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/raid1/www/Hosts/bankrupt/TCRLA_Public/010406.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, April 6, 2001, Vol. 2, Issue 68 Headlines B R A Z I L CVRD: Makes Public Reference Prices For Iron Ore Products IDEIASNET: Posted R$7M In Losses In 4Q00 LOJAS ARAPUA: Ends 2000 With R$204.8M In Losses C H I L E ENERSIS: S&P Places Enersis, Others On Watch Negative M E X I C O BANCRECER: Tender Invitation To Be Released Second Half Of April GRUPO VITRO: Buys Spanish Cristalglass Vidrio Aislante For Stock MATTEL INC.: To Close U.S. Plant, Transfers Activities To Mexico OBSIDIANA.COM: StarMedia Acquires Assets With Common Stock TRIBASA: Responds To NYSE Notification Regarding ADR Delisting XEROX: Makes First Major Move to Third-Party Vendor Financing P A R A G U A Y ACEPAR: Financial Strife Due To International Reasons - - - - - - - - - - =========== B R A Z I L =========== CVRD: Makes Public Reference Prices For Iron Ore Products --------------------------------------------------------- Companhia Vale do Rio Doce, the Rio de Janeiro-based mining- transport company, has revealed to the public the reference prices for its iron ore products to steel company customers, Business News Americas reported Wednesday. The move is part of the company's new policy of more market openness. The reference prices are (with increases in brackets): Southern System Standard Sinter Feed to Europe US$28.92/t (4.52%), to Japan US$25.98/t 4.3%; Carajas Sinter Feed to Europe US$30.03/t (4.31%), to Japan US$26.48/t (4.21%): New Tubarao A to Japan US$28.34/t (3.23%), Special Lump Rio Doce to Japan US$30.43 (3.23%). A previous TCR-LA reported on the company's decision to retain its aluminum assets despite its ongoing strategy to focus only on core activities. IDEIASNET: Posted R$7M In Losses In 4Q00 ---------------------------------------- In the last quarter of the year 2000, Ideiasnet posted losses reaching R$7 million, surpassing the R$1.9 million and the R$5 million losses it posted in the third and second quarters respectively, South American Business Information reported Wednesday. The holding company accumulated a total of R$23.9 million in losses in 2000, R$14.3 million of which came from its affiliated companies. To date, Ideiasnet's investments have amounted to R$21.9 million. Ideiasnet, early this year, pulled the plug on Webseg, in which it holds 10.6 percent stake. Earlier in 2000, it also discontinued operations on two other dotcoms, Gibraltar and Patavina.com. LOJAS ARAPUA: Ends 2000 With R$204.8M In Losses ----------------------------------------------- The Brazilian retail chain Lojas Arapua, which applied for bankruptcy protection from creditors in June 1998, posted a loss of R$204.8 million in 2000, improving on the R$270.53 million it reported in 1999, according to South American Business Information Wednesday. The chain ended last year with a negative net worth of R$1.34 billion and R$1.2 billion in debts. However, it reduced operating loss from R$267 million to R$197million in 2000, due mainly to the performance of Arapua Comercia, the chain's operating subsidiary. In May 1999, Lojas Arapua transferred all its business activities and assets, points-of-sale operations and distribution centers to Arapua Comercial. Arapua registered a net income of R$492.4 million in 2000 with a 26.2 percent gross margin. The operating loss reached R$12.5 million. Arapua Comercial reached its break- even point in 2000, ending with a positive R$400,000. Arapua's crisis began in 1997, when the company posted R$185 million in losses, and its orders dropped from R$1.5 million in 1996 to R$500 million in 1997. In 1998 the company sought bankruptcy protection due to R$800 million in mounting debt. In 1999 the company re-negotiated 66 percent of its debts with its creditorsby issuing new debentures. Only Evadin, its major creditor, did not agree to the compromise. Arapua had R$100 million in debts with Evadin. ========= C H I L E ========= ENERSIS: S&P Places Enersis, Others On Watch Negative ----------------------------------------------------- Standard & Poor's today placed the local currency ratings of Enersis S.A., Empresa Nacional de Electricidad S.A. (Endesa Chile), Endesa Chile Overseas Co., Empresa Electrica Pehuenche S.A. (Pehuenche), and Chilectra S.A. on CreditWatch with negative implications. In addition, the foreign currency ratings of Endesa Chile, Endesa Chile Overseas Co., and Pehuenche were also placed on CreditWatch with negative implications -- see below for ratings listing. This action reflects, to a large degree, the increasing contribution of utility earnings to Enersis and Endesa Chile from countries outside of Chile. Importantly, the ability to generate funds at, and access funds from, non-Chilean subsidiaries has become riskier. The creditworthiness of the subsidiaries, especially those in Argentina, Colombia, and Peru, has weakened given those countries' greater macroecomic stress, interest rate volatility (and in some cases currency devaluations), and potentially more difficult and costly access to capital. Thus, utilities are exposed to greater business and financial risk. Furthermore, while Endesa Chile's portfolio of subsidiaries provides diversification, its dependence on hydro generation in Colombia, Brazil, and Chile can result in earnings swings. Enersis is 65% owned by Endesa S.A. (single-'A'-plus/stable/'A- 1'), the largest vertically integrated electricity company in Spain. Endesa has provided tangible support, such as deeply subordinated loans, which has been factored into the ratings of the greater Enersis family. Enersis' largest investment is its 98% ownership of Chilectra, Chile's largest electricity distributor. Chilectra is Enersis' investment vehicle for distribution companies in Argentina, Colombia, Peru, and Brazil. Enersis, in turn, owns 60% of Endesa Chile, Chile's largest (and predominantly hydro) generation company. Endesa Chile is Enersis' vehicle for investment in generation in Argentina, Colombia, Peru, and Brazil. For Enersis and Endesa Chile, roughly half of earnings are provided by Chilean operations, with the remainder coming from the international portfolios. At double-'B'-minus, Brazil's foreign currency rating has strengthened since the real plunged against the dollar in early 1999. However, the other countries in which the Enersis family operates have fared worse. Colombia's foreign currency rating, now double-'B', was lowered in September 1999 and subsequently in May 2000. Peru's foreign currency rating was lowered to double-'B'-minus in November 2000, and Argentina's rating, which fell in November 2000, took a stunning turn for the worse in March 2001; the foreign currency rating is now single-'B'-plus and remains on CreditWatch with negative implications (although Empresa Distribuidora Sur S.A., Enersis' Argentine distribution businesses, remains at double- 'B'-plus/CreditWatch negative, due to a very strong financial profile). An additional risk to Enersis and Endesa Chile is that common dividends are subject to certain legal requirements. Accounting losses, such as those caused by currency fluctuations, can limit or bar dividend distributions by the subsidiaries. Financial performance for 2000 at Enersis and Endesa Chile has been weaker than expected. To a large degree, this results from a continuation of dry hydrology in Chile extending into the first half of 2000. Still, projected financial ratios are not commensurate with current ratings given these developments. Standard & Poor's will be conducting a more extensive review to examine the composition of cash flows from the group and the ability of Enersis and Endesa Chile to service debt (issued at the Chilean level) with a reduced dependence on dividends from the international subsidiaries, Standard & Poor's said. -- CreditWire Local currency ratings placed on CreditWatch Negative: To From Enersis S. A/Watch Neg/-- A/Stable/-- Chilectra S.A. A/Watch Neg/-- A/Stable/-- Endesa Chile A-/Watch Neg/-- A-/Stable/-- Endesa Chile Overseas Co. A-/Watch Neg/-- A-/Stable/-- Pehuenche BBB+/Watch Neg/-- BBB+/Stable/-- Foreign currency ratings placed on CreditWatch Negative: Endesa Chile A-/Watch Neg/-- A-/Stable/-- Endesa Chile Overseas Co. A-/Watch Neg/-- A-/Stable/-- Pehuenche BBB+/Watch Neg/-- BBB+/Stable/-- Foreign currency ratings affirmed: Enersis S.A. A-/Stable/-- Chilectra S.A. A-/Stable/-- =========== M E X I C O =========== BANCRECER: Tender Invitation To Be Released Second Half Of April ---------------------------------------------------------------- The invitation to tender bids in the forthcoming sale of government-intervened Bancrecer will be ready for the second half of this month, South American Business Information reported Wednesday. This timetable suggests that the bank will probably transfer into the hands of the private sector by July. The invitation to tender is reportedly being prepared carefully to ensure that the 5 or 6 entities which have expressed serious interest in the bank's acquisition will retain such interest and generate a real battle for power and hence, a good price. As previously reported in the TCR-LA, Deutsche bank will act as financial agent in the sale, which includes Bancrecer's loan portfolio, as well as its network of almost 600 branches. The government-intervened institution lists assets of more than US$8 billion, almost US$6 billion of which are loans that have not been repaid (US$5 billion of which have been transferred to IPAB which has injected over US$10 billion into the struggling bank). Bancrecer's 51 percent stake in Afore Bancrecer pension group, as well as loans that have `timed out', will also be sold but separately. GRUPO VITRO: Buys Spanish Cristalglass Vidrio Aislante For Stock ---------------------------------------------------------------- Vitro, S.A. de C.V. (BMV:VITROA; NYSE:VTO) today announced that, in line with the Company's strategic plan to selectively invest in its core businesses, to increase growth and diversify geographic coverage, Vitro Plan, S.A. de C.V., one of the Company's flat glass subsidiaries, signed a stock purchase agreement to acquire 60 percent of the outstanding shares of Spain's Cristalglass Vidrio Aislante, S.A., holding company of the Spanish Group Cristalglass. Cristalglass fabricates, distributes and sells flat glass for the construction industry. The company employs over 300 people and has an estimated 30 percent share of the Spanish markets where it has presence. Annual sales are close to US$60 million. Cristalglass has three fabrication facilities located in the cities of Camponaraya and Villadecanes, in the province of Leon, and in Fuenlabrada, in the outskirts of Madrid, as well as two distribution centers in the cities of La Coruna and Valencia. Federico Sada G., Chief Executive Officer of Grupo Vitro, commented: "This acquisition is in line with our strategic plan to selectively invest in our core businesses, Flat Glass, Acros Whirlpool and Crisa, to further and diversify our growth. At the same time, through this acquisition Grupo Vitro takes an important step toward establishing a position in the European market from which to grow and diversify". Jose Domene, Chief Executive Officer of Flat Glass, emphasized that the acquisition is in line with the expectation of growth and diversification in the lines of value-added products of Flat Glass. This will allow the Company to achieve important synergies, benefit from the existing production facilities in Mexico and penetrate the European market. Through this operation, Flat Glass is expected to increase annual sales by 5 percent and will represent 37 percent of the Company consolidated sales by year-end. A significant percentage of Cristalglass' sales are of glass "duo vent", which is used for thermal and acoustic insulation, solar protection, and security glass in buildings and houses. Cristalglass serves the Spanish, Portuguese and French markets. The transaction is expected to close by April 30, and is subject to certain closing conditions, which are common for this type of operations. MATTEL INC.: To Close U.S. Plant, Transfers Activities To Mexico ---------------------------------------------------------------- Mattel Inc., the toy giant whose products include such American classics as Barbie dolls and Hot Wheels cars, said Tuesday it would shut down a plant in western Kentucky and move the work to plants it operates in Mexico, according to an Associated Press report. The Murray, Ky., plant's 980 workers will be laid off in the next 18 to 24 months beginning in June, said Don Myers, plant manager. Closure of the plant, acquired by Mattel when it bought Fisher- Price in 1993, is part of a wider restructuring announced by Chief Executive Officer Robert Eckert immediately after he took over the reins of the struggling company last May. Since his arrival, Mattel has dismissed around 300 employees or 10 percent of its headquarters staff and virtually gave away its money- losing Learning Co. educational software division that it bought in 1999 for $3.5 billion. According to the company's estimates, the restructuring would save it around $200 million over the next three years. The company would not say how much savings it expected to reap from the Kentucky closure, but company spokeswoman Lisa Marie Bongiovanni said most of the plant's output will be transferred to Mattel's three existing facilities in Mexico. OBSIDIANA.COM: StarMedia Acquires Assets With Common Stock ----------------------------------------------------------- After closing its Argentine office in late December 2000, cutting its workforce nearly in half and scrambling to find a financial partner, Obsidiana may have found a solution to its cash-strapped condition. StarMedia Network, Inc. (Nasdaq: STRM) (http://www.starmedia.com),the leading Internet media company for Spanish- and Portuguese-speaking audiences worldwide, today announced an agreement to acquire the assets of Obsidiana (http://www.obsidiana.com),the premier online destination for Latin American women. The acquisition creates the largest and most comprehensive women's destination online in the Spanish- and Portuguese-speaking world. Under the terms of the agreement, StarMedia will acquire the key assets of Obsidiana, including its user database, its leading brand and extensive original content, in exchange for shares of StarMedia's common stock. In addition, members of Obsidiana's core management team will join StarMedia. During the next several months, Obsidiana's offerings will be fully integrated into StarMedia's Spanish- and Portuguese-language women's destinations, Cadamujer and Viamulher. "Over the last year, we have seen tremendous success with our women's product offerings, on both a client and user basis. The acquisition of Obsidiana reinforces our on-going commitment to the women's online market, one of the fastest growing and most highly sought-after demographics on the Web," said Fernando Espuelas, Chairman and CEO of StarMedia Network, Inc. "By combining two of the top women's online destinations in our space, we are able to provide a more robust content offering for our users, and a larger targeted audience base for our clients." Sonia Dula, Founder of Obsidiana, stated, "StarMedia's dominant audience reach, resources and leadership position ensures that our company's founding mission to empower Spanish- and Portuguese-speaking women through the Internet continues in the future." The closing of the acquisition is subject to customary conditions. About StarMedia Network, Inc. StarMedia Network empowers and connects Spanish- and Portuguese- speakers through the Internet, enhancing the lives of its 27 million users. StarMedia Network is the leading Internet media company in the Spanish- and Portuguese- speaking world. The Company has operations in Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico, Spain, Uruguay, Venezuela, and throughout the United States. About Obsidiana.com Obsidiana, the premier online destination for women in Latin America and the U.S. Hispanic market, offers its users 100 percent original and locally produced programming, interactive news, information and advice on virtually every subject of importance to today's modern Latin woman. TRIBASA: Responds To NYSE Notification Regarding ADR Delisting -------------------------------------------------------------- Struggling Mexican builder Grupo Tribasa issued a statement Tuesday that the company has met since February, the requirements needed to continue listing its American Depositary Receipts (ADRs) on the New York Stock Exchange (NYSE), Reuters related Wednesday. The statement was issued in response to the notification Tribasa received on December 20 from the NYSE informing it of its failure to meet certain criteria required to remain listed on the exchange. The notification stated that Tribasa must maintain a total market capitalization of no less than $15 million during a period of 30 days, and a minimum share price of $1 during a period of 30 days. In addition, Tribasa said it has also presented an 18-month business plan to the exchange, which will be subjected to a review for a final decision on the company's listing. Tribasa, which reported major net losses in 1999 and 2000, is one of several large Mexican construction companies that has been struggling since the mid-1990s due to increased foreign competition in the Mexican building market, and because of lingering problems related to the 1994-1995 economic crisis here. XEROX: Makes First Major Move to Third-Party Vendor Financing ------------------------------------------------------------- Xerox Corporation (NYSE:XRX) today announced an agreement with a financing partner to provide on-going, exclusive equipment financing to Xerox customers in Denmark, Sweden, Finland and Norway. Xerox is selling its existing portfolio of lease receivables for these countries to the partner for approximately $370 million in cash with $285 million received today. "Today's announcement is the first important step in the company's plan to transition customer equipment financing to third-party vendors," said Paul A. Allaire, chairman and chief executive officer. "The combination of exiting equipment financing, asset sales and operational cash improvements is at the core of restoring the financial strength of Xerox." Allaire also confirmed that the completion of this transaction raises Xerox's current worldwide cash balance to approximately $3.1 billion available to meet financial obligations. In October of last year, Xerox announced its plan to move to third-party equipment financing as part of its turnaround plan. Over time, this is expected to remove as much as $11 billion in equipment financing-related debt from the Xerox balance sheet. The company also confirmed that negotiations continue with several potential vendors in other countries, including the United States, to complete this transition. "This partnership both enhances Xerox's liquidity and guarantees that Xerox's Nordic customers continue to receive the financing services they require when purchasing any of Xerox's wide range of innovative products," said Barry D. Romeril, Xerox chief financial officer. "Our financing partner's purchase of Xerox's Nordic lease receivables for essentially full value exemplifies the quality of Xerox's existing portfolio. The landmark agreement is a clear indication of the company's progress in executing on one of the key elements of our turnaround strategy." The long-term agreement includes the transfer of up to 20 administrative employees who will help ensure the seamless transition of financing operations. =============== P A R A G U A Y =============== ACEPAR: Financial Strife Due To International Reasons ----------------------------------------------------- Mr. Guillermo Stanley, President of the Paraguayan steel maker Acepar, attributed the company's poor financial condition to smuggling, tax evasion and import controls, South American Business Information reported Wednesday. According to Stanley, these terrible internal conditions have created a poor business environment in which to compete. More than two years ago, Acepar applied to the Brazilian government to register its brands and begin exports. However, according to the company, it has never received a responce regarding the matter. Currently, Acepar is seeking a 90-day suspension of operations from the government, during which time it will supply customers with stock-piled inventories. Acepar, at present, is running at 50 percent of its installed capacity of 12,000 mtpy. 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 Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Janice Mendoza, Editors. Copyright 2001. All rights reserved. ISSN 1529-2746. 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 Latin America subscription rate is $575 per half-year, 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 * * *