/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/011024.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 Wednesday, October 24, 2001, Vol. 2, Issue 208 Headlines A N T I G U A & B A R B U D A LIAT LTD.: Caribbean Star Denies Interest In Possible Alliance A R G E N T I N A FARGO SA: S&P Likely To Reduce Rating On Expectations Of Default B R A Z I L CESP: Sao Paulo Mulls Plan To Split Company In Three Parts CVRD: To Counter Monopoly Charges EMBRAER: Losses In Order Options Reach $1B EMBRAER: Urges Canada To Heed WTO Ruling EMBRAER: Expresses Confidence On Deal With Chinese Airline MOULINEX: Court Approves SEB's Bid C H I L E LANCHILE: Forms Lancargo Chile As Part Of The New Lancargo Group M E X I C O CLUB MED: To Close 15 Resorts Siting Waning Travel Industry GRUPO TRIBASA: Bankruptcy Imminent As Debt Payments Come Due GRUPO TRIBASA: Will Give Up Control To Obtain Financing MINERA AUTLAN: On The Verge Of Technical Bankruptcy P A N A M A PAFCO: Signs New Collective Agreement With Workers P A R A G U A Y CIPAR: Urges Government To Define Restructuring Plan P E R U AERO CONTINENTE: Founder Denies Criminal Charges V E N E Z U E L A CORIMON: Sells 26% Pralca Ownership To IFC GRAFFITI: Close To Emerging From Crisis - - - - - - - - - - - - =============================== A N T I G U A & B A R B U D A =============================== LIAT LTD.: Caribbean Star Denies Interest In Possible Alliance -------------------------------------------------------------- An unnamed top official of Caribbean Star denied that the Antigua-based regional carrier has an interest in any alliance with its competitor, LIAT Ltd., according to a CANA report released Sunday. The latest revelation contradicts previous reports that Caribbean Star owner Allan Stanford had expressed some interest in the cash-strapped LIAT a year ago. LIAT has been struggling to operate despite severe cash flow problems for the past three years. The company experienced great difficulty in March 1999 in meeting its payroll estimated at about EC$60 million monthly. A month prior to that, sources said it only had enough cash on hand to keep it afloat until April. Despite the odds, the company has managed to continue operating but is reportedly in dire need of either cash or support from a partnering firm. ================= A R G E N T I N A ================= FARGO SA: S&P Likely To Reduce Rating On Expectations Of Default ---------------------------------------------------------------- Argentina's biggest bread maker Fargo SA may have its rating downgraded by Standard & Poors, as delays in negotiations over a missed loan payment raised concern the company may default on its bonds, Bloomberg said Monday. S&P placed its CCC- rating -- two notches above default -- on Fargo's $120 million senior unsecured notes due 2008, and added CreditWatch with negative implications. According to S&P: "A potential acceleration on the defaulted loan by the creditor, and the upcoming amortization payments on the defaulted loan for $2 million in November 2001, and $4 million in May next year increase the risk of triggering cross-default clauses with the $120 million notes." =========== B R A Z I L =========== CESP: Sao Paulo Mulls Plan To Split Company In Three Parts ---------------------------------------------------------- In an attempt to reduce indebtedness and draw investor interest for Cia. Energetica de Sao Paulo (CESP), Brazil's Sao Paulo state is studying plans to split the power generator into three companies, Bloomberg said Monday. One plan would see the creation of a holding company that would have three subsidiaries. The sale of the first subsidiary would help reduce debt of the remaining two units. Another plan under study is to sell CESP to four companies, which would then divide the company into parts. The state, which owns 38.7 percent of CESP's shares, is aiming to sell these companies in the first half of next year. A total sale of CESP by the state has already failed twice in its attempts to sell the company over the past year as bidders were concerned the company's large U.S. dollar debt would reduce their investment returns. About 80 percent of CESP's 8.1 billion reais in debt is denominated in U.S. dollars, according to the utility's June figures. CVRD: To Counter Monopoly Charges --------------------------------- In an effort to convince primary clients that it is not attempting to create monopolies, Companhia Vale do Rio Doce (CVRD) will introduce separate accounting systems for the Vitoria to Minas and Estrada de Ferro Carajas railroads, Valor Economico said in a report. Accordingly, the move is aimed at achieving the degree of transparency required by the Ministry of Transport and avoiding the alternative of having to make the railroads into independent subsidiaries. Meanwhile, CVRD also needs to defend its acquisitions, which are now under scrutiny by the government. For a company of its size, defending this strategy is imporant to be able to act in the international market. Meanwhile, CVRD also has to protect its investments in rail transport, which have been criticized by some steel companies. The MRS Logistica railroad is reporting less movement of iron ore from the Ferteco mining operation since Vale bought it. There have been rumors that Vale has been diverting the ore to its own rail system. In its reply, Vale said that it is moving less ore from Ferteco because that company had been buying from smaller mining companies and Vale has determined that this is not viable from either a cost or quality perspective. Cade (Conselho de Defesa Economica) is looking at the concentration of the company's assets and acquisitions in the areas of mining and transportation. The company may be subject to fines if it is proved that there has been damage to the interests of its competitors because of its concentration of power. CONTACT: Roberto Castello Branco: castello@cvrd.com.br +55-21-3814-4540 Andreia Reis: andreis@cvrd.com.br +55-21-3814-4643 Barbara Geluda: geluda@cvrd.com.br +55-21-3814-4557 Daniela Tinoco: daniela@cvrd.com.br +55-21-3814-4946 EMBRAER: Losses In Order Options Reach $1B ------------------------------------------ Empresa Brasileira de Aeronautica SA (Embraer), a leading aircraft maker, lost $1 billion in order options for regional jets as several companies have canceled order options following last month's terrorist attacks in the US, according to a report Monday in Bloomberg. Embraer's options were worth $12.8 billion at the end of June compared with a backlog of firm orders now worth $11.2 billion. However, a slump in the airline industry has not lowered firm orders for the company's jet transports, although, it has delayed delivery of some aircraft over the next two years, said Mauricio Botelho, Embraer's president. To see company's latest financial statements: http://www.bankrupt.com/misc/Embraer.pdf CONTACT: Anna Cecilia Bettencourt +55 12 345 1106 acecilia@embraer.com.br Milene Petrelluzzi +55 12 345 3054 milene.petrelluzzi@embraer.com.br EMBRAER: Urges Canada To Heed WTO Ruling ---------------------------------------- Embraer, the world's fourth largest maker of civilian aircraft, urged Canada on Monday to heed an interim ruling by the World Trade Organization (WTO) and cease what it says are illegal subsidies to aircraft firm Bombardier Inc., Reuters said in a report. "The fair thing to do would be to cancel these operations, as they were implemented in full awareness of their illegality, turning Embraer down by the use of unfair international trade practices," said Embraer President Mauricio Botelho. Botelho said the WTO ruling announced Friday meant Bombardier would have to renegotiate an estimated $4 billion worth of airplane deals. Meanwhile, Bombardier said on Monday it was confident Canada would honor its financing commitment in a $1.7 billion contract under which the aircraft maker agreed to supply 75 jets to United Airlines affiliate Air Wisconsin. To facilitate the sale, Canada promised to provide roughly $1.1 billion of low-interest financing to Air Wisconsin. But the WTO ruling, for which a final report is expected next month, says that was an illegal subsidy. When promising the financing, Canada had argued that it was simply responding to similar low-interest loans Brazil provided to Embraer's customers and which were condemned by previous WTO rulings. EMBRAER: Expresses Confidence On Deal With Chinese Airline ---------------------------------------------------------- Embraer is expecting confirmation on 30 aircraft orders from China, Reuters reported Monday. According to Embraer President Mauricio Botelho, the company is hopeful the Chinese government would approve the sale of 20 50- seat ERJ-145 jets to China Southern Airlines and another 10 to Wuhan Airlines, part of the China Sky Aviation Group. "We are seeing signs that they (the sales) will be given the go- ahead," he said. Botelho declined to comment on the size of the overall sale until it received official approval. The market price of an ERJ-145 is approximately $20 million. Approval would be good news for Embraer investors, who have seen the company's shares lose half their value in little more than two months after it warned of lower deliveries and was later hit by the Sept. 11 attacks in the US. MOULINEX: Court Approves SEB's Bid ---------------------------------- The French commercial court of Nanterre chose French small appliance maker SEB on Monday to buy parts of the bankrupt French-Italian household equipment group Moulinex-Brandt, reported Agence France Presse. Accordingly, SEB offered to buy the parts, which consist of the production of mixers, coffee makers and electric kettles. SEB is not acquiring the Moulinex businesses producing microwave ovens and vacuum cleaners, which were making big losses, nor deep-fry appliances. The offer is expected to save 3,600 jobs out of a total of 8,800 in the Moulinex division only. Although Fidei's offer would have saved more jobs, SEB secured more financial backing for its bid. The entire group Moulinex-Brandt employs worldwide 21,000 people and has interests in 11 countries from China to Brazil. The disposition of Brazilian operations was not clear from the ruling. ========= C H I L E ========= LANCHILE: Forms Lancargo Chile As Part Of The New Lancargo Group ---------------------------------------------------------------- In a company press release, Lan Chile S.A., ("Lan Chile" or "the Company") (NYSE: LFL) announced that in an extraordinary meeting held Monday, Ladeco's shareholders approved the renaming of LanChile's main subsidiary, Ladeco S.A., to "LanCargo Chile". LanCargo Chile will now form part of the Company's newly-formed LanCargo Group, as one of its main subsidiaries. This is the first major step in LanChile's passenger and cargo restructuring plan. The Company's internal restructuring plan began in July 2000 and is aimed at creating distinct passenger and cargo companies under the LanChile ("LFL") corporate holding company. By more clearly separating the two businesses, the Company expects to improve internal transparency and accountability, facilitate the incorporation of strategic partners within each area, and thus better enable both business areas to reach their full potential. Once completed, the LanCargo Group will form Latin America's largest cargo operator. In 2000, the Company's consolidated cargo operations generated over US$ 590 million in revenues and transported over 400 million tons. Through its various subsidiaries and affiliates, the Company's cargo group offers airport-to-airport, courier, door-to-door and logistics services to more than 20 countries with a specific focus on Latin America. The LanCargo Group transports air cargo in four different ways: 1) on its dedicated freighter fleet of five Boeing 767 and four DC-8 aircraft, 2) in the bellies of LanChile's 43 international and domestic passenger jets, 3) on two to five wet-leased Boeing 747 or MD-11 freighters, and 4) in the aircraft bellies of other international airlines. As part of the formation of the LanCargo Group, Ladeco's passenger operations were transferred earlier this year to the Company's new subsidiary, Transportes Aereos S.A, and will be marketed in the future under the new LanExpress brand. The LanExpress concept, which will completely replace the Ladeco brand by the end of the year, will comprise a new, more efficient travel experience; offering, among other technological innovations, automated check-in machines at various domestic destinations. To see company's latest financial statements: http://www.bankrupt.com/misc/LanChile.pdf CONTACT: Lan Chile S.A., Santiago Alejandro de la Fuente or Daniel Jones 562/565-2538 / 6812 djones@lanchile.cl or i-advize Corporate Communications, Inc., New York Maria Barona or Blanca Hirani, 212/406-3691 mbarona@i-advize.com or bhirani@i-advize.com =========== M E X I C O =========== CLUB MED: To Close 15 Resorts Siting Waning Travel Industry ----------------------------------------------------------- French resort operator Club Mediterranee, which suffered up to $27 million in losses in the wake of the September 11 terrorist attacks in the US, will temporarily close 15 resorts, Daily News reported Saturday. Club Med will be closing resorts in the Bahamas, the Caribbean island of St. Lucia, Greece, Africa, Malaysia, Israel, Egypt and Mexico, among others. It will have 105 resorts in operation. Instead, it will focus on winter ski resorts. Several analysts believe that the company's problems didn't begin on Sept. 11, but the threat of continued terrorism has made matters worse. The travel industry was already facing a downturn due to the weakening economy. "People may feel more concerned about trying to reach those places," said Henry Harteveldt, a travel analyst with Forrester Research. "They may have security concerns, or they may feel that it might be hard to get back home if something happened." Club Med, which has also started a general program to cut operating costs, will take a $54 million to $63 million charge to cover the cost of the restructuring. GRUPO TRIBASA: Bankruptcy Iminent As Debt Payments Come Due ----------------------------------------------------------- Bankruptcy looms ahead of Tribasa as the company's main creditors, Bank of America, Bancomer and Banco del Atlantico, have filed a suit due to the company's apparent inability to pay off its debt of more than $1.2 billion, EFE News Service reported Saturday. Should the case be accepted, Tribasa, one of Mexico's leading construction firms, will be obliged to enter into "conciliation" with creditors, a process that would take a year. If no accord is reached, Tribasa would be declared bankrupt. While the company has shares worth 14 billion pesos (approximately $1.505 billion) its liabilities have gone up to 11.628 billion pesos (approximately $1.25 billion) during the first half of this year. According to Tribasa administrative chief David Penaloza, the company was not bankrupt, explaining that it is attempting to restructure its debts. Penaloza insisted that he is even willing to give up control of the company if necessary. "The deadline for agreeing to capitalize the company does not depend on us. We have businesses in Mexico, Ecuador and Chile. It is very complex, but we have never stopped trying to resolve our problems," Penaloza added. GRUPO TRIBASA: Will Give Up Control To Obtain Financing ------------------------------------------------------- Tribasa President and CEO David Penaloza expressed willingness in giving up control of the company just to be able to get financing, Mexico City daily Reforma reported Monday. Accordingly, the company is now on the hunt for strategic partners in order to help it meet its debt obligations. The move could force the Penaloza family to give up its majority ownership. "The financing of Tribasa necessarily implies the loss of control by the Penaloza family over the company. If that's the case, we're not going to sit here with the majority share," Penaloza said. The U.S. company Advent will be the company to finance Tribasa, with an investment of $150 million, although terms still have not been agreed to, revealed Penaloza. "We have an offer in the order of $150 million in financing, which we would use for our debt obligations," he said. MINERA AUTLAN: On The Verge Of Technical Bankruptcy --------------------------------------------------- Miguel Gaytan, an analyst at Bursametrica, revealed that Companhia Minera Autlan, a magnesium exporter based in Jalisco and Hidalgo, is now close to technical bankruptcy, Mexican financial daily El Economista revealed Monday. Accordingly, the company, which is now in the process of being sold, has short- term debts totaling 678.7 million. Several companies in the Mexican mining sector are struggling with the poor economic situation hitting the segment. The situation is becoming worse as a result of falling sales in the third quarter and problems with making short-term debt payments. =========== P A N A M A =========== PAFCO: Signs New Collective Agreement With Workers -------------------------------------------------- Panamanian banana producer Puerto Armuelles Fruit Company (PAFCO), an affiliate of the multinational Chiquita Brands, signed a new collective agreement with its workers, averting the loss of more than 1,000 jobs, AP reported Monday. The move also eliminated the company's threat to leave a port where it had operated for more than 50 years. Under the terms of the accord, PAFCO agreed not to fire 1,350 workers, disclosed union leader Edgar Williams. It will also give recently fired employees first preference for any new jobs that may open up, Williams added. The accord also requires workers to adopt better methods of picking and packing the bananas so that they are in better condition when they leave the port. A month ago, the company halted exports of Chiquita bananas from Puerto Armuelles because the quality of the fruit was not high enough. "We want for the fruit that leaves the port to be competitive on the international market," said Puerto Armuelles Fruit Co. executive Carlos Aragon. =============== P A R A G U A Y =============== CIPAR: Urges Government To Define Restructuring Plan ---------------------------------------------------- Food company Cipar demanded that the Paraguayan government define a restructuring plan in order to allow it to search for new partners, South American Business Information said in a report. Accordingly, the company has estimated debts of G$1.970 billion and is aiming to refinance them over a 15-year term at most. Cipar, at present, operates only 3 percent of its full production capacity. ======= P E R U ======= AERO CONTINENTE: Founder Denies Criminal Charges ------------------------------------------------ Peruvian airline Aero Continente's founder, Fernando Zevallos, said there was no evidence, which could support charges that he was linked to drug trafficking and a criminal organization, Reuters said Monday. "There is nothing illegal about this company. I would like to clear up this matter ... as quickly as possible," said Zevallos. The airline's operations in Chile were interrupted for nearly two months earlier this year in the wake of an inquiry in Santiago that it was involved in money laundering, but the charges there were later dropped for lack of evidence. According to Zevallos, the company was considering suing Chile for the losses it incurred during weeks of halted flights. "At the right moment ... we will take the steps that correspond to the damages and losses this intervention caused," he said. Zevallos also denied accusations he was linked to Fujimori's former spy chief Vladimiro Montesinos, who is now jailed on charges from murder to money laundering. ================= V E N E Z U E L A ================= CORIMON: Sells 26% Pralca Ownership To IFC ------------------------------------------ Corimon CA announced it has sold its 26 percent stake in the money-losing Pralca joint venture to the International Finance Corp. (IFC) for $22 million in assumed debt, Bloomberg reported Monday. "Under the agreement, the IFC will assume our Pralca debt," said Corimon Chairman Carlos Gill. "They will also take our shares." Corimon, one of the two Venezuelan companies traded on the New York Stock Exchange, has been seeking to pull out of Pralca for three years after Venezuelan state-run petrochemical company Pequiven SA said it would build a larger plant with ExxonMobil Corp. Corimon said Pequiven was obliged to buy its stake since the new plant would compete with Pralca. Pequiven holds 51 percent of Pralca's shares. Connecticut-based Olin Corp. holds the remaining 25 percent. GRAFFITI: Close To Emerging From Crisis --------------------------------------- Venezuelan clothes-store chain Graffiti is about to emerge from its liquidity crisis as the company's management is in the final stages of restructuring debt of US$40 million, El Nacional said in a report. Accordingly, the company's obligations have already been reduced by 63 percent -- via negotiations giving Banco de Venezuela and Banesco a share of the company's property assets -- to between US$12 million and US$15 million. The firm consists of 30 traditional-format stores plus 35 'Mundo' ('World') format operations but a new store will open at the end of this month in Punto Fijo, and another should open before the end of the year in Centro Comercial Metropolis, Valencia. The firm's real resurrection will depend on its Christmas campaign. 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 * * *