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                                A S I A   P A C I F I C

        Wednesday, December 15, 1999, Vol. 2, No. 244

                                            Headlines


* C H I N A  &  H O N G  K O N G *

GUANGZHOU FINANCE: Bankruptcy hearing stayed til March


* I N D O N E S I A *

PT DJAJANTI GROUP: On brink of bankruptcy


* K O R E A *

DAEWOO GROUP: Foreign creditors made cash-buyout ultimatum
DAEWOO MOTOR: GM makes offer during negotiations
DAEWOO MOTOR: Gov't rejects GM offer
HANBO IRON & STEEL: Takeover deal agreed to


* M A L A Y S I A *

MAN YAU HOLDINGS: Rehab goes on despite restraining order


* S I N G A P O R E *

KIAN HO BEARINGS: Trading suspended on criminal charges


* T H A I L A N D *

SIAM CHEMICALS: Posts first-half losses
THAI HEAT EXCHANGE: Creditors approve rehab plan


==============================
C H I N A  &  H O N G  K O N G
==============================

GUANGZHOU FINANCE: Bankruptcy hearing stayed til March
------------------------------------------------------
The Hong Kong subsidiary of a debt-laden financial
conglomerate owned by the Guangzhou municipal government
has once again been granted a stay of execution.

The Hong Kong High Court yesterday agreed to adjourn the
hearing of a bankruptcy petition against Guangzhou Finance,
a unit of Guangzhou International Trust and Investment
Corporation (Gzitic). The judge agreed to postpone the
hearing until 6 March next year.

The 11 creditor banks who had filed the suit had wanted the
hearing adjourned only until January or February. However,
the judge said that at the request of Guangzhou Finance he
had agreed to a later date because of the large number of
public holidays in December and January. The suit has been
put off five times since February this year when the banks
originally initiated legal action after the company
defaulted on a US$30 million (HK$234 million) syndicated
loan it had signed in 1997.

Each time Gzitic has pleaded for more time to work out a
restructuring plan.  Gzitic is still negotiating details of
the plan with creditors, including over 130 foreign
institutions. A draft plan put forward by its financial
adviser, PricewaterhouseCoopers (PwC), in August proposed
50 per cent debt repayment through cash and asset sales and
a further 50 per cent through financial instruments
connected to a new bank.

The last postponement was in August, which the banks agreed
on resumption of interest payments and support in writing
from the Guangzhou municipal government. In June, PwC
estimated that if Guangzhou Finance was liquidated there
would be only 32 to 42 per cent payout to creditors.  (Hong
Kong Standard  14-Dec-1999)


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I N D O N E S I A
=================

PT DJAJANTI GROUP: On brink of bankruptcy
-----------------------------------------
Two tuna fish canning industries in Sorong and Biak, Irian
Jaya province, for the last few months have been forced to
cut production activities due to sharply falling
international prices of canned fish products.

The two fish canning industries also plan to carry out
manpower discharges as a result of sustained losses endured
by the companies.  Management of PT Djajanti Group Irian
Jaya, presently the largest fish canning industry in the
province, Busli Saraka in the provincial capital
Jayapura last Saturday said the price drop in canned fish
products in international markets may endanger the
existence of tuna fish canning industries in Indonesia and
other Asian countries as well.

The tuna fish canning industry owned by Djajanti with
location in Biak regency is one of the largest tuna fish
canning industries in Indonesia and Southeast Asia.
Busli explained, canned tuna fish production of the company
which normally is sold in European and US markets at $ US22
per carton containing 40 cans now sells only for
$US10/carton, while production cost per carton stands at
$US16.

This situation has led to over-production and unable to
sell. In order to minimise losses, production output has to
be reduced, while the possibility of a complete stoppage of
production still exists if sales prices do not improve.
The tuna fish canning industry owned by the Djajanti Group
has a production output of 400 tonnes of fresh fish per day
employing a total of 4,000 workers both on land and at sea.

The fish canning industry was formerly owned by PT Multi
Transpace, a French-Indonesia joint venture company at the
production output of 100 tonnes of fresh fish per day.
Because of going bankrupt the company was then acquired by
PT Djajanti Group, which then constructed a new plant at
the capacity of 300 tonnes of fresh fish per day.  The
canning factory is managed by a Djajanti subsidiary
company, PT Biak Mina Jaya (BMJ) which in the process has
invested billions of rupiah in the venture to modernise the
plant and to construct business infrastructure to become an
export oriented company, since the price of canned tuna
fish at the time was quite good.

Aside from constructing a new plant, which was officially
put in operation in January 1998, the company also
constructed a new fish port and bought modern fishing boats
to enhance the capacity of the fishing fleet left behind by
PT Multi Transpace.   (Asia Pulse  14-Dec-1999)


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K O R E A
=========

DAEWOO GROUP: Foreign creditors made cash-buyout ultimatum
----------------------------------------------------------
The Daewoo Group's domestic creditors and the Corporate
Restructuring Coordination Committee (CRCC) have sent an
ultimatum to the group's foreign creditors that if they
refuse to accept a proposal for a cash buyout of their
claims to Daewoo by the end of this month, Daewoo Corp.
will be put under court receivership.

The buyout proposal was delivered to the Steering Committee
of Foreign Creditor Banks Dec. 7 through Daewoo's financial
and legal advisors, including Lazard Freres & Co. In the
proposal, domestic creditors offered to buy out Daewoo's
foreign debt in cash at recovery ratios of 18 percent for
Daewoo Corp., 33 percent for Daewoo Motor, 34 percent for
Daewoo Electronics and 65 percent for Daewoo Heavy
Industries. For loans extended to the four firms' overseas
operations, recovery ratios of 30 to 90 percent were
offered.

The steering committee reportedly dismissed the proposal as
unsatisfactory, instructing its advisors to cease further
diligence meetings with Daewoo's advisors. A scheduled
meeting between advisors of Daewoo and the committee in New
York yesterday did not take place because of the
committee's refusal to meet.

An official at a domestic creditor bank said yesterday that
domestic creditors have told foreign creditors that their
patience is running out. He stressed that the suggested
recovery ratios and the proposal for cash buyouts of
foreign debt represent the best compensation plan for
foreign creditors.

"We cannot make any more concessions. We have no plan to
make a new proposal, either," he said. A government
official confirmed that the deadline for foreign creditors
to accept the proposal is the end of this month. "The
government and domestic creditors agreed last weekend to
put Daewoo Corp. under court receivership should foreign
creditors refuse to accept our proposal by the end of this
month," he said.

He added that the government has already started to devise
measures to stabilize financial markets and protect small-
and medium-sized enterprises with ties to Daewoo Corp., in
anticipation of the large corporation being put under court
management.  Noting that the law on corporate bankruptcy
was revised Dec. 7, the official said the court procedures
on Daewoo Corp. will proceed swiftly, enabling the
creditors to minimize the fall in the firm's value and
damages to other interested parties.

With the collapse of talks with the steering committee of
foreign creditors, Daewoo plans to contact foreign
creditors one-on-one to persuade them to accept the
proposal. So far, it has refrained from meeting with
creditors on an individual basis in recognition of the
steering committee's representation of the entire foreign
creditor group.

Meanwhile, Daewoo's advisors sent a letter to all of its
foreign creditors Dec. 10, requesting that they promptly
accept the proposal for cash buyouts of their loans to
Daewoo units.  The advisers said in the letter that the
proposal incorporated certain factors that had not been
included in the preliminary workout plans drafted by Korean
creditor banks.

The principal adjustments, they said, included taking into
account the realizable value of intercompany receivables
and equity investments, adjusting for the impact of
guarantees of subsidiary debt and including certain off
balance sheet liabilities, such as the impact of the bank
accounts maintained by Daewoo Corp. in London.

Noting that "the proposal provides a further significant
improvement in recovery value for the foreign creditors,"
the advisers said the steering committee's rejection of it
is "wholly unconstructive."  Referring to the committee's
complaints about the "format" of the domestic restructuring
plans, Daewoo advisors said that the format is in fact
irrelevant to the merits of the buyout proposal, since it
entails a purchase of the foreign creditors' claims for
cash and thereby ends their exposure to the workout
process.

Noting that they have made large amounts of information
available to the steering committee's advisors, the Daewoo
advisors suspected that the committee has not communicated
information regarding the analysis of Daewoo's financial
situation to the broader creditor group.

"By refusing to seriously consider the buyout proposal,
they (committee members) are refusing to make available and
potentially jeopardizing the higher recoveries that could
be achieved by the (foreign) creditors," the letter read.

It added that if the committee "continues to fail to
credibly represent the broader interests of the foreign
creditor group and to engage in meaningful dialogue about
the buyout proposal, we may have no choice but to deal
directly with the foreign creditors generally."  (Korea
Herald  15-Dec-1999, Korea Times  14-Dec-1999)

DAEWOO MOTOR: GM makes offer during negotiations           
------------------------------------------------          
Executives of General Motors Corp held last-ditch talks
with creditors representing the failing Daewoo Group on
Tuesday about buying Daewoo Motor Co, as other global
carmakers also expressed interest.  GM Executive Vice
President Louis Hughes who is visiting Seoul and president
of GM Korea Alan Perriton submitted a proposal to Daewoo
Motor's local creditors, led by Korea Development Bank
(KDB), on Tuesday, a GM Korea spokesman said.

"The proposals include how we assess Daewoo's assets and
debts," said Kay Lee, head of public relations at GM Korea.
"They do not specify a price because we believe it is still
too early to discuss that."

GM spokesman Tony Cervone in Detroit said the proposal
offered a price in billions of dollars. But he did not
elaborate. Unlisted Daewoo Motor is the world's 15th
largest automotive firm, producing 950,000 units in 1998.
Spokesman Lee said the GM officials also presented a
proposal to the Financial Supervisory Commission, South
Korea's financial regulator, on Monday.  Daewoo Motor was
one of 12 Daewoo affiliates put under debt workout programs
in August by creditors who rescued the firms from imminent
bankruptcy a month earlier.

KDB, the primary creditor for Daewoo Motor, has said the
outcome of talks with GM would determine whether creditors
put the carmaker up for an auction.  Daewoo Motor has
liabilities of 18.6 trillion won ($16.5 billion), against
12.9 trillion won in assets.  KDB said U.S. auto giant Ford
Motor has expressed interest in an international auction
for Daewoo Motor, which the bank floated as a possibility.  
European car manufacturers DaimlerChrysler and Fiat SpA had
also expressed an interest in Daewoo Motor, the German
newspaper Handelsblatt reported on Monday.

It said DaimlerChrysler, which already has a three percent
stake in Daewoo commercial vehicle unit Ssangyong Motor,
asked KDB for detailed information.  DaimlerChrysler
declined to comment on the report, which a spokesman called
speculative. Fiat also declined comment.
Officials at Renault declined to comment on whether they
might have an interest in Daewoo. A selloff plan needs the
approval of Daewoo Motor's foreign creditors, who are owed
an estimated $1.8 billion. GM Korea's Lee said GM was best
suited to take over Daewoo Motor based on their close past
relations.

"Given the close business ties between the two firms, GM
would be in the best position to normalize the troubled
operations of Daewoo Motor," he said, not elaborating on
how GM views Daewoo Motor's financial situation.

GM and Daewoo cooperated for 15 years before cutting ties
in October 1992 over differences in strategy and investment
plans. Despite GM's overture, creditors said they prefer to
sell the Korean carmaker after the debt workout process.

"If we sell Daewoo Motor now, we can't get a good price,"
said a CRCC official in charge of Daewoo Motor. "We would
prefer to sell it when the operation and the business of
Daewoo Motor is normalized after workout support from the
creditors."

KDB said a number of questions about the deal had yet to be
answered including how much money GM was prepared to pay.
Detailed future plans for Daewoo Motor are scheduled to be
available after the carmaker signs a debt workout program
by the end of the year. Local creditors have drafted a debt
rescheduling plan calling for a temporary freeze on
principal repayment.  (Reuters  14-Dec-1999)

DAEWOO MOTOR: Gov't rejects GM offer                       
------------------------------------                 
Drawing a negative response, General Motors Corp. yesterday
asked the Korean government to extend sweeping debt write-
offs in its bid for Daewoo Motor, sources said yesterday.

The sources said the first-phase of negotiations between GM
and the Korean government has fallen through due to a
number of differences, including debt write-offs and the
scope of Daewoo operations to be taken over.  GM Vice
President Louis Hughes met with Financial Supervisory
Chairman Lee Hun-jai in Seoul Monday and suggested buying
most of Daewoo's plants at home and abroad for several
billion dollars.

But the world's largest car maker refused to take over all
of Daewoo Motor's 18.6 trillion won ($16.4 billion) debts,
and demanded extensive debt write-offs, an FSC spokesman
said. GM also expressed its reluctance to take over
Daewoo's entire operations, he said, forecasting the talks
may drag on for several months and could eventually end in
failure.

Allen Parriton, a GM Asia-Pacific executive responsible for
M&As (mergers and acquisitions), said in a news conference
in Seoul that GM is not interested in taking over all of
Daewoo Motor's overseas plants. He added that GM had failed
to obtain any pledge on a private contract from the FSC
chairman.  In this regard, a top executive at the Korea
Development Bank (KDB), a leading Daewoo creditor, said
recently that creditors will finalize their position on the
fate of Daewoo Motor next year.

"Despite strong signals from GM, the creditors will hold
off on making a final decision for the time being, focusing
instead on upgrading Daewoo's competitiveness through a
managerial shake-up," said the KDB executive.

Meanwhile, amid the intensifying international competition
for Daewoo Motor, a debate is raging among local economists
over how to sell off the No. 2 Korean automaker. Objections
to the proposed sale of Daewoo Motor to a foreign firm
appear to be dissipating. With regard to the timing and
other details of the sell-off, domestic economists and
scholars are sharply divided between speedy disposal
through a private contract and time-consuming international
bidding.

In addition, calls for handing over Daewoo Motor to a
Korean-foreign firm consortium have also gained support
lately.  Sparking the latest round of debate, Lee Seon,
president of the state-run Korea Institute for
International Economics & Trade (KIET), insisted in a local
newspaper report that Daewoo should be sold to a joint
Korean-foreign consortium.  The Daewoo issue, he said,
should be approached from the point of long-term industrial
policy.

"The sale of Daewoo Motor to foreigners will result in the
death of auto parts suppliers, the weakening of Korea's
auto R&D ability, mass layoffs and closure of parts of
Daewoo plants," said the KIET president. "Even so, Daewoo's
independent survival is considered risky in this time of
global consolidation. Thus, the best solution is awarding a
joint managerial right to domestic automakers."

Lee noted that Korea will be capable of accommodating two
mid-sized global players, each with an annual output
capacity of 2 million units, as the nation's total auto
sales are expected to grow to 3.85 million units, including
1.75 million at home, by 2005.  But Chon Yong-wook, a
business professor at Seoul's Choongang University, warned
that Seoul's foot-dragging on the sale of Daewoo Motor will
only result in the continuous slide in the company's
corporate value by accelerating the exodus of talented
employees and the collapse of components suppliers.

"To put Daewoo Motor up for international open bidding will
only play into the interests of Ford Motor, DaimlerChrysler
and other global giants, who do not have any actual intent
to buy Daewoo," the professor charged.

Kwon Hyuck-ki of the LG Economic Research Institute also
argued that the government should first open negotiations
with the most serious and aspiring candidate, GM, instead
of choosing to hold an open auction.  Yesterday, 6,500
Daewoo Motor white-collar union workers joined the debate,
demanding the carmaker be turned into a public corporation
through debt-for-equity swaps and debt-relief by the state-
run KDB before being sold to foreigners.

The unionists warned that a foreign takeover of Daewoo will
damage the nation's auto competitiveness, dealing a
devastating blow even to Korea's top carmaker, Hyundai
Motor.  Similarly, Prof. Choo Woo-jin of Seoul National
University said the best solution would be to initially
turn Daewoo Motor into a public company.

"In the second stage, the most aspiring candidate, like GM,
should be given the chance to implement a private contract.
But foreign firms should not be allowed to own more than 50
percent of Daewoo in order to prevent massive bankruptcies
of local parts manufacturers," he said.  (Korea Herald  15-
Dec-1999)

HANBO IRON & STEEL: Takeover deal agreed to
-------------------------------------------
A US-based investment consortium has agreed to take over
South Korea's insolvent Hanbo Iron and Steel Co. Ltd.,
local creditors of the failed steel maker said yesterday.

"We have reached a verbal agreement with the consortium,
consisting of Nabors Capital, Third Avenue Fund and UNX
Capital, in New York," said an official of Hanbo's key
creditor Korea First Bank.

The official refused to reveal the price tag, although
local daily JoongAng Ilbo said the Nabors consortium had
agreed to pay 500 million dollars for Hanbo by the end of
next Feburary.

"Although (the price is) 20 percent higher than originally
expected, the deal is not so bad as (the loss) could be
recovered as soon as the operations of Hanbo are back on
track," JoongAng quoted a Nabors official as saying.  
(Business Day  14-Dec-1999)


===============
M A L A Y S I A
===============

MAN YAU HOLDINGS: Rehab goes on despite restraining order
---------------------------------------------------------
Man Yau Holdings Bhd announced that it has received a
sealed copy of the restraining order which was granted by
the High Court, pending the completion of a proposed debt
restructuring scheme by Man Yau or until further order of
the court.

In a statement to the KLSE, it said the restraining order
would be for three months from Nov 24, 1999 to Feb 23,
2000.  The restraining order will not have any material
operational effect on Man Yau and the financial effects
will be announced once the proposed scheme is finalised.

The outline of the proposed scheme is as follows:
* Proposed cancellation of RM0.67 from every share in Man
Yau and consolidation of the resultant three shares of 33
sen each into one share (consolidated share);
* The entire share premium account RM24.4mil of Man Yau
will be utilised to reduce the accumulated losses of the
Man Yau group;
* Proposed sales of assets belonging to the subsidiaries,
namely Man Yau Plastic Factory (Malaysia) Sdn Bhd, Wang
Corp Sdn Bhd and Channel Legacy Sdn Bhd.

Upon the distribution of the assets belonging to these
subsidiaries, these companies will be wound up.
* Man Yau will implement a proposed rights issue of
12,100,000 new shares with 12,100,000 detachable warrants
at par on the basis of one new Man Yau share for every one
consolidated share held.

The proceeds from the proposed rights issue will be
utilised for part repayments of Man Yau's creditors,
working capital and estimated expenses of the scheme.
The proposed debt restructuring will entail a scheme of
arrangement and reconstruction pursuant to Sect 176 (10) of
the Companies Act, 1965 in respect of the amounts owing to
the creditors of Man Yau.

As part of the scheme, Man Yau is to acquire the entire
issued and paid-up capital of Pembinaan Sahabatjaya Sdn Bhd
(PSSB).  Upon the completion of the proposed acquisition,
the vendors of PSSB may place out certain Man Yau shares to
potential investors to meet the public shareholding spread.
Upon completion of the proposed debt restructuring, the
financial institutional creditors of Man Yau will offer, on
a restricted basis, a certain amount of ICULS with warrants
to the shareholders of Man Yau (other than the vendors of
PSSB).  (Star Online  14-Dec-1999)


=================
S I N G A P O R E
=================

KIAN HO BEARINGS: Trading suspended on criminal charges
-------------------------------------------------------
Shares of Kian Ho Bearings were suspended from trading
yesterday following the charging of its ex-managing
director Kwek Chee Tong last Saturday with criminal breach
of trust.

An announcement from Kian Ho Bearings said it had requested
the suspension with immediate effect pending the release of
an announcement on the findings by the company's auditors
Ernst & Young, and their financial impact on the company.
The auditors' findings were presented to the company last
Friday.

The Audit Committee of Kian Ho had commissioned Ernst &
Young to conduct a special review of advances made by the
company to some customers and suppliers, and certain long
outstanding debts.  This was done following an
investigation by the Commercial Affairs Department.

No plea was recorded from Kwek, 51, who was charged with 10
counts of criminal breach of trust and one count of
cheating involving $6.06 million.  Kwek might face more
charges at the next mention, according to the prosecution.
Kwek, who resigned from Kian Ho on Dec 1, is alleged to
have misappropriated various amounts between Aug 13, 1997
and March 11 this year.  The court set bail at $2 million
in one surety or $1 million in two sureties, and fixed the
case for mention again on Jan 7.

Meanwhile, Kian Ho chief executive Wee Piew has clarified
that the company did promptly announce his appointment on
Dec 1 and Kwek's resignation from the company on the same
day.  This was in response to a BT report last Saturday
which wrongly said that the changes were announced only
last Friday.  (Business Times  14-Dec-1999)


===============
T H A I L A N D
===============

SIAM CHEMICALS: Posts first-half losses
---------------------------------------
Siam Chemicals announced consolidated losses of 912.25m
baht for the first-half year ending June 30, compared with
losses of 426.26m last year. Second quarter losses were
67.35m baht, compared with losses of 211.18m last year.
Results are reviewed.  (Bangkok Post  14-Dec-1999)

THAI HEAT EXCHANGE: Creditors approve rehab plan
------------------------------------------------
Thai Heat Exchange Plc said in a filing to the Stock
Exchange of Thailand that it has won a majority vote from
its creditors for the company's debt restructuring plan.

Ten creditors, representing 94.8% of debt, voted to accept
the plan.  Under the plan, the regular loan of Bt376.2
million will be extended to 12 years. In addition, there
will be loan conversion worth Bt80.2 million to zero coupon
convertible debentures. Interest payment and redemption of
debentures will take place from the 13th to 15th years.  
There also will be conversion of Bt207.1 million loan to
convertible premium shares at Bt10 apiece.  

The company also plans to appoint Vovant Associates as its
legal advisor to prepare the restructuring agreement to be
endorsed within 60 days.  (The Nation, Bangkok Post  14-
Dec-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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Copyright 1999.  All rights reserved.  ISSN: 1520-9482.

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