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/raid1/www/Hosts/bankrupt/TCRAP_Public/991230.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 Thursday, December 30, 1999, Vol. 2, No. 254 Headlines * C H I N A & H O N G K O N G * HWA KAY: Shuttered Operations Shrink Turnover & Narrow Losses MEI AH: Television Broadcaster's Performance Improves THEME INTERNATIONAL: Half-Year Results Show Cost-Cutting Measures * I N D O N E S I A * LONDON SUMATRA: Collapse of Lazard Asia deal hurts firm PT ANWAR: Projects Equity for Debt Swap to be Completed in June PT ASTRA: IBRA Tells Company to Speed Up Due Diligence Process PT PUTRA: Motorcycle Finance Concern Declared Bankrupt PT SINAR: Receives Okay to Restructure US$46.7 Medium-Term Notes * J A P A N * MITSUBISHI MOTOR: Widens Efforts to Restructure Operations NISSAN DIESEL: To join Hino-Isuzu Bus Joint Venture YAKULT HONSHA: Company Charged with Filing False Earnings Reports * K O R E A * DAEWOO CORP.: FSC Continues Negotiations with Foreign Creditors DAEWOO MOTOR: Creditors Name New Senior Officers HYUNDAI GROUP: Reforms Rouse Financial Sector, AWSJ Says KOREA HEAVY: End of HANJUNG Strikes Signals Start of Next Chapter KOREA INVESTMENT: Government Injects Won 600 Billion of Capital KOREA TOBACCO: Government Injects Won 300 Billion of Capital * M A L A Y S I A * UNIPHOENIX CORP.: Explains Qualification in Auditor's Report * P H I L I P P I N E S * BW RESOURCES: No Free Cash to Pay Account Holders NATIONAL STEEL: Seeks Suspension on Debt Payments from SEC PHILIPPINE ASSOCIATED: Minority Sharheolders Appeal to Sup. Ct. SOLID BANK: Metrobank to buy Solidbank for PhP6.77B VICTORIAS MILLING: Puts New 53.35% Equity Stake Up for Sale * T H A I L A N D * PRECIOUS SHIPPING: Agreement to Defer Principal Payments PREMIER ENTERPRISE: Creditors Vote to Accept Restructuring Plan PP: New Incineration Project to Fund Rehabilitation Plan SAHAVIRIYA OA: Debt Restructuring Plan Approved by Creditors SRITHAI SUPERWARE: Court to Consider Creditor-Approved Plan TELECOM HOLDING: Sells-Off Claybridge Shares THAI MODERN: Executives Charged with Fraud & False Statements THAI OLEFIN: Maturity for $332 Million Extended from 2005 to 2007 THAI PETROCHEMICAL: Selling Stock to Raise Funds to Settle Debts ================================ C H I N A & H O N G K O N G ================================ HWA KAY: Shuttered Operations Shrink Turnover & Narrow Losses ------------------------------------------------------------- Restructured Hwa Kay Thai Holdings' turnover shrank 96.53% to $7.7M for the six month to September 30 after closing shops and restaurants. Attributable losses narrowed by 92.88% from the same period last year to $10.04M. (South China Morning Post 29- Dec-1999) MEI AH: Television Broadcaster's Performance Improves ----------------------------------------------------- Mei Ah Entertainment Group's net loss narrowed from $29.87M to $2.82M and turnover leapt 30.8% to $90.66M year on year in the six months to September 30. The result of its subscription television broadcaster's license application will be announced soon. (South China Morning Post 29-Dec-1999) THEME INTERNATIONAL: Half-Year Results Show Cost-Cutting Measures ----------------------------------------------------------------- Cost cutting has narrowed Theme International Holdings' net loss to $17.39M in the first half-year from $106.05M a year earlier. The debt-troubled fashion retailer's turnover was $121.22M for the six months to September 30, 24.82% lower than in the same period a year earlier. The company has 122 retail outlets, down from 130 on January 31. It had more than 200 outlets in 1997. Theme was weighed under $242.78M in debts and was hampered by limited working capital. Sources said the company needed about $45M in fresh cash to stay afloat, part of which is expected to be provided by High Fashion. (South China Morning Post 29-Dec- 1999) ================= I N D O N E S I A ================= LONDON SUMATRA: Collapse of Lazard Asia deal hurts firm ------------------------------------------------------- London Sumatra's planned sale of a 50 per cent stake to Lazard Asia Investments has fallen through, the South China Morning Post reports, hurting its US$254 million debt restructuring. The transaction reportedly collapsed because the two parties were unable to agree on a price for the stake. "Our major shareholder decided to cancel the deal because they don't agree with the pricing," Claudia Lauw, investor relations official of Indonesia's second-largest publicly traded palm-oil company said. The price offered by Lazard was probably less than the $100 million the two sides agreed to in June when they signed a memorandum of understanding, Ms Lauw said. That agreement, which lapsed on Christmas Day, depended on the successful restructuring of the company's debts, which has not happened. Ms Lauw said the company would focus on its debt renegotiations and planned to hire a financial adviser to assist it. In the meantime, it is also open to other investors to link up with the company. "We need to speed up the [debt restructuring] process," she said. "We are basically open if there is another investor." PT ANWAR: Projects Equity for Debt Swap to be Completed in June --------------------------------------------------------------- Publicly-listed poultry farm company PT Anwar Sierad (JSX: ANSI) said it hopes to complete restructuring its debt of $ US316 million before June 28, 2000, according to a report circulated by Aisa Pulse. Company president Budiardjo Tek said US$210 million of the debt would be converted into equity and US$90 million would be converted into bonds including US$40 million in US dollar bonds, US$40 million in yen bonds and US$10 million in rupiah bonds. After the debt to equity swap, its creditors would control 68% of the company shares and the old shareholders would keep the remaining 32%. PT ASTRA: IBRA Tells Company to Speed Up Due Diligence Process -------------------------------------------------------------- January 17, 2000 is the deadline for management of PT Astra International (JSX:ASII) to cooperate with Gilbert Global Equity Partners and Newbridge Asia in their due diligence process. Gilbert and Newbridge have expressed and interest in buying Astra shares -- a 40% stake, according to yesterday's edition of The Wall Street Journal -- held by the Indonesian Bank Restructuring Agency (IBRA). The company, however, is being charged with dragging its feet as Gilbert and Newbridge undertake their due diligence. A government source told the Neraca Daily that if the due diligence is not completed by January 17, the case would be brought to the Financial Sector Action Committee. IBRA, as previously reported in the TCR-AP, controls a large stake in Astra taken as collateral for debts from a number of its shareholders who helf non-performing debts to the government. In a statement issued recently, Astra expressed its objection to the two investors' demand for information to start the process of the due diligence. Gilbert Global Equity Partners and Newbridge Asia then charged the management of the country's largest automaker with attemping to obstruct a due diligence process, Asia Pulse relates. The Wall Street Journal recalls that, subject to their due diligence, Gilbert and Newbridge offer 3,750 rupiah (53 cents) per share. To the Company's defense, the Jakarta Post reports that the Indonesian Public Companies Association (AEI) gives moral support to the Astra's management. The association said on Tuesday that Astra International showed legitimate reason in not providing inside and proprietary information to a consortium of investors. "AEI views Astra as having taken the right steps," AEI executive secretary Hidayat Muchtar said at his office. He told the Post that the U.S. consortium could not demand such inside information because it was only a potential investor, not a shareholder. Providing the information could lead to Astra's management being sued by its shareholders, especially strategic partners like Toyota Motors Corp. of Japan. Steven J. Gilbert, chairman of the Gilbert Global Equity Capital said in a statement last week, "We are very concerned that such actions may discourage them (foreign investors) from investing in Indonesia, thereby impacting the economic recovery plan of the government." Astra vice president Aminuddin said on Thursday that the investor group's request "goes far beyond the typical information that would be provided in a public company takeover-type situation, even in a developed market. "We sincerely believe the Gilbert/Newbridge consortium is going about its job unprofessionally, unnecessarily undermining the investors' confidence in Indonesia, and has not shown its own true interest of what it will do when it acquires the controlling stake in Astra". Aminuddin also accused the investor group of having no intention to follow tender offer procedures under the Indonesian Capital Market Law pertaining to acquiring a controlling stake in a listed company. "Astra is perturbed by this approach which undermines the Indonesian government's credibility," he said. Hidayat supported Aminuddin's argument and said that his association believed the sale of the stake should proceed through a tender process. "Any shareholder -- be it the government, private institutions, state- owned companies or individuals -- has to comply with all the existing capital market regulations," AEI said in the statement. PT PUTRA: Motorcycle Finance Concern Declared Bankrupt ------------------------------------------------------ In the Jakarta Commercial Court, Judge Sihol Sitompul found that motorcycle finance company Putra Surya Multidana had failed to repay a US$1 million bond debt to New York-based Phoenix Global Investment Corp. "We hereby declare PT Putra Surya Multidana bankrupt as compliant to Law No. 4/1998 on Bankruptcy," presiding judge Sihol Sitompul said reading the verdict, finding that Putra is also liable for court costs. The bankruptcy petition filed by the plaintiff met all the stipulations laid down in the bankruptcy law, Sihol said. He added that although Phoenix was the only party filing the petition, the firm had proof PSM had at least two creditors. He said the plaintiff had proven PSM had at least one matured debt and two creditors -- the prerequisites for any party to be declared bankrupt under the existing bankruptcy law. In addition to the plaintiff, PSM also owes debts to New York- based Virgin Capital Corporation in the amount of US$1 million and to a number of banks under the control of the Indonesian Bank Restructuring Agency. The ruling makes Putra Surya the third publicly traded company declared bankrupt by the court, which was formed as part of Indonesia's US$49 billion International Monetary Fund bailout. Putra Surya lawyer Lucas Curator said the company would appeal the bankruptcy ruling by Sunday. This was reiterated by the defendant's lawyer, Chairunnisa Jafizham, saying she would appeal the bankruptcy verdict to the Supreme Court within eight days. The 1998 Bankruptcy Law requires that an appeal be filed within eight days after a verdict in a bankruptcy case is handed down. "We will see what we can do for the appeal," she told reporters after the court hearing. Putra Surya shares have been suspended since September 30. A one-time high flyer of the Jakarta stock exchange after its HK$230 million initial offering in April 1997, the stock nearly doubled to 4,000 rupiah in August 1997, pushing its market capitalisation to about HK$800 million, according to data compiled by the South China Morning Post. Putra Surya, the Post recalls, said in October it had filed international police reports alleging fraud by Alex Ng, its former president-director. It said that HK$45 million was missing from the company's coffers. Putra Surya told the stock exchange it had filed police reports in Singapore, Indonesia, Hong Kong and with Interpol, alleging that funds were transferred to unauthorised accounts at the Zurich branch of ABN Amro Bank and a Guernsey branch of the Republic National Bank of New York. Mr Ng joined the company last year and is still at large, the report to the stock exchange said. Earlier this month, the Indonesian Bank Restructuring Agency pledged to take unspecified legal action against Putra Surya Perkasa Group, the bankrupt company's parent, which owes the bank rescue body 5.1 trillion rupiah. Phoenix Global Investment filed a bankruptcy claim against PSM earlier this month for the latter's failure to pay matured interest payments on the $1 million in convertible bonds it issued to the foreign bond holder. Marthens Manafe, the plaintiff's lawyer, said the convertible bonds were issued to Phoenix Global in December 1996 and would mature in May 2001. He added that interest payments on the bonds were to be paid by the issuer each July. "Because they (PSM) failed to pay the matured interest payments for July 1998 and July this year, the whole principal value of the bond automatically became due," he said. PSM, listed on the Jakarta Stock Exchange (JSX), is an affiliate of the heavily indebted Putra Surya Perkasa (PSP) Group. PSP, among IBRA's largest debtors, has been categorized a noncooperative debtor for its failure to comply with the agency's debt restructuring program. The business group operates eight subsidiaries and owes a total debt of some Rp 5 trillion to banks under the control of IBRA. PT SINAR: Receives Okay to Restructure US$46.7 Medium-Term Notes ---------------------------------------------------------------- Indonesian finance company PT Sinar Mas Multiartha has reportedly obtained approval from the Asian Banking Corporation of South Korea to restructure US$46.7 million of debt in Medium-Term Notes (MTNs). An agreement on the debt restructuring signed recently involved a 5-year rescheduling of the notes' maturity without a debt reprieve nor an additional grace period, according to a report circulated by Asia Pulse. The interest payments would continue to be made semi-annually, but the rate was revised from the previous 11% per annum to 3 percentage points above the London Interbank Offered Rate (LIBOR). Sinar Mas Multifinance told reporters that the new agreement required the firm to repay 10% of total debts, or US$4.67 million, annually between this December to 2003. Repayment of the remaining US$23 million would be settled in Nov 2004 at the end of the notes' maturity. ========= J A P A N ========= MITSUBISHI MOTOR: Widens Efforts to Restructure Operations ---------------------------------------------------------- Mitsubishi Motors Corp. unveiled further moves in Tokyo this past week to restructure its ailing operations, including an additional 10% reduction in manufacturing capacity in Japan and a termination of new investment in Europe to focus on North America. Katsuhiko Kawasoe, president of Mitsubishi, said the yen's strength and a worse-than-expected slump in Japan's car market have "used up" the effectiveness of the restructuring measures the Japanese auto maker has implemented so far, and that more streamlining is needed to ensure an early turnaround. The steps, announced Friday and related via The Asian Wall Street Journal, are the latest in a series of moves by the ailing auto maker to make itself more attractive to potential suitors. Mr. Kawasoe, the Journal reports, said Mitsubishi will continue to seek alliances, including those that may turn into equity relationships, with other car makers by promoting its gasoline- direct-injection engine technology. "We continue to seek collaborative ties with companies world-wide that will prove mutually rewarding," he said. Mitsubishi's latest restructuring plan covers the period between April 2000 and March 2004. Mr. Kawasoe said Mitsubishi will invest "several hundred million dollars" in the U.S. where its cars have sold at a record pace this year that the company otherwise would have spent in Europe during the period. The funds will go primarily to developing cars and light trucks with "a more distinct American taste," Mr. Kawasoe said. Through cost cutting and by improving revenue and profit, Mr. Kawasoe said Mitsubishi plans to slash group interest-bearing debt to about one trillion yen (US$9.78 billion) by March 2004, from 1.75 trillion yen last March. Under the previous plan, Mitsubishi sought to cut debt to 1.3 trillion yen by March 2001. The new restructuring measures are expected to help Mitsubishi Post parent pretax profit of 100 billion yen and group pretax profit of 150 billion yen in the year ending March 2004, up from 20 billion yen on both parent and group bases for the year ending March 2001, Mr. Kawasoe said. NISSAN DIESEL: To join Hino-Isuzu Bus Joint Venture --------------------------------------------------- Troubled truck maker Nissan Diesel Motor plans to join a bus- making joint venture to be set up by Japanese rivals Isuzu Motors and Hino Motors, a report appearing in Business Day this week relates. Nissan Diesel, which makes some 800 buses a year, will transfer the development and production division of its bus business to the joint venture, Kyodo News agency said quoting industry sources. Nissan Diesel could not be reached for comment by Business Day. Nissan Diesel, a unit of Nissan Motor, said in October its losses nearly tripled in the six months to September and that it was expecting another huge loss ahead. Kyodo news reports that Subaru car maker Fuji Heavy Industries also intended to join the Hino-Isuzu joint venture, and that Nissan Diesel and Fuji would announce the move early in January. But a Fuji spokesman denied that the company, which earlier this month was bought into by US giant General Motors, was taking part. "We've never heard of it and there is no such a thing at all," he said. Hino could not be reached for comment, but an Isuzu spokesman also denied the report. "There is no such deal at all," he said. Earlier this month Hino and Isuzu said they would set up a joint venture within a year to consolidate their bus-making operations. Hino is affiliated with Toyota Motor Corp. while Isuzu is controlled by General Motors. YAKULT HONSHA: Company Charged with Filing False Earnings Reports ----------------------------------------------------------------- From Tokyo, The Asian Wall Street Journal reports that the Securities and Exchange Surveillance Commission filed allegations that Yakult Honsha Co. falsified of earnings results for the six months ended September 1997. The commission alleges two executives at the company plotted to conceal Yakult's losses on Princeton Economics International notes that were sold by the Tokyo branch of Cresvale International Ltd., according to people close to the commissions. Officials at Yakult Honsha weren't available to comment, the Journal said. ========= K O R E A ========= DAEWOO CORP.: FSC Continues Negotiations with Foreign Creditors --------------------------------------------------------------- The South Korean government will delay placing Daewoo Corp. under court receivership but continue negotiations with the foreign creditors of the troubled Daewoo Group until late January. Lee Hun-jai, chairman of the Financial Supervisory Commission, held a meeting Monday with presidents of Daewoo's creditor banks to review the progress of workout programs for Daewoo affiliates. Sources told Yonhap, Asia Pulse and other news services that participants agreed not to place Daewoo Corp. under court receivership within this year but to postpone the decision for three to four weeks in a bid to give foreign creditors negotiating leeway. Last week, foreign creditors turned down an average loan recovery rate of 34 percent proposed by domestic creditors and asked for 59 percent. The government and domestic creditors will not back off from their original position regarding the loan recovery rate, and will press for court receivership of Daewoo Corp. next month if foreign creditors hold on to their demand for a 59- percent recovery rate. DAEWOO MOTOR: Creditors Name New Senior Officers ------------------------------------------------ Creditors of South Korea's Daewoo Group named: * Kim Shin-jung, 54, Daewoo Motor's vice president resident in India, as the automaker's new president for overseas business; * Jung Ju-ho, 53, chief restructuring planner of Daewoo Group, was named as Daewoo Motor's president of the company's domestic operations; and * Park Sung-hak, 56, president of Daewoo Group's Indian headquarters, was named president of Daewoo Motor Sales Corp.; this week, and reports say that creditors will name a new chairman within this week. HYUNDAI GROUP: Reforms Rouse Financial Sector, AWSJ Says -------------------------------------------------------- Hyundai Group has gotten serious about reform, but some in South Korea's financial sector are craving still more. The turnaround at Hyundai, South Korea's largest conglomerate, has been dramatic. Its debt has dropped about from more than four times the amount of its equity a year ago to less than two times its equity, not counting its asset revaluation. Its total liabilities have fallen from 64.9 trillion won (US$57.4 billion) six months ago to an estimated 46.5 trillion won now. Hyundai raised an estimated 13.3 trillion won in stock offerings this year, and the group expects to have 26 affiliates at the end of the year, reduced from a 1999 high of 79 through sales, spin- offs and mergers. In coming year, says Park Se Yong, the executive chairman of Hyundai's corporate restructuring committee, Hyundai plans to split itself into five independent subgroups, each centered on one major business automobiles, electronics, heavy industries, construction and finance. "The government and the people would like to see big groups like Hyundai be more compact-sized," Mr. Park says. But some bankers and analysts still believe that Hyundai must do more to ensure the competitiveness of its companies in the long term because the group is facing immense potential challenges. General Motors Corp. and Ford Motor Co. are both pursuing the acquisition of Daewoo Motor Co. One of them succeeding would give a foreign car maker a major presence in South Korea for the first time and put pressure on Hyundai Motor Co. Kim Young Hwan, chief executive of memory-chip maker Hundai Electronics Industries Co., says the company can rely on its internal resources to make investments and service its debt, which will total approximately nine trillion won at year end, but, if it does so, it will face difficulties maintaining its market share. Bankers and analysts would like Hyundai to continue to make financial improvements and form tie-ups with foreign companies, especially in capital-intense industries such as automobiles and electronics. "They need foreign strategic alliances, to get cash, pay debt, and clean up the balance sheets," says Koh Wonjong, head of research at ABN Amro Asia in Seoul. An official at Hyundai Motor says the car maker wants to remain independent, but is interested in alliances with foreign firms for specific projects. Hyundai Electronics' Mr. Kim says his company is in talks with Japanese chip makers about possible areas of cooperation, and is also pursuing a foreign partner for its flat-screen business. "Our doors are wide open to talk," he says. Hyundai's reforms have eased concerns about the group's financial health. During most of South Korea's financial crisis, which started in late 1997, Hyundai was adding heft while other conglomerates were slimming down. Huyndai companies, led by Huyndai Motor, acquired car maker Kia Motors Corp. in an auction last year, giving Hyundai control of more than 70% of the local car market. This year, Hyundai Electronics acquired competitor LG Semicon Co. Now Hyundai has 25% of the world's capacity for dynamic random access memory chips, or DRAMs more than any other company. Mr. Park sees the acquisition as the right moves for Hyundai. "We shall continue to specialize and concentrate our efforts," he says. "This is not expansion, but concentration." But financial markets got jittery this year, especially after the Daewoo Group nearly defaulted on its debt in July. Now Daewoo is being dismantled by its creditors after amassing liabilities in excess of 87 trillion won. Mr. Park says international banks temporarily tried to reduce their exposure to Hyundai in the wake of Daewoo's problems. Hyundai continues to send mixed signals as to whether the group has truly changed its expansionist ways. In October, Hyundai agreed to sell half of its oil-refinery business to International Petroleum Investment Co. of Abu Dhabi for $510 million. But it also signed a memorandum of understanding with financial-sector regulators to acquire Josun Life Insurance Co. This month, Hyundai Motor expressed its interest in taking over the Poland car-manufacturing operations of Daewoo Motor. Hyundai is also at the forefront of business in North Korea. Last year, Hyundai promised North Korea US$942 million in fees over six years to run a tour service to a North Korean mountain. Hyundai also plans a US$10 billion industrial complex in North Korea. "In a few years, the size and quality of the business (in North Korea) will be greatly improved," says Kim Ko Joong, senior executive vice president at Hyundai Asan Corp., the affiliate conducting the North Korea businesses. (The Asian Wall Street Journal 28-Dec-1999) KOREA HEAVY: End of HANJUNG Strikes Signals Start of Next Chapter ----------------------------------------------------------------- Privatization efforts are expected to get underway once again at state-run Korea Heavy Industries and Construction Co., or HANJUNG, following the end of a 48-day-long strike. Although the agreement reached between workers and management still contains vague promises, such as "privatization that ensures maximum benefits for both workers and the company," the end to the crippling strikes has removed external obstacles. Also, a major instigator of the strikes - a business swap between Samsung, Hyundai and HANJUNG - was concluded earlier this year. Samsung Heavy Industries Co., Hyundai Heavy Industries Co. and HANJUNG signed a formal contract in early November to swap their power generation equipment and ship engine operations. Under the contract, Samsung Heavy will transfer all of its power plant operations to HANJUNG, while Samsung's ship engine operations will be transferred to a new company. HANJUNG will hold a 60 percent stake in the new ship engine company, while Samsung Heavy will hold the remaining 40 percent. HANJUNG will also take over Hyundai Heavy's power plant operations. The planned ship engine company will lease the ship engine facilities of Samsung and HANJUNG for five years and purchase them at a later date. The deal aims to resolve bloated investment and over-capacity at the nation's top five business groups and has been touted as the removal of one of many obstacles in efforts to privatize HANJUNG. The business swaps are part of the reforms the government has been pushing the nation's top business groups to implement in seven industries, including semiconductors, cars and petrochemicals. However, the signs indicate a rough road ahead. The Korean government, which originally planned an open sale of HANJUNG's operations, has recently been avoiding direct comments regarding such a sell-off. Also, rumors have been circulating that the government is pushing for an exclusive sales contract with the General Electric Company of the United States, causing other interested parties to accuse Seoul of favoritism. As ambiguous as certain clauses may seem, the agreement between labor and management shows that the government has accepted most of the demands of the union. Company officials agreed to give workers "a maximum amount of stock options within the limits of existing laws," by offering them loans through financial institutions. Another clause reportedly contained provisions for a joint labor-management committee to discuss future privatization decisions. Sources close to the talks said HANJUNG's management agreed with union officials to give them a 15 percent stake in the state-run company, while pursuing the handout of additional shares progressively through listing on the local bourse. Hinting at that possibility, a HANJUNG spokesman said, "We are discussing a wide range of possibilities." Meanwhile, industry watchers have cautiously pointed out the underlying desire by the government to obtain equity participation by GE, owing mostly to Seoul's intent to lower the number of chaebol-controlled industries. Of the 51 percent stake in HANJUNG slated for sale, the government has decided to hand out 15 percent to union members. If an equal number of shares are handed out to GE and ABB-CE, then domestic conglomerates will have less than a 10 percent stake to divide among themselves. Industry watchers point out that the government's decision to hand out shares to labor officials was Seoul's attempt to quell negative developments in a rush, with only months remaining before general elections next year. Meanwhile, the Ministry of Commerce, Industry and Energy yesterday denied a local press report that it plans to keep chaebol groups from taking part in HANJUNG's privatization. The report said that the ministry plans to sell a 20 to 25 percent stake in the company to foreign companies in a strategic alliance. "The report is simply inaccurate," said a ministry official. He said the government hasn't finalized plans on how it will privatize the company. (The Korea Herald 29-Dec-1999) KOREA INVESTMENT: Government Injects Won 600 Billion of Capital --------------------------------------------------------------- The South Korean government will inject 600 billion won (US$531 million) in shares of Industrial Bank of Korea into ailing Korea Investment Trust Co., the Ministry of Finance and Economy said, according to a report appearing in The Asian Wall Street Journal. The capital injections, completed Tuesday, are part of a government plan to inject a total of two trillion won into KITC and Korea Tobacco & Ginseng Corp., both of which the Financial Supervisory Commission declared nonviable earlier this month when an audit revealed their liabilities far surpassed their assets. KOREA TOBACCO: Government Injects Won 300 Billion of Capital ------------------------------------------------------------ The South Korean government will inject 300 billion won in shares of Korea Tobacco & Ginseng Corp. into Daehan Investment Trust Co., the Ministry of Finance and Economy said, according to a report appearing in The Asian Wall Street Journal. The capital injections, completed Tuesday, are part of a government plan to inject a total of two trillion won into KT&GC and Korea Investment Trust Co., both of which the Financial Supervisory Commission declared nonviable earlier this month when an audit revealed their liabilities far surpassed their assets. =============== M A L A Y S I A =============== UNIPHOENIX CORP.: Explains Qualification in Auditor's Report ------------------------------------------------------------ Uniphoenix Corp Bhd has explained its qualification in the auditors report in its 1999 annual report, according to a news item appearing in Tuesday's edition of The Star. In a reply to the KLSE, UCB said as at June 30, the group and company had net current liabilities of RM392.581mil and RM427.117mil respectively. They had net shareholders' deficit of RM330.402mil and RM329.320mil respectively. In July of this year, The Star recalls, the company announced its revised proposed restructuring scheme and the ability of the group to continue as a going concern is dependent on the successful implementation of the said restructuring scheme. "The matters highlighted above is significant and the implementation of the said scheme is uncertain as it is pending the approval of various parties," the statement said. In February this year, Pengurusan Danaharta Nasional Bhd appointed Special Administrators to assume control of the assets and liabilities affairs of a subsidiary, Halim Securities Sdn Bhd, with the objective of restructuring Halim Securities. "The implementation of the schemes will result in adjustments being made to certain amounts and the classification of assets and liabilities in the amounts of the group and the company where a quantification of the possible effects on the accounts could not be determined. "At the date of the report, the auditors have highlighted this matter of fact in their report," the statement said, according to The Star. ===================== P H I L I P P I N E S ===================== BW RESOURCES: No Free Cash to Pay Account Holders ------------------------------------------------- Some brokers continue to show scars from the unusual surge in prices of gaming firm BW Resources Corp. Connell Securities, Inc. -- a former member of the Philippine Stock Exchange (PSE) -- is faced with a dilemma on how to settle its accounts with clients as the PSE and corporate watchdog Securities and Exchange Commission (SEC) have dribbled around the role of being "receiver" (or distributor of funds) for the proceeds of Connell's sale of its Exchange seat. "The owners are willing to pay," Rebecca Licuanan, former internal auditor for Connell, told BusinessWorld. "But the funds are not with us. We cannot step in. Neither PSE nor SEC has given us instructions. They have not released the funds (from the sale of the exchange seat)," Ms. Licuanan said. It would be recalled that last September, approval of the sale of the seat was sought from PSE's board of governors. The seat, which was sold for PhP27 million (US$669,759 at PhP40.313=US$1), was taken by another local broker Coherco Securities, Inc. Ranking sources at the PSE estimated Connell's liabilities to reach between PhP42 million to PhP52 million ($1.04 million to $1.28 million), varying as it is depending on the market prices of the shares held by clients. Connell contested the amount saying that as of September, the PhP27 million net proceeds could cover 80% of the company's obligations. How did the Connell problem happen? Sources recounted there was a "mysterious" shortage of shares of BW in the firm's inventory. "There were some shares not available in our inventory. BW was one of them. A client for instance wanted to buy BW through us. We found out some shares were not available in the inventory so we had to buy (these) back and how much was BW? From PhP1 (originally), it rose to... (in October as high as within the day) PhP107," a source said. "It could have been stolen but who would want it for PhP1? It could have been sold," the source theorized. For its part, the PSE is mulling to tap the Securities and Investors Protection Fund (SIPF) -- the lifesaver for insolvent brokerage firms -- as an alternative should customers of Connell demand that they be paid their dues. "Or we can deposit the proceeds to court," a ranking source said. The SEC has remained mum on being the "liquidator" of Connell's assets saying PSE still has "residual authority" over Connell even if it is no longer a member of the Exchange. A liquidator takes charge of collating the company's assets and converting these to cash as well as distributing these to the claimants. A source in SIPF, Inc., the non-stock profit corporation which manages the fund said the reserve has amounted to more than PhP100 million ($2.4 million). The source said this reservoir could be tapped by brokers and clients who apply to the corporation should the broker fail to settle its accounts to customers. Applicants however could be satisfied up to PhP100,000 ($2,480), which is the fund's liability limit. The PSE, however, has been faced with growing dissatisfaction over its handling of the Connell case as one governor, who heads the membership committee was reportedly upset over the sale of the seat. PSE Roberto Coyiuto reportedly wrote a letter asking that PSE management led by president and chief executive Jose Luis U. Yulo be sanctioned for approving the sale without informing him since the sale should proceed only if SEC should guarantee that PSE be absolved from Connell's liabilities. Mr. Coyiuto could not be reached for comment as he was "out of town." Mr. Almadro said Mr. Coyiuto was present during the meeting and did not comment to changes in the board decision involving Connell. In the a PSE memorandum dated December 16, the board of governors in its meeting held last October 13 amended its decision and approved the sale of Connell's seat sans the condition that PSE be free from liabilities. The SEC, for its part, said "the Commission does not interporse any objection to the sale" but did not officially comment on whether PSE was free from the liabilities. Connell officially stopped operations since May 15 due to internal problems. It sold its seat to Coherco Securities of businessman Wilfred Tan Co, owner of the Robinson's Handyman, Inc. chain of stores. Connell is the third broker to cease operations after Malaysia-based Amsteel Securities and Hong Kong- based Kerry Securities pulled out of the PSE early this year. (Business World 29-Dec-1999) NATIONAL STEEL: Seeks Suspension on Debt Payments from SEC ---------------------------------------------------------------------- Forced to seek debt relief to avert foreclosure on its assets, National Steel Corp. asks Manila's Securities and Exchange Commission for a suspension on payments of 15.4 billion pesos (US$383.2 million) of debts and loans. National Steel's petition came a day after a local court denied a petition to extend an order that temporarily stopped a syndicate of local banks, including Philippine National Bank, Allied Banking Corp., Westmont Bank, and Land Bank of the Philippines, from selling National Steel's assets on December 22. Immediately, National Steel asks the SEC to install a management committee to prevent the dissipation of its assets. NSC suggests that the "creation of a management committee or rehabilitation receiver will help facilitate the resumption of the company's business operations as well as its long-term rehabilitation," according to a report appearing in BusinessWorld. The PNB Syndicate loaned National Steel close to 10 billion pesos. National Steel says a suspension will give it time to draft a rehabilitation plan and find a new financial backer to help it pay all its debts. National Steel says its assets are worth 20 billion pesos, more than enough to cover all its liabilities. For believers in publicly-filed financial reports, SEC submissions indicate that the company has assets of PhP29.27 billion (US$726 million) and liabilities of PhP16.12 billion (US$399 million). National Steel's petition is getting no priority. An SEC official told BusinessWorld that the provisional suspension order has not yet been issued as NSC's petition is "not with extreme urgency," despite the temporary restraining order (TRO) issued by the regional trial court of Lanao del Norte against foreclosure proceedings on the steel firm's assets. "It will be practically impossible for petitioner to resume its operations and rehabilitate itself unless the SEC intervenes and declares NSC in a state of suspension of payments," NSC said in its petition. NSC asserts that a foreclosure sale "will cause irreparable injury not only to the company but also to the national economy." National Steel, according to the Philippine Daily Inquirer, blames its dire financial straits on the entry of imported and cheap selected steel products since the government reduced the tariffs on these products to three percent from 20 percent, unstable foreign exchange rates and high interest rates, especially at the height of the Asian financial crisis. PHILIPPINE ASSOCIATED: Minority Sharheolders Appeal to Sup. Ct. --------------------------------------------------------------- BusinessWorld says that it appears oppositors to the sale of the debt-saddled Philippine Associated Smelting and Refining Co. (PASAR) to private consortium, Pasar Holdings Inc. have not yet given up. PASAR minority stockholders and seven congressmen -- in separate appeals filed before the Supreme Court yesterday -- begged the High Tribunal to overturn a December 14 ruling upholding the turnover of the firm to the former Copper Smelting Investment. Ltd (CSIL) for PhP3.2 billion (US$79.37 million). They claimed the decision laid down a bad precedent. CSIL is Pasar Holdings Inc.'s predecessor. They cautioned the court's failure to nullify the sale will later embolden the Asset Privatization Trust (APT) and the Committee on Privatization (CoP) "to continue their scandalous management of the government's privatization program." "Strike down all attempts to give away the country's strategic industrial resources at bargain-basement prices...The green light (you gave by upholding the PASAR sale will allow) speculators to descend upon the carcass of our prostate economy," asked the oppositors. Both motions for reconsideration warned of the effects of the "unfavorable" decision on next year's scheduled sale of the Philippine Phosphate Fertilizer Corp., the National Food Authority and the National Power Corp., among others. "These corporations are being pictured as debt-laden, thus preparing the public for accepting a PASAR-like bidding process that would attract avaricious international adventurers and their local counterparts and dummies who are now salivating at the prospect of acquiring strategic Philippine industrial concerns for a pittance," they said. Two weeks ago, the Supreme Court junked for lack of merit the petitions for review of PASAR minority stockholders Teodoro Bernardino and Teodulo Gabor, Jr. and congressmen Ricardo Silverio, Raul Gonzalez, Prospero Pichay, Sergio Apostol, Federico Sandoval, Rodolfo Bacani and Roy Padilla, Jr. The Tribunal's first division said the petitioners failed to prove the government abused its power in "accepting the bid of CSIL." It added the oppositors did not back up their claim the sale was "disadvantageous to the government and the Filipino people." They insisted the cash-strapped government should not use its dire financial situation to legitimize the sale of PASAR. "The country is admittedly facing a host of financial problems but this is no excuse to sacrifice even its dignity by practically begging for crumbs in exchange for substantial assets, " they said. The privatization proceeded as planned in June after the Supreme Court refused to issue a restraining order to stop its finalization. The CSIL consortium, backed by Switzerland-based global commodities trader Glencore International AG, paid PhP3.2 billion for 292 million or common A PASAR shares the National Development Co. (NDC) on behalf of the government. This is equivalent to 37.7% stake in PASAR. In their appeals, the oppositors claimed government erred in surrendering to Pasar Holdings the old PASAR's PhP25.6-billion ($635 million) future receivables even as it allowed to shoulder PhP32 billion ($793 million) in liabilities. "These facts are matters of record," they said, in convincing the Court to take a second look at the case. SOLID BANK: Metrobank to buy Solidbank for PhP6.77B --------------------------------------------------- The Metrobank Group is pushing through with its purchase of a 51% stake in listed Solidbank Corp., Philippine newspapers report, despite a pending petition for a delay in the sale by Solidbank's foreign partner Bank of Nova Scotia (Scotiabank). In a disclosure to the Philippine Stock Exchange (PSE) yesterday, the Metropolitan Bank and Trust and Co. (Metrobank) said its board of directors has approved the purchase of "at least 51%" of Solidbank's outstanding capital stock for PhP6.766 billion (US$167 million). The transaction would involve 11.798 million common shares, priced at PhP573.50 ($14.22) apiece. This would be equivalent to roughly 2.52 times Solidbank's book value, pegged at PhP227.16 ($5.63) as of end-1998. The Solidbank purchase, BusinessWorld relates, would be the Metrobank Group's third acquisition in less than a year. Last July, it agreed to buy 67% of the Philippine Banking Corp. (PhilBank) at 1.425 times the adjusted book value, or PhP2.928 billion ($72.63 million). The transaction was crossed at the PSE last August. It also acquired 100% of AsianBank Corp.'s capital stock at a "negotiated price" of PhP2.25 billion ($55.81 million), or 0.592 times the bank's PhP3.8-billion ($94.26 million) book value. A source from the Metrobank Group told BusinessWorld that the country's biggest bank (about to be overtaken by the Bank of the Philippine Islands-Far East Bank and Trust Co. merger) is "prepared to push through with the transaction." The bank has two working days or until Jan. 3 next year to close the deal. Scotiabank's deadline to exercise its "right of first refusal" over the Madrigals' 38% stake lapsed yesterday, which technically paved the way for Metrobank to gobble up the family's shares. "We need a formal notice before we can act We are waiting for the formal notice from the Madrigals (that would inform us) that the 30-day period (for Scotiabank to exercise its right of first refusal) has lapsed," an unnamed source told BusinessWorld. Bangko Sentral Governor Rafael Buenaventura said yesterday that he hoped to see the shareholders of Solidbank settling their dispute soon, noting that whichever group would succeed in taking over the bank would be acceptable to the BSP. "It is immaterial whether it is Metrobank or Bank of Nova Scotia or if it reverts to the Madrigals. They should resolve it very soon," Buenaventura urged. VICTORIAS MILLING: Puts New 53.35% Equity Stake Up for Sale ----------------------------------------------------------- Hoping to raise no less than P567.08 million, the Philippines' largest sugar miller, Victorias Milling Corp, said Monday that a 53.35 percent stake in new common shares will be sold. The sale of Victorias' majority stake is part of the firm's survival plan approved by the Securities and Exchange Commission in August if shareholders failed to raise fresh funds. In its bid invitation published in the Manila Bulletin and other local newspapers, Victorias said pre-qualified bidders may conduct a due diligence on the company from February 4 to March 3 after paying a fee of P50,000 each. The company did not say when it planned to hold the bidding. It said interested buyers must register no later than January 12. VMC was brought to its knees in early 1997 after a prolonged sugar glut from the country's over-importation strained its finances. Its diversification projects, which included real estate developments, also failed to produce the expected results after the property market slowed. This forced the company to seek a debt moratorium from 32 banks, which have a combined exposure of P3.4 billion. In other news, Bankers Trust Co., the Philippine Daily Inquirer reports, has resigned as Victoria's financial adviser to "avoid any perceptions of conflict of interest." Bankers Trust was acquired recently by Deutsche Bank AG, one of the major unsecured creditors of Victorias. "While Bankers Trust is of the opinion that no conflict of interest exists, we would like to request the Victorias management committee to accept our resignation to avoid any perceptions of conflict of interest," it said in a letter to =============== T H A I L A N D =============== PRECIOUS SHIPPING: Agreement to Defer Principal Payments -------------------------------------------------------- Precious Shipping Public Company Limited advises that it executed a Principal Deferral Agreement with Den Norske Bank ASA, London Branch; Credit Agricole Indosuez, BIBF; Credit Suisse First Boston, Singapore Branch; Banque Nationale de Paris, BIBF; Export Import Bank of Thailand; The Siam Commercial Bank Public Company Limited; and The Hongkong and Shanghai Banking Corporation Limited. According to the Agreement, all matured repayments of the principals falling due between 15th July, 1999 and 31st December, 1999 under any loans to above financial institution creditors being parties have been deferred to 31 December 1999 or such later date as may be agreed between financial institution creditors being parties and the Company so that the Company can proceed with the debt restructuring during such deferral period. PREMIER ENTERPRISE: Creditors Vote to Accept Restructuring Plan --------------------------------------------------------------- Premier Enterprise announced that that in the creditors meeting which convened last 30 November 1999 to vote on the company's debt restructuring plan, the resolution to approve the Company's restructuring plan exceeding the requirement stipulated by the Corporate Debt Restructuring Advisory Committee. The next step is that the company and the creditors will be signing the restructuring contract at later date. PP: New Incineration Project to Fund Rehabilitation Plan -------------------------------------------------------- On July 2, 1999, PP announced its intention to propose a rehabilitation plan. This week, Mr. Veerachai Eurvilaichit, Managing Director for PP, discloses that FINANSA LIMITED as the Companys Financial Advisor for the plan since June 15, 1999, and we have already completed the Debt Restructuring Contracts with all the Companys financial institutional creditors since December 16, 1999. Additionally, the Company is now studying the feasibility of the implementation of an incineration project which will greatly improve the rehabilitation plan in terms of revenue. Accordingly, PP will postpone submission of the plan. Together with FINANSA, the Company is jointly preparing details of the plan in March 2000. SAHAVIRIYA OA: Debt Restructuring Plan Approved by Creditors ------------------------------------------------------------ The Asian Wall Street Journal reports that Sahaviriya OA PCL of Thailand said its creditors have approved a debt-restructuring plan for total debt of 7.78 billion baht ($207.9 million). The company told the Stock Exchange of Thailand that creditors representing about 76% of total debt value have voted in favor of the plan. The plan includes debt forgiveness, asset transfer, capital reduction followed by capital increase, and a debt-to- equity conversion, the company's financial adviser Seamico Securities said. The Nation reported creditors have accepted a reduction in debt of 70%, or 5.4 billion baht. As of July 19, the company had total assets valued at 2.03 billion baht, a company representative said. Upon completion of the debt-restructuring plan, the company's registered capital will be increased to 500 million baht, from the current 200 million baht. Creditors will end up with a 90% stake in the company after a debt-for-equity swap valued at 900 million baht, the representative said. SRITHAI SUPERWARE: Court to Consider Creditor-Approved Plan ----------------------------------------------------------- Pursuant to the Court Order on May 28, 1999, Srithai Superware Public Company Limited was allowed to enter a Rehabilitation Process and SGV-Na Thalang & Co., Ltd. was appointed as the Planner. Furthermore, the vote at the Meeting of Creditors on December 20, 1999 was approved the Business Reorganization Plan of Srithai Superware Public Company Limited. Pursuant to Part 8 of the Bankruptcy Act B.E. 2483 (A.D. 1940) as amended by Bankruptcy Act (No. 5) B.E. 2542 (A.D. 1999), the Court considers on the resolution of the Meeting of Creditors in respect of the approval of the Business Reorganization Plan. At the hearing on December 24, 1999, the Court postponed the consideration of the Business Reorganization Plan and appointed the hearing date to be at 1.00 pm on December 30, 1999. TELECOM HOLDING: Sells-Off Claybridge Shares -------------------------------------------- In line with its debt-restructuring plan, Telecom Holding (TH), a subsidiary of Telecom Asia Corporation Plc, has sold its US$3.3 million stake in Claybridge Enterprise. TH sold its entire 93.67 per cent stake, or 3,699,000 shares, in the US-based company to an unnamed third party. Claybridge is the sole investor in Kendin Comunication, which produces electronic circuits. Dr Vallobp Vimolvanich, TH's president, said the company continues to sell its overseas investments in order to focus on its core business in accordance with its debt-restructuring plan. TH has about eight billion baht in debt. It expects to complete its debt clearing process in the first quarter of next year. Among its flagship businesses are Asia Multimedia, the fibre optic network operator, Internet service provider Asia Infonet and Personal Communication Telephone (PCT). To meet creditors' demands, the company recently sold several overseas projects, including its 15 per cent of Kopin Corporation Co for US$39 million. US-based Kopin is a manufacturer and distributor of telecom equipment. TH also sold its 20 per cent of optical fibre operator ComLink Co for Bt567 million. The shares were offered to ComLink shareholders, including the Lamsam family, the Bhirombhakdi family and Pridiyathorn Devakula, president of the Export-Import Bank of Thailand. Last year, TH sold its stake in Hong Kong-based APT Satellite for Bt3 billion. TH has yet to pull out of one project: Fibre Optics around the Globe. However, TH plans to divest its entire share after listing the company operating the project in an overseas stock market. TH expects to get a higher return that way. Meanwhile, the company announced that it would enter the television commerce business in 2000. The company expects to secure a foothold in t-commerce through existing business networks. T-commerce involves business transactions via interactive television. (The Nation 28-Dec-1999) THAI MODERN: Executives Charged with Fraud & False Statements ------------------------------------------------------------- Writing for the Bangkok Post, Nuntawan Polkwamdee reports that the Securities and Exchange Commission yesterday announced criminal charges against directors and executives of Thai Modern Plastic. A total of six directors and employees of Thai Modern Plastic were charged with securities violations and embezzlement occurring between March 1993 and December 1997. The SEC filed the charges on Monday with the Economic Crime Investigation Division. Chit-aram Panyamanichote, Aram Panyamanichote, Panit Panyamanichote, Chitra Panyamanichote and Prasit Pornpaitoonsakul were accused of fraud and embezzlement of company assets for personal gain. Mr Chit-aram, Mr Aram, Ms Chitra and Mr Prasit were accused of making false statements, improper accounting and submission of incomplete financial statements to mislead and damage benefits of the company and shareholders. Mr Aram and Ms Chitra were accused of falsifying documents used for accounting purposes, submitting false written statements and misleading accounting records. Valaiporn Yongkunavoot was named as an accomplice of the other suspects and accused of assisting in the falsification of records. Penalties for each alleged offence range up to 10 years' jail and fines of up to one million baht. Shares of Thai Modern Plastic have been suspended from the Stock Exchange of Thailand since mid-1998, and the company is implementing a rehabilitation plan. The company posted losses of 125 million baht for the first nine months of this year, compared with losses of 462.86 million last year. THAI OLEFIN: Maturity for $332 Million Extended from 2005 to 2007 ----------------------------------------------------------------- The board of directors of the Petroleum Authority of Thailand, or PTT, approved a debt-settlement extension for its heavily indebted unit, Thai Olefins Co., officials from Thai Olefins said. Thai Olefins Chairman General Yuthasak Sasiprapa said PTT struck a deal with Thai Olefins creditors in which its $332 million debt principal settlement was extended to 2007 from 2005. Mr. Yuthasak said the new settlement plan will allow the company more operating flexibility because of increased liquidity in the near term., as the repayment of some $122 million in debt principal is effectively on hold for four years. Under the new plan, Thai Olefins will pay creditors $8 million in principal and $30 million in interest beginning next year. The repayment amounts will rise incrementally each year after that. Under the previous contract, Thai Olefins was obligated to pay annually $52 million toward principal and $30 million in interest payments. Mr. Yuthasak said Thai Olefins estimates annual profit this year at 130 million baht ($3.5 million), after operating costs and debt repayments, bolstered by the favorable prices of olefin s in the third and fourht quarters of 1999. The company's creditors include foreign and domestic institutions, including Industrial Bank of Japan, Bangkok Bank, Sumitomo Bank, U.S. Exim Banka, Korea Exim Bank, japan Exim bank and Sakura Finance Asia. (The Asian Wall Street Journal 28-Dec- 1999) THAI PETROCHEMICAL: Selling Stock to Raise Funds to Settle Debts ---------------------------------------------------------------- Thai Petrochemical Industry Plc, reporting additional details on its wholly owned subsidiary Rayong Tank Terminal Co Ltd's recapitalisation plan, said the latter is increasing its registered capital from Bt600 million to Bt1 billion to raise funds for a debt settlement with its parent firm. Earlier, TPI's board of directors allowed the firm to subscribe to four million capital-increase shares issued by Rayong Tank Terminal Co Ltd for Bt400 million. (The Nation 28-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 * * *