When an Asian conglomerate begins having troubles with mounting debts and no clear way to pay them off except by holding a fire sale of assets, it is hard to blame investors for being wary. After all, it has been only four years since the Asian financial crisis exposed the weakness of trying to fuel growth by piling on the debt. First Pacific Co, a Hong Kong-based investor in troubled Southeast Asian assets, would seem to epitomise these fears. Over the past year, the company's share price has been hammered due to worries that it would not be able to repay nearly US$360 million in convertible notes due in March. That for nearly a year, First Pacific's chairman Manuel Pangilinan could not offer firm assurances that banks were interested in refinancing the issue also has not helped investor confidence. Its shares have nearly halved in value over the past 12 months and closed yesterday at HK1.02. . Yet, even as recently as June 1999, the company's shares were valued by investors at up to $7 per share. Granted, conglomerates - companies whose purpose is to hold stakes in other companies, providing them with management advice and financial expertise - normally trade at a discount to the sum of their investments. First Pacific's discount between the value of its investment portfolio and its own share price traditionally has been in the 30 to 35 per cent range. But the gap now stands at nearly 50 per cent, due to its financial worries. And for that reason, investment analysts have again begun looking at this company in a positive light. Lehman Brothers analyst Philip Tulk is telling investors to 'capitalise on the move' as First Pacific's stock closes the discount gap. His line of reasoning is simple. First Pacific has made moves in the past two months to cover its most pressing debts and is now in a much better position. The company has borrowed US$200 million from ING Bank for two years. It also has sold two long-term holdings, Berli Jucker, a Thai conglomerate, for US$135 million, and Darya-Varia, an Indonesian pharmaceuticals company, for US$35 million. While those two sales will be done at a loss, they effectively cash up the company. Also, they allow First Pacific to concentrate on its two most important assets, controlling interests in the world's largest instant-noodle maker, Indofoods, and Philippine Long Distance Telephone (PLDT), by far the nation's largest telecoms company. First Pacific also is on the market to sell off all or part of Fort Bonifacio, a huge urban redevelopment project in central Manila that has languished for the better part of a decade and has yet to produce tangible returns. This sale, while likely to produce a loss of between US$470 million and US$590 million for First Pacific and a writedown in shareholders' equity of US$190 million to US$310 million, should prove a huge watershed for turning the company around. It also will return between US$60 million and US$180 million to First Pacific's coffers for more profitable investments. Yet, while the company's financial health seems to be improving, it is still vulnerable to the continuing political and economic uncertainties of Asia that disturb investors. For one, after more than two years of managing PLDT, the company's crown jewel, its actual ownership continues to remain under debate in the Philippine Supreme Court. The present government contends that the true ownership of the shares that First Pacific bought lies with the former president Ferdinand Marcos and, hence, is the property of the Philippine people. Allegations also have been made that parties connected with First Pacific bribed former president Joseph Estrada, now facing his own criminal proceedings, to ensure that the acquisition went smoothly. With clouds as dark as that on the horizon, can you blame investors for staying away?