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/raid1/www/Hosts/bankrupt/TCRAP_Public/991227.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 27, 1999, Vol. 2, No. 251 Headlines * C H I N A & H O N G K O N G * CHINA ELEGANCE INT'L FASHION: Share offer to reduce debt CHINA JIALING INDUSTRIAL CO.: Stock price falls NANTONG MACHINE TOOL: Stock price falls NPH INTERNATIONAL: Narrows six-month loss RUBBER BELT: Stock price falls SICHUAN TOP CHANGZHENG SOFTWARE: Stock price falls * I N D O N E S I A * PT FISKARAGUNG PERKASA: Creditors to auction assets PT SINAR SLIPI SEJAHTERA: Has real property seized by IBRA * J A P A N * MITSUBISHI MOTORS CORP.: To cut debt,assembly line,labor SUMITOMO METAL INDUSTRIES: Shares fall on profit-taking TOYOTA MOTOR: Shares fall on profit-taking * K O R E A * DAEWOO CORP.: Key Daewoo unit US$2.5b poorer DAEWOO GROUP: Foreign creditors reject buyout proposal DAEWOO MOTOR: GM offering 1/3 equity stake to creditors DAEWOO MOTOR: Local opposition to GM increases DAEWOO MOTOR: GM not keen on auction idea DAEWOO MOTOR: Samsung eliminates itself from the running HYUNDAI ENGINEERING & CONSTRUCTION: Stock slips KOREA FIRST BANK: Newbridge purchase deal finally closes SAMSUNG GROUP: Stock slips * M A L A Y S I A * DAI-ICHI INDUSTRIES: Posts annual loss MYCOM BHD: Predicts mid-2000 restructure completion TERAMAJU SDN: Workout plan okayed by secured creditors * P H I L I P P I N E S * HERITAGE PARK: Investors hail PEA contract rescission UNIWIDE GROUP: Paragon sale a start, fresh capital needed UNIWIDE SALES INC.: I Mart buys convenience store network * S I N G A P O R E * CYCLE & CARRIAGE: Stock continues slide for 3rd day THAKRAL CORP.: Posts first-half loss,rehab plan by Q1 2000 THE HOUR GLASS: Posts first-half loss * T H A I L A N D * EMC: Reports rehab plan progress to SET NITHI VENTURE CORP.: Boards approve debt restructure plans POWER-P PLC: Reports debt rehab agreement to SET SUBMICRON TECHNOLOGY: Appoints financial adviser for rehab TELECOMASIA CORP.: Signs debt restructuring agreement THAI-GERMAN PRODUCTS: Files rehab report with SET ============================== C H I N A & H O N G K O N G ============================== CHINA ELEGANCE INT'L FASHION: Share offer to reduce debt -------------------------------------------------------- Leather-jacket retailer China Elegance International Fashion plans to get creditors off its back by raising $31.2 million from an open offer to existing shareholders. Independent shareholders yesterday approved the proposed share offer, with the proceeds to be spent largely paying off trade creditors and purchasing a fashion collection for spring. Chairman Cheung Ngan said the open offer would improve Elegance's financial health as the company had survived on internal cash flow only since the financial crisis began in 1997. "All the banks have turned off their taps to us," he said. The open offer involved selling 3.33 billion new shares on a one-for-one basis at one cent per share. The offer price is a 62.96 per cent discount to yesterday's closing of 2.7 cents. (South China Morning Post 23-Dec-1999) CHINA JIALING INDUSTRIAL CO.: Stock price falls NANTONG MACHINE TOOL: Stock price falls RUBBER BELT: Stock price falls SICHUAN TOP CHANGZHENG SOFTWARE: Stock price falls -------------------------------------------------- The Shanghai Class B Share Index dropped 2.1%, while its Shenzhen counterpart fell slightly. Traders said the market continued to sell shares in companies that are offering state shares to existing shareholders while investors shift funds to a series of initial public offerings. Motorcycle maker China Jialing Industrial Co., one of the two companies selling state shares to existing shareholders, fell 7.5% in Shanghai. Sichuan Top Changzheng Software, which recently issued a tranche of Class A shares, shed 10% in Shenzhen. Shanghai-listed Nantong Machine Tool fell 8.1%. In the Class B share market, the biggest decliners were Rubber Belt, which fell 8.4% in Shanghai, and Seg, which dropped 4.4%. Class A shares are limited to local investors and Class B shares technically are limited to foreign investors but also are traded by local investors. (The Asian Wall Street Journal 22-Dec-1999) NPH INTERNATIONAL: Narrows six-month loss ----------------------------------------- NPH International yesterday saw its interim net loss narrow by 25.6% to $10.06M helped by an exceptional gain of $3.5M. Turnover fell 57.6% to $11.8M under a weak economy which demanded less dried seafood and health products. For the six months the company made an exceptional gain of $3.47M after a $4.48M loss on disposals of investment properties as well as a $1M loss related to the disposal of other investment properties. ================= I N D O N E S I A ================= PT FISKARAGUNG PERKASA: Creditors to auction assets --------------------------------------------------- Creditors of bankrupt PT Fiskaragung Perkasa will sell fixed assets of the publicly listed salt producer through an asset auction or a direct offer to an interested investor, an official said. Tuti Simorangkir from Makarim & Taira S. law firm, who is acting as the court-appointed receiver for Fiskaragung, said creditors were not interested in taking over the bankrupt company but expressed interest in selling it to a third party. "The creditors don't mind if it has to go through an assets auction or a direct sale to an interested investor, as long as they can get their money back soon." But she said sale of the assets at auction would end the company's chances of continuing its operations. "If it happens, Fiskaragung will be immediately liquidated." Fiskaragung's concern is for its operations to continue, Tuti added. Its total debts are US$40.5 million and Rp 18 billion based on the latest data, Tuti said. "The creditors are expecting Fiskaragung could be purchased by investors at the price of its total debts." One of the creditors' lawyers, Rafael Adrian from Taira Faisal & Panggabean law firm, said the total value of Fiskaragung's assets would not cover its total debts of over $40 million. "The value of the three lines of equipment Fiskaragung possesses at its factory are not worth anywhere close to the amount of debts the company accrued to buy such equipment." He alleged there were indications that part of the loans for equipment was diverted. "There was a missing link between the total loan received and the value of the assets Fiskaragung currently possess," he said. Fiskaragung was declared bankrupt in late November by the Jakarta Commercial Court after it failed to reach a debt restructuring agreement with its creditors during a debt payment suspension (PKPU) period granted by the court. PKPU is the standstill period during which an indebted company must come up with a debt-restructuring proposal. It must be approved by a majority vote of creditors. PKPU allows the company a maximum 270-day period to negotiate the debt-restructuring agreement with its creditors; failure to reach an agreement within the period will lead to a declaration of bankruptcy by the court. Fiskaragung's majority creditors were not satisfied with the debt-restructuring plan and voted to reject it within the first four months of the PKPU period. Ten foreign creditors jointly filed a bankruptcy suit against Fiskaragung in the Jakarta Commercial Court in May for failure to repay $29 million in matured debts. The foreign creditors are from Hong Kong, South Korea, Malaysia and Singapore. The Hong Kong creditors are Hanil Leasing & Finance (HK) Ltd., Hanmi Leasing and Finance (HK) Ltd., KEB Leasing and Finance Ltd., CBK Leasing and Finance (HK) Ltd., ORIX Asia Limited and Hong Kong First Citicorp Leasing (HK) Ltd. Kyongnam Bank of Korea and Kookmin Bank are from South Korea, AMMB International from Malaysia and KDLC Leasing from Singapore. (The Jakarta Post 23-Dec-1999) PT SINAR SLIPI SEJAHTERA: Has real property seized by IBRA ---------------------------------------------------------- The Indonesian Bank Restructuring Agency flexed its muscle by invoking for the first time its special power to seize assets from a debtor company controlled by former President Suharto's daughter. IBRA said Tuesday that it has seized 14 hectares of property from PT Sinar Slipi Sejahtera after the company failed to pay its debt to IBRA totaling 433.11 billion rupiah and $45.2 million. The move is expected to send a strong message to recalcitrant Indonesian debtors that IBRA is prepared to use its power under a special government regulation to recover over 220 trillion rupiah ($31.01 billion) of debts under its management. The asset seizure will also dispel public skepticism that IBRA may be politically too weak to tackle the large debtors who are well-connected and powerful cronies of ex-President Suharto. Sinar Slipi is a property company controlled by former President Suharto's daughter Siti Hardijanti Rukmana. Ibra, formed early last year to reform the crippled banking sector, inherits a massive amount of debt from closed banks, state banks and banks taken over by the government, effectively becoming the country's largest debt collector. To empower the agency's debt collection, the government passed a special regulation in February giving IBRA power to seize assets and cancel contracts deemed unfavorable to the government. But even as IBRA wielded its power, it suffered a setback when the Supreme Court rejected its request to revoke the bankruptcy decision on the grounded Sempati Air, partly controlled by Mohamad Hasan, a close associate of ex- President Suharto, and Mr. Suharto's youngest son, Hutomo "Tommy" Mandala Putra. The decision will hurt IBRA's efforts to recover 220 billion rupiah in debts from the airline and pursue the airline's directors and shareholders for possible mismanagement. IBRA's action on PT Sinar Slipi marks the first time the agency has invoked the special regulation to seize assets. "Using the special power to seize assets of Sinar Slipi is the best option for us, because it's fast," said Augustus Sani Nugro ho, head of legal division at IBRA. Despite taking control of the assets, IBRA may still suffer losses, as the value of the company's assets is estimated to be 216.8 billion rupiah. "We'll have to find other assets," Mr. Nugroho said. However, tracing other assets of Sinar Slipi could be a difficult task as there is scanty data on the company's financial situation, he said. Mr. Nugroho said the discrepancy between Sinar Slipi's outstanding debts and its assets warrants further investigation. If an investigation shows that the company's funds were misused, IBRA can hold the shareholders of the company accountable, he said. Separately, Indonesia's PT Bank Mandiri will transfer between the 10 trillion rupiah and 15 trillion rupiah in bad debts to the IBRA by the end of the year, said Mandiri President Director Robby Djohan. He also said he expects the bank to transfer another five trillion rupiah in bad debts to the agency next year. Bank Mandiri was formed in early August by the merger of PT Bank Ekspor Impor Indonesia, PT Bank Pembangunan Indonesia, PT Bank Bumi Daya and PT Bank Dagang Negara. The government is sued 103 trillion rupiah in bonds in October, aimed at boosting the bank's capital. However, the bonds were issued 2 1/2 months late, a factor that forced Mandiri to be a net borrower in the interbank market. Speaking about the bank's performance, Mr. Djohan said Mandiri booked between nine trillion rupiah and 10 trillion rupiah in losses because of negative interest spreads since the merger. He said the bank as of Dec. 20 had 31 trillion rupiah in loan provisions and 12 trillion rupiah in interbank claims. The IBRA Tuesday said it will pay a total of 1.09 trillion rupiah in interbank claims to Mandiri and five other local banks before the end of the year. IBRA's Deputy Chairman Sumantri Slamet said the amount represents 11 claims out of 216 claims filed to the agency. The claims that will be paid include those filed by PT Bank Internasional Indonesia, PT Bank Bahari, PT Bank Putera Multikarsa, PT Bank Pan Indonesia, PT Bank Century Intervest Corp., and PT Bank Mandiri. (The Asian Wall Street Journal 22-Dec-1999) ========= J A P A N ========= MITSUBISHI MOTORS CORP.: To cut debt,assembly line,labor -------------------------------------------------------- Mitsubishi Motors Corp. (7211) will reduce its interest- bearing debt, eliminate one domestic assembly line and shrink its administrative work force by 13% under its new business plan, The Nihon Keizai Shimbun learned Wednesday. The restructuring blueprint, which runs through fiscal 2003, is expected to be announced Friday. Mitsubishi Motors aims to slice its groupwide interest-bearing debt to 1 trillion yen, from 1.75 trillion yen as of Sept. 30, according to sources familiar with the plan. To reach that goal, the automaker plans to trim its administrative work force from 8,000 to 7,000. It also wants to lower its break-even point by 20-30% in the passenger car division, compared with an originally targeted cut of 16%. Aiming to boost the independent profitability of its minicar operations, Mitsubishi Motors plans to set up a separate minicar headquarters in fiscal 2000. As part of that move it will eliminate one assembly line at its plant in Okayama Prefecture, which has five lines. The company will also consider shrinking operations in Europe as it focuses resources on three core markets: Japan, the rest of Asia and the U.S. Although white-collar job cuts are expected to be stepped up, Mitsubishi Motors plans to add 300 employees in R&D. (Nikkei 23-Dec-1999) SUMITOMO METAL INDUSTRIES: Shares fall on profit-taking TOYOTA MOTOR: Shares fall on profit-taking ------------------------------------------------------- Shares fell on profit-taking and worries about the outcome of a meeting of the U.S. Federal Reserve's policy board. Toyota Motor fell 5.5%, hit by profit-taking after recent rallies and Sumitomo Metal Industries was the most active issue on the First Section of the Tokyo Stock Exchange, declining 5%. Decliners outnumbered advancers on the Tokyo Stock Exchange's First Section, with 739 issues falling, 485 issues rising and 116 unchanged. Volume on the First Section of the Tokyo Stock Exchange was estimated at 452.04 million shares, down from 500.92 million shares Monday. Twenty-three of the 36 industry sub-indexes that make up the broader index fell. The biggest decliners were fishery, automobiles and trading company stocks, all down by more than 2%. (The Asian Wall Street Journal 22-Dec- 1999) ========= K O R E A ========= DAEWOO CORP.: Key Daewoo unit US$2.5b poorer -------------------------------------------- Daewoo Corp is worth about US$2.5 billion less than expected, according to the latest due diligence. That will make it more difficult for domestic and foreign creditors to reach a debt restructuring agreement for the unit and heightens the possibility of Daewoo's Group's biggest and most indebted affiliate being placed in court receivership. It also raises the likelihood of Daewoo becoming Korea's biggest corporate failure. Daewoo Corp is one of two key units that hold most of the group's $6.3 billion debt from foreign banks and bond-holders. The chances that it is headed for receivership yesterday increased when foreign creditors rejected an offer from domestic creditors to buy out Daewoo Group's foreign debt. They said a blueprint for saving the group units will not be accepted until domestic lenders reconsider the offer. "What's important for now is how they can cap losses, rather than how much they can recover their money," Rhee Nam-uh, head of research at Samsung Securities, said. "Putting Daewoo Corp under court receivership is inevitable, because no-one would want to pour more money into a company with dubious prospects." Lee Hun-jai, chairman of Korea's Financial Supervisory Commission, yesterday said the government would put Daewoo Corp under court receivership should debt talks with foreign creditors fall through. Such a move may topple other Daewoo Group units and their tens of thousands of suppliers. This is because Daewoo Corp, besides being the trade and construction unit as well as the group's parent company, was the financial backbone for the conglomerate. Daewoo Group's affiliates are estimated to have more than 10,000 suppliers who make about five trillion won (about HK$34.24 billion) worth of transactions a year, according to a survey by the Commerce, Industry and Energy Ministry. Daewoo Corp provided the most loans and debt-payment guarantees to other group units at home as well as overseas. A final due diligence almost completed on its assets now shows its net worth is about 2.8 trillion won less than the 14.5 trillion won evaluated two months ago. That means both domestic and foreign creditors will have to bear more losses, said officials at Korea First Bank, Daewoo Corp's main domestic creditor. It also means there may be nothing worth rescuing in the unit, according to one analyst. "A dilemma that Daewoo Corp's creditors are facing is the company has no tangible facilities like its heavy machinery and car-making group affiliates," Lee Keun-mo, head of research at Good Morning Securities, said. (South China Morning Post 23-Dec-1999) DAEWOO GROUP: Foreign creditors reject buyout proposal ------------------------------------------------------ Foreign creditors yesterday rejected a debt buy-out proposal for the failed Daewoo Group, as US auto giant General Motors Corp. strengthened its bid for the group's auto business. "(We) cannot accept the buyout proposal as it was proposed by the Daewoo advisors," the committee of foreign bank creditors said in a statement. The committee urged South Korea's government and local creditors to present a "realistic solution which all of the foreign creditors may resonably accept." The debt- rehabiliation proposal drawn up by domestic creditors was based on "inaccurate financial data," it said, adding that foreign creditors had not been given sufficient access to information on the group's financial status. South Korean financial officials have warned foreign creditors that if they do not agree to the buy-out package, key Daewoo units could be put into receivership, causing them even greater losses. "We have not received any formal response from foreign creditors. They appear to be asking for a new proposal," an official at the government-guided Corporate Restructuring Coordination Committee told AFP. They said the move by foreign creditors must not delay the group's rehabilitation plans, including the proposed sale of Daewoo Motor Co. Daewoo Motor will be sold off through an auction open only to selected bidders, the Financial Supervisory Commission said yesterday. The limited auction is seen as putting General Motors in the best position. The Daewoo Group is being dismantled after it collapsed in August under the weight of about $77 billion in debt. But its rehabilitation has been delayed by the lack of support from foreign creditors. Financial officials believe foreign creditors are using "delay tactics" to win bargain basement prices in the sale of Daewoo assets. In yesterday's statement, foreign creditors said the buy- out proposal was based on the assumption that each of Daewoo units had operated as an independent coporation. In fact, Daewoo units had operated as an single entity in funding and management, with Daewoo Corp.'s borrowings used to support other subsidiaries, they said. (Business Day 23-Dec-1999) DAEWOO MOTOR: GM offering 1/3 equity stake to creditors ------------------------------------------------------- General Motors of the US has proposed to Daewoo Motor's creditors that they should convert part of Daewoo Motor's debts into equities. According to the Asian Wall Street Journal's December 21 edition, Louis Hughes, the executive vice-president who was leading GM's negotiation to takeover Daewoo Motor was quoted as saying that GM is offering Daewoo's creditors one third equity stake in exchange for an undisclosed part of Daewoo Motor's debts. The newspaper said Hughes remarks represented the American motor company's first explicit announcement that it is willing to pay between US$5.3 billion to US$6.2 billion for some of Daewoo Motor's assets. Hughes also reported that the ongoing negotiations to takeover Daewoo Motor could wrap up in the next 30-45 days. He was quoted as saying that he was very encouraged by the meetings he had with Korean government officials and representatives from creditors last week. However, Hughes noted if the negotiation drags on too long, the entire deal can be delayed until after April next year, when the nation's general elections are held. (Digital ChosunIlbo 22-Dec-1999) DAEWOO MOTOR: Local opposition to GM increases ---------------------------------------------- Despite reports that General Motors is offering to assume a third of Daewoo Motor's debt as part of its takeover bid, the local business community is becoming increasingly vociferous in its opposition to the U.S. carmaker's plans. In the latest development, the Federation of Korean Industries (FKI), the largest trade association for the chaebol, yesterday reiterated its intention to deter GM's attempt to take over Daewoo Motor. FKI Executive Deputy Chairman Sohn Byung-doo, meeting with GM Korea president Allan Perriton and GM Korea director David Jerome, expressed concerns that GM's acquisition of the Daewoo unit would devastate Korea's auto industry. Meanwhile, an FKI-sponsored opinion poll found an overwhelming percentage of Koreans are opposed to GM's bid, citing adverse effects on the economy as the main reason for their opposition. Of 2,622 adults polled, the FKI- affiliated Korea Center for Free Enterprise (CFE) survey found 52 percent objected to Daewoo's sale to GM, whereas only 48 percent showed a positive response. Kim So-rim, an executive of the Korea Automobile Manufacturers' Association (KAMA), said GM's real intentions toward Daewoo Motor are extremely questionable. "If Daewoo Motor falls into the hands of GM, it will be difficult to expect the American company to contribute to the development of the Korean auto industry," said Kim. "GM will surely pay little attention to expanding Daewoo plants and employment, let alone investments in technology." The KAMA executive then demanded Daewoo Motor be handed over to domestic companies, rather than foreigners, as it would be more beneficial to the overall industrial development, he said. An unnamed participant also insisted that the Daewoo unit is a leading player in the Korean economy, warning policymakers not to sell off the automaker to GM. Earlier last week, FKI Secreatary-General Yu Han-soo said GM's control of Daewoo will drive domestic automakers, like Hyundai Motor and Kia Motors, out of business. Hyundai Motor also raised strong objections to GM's bid and expressed an interest in Daewoo's car plant in Poland, forcing the Korean government to change its policy in favor of an open international sale. Faced with the escalating negative sentiment, GM conducted various public relations efforts, but with little success. According to sources, GM's request for meeting with FKI deputy Chairman Sohn had originally been rejected by the chaebol association. "GM indicated its wish to visit the FKI in an effort to allay the widespread anti-GM sentiment, but were given a negative response," said one of Sohn's deputies. "Only after repeated desperate pleas from GM, Sohn agreed to meet the GM officials briefly." FKI spokesman Lee Yong-hwan said the federation is considering launching various measures to deter GM's bid. Meanwhile, the Financial Supervisory Commission spokesman Kim Young-jae confirmed the government's official stance to sell Daewoo through limited open bidding. Kim said the creditors will screen letters of intent from all aspiring buyers until the end of February before awarding the exclusive negotiating right to a single bidder. (Korea Herald 23-Dec-1999) DAEWOO MOTOR: GM not keen on auction idea ----------------------------------------- General Motors, the US automotive group seeking an agreed takeover of Daewoo Motor, warned yesterday that a lengthy auction for the debt-burdened South Korean carmaker could hamper its recovery prospects. Lou Hughes, the GM executive leading the bid proposal, said: "An auction could incur very significant costs through having such a large company functioning leaderless for several months." Mr Hughes, executive vice-president responsible for new business strategy, said Daewoo required rapid action to resolve problems dominated by a $16bn debt, a management vacuum and factories operating at less than 50 per cent capacity. He was speaking after South Korea's Financial Supervisory Commission indicated it would hold a limited auction for Daewoo Motor, which could prompt offers from Ford and DaimlerChrysler. An FSC spokesman predicted that the auction process could last several months. The move follows the expiry last month of exclusive negotiations with GM. Mr Hughes refused to confirm reports that GM has offered $6bn-$7bn for Daewoo Motor, which it managed as part of a joint venture until 1992. Nevertheless, he said the group had made a formal offer to the FSC and creditors led by the Korean Development Bank. "We are interested in giving creditors an equity stake in the company to enable them to avoid a debt write-off," he added. "My preference would be 25 per cent for creditors and 75 per cent for GM." The world's largest carmaker is anxious to secure control of Daewoo to strengthen its modest presence in Asia and to develop a "value brand" in Europe alongside its Adam Opel subsidiary. In an attempt to counter opposition from the Federation of Korean Industries and Daewoo labour unions, Mr Hughes said the GM offer included all of Daewoo's Korean assets and a promise to develop the company as GM's research hub in Asia. He also vowed to develop the carmaker's own platforms and engineering expertise rather than "simply inserting" GM technology. Industry analysts said GM remained best placed to win control of the company, describing Ford and DaimlerChrysler's reported interest as "calculated spoiling tactics". On Wednesday, Mr Hughes tried to avert any opposition among Daewoo suppliers by promising that a successful bid would give them access to GM's global purchasing programme. (Financial Times 23-Dec-1999) DAEWOO MOTOR: Samsung eliminates itself from the running -------------------------------------------------------- Samsung Group said it would not make an offer for Daewoo Motor, denying speculation that it would become a second challenger to GM's bid. Korea's second-largest industrial group, Samsung has been trying to get rid of its auto business since July when the group filed for receivership for Samsung Motor. A Samsung executive also strongly denied rumors that Samsung may form a strategic alliance with a foreign firm to enter the bidding war. "Reports that Samsung is contacting GM to jointly take over Daewoo Motor are totally groundless," he said. Samsung, which officially quit the auto business last fall after the bankruptcy of Samsung Motors, has long been mentioned as one of the potential bidders for the Daewoo carmaking unit. GM, the world's largest car maker, has said it was ready to take over all Daewoo Motor assets at home and abroad provided creditors - mostly state-run banks - wrote off a large chunk of its 18.6 trillion won (HK$127 billion) debt. (Hong Kong Standard, Korea Herald 22-Dec-1999) HYUNDAI ENGINEERING & CONSTRUCTION: Stock slips SAMSUNG GROUP: Stock slips ----------------------------------------------- Shares of Samsung slumped 8.6% and Hyundai Engineering & Construction slid 2.5%. The composite index fell as local institutions continued to sell stocks to obtain cash ahead of the year end, analysts said. Decliners overwhelmed advancers 762 to 101, while 27 stocks were unchanged. A total of 34 stocks fell by the 15% daily limit, while eight issues rose by the daily limit. (The Asian Wall Street Journal 22-Dec-1999) KOREA FIRST BANK: Newbridge purchase deal finally closes -------------------------------------------------------- Newbridge Capital of the United States and the Korean government closed their deal on the takeover of Korea First Bank (KFB) yesterday, signing a "definite agreement" for a transfer of the bank's majority 51 percent stake. The deal was priced at 500 billion won ($420 million) with the bank's capital adequacy ratio expected to improve to 10 percent. The U.S. investor agreed to provide another 200 billion won ($177 million) over the next two years as bank earnings improve. Newbridge indicated that their definition of "improved bank earnings" is the generation of at least 100 billion won in income each year until 2001. The Korean government in return committed to offer a two-year guarantee to cover KFB's non-performing loans. For the workout loans and liabilities held by other financial institutions, the government guarantee is stretched over the next three years. With the transfer of full management authority, the U.S. investor decided to give 5 percent rights to Seoul for new shares. Newbridge will pay on Jan. 18, after the Y2K, or millennium bug, issue is cleared here. During the press conference marking the deal's closure, Newbridge announced a new management line up. Wilfred Horie was named president and CEO of the bank, Robert Barnum, board chairman and Korea's former trade minister Kim Chul- soo, vice-chairman of the board. Horie served as vice-president of Associates of First Capital Corp, the largest finance company on the New York Stock Exchange. Barnum was former president of American Saving Bank, a troubled U.S. bank which he turned around back to profitablity. Horie said the bank's business would now focus on the retail market instead of large dealings with corporate clients. "We will be focusing on consumer banking," Horie said to more than 50 reporters during a press conference at KFB headquarters. With regard to the number of employees and the size of branches, Newbridge sais they are just about right, meaning there will be no drastic changes to present conditions. For the bank's new management, the U.S. investor said their own staff would fill at least three major positions. "Management will focus on traditional western policy. The chief credit officer, chief financial officer and chief technology officer will come from the Newbridge side," Horie said. In regards to the bank's controversial New York branch, Newbridge said it would continue to work on setting up a new form of financial institution. KFB recently returned its bank license to the state of New York after 2 years of operations and had been seeking ways to set up a new company to maintain its presence in the U.S. Under the U.S. Banking Holding Act, private companies like Newbridge are not permitted to own shares in the banking sector within U.S. jurisdiction. With KFB's presence in New York, Newbridge would not have been able to close the deal. Newbridge won the right to take over KFB in competition with other major banking concerns, including the British HSBC, on new year's eve 1998. KFB currently operates 336 branches across the nation, three overseas offices, and two international joint venture firms. It has 4,809 employees, down from over 8,000 before the financial crisis and has a total of 4.5 trillion won in paid-in capital. The total assets of the bank at the end of Oct. were 32.809 trillion won. Two leading investment firms, the Texas Pacific Group and Richard C. Blum & Associates established the U.S. private equity investor. Newbridge and its affiliates currently manage $10 billion in commercial capital. (Korea Times 23-Dec-1999) =============== M A L A Y S I A =============== DAI-ICHI INDUSTRIES: Posts annual loss -------------------------------------- DAI-ICHI Industries Bhd, which reported a group pre-tax loss of RM15.2mil for its fiscal year ended June 30, 1999, expects a rebound this year with improved market conditions. Its chairman and managing director Tai Keik Hock said he expected at least RM1mil in profit from new orders in the first quarter of 2000. (Star Online 23-Dec- 1999) MYCOM BHD: Predicts mid-2000 restructure completion --------------------------------------------------- Mycom Bhd hopes to complete its restructuring exercise, which includes an overhaul of its financial position, by the middle of next year. "We hope to complete it (the restructuring) by June 2000," Mycom managing director Datuk Yap Yong Seong told reporters after the company's AGM in Kuala Lumpur yesterday. He declined, however, to elaborate. Mycom chairman Tan Sri Jaffar Abdul said in the company's latest annual report that it was finalising negotiation with bankers to restructure its financial position. As a result, the group's gearing should start to reduce while the terms of its financing would be more matching to those of its investments within the foreseeable future, he said. "With further divestment looking more realisable now that the economy is again on a growth trend, our goal of restoring Mycom's financial health seems to be within reach once we complete the overhaul of our financial position," Jaffar added. Jaffar said due to collateral sales by bankers to reduce debt balances towards the end of the financial year ended June 30, 1999, Mycom's stake in Olympia Industries Bhd had been reduced to below 50%. Thus, Olympia was no longer its subsidiary although management control vested with Mycom. "This will reduce the contribution of the financial services sector (via Olympia) to the future value of Mycom. However, we expect the value derived from Mycom's focus on the property and resource-based sectors to be able to compensate for the lower contribution from the financial services sector," he added. Mycom's resource-based activities include oil palm plantations and the granite industry. Jaffar said Mycom's oil palm plantation division had completed the development of 3,700ha as of June this year with an additional 3,100ha at various stages of development. "In the near term, barring any unforeseen circumstances, the division is expected to register further growth in earnings as more areas are brought into harvesting," he said. Jaffar said Mycom had also been revising the development plans for some of its land bank to reposition itself to tap further into the low- to medium-cost residential property sector. He said the property companies within the Mycom group were expected to launch a total of 640 units next year with sales amounting to RM94.5mil. He added that Mycom was reassessing the timing for resumption of development of its Duta Grand Hyatt Hotel project. "We are now discussing with project financiers to ensure that the project can capture the turnaround of the hotel industry which is expected to occur in the medium term," he said. Jaffar said Mycom's construction division had in hand contracts worth RM100mil which should sustain its operations until the end of 2000. Jupiter Securities Sdn Bhd, which Mycom owns through its investment in Olympia, was placed under special administrators in April this year to expedite debt restructuring negotiations with all its creditors. Jaffar said the proposed restructuring scheme was approved by the creditors and was now awaiting approval from all the relevant authorities. "Once the scheme is implemented, trading restrictions will be removed and Jupiter will be on a stronger financial footing to benefit from the improved performance of the stock market," he said. Mycom posted a pre-tax loss of RM382.1mil for its financial year ended June 30, 1999. Its main investment, Olympia, incurred a pre-tax loss of RM267.2mil for the year. (Star Online 23-Dec-1999) TERAMAJU SDN: Workout plan okayed by secured creditors ------------------------------------------------------ The workout proposal by the special administrators of plywood and veneer manufacturer Teramaju Sdn Bhd has been accepted by the company's secured creditors. In a statement yesterday, the special administrators said an independent advisor, Arab-Malaysian Merchant Bank Bhd, had reviewed the proposal and concluded that the deal was reasonable and fair to all creditors and shareholders of Teramaju. Under the workout proposal, secured creditors would received an upfront cash payment of RM3mil and the conversion of the balance of RM11.51mil (after a 25% waiver) into a five-year term loan. The workout proposal for the bank creditor would involve a 25% waiver of the amount owed and the conversion of the balance of RM11.98mil into a five-year term loan. For the hire-purchase creditor, the proposal would involved the conversion of a RM3.39mil debt into a five-year term loan, and for the shareholders, it would involve a 100% waiver on an inter-company debt of RM10.7mil. Under the Pengurusan Danaharta Nasional Bhd Act 1998, the workout proposal is binding on all creditors and shareholders of Teramaju. (Star Online 23-Dec-1999) ===================== P H I L I P P I N E S ===================== HERITAGE PARK: Investors hail PEA contract rescission ----------------------------------------------------- Investors in the Heritage Park project hailed the decision of the new management of Public Estates Authority (PEA) to junk a multimillion-peso contract with a Chinese contractor following allegations that the latter has been overpaid by close to P70 million for work it did not complete. The investors said Edison Construction owned by Chinese businessman Elpidio Uy obtained several major contracts from PEA, some of which were sealed during the last months of the Ramos administration, related to the development of Heritage Park into a world-class memorial park. The contracts, however, were suspended in October this year following current PEA general manager Carlos Doble's directive to Uy to explain the major delays in the project. The investors had clamored for a probe of allegations that Uy was paid the P217 million by the old PEA management equivalent to 82.78 percent completion when Uy had allegedly only completed 68.21 percent of the project. The investors said they were concerned that the project has already been delayed by two years due to the slippages, despite the fact that the project has sufficient funding. The investors said the contracts, several of which did not go through public bidding, had already been earlier questioned by Sen. Franklin Drilon. Drilon had directed former PEA chair Arsenio Yulo to explain allegations that the former PEA management had favored Uy. PEA employees had charged that Uy was awarded several negotiated contracts "despite his poor performance." Yulo denied the allegations. PEA sources said new PEA general manager Carlos Doble had junked the Uy contract following an instruction from the Bases Conversion Development Authority (BCDA) which owns the Heritage Park for the government. Uy sued Doble and the executives of BCDA following the junking of the contracts. The investors said they were poised to fully take over the Heritage Park project. Among the major investors include Allied Bank. The project underwriter is the Philippine National Bank. (Philippine Daily Inquirer 23-Dec-1999) UNIWIDE GROUP: Paragon sale a start, fresh capital needed --------------------------------------------------------- Notwithstanding the sale of its convenience store network, First Paragon Corp., the entire Gow-owned group will need more than PhP1 billion ($24.7 million) in fresh equity and a serious refocusing of business to be rehabilitated. Several debt-for-asset swaps are being considered. Under the rehabilitation plan, at least PhP1 billion is "required immediately" to fully restore the operation of the group's retail business, particularly that of the Uniwide Sales and Warehouse Club, Inc. (USWCI). The full amount will be used for stock replenishment of all the stores, and an additional PhP500 million ($12.4 million) will also be needed for capital expenditures, the Uniwide receivership committee said. The Uniwide group suffered from liquidity problems as a result of the economic crunch and filed for suspension of debt payments and rehabilitation with the SEC last June 26. The firm's total unsettled obligations amounted to over PhP11.1 billion ($274.5 million) as of June. Once the proposed rehabilitation plan is given the go signal (by the Commission), the Uniwide group's retail business will have to recapture its lost market share and generate revenues of at least PhP12 billion ($296.8 million) on the first year and achieve profitability on the third year of operations. Under the plan, Uniwide's retail business will have to implement a more aggressive marketing plan through advertising and promotional campaigns. (Business World 22-Dec-1999) UNIWIDE SALES INC.: I Mart buys convenience store network --------------------------------------------------------- The Securities and Exchange Commission has approved the sale of the convenience store network of debt-ridden Uniwide Sales Inc. to I Mart International Corp., operator of the I Mart retail chain. The SEC hearing panel headed by SEC Chair Perfecto R. Yasay Jr. ordered that the proceeds of the sale of the Uniwide family stores amounting to P145 million would be held in escrow with Solidbank Corp. subject to certain terms and conditions as provided in a memorandum of agreement. The Uniwide receivership committee recommended the sale of the assets of First Paragon Corp., which include both tangible properties and leasehold rights, to I Mart as it submitted the best bid of P145 million. First Paragon owns and operates 44 Uniwide family stores located in various leased areas in Luzon while I Mart owns and operates retail stores called IMart in the Philippines based in Quezon City. Uniwide receivership chair Monico V. Jacob said the Philippine Bank of Communications and Equitable Banking Corp., which holds the leasehold rights, did not object to the sale provided their respective rights were protected. The receivership committee moved for the sale of the convenience store network as the assets were fast deteriorating and would be better off converted into cash to be held in escrow. The assets of First Paragon were the first of the Uniwide group's assets to be sold to raise cash to meet over P11 billion in debt obligations to its creditor banks. The memorandum of agreement preceding the sale of First Paragon was signed last Dec. 9 and is expected to be closed by February next year. According to the memorandum of agreement, the escrow agreement would be for 60 days from the execution of the agreement within which First Paragon would transfer the assets of the Uniwide family stores to I-Mart. The escrow agent would be authorized to release funds to First Paragon upon delivery of certain documents such as deed of assignment of lease to I-Mart and required orders from the SEC. (Philippine Daily Inquirer 23-Dec-1999) ================= S I N G A P O R E ================= CYCLE & CARRIAGE: Stock continues slide for 3rd day -------------------------------------------------- The stock of motoring giant Cycle & Carriage slided for the third consecutive day, following last Friday's announcement that it was losing its Mercedes Benz wholesale business to its principal, DaimlerChrysler. It hit a low of $5.05 yesterday before closing 30 cents lower at its year low of $5.25. The stock has tumbled 26 per cent this week, erasing some $440 million of its market capitalisation. Some analysts see another 20 per cent downside, citing uncertainty over how the company will cope with the loss of a lucrative part of its Mercedes Benz franchise. >From Jan 1, 2000, C&C will give up its wholesale business to Daimler-Chrysler. And from Jan 1, 2001, the Singapore company will hold the exclusive distribution rights in Singapore for all aspects of the Mercedes Benz operations for five years after which the rights would be automatically renewed for periods of one year each. Brokers, analysts and fund managers remain pessimistic about the immediate prospects for the stock price and the company. They reckon that the company could see a sharp squeeze on its margins. Said JM Sassoon's Lai Yeu Huan: "It is really hard to tell how the margin is shared between the wholesale and the distribution as they tend to be lumped together. But I reckon pre-tax earnings from the Mercedes Benz franchise will fall from $40 million in FY2000 to just $9 million in FY2001." Most research houses calculate that, on a company-wide basis, the loss of the Mercedes Benz wholesale business would wipe out anywhere from 15 to 20 per cent of the company's profits for the year 2001. DBS Securities has cut its FY01 earnings forecast for the company by 15 per cent to $90.6 million, or 38.7 cents per share to reflect the changes. JM Sassoon's Mr Lai forecasts net earnings to rise from $94 million in FY99 to $101 million in FY2000, then dive 15 per cent to $85 million in FY2001. Analysts see the C&C development as being generally negative for motoring stocks, and point out that the episode illustrated the dangers that motoring companies here faced. The other counters with motoring interests include Tan Chong International (Nissan), Inchcape (Toyota), Sime Singapore (BMW), Wearnes International (Jaguar) and ST Engineering (Opel). Share prices of these companies were relatively stable yesterday. (Business Times 23-Dec-1999) THAKRAL CORP.: Posts first-half loss,rehab plan by Q1 2000 ---------------------------------------------------------- Thakral Corp has continued to bleed, announcing yesterday a $100.6 million bottomline loss for the six months to Sept 30. In the preceding 12 months, it lost a total of $232 million. To get back on its feet, Thakral is likely to finalise a debt restructuring deal with its bankers by the first quarter of next year. Together with measures to divest non-core assets and maximise working capital, Thakral's balance sheet should be considerably improved in the next 12 months and the company should no longer be in breach of any financial covenants, said Arthur Andersen partner Nicky Tan at a press briefing yesterday. Arthur Andersen is Thakral's independent financial adviser. Thakral owes its bankers just under $500 million, most pressing of which is a US$250 million (S$417.5 million) syndicated loan maturing in April 2000. Of this, US$20 million was repaid in the first half. The group plans to divest $60 million in non-core assets in the next six to 12 months. A further $60 million in working capital needs will also be shaved off in the same period, through better inventory and receivables management. Among the assets likely to be sold are Thakral's Australian hotel properties, its stake in its listed Australian unit, a warehouse in Hongkong, and other listed securities in the region. The group is drawing up a list of more non-core assets to be sold later, while also studying "various options" to raise $120-150 million in additional equity in the next 12 months, in order to recapitalise its balance sheet, cut debts and fuel growth. Options under consideration include roping in investors and a rights issue, said Mr Tan. The group is also in preliminary discussions with a financial institution interested in making a "significant direct investment" in Thakral, said deputy chief executive Elie Baroudi. Despite its first-half loss, Thakral expects to make an operational profit in the second half, although extraordinary losses from the sale of non-core assets are still expected. The group hopes to break even at the bottom line. Loss per share in the first half was 10.07 cents, compared with earnings per share of 4.19 cents at the interim last year. Net tangible asset backing per share was slashed from 62.41 cents to 3.34 cents. The group chalked up exchange losses of $41.8 million from yen option contracts carried forward from last year. Inventory writedowns came to $20.5 million, and there were doubtful debt provisions of $7.4 million. Operating loss was $32.4 million. Thakral has no more outstanding yen option contracts. It has also renegotiated its purchase terms with Japanese suppliers to US dollars and will not need to hedge its yen exposure through further yen option contracts, said Mr Baroudi. It also shortened ordering times to better manage its inventory. The group has also closed its "unviable" TV manufacturing plant in Chengdu, China. Sales fell 19 per cent to $345.3 million as demand in its core China and Hongkong markets stayed weak, affecting margins and causing some items to be sold at a slight loss. "We've almost stopped hoping for a recovery," said managing director Inder Bethal Singh Thakral. "We're focusing on how to be profitable with the market as it stands today." Its IT distribution group, which deals in IBM and Hewlett- Packard products, was hit by price pressures and dumping by local suppliers in the first half, and incurred losses from inventory writedowns and logistics inefficiencies. Thakral said its core audio-visual distribution margins improved in October and November, and should grow from 4.1 per cent to 6.2 per cent in the second half. The group is also developing an Internet and e-commerce strategy. It is "in the process of procuring" Internet service licences in three main Chinese cities and will link up with "international operators" if successful. It is also discussing with a major customer in China an e- commerce initiative involving delivering its home entertainment products online. In the meantime, three Thakral-nominated board members -- Kuldip Singh Thakral, Rajinderpal Singh Thakral Butra and Kanwaljeet Singh Dhillon -- have resigned, leaving five independent directors and four Thakral nominees on the board. Member of Parliament Heng Chiang Meng joined Thakral's board yesterday. (Singapore Business Times 23- Dec-1999) THE HOUR GLASS: Posts first-half loss ------------------------------------- Luxury watch manufacturer and retailer The Hour Glass has sunk deeper into the red with losses of $7.1 million at half-time compared with $4.9 million last year. The company yesterday said it intended to review its business strategy, and has engaged Arthur Andersen Global Corporate Finance (Singapore) to do so. For the six months ended Sept 30, 1999, group turnover came to $19.9 million, up 17 per cent from previously. But the significant improvements in the retail and wholesale business sectors were not enough to cover losses by Swiss watch manufacturing operations. The retail and wholesale sector posted operating profits of $4 million from a loss of $900,000 last year. However, the Swiss subsidiaries chalked up operating losses of $9.2 million. "In terms of Swiss watch manufacturing, our expertise may not be as good as we should be. We are looking for strategic partners who can help us strengthen our brands," said Henry Tay, THG executive chairman. He said the strategy to integrate backwards into manufacturing and to earn profits from three levels -- retailing, wholesaling and manufacturing -- was still sound. "But with the changes and consolidation taking place in the watch industry, we have to relook this strategy and maximise our options." Arthur Andersen, he said, would recommend the best way forward. Jeff Pirie, director of Arthur Andersen, added: "It is really part of the evolution of strategy of The Hour Glass. It is not a kneejerk reaction and should be seen as a good thing." And to gain more flexibility in carrying out its future strategy, THG yesterday said it had bought out the minority shareholders in Gerald Genta SA and Daniel Roth SA. The company took over the remaining 34 per cent of Gerald Genta and 49 per cent of Daniel Roth. It paid 425,000 Swiss francs ($454,000) for the Gerald Genta stake and a nominal three francs for the Daniel Roth stake. Under the Gerald Genta deal, Mr Gerald Genta is freed from his obligations as a guarantor for bank credit facilities amounting to 600,000 francs and THG assumes contingent tax liabilities of up to 100,000 francs. In Daniel Roth's case, the three minority shareholders -- Robert Sia Sok Hia, Daniel Roth and Creation Bel Art SA -- irrevocably waived their loans, and accrued interest, to Daniel Roth SA. The amount comes to 2.44 million francs. Yesterday, the THG stock rose three cents to 65 cents with 26,000 shares traded. (Business Times 23-Dec-1999) =============== T H A I L A N D =============== EMC: Reports rehab plan progress to SET --------------------------------------- Mr. Komol Wongpornpenpap, President of EMC has reported to the Stock Exchange of Thailand (SET) that it presently is in the negotiation process for the debt-restructuring with various financial institutions and appointed IFCT Advisory Co., Ltd. as its financial advisor on October 8, 1999, and Siam Premier Co., Ltd. as its legal advisor on November 1, 1999. EMC filed the report in response to SET's notice of intention to delist the company. Up to the present, it told the SET, EMC's financial advisor has been working on this issue by having inspected the Company's information and arranged the financial plan by having held four meetings on the Debt-Structure Arrangement, which is to be proposed to the creditor financial institutions. At the same time, EMC's legal advisor has examined the Company's legal documents and information since November 22, 1999, by which the summary and the legal document inspection report are expected to be obtained shortly. Nonetheless, on November 1, 1999, Bangkok Bank (Pcl.), EMC's creditor financial institution, was informed by the Bank of Thailand via the Office of the Board of Debt- Restructuring Promotion that EMC, a debtor of Bangkok Bank, was grouped in the third category of the debtors required to restructure the debts (Kor Por Nor 3), which directs EMC to restructure its debt in accordance with the debt- restructuring process stipulated by the Bank of Thailand. EMC signed its name to restructure its debt in accordance with the Kor Por Nor's framework and has informed all relevant parties about this issue on December 1, 1999. There will be the first creditors meeting on December 15, 1999, which is in accordance with the debt restructuring framework designated by the Bank of Thailand. EMC expects that the debt-restructuring process will be completed within the first quarter of the year 2000. EMC hence would like to inform that so far EMC has been urgently processing its debt-restructuring. However, such a process has been slower than stipulated because a large amount of details are being involved, negotiations generally take time and also obstructed by non-decider or non-negotiator of the closed financial institution. EMC will periodically inform the Stock Exchange of Thailand about the progress of its debt-restructuring after the debt-restructuring negotiation is completed or when progress is achieved. (Stock Exchange of Thailand 22-Dec- 1999) NITHI VENTURE CORP.: Boards approve debt restructure plans ---------------------------------------------------------- Nithi Venture Corporation Plc's boards yesterday approved several debts restructuring plans, which the company entered with several creditors between Sep 30 to Dec 20, 1999 totaling Bt 561.94 million (as of Sept 30,1999) which consisted of outstanding principle of Bt444.07 million and accrued interest of Bt117.87 million. The following are details relating to the debt restructuring arrangements: Group 1 creditors: Creditors who extended loans to the company against assets collateral, and are willing to continue extending the loan to the company's food and agricultural business. Loans from these creditors will be restructured so that all the outstanding debts plus the facilities will be transferred to River Kwai International Food Co Ltd (RKI), a wholly-owned subsidiary. Concurrently, the company will transfer all of its assets related to food and agricultural business to RKI in return for this agreement. Group 2 creditors: Creditors who are partially secured by some of the company's assets. These creditors agreed to cancel all accrued interests and some of the principles. In return, the company will pay installment payments for the remaining debt until the end of 1999. Group 3 creditors: Creditors with no collateral against their loans, and who agreed to forgive all accrued interest and some of their principles. The remaining debts will be swapped to convertible debentures. The company's board approved the followings resolutions: 1) Approved to increase the company's registered from Bt240 million to Bt737.100 million at Bt 10 par value. 2. Approved to issue Bt 248.55 million in convertible debentures via private placement and allocate 49.71 million newly issued shares to accommodate the exercise of convertible debentures. 3) Approved to amend the company's memorandum item 6 and 11 (2) to allow foreigners to hold up to 49 per cent equity stake. 4) Approved to hold shareholders' meeting for exemption of tender offer for Pavillion Asia Co Ltd and Pavillion Fund Song the owner of convertible debentures of 152,000 units and 96,550 units, convertible into 30.4 million shares and 19.310 million shares respectively. To exempt the tender offer of Pavillion Co Ltd and Pavillion Fund Song, a minimum of 75 per cent shareholders' consent who are present is required. 5) Approved the appointment of Viriya Anucharee as a member of the board of directors. Viriya will assume an independent directorship role, and serve as a member of the company's audit committee. (The Nation 22-Dec-1999) POWER-P PLC: Reports debt rehab agreement to SET ------------------------------------------------ Veerachai Uahvilaijit, Managing Director of Power-P Plc, has reported to the Stock Exchange of Thailand that the company has signed a debt restructuring contract with Kiatnakin Finance Public Company Limited on 16th December 1999. The debt restructuring contracts with all 14 Institutional Creditors, representing 100% of the total of outstanding debt, are now well in place. The main contents of the Debt Restructuring Agreement which remain the same as follows: 1. The respective Creditors agreed that, instead of the old interest rates applied by each individual creditors for failure of debt settlement when due, an annual interest rate at 16.50% shall apply for interest outstanding on Principal Sum before the signing of this Debt Restructuring Agreement. 2. The respective Creditors also agreed that, after signing the Agreement, the MLR interest rate of Siam Commercial Bank Public Co., Ltd. shall apply to all creditors for their respective outstanding principal sums but with a special schedule allowing partial payments to be made, i.e. at 4.25% for year 1999, 4.75% for year 2000, 5.25% for year 2001, 6.50% for year 2002, 4.25% for year 2003, 10.75% for year 2004, and at full MLR rate for years thereafter. 3. The respective Creditors further agreed to extend repayment period of the Principal Loan by starting from year 2001 till the total loan is repaid before 26th August 2017, and 4. Following the signing of this Agreement, the respective Creditors agree to render financial support, on each individual project basis, as will be submitted by the Company. (Stock Exchange of Thailand 23-Dec-1999) SUBMICRON TECHNOLOGY: Appoints financial adviser for rehab ---------------------------------------------------------- Submicron Technology Plc has signed an agreement to appoint Bank of America as its sole financial adviser. The US bank will provide financial advisory and investment banking services related to the Thai wafer manufacturer's debt restructuring activities, Submicron said in a statement. In addition, Bank of America would also act as the exclusive placing agent for any placement of equity securities issued by Submicron. "We are confident that the final debt restructuring plan, and equity placement, will lead to an ultimate win-win situation for all involved," Submicron chief executive Charn Uswachoke said. Mr Charn said that the revival of Submicron, which had been struggling for years with heavy debts, would lead to the emergence of an integrated electronics sector that would include hundreds of supporting industries and generate substantial export revenue. "We believe that the business itself will mark the beginning of the high-tech industry in Thailand, and bring the country up to par with its regional neighbours," he said. Submicron was founded by Mr Charn in 1991. It started building a factory in 1995, financed by 23 local financial institutions with a value of more than 19 billion baht. However, the 1997 economic crisis forced the company to suspend a planned initial public offering, and creditors withdrew their support. Work subsequently stopped at the plant, which at the time was 80% completed. For the last 18 months, Submicron has been negotiating with its technical partners, vendors and private investors, while the manufacturing facility was being maintained by the company's technical personnel. (Bangkok Post 23-Dec-1999) TELECOMASIA CORP.: Signs debt restructuring agreement ----------------------------------------------------- Telecomasia (TA), Bangkok's largest phone operator, said restructuring of 61.8 billion baht of delinquent debt should be complete by February, after terms of a share sale to Germany's Kreditanstalt fur Wiederaufbau (KwF) are set. The company, more than 40 creditors and Government officials signed a broad agreement today, three months after suppliers such as Siemens, Tomen, Mitsui and Lucent Technologies, and banks such as KfW and Bangkok Bank gave preliminary approval to the proposal. The debt overhaul - which would be the second largest since Thailand devalued the baht and fell into recession in 1997 - calls for about a tenth of debt to be written off, postponement of principal payments for up to eight years and the sale of about 24 percent of the enlarged company to KfW, a German development bank, for $150 million. "TelecomAsia will be able to reduce the amount of debt outstanding to 55.1 billion baht from 61.8 billion baht, as well as meet future debt service obligations," said Vice Chairman Athueck Asvanund. The equity sale could come as early as February, after final terms are set and shareholders approve the overall plan, he said. The current proposed price is 21.37 cents for each of 702 million new shares. TelecomAsia shares rose 3.25 baht, or 7.2 percent, to 48.25 baht, the highest since July 29, 1997. Shares were suspending briefly by the stock exchange, which requested more information on the debt plan progress. TelecomAsia has not paid principal and most interest on its debt for two years. The company, like many largest local businesses, was squeezed by the July 1997 devaluation, which increased its foreign-currency debt by more than a third. Recession and the closure of three-quarters of Thailand's finance companies also curbed demand for phones and telecommunications services. Other telecom firms, including United Communications Industry and Total Access Communications, earlier revamped their debt contracts. Advanced Info Service, the largest mobile phone operator, sold a fifth of itself this year to Singapore Telecommunications. TelecomAsia installed 2.5 million fixed lines in Bangkok. Barely half have subscribers. The company also provides Internet services and is the controlling shareholder of United Broadcasting Corporation, Thailand's largest pay-TV operator. Under the plan, current shareholders, led by the Chearavanont family and its investment arm, Charoen Pokphand Group, as well as Bell Atlantic, would have the right to gradually buy KfW's stake back beginning two years after the German bank invests. The buy-back price is among the terms still to be hammered out. Charoen Pokphand Group's combined stake will fall to 27 percent, from 36 percent with KfW's investment. Bell Atlantic's stake will decline to 14 percent, from 18 percent. The German bank's investment will be done through two units, one the bank itself and the second a Thailand- registered trust, to keep TelecomAsia as a 51 percent Thai- owned company. Talks were accelerated by Thailand's central bank, which brokered negotiations under a debt restructuring program that set specific agreement deadlines, penalties for non-compliance and,in some cases, binding arbitration. The preliminary agreement on October 1 came on the final day before the company would have had to be put into bankruptcy court. It will use proceeds from the sale to partly repay unsecured lenders, which account for 13.29 billion baht ($349 million) of the total debt. "Some creditors have agreed to accept only 60% of the loan and the deals are finalised while the others will take 40% repayment and the remaining debt will be paid during 2004-2007," TA president Supachai Chearavanont said. Promissory notes will be issued for most of the remaining unsecured debt. Secured lenders have agreed to reschedule debt worth 48.5 billion baht ($1.2 billion). TA will begin repaying principal in the second quarter of 2002. The details are very similar to an outline agreement between the company and its creditors in October. Vallobh Vimolvanich, chairman of Telecom Holding (TH), a subsidiary of TA, said that after the parent company's debt restructuring was finalised, TH would begin to restructure its debt. Mr Vallobh said TH has debt totalling about 20 billion baht. Of this total, about 10 billion baht was borrowed to invest in the personal communications telephone (PCT) and the remaining 10 billion baht was for other projects such as cable TV services, he said. Veerawat Kanjanadul, TH's chief financial officer, said that TH had already held discussions with its creditors individually and would hold talks with all of them soon. Each single creditor has agreed to restructure debt for more than 10 years. Prime Minister Chuan Leekpai has sent a message of congratulations to the company on the completion of TA's debt restructuring, saying that the process had shown foreign investors' confidence in the Thai economy. Suthep Thaugsuban, the transport and communications minister, said that the success of the company's debt restructuring reflected the confidence of foreign creditors in Thai telecom companies. He said it would restore a positive investment environment in Thailand. Moreover, this would help Thai telecom companies prepare for liberalisation next year. TelecomAsia said in a statement that Thailand's economic crisis had not only boosted deregulation but it had also created many new opportunities. In the new competitive environment, the winners would be those which could manage cost-effective operations backed by strong financial support and provide high quality services matching the needs of the market, TA said. TA stock rose 3.25 baht to close at 48.25 yesterday. The trading of TA shares was halted in the afternoon by the Stock Exchange of Thailand but was later lifted after TA announced its debt restructuring deal to the market. (Business Day, Bangkok Post 23-Dec-1999) THAI-GERMAN PRODUCTS: Files rehab report with SET ------------------------------------------------- Thai-German Products Plc is currently preparing its business reorganization plan which is expected to be completed and presented to a meeting of the creditors of the Company for consideration in the middle of April 2000, the company reported to the Stock Exchange of Thailand (SET) this week. It is expected that the business reorganization plan of the Company will be approved by the creditors of the Company and the Court will issue an order to give consent to the said business reorganization plan approximately at the end of the May 2000. Mr.Praisun Wongsmith, director of Siam City M.B. Co.Limited and Mr.Veerachai Leelaprachakul, director of PLV and Associates Company Limited filed the report on behalf of TGP. TGP previously had notified the SET that on September 7, 1999 the Central Bankruptcy Court (the Court) issued the Company an order for business reorganization, with Siam City M.B. Company Limited and PLV and Associates Company Limited being co-plan preparers as explained. Following the approval from the creditors and the Court order giving consent to the said business reorganization plan, the Company told the SET, it will submit its business reorganization plan to the SET and such plan shall be deemed the plan approved by the shareholders to resolve the cause of the delisting of the securities of the Company. (Stock Exchange of Thailand 23-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 ***