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/raid1/www/Hosts/bankrupt/TCRAP_Public/991220.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 Monday, December 20, 1999, Vol. 2, No. 247 Headlines * C H I N A & H O N G K O N G * FAR EAST HOTELS: Narrows losses GLOBAL FOOD CULTURE GROUP: Narrows 6-month loss GUANGDONG ENTERPRISES: Debt Pact Struck HONG KONG TOY CENTRE INT'L: In red a second year INTERNATIONAL GOLF & YACHT CLUB: Shun Tak buys ailing club * I N D O N E S I A * BANK BALI: StanChart pull-out major rehab setback TIRTAMAS GROUP: IBRA plans legalities against 2 affiliates * J A P A N * LONG-TERM CREDIT BANK: Sues 15 former executives * K O R E A * DAEWOO CORP.: Executives' heads roll in downsizing DAEWOO GROUP: Foreign creditors seek more steering groups DAEWOO GROUP: Debt deal predicted by Christmas DAEWOO MOTOR CO.: GM demands priority in acquisition talks * M A L A Y S I A * AMALGAMATED INDUSTRIAL STEEL: In talks to stay afloat CA FURNITURE INDUST.: Has administrator appointed CA MANUFACTURING SDN: Has administrator appointed CATON WOOD INDUSTRIES: Has administrator appointed PILECON ENGINEERING: Borrowings cut,rights issue in rehab SCK GROUP BHD: Signs debt-rehab pact with 10 banks * P H I L I P P I N E S * EYCO GROUP: Creditors press asset liquidation PILIPINAS HINO SALES: Creditors lawsuits on hold for talks PRIME SAVINGS BANK: Manila Bank stockholders cold on buyout TRIPLE V GROUP: Restructuring has debts being paid off VALLE VERDE COUNTRY CLUB: SEC asked to appoint receiver * S I N G A P O R E * KIAN HO BEARINGS: In financial trouble, denies insolvency * T H A I L A N D * INT'L ENGINEERING: To appeal court repayment order KARAT SANITARYWARE: 91% of creditors approve rehab TPI POLENE: Creditors finally approve restructure ============================== C H I N A & H O N G K O N G ============================== FAR EAST HOTELS: Narrows losses ------------------------------- Interim net loss of Far East Hotels and Entertainment fell by 96% to $197,938 from $4.9M in the same period last year. Turnover also rose 20.8% to $22.76M. Amid a sharp downturn in the hotel sector, Far East Hotels sank into the red during the last financial year, despite having terminated its theatre and entertainment business during the past few years. GLOBAL FOOD CULTURE GROUP: Narrows 6-month loss ----------------------------------------------- Cantonese and Hollywood action star Jackie Chan, chairman of sushi restaurant chain Global Food Culture Group, said group turnover had taken a beating from a fall in the sale of Genryoku Sushi and the streamlining of the company's operation. However, the group did better and narrowed losses to $24.88M in the six months to the end of September, against the $75.7M lost in the period last year. Thi8s was achieved despite turnover falling 37.95% to $141.32M, compared with $227.75M a year earlier. GUANGDONG ENTERPRISES: Debt Pact Struck --------------------------------------- Guangdong Enterprises (Holdings) Ltd. announced terms of an agreement Thursday with its main committee of creditors on how it will repay the $4.5 billion it owes, ending a year of uncertainty. Although terms have not been confirmed, the agreement is designed to share the loss between creditors and the government of Guangdong Province, which controls Guangdong Enterprises and affiliates, said Wang Qishan, executive deputy governor of the province. "What we have today is a better deal than at one point seemed possible," said Mervyn Davies, executive director of Standard Chartered PLC, one of the banks on the steering committee representing creditors. A successful agreement could pave the way for international banks to increase lending to China. In July, the Guangdong government abruptly announced that it would stop making interest payments on the debt of Guangdong Enterprises. That came after the creditors rebuffed a complex proposal to overhaul Guangdong Enterprises, in which the banks and the government would have shared the losses of the company. Saying the loans had been guaranteed by the provincial government, the banks demanded that Guangdong repay them by injecting an additional $1.8 billion of assets into the financially stricken company. The impasse over Guangdong soured foreign creditors on China. This year, international banks loaned about $3 billion to Chinese companies, down 64 percent from $8.3 billion last year, according to Thomson Financial Securities Data Co. The deal announced Thursday involves the sale of new debt totaling 14 billion Hong Kong dollars ($1.8 billion) from Dongshen Water Supply Co. that has been transferred from the government to Guangdong Investment Ltd., part of the group, as well as other debt by group firms. Creditors will receive equity in Dongshen - which will be injected into a new company, Water Co. Holdings - in exchange for writing off some of their loans to the group. About 600 million Guangdong Investment shares - valued at about 936 million dollars - as well as equity in subsidiaries created by Guangdong Enterprises and its Guangnan (Holdings) Ltd. unit in the restructuring will be transferred to creditors. (International Herald Tribune 17-Dec-1999) HONG KONG TOY CENTRE INT'L: In red a second year ------------------------------------------------ Hong Kong Toy Centre International remained in the red after losing major customers and failing to launch new toy products this year. The company said interim net loss reached $37M, compared with a $29M loss incurred in the same period a year earlier. Turnover rose by a mere 4.4% to $137M. INTERNATIONAL GOLF & YACHT CLUB: Shun Tak buys ailing club ---------------------------------------------------------- Shun Tak Holdings is taking over International Golf & Yacht Club, hoping to ride on the growing popularity of golf and yachting in Hong Kong. The International Golf and Yacht Club, which is located in HITEC, Kowloon Bay, has 2,000 members, and membership has grown an annual rate of 500 to 600 members. It faced financial difficulty and was dissolved following the closure of its Wan Chai branch. Shun Tak said it acquired on Tuesday 70 per cent of interest in the club. A source said the club was purchased for at least $10 million, but refused to give the exact figure. "Shun Tak is definitely interested and plans to strenghten its hospitality sector," executive director Pansy Ho Chiu- king said. Ms Ho expects Hong Kong tourism to be bolstered by the presence of a Disney theme park on Lantau Island. Apart from taking control of management and operation, Shun Tak has also assumed the company's outstanding debts. Ms Ho refused to disclose the amount of the debt assumed but said the project is considered a long-term investment by the company. It is expected that the investment will break- even in half a year, she said. Shun Tak will try to enhance the club's operations and add value to it by adopting an "intranet" concept that will link it with other golf and yacht clubs currently managed by Shun Tak and other groups in Southeast Asia, Ms Ho added. Shun Tak's hospitality business concentrates on Macau, including Mandarin Oriental, Westin Resort and The Macau Golf and Country Club. On the group's property business, Ms Ho said Shun Tak is not interested in phase three of the residential development at MTRC Kowloon Station, of which the submission of an expression of interest is due today. The Hong Kong-based conglomerate is satisfied with its presence in property development and has not drawn any plan for the market in the following year, Ms Ho said. She expects the property market to turn stable in the middle of next year, and The Belcher's phase two is scheduled to be released for sale by then. About 80 per cent of The Belcher's phase one, which is close to be completed, have been sold. It has lately acquired stake in Sea Palace and Jumbo Palace floating restaurants from Melco International Development. Meanwhile, Ms Ho said the sales drop in the shipping business has narrowed since the middle of this year and has shown improvement in summer. At the moment the company is busy shipping guests to attend the Macau handover celebrations. (Hong Kong Standard 17-Dec-1999) ================= I N D O N E S I A ================= BANK BALI: StanChart pull-out major rehab setback ------------------------------------------------- British-based Standard Chartered Bank's decision to quit its Bank Bali deal is a major setback to Indonesian bank rescue plans and will send a cold chill through direct investors, said analysts yesterday. But some disagreed, arguing Bank Bali was a one-off situation which should not shake those closely following Indonesian developments. It's a view which seemed reflected by the calm reaction of financial markets. The Investment Minister, Laksamana Sukardi, and several analysts said that, although the move came as no surprise after months of wrangling, it was still bad news as Indonesia struggles to drag itself out of its worst economic crisis in three decades. "Foreign investors will now think twice befre investing their money here and it is also quite a major setback to the whole bank restructuring program," said Laksono Widodo, head of research at ING Barings Securities. But financial markets generally shrugged off the news. The rupiah firmed slightly while stocks eased only slightly on the decision. Mr Laksamana said Standard Chartered's move would discourage foreign investment, but added that he did not expect more cases to emerge. "Is it because there was social pressure that the contract, which had already been signed, had to be changed? (If that is the case) people would not want to invest here," he said. An analyst involved in the bank deal expected any new investor would seek a sharp discount on the price Standard Chartered had been prepared to pay, which could delay the bank's recapitalisation by at least three months. Indonesia's multi-billion recapitalisation plan to revive the banking sector _ wrecked by the economic meltdown and crippling debts _ is vital to help kickstart the economy. Standard Chartered on Wednesday said it was pulling out of its management and investment agreements on the recapitalisation of the stricken Indonesian bank to remove any impediments to a rights issue next month. The move came after a series of protests by Bank Bali staff culminated last month in the Standard Chartered management team being driven from its offices under a hail of plastic bottles. In April Standard Chartered agreed to pay US$56 million (HK$436.8 million) for 20 per cent stake of Bank Bali. But its due diligence then discovered Bank Bali had paid a 60 per cent commission to a firm run by officials of the powerful Golkar party for the recovery of 904 billion rupiah (HK$995.28 million) in loans from the government's Indonesian Bank Restructuring Agency (Ibra). The revelations sparked a political scandal that continues to make headlines in Indonesia. With the cost of recapitalisation rising, Standard Chartered asked Ibra to use its power to take over the bank. The agency complied and gave Standard Chartered management control. However, employees attacked the takeover as improper. Standard Chartered, Ibra and the central bank have all denied any impropriety. "The problem was managerial, between the new Standard Chartered management, the old management and the employees," said Heriyanto Irawan, from Merrill Lynch Securities. (Hong Kong Standard 17-Dec-1999) TIRTAMAS GROUP: IBRA plans legalities against 2 affiliates ---------------------------------------------------------- The Indonesian Bank Restructuring Agency (IBRA) is considering legal action against two indebted companies from the Tirtamas Group which have failed to cooperate with efforts to settle their debts with the agency, an IBRA executive said. Hendro Santoso identified the two uncooperative companies as chemical firm PT Sumi Asih and commodity trading firm PT Tirtamas Comexindo. "Sumi Asih is now under the control of our litigation unit," he said during a media conference, declining to say when legal action would be taken. He said Tirtamas Comexindo had recently been transferred to the agency's legal division. Sumi Asih owes IBRA Rp 29.30 billion plus US$3.50 million in foreign exchange loans, while Tirtamas Comexindo owes the agency Rp 69.70 billion plus $95.70 million. The companies are two of nine Tirtamas Group companies which owe a combined Rp 3.59 trillion in principal debts to IBRA, including $218.47 million in foreign exchange loans, making the group the sixth largest indebted business group under IBRA's control. The companies' debts were transferred to IBRA by state- owned and private banks as part of the country's bank restructuring program. IBRA is attempting to recover some Rp 235 trillion in non-performing loans owed by thousands of Indonesian companies to help finance the bank restructuring program. Tirtamas Group is controlled by tycoon Hashim Djojohadikusumo. Several of the group's companies are joint ventures with former president Soeharto daughter Siti Hediati Prabowo, who is also Hashim's sister-in-law. The group originally had 10 companies which were indebted to IBRA, but multifinance firm PT Harita Kencana Finance repaid its Rp 3.17 billion debt to the agency. The group's largest indebted company is holding investment firm PT Tirtamas Majutama, which has investments in the petrochemical, power generation, cement and cigarette industries. Hendro said the process of restructuring Tirtamas Majutama's Rp 1.81 trillion plus $55.38 million in debts was sluggish because the company was unable to provide documents on the flow of its debts and its ownership in Pacific Resources Investment Ltd. He said Tirtamas Majutama received in July 1997 a one-year Rp 1.63 trillion loan from state Bank Bumi Daya, state Bank Negara Indonesia, privately owned Bank Lippo and the now defunct Bank Papan Sejahtera, which was part of the Tirtamas Group, to establish PT Trans Pacific Petrochemical Indotama (TPPI). Hendro said the company failed to repay the principal and interest of the loans, with the exception of having made payments to Bank Lippo for the first three months after it received the loan. However, in ensuing months the company failed to service its debt to Lippo. Hendro said that based on information obtained by IBRA, the flow of the Tirtamas loans to TPPI was through a 10 percent equity participation in the latter, equivalent to Rp 90.2 billion, and a Rp 500 billion loan to Pacific Resources Investment Ltd., which controls a 60 percent stake in TPPI through PT Trans Pacific Petrochemical Ltd. "Until now there's no explanation on where the remaining Rp 1.04 trillion (from the four banks) went or on the ownership of Pacific Resources, although IBRA has asked several times," Hendro said. Hendro also noted restructuring the debts of publicly listed cement maker PT Semen Cibinong was slow because it involved foreign creditors, including Chase Manhattan Corp., U.S. Exim Bank, Deutsche Bank AG and ABN AMRO Bank. "The debt restructuring talks were nearing their final stage in July, but were stopped after a company statement that some $250 million from its balance sheet was missing," Hendro said, adding that the money was meant to be used to repay part of the company's debts. He said a financial audit of Semen Cibinong was expected to be completed at the end of this month. The other indebted firms from the Tirtamas Group are concrete producer PT Trumix Beton, shipping operator PT Comexindo Maritime, palm oil plantation PT Tidar Kerinci Agung, property developer PT Panca Muspan and investment firm PT Maharani Paramitra. (The Jakarta Post 17-Dec-1999) ========= J A P A N ========= LONG-TERM CREDIT BANK: Sues 15 former executives ------------------------------------------------ The government-controlled Long-Term Credit Bank of Japan Ltd. sued 15 of its former executives Thursday, seeking damages of about 6.3 billion yen ($60.7 million) The suit, in Tokyo District Court, accused two former presidents, Tetsuya Horie and Katsunobu Onogi; the former chairman, Takao Masuzawa, and 12 others of making improper loans and paying illegal dividends, the bank said in a statement. The former executives were accused of losing an estimated 290 billion yen, but the bank decided to sue them for less, based on their ability to pay, the statement said. "LTCB ended up with 3.6 trillion yen in liabilities," said Takashi Anzai, the bank's president. "It's clear there was a failure in management." It was the second legal action related to the bank this month. On Dec. 1, 34 former shareholders filed a compensation suit for 896 billion yen against 10 former executives and Showa Ota & Co., the bank's accounting firm. LTCB, once one of Japan's biggest banks, was nationalized in October 1998 after regulators determined that it would never recover from a mountain of bad loans. It was the first time the Japanese government had taken over a bank since World War II. An investment group organized by Ripplewood Holdings LLC of the United States said in September that it planned to acquire LTCB. The parties are still holding talks, the bank said. Japan's financial regulators say a deal could be reached by Christmas. (International Herald Tribune 17-Dec-1999) ========= K O R E A ========= DAEWOO CORP.: Executives' heads roll in downsizing -------------------------------------------------- Daewoo Corp., the flagship trading arm of the Daewoo Group, announced a massive retrenchment of its executives, sacking almost half of them and downsizing its head office and foreign affiliates. Daewoo Corp. issued the reshuffle Thursday in which 29 of total 71 directors were fired while re-appointing only 42 of them. Of the 42 re-appointees, 17 had been signed in on yearly contracts so they can exclusively handle the restructuring of the firm's foreign affiliates and negotiations for debt rescheduling with its foreign creditors. Since 17 of the 42 re-appointed directors have been re-employed also on yearly contract basis so the company explained that 46, or 65%, out of 71 executives have been affected by the reshuffle. Daewoo also said it downsized the organizations of its head office from the existing 3 business sectors, 17 divisions and 77 teams to 1 business sector, seven divisions and 55 teams. (Digital ChosunIlbo 17-Dec-1999) DAEWOO GROUP: Foreign creditors seek more steering groups --------------------------------------------------------- Foreign creditors of Daewoo Group yesterday called for setting up more steering committees to facilitate the negotiation process of rescheduling $5 billion in debt. As the loss ratios imposed on Daewoo's foreign debts differ widely, ranging from 35 percent to 82 percent, a number of overseas creditors are now demanding to form additional steering panels to deal with companies with relatively lower damages. The highest loss ratio, or haircut, of 82 percent is assigned to Daewoo Corp. debts while only 35 percent is imposed on the liabilities of Daewoo Heavy Industries. The ratios for Daewoo Electronics and Daewoo Motor are 66 percent and 67 percent, respectively. "We are not blaming the Steering Committee members for a deadlock in negotiations. They are doing all they can to represent the interests of Daewoo's 200-plus overseas lenders," a foreign banker in Seoul told The Korea Times yesterday during a telephone interview. "Still, some of us believe it will help ease the situation when there is more than a single steering committee. Foreign banks need to consider setting up additional committees dealing with companies like Daewoo Heavy Industries and Daewoo Electronics that should have relatively low loss ratios," he said on condition of anonymity. All eight members of the Foreign Bank Steering Committee, set up on Aug. 18 this year, have large dealings in Daewoo Corp. On Dec. 10, Daewoo and its financial advisors blamed the Steering Committee members for not reflecting the broader interests of all the 200-plus foreign creditors and instead trying to secure only their own interests. Daewoo's financial advisors said that they will reject dialogues with the Steering Committee and engage in individual negotiation with each foreign bank if the committee members continue to ignore the concerns of the majority of creditors. In response, the Steering Committee said that it has no objections to the plan put forth by other foreign banks. "We have formed the committee voluntarily. If others want to pursue separate plans, they should feel free to do so as stated in the Dec. 12 letter that the committee sent to all foreign lenders," said a member of the Steering Committee yesterday. The Dec. 12 letter said that the Committee has no objection to any foreign creditor of the Daewoo companies expressing directly to Daewoo, its' reaction to either the buyout proposal or the workout process. The Steering Committee has been arguing that as Daewoo had acted as a group when borrowing money from overseas lenders, the same loss ratio should be imposed for all foreign debt. Contrastingly, it seems that the 82 percent haircut for the Daewoo Corp. debt is far higher than the ratios imposed on others and this is unacceptable. The nine-member Steering Committee, represented by Chase Manhattan Bank, Citibank, HSBC, ABN AMRO, United Bank of Switzerland, Bank of Tokyo- Mitsubishi, Dai-Ichi Kangyo Bank, National Australia Bank and Arab Bank, was formed on Aug. 18. UBS left the committee earlier, making it an eight-member panel. Despite the 4-month negotiation between Daewoo and the Steering Committee, there has not been any major breakthrough to rescheduling the group's $5 billion overseas liabilities. (Korea Times 17-Dec-1999) DAEWOO GROUP: Debt deal predicted by Christmas ---------------------------------------------- Talks between the disintegrating Daewoo Group and its unhappy foreign creditors about a debt buy-out agreement should conclude before Christmas, according to Seoul's financial regulator. "The negotiations will begin in earnest at the end of this week or early next week and conclude before Christmas," said Lee Hun-jai, chairman of the Financial Supervisory Commission. "There is no deadline but it's not good to drag it out." Mr Lee added that legal action might be inevitable if Daewoo's foreign creditors refused to accept the buyout offer. Daewoo and its foreign creditors have exchanged a series of acrimonious letters over the past week about how much loss foreign banks will have to take on their Daewoo loans and bonds. The impasse poses a threat to South Korea's fragile banking system and to debt workout plans crafted by Daewoo's domestic creditors. Domestic creditors placed 12 core units of the country's second-largest conglomerate in debt workouts in August after it barely averted default on its 86 trillion won (about HK$589.1 billion) debt. The plans call for the banks to convert billions of dollars of Daewoo debt into equity. That would allow them to avoid having to write off a huge amount of bad debt at year's end when they have to meet stringent capital adequacy standards, analysts said. Daewoo Group advisers were set to meet foreign bankers' representatives last night in New York. Advisers from both sides will talk about Daewoo's proposal to buy out foreign debt at recovery ratios as low as 18 cents on the dollar. Mr Lee said despite Daewoo Motor and Daewoo Electronics shareholding ties to Daewoo Corp, which holds the bulk of the group's foreign loans, there was little possibility the two companies would seek court receivership. He also said General Motors (GM) had asked for exclusive negotiating rights to take over Daewoo Motor, and said it would be preferable to handle the request quickly. "If dragged out, the corporate value may decline, so I believe it's desirable to deal with it as soon as possible." Mr Lee said GM had proposed setting up a new company to absorb the existing Daewoo Motor and retain its workforce. In a speech to the institute earlier, Mr Lee said the government would privatise nationalised financial firms as soon as possible by selling its stakes in them, rather than wait for share prices to go up to maximise profits. But he said the government would take its time in selling its stakes in Korea First Bank and Seoulbank, since the two were looking for new management. Mr Lee also said he planned to privatise two investment trust companies, which are being nationalised after they became insolvent due to their Daewoo Group exposure, by listing them on the over-the-counter Kosdaq market as soon as possible. The government is taking over Korea Investment Trust and Daehan Investment Trust with an injection of public funds. Mr Lee brushed aside talk the government would embark on a second round of restructuring in the financial sector. "I am hearing rumours a second-round of financial restructuring would kick in and we would again see a wave of mergers, but the government doesn't plan to directly intervene," he said. The government last year closed, merged or nationalised many of the country's biggest commercial banks. That was in line with agreements made with the International Monetary Fund to restructure the financial industry in exchange for a US$60 billion rescue package after South Korea was affected by the financial crisis two years ago. (South China Morning Post 17-Dec-1999) DAEWOO MOTOR CO.: GM demands priority in acquisition talks ---------------------------------------------------------- US auto giant General Motors Corp. has said its exclusive negotiator status should allow it to acquire South Korea's embattled Daewoo Motor Co through a non-competitive bid, a senior financial official said Thursday. "General Motors (GM) is proposing that it should be given priority in talks with domestic creditors," Financial Supervisory Commission (FSC) chief Lee Jun-Jai told reporters. He said that GM was interested in Daewoo Motor's production lines for leisure-sports vehicles and passenger cars at home and abroad. The US company hopes to take over Daewoo Motor's clean assets as part of a global strategy to use South Korea as its production base in Asia, he said. Lee said local creditors should hold some portion of the equity in Daewoo Motor to help them recover losses through the equity market, even if a General Motors takeover goes ahead. GM's proposal reflects lingering doubts over a local due diligence examination of Daewoo Motor's assets and debt, other FSC officials said. On Thursday, the main creditor Korea Development Bank revealed a new due diligence report projecting Daewoo Motor's net value at 11 trillion won (9.7 billion dollars), 300 billion won less than estimated earlier. The difference was caused by the discovery of more insolvent assets, it said. Daewoo's debt was estimated at 18.6 trillion won. Daewoo Motor and 11 other units of the failing Daewoo Group, once the country's second largest conglomerate, are in the throes of a government-guided rescue program aimed at averting bankruptcy. Local creditors have pledged debt- equity swaps and new capital for the group. But their negotiations with foreign creditors on how to reschedule debt have bogged down. Lee said the government would try to resume negotiations with foreign creditors next week. Financial officials worry a delayed workout program will strengthen GM's position to buy Daewoo Motor at a bargain basement price. The Daewoo Group is being dismantled after it collapsed in August under the weight of about 77 billion dollars in debt, with Seoul leading the effort by pushing for the sale of rehabilitated core units. (China Daily 17-Dec-1999) =============== M A L A Y S I A =============== AMALGAMATED INDUSTRIAL STEEL: In talks to stay afloat ----------------------------------------------------- Amalgamated Industrial Steel Bhd (AISB) is negotiating with a party to acquire a "revenue-generating asset" that will enable the company to remain afloat, said chairman Tan Sri Dr Abdul Hamid Pawanteh. He said this was in line with the company's plan to diversify from its core business which had been badly hurt by the recession. AISB, which produces steel pipes mainly for the construction sector, posted an operating loss of RM10.86mil for its financial year to June 30, 1999. "The company must diversify in order to remain viable over the medium and long term," Hamid said after the company's AGM in Shah Alam yesterday. He declined, however, to give further details on the asset, saying: "It will involve acquiring a company which owns the revenue-generating asset. Since we do not have the cash, we will acquire the company via a share swap." Hamid said the proposed acquisition was the company's third after its other two plans also involving the acquisition of "revenue-generating assets" were aborted. "In the first two plans we had two good assets to be injected into the company but then they were either linked to our significant shareholder or director, so we did not proceed with the exercise," he said. "This time we hope we will be able to complete the negotiations and submit the proposal to the relevant authorities for approval." With the construction sector showing signs of growth, the worst may be over for the firm. But for the short term it is unlikely that demand for steel pipes would reach pre- crisis levels. Hamid expects the company to show slight improvement in its performance in the second quarter after registering a pre-tax profit of RM50,000 in the first quarter to Sept 30, 1999. (Star Online 17-Dec-1999) CA FURNITURE INDUST.: Has administrator appointed CA MANUFACTURING SDN: Has administrator appointed CATON WOOD INDUSTRIES: Has administrator appointed -------------------------------------------------- Pengurusan Danaharta Nasional Bhd announced the appointments of special administrators to three companies CA Furniture Industries Sdn Bhd, CA Manufacturing Sdn Bhd and Caton Wood Industries Sdn Bhd effective yesterday. (Star Online 17-Dec-1999) PILECON ENGINEERING: Borrowings cut,rights issue in rehab --------------------------------------------------------- Construction group Pilecon Engineering Bhd, which is significantly geared, intends to reduce its borrowings with RM195.8mil proceeds raised from a rights issue of 199.78 million shares. Pilecon's shareholders yesterday granted approval for the proposed rights issue at an EGM called to raise funds to facilitate the company's proposed debt restructuring exercise. Its managing director Datuk Dr Gan Khuah Poh said the proposed rights issue would help reduce Pilecon's gearing position, which currently stood at 1.11 times. Of the total proceeds, 40% or RM78.32mil will be utilised to pay off part of the company's debts which amounted to RM331.26mil. The remaining sum will be used as additional working capital for ongoing construction and property development projects. The new shares will be issued at 98 sen each on the basis of one new share with one new warrant for every existing ordinary share held based on the current paid-up capital of RM99.89mil comprising 199.79 ordinary shares of 50 sen each. The restructuring exercise also involves converting existing debts into five-year redeemable secured floating rate notes (RSFN) issued by the group. The group will issue up to RM181.9mil nominal value of RSFN to creditors on the basis of RM1 nominal value for every RM1 nominal value of existing debts. The notes will be subscribed by lenders on a proportionate basis based on the balance of outstanding debts owing to them after the part cash repayment. Gan said upon the completion of the rights and RSFN issues, Pilecon would save a minimum of RM4.7mil a year on interest payments and its gearing ratio would be reduced to 0.51 times. The restructuring exercise was expected to be completed in March next year, he disclosed at the press conference after Pilecon's EGM. Dr Gan said he foresaw no problem on the subscription of Pilecon's right issue. He said the earlier incident in which shareholders voted against extension of the expiration period of the warrants, should not affect investors' interest in the rights issue which would come together with warrants. He said the new warrants would be exercised subject to a "step-up" pricing mechanism. According to the scheme, the exercise price for the warrants is RM1 for the first year after the issue date, and the price will be 10 sen higher in each subsequent year. This means the exercise price will rise to RM1.30 in the final year. "This will encourage warrant holders to convert their warrants earlier," Dr Gan said. Dr Gan said the exercise period of the warrants would not be extended further. Pilecon was earlier reprimanded and fined RM100,000 by the KLSE for breaching its listing requirements in relation to a decision to reject an extension of the company's warrants. On the group performance, Gan said Pilecon would incur a loss owing to the slow recovery in the construction sector during its current financial year ending Dec 31. He said group earnings were dragged down by the large amount of provisions made for bad debts. However, he expected the company to return to the black in the next financial year as the in-house construction projects were expected to generate revenues to sustain its earning growth. Pilecon expects to secure RM200mil to RM300mil worth of projects in 2000. The group has RM500mil worth of projects in hand. (Star Online 17-Dec-1999) SCK GROUP BHD: Signs debt-rehab pact with 10 banks -------------------------------------------------- SCK Group Bhd has signed a RM75mil debt restructuring agreement with 10 banks led by Pengurusan Danaharta Nasional Bhd. Director Low Chin Kiat said the signing of the agreement would place SCK in a position to re-establish its standing as a market leader in the local interior decoration, furniture and renovation industry. "Our restructuring exercise has finally been approved and endorsed by all our leading banks. That will strengthen our corporate reputation and put our past problems behind us," he told reporters after the signing of the agreement in Subang Jaya yesterday. Low said that with more than RM50mil contracts in-hand and a further RM100mil under negotiation, the debt restructuring agreement was strategic for the company's future growth and development. "We are confident of making a strong comeback. . .Our interior renovation and decoration projects include the Perwira Affin Bank headquarters and the Crown Prince Hotel," he said. The other signatories to the agreement included Perwira Affin Bank, HSBC Bank, Maybank, Arab-Malaysian Bank, Phileo Allied Bank, Pacific Bank, RHB Bank, Multi-Purpose Bank, Oriental Bank and Public Bank. SCK's financial debt restructuring scheme involves a proposed capital reduction, rights issue with warrants, and restructuring of bank borrowings with a waiver on interests for 1998. Low said that with the interest rate waiver the company's total debts of RM75mil would be cut to RM66mil. From the proposed rights issue with warrants, about RM6mil of the proceeds will be paid to all the lenders. Of the remaining debt, about RM30mil would be converted into SCK shares and the rest into a five-year term loan. "The proposed capital reduction will reduce SCK's current paid-up capital of 19.875 million to 9.9375 million shares of RM1 each while the proposed rights issue with warrants will be on a one-for-one basis," Low said. A proposed employees share option scheme (ESOS) is also part of the restructuring exercise. Low said that SCK would soon be submitting its proposal to the Securities Commission (SC) and the relevant authorities for approval. In line with this development, the company will also be applying to be requoted on the KLSE. The counter was suspended on April 14, 1998, at RM1.90. Under a new management team that took over in September last year, SCK turned around to post RM1.02mil in net profit for the half-year compared with a loss of RM11.8mil in the previous corresponding period. (Star Online 17- Dec-1999) ===================== P H I L I P P I N E S ===================== EYCO GROUP: Creditors press asset liquidation --------------------------------------------- The consortium of creditor banks of the bankrupt Eyco Group of Companies is asking the Securities and Exchange Commission (SEC) to enforce its order approving the liquidation of the company's assets and rejecting its plea for debt relief. The creditor banks, in a motion filed with the SEC, have asked the regulatory body to issue a writ of execution which will authorize the banks to collect the debts accumulated by Eyco. They said this is possible even if the Court of Appeals (CA) has yet to decide on the petition of EYCO for a temporary restraining order (TRO) that would enable it to keep its creditors from seizing its assets as payments for its loans to the banks. The banks cited Sections 1 and 12, Rule 43 of the New Rules of Civil Procedure which states "that the final order or resolution authorized by an quasi-judicial agency in the exercise of its quasi-judicial functions applies to . . . The Securities and Exchange Commission." Section 4 on the other hand, specifies that "judgments in actions for injunction, receivership, accounting and support, and such other judgments as are now or may hereafter be declared to be immediately executory, shall be enforceable after their rendition and shall not be stayed by an appeal taken therefrom, unless ordered by the trial court." The Eyco Group earlier appealed to the CA for a temporary restraining order and subsequently, a writ of injunction. Eyco said the SEC decision was erroneous and was a grave abuse of discretion since it lacked jurisdiction in rendering the decision. Eyco said that SEC gave the order to liquidate the assets without any valid authority from its creditors. Moreover, the Eyco group said the SEC erred in dismissing the petition for suspension of debt payments and ordering the liquidation and dissolution of Eyco, saying "the order of liquidation and dissolution is baseless and unfounded because Eyco and its companies are in fact solvent." The company added that the evidence to support the order is inadmissible because the evidence is hearsay and the evidence was not presented before the hearing panel. As a result, Eyco said it was denied due process as they were not given the opportunity to be heard. It added that its proposed rehabilitation plan prepared by Strategies and Alliance Corp. (SAC) which proposed to settle all of its obligations is feasible. Eyco earlier warned the SEC order only benefit five of its bank creditors while about 52 other creditors will be left holding an empty bag. (The Philippine Star 17-Dec-1999) PILIPINAS HINO SALES: Creditors lawsuits on hold for talks ---------------------------------------------------------- Creditor banks have agreed to hold all legal actions against vehicle dealer Pilipinas Hino Sales Corp. and return to the negotiating table to discuss terms for the company's restructuring plan for its 300-million-peso (US$7.4 million) loan. In an interview with BusinessWorld, Pilhino vice-president and comptroller Teodoro Carandang said a memorandum of agreement (MoA) is being circulated for the banks to sign for this purpose. So far, five out of seven creditors have already signed, although all have reportedly given their nod on the planned restructuring. "The banks have agreed that we should sit down and discuss the terms on how we will pay our obligations," he said. Both parties have also agreed that the company should continue operations. By next week, we hope that all the banks have already signed so that we can start with the negotiations. Under the MoA, Pilhino and its seven creditor banks will determine the terms of the restructuring plan during a 90-day negotiation period. Creditor banks include Far East Bank and Trust Co., Land Bank of the Philippines, Metropolitan Bank and Trust Co. and Philippine National Bank. Their PhP300-million exposure with Pilhino is secured by trust receipts. Mr. Carandang said the parties have initially agreed to pay a huge portion of the car dealer's loans through its receivables. Moreover, Pilhino has also proposed to extend the payment date of its obligations for another ten years. "But if the business climate is good, we will not wait for 10 years to pay. We can do it in five years depending on the banks," he said. The car dealer is also considering a debt-for-asset swap. The company has over PhP50-million ($1.2 million) worth of real-estate properties secured from customers who were not able to pay Pilhino. The management will also negotiate for an interest-free payment of its debts. Mr. Carandang said the company initially targetted to start negotiations with the banks before the end of the year. But given the upcoming holiday season, the management has rescheduled it to January next year. Menawhile, the management plans to continue with operations while discussions with the banks are ongoing. Pilhino serves as one of the dealers of Japanese supplier Pilipinas Hino, Inc.'s which assembles and manufactures Hino trucks. The truck dealer encountered financial difficulty when vehicle sales dropped due to the economic crisis. One option which the management of Pilhino considered earlier was to set up a separate company to ensure survival. Industry sources said the proposal would allow the viability of Pilhino since a portion of the new company's revenues will be used to pay the vehicle dealer's debts. (Business World 17-Dec-1999) PRIME SAVINGS BANK: Manila Bank stockholders cold on buyout ----------------------------------------------------------- Manila Banking Corp.'s takeover of cash-strapped Prime Savings Bank, supposed to be the key to the thrift bank's rehabilitation, was being delayed by insufficient support from some uninsured depositors, Bangko Sentral ng Pilipinas Deputy Governor Alberto Reyes said. Prime Bank has been on a bank holiday for six months now due to a negative capital base. The BASP, for its part, approved last September a rehab plan for the thrift bank involving Manila Bank's takeover. Manila Bank has agreed to become the thrift bank's white knight on condition that the depositors would restructure their fund placements with the bank. Manila Bank has agreed to become the thrift bank's white knight on condition that the depositors would restructure their fund placements with the bank. The depositors were supposed to sign an agreement that they would not be able to withdraw their money for four to five years at an interest rate of 2 percent. "We need more signatories. Only 67 percent, I think, has signed. It's unfair to those who already signed because it's delaying the entire rehabilitation plan," Reyes said. Although more than majority has already signed, Reyes said the level was still not enough because the remaining 33 percent would still amount to huge amounts of money vis-a- vis the bank's total deposit liabilities. The bank has some P3.9 billion in deposit liabilities, of which only P1 billion is covered by insurance. Based on these figures, the remaining amount of deposits not yet subjected to the agreement would amount to around P1.3 billion. But Reyes said the BSP was still hoping that all of Prime Bank's depositors would sign the agreement as soon as possible so as to fast-track the rehabilitation, or otherwise push the bank toward permanent closure. "We will know by the first week of January," Reyes said. Under the rehab plan, Prime Bank was supposed to be merged with Omni Savings Bank, another thrift bank earlier acquired by Manila Bank. Six months after the merger, the new entity would then be absorbed by Manila Bank. Manila Bank has pledged to infuse a fresh capital of at least P500 million to rehabilitate Prime Bank and meet the P250- million minimum capital requirement for Metro-Manila based thrift banks. Prior to the suspension of its operations, Prime Bank stood with a negative capital of around P200 million. Its bleeding financial condition, based on government findings, was caused by "big exposure to some bad investments" as well as "questionably high salaries of bank executives." The bank was said to have gone too aggreessive with its "Kumpare loan" offering, a consumer lending strategy which offered salary loans to retail borrowers such that almost half of its total loan portfolio went sour. "The bailout would not come without a cost on the part of the government, which would absorb the bank's P1.4 billion worth of non-performing loans through a facility with the Philippine Deposit Insurance Corp.," Reyes admitted. The liabilities on top of these bad loans, such as the P250 million worth of inter-office floating debts, will be shouldered by Manila Bank. Prime Bank, one of the biggest thrift banks in the country, has a network of 62 branches and an asset base of P5 billion. (Philippine Daily Inquirer, The Asian Wall Street Journal 17-Dec-1999) TRIPLE V GROUP: Restructuring has debts being paid off ------------------------------------------------------ It looks like cash-strapped Triple V Group, owned and managed by businessman Victor Villavicencio, will welcome the new millennium debt-free. Company sources said the restaurant group has already paid 75% of its estimated one- billion-peso (US$24.6 million at PhP40.643:US$1) total debt to 17 creditor banks. "We've already paid three-fourths of our debts and we continue paying. The banks have accepted the terms of the restructuring. We're now getting ready for the millennium and we're looking forward to next year when we plan to launch various projects," a company source, who requested anonymity, told BusinessWorld in a telephone interview. According to industry sources, Mr. Villavicencio was able to encourage a number of banks to swap shares in Subic Bay Yacht Club (SBYC) to pay for debts. The businessman serves as chairman to Subic Bay Waterfront Development Corp. which presently develops and manages SBYC. The company also handles the sale of the yacht club's unsold shares. BusinessWorld, however, learned Mr. Villavicencio approached the banks individually and offered them differing discounts for the club shares. Philippine National Bank (PNB) and Land Bank of the Philippines, two of the restaurant chain's largest creditors, were the last to negotiate for a huge discount. The two banks reportedly got a 20% discount for the club shares while other creditors such as AsianBank Corp. were granted only 5% discount. Moreover, there were also creditors who did not get any discount at all but agreed on the terms to settle their claims. These banks allegedly agreed to SBYC's per-share price quotation of PhP1.7 million (US$41,800 at PhP40.643:US$1) for individual shares and PhP2.4 million ($59,000) for corporate shares. Triple V owes PNB PhP93 million ($2.3 million) while Land Bank has a PhP100-million ($2.5 million) exposure. AsianBank has a PhP74.4-million ($1.8 million) exposure. "It was Mr. Villavicencio who talked to the banks and he's the only one familiar with the terms. We cannot comment if he indeed offered the banks different discounts," the source said. A source from the banking industry said it is "unfair" to creditors who received a lower discount when all the banks should get a uniform rate. "We're not sure if AsianBank has no knowledge that some of the banks got a higher discount enabling them to get more club shares. But one thing that the banks should learn is to be more cautious next time in negotiating for debt payment," a source said. Another source, however, said Mr. Villavicencio has the prerogative to offer the banks differing discounts since there are no existing rules stipulating that the terms should be uniform for all banks. "That's Mr. Villavicencio's right. But in terms of ethics, that's questionable," the source said. Aside from the club shares, Mr. Villavicencio has also offered to offset Triple V restaurants' credit card billings to some of the creditors. These include AsianBank, PDCP Bank, Banco De Oro, Universal Bank and Security Bank. (Business World 17-Dec-1999) VALLE VERDE COUNTRY CLUB: SEC asked to appoint receiver ------------------------------------------------------- A member of the Valle Verde Country Club Inc. has asked the Securities and Exchange Commission to immediately appoint a management committee to take over the operations of the leisure firm to prevent the alleged dissipation of its assets. A certain Vicente Velasquez has filed a petition with the SEC accusing the board of directors of Valle Verde of perpetuating themselves in office by deliberately failing to call new election of officers for several years now and of refusing access to its books and records. Velasquez claimed that the refusal of the club's management to open up all books and records had given rise to suspicion that there were matters being hidden from the members which, if not stopped, "could result in the dissipation or loss of assets or other properties." He said Valle Verde had been incurring huge losses owing to "useless" capital expenditures, despite increases made on membership fees. Despite Valle Verde's huge losses, Velasquez said, the officers of the leisure club appropriated themselves with unreasonable increases in their salaries. "Petitioner would show the commission that research and/or investigation made by some concerned members of Valle Verde would lead one to reasonably believe that funds or assets of Valle Verde may have been misappropriated, assets may have been misused, receivables remain uncollected and acts or omissions have been committed that are not to the best interests of Valle Verde and its members," Velasquez said. Velasquez said the Valle Verde board had failed to show the concerned members the rules and procedures on convening the annual membership meeting. He added that it also refused to give information to members regarding the names and contact address and telephone numbers of current members. Velasquez underscored the need to immediately appoint a management committee to safeguard the firm's assets and properties. (Manila Times 17-Dec-1999) ================= S I N G A P O R E ================= KIAN HO BEARINGS: In financial trouble, denies insolvency --------------------------------------------------------- Kian Ho Bearings warned yesterday that multi-million-dollar advances and debts it was owed might have a financial impact, but stressed it is solvent and able to meet obligations. The company added it has instructed its lawyers to take legal action against former managing director Kwek Chee Tong and Kian Ho's controlling shareholder KHB Holding to recover an outstanding amount of $2.425 million. Trading in Kian Ho's shares was suspended on Monday after Kwek was charged last Saturday with criminal breach of trust (CBT). No plea was recorded from Kwek, who was charged with 10 counts of CBT and one count of cheating involving $6.06 million. Kian Ho requested yesterday that the suspension be lifted immediately. In a statement issued after considering a report by its auditors Ernst & Young, Kian Ho's directors said it is continuing to conduct its business on normal terms. "The company runs a viable business and all necessary steps will be taken to protect its financial and commercial interests." They added that its ability to remain solvent will depend on the continued support of its principal bankers. Kian Ho said its management has been in talks with the bankers to secure their continued support, and none of them has terminated or indicated they plan to terminate their support. The company's audit committee had commissioned Ernst & Young to conduct a special review of advances it made to some customers and suppliers, and certain long outstanding debts. This followed an investigation by the Commercial Affairs Department into the affairs of Kwek. Kian Ho said yesterday that Ernst & Young was still verifying the validity of the transactions relating to the advances to and debts owed by various parties. If these advances and debts cannot be recovered, the net assets of the group will drop to $28.7 million from $39.45 million. The fall by $10.75 million comprises $2.14 million owing by customers, $6.59 million being advances to suppliers and $2.425 million owing by Kwek and/or KHB Holding, and after taking into account a provision of $401,000 for these debts. Based on the financial position of the group as at June 30 this year, its net tangible assets per share could be cut to 18.4 cents from 25.15 cents. It will also incur an operating loss of $9.7 million and loss per share of 6.23 cents for the six months ended June 30 this year, instead of net profit after extraordinary items of $1.03 million and earnings per share of 0.66 cent. Kian Ho's audit committee has advised the board to engage the auditors to independently verify the validity of the relevant purchase orders and physical existence of stocks and to engage the firm's lawyers to advise on the action to take to recover the outstanding sums owing to the company. (Straits Times 17-Dec-1999) =============== T H A I L A N D =============== INT'L ENGINEERING: To appeal court repayment order -------------------------------------------------- International Engineering Plc (IEC) says it will appeal a ruling from the Central Intellectual Property and International Trade Court that has ordered the company to repay more than US$9 million in syndicated loans, including principal and interest of 7.81 per cent, to three foreign creditors. The syndicated loan was extended in 1995. The applicable exchange rate will be the average selling rate of commercial banks on the payment date. The exchange rate on the last day prior to the payment day would be applicable if there is no exchange rate on the payment date. However, if the Bank of Thailand announces an average rate for commercial banks, that rate will be applicable. The financially-ailing firm also is responsible for Bt150,000 as legal expenses incurred by creditors. (The Nation 17-Dec-1999) KARAT SANITARYWARE: 91% of creditors approve rehab -------------------------------------------------- Sanitaryware Plc, one of Thailand's largest sanitary ware manufactures announced yesterday that 91.4 per cent of its creditors had approved the company's Bt2.1 billion debt- restructuring programme. The debt revamp plan simply involves the rescheduling of the repayment terms, which has been extended for another seven years. Also, the lenders, which include the Bank of Ayudhaya, the Industrial Finance Corp of Thailand, Siam Commercial Bank, Citibank and others, have agreed to provide a three-year grace period for repaying the loan principal. Interest rates would be at preferential rates in the first three years, the company said. Since Karat's problem stems essentially from the concentration in the maturity of its debts and its over- investment, a company source said the debt rescheduling would be sufficient, provided the domestic demand recovered within the next three years. Karat has been operating its five factories at nearly full capacity. But the firm has fallen victim of the sudden shrinkage in domestic demand coupled with its fresh borrowings for the construction of its new factories in Thailand and abroad. Due to the disappearance of demand, Karat has been forced to suspend construction or the opening of new plants although loans have already been borrowed and in some projects, machinery has already been shipped to the sites. Projects either on hold or cancelled completely include new sanitary ware plants in Prachinburi and Lampang, the sixth sanitary ware plant in Saraburi, a sanitary ware project in Vietnam, and a water tank project in Khon Kaen. Formerly part of the Siam City Cement Group, one of Karat's largest creditors is the Bank of Ayudhaya. In June, SCCC sold its 43 per cent stake in Karat to a group led by former SCCC managing director Somkiat Limsong. Karat would consider opening its sixth sanitary ware plant in Saraburi next year if it received larger export orders, said the source. "Exports remain good but the domestic market remains stagnant," said a Karat executive. Karat earns 80 to 90 per cent of its revenues from exports. While four of the firm's five factories have been subjected to a Board of Investment's condition stipulating that they export at least 80 per cent of output. SCCC which is now jointly controlled by Swiss cement firm Holderbank and the Bank of Ayudhaya's Ratanarak family, sold Karat as part of its new corporate policy to focus on its core cement and concrete businesses. (The Nation 18-Dec-1999) TPI POLENE: Creditors finally approve restructure ------------------------------------------------- Creditors of TPI Polene Plc yesterday gave final approval to the cement company's plan to restructure its 51-billion- baht debt owed to 44 creditors. A total of 32 creditors, representing 95.6% of the total debt held, backed the plan, while six creditors holding 4.4% voted against it. Orapin Leophairatna, senior executive vice-president of the company, part of the Thai Petrochemical Industry Group, said that in the next step, the company would seek the protection of the Central Bankruptcy Court. She said that as not all creditors had approved the plan, the company therefore had to seek protection from the court, in order to prevent the creditors who disagreed with the plan from suing the company later. Under the plan, the company would settle repayment of its debts in five years, but the schedule could be extended by one year each for a maximum of three times, she said. The company will have to increase capital by US$270 million, of which $180 million will be used to repay loans. The creditors who wanted to get their loans repaid immediately could offer to sell their loans at a discount of 60% to the company, meaning they would get back only 40% of their loans. The remaining $90 million would be used for building a new cement line, which would be the fourth one for the company. The company would begin to service regular loan interest on Jan 5, while the payment of the loan principal would begin in 2002, with $50 million to be paid every six months until the end of 2004, and $72 million paid every six months from 2005 through 2007. The restructuring plan calls for the company to maintain reserve cash of 1.6 billion baht as working capital. Dividends can be paid after at least 85% of total debt is repaid to creditors. The plan also offers options to creditors to convert their loans in the form of overdue interest payment into equity in the company. Total overdue interest amounts to seven billion baht. The limit for the debt-to-equity conversion ratio will depend on the amount of discounted debts. (Bangkok Post 17-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 newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Darryl Henning, Managing Editor, Felix Ordona and Cristina Pernites, Editors. Copyright 1999. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***