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November 30, 2000

From Our Correspondent: Hirohito and the War
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From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

OCTOBER 8, 1999 VOL. 25 NO. 40

M A N A G E R S   A T   W A R

When the Crisis struck, many Thai executives avoided their creditors. Not Sanan, who immediately appointed an outside negotiator to restructure the debt

Yvan Cohen for Asiaweek
Gambling with the Truth

When the Thai government bailed out on the baht July 2, 1997, plastics-maker Srithai Superware found itself holding U.S.-dollar debts it couldn't hope to service. Saving the listed, family-controlled company fell to its president, Sanan Angubolkul, a U.S.-trained veteran who had run Srithai for a quarter-century. Having seen the government and the Bank of Thailand lose the economy Sanan knew better than to ask for a bailout. "What can you do?" he wondered, as he watched the prime minister abandon the baht after vowing to back it only two days before. Sanan could expect no help from Chavalit Yongchaiyudh. "We have to dig ourselves out," he told himself and his colleagues.

First, Sanan broke the news to the owners. "It is very important how you sell your idea, how you convince the family," he says. "You must be trusted to solve the problem, keep them informed and give them the option of making the decision with us." Next he had to buy time with the creditors. As Sanan had told his staff for years: Losing money is tolerable, but if you lose your credit line, you lose it all.Sanan differed from his fellows. His first instinct was not to cover up and deny-deny-deny, but to tell it like it is. Announcing that the company was carrying $182 million in foreign debt prompted surprise and shock. "It was a radical approach," he says. "The majority of Thai companies waited. Stuck their heads in the sand."

Employees First Lance Gokongwei, Cebu Pacific

Gambling with the Truth Sanan Angubolkul, Srithai Superware

A Scion Ditches the Past Cho Jung Ho, Hanjin Securities

Daughter Knows Best Adrienne Ma, Joyce Boutique

When Creditors Scream Rini Suwandi, Astra International

Money, Money, Money Hayakawa Shigezo, Misumi Corp.

Candor was fraught with peril in a culture that would rather smile than talk about problems. Indeed, many in the Thai business community thought Sanan was crazy. He remembers clearly what they said: "'This is stupid. Why did you tell your problem to the whole world? Even the suppliers, the banks you don't have a problem with, will be nervous.'" Sanan knew much of that was true but couldn't help wondering: Yes, but where will we be when creditors start knocking on the door?

It didn't bear thinking about, so Sanan hired financial consultant SGV Na-Thalang to oversee the negotiations with all 23 creditors, many of them foreign institutions. "The creditors naturally want to take back as much as they can as soon as they can, while debtors want to postpone and find an excuse not to pay," says Sanan. "I think it is impossible if you have a borrower talk directly to a creditor because both will not trust each other." The SGV adviser kept the discussions businesslike and unemotional. To simplify matters, the 23 creditors appointed a steering committee of six. Due diligence complete about six weeks into the process, Sanan suggested speeding up the debt-restructuring, and the committee was cut to three people.

As the negotiations continued, Sanan streamlined operations, ending Saturday work to cut energy costs, slashing salaries by 15%, freezing new investment and converting idle assets into cash. Thai department stores were in no position to buy the company's tableware. So Sanan shifted production to exports. Although he eschewed mass layoffs, Sanan let go employees who had been with the company less than three months. Workers, he says, were mostly cooperative because they were made to understand that this was not a company-specific problem but one afflicting the entire nation. Throughout, Sanan says, he made sure shareholders, staff and creditors were kept in the communications loop. The secret, he adds, is to be good to the people who count. "The shareholders and staff are supporters," he says. "Whenever I want to make a decision, it is fully supported - even during the process of rehabilitation."

Sanan picked up part of his management philosophy at Atlanta's Oglethorpe University, where he got a degree in business administration. The rest of it he absorbed during a stint at German trading company Rieckermann (Thailand). "The Germans are very tough and straightforward," he says. "You get bloodied in front of the boss." Sanan emerged from the experience a keen time-manager and advocate of productivity. At Rieckermann, he says, when an employee is five minutes late, managers would ask: Say you are the leader of 500 people and you are five minutes late. Multiply the two and how many minutes does the company lose? "You learn the basic philosophy of how to become a good leader," Sanan reckons. The post-Crisis high point came in May, when shareholders and creditors sat down and signed new loan terms. After months of micro-managing, Sanan could take a breath. Srithai would survive to make more melamine dishes.

NEXT: A Scion Ditches the Past

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