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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
Wednesday, October 17, 2001, Vol. 2, Issue 203
Headlines
A R G E N T I N A
AEROLINEAS ARGENTINAS: New Owners Project Two Week Turnaround
TOWER RECORDS: Argentinean Partner To Expand Business
Fitch Drops Ratings On 16 Argentine Corporates
Fitch Downgrades 10 Argentine Banks After Rating Action
B R A Z I L
BANCO ECONOMICO: Banco Central To Auction Acominas Shares Oct 24
COOPETFES/CREDITEL: Liquidation Due To Irregular Loan Concession
EMBRATEL PARTICIPACOES: Shares Up 5%, Not Much Downside Left
EMBRATEL: Battle With Telefonica Over Intragov Reaches Court
INDUSTRIAS KLABIN: Preferred Shares Up On Restructuring News
MOULINEX: Senior Managers Lobby For Fidei's Offer
TELEMAR: Union Leader Reveals Outsourcing Plans
TELEMAR: Listel To Sue Over 'Illegal' Cut In Telelistas Revenues
VARIG: Takes Over Rio-Sul's Campinas Reservation Center
C H I L E
COMPANIA MINERA: Codelco Seeking Private Partners To Run Mine
EDELNOR: AES Withdraws Senior Loan Certificates Offer
TELEX-CHILE: Creditors Have 40 Days to Consider Orderly Sale
E C U A D O R
BANCO DEL PACIFICO: Spanish Firm To Administer Bank
J A M A I C A
AIR JAMAICA: Dealing With Another Financial Burden
AIR JAMAICA: Union Postpone Wage Negotiations Until Next Year
M E X I C O
VITRO: Predicts 32% Drop In 3Q01 Operating Profit
- - - - - - - - - - - -
=================
A R G E N T I N A
=================
AEROLINEAS ARGENTINAS: New Owners Project Two Week Turnaround
-------------------------------------------------------------
The Spanish tour operator Marsans and the Argentine airline
Airplus, the new owners of Aerolineas Argentinas, said that the
airline will be flying again in less than two weeks, El Pais
reported Saturday. They have guaranteed no job cuts for the next
two years, although employment agreements will be revised.
According to an agreement signed on October 2, Air Comet will
contribute $615 million towards payment of the $1.2 billion debt.
SEPI, on the other hand, will assume the remaining $585 million.
As proof of their commitment to keeping their promises, the new
owners have announced the payment of one and a half months of
salary which were in arrears, totaling some $18 million. Air
Comet's chairman, Antonio Mata, also announced other measures
including employee share purchase plans and a capital increase in
the next nine months.
Meanwhile, the new owners have asked the Argentine government to
pay for the airline's insurance against acts of terrorism
following a sharp increase in the cost of premiums. In addition,
they have requested changes to the aviation code which currently
prevents foreign companies from holding a majority stake in the
capital of a national carrier.
TOWER RECORDS: Argentinean Partner To Expand Business
-----------------------------------------------------
Tower records will not altogether vanish in the Argentinean music
market even after selling its four branches in the country,
reported South American Business Information.
New owner Condor Ventures will continue to operate the branches
and plans to expand the business in Argentina under the Tower
name.
Already, there are plans to open three more branches before the
end of the year and expansion to the provinces is being
considered for 2003.
Accordingly, the expansion drive will be by way of franchising.
Condor Ventures owns the master-franchise of Tower Records in
Argentina, Brazil, Uruguay, Paraguay and Bolivia.
Condor Ventures expects a turnover of US$30 million by end of
2002 as a result of opening the new branches.
CONTACT: Louise Solomon, PR Manager of Tower Records,
+1-916-373-2574
Fitch Drops Ratings On 16 Argentine Corporates
----------------------------------------------
Fitch has downgraded and placed on Rating Outlook Negative
several international scale local and foreign currency corporate
credit ratings in Argentina.
Fitch has also affirmed current ratings on two credits.
Ratings Downgraded:
Company Debt Rated From/To
Aguas Argentinas S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Capex S.A.
-- Local Currency `BB' / `BB-', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Compania Mega S.A.
-- Sr. Project Debt `BB' / `BB-`.
Edenor S.A.
-- Local Currency `BBB-' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Hidroelectrica Piedra del Aguila S.A.
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Imagen Satelital S.A.
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Metrogas S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Molinos Rio de la Plata S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
Telecom Argentina S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Telefonica Holding de Argentina S.A.
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative;
Transener S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Transportadora de Gas del Norte S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Transportadora de Gas del Sur S.A.
-- Local Currency `BB+' / `BB', Rating Outlook Negative;
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative.
Pecom Energia S.A.
-- Local Currency `BBB-' / `BB+', Rating Outlook Negative;
-- Foreign Currency `BB-' / `B', Rating Outlook Negative.
Siderar S.A.
-- Foreign Currency `B+' / `CCC+', Rating Outlook Negative;
YPF S.A.
-- Local Currency `A-' / `BBB', Rating Outlook Negative;
Ratings Affirmed:
Hidroelectrica Piedra del Aguila S.A.
-- Local Currency `B+', Rating Outlook Negative.
YPF S.A.
-- Foreign Currency `BBB-', Rating Outlook Negative.
The rating actions reflect the effects of increased country risk
on Argentine corporate credits. Fitch recently downgraded the
nation's sovereign rating to `CCC-` from `B- ` while maintaining
the Rating Outlook Negative. Central government delays in the
transfer of tax revenues to provincial governments, an economy
mired in recession with rising interest rates and the imminent
domestic public debt exchange are symptoms of the sovereign's
severe financial distress and deteriorating creditworthiness.
This environment may result in increased pressure on the
financial flexibility and credit fundamentals of Argentine
corporate credits. For those companies regulated by a government
authority, the heightened political risk increases the potential
for government interference in the regulatory process, leading to
possible efforts to influence or control prices to the detriment
of corporate cash flows.
Argentine companies continue to face higher refinancing risks and
slower growth. Entities with debt maturities over the ensuing 18
months are likely to have fewer and more expensive financing
options, further limiting financial flexibility and pressuring
credit protection indicators.
CONTACT: Fitch
Alejandro Bertuol, 212/908-0393, New York
or
Lorna Martin, 5411/4327-2444, Buenos Aires
Fitch Downgrades 10 Argentine Banks After Rating Action
-------------------------------------------------------
Fitch, the international rating agency, has downgraded the short-
term foreign and local currency ratings of the Argentine banks
indicated below to 'C' from 'B'.
The Long-term foreign and local currency ratings have also been
downgraded to 'CCC-' from 'B-' remaining on Rating Outlook
Negative. These rating actions follow a similar action taken
today with Argentina's sovereign ratings, which constrain the
ratings in question.
Ratings Affected:
Banco Bisel
-- Short-term downgraded to 'C' from 'B';
-- Long-term downgradedto 'CCC-', Rating Outlook Negative from
'B-', Rating Outlook Negative;
-- Support '3T',
BBVA Banco Frances
-- Short-term downgraded to 'C' from 'B';
-- Long-term downgraded to 'CCC-' Rating Outlook Negative, from
'B-' Rating Outlook Negative;
-- Individual rating 'C/D';
-- Support '3T'.
Banco de Galicia y Buenos Aires
-- Short-term downgraded to 'C' from 'B';
-- Long-term downgraded to 'CCC-' Rating Outlook Negative, from
'B-', Rating Outlook Negative;
-- Individual Rating 'D';
-- Support '4T'.
Banco de Galicia y Buenos Aires (Local Currency)
-- Short-term affirmed downgraded to 'C' from 'B';
-- Long-term downgraded to 'CCC-' Rating Outlook Negative, from
'B-', Rating Outlook Negative.
Banco Hipotecario
-- Short-term downgraded to 'C' from `B';
-- Long-Term downgraded to `CCC-' Rating Outlook Negative, from
'B-', Rating Outlook Negative;
-- Individual Rating 'D';
-- Support '4T'.
Banco Hipotecario (Local Currency)
-- Short-term downgraded to 'C' from `B';
-- Long-Term downgraded to 'CCC-' Rating Outlook Negative, from
'B-', Rating Outlook Negative;
Banco de Inversion y Comercio Exterior
-- Long-term downgraded to 'CCC-' Rating Outlook Negative, from
'B-', Rating Outlook Negative;
Banco de la Provincia de Buenos Aires
-- Long-Term downgraded to 'CCC-' Rating Outlook Negative, from
'CCC', Rating Watch Negative;
-- Support '4T'.
Banco Rio de la Plata
-- Short-term downgraded to 'C' from 'B';
-- Long-Term downgraded to 'CCC-' Rating Outlook Negative; from
'B-', Rating Outlook Negative;
-- Individual Rating 'C/D';
-- Support '3T'.
HSBC Bank Argentina
-- Long-Term downgraded to 'CCC-' Rating Outlook Negative; from
'B-', Rating Outlook Negative.
CONTACT: Fitch, New York
Peter Shaw, 212/908-0553
Agatha Pontiki, 212/908-0306
or
Lorna Martin
or
Ana Gavuzzo, +5411 4327-2444 (Buenos Aires)
===========
B R A Z I L
===========
BANCO ECONOMICO: Banco Central To Auction Acominas Shares Oct 24
----------------------------------------------------------------
The Brazilian Central Bank continues to liquidate Banco Economico
with the sale of its shares in Acominas, Valor Economico reported
Thursday. Economico has a 17.69-percent interest in Acominas and
the Central bank has fixed the minimum price for the stake at
R$489 million, well above the estimate of one of Acominas'
shareholders, Gerdau, who suggested a figure of US$50 million.
The auction for the stake is scheduled for October 24.
According to estimates made in June this year, Economico owed
R$8.7 billion to the bank. The Central Bank reduced the total to
R$785 million through the sale of the shares it held in Copene.
The owner of the bank, Mr. Angelo Calmon de Sa, is negotiating
with the Banco Central regarding the best way to deal with Banco
Economico's debts totalling R$12.3 billion, against assets of
R$10.2 billion. Reports say various options are being discussed.
COOPETFES/CREDITEL: Liquidation Due To Irregular Loan Concession
----------------------------------------------------------------
Irregularities in credit concessions are reportedly the reason
behind the recent liquidation of Coopetfes and Creditel,
according to Gazeta Mercantil Online Monday. The credit
institutions operate in Brazil's southeastern state of Espirito
Santo. The Central Bank said the institutions had "compromising
financial situations and practiced serious irregularities,
violating legal rules." There are currently no available data on
the combined assets of the two banks.
EMBRATEL PARTICIPACOES: Shares Up 5%, Not Much Downside Left
------------------------------------------------------------
Preferred shares of Embratel Participacoes SA rose 5 percent to
8.02 reais on Monday, reported Bloomberg.
"Embratel doesn't have any bad news to keep pushing it down
further," said Fabio Motta, portfolio manager at ING Investment
Management in Sao Paulo. The stock "will likely do better than
the index from now on as they lost a lot this year."
Embratel shares are the worst performing shares in the index,
fallen as much as 73 percent this year, while the Ibovespa fell
26 percent.
To see company's latest financial statements:
http://www.bankrupt.com/misc/Embratel.pdf
CONTACT: Embratel Participacoes S.A.
Silvia M.R. Pereira
Investor Relations
TELEPHONE: (55 21) 2519-9662
FAX: (55 21) 2519-6388
EMAIL: invest@embratel.com.br
or
Wallace Borges Grecco
Press Relations
TEL: (55 21) 2519-7282
FAX: (55 21) 2519-8010
EMAIL: cmsocial@embratel.net.br
EMBRATEL: Battle With Telefonica Over Intragov Reaches Court
------------------------------------------------------------
The struggle between Embratel and Telefonica for the
implementation of the data network Intragov in Sao Paulo has now
reached the court, therebys suspending the tender, South American
Business Information reported Monday. According to Embratel,
Telefonica is charging prices lower than what the other carriers
charged for the use of the same service.
The battle between the two companies is harming government plans,
aside from depriving it of R$2.5 million each month the row
continues.
The Intragov will link 20,000 points in the State through a
broadband connection.
INDUSTRIAS KLABIN: Preferred Shares Up On Restructuring News
------------------------------------------------------------
Preferred shares of Industrias Klabin de Papel e Celulose SA rose
5.6 percent to 75 centavos on Monday, Bloomberg revealed in a
report. Latin America's largest pulp and paper company said it
will restructure its operations to reduce costs and implement
integration between companies in the group. Fator Doria Atherino
brokerage said in a report that it considers the restructuring
positive for Klabin.
Klabin ended the first half of 2001 with a R$64.585-million net
loss. Net turnover during the period totaled R$1.169 billion,
while net assets stood at R$1.425 billion.
MOULINEX: Senior Managers Lobby For Fidei's Offer
-------------------------------------------------
The senior managers of bankrupt French consumer electrical
appliances manufacturer still find Fidei's offer more favorable
than SEB's, although SEB remains the number one contender, La
Tribune reported Monday. Fidei specializes in turning bankrupt
firms around. It offered to acquire Moulinex's household
electrical products division, which employs 5,400 staff worldwide
and 2,920 in France, but only if banks agree to exchange debt for
equity. Moulinex's fate now lies in the hands of the banks,
otherwise, the commercial courts of Nanterre will determine its
future and likely liquidate the company.
TELEMAR: Union Leader Reveals Outsourcing Plans
-----------------------------------------------
In a bid to reduce costs, Brazil's largest fixed-line telephone
operator Telemar plans to outsource most of its network
maintenance division, leading to hundreds of job cuts, Reuters
reported Thursday. Telemar refused to make a comment regarding
the outsourcing strategy or the job losses, but according to Luiz
Antonio Souza da Silva, president of the Telecommunications'
Workers Union in Rio de Janeiro, the firm planned to outsource a
unit of 3,000 workers. Between 80 percent and 90 percent of those
employees will be offered employment in the outsourced company
but at least 300 will be dismissed, he said.
TELEMAR: Listel To Sue Over 'Illegal' Cut In Telelistas Revenues
----------------------------------------------------------------
Listel Listas Telefonicas S.A. is reportedly unhappy with the
anti-competition practices of Telemar and determined not to allow
them to go unpunished.
According to an article by Valor Economico, Listel is allegedly
planning to file a complaint in court about the slice of revenues
Telemar generates from Telelistas.
Under existing regulations, Brazilian telephone companies are
only allowed to generate revenues from their phone services.
Telemar is reportedly enjoying a 14.5% cut in the advertising
revenues generated from the publication of Telelistas' phone
directories.
VARIG: Takes Over Rio-Sul's Campinas Reservation Center
-------------------------------------------------------
As part of an ongoing cost-cutting drive, Varig deactivated
recently the reservation center of Rio-Sul Airline in Campinas,
reported South American Business Information. Accordingly,
customers of the airline subsidiary will now be served through
the 0800 number of Varig.
Since July, the Company has been looking for ways to reduce
costs, overturn losses and make Rio-Sul its only profit-making
unit.
Earlier, the Company also retook control of profitable customer
service locations such as that in Rio, Belo Horizonte, Porto
Alegre, Curitiba and Brasilia.
CONTACT: VARIG Brazil
Media Relations
21-3814-5480
=========
C H I L E
=========
COMPANIA MINERA: Codelco Seeking Private Partners To Run Mine
-------------------------------------------------------------
Codelco CEO Juan Villarzu revealed that the Chilean state-owned
mining company is seeking to attract private partners to help run
Los Bronces copper mine, which it is in talks to buy from Exxon
Mobil Corp., Business News Americas reported Thursday. Codelco is
currently negotiating with Exxon to buy its Compania Minera
Disputada de las Condes subsidiary, which operates the 170,000tpy
Los Bronces. According to Villarzu, negotiations could take up to
six months. Codelco has hired international investment bank UBS-
Warburg and local consultants Asset-Chile to help it with the
negotiations.
Codelco's plans to combine Los Bronces with the Rio Blanco
underground deposit, part of its 250,000tpy Andina division in
central Chile's Region V, Villarzu revealed. He said private
sector partners taking equity stakes in Los Bronces could be
pension funds and other institutional investors, or mining
companies, adding: "Codelco could even be the minority partner."
EDELNOR: AES Withdraws Senior Loan Certificates Offer
-----------------------------------------------------
The AES Corporation (NYSE:AES) has announced that it is
withdrawing its tender offer (the "Offer") by Luna III, Ltd., a
wholly owned indirect subsidiary of The AES Corporation to
purchase all of the outstanding (i) 10-1/2% Senior Loan
Participation Certificates due 2005 (the "2005 Certificates") and
(ii) 7-3/4% Senior Loan Participation Certificates due 2006 (the
"2006 Certificates" and, together with the 2005 Certificates, the
"Certificates") of Empresa Electrica del Norte Grande S.A., a
Chilean corporation ("Edelnor").
AES is a leading global power company comprised of competitive
generation, distribution and retail supply businesses in
Argentina, Australia, Bangladesh, Brazil, Cameroon, Canada,
Chile, China, Colombia, Czech. Republic, Dominican Republic, El
Salvador, Georgia, Germany, Hungary, India, Italy, Kazakhstan,
the Netherlands, Nigeria, Mexico, Oman, Pakistan, Panama, Sri
Lanka, Ukraine, the United Kingdom, the United States and
Venezuela.
The company's generating assets include interests in one hundred
and eighty one facilities totaling over 60 gigawatts of capacity.
AES's electricity distribution network has over 920,000 km of
conductor and associated rights of way and sells over 126,000
gigawatt hours per year to over 18 million end-use customers.
In addition, through its various retail electricity supply
businesses, the company sells electricity to over 154,000 end-use
customers.
AES is dedicated to providing electricity worldwide in a socially
responsible way.
CONTACT: AES Corporation
Kenneth R. Woodcock, 703/522-1315
TELEX-CHILE: Creditors Have 40 Days to Consider Orderly Sale
------------------------------------------------------------
An orderly sale of Telex Chile and all its asset could be had in
the coming months if a proposal for a preventive judicial
agreement will be approved by creditors, El Diario revealed
October 9 in a report. Accordingly, the proposal would heavily
depend on the next 40 days during which time creditors are
expected to consider and form a decision on the said agreement.
Creditors own 51 percent of the company, virtually holding its
future in their hands.
=============
E C U A D O R
=============
BANCO DEL PACIFICO: Spanish Firm To Administer Bank
---------------------------------------------------
Banco del Pacifico President Leopoldo Baez signed an agreement
Monday with the executives of Spain's Interdin & Ahead Advisory
Group (IAGG) to place nationalized bank Banco del Pacifico under
IAGG's administration, reported EFE. The agreement was part of
Ecuador's accord with the International Monetary Fund (IMF) to
strengthen the Andean nation's banking system.
The Central Bank, which assumed control of the bank last July,
hopes that IAGG's intervention will make Banco del Pacifico more
attractive to foreign investors. The government plans to
privatize Pacifico this year.
=============
J A M A I C A
=============
AIR JAMAICA: Dealing With Another Financial Burden
--------------------------------------------------
The Public Accounts Committee of Parliament (PAC) learned last
Tuesday that the national airline Air Jamaica still continues to
owe the Government millions of dollars in unpaid stamp duty,
reported The Jamaica Gleaner. Vinette Keene, Commissioner of the
Taxpayer Audit & Assessment Department (TAAD) told the PAC that
Air Jamaica's outstanding payments had now reached the $400
million mark. However, the TAAD head said that talks were taking
place to have the money paid up.
"Most of the other airlines have paid up their arrears and the
interest associated with them," Mrs. Keene said. "There is still
some arrears outstanding from Air Jamaica but the Ministry of
Finance and ourselves are working with them to work out the
payment schedule."
Payment of the arrears is likely to put a heavy financial burden
on the company, which continues to struggle amid a decline in air
travel, following the September 11 terrorist attacks in the
United States. Air Jamaica said it had lost US$11 million in the
days after the attacks.
AIR JAMAICA: Union Postpone Wage Negotiations Until Next Year
-------------------------------------------------------------
The Bustamante Industrial Trade Union, BITU, one of the unions
representing Air Jamaica workers, has agreed to delay wage
negotiations with the airline, RJR Radio Jamaica reported
Saturday. The BITU decided to postpone until next year the
negotiations in behalf of the airline's 400 flight attendants.
According to the union's senior vice president, Ruddy Spencer,
the proposal has already been presented to flight attendants.
The union's decision should come as good news to Air Jamaica's
management, which has been struggling to cut costs at the
backdrop of a significant decline in revenue triggered by the
fall-out from last month's terrorist attacks in the US.
===========
M E X I C O
===========
VITRO: Predicts 32% Drop In 3Q01 Operating Profit
-------------------------------------------------
Mexican glassmaker Vitro SA predicted a 32-percent drop in the
third-quarter operating profit as a result of weak demand that
has pulled down the prices on construction glass and home
appliances, Bloomberg reported Monday.
According to the glassmaker, preliminary operating income was 590
million pesos ($63 million) for the quarter compared with 864
million pesos for the same period a year ago.
In a statement released through the Mexican stock exchange, the
company revealed earnings before interest, taxes, depreciation
and amortization fell 22 percent to 1.11 billion pesos from 1.43
billion pesos a year ago. Sales fell about 4 percent to 7.18
billion pesos compared with 7.51 billion a year ago.
Vitro also sells home appliances, such as refrigerators and
washing machines. Profit margins on those goods have suffered as
consumer demand has slowed along with the economy.
Vitro disclosed it reduced its debt by $31 million to $1.614
billion during the quarter.
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 and Edem
Psamathe P. Alfeche, 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 240/629-3300.
* * * End of Transmission * * *