, meanwhile, also invoked the interconnection law to push for the interconnection of the text messaging services of Smart Communications, Inc. and Globe Telecom GMCR, Inc., considered the pioneer of text messaging services in the country. At the very least, he said local phone firms should not be allowed to interpret the interconnection law according to their own discretion. And assuming this is allowed, he said nothing could stop PLDT if it decides not to recognize the numbers of other phone firms. Executive Order (EO) 59 issued by former President Fidel Ramos in February 1993 effectively required PLDT to open up its facilities for interconnection. This is because only PLDT has the extensive physical infrastructure -- built up through more than six decades of virtual monopoly. The interconnection fight between PLDT and Globe has now reached the courts without as yet signs of letting up. Another business venture which PLDT was forced to review was its investment in satellite-based communication service through ACeS International Ltd. This, after global satellite firm Iridium World Communications LLC failed to meet its subscriber targets resulting in losses. Recently, Iridium was even forced to file for bankruptcy. To be on the safe side, PLDT decided to reduce its stake in ACeS to only 20% from some 38% previously. "We felt more comfortable holding lesser of the satellite risk. It's just a risk rebalancing decision We feel there's more money to be made in cellular services than wireless satellite," Mr. Pangilinan pointed out. Satellite-based mobile phones failed to fly in the US because of its higher-cost and remaining inadequacies. To date, satellite-based mobile phones don't work indoors. But there's definitely a niche market for satellite phones, he said. When asked though if the Philip-pine market is big enough to justify the needed investment, he only said "that's something we have to see." To make up for the technical inadequacy of a satellite- based phone, the ACeS phone will be bundled together with Smart, wherein the local GSM network will take over the system if the phone is used indoors. Mr. Pangilinan said the service will be made available by the second quarter of next year. As this developed, Mr. Pangilinan said the group of retail magnate Henry Sy has shown the most interest in entering the Fort Bonifacio Global City in Taguig. Mr. Pangilinan's Metro Pacific Corp. is jointly developing the former military base with the Bases Conversion Development Authority and other developers as an alternative business center to Makati. Recently, BCDA announced shopping mall developers Mr. Sy's of the SM chain of malls, Gokongwei family through their Robinson's malls, and the Rustan's group have expressed interest on buying properties inside the Global City. Mr. Pangilinan said though that the proposed partnerships are in various stages of discussions. (Business World 28- Sep-1999) ================= S I N G A P O R E ================= KOBE STEEL: Restructuring organization -------------------------------------- Kobe Steel Ltd said it will set up two fully-owned units in Singapore as part of a restructuring, with operations of the two units to be transferred from its existing wholly- owned unit in Singapore, Kobe International (S) Co Pte Ltd. One of the two companies to be set up, Kobelco International (S) Co Ltd, will market and service construction equipment, Kobe Steel said. Another company to be established, Kobelco Machinery Asia Pte Ltd, will manufacture, market and service products such as standard compressors and crushers, it said. (Star Online 28-Sep- 1999) LC DEVELOPMENT: Net worth drops 75 percent ------------------------------------------ A huge write-down of its assets brought LC Development's net worth down from $157 million to just $39 million for the year ended June 30. As a result of write-downs totalling $124 million, the group plunged deeper into the red with a whopping $120 million loss for the year ended June 30. The amount includes a $14 million loss from the sale of 17 Draycott apartments to property dealer Simon Cheong. For the year under review, group pre-tax loss worsened from $14 million to $120 million. Turnover, however, grew 96 per cent to $33.5 million mainly due to sales revenue from its residential developments in Singapore. Loss per share was 91.3 cents compared to a loss per share of 11.4 cents last year. Net tangible assets per share was 30 cents, a hefty 90 cents less than the previous year. No dividend was recommended. Subsequent to the year-end, LC Development completed its capital reduction exercise to shore up its balance sheet. The company cut the par value of its shares to 10 cents from $1 by cancelling issued and paid-up capital of $93.3 million, representing issued and paid-up capital permanently lost or unrepresented by available assets. It also transferred the aggregate of the difference between the post-cancellation paid-up capital per share and its par value of 10 cents a share to a capital reduction reserve. At the end of August, LC Development completed its $162.7 million purchase of the entire share capital of LC Hotels from Lum Chang Holdings and Waterbank Properties. The sellers were paid by LC Development's issue of 562.8 million new shares. Lum Chang and Waterbank, a subsidiary of DelGro Corp, held 60 per cent and 40 per cent of LC Hotels respectively. Following the acquisition of LC Hotels, LC Developments will have 1,207 hotel rooms and 119 service apartment units in Thailand, Vietnam, Australia, China and London in its portfolio. Meanwhile, LC Development shares continued their downward slide. The counter, which hit a year's high at 87 cents in June, closed 1.5 cents down at 34 cents yesterday in thin trading. (Business Times 28-Sep-1999) MEDIARING: Loss-producing company to be listed ---------------------------------------------- A local Internet company whose backers include Creative Technology, United Overseas Bank, Singapore Technologies and the Economic Development Board, is aiming at becoming the first loss-making concern to be listed in Singapore. Sources in Internet circles said the company, MediaRing, could stage its initial public offering (IPO) by mid or late November. MediaRing offers cheap International phone calls over the Internet. The company is said to have raised between S$80mil and S$40mil in private capital, and aims to tap the public for another S$50mil. At its IPO, MediaRing will have a market capitalisation of nearly S$100mil (calculated by multiplying the number of all issued shares by the IPO price). This will qualify it for a listing under a new rule allowing loss-making companies with good growth potential to be listed, provided they have at least S$80mil in market cap. Previously, main board aspirants must have at least a five-year profit record. The new rule, together with other measures to further liberalise the local financial markets, was announced by Deputy Prime Minister Lee Hsien Loong last weekend. Contacted by the Singapore Business Times, MediaRing chief executive officer Ng Ede Phang declined to comment. Ng's reticence appears to be in line with the traditional practice of IPO aspirants lying respectfully low before a listing. They said MediaRing's backers were pushing for a fast IPO as there were "at least a dozen" Internet companies gunning for a listing after BG Lee's announcement. Like most Internet concerns, MediaRing has no profit to speak of. In fact, talk is that it has a "burn rate" Internet jargon on how much money it is using up of S$8mil to S$10mil a year. But this is considered a good even a necessary trait among Internet companies, since high expenditure suggests the company is busily building up its infrastructure for the future. A listing for MediaRing could be highly lucrative for its backers. Observers noted that Nasdaq-listed Internet telephony provider NetZPhone, which went public three months ago, has a market capitalisation of about US$3.5bil (S$6bil). What MediaRing will offer the investing public is a slice of the action in the fast growing, but highly competitive, business of Internet telephony. Making phone calls through the Net was limited to hardcore computer geeks a few years back. But fast-advancing technology has improved voice quality, smoothened pauses and made connections between parties much easier. Today, Internet telephony is posing a real threat to conventional telephone operators like Singapore Telecom, and could supersede them in five to 10 years. (Star Online 28-Se9- 1999) NETWORK FOODS INT'L.: Shrinkgs first-half loss ---------------------------------------------- Network Foods International trimmed its interim losses significantly from $14.6 million to $829,000, helped by a stronger turnover, reduced costs and a foreign exchange gain. Turnover for the six months ended June 30 rose 9 per cent to $23.2 million as the group focused on proprietary brands of chocolate products it manufactures. "The beginning of the regional economic recovery has witnessed an improvement in the overall group results," it said. Its efforts to generate steady growth from new agency lines for its three marketing and distribution companies also lifted sales. Network made a largely unrealised foreign exchange gain of $1.5 million from the appreciation of the Indonesian rupiah against the US dollar, compared with a $9.5 million loss last year. It expects operating results to keep improving. It will continue to consolidate proprietary brands, seek agency lines and control costs. It said it had secured "potentially lucrative" agency lines in Singapore, Malaysia and Hongkong which should "contribute significantly" to second-half results. Its manufacturing units are expanding their platforms in Malaysia and India, having embarked on "attractive" private labels and contract packing arrangements for additional volume. Loss per share narrowed to one cent from 24 cents a year earlier. Net tangible asset backing per share halved to four cents. (Straits Times 28-Sep-1999) PENTEX-SCHWEIZER CIRCUITS: Posts annual loss -------------------------------------------- Printed circuit board (PCB) maker Pentex-Schweizer Circuits yesterday reported a full-time loss for the year ended June 30 but said that it expected the current year to be profitable. It suffered a $16.3 million loss, compared with a $2 million profit a year earlier. The loss was due mainly to a one-time charge of $19.4 million incurred in its rationalisation exercise in which production at its Bukit Merah plant was shut down on June 3. Group turnover fell 9.5 per cent to $134 million on lower production in May and June. Diluted loss per share was 24.1 cents, against an earnings per share of three cents a year ago. Net tangible asset backing per share fell from 92.4 cents to 66 cents. A final dividend of 3 per cent was declared. Pentex intends to invest about $20 million in a new building and equipment to meet demand for high-density interconnect PCBs. The facility is expected to contribute to operating results in the next financial year which begins on July 1 next year. (Straits Times 28-Sep-1999) =============== T H A I L A N D =============== LAND & HOUSES: To sell shares, swap debt for equity --------------------------------------------------- Land & Houses, Thailand's largest developer of detached homes, said it will raise 3.8 billion baht (US$93 million) by selling shares to shareholders and a Singapore state company while swapping part of its debt for equity. The company said it plans to raise 2.49 billion baht by offering shareholders two new shares for every five they own at 14 baht each, about half the current share price. The offer is open to shareholders of record as of October 13 and payment is due in November. The company will raise another 1.32 billion baht by selling 94 million shares this week at 14 baht each to Government of Singapore Investment (GIC), which manages foreign-exchange reserves for the Singapore government. GIC, which does not have shares in Land & Houses now, will own 13 percent of the company. Creditors, led by Siam Commercial Bank, will also be asked to convert an unspecified amount of delinquent debt into a 15 percent stake in the company in the form of common shares and convertible debentures, Land & Houses said. The company's debt totals 21 billion baht. Land & Houses will probably be one of the few Thai companies to sell shares to foreign investors during the rest of the year as slower- than-expected economic growth, mounting loan defaults and a weakening baht erodes investor confidence, analysts said. Siam Cement, Thailand's largest industrial conglomerate, said on Friday it indefinitely delayed a share sale because of poor market conditions. "Land & Houses doesn't have to delay its share sale because GIC already agreed to buy the shares a few months ago," said Pumipat Sinacharoen, an analyst at ING Baring International. "They were just waiting to complete details of the debt restructuring." The share sales will double Land & Houses' share capital to 746 million shares. Proceeds will be used as working capital and to fund the purchase of housing projects from other developers through a property fund. In a move designed to aid the real estate industry, Thailand granted tax privileges to property funds approved between May 1990 and May 1999 "We don't have a specific plan for our property fund yet," said Executive Vice President Adisorn Thananun-Narapool." But we must establish it within a certain period to obtain the tax privileges." Some foreign institutions have already set up property funds, though they have not been very active. "Existing property funds haven't been buying many projects because they can't agree on the prices," Adisorn said. Land & Houses shares fell 7 percent to 26.75 baht. At the same time, GIC has bought an 11 percent stake in the Charoen Pokphand group's CP 7-Eleven, the Business Times reported, citing data from the Thai Ministry of Commerce. Thaivest, a GIC affiliate, bought 20 million shares, or a 10 percent stake, in the privately held CP 7-Eleven, while GIC bought a further 2 million shares or a 1 percent stake. CP 7-Eleven, which has 1,000 convenience stores across Thailand, has plans to seek a listing on the Stock Exchange of Thailand later this year, the paper reported. Last month, GIC, which manages investments of more than $58 billion, said an real annual rate of return on its investments of between 3 percent and 4 percent is an acceptable long-term yield. (Bloomberg, Business Day 28- Sep-1999) THAI TEL.& TEL.: Y2K woes on top of debt restructuring ------------------------------------------------------ Executives of Thai Telephone and Telecommunication already have enough headaches from the challenge of restructuring 32 billion baht in debt. Add Y2K woes as well. Several analysts have changed their recommendation on TT&T to "sell" in recent months, citing the slow pace of debt restructuring, political risks and the company's progress in addressing the millennium computer bug. The company's efforts in solving Y2K problems were among the slowest among major firms listed on the Stock Exchange of Thailand, one analyst said. TT&T, concession holder for 1.5 million fixed telephone lines in the provinces, said last month that it had spent about half of its 416-million-baht budget for Y2K compliance. A debt restructuring agreement with 43 creditors is expected to be concluded by year-end. Last month, Shin Corporations scrapped talks to form a strategic partnership with TT&T. "TT&T continues to lose money. And while the company's board has approved a budget for Y2K, it remains uncertain whether the company will be able to change systems in time," one analyst said. But TT&T says its computer and telephone systems are well- prepared. Chutichai Napasub, vice-president of networks and operations, said contingency plans were expected to be finalised within the third quarter. Backup systems would run in parallel while main systems were overhauled. Computers would also have their clocks turned back four years. "Even if there are any problems, customers won't notice anything. In a worst-case situation, there could be some impact on the recording of telephone charges," he said. He said the company had no problems funding its Y2K work, noting that it had cash reserves of more than two billion baht with local banks. Creditors have also approved plans to set aside funds for dealing with Y2K. "Our suppliers have also signed contracts with us already. If we do have any problems, they will be in the form of outside, uncontrollable events more than anything," Mr Chutichai said. He acknowledged that debt restructuring had moved relatively slowly. Creditors are in disagreement about the best strategy. And uncertainty remains about how to convert concession and revenue-sharing agreements with the government. Without a formal "standstill" agreement, some lenders are charging penalty interest charges as high as 40% on defaulted loans. (Bangkok Post 28-Sep-1999) WATTACHAK GROUP: To seek restructuring next month ------------------------------------------------- The financially beleaguered media company, Wattachak Group, will organise a creditors' meeting next month to seek their agreement on restructuring its 5.9-billion-baht debt. The group now publishes its daily, Wattachak 2000, replacing the daily Wattachak. The Revenue Department seized the company's former masthead, along with those of its other publications, for failure to pay 179 million baht in taxes. Santi Ruangpaisalbamrung, Wattachak managing director, said the company now possessed only core assets including land, office buildings and a printing house. Other assets such as office equipment had been seized. The company applied in June to join the Corporate Debt Restructuring Advisory Committee programme, overseen by the central bank, for major debtors. Wattachak's major creditors are Bangkok Bank, Krung Thai Bank and Arab Banking Corp. Mr Santi said he could not predict the attitude of the company's creditors at the meeting, "but we will have to see what they would do with us". He said Wattachak would not propose anything to the creditors as the company was insolvent. "We could not even employ a financial consultant to write a debt restructure plan for us," Mr Santi said. Although the company's publication mastheads were foreclosed, it would not affect the company in publishing the daily, Mr Santi said. Before the foreclosure, the company had transferred its remaining employees to work for Wattachak Classified Co, a newly established firm which publishes the daily under the new masthead, Wattachak 2000. The Revenue Department had an appraisal value, for all six mastheads, at 56 million baht and is expected to announce soon auction dates for their sale. Meanwhile, Sunan Srichantra, a senior editor of Krungthep Thurakit daily, a Thai-language business daily of The Nation group, said he did not think the Revenue Department would be successful in auctioning the Wattachak group's mastheads. Before joining Krungthep Thurakit, Mr Sunan owned several newspapers, which were all closed. Demand for the mastheads is limited to those who want to invest in publications. Moreover, the successful investors would have to invest a lot more in production and build tangible assets, he said. (Bangkok Post 28-Sep-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. 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