/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/011018.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 Thursday, October 18, 2001, Vol. 2, Issue 204 Headlines A R G E N T I N A SOCIEDAD COMERCIAL: Court Orders Restraining Order Continuity B R A Z I L ELETROPAULO METROPOLITANA: Seeks `Clean' Loans EMBRAER: To Unveil New Jet Late This Month GLOBO CABO: Shares Drop On Falling Currency EMBRATEL: Shares Fall On Regulatory Requirement Concern MOULINEX: Works Council Meeting Fails To Determine Future TELEMAR: Telelistas Shuns Listel's Allegations CVRD/GERDAU: Bethlehem Steel's Bankruptcy Brings Tough Times C H I L E COMPANIA MINERA: Exxon Inks Agreement With Antofagasta M E X I C O CINTRA: IPAB Delays Sale Until 2H02 Siting Market Conditions CORPORACION GEO: Shares Go Up On Earnings Forecast POLAROID: Mexican Production Plant Likely To Close POLAROID CORP.: Company Profile SAVIA: Shares Climb An Unexplained 45% VITRO: Announces Preliminary Third Quarter 2001 Results V E N E Z U E L A SIDOR: Salomon Analyst Comments On Earnings, Debt-Restructuring - - - - - - - - - - - ================= A R G E N T I N A ================= SOCIEDAD COMERCIAL: Court Orders Restraining Order Continuity ------------------------------------------------------------- The New York southern district bankruptcy court has ordered the continuity of a restraining order protecting the assets of oil and entertainment conglomerate Sociedad Comercial del Plata (SCP) from action by US creditors, AFX European Focus reported Monday. Accordingly, the restraining order also covers the assets of the company's oil unit, Cia. General de Combustibles SA (CGC). According to Santiago Soldati, the measure is also applicable to Reef Exploration Co. in other countries. A hearing has been ordered for March 15 to review the decision, he added in a letter to the stock exchange. SCP filed for protection last year in September, when a lawsuit filed by Reef Exploration Inc. proved to be an insurmountable obstacle in the conglomerate's negotiations with financial creditors initiated when it defaulted on services due April 1999 on a US$25-million bond issue. =========== B R A Z I L =========== ELETROPAULO METROPOLITANA: Seeks `Clean' Loans ---------------------------------------------- Eletropaulo Metropolitana, like other companies that have no dollar-denominated income, is looking for so-called `clean' loans free from additional securities or guarantees, Valor Economico reported Monday. This type of loan has a much higher interest rate than those linked to export income, as well as shorter terms and a lack of political risk coverage, which is in short supply at the moment. Eletropaulo reportedly has debts of R$993 million and has cut investments from R$400 million to R$250 million until 2002. EMBRAER: To Unveil New Jet Late This Month ------------------------------------------- Brazilian Embraer, the world's No. 4 maker of civilian aircraft, announced it would roll out on October 29 its new ERJ 170 jet at the company's Sao Paulo dos Campos plant, Reuters said Monday. "It's the first time people will see it totally finished, with all systems installed, its motors, like it's ready to fly," related a spokesman for the company. Embraer revealed it has 82 firm orders and 130 options for the 70-seat jet. The ERJ 170 is part of a new family of larger Embraer planes, which includes the 98-seat ERJ 190-100 and 108- seat 190-200, which have 30 firm orders and 72 options combined. Embraer reportedly invested a total of $850 million for the new line1. Like other companies in the aviation sector, Embraer has announced staff cuts and fewer deliveries following last month's terrorist attacks in the US. In September, the jetmaker predicted a $1.9-billion loss in revenue due to lower 2001 and 2002 aircraft deliveries. However, analysts believe that by the time customers actually start picking up their new ERJ 170s, the outlook may be better. "The first deliveries will be in a year's time. By then, one would hope the scenario is a little better than it is today," said Carl Weaver, an analyst at Bear Stearns in Sao Paulo. GLOBO CABO: Shares Drop On Falling Currency ------------------------------------------- Shares of cable television provider Globo Cabo SA fell 3 percent to 65 Brazilian centavos, according to a report Tuesday in Bloomberg. The company has 57 percent of its about $776 million in debt denominated in dollars, while its revenue are in reais. Stocks of companies that could be hurt by a falling currency "are to be avoided," suggested Bill Rudman, Latin America portfolio manager with WestAM, a unit of WestLB Asset Management in London. EMBRATEL: Shares Fall On Regulatory Requirement Concern ------------------------------------------------------- Shares of Embratel Participacoes SA fell on concern regulatory requirements will cut into earnings, Bloomberg revealed Tuesday. Embratel, Brazil's largest long-distance service operator lost 3.7 percent to 7.72 reais. "We are cautious on the Brazilian telecom stocks for the next six months," said Tucker Grinnan, Latin America telecommunications analyst with Deutsche Banc Alex. Brown in New York. The government is reluctant to ease regulations requiring companies like Embratel to service people that may have no obvious means for paying the bill, he said. MOULINEX: Works Council Meeting Fails To Determine Future --------------------------------------------------------- The meeting of the central works council committee of troubled household electrical appliances manufacturer Moulinex held Monday fizzled out, Les Echos said in a report. Unions failed to agree which of the two main offers, SEB's and Fidei's, was preferable. Two unions, CGT and Sydis, walked out in protest at the attitude of the banks, which they accused of pushing Moulinex towards liquidation. Since the company filed for bankruptcy on September 7, the banks have indeed refused to finance its operations and have sequestrated merchandise worth an estimated FFr1.5 billion stored in warehouses. This has blocked Moulinex from re-launching production. A French commercial court in Nanterre was scheduled to examine Tuesday the various offers for bankrupt electrical appliances manufacturer Moulinex and a decision was expected Wednesday. TELEMAR: Telelistas Shuns Listel's Allegations ---------------------------------------------- Telelistas, which produces telephone books in the areas served by Telemar and Brasil Telecom, shunned competitor Listel's allegations that it is receiving undue favors from Telemar, Valor Economico reported Monday. Listel was planning to make a complaint to Cade (Conselho Administrativo de Defesa Economica), alleging anti-competition practices on the part of Telemar. At issue is the deal between Telemar and Telelistas by which Telemar is gets a 14.5 percent cut of the advertising revenues from the publication of Telelistas' phonebooks. This is illegal under existing regulations, which limit telephone companies to income generated from provision of phone services. The telephone list market in Brazil has been growing at 30 percent yearly since 1997. Listel had 45 percent of this market, but has been losing share to Telelistas. CVRD/GERDAU: Bethlehem Steel's Bankruptcy Brings Tough Times ------------------------------------------------------- The recent Chapter 11 bankruptcy filing of Pennsylvania-based Bethlehem Steel will have Latin American steel and iron ore producers facing even more difficulties, according to a Chicago- based steel analyst in a Business News Americas report published Tuesday. The analyst suggested that Bethlehem's problems would only add more ammunition to calls from the US steel industry and its powerful union USWA for higher tariffs on steel imports. According to the analyst, possible consequences would include lower sales volumes and income for the many Latin American steel companies who rely on the US for a large part of their export revenues, such as Brazil's Gerdau and Mexico's Imsa, SanLuis and Ahmsa. Suppliers of iron ore, pellets and related products, such as Brazil's CVRD and Mexico's Minera Autlan, can expect lower demand from US customers who are likely to cut production as the market there weakens, the analyst added. Bethlehem filed for Chapter 11 Monday after posting heavy losses for five consecutive quarters, culminating in a US$152-million loss for the third quarter this year. The company pointed out cheap imports as the main reason for its continued losses, plus pension commitments to 74,000 former employees, a US$3-billion healthcare obligation and the fractured state of the US steel market with many small players. ========= C H I L E ========= COMPANIA MINERA: Exxon Inks Agreement With Antofagasta ------------------------------------------------------ UK-based Antofagasta plc has signed a confidentiality agreement with Exxon Mobil to buy its Chilean mining subsidiary Compania Minera Disputada de las Condes, Business News Americas reported Friday. "Disputada is something we would be interested in," disclosed Hussein Barma, the London company's CFO. Disputada operates the 170,000tpy Los Bronces and 70,000tpy El Soldado copper mines, and the Chagres smelter, all in central Chile. Antofagasta, which is controlled by Chile's Luksic group, operates the 300,000tpy Los Pelambres, 75,000tpy El Tesoro and 50,000tpy Michilla mines. Chile's state copper corporation Codelco has also signed confidentiality agreements with Disputada. The company aims to combine the open pit Los Bronces with the Rio Blanco underground deposit, part of its 250,000tpy Andina division, which share the same orebody, and bring in private sector partners for the Bronces part of the operation. Disputada said it will provide information and site visits to all interested companies and hold discussions before offers are received. "[That will take] until December or later. Only then will Disputada's owners be able to make a decision whether to sell, and if so, what offer to accept," said the statement. Analysts have estimated Disputada's value at around US$850 million. =========== M E X I C O =========== CINTRA: IPAB Delays Sale Until 2H02 Siting Market Conditions ------------------------------------------------------------ The Mexican bank bailout agency IPAB decided to delay until the second half of 2002 the sale of Cintra, the company, which controls Mexicana and Aeromexico, Mexico City daily El Universal reported Tuesday. According to IPAB, "it would be a grave error to sell the company over the next few months," given the crisis being suffered by the airline industry as a result of last month's terrorist attacks in the US. "We have to wait to sell the company once the market conditions are more adequate," said an IPAB source. The IPAB believes that airlines that might otherwise be interested in entering the Mexican market are currently preoccupied with matters of insurance and the cancellation of flights. CORPORACION GEO: Shares Go Up On Earnings Forecast -------------------------------------------------- Mexican homebuilder Corporacion Geo SA rose 71 centavos, or 10 percent, to 7.61 pesos, a one-month high, Bloomberg said Tuesday. According to Marco Laloz, Geo's investor relations officer, the company's earnings forecast last week may be prompting investors to buy. The company last week said it would probably report total revenue this quarter of between 1.2 billion pesos ($131 million) and 1.25 billion pesos, compared with 1.1 billion pesos during the same period last year. Geo said it would release its earnings results on October 22 after markets close. POLAROID: Mexican Production Plant Likely To Close -------------------------------------------------- US-based camera manufacturer Polaroid, which recently applied for Chapter 11 bankruptcy protection, is likely to close its production plant in Queretaro, in Mexico, Mexican financial daily El Economista reported Monday. The company had slashed around 10 percent of its workforce in the country a few months back. Polaroid filed for bankruptcy protection after the strategies outlined by bankers failed to rescue the company from its financial troubles. Polaroid defaulted on interest payments to bondholders in July and August. Polaroid's debt, meanwhile, is nearing $1 billion. Polaroid's troubles stem from the sharpened competition in the market for cameras following the introduction of digital cameras. POLAROID CORP.: Company Profile -------------------------------- NAME: Polaroid Corp. 784 Memorial Drive Cambridge, MA 02139 TELEPHONE: (781) 386-2000 FAX: (781) 386-3276 WEBSITE: http://www.polaroid.com/ EMAIL: investor_relations@polaroid.com TYPE OF BUSINESS: Polaroid Corporation designs, manufactures and markets worldwide a variety of imaging products. These include instant photographic cameras and films, digital imaging systems, conventional films and light polarizing filters and lenses. The principal products of the company are used in amateur and professional photography, industry, graphic arts, science, medicine, government and education. SIC: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] EMPLOYEES (last reported count): 8,865 TOTAL ASSETS: $1.81 billion (as of July 2001) TOTAL LIABILITIES: $1.634 billion (as of July 2001) CHAIRMAN/CEO: Gary DiCamillo CFO/EXEC.VP: William Flaherty INVESTOR RELATIONS CONTACT: Patricia R. Weller Director, Investor Relations Phone (781) 386-6603 SAVIA: Shares Climb An Unexplained 45% -------------------------------------- Savia SA, a vegetable seed producer and fresh fruit distributor, saw a 45-percent rise in its shares to 3.17 pesos, Bloomberg reported Tuesday. The company's shares hit an all-time low this year after it sold its insurance subsidiary to pay off debt. Savia's share price has doubled in the last four sessions. The company said in a statement that it could not explain the share movements with any relevant event. VITRO: Announces Preliminary Third Quarter 2001 Results ------------------------------------------------------- - Debt was reduced on a quarter over quarter basis by US$31 million, and by US$48 million during the past six months - Consolidated Net Sales increased YoY 0.8% in dollar terms, driven by Flat Glass, Glass Containers and Acros Whirlpool, and 4.5% on an accumulated basis, in a context where the Mexican Economy manufacturing index has decreased year-to- date by more than 3% - EBITDA for the quarter decreased YoY by 17.8% in dollar terms as a result of the economic slowdown and the events following the September 11 terrorist attacks. Year-to-date, EBITDA has decreased 6.6% in dollar terms - Low exposure to Automotive Industry OEM products (approximately 7% of aggregate sales for 2000) does not affect the Company significantly Vitro, S.A. de C.V. announced Monday selected unaudited preliminary results for the three-month period ended September 30, 2001. During the third quarter, the Company used US$31 million from cash flow to reduce outstanding debt. Outstanding debt on September 30, 2001 was US$1,614 million, compared with US$1,662 million on March 31, 2001 and US$1,645 million on June 30, 2001, bringing the total debt reduction during the last six months to US$48 million. The Company's sales performance for the quarter was favorable in dollar terms, mainly driven by the results of the Flat Glass, Glass Containers and Acros Whirlpool business units and included sales at Cristalglass, the European-based processor and distributor of construction glass. Year-to-date, sales remained practically at the same level in peso terms and showed a 4.5 percent improvement in U.S. dollars, when compared with the same period last year. Third quarter results continued to be affected by the strength of the Mexican peso and price pressures arising from the continued slowdown of the U.S. and Mexican economies, which has reduced demand and, as a consequence, decreased the fixed costs absorption for some of the business units. Additionally, results started to show some impact from the events of the World Trade Center in New York and their immediate impact on consumers' sentiment, particularly in segments such as the restaurant service and automotive OEM's, which represented two and seven percent, respectively, of the Company's total sales for year 2000. Year-to-date, EBITDA declined by 13 percent in peso terms and by 6.6 percent in U.S. dollars when compared with the previous year. The following is an overview of the operating results of each of the five business units during the third quarter: Flat Glass In nominal dollar terms, sales at the Flat Glass business unit rose mainly as a result of the sales by Cristalglass, which started to consolidate as of May of this year. Sales to the auto segment declined, especially to the U.S. export market, as a result of the partial plant shutdowns announced by the auto OEM sector in that country, following the September 11th tragedy. Profitability for the business unit remained stable in terms of margins with respect to the two previous quarters, but declined with respect to the same quarter last year. This was due primarily to pressure on prices resulting from a strong peso that promotes imports and volume adjustments in the OEM and commodity sectors. Glass Containers Improved YoY pricing, as a result of a better product mix in the export sales segment, helped offset the YoY decrease in volumes for this business unit. In terms of profitability, extraordinary maintenance costs and the continued price pressures in the domestic market affected the EBIT and EBITDA comparison against the same quarter last year. Acros Whirlpool Sales at Acros Whirlpool continued to grow, driven by volume increases in the export markets. The export market continued to particularly benefit from shipments of refrigerators to the U.S., which increased significantly in spite of the U.S. economic downturn, as the models for the export market represent a more affordable option for U.S. consumers. In terms of profitability, the domestic competitive environment resulted in continued price pressures in the domestic market, specially as a result of low- cost Asian imports. In addition, the sales mix has a more important export component, which has a lower contribution to our margins. Glassware Sales for the quarter continued at lower levels, when compared with the third quarter of last year, as a result of lower demand in the retail and industrial sectors, resulting from the slowdown of the U.S. and Mexican economies, as well as a strong peso that promotes low-cost Asian imports. This was partially offset by an increase in sales in the candleholder market. Profitability margins increased with respect to the previous quarter as a result of cost and expense reductions and an improved sales mix. Diverse Industries Year-over-year, the decline in domestic consumption affected sales of aluminum cans and plastic ware and containers to retailers. This was partially offset by the improved sales in the capital goods segment and the soda ash operations. EBIT for the quarter declined primarily as a result of the strength of the peso, although year-to-date it remained constant in dollar terms. CONTACT: Vitro S.A. de C.V. financial community: Gerardo Guajardo, 011 (52) 8329-1349 gguajardo@vto.com Beatriz Martinez, 011 (52) 8329-1258 bemartinez@vto.com or Breakstone & Ruth International U.S. contact: Luca Biondolillo, 646/536-7012 Lbiondolillo@breakstoneruth.com Susan Borinelli, 646/536-7018 Sborinelli@breakstoneruth.com or Vitro, S. A. de C.V. media: Albert Chico, 011 (52) 8329-1335 achico@vto.com ================= V E N E Z U E L A ================= SIDOR: Salomon Analyst Comments On Earnings, Debt-Restructuring --------------------------------------------------------------- Mauricio C. Reveco, a steel analyst at Salomon Smith Barney Inc. in New York, commented on earnings prospects and the possibility of another debt restructuring at Siderurgica del Orinoco (Sidor), Venezuela's largest steelmaker, Bloomberg related Tuesday. With regards to Sidor's prospects: "Despite the good job in the restructuring of Sidor operations, there is no room for a fundamental recovery until economic conditions change, until we see a recovery in volumes and prices, and we don't see this happening before the second half of 2002." On possibilities of a fresh debt restructuring: "We think that in this particular moment, although its situation is not the best, there have been some improvement in the last months." "Nevertheless, I think that global economic conditions are slowing demand for steel and this could lead Sidor to a debt restructuring." 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 * * *