TCRAP_Public/991026.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, October 26, 1999, Vol. 2, No. 208


* C H I N A  &  H O N G  K O N G *


* I N D O N E S I A *

PT MEDCO ENERGI CORP.: Gets creditor approval of rehab

* J A P A N *

PFIZER PHARMACEUTICALS: Fined for tax evasion

* K O R E A *

DAEWOO GROUP: Debt workout plans expected by Nov. 2
DAEWOO GROUP: No workout involvement for foreign creditors
DAEWOO GROUP: No lawsuits for foreign banks
DAEWOO GROUP: Loan loss ratio could hit 50 percent
DAEWOO SECURITIES: FSS begins funding probe
HYUNDAI GROUP: To let go of 53 affiliates in rehab
HYUNDAI GROUP: To focus on five core businesses
KEUM KANG DEVEL.IND.CO.: FTC eyeing for possible probe
LOTTE DEPT. STORE: FTC eyeing for possible probe
SEOUL INVEST. TRUST MGMT. CO.: FSS begins funding probe
SHINSEGAE DEPT. STORE: FTC eyeing for possible probe

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

PHILIPPINE AIRLINES: IATA readmits after debt payoff

* T H A I L A N D *

AROMATICS (THAILAND) PLC: Creditors approve rehab plan
HMC POLYMERS CO.: To raise capital as part of rehab
SIAM CEMENT: Expects restructuring to accelerate

C H I N A  &  H O N G  K O N G

Dragged down by a $132.88 million exceptional loss, King
Pacific International Holdings suffered a $200.8 million
net loss for the year ended 31 March.

Chairman Cheung Yiu-wing blamed the sluggish results to
huge provisions made for certain projects and investments
as well as for non-recovery of a deposit.  Turnover fell
47.4 per cent to $1.73 billion. Operating loss widened
sharply to $56.4 million from $2.7 million last year.

Commenting on the building construction, maintenance and
renovation business in Hong Kong, Mr Cheung said the
operation experienced a 48.1 per cent fall in turnover to
$1.65 billion.  The division recorded an operating loss,
excluding interest expenses, of $28.3 million due to
competition and an unexpected loss of one of its projects
in Tseung Kwan O because of delays and rework.

King Pacific's local restaurant operation also posted a
$6.7 million operating loss.  Its 40 per cent owned Hubei
Chang Zhou Power Development (HCZP) plant in Suizhou has
been suspended because of disputes with the mainland
partner on the replacement of HCZP's management.  (Hong
Kong Standard  25-Oct-1999)


PT MEDCO ENERGI CORP.: Gets creditor approval of rehab
PT Medco Energi Corp. (JSX:MEDC) said part of its debts
would be converted into shares and the rest would be
settled with a rollover of 8 years.

A company spokesman said the decision was made in a meeting
last week attended by its creditors representing 92% of its
total loan.  The spokesman said the creditors gave
commitment to support the restructuring program of the oil
and gas contractor.  In an earlier meeting, Medco succeeded
in securing agreement from the majority of 52% of the
creditors to restructure its US$ 250 million debts.  (Asia
Pulse  22-Oct-1999)


PFIZER PHARMACEUTICALS: Fined for tax evasion
Pfizer Pharmaceuticals Inc., the Tokyo-based affiliate of
U.S. drugmaker Pfizer Inc. and the producer of the anti-
impotence drug Viagra, failed to declare a total of 4.5
billion yen in corporate income over a four-year period to
November 1998, industry sources said Sunday.

The Tokyo Regional Taxation Bureau, which discovered the
alleged tax evasion, is believed to have ordered Pfizer
Pharmaceuticals Inc. to pay 1.8 billion yen in additional
taxes and penalties.  The tax authorities judged that the
company's taxable corporate income flowed out of the
country in the form of interest because the interest rate
on loans from an affiliated finance company in Ireland was
extremely high, according to the sources.

Pfizer Pharmaceuticals decided not to file a complaint and
has already paid 2.7 billion yen, including local taxes,
the sources said.  In 1991, Pfizer Pharmaceuticals entered
into a long-term loan contract with the Irish financier
that pegged interest rates to business performance,
company sources said.  Those interest rates have
skyrocketed compared with market interest rates in Japan
since 1995, when Pfizer Pharmaceuticals' business started
taking off, resulting in absurdly huge profits for the
Irish company, sources said.

Ireland has a preferential tax system for foreign companies
in order to invite foreign investment.   Pfizer
Pharmaceuticals, which sells medicines mainly to hospitals,
posted sales of 149 billion yen in the business year to
November 1998, according to a private credit research
company.  (Kyoto News, NewsHound  24-Oct-1999)


DAEWOO GROUP: Debt workout plans expected by Nov. 2
Creditors of the Daewoo Group will conclude debt workout
plans for 12 of its affiliates between Friday and Nov. 2.

The workout plans will cover a broad range of issues,
including the ratio of loss-sharing, business plans,
estimated sales revenues, self-help plans and debt
rescheduling.  The decision was made at a meeting between
officials of the Corporate Restructuring Coordination
Committee and the six large creditor banks of the group -
Korea Development, Korea First, Seoul, Korea Exchange, Cho
Hung and Hanvit, a commission official said.

Creditors are expected to announce workout plans for five
Daewoo affiliates that are relatively in good shape -
Daewoo Heavy Industries, Daewoo Electronics, Daewoo
Electronic Components, Orion Electric and Keangnam
Enterprise - by Thursday or Friday, when foreign creditors
hold meetings in Tokyo.

On Saturday, debt workout plans for the four auto-related
firms - Daewoo Motor, Ssangyong Motor, Daewoo Motor Sales
and Daewoo Telecom - will be finalized, with Daewoo Corp.'s
workout plan to be concluded the next day. Plans for two
financial firms, Dynasty Club Korea and Daewoo Capital, are
due Nov. 2.

Prior to concluding the workout plans, creditors said they
will complete mid-term audits of nine of these affiliates
except Daewoo Corp. and two financial firms by today.
(Korea Herald  25-Oct-1999)

DAEWOO GROUP: No workout involvement for foreign creditors
Foreign creditors of the Daewoo Group are not likely to
participate in the rehabilitation process of the 12 Daewoo
units put under debt-workout plans, a financial regulator
said yesterday.

The official said foreign creditors have been confirmed to
have no intention of participating in the workout process
at meetings with Daewoo and Seoul government officials.
He said foreign creditors are expected to endorse a
temporary repayment freeze at their planned Oct. 28 meeting
in Tokyo and will try to recover their loans to Daewoo
through negotiations with domestic creditors and Seoul
government officials.

"They are not willing to join the rehabilitation process
because that may entail provision of new loans or debt-for-
equity swaps," the official said. "In addition, since their
exposure to Daewoo is smaller than that of domestic
creditors, they will not have a bigger say in decision-
making than domestic creditors."

The foreign creditors' stance is that if the debt workout
process bears fruit, they can share in it. But if things go
wrong, they will resort to legal suits to get the most out
of Daewoo, the official said.  (Korea Herald  26-Oct-1999)

DAEWOO GROUP: No lawsuits for foreign banks
Most major foreign creditor banks of Daewoo Group have no
intention of filing lawsuits to secure their loans, said a
key member of the steering committee of the foreign
creditors to Daewoo.

Despite a number of legal cases in progress, Daewoo's large
overseas creditors want to see a peaceful solution to the
group's $5.05 billion in debts, he told The Korea Times

"There are a number of cases where overseas creditors have
taken legal measures to get their money back from Daewoo,"
said a foreign banker.  "But a consensus has been reached
among Daewoo's major foreign creditors that launching legal
proceedings is not an appropriate choice. Large creditors
will resolve the issue through continued dialogues with
Daewoo and the Korean government."

This is a major breakthrough to rescheduling Daewoo's
foreign liabilities and is expected to give a big boost to
Daewoo's successful return from its temporary liquidity
crisis.  The threat from foreign creditors that they would
take legal actions to protect their interests has been the
only factor standing in the way of the government's swift
restructuring of Daewoo.

Now with the commitment from Daewoo's major creditors that
they will refrain from legal actions, the workout process
of Daewoo will gain momentum.  Earlier a senior Citibank
official also said that the U.S. bank will not consider
lawsuits against Daewoo.  Onno Ruding, vice-chairman of
Citibank, said last week in Seoul that the bank will not
adopt such hardline policies.

After being informed that Daewoo is unable to pay its
short-term overseas liabilities until the workout is
complete, a number of small European creditors have filed
lawsuits to secure their loans to the group.  France's
Netexis Banques Populaires filed a legal action on July 17
against an overseas subsidiary of Daewoo in Hong Kong for
the amount of $10 million.  Bank Brussels Lambert,
Belgium's second largest bank, filed a lawsuit against
Daewoo to secure a $10 million loan to the group's overseas
motor sales firm.

Regarding the Oct. 28 meeting of all foreign creditors, the
committee member noted that it is unlikely the participants
will draw any conclusions.

"We do not believe the meeting in Tokyo will produce any
universal decision. There are over 200 banks involved with
the issue and it is practically impossible to expect a
common answer," he said.  "Some banks may be calling for
tough actions to secure their money while others will take
moderate lines. One thing clear is that everyone wants to
see Daewoo recover from the crisis and for it to be able to
pay back debts on its own."

The first general meeting of Daewoo's foreign creditors
took place in Seoul on Aug. 18 during which they formed a
nine member steering body represented by Chase Manhattan,
Citibank, HSBC, ABN AMRO, UBS, Tokyo-Mitsubishi, Dai-Ichi
Kangyo, NAB and Arab Bank.  Through the steering panel,
foreign creditors have demanded that the Korean government
consult with them prior to issuing any debt restructuring
plans for Daewoo.

They also presented a view through the committee that the
financial authorities provide a guarantee on their credits
in Daewoo should the group fail to repay their overseas
loans.  It is only then that they will agree to refrain
from legal actions to recover the short-term credits in

However, the two sides have reached no accord on any of the
issues raised in the last two months.  The local
authorities conducted a rehabilitation of Daewoo while
excluding the group's foreign creditors.  On the issue of a
government guarantee, the Korean authorities flatly ruled
out the possibility, saying the international standard does
not allow the government to offer assurances on private
deals.  The foreign creditors on the other hand also failed
to live up to their word of refraining from legal actions
as some have already filed law suits overseas to secure
their money.  (Korea Times  25-Oct-1999)

DAEWOO GROUP: Loan loss ratio could hit 50 percent
The loss ratio on loans owed by affiliates of South Korea's
ailing Daewoo Group is expected to reach 40% to 50% on
average, greater than had been estimated, analysts said

The ratio is the proportion of loans in excess of the
group's assets as determined by a due diligence study that
is to be completed this week.  The financial markets have
been keen to learn the figure -- and how much of a haircut
financial institutions are going to have to take in the
Daewoo debacle.

South Korea's second-largest conglomerate is being
dismembered by its creditors. The government put the
group's debts at 61.8 trillion won ($51.3 billion) at end-
June and about a tenth of that is owed to foreign bankers.
Analysts said the due diligence could put the loan loss
ratio at well beyond the 30% to 35% previously estimated by
government officials. But if the market's estimates of 40%
to 50% prove correct, that would mean at least $25 billion
of Daewoo's debts would have to be chalked up as a loss.

Local creditors put 12 core affiliates of the group under a
debt workout program in late August in an effort to keep
them afloat long enough to sell them to a third party, spin
them off, or close or merge them.  Daewoo hired Lazard
Freres & Co. to work with local creditors on the due
diligence, the result of which will become the basis for
drawing up detailed debt rescheduling plans for each
company by early next month.

Officials at the Corporate Restructuring Coordination
Committee, formed by local creditors, declined to comment.
But an official at a leading local creditor bank told
Reuters the ratio would turn out to be bigger than had been

"I can't give you an estimate in number but it would be
quite different from what has been expected," said the
official, who declined to be identified.

Analysts estimated the loss ratios would range from 20% to
60%, depending on the individual Daewoo company. The
highest ratio would likely apply to Daewoo Corp., which
handled much of the financing for the group's affiliates.

"The ratio for Daewoo Corp. would reach more than 50% while
that for Daewoo Motor Co. will likely be slightly below
50%," an analyst at a foreign brokerage house in Seoul
said. "Other companies may show less than a 30% ratio."

Higher-than-expected loss ratios would have a direct impact
on the local investment trust companies that hold most of
the estimated 27 trillion won worth of Daewoo's debt
securities, because the ratios would apply in putting a new
market value on Daewoo's bonds and commercial paper.
Bank creditors, on the other hand, won't be hit as hard
because they have already been provisioning for potential
losses on their problem loans since earlier this year,
analysts said.

"The higher ratio will shock markets at first, but it will
be accepted as a very positive sign in the long run that
the country no longer conceals the reality," Mok Young-
chung, banking analyst at ING Baring Securities, said.

Lack of facts about the magnitude of troubles and potential
recovery for Daewoo companies has been the biggest obstacle
in charting the group's rescue plans.  (Reuters, Business
World  26-Oct-1999)

DAEWOO SECURITIES: FSS begins funding probe
SEOUL INVEST. TRUST MGMT. CO.: FSS begins funding probe
The Financial Supervisory Service has started probes into
Daewoo Securities and Seoul Investment Trust Management Co.
on suspicions of illegal provision of funds to other Daewoo
Group firms.

The investigation is part of the financial watchdog's
comprehensive scrutiny of financial institutions affiliated
with the top-five chaebol groups. Regulators have already
completed investigations of financial units run by the
Hyundai, Samsung and LG Groups. Currently, they are looking
into SK Group firms.

Investigation into Daewoo units was slated to start in the
middle of next month but was advanced.  Officials said the
probe into Daewoo Securities will focus on its transactions
with sister firms. If illegal deals are detected, involved
company officials will be punished, they said. The probe,
scheduled to be completed by Nov. 20, will also examine the
company's assets and liabilities.

Daewoo Securities, which was recently spun off from its
parent group, had been a key source of financing for Daewoo
affiliates.  The inspection of Seoul Investment Trust
Management, which has been experiencing severe fund
shortages, will focus on its assets and debts to devise
measures to keep it afloat.

Investigators will also check whether the company has
illegally put Daewoo bonds into customers' trust accounts.
Seoul Investment Trust has been managed by the Daewoo
Group, although the Hanjin Group is its largest
shareholder.  (Korea Herald  26-Oct-1999)

HYUNDAI GROUP: To let go of 53 affiliates in rehab
The restructuring plan of South Korea's Hyundai Group
became clearer Friday as the conglomerate announced it will
let go of 14 affiliates next month.

Park Se-yong, head of the group's restructuring committee,
said Hyundai will sell off Aluminium of Korea within two to
three weeks and Diamond Ad sometime next month. Other
affiliates to be put on the selling block are Hyundai Pipe
and Hyundai Elevator around the end of this year.

With the expected merger of Hyundai Petrochemical and
Samsung General Chemical just around the corner, Hyundai
will let 20 affiliates go before the year is out.  Park,
also the chairman of Hyundai Merchant Marine Co., said
Hyundai will not participate in an international bidding
for Samsung Motors even if it is held.

The Hyundai Group is on schedule for its plan to let go of
53 affiliates this year, of which 33 have already been spun
off. Of the remaining 20, 14 will be taken care of early
next month.  Park said Hyundai will have no trouble
bringing down its debt ratio to below 200 percent by the
end of this year through spinoffs, mergers, sale and rights
offerings.  (Asia Pulse  22-Oct-1999)

HYUNDAI GROUP: To focus on five core businesses
Hyundai Corporation, burdened with debts of US$27.5
billion, has been undergoing a major overhaul in which it
will focus on only five core businesses out of the present

After more than two years of regional economic and
financial crisis, Hyundai has decided on a strategy to
develop five core businesses -- automobile, semi-conductor,
heavy industry, construction, and finance and services --
into leading global companies in terms of competitiveness,
in their respective industries.

At the same time, the conglomerate will dispose of its 10
other business lines.  At last week's World Economic Forum
in Singapore, attended by more than 700 political and
business leaders, chairman Park Se Yong said Hyundai was
moving ahead to execute the financial and business
restructuring programme without delay.

South Korea is among the three Asian economies, Thailand
and Indonesia being the other two, that entered the
International Monetary Fund programme after the July 1997

"Under the principle of selection and concentration,
Hyundai has selected the five core industries that remain
globally competitive," said Park, who added that the group
would concentrate its management resources on the core
businesses so that they could climb to at least third slot
in each of their industries.

To achieve the objective, he said, the group would pursue
more profit orientation and would not make any new
investment. It would also withdraw from any existing
businesses not generating profit.  The new strategy is a
contrast to the pre-crisis days when Asian companies, South
Korean included, embarked on relentless expansion drives,
resulting in the chaos witnessed in 1997 and an
overcapacity in many industries due to a collapse of

Park said Hyundai's core industries will be divided into
five independent groups, beginning with the separation of
the automobile sector in the first half of 2000. The
remaining four core industries will be disaffiliated by
2003. The group will shorten the disaffiliation period if
circumstances permit.  For each core industry, Hyundai will
intensify research and development (R&D) efforts by
establishing R&D centres and forming strategic alliances
with leading foreign companies.

This would enable the companies to become globally-
competitive enterprises on the international market, he
said.  To improve corporate governance, Hyundai will also
simplify cross-shareholdings and continue implementing the
policy for independent directors and auditors.

"The group has already installed the independent directors
system for the first time in Korea and has consolidated the
management responsibility to a higher level so that each
company is managed through the dual system of a board of
directors and management executives.  In addition, each one
of Hyundai's largest shareholders was appointed as a
representative director in some of the major subsidiaries.
For more transparent information, Hyundai is well prepared
to issue combined financial statements beginning in 2000''
he said.

According to Park, Korea's big business groups were
gradually building up sound and stable financial structures
by reducing debt-equity ratios through various means such
as selling assets, spin-offs, company disaffiliation and
issuing new shares.  Secondly, the business structure of
big groups was being improved so that they could
concentrate on core businesses with core competence via
consolidation, sales of subsidiaries, mergers and
acquisitions, and business swaps which were being pursued.

Park said some people may think that Hyundai's corporate
restructuring process looked a little bit slow, this was
because of the fact that Hyundai had mainly large-scale and
a heavy industry oriented business structure.  As executive
chairman of Hyundai Corporate Restructuring Committee, he
believed that the group would complete all restructuring
plans by end of this year to allow each of the companies to
pursue its own corporate restructuring programme.

The group plans to reduce its debt to equity ratio to 200
per cent at end of this year from 340.8 per cent at end of
the first half of this year.  Hyundai also plans to shrink
the total number of its affiliates to 32 from 46 by early
November via spin-offs, mergers and a liquidation in the
latest stage in its restructuring programme.

The conglomerate also plans to shed an additional six units
by the end of the year to complete its previously announced
plan of reducing its operations to 26 affiliates from 79, a
Hyundai Group source said.  Hyundai Group will spin off
Chip Pac Korea Co Ltd, Transorient Shipping Co Ltd and Kia
Intertrade Co and will liquidate Hyundai Broadcasting
System.  (The Nation  26-Oct-1999)

KEUM KANG DEVEL.IND.CO.: FTC eyeing for possible probe
LOTTE DEPT. STORE: FTC eyeing for possible probe
SHINSEGAE DEPT. STORE: FTC eyeing for possible probe
The country's "Big Three" department stores are reacting
sensitively to the news of an upcoming Fair Trade
Commission (FTC) probe of the five biggest chaebol's inter-
group business transactions, including ties with companies
which were spun off from the groups.

Hyundai Department Store, operating under the corporate
name Keum Kang Development Ind. Co. and Shinsegae
Department Store are being discussed as possible subjects
of the FTC probe which will start at the end of this month.
Lotte Department Store, an affiliate of the Lotte Group, is
also paying close attention to the situation. The Lotte
Group ranks 11th among chaebol groups.

Industry insiders point out that Keum Kang Development Ind.
Co., which separated from the Hyundai Group last April, may
become a target of the FTC probe, as it has separated from
the group only recently and holds shares in Hyundai Asan
Corp., a Hyundai Group affiliate.  Keum Kang Development
Ind. Co. officials say that they have no cause for worry
but nevertheless admit that the 5 percent interest the
company holds in Hyundai Asan Corp., set up last February
for the purpose of Mt. Keumgang development, could invite
suspicions about its ties to the group.

However, Keum Kang Development Ind. Co. officials emphasize
that there are no legal problems. The 5 percent interest is
far below the 15 percent stake limit in an unlisted
affiliate stipulated by the Fair Trade Law.  To set the
department store apart from Keum Kang Development Ind.Co.,
the Hyundai Department Store is reported to be revamping
its corporate image.

Shinsegae Department Store, which separated de facto from
the Samsung Group in 1992 before being legally separated
last year, is another likely target of the upcoming FTC
investigations. Samsung Corp., an affiliate of the Samsung
Group, also has a retail business which competes directly
with Shinsegae Department Store.

Lotte Department Store officials are not resting easy,
sensing that the probe into the top five chaebol groups
could have repercussions for the retail giant. The store is
reported to have begun its own check into its transactions
with Daehong Communications, the Lotte Group-affiliated
advertising agency, and group-affiliated suppliers.  (Korea
Herald, Digital ChosunIlbo  25-Oct-1999)


PHILIPPINE AIRLINES: IATA readmits after debt payoff
Interlining relations between debt-laden Philippine
Airlines (PAL) and other international airliners are
expected to normalize as the local flag carrier was
recently reinstated in the International Air Transport
Association (IATA) clearing house, following settlement of
the airline's obligations.

"The development restores PAL's interline links with nearly
200 airlines worldwide and considerably boosts its
prospects for recovery," PAL said in a statement.

Earlier, PAL's permanent receivership committee (PRR)
drafted recommendations to amend PAL's repayment plan,
particularly the payment of IATA claims.  The PRR, chaired
by Renato Z. Francisco, the proposed IATA settlement was
approved by 55.05% of PAL's creditors, including the
European Export Credit Agencies.

The amended repayment plan for the IATA claims did not only
do away with the original 12 monthly installment scheme but
also required an additional security deposit of $12 million
to be paid by PAL over a three-month period. Under the new
payment plan, the $12-million deposit is refundable with
interest after one year, provided PAL is current on its

PAL settled its remaining $13 million outstanding loan to
IATA this October, following the SEC's go-signal, and as
part of the airliner's effort to regain the confidence of
the international airline industry.  Meanwhile, the
airliners that have formally restored normal interline
relationships with PAL include Lufthansa, British Airways,
Qantas, Singapore Airlines, Thai Airways International,
Korean Airlines and Gulf Air, among others.

Interlining allows the acceptance of PAL tickets, airway
bills and other travel documents for carriage by other
airlines, giving the flag-carrier access to more
destinations.  The IATA settlement will also allow PAL to
collect its receivables from other airlines relating to
ground handling and catering services in Manila.  PAL was
suspended form the clearing house in September 1998 after
falling behind on its interline dues amounting to over $32
million.  (Business World  26-Oct-1999)


AROMATICS (THAILAND) PLC: Creditors approve rehab plan
Aromatics (Thailand) Plc (ATC) has won creditor approval of
its US$400-million debt-restructuring plan, which calls for
an additional $200 million to be injected into the company,
and will submit it to the Cabinet for approval.

ATC's major shareholder, the Petroleum Authority of
Thailand (PTT), has already approved the deal.
Pichai Chunhavajira, PTT's deputy governor for corporate
finance and accounting, said commercial banks led by Sunwa
Bank of Japan had approved ATC's debt-revamp plan. Along
with a $200-million parallel loan, this group of creditors
agreed to offer a two-year grace period for debt repayment.

"We have convinced the banks that PTT and other
shareholders of ATC are committed to help ATC solve its
problems. Also, these creditors have agreed that ATC's
business still has the potential to grow once petrochemical
prices pick up in the next few years," he said.

At the same time, however, the remaining creditors, which
are export-import banks, still object to the debt-revamp
plan. This group of creditors, which controls about half of
ATC's debt, is led by the Export-Import Bank of Korea.
The $200-million parallel loan will be used to repay debt
owed to the export-import banks in six-month installments,
said Pichai.  The interest rate of the parallel loan will
be minimum lending rate (MLR), he said.

According to the debt-restructuring plan, ATC's
shareholders will have to inject a combined $210 million
into the company's capital increase.  Additionally, PTT,
which holds 44 per cent in ATC, will extend credit for
condensate purchasing from the national oil firm at an
interest rate of 3 per cent over MLR, Pichai said.
The other shareholders of ATC are Banpu (9.5 per cent),
Siam Cement (15 per cent), the Crown Property Bureau (5 per
cent) and minority shareholders (12.75 per cent). ATC is
listed on the Stock Exchange of Thailand, and 13.75 per
cent of it is held by the public.  (The Nation  25-Oct-

HMC POLYMERS CO.: To raise capital as part of rehab
HMC Polymerc Co., a petrochemical firm under the Bangkok
Bank/Hua Kee group, said it would raise registered capital
by another Bt400 million early next year once the company
had reached an agreement with creditors to restructure its
Bt4-billion debt.

HMC managing director Pichit Nithivasin said increasing the
capital was a condition set by the company's creditors
after the banks agreed to extend loan repayment by two
years. The company will soon sign debt-restructuring
agreements with seven or eight creditors, both local and
foreign banks.

"We have to raise the capital since a part of HMC's debt is
short-term borrowing," said Pichit in an exclusive
interview with The Nation.

HMC's registered capital is Bt2 billion. Since the crisis
in the region the company has increased capital by Bt200
million.  For the newest capital increase, all of HMC's
shareholders have agreed to inject capital into the company
in a bid to retain their ownership. The move reflects their
belief in the potential of the petrochemical industry.

Under the current shareholder structure, US-based Montell
holds a 40-per-cent stake in HMC, while Taiwan
Polypropylene owns 5 per cent. The remaining 55 per cent
belongs to Thai shareholders, including BBL and Pichit's
Hua Kee group.  At the same time HMC will increase its
production capacity of polypropylene (PP) by getting rid of
the bottlenecks in its second production unit.

Thanks to the streamlining, the first plant's capacity has
been increased to 200,000 tonnes a year from 160,000
tonnes. The second plant's output will rise to between
200,000 and 250,000 tonnes from 160,000 tonnes at present.
Also, the company aims to boost its exports from the
existing 15,000 tonnes per month to 20,000 tonnes next
year. About 30 per cent of exports, or 7,000 tonnes a
month, will be to Japan, which has lost competitiveness in
terms of production cost with Thai manufacturers.  Exports
to Japan are 2,000 to 3,000 tonnes a month.

On the domestic market, Pichit anticipated that overall
demand would pick up by 10 per cent after dropping 10 per
cent last year from the 1997 level. Prior to the crisis,
local demand for PP had been growing by 15 to 18 per cent a
year, Pichit said.  Apart from HMC, Pichit oversees another
seven firms in the BBL group, including Bangkok Synthetics
Co (BST), BST Elastomers CO (BSTE), Bangkok Polyethylene
Plc (BPE) and small power-producer Bangkok Cogeneration Co
(BCC). BPE is planning to remove bottlenecks and improve
efficiency at a marginal cost.

HMC is the sole company in the group which has had to
restructure its debt, he said, adding that businesses of
other subsidiaries had been settled.  Ongoing projects have
been completed and now become operational, while future
projects will be postponed two to three years pending
recovery of domestic and regional markets, he said.
BST has already increased its capacity of butene-1 from
10,000 tonnes a year to 35,000 tonnes. Butadiene and
isobutylene projects have been operating with a capacity of
140,000 and 40,000 tonnes respectively.

BST meanwhile expanded to downstream petrochemical projects
by co-investing with JSR Corporation and Nippon Zeon to set
up BSTE. The company is now producing and 40,000 tonnes of
butadiene rubber and 60,000 tonnes of styrene butadiene
rubber a year.  (The Nation  25-Oct-1999)

SIAM CEMENT: Expects restructuring to accelerate
Thailand's flagship industrial conglomerate Siam Cement Plc
said it expects its restructuring programme to speed up as
the Thai economy is recovering.

Siam Cement vice president Aviruth Wongbuddhapitak said
that after a slow start, the company's balance sheet will
begin to see significant results from its restructuring in
the third and fourth quarter of this year.  One major
business restructuring deal is expected to be announced
tomorrow during a press conference scheduled to announce
its third quarter results.

Aviruth cited proceeds from other business restructuring
and capital increases as among the factors helping Siam
Cement accelerate its financial restructuring. Rising
operating incomes as the economy picks up steam will also
help, he said.

"So far debt reduction from business restructuring has not
yet been much, partly because of the bad market situation.
But in the fourth quarter there will be announcements about
business restructuring every quarter, every six months,"
said Aviruth, in charge of Siam Cement's corporate finance

In December last year, Siam Cement announced it would
downsize around one-third of its businesses to concentrate
on three core businesses -- cement, petrochemicals and
paper.  In his first press interview since September when
Siam Cement cancelled a US$700-million capital increase via
private placement, Aviruth said SCC has met its goal to
reduce foreign debt to balance with export revenues,
currently about $1.5 billion.

According to Aviruth, Siam Cement's foreign debt has been
cut significantly, from $4.5 billion at its peak in mid-
1997 to $2.2 billion now, mainly from refinancing foreign-
currency debts into baht debts.  The group has also cute is
total short-term loans from Bt100 billion to less than Bt20
billion. "We got rid of the two weak points," he said.

However, since total debts have not been reduced much,
Aviruth said Siam Cement would continue to abide by its
business restructuring commitment.  While not ruling out a
capital increase issuance in the future, Aviruth said Siam
Cement has decided to postpone a capital increase
indefinitely. There is no urgent need for a capital
increase, he said, and selling shares now would be like
selling at a discount.

He blamed several negative news reports during Siam
Cement's roadshow for its failure to sell stock at the
indicative price of Bt860-900 per share. Its shares on the
foreign board were trading at slightly above Bt800 at that

"Actually, we did receive a warm welcome, but surely the
investors could not buy the stocks at a rate higher than
the market price.  If we only wanted to dress up [the
balance sheet], why should we sell [the shares] at a
discount. People would ask why did we hurry. We have never
defaulted on our loans. [They would ask] did the banks
pressure us to raise the funds," he said.

Aviruth said Siam Cement plans to use proceeds from the
sale of non-core businesses to reduce its debt by Bt60
billion to Bt70 billion within 2002. This year, business
restructuring could trim close to Bt20 billion from its
debt.  The group plans to sell all of or a majority stake
in its Bt12.5-billion printing and writing paper business
and to merge its Bt7-billion construction steel business
with three other local steel firms.

Siam Cement would not have to consolidate the debts of its
subsidiaries after reducing its stake in the firms to less
than 50 per cent.  Aviruth said he does not expect these
two major deals to be concluded before next year. He said
Siam Cement would use funds from its baht debenture
issuance to pay foreign debts due for next year and to pre-
paid some medium-term loans. Without the debenture
proceeds, Siam Cement would have to use its cash flow to
service about Bt35 billion in debt next year.

Siam Cement is issuing the tranche (totalling Bt12 billion)
of its Bt50 billion domestic debentures. Aviruth did not
rule out the possibility that the firm would issue more
debentures next year.  (The Nation  26-Oct-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
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