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, November 23, 2001, Vol. 2, Issue 229
A R G E N T I N A
AEROLINEAS ARGENTINAS: New Chairman Defends Protection Filing
Aerolineas Argentinas' new chairman, Antonio Mata, defended the
Argentine airline's filing for protection from creditors.
In an interview with El Pais, Mata said he believes that the
filing is a good means of helping the airline to emerge from its
crisis, adding that Aerolineas Argentinas is commercially and
economically stronger compared to those companies that have
recently undergone liquidation.
The chairman revealed that the airline's strategy involves cost
cutting and operating in profitable routes. Mata, who believes
that traffic to Mercosur countries and Europe is a significant
source of revenue, says that funds will have to be generated via
an increase in revenue or an increase in capital from
shareholders to keep the company healthy.
According to him, Aerolineas Argentina's sales have risen 35
percent since the end of October and are predicted to exceed $1
billion next year. Sales totaled $922 million in 2000. Monthly
losses are now less than $40 million and have been reduced by
half in a month.
Unions have also supported a pay cut "because they understand
that 80 percent of something is better than 100 percent of
nothing", and Aerolineas Argentinas has managed to cut its labor
costs without cutting jobs, unlike other airlines, Mata added.
The airline expects to break even in a year, turn a profit in two
years and aims to increase its fleet while maintaining its
CISA: May Re-Launch Vitamina Under New Commercial Concept
Women's clothing company Vitamina, which two years ago operated
with 50 locations now has only one shop, according to an El
The Investment fund and owner of the company, CISA (Compania de
Indumentaria), closed Vitamina's main branch in Buenos Aires
city, investing nearly US$1.2 million for renovation, El Cronista
The latest speculation is that the company plans to re-launch
Vitamina under a new commercial concept.
CISA, which also owns the brand John L. Cook, called in the
receivers in June last year with a debt of US$40 million.
The largest shareholders of this investment fund, AIG (American
International Group) and Bank of America, granted Mariano
Rodriguez Giesso, head of the men's clothing business Giesso, the
management of the 2 brands last December.
Gieso created the company NPI which, in exchange for a
commission, took over the financial management of the brands, the
development of a collections system, branch operations, and the
sale of clothes to multi-brand shops.
GRUPO GALICIA: Shares Likely To Drop Further On Debt Worries
Shares of Grupo Financiero Galicia SA, the holding company for
Argentina's third-largest bank, were expected to drop further
from Tuesday's all-time low as investors expect the bank to
suffer from the government's debt default, Bloomberg reported
The bank has lent $4.7 billion to Argentina's government that
probably will be included in a debt exchange that will conclude
Investors are also concerned that if there is a run on banks,
Galicia lacks an international parent company to act as a lender
of last resort.
Grupo Galicia, the bellwether of the Merval index, suffered the
worst drop Tuesday, losing 9.7 percent, to 44.70 Argentine
B O L I V I A
LAB: Lufthansa Presents Official Proposal For Management Control
Lufthansa Consulting confirmed its interest in managing Bolivia's
flagship airline Lloyd Aereo Boliviano (LAB) when it presented an
official proposal to Ernesto Asbun on November 15.
Among the plans included in the consulting firm's proposal are
the opening of new routes and the purchase of new airplanes.
General Electric and IFLC, which have also presented their own
offers, said they are prepared to provide the Bolivian airline
with working capital and airplanes.
Asbun, a Bolivian investor, recently acquired Vasp's interest in
B R A Z I L
ACESITA: Debts Swell by 300% Due To Currency Exchange Variance
Losses of iron and steel maker Acesita during the first nine
months this year surged by 300 percent due to the currency
exchange rates and a R$27-million additional provision, reported
According to the report, total losses from January to September
amounted to R$191 million compared to only R$50.5 million for the
same period last year.
The report revealed that the company's debts as of September
totaled R$1.4 billion ($533 million), including R$142 million
incurred by Acesita International.
The company, however, boasts that overall performance is not as
bad as last year since earnings in the third quarter rose by 22.9
percent to R$383.7 million.
Overall, the restructuring at the company seems to be working.
Acesita has so far recorded R$1 billion in net earnings, slightly
over the R$997 million it had last year.
CABO MINING: Concludes Settlement, Debt For Equity Swap
Settlement and Shares for Debt Agreements have been concluded and
approved by Cabo Mining Corp. (CDNX: CEV.) (the "Company") Board
of Directors and shareholders. The transactions include
Termination and Mutual Release Agreements which complete the
Company's disengagement from the Latin America telecommunications
industry. The announcements were made in an official company
The Company has also exchanged and added some ground to its
Cobalt, Ontario mineral exploration property. These events along
with an offer of new exploration and working capital financings
sees the Company with single focus on mineral exploration in
Canada, as it is requesting a reinstatement to trading on the
Canadian Venture Exchange ("CDNX").
As part of the its reorganization, the Company is pleased to
announce the CDNX has accepted a proposed transaction whereby the
Company agrees to settle $2,726,843 of loans and trade payables
for 18,178,954 shares of the Company at $0.15 per share. Debt
Settlement Agreements are in place with twenty-four parties to
settle debts comprised of $2,495,910 of loans and private
placements cancelled by agreement and converted to loans, and
$230,933 in trade payables. Shareholder approval for the issuance
of shares by the Company under these agreements was granted at an
Extraordinary Meeting of the Shareholders held in Vancouver,
B.C., July 13, 2001. There will not be a change of control of the
Company resulting from the issuance of these shares.
A further $825,000 of private placement with four investors has
been canceled and exchanged for telecommunication equipment and a
2% interest in a Brazilian telecom industry company. The
equipment and 2% interest were acquired by the Company under
terms of Termination and Mutual Release Agreements between the
Company, the Shareholders of Digital Network Services, Inc. and
Digital Network Services, Inc. and between Digital Network
Services, Inc. and Ronam Telecom Ltd. of Sao Paulo, Brazil.
The parties to the Debt Settlement Agreements further agreed to
amend these agreements September 5, 2001, by accepting a pooling
provision restricting the issuance of their shares to equal
quarterly releases commencing the later of four months from the
closing of the public financing or the resumption in trading of
the Company's shares. This amendment was sought by the Company in
response to a conditional offer from Canaccord Capital
Corporation ("Canaccord") of a $495,000 "commercially reasonable
efforts" financing received August 10, 2001, by the Company. The
proposed financing contemplates 1,700,000 flow through units and
1,600,000 non-flow through units at $0.15 per unit, with each
unit consisting of one share and one share purchase warrant
entitling the holder to purchase one additional share at $0.15
per share for a period of two years. This financing is subject to
CDNX acceptance and reinstatement to trading of the Company's
shares on the facility of the Exchange.
These events were preceded by termination of a sponsor agreement
between the Company and Global Securities Corporation and by a
finders fee agreement with Mr. Michael Rahtjen, with respect to
$2,105,100 of funds received by Cabo initially as private
placements and then converted to the loans referred to above. The
finders agreement valued at $137,755, is payable by the issuance
of 918,367 shares and is subject to CDNX acceptance of the Debt
The Company is also in the process of finalizing a non-brokered
private placement with seven parties to provide the Company with
$220,000 of exploration and working capital financings. This
placement, which is subject to CDNX acceptance and reinstatement
to trading of the Company's shares on the facility of the
Exchange, will be done at $0.15 per unit. Each unit is comprised
of one share and one warrant allowing the holder to purchase an
additional share within two years at $0.15 per share in the first
year and at $0.18 per share in the second year.
With these transactions in place, the Company will be in a
position to continue its mineral exploration project in Cobalt,
Ontario that is adjacent to the recent microchip diamond
discovery announced by Prairie C in June 2001. This discovery is
significant in that it confirms a diamond occurrence in a
lamprophyric environment on the border between the Company's
claims and the Prairie C ground, adding a new dimension to the
search for diamonds in Ontario. The Company intends to pursue
this opportunity as vigorously as possible with an aggressive
A further addendum to one of the Cobalt, Ontario mineral property
option agreements was made effective September 5, 2001, between
the Company, Branchwater Resources Ltd. and Outcrop Explorations
Ltd. whereby the Company has handed over its interest in the nine
patented claim, 320 acre, Teledyne property and acquired, under
terms of the option, 400 additional acres, covered by eight
staked claims. Cabo also retains a 1% net smelter return royalty
interest in the Teledyne property.
An $80,000 drilling contract with Frontier Exploration Drilling
for 1500 meters of diamond drilling on the Company's Cobalt
Property has been approved by the Board of Directors and will
commence upon receipt of the financings.
Quoting the Summary in the July 2001 "Report on the Cobalt Area
Exploration Project, Northeastern Ontario" written for the
Company by David J.T. Douville, QP of D.J. Consultants, (the
The Cobalt Project encompasses a large land position
approximately 20,000 acres in Canada's most famous "silver"
mining camp. Traditionally, this area is known as the "Silver
Capital of Canada". Since the early 1900's Cobalt has seen dozens
of small mines come and go. Production figures include - 450
million ozs. of silver, 24.8 million lbs. of cobalt, 3.2 million
lbs. of copper, 3.1 million lbs. of nickel, and 1.2 million lbs.
Most of this production was mined from small vein hosted deposits
intimately associated with a rock structure known as the
Nipissing Diabase sill. This sill intrudes all of the three main
rock types in the area - Archean aged metavolcanics (Keewatin
volcanics), granitic rocks (Lorrain granite) and Huronian aged
metasediments (Gowganda Formation). The Keewatin rocks form a
major greenstone belt in the Cobalt Area. The primary targets of
Cabo's Cobalt Project have been the greenstone belt to
investigate for base metals (Zn, Cu, Pb) in Volcanogenic Massive
Sulphide deposits ("VMS") and the traditional silver (Ag) /
cobalt (Co) mineralization along the Nipissing Diabase sill. The
Timmins, Kirkland Lake and Noranda base metal - gold camps all
lie within similar geological settings a short distance from
Cobalt, Ontario. Recently, the targets have been expanded to
include potential diamonds in kimberlite and lamprophyre
intrusions as a result of the discovery of diamonds in xenolith
bea ring lamprophyre dykes on an adjoining claim in the Pan Lake
Area (60 metres north of the Cabo claim boundary) and the
documentation of diamond bearing kimberlite pipes in Bucke
Township and the New Liskeard area.
The Cabo Cobalt Properties include prospects that have been
explored by at least 18 shafts, four adits, one decline (686 m)
and many hundreds of pits and trenches. All of these old workings
were in search of Ag /Co deposits.
Cabo has carried out a regional scale evaluation program covering
most of the Cobalt Property and detailed work over four selected
target areas. The regional work has included an airborne
geophysical survey covering 70% of the Cobalt Project,
reconnaissance soil and alluvial sampling over 25% of the Cabo
claims as well as cursory examination of 80% of the known mineral
prospects. Detailed work has included control grids, ground
geophysical surveys, geological mapping and prospecting in four
areas - New Lake, Pan Lake /Anderson Lake, Lang Caswell and North
Cobalt. Stripping programs were carried out in two areas - the
Lang-Caswell for Ag/Co mineralization and the Pan Lake area for
Base Metals, Ag/Co and diamond bearing lamprophyre.
Thirteen drill holes have been completed by Cabo on seven
targets. Five of these targets were selected by means of
historical records, government information and limited field
examination. The other two were defined by detailed fieldwork.
Four base metal targets remain to be drill tested along with two
Ag/Co vein systems.
Within the Cobalt Property, the prospect with the highest
priority at this time is the Pan Lake lamprophyre zone. Mapping,
prospecting and limited mechanical stripping has outlined a 200
metre wide structure that contains extensive xenolith bearing
lamprophyre dykes. This zone of dykes trends northeastward
through the south side of Pan Lake. It has been traced in outcrop
for in excess of 1200 metres on the Cobalt Property. A 22.2 kg.
sample of similar dyke material collected from an exposure
located 60 metres north of the Cabo property and along the
northeast structure was recently found to contain 3 microchip
diamonds. Heavy mineral processing of till samples collected in
the Pan Lake area has detected a cluster of samples containing
elevated numbers of Kimberlite Indicator Minerals (KIM's). This
area is located nearly 25 kilometres from the nearest documented
kimberlite. Additional till sampling, along with detailed
chemical analysis of the KIM's in association with detailed
interpretation of existing airborne geophysical data may assist
in locating the source.
The Company also announces the resignation of Paul A. Dumas, as a
director of the Company and the appointment of D. Alex Caldwell,
as the Company's Corporate Secretary.
ON BEHALF OF THE BOARD,
John A. Versfelt, President and CEO
The Canadian Venture Exchange has neither approved nor
disapproved of the contents contained herein.
CONTACT: Cabo Mining Corp.
John A. Versfelt
CEMIG: Nine-month Results In Red Due To Depreciation, Rationing
In a company press release, Companhia Energetica de Minas Gerais
(CEMIG) (NYSE: CIG; BOV: CMIG4), one of Brazil's largest energy
companies, posted Tuesday its financial results for the nine-
month period ended September 30, 2001. CEMIG reported a nine-
month net loss of R$195.0 million. The loss came on the heels of
2000 nine-month net profits of R$324.1 million.
Operating revenues, net of value-added tax, increased 3.5 percent
to R$2.8 billion. The operating margin for the period was 11.1
percent compared with 19.5 percent for the nine-month period last
The average electricity rate increased to R$132.48 per MWh from
R$115.83 per MWh for the first nine months of 2000 as a
consequence of rate increases of 11.8 percent and 16.5 percent
that became effective in May 2000 and April 2001, respectively.
The volume of electricity sales to final customers decreased 3.1
percent, due primarily to sales decreases of 9.8 percent and 4.3
percent in the residential and commercial sectors, respectively,
reflecting the electric power rationing program of the Brazilian
Federal Government that began in June.
Nine-month operating costs and expenses increased 14.3 percent to
R$2.5 billion from R$2.1 billion in the nine-month period ended
September 30, 2000, principally as a result of increases in
electricity purchased for resale, personnel expenses and
Energy purchased by CEMIG for resale rose 35.4 percent to R$815.0
million from R$602.0 million. The primary reasons were an 8.0
percent increase in the US dollar-denominated price of purchases
from Itaipu, the devaluation of the real against the dollar, and
an increase of 85% to R$95.0 million in energy purchased under
initial supply contracts.
Nine-month personnel costs increased 13.4 percent to R$427.3
million from R$341.0 million, due largely to wage increases of
5.4 percent and 6.2 percent in July and November 2000,
CEMIG's Chief Executive Officer Djalma Bastos de Morais commented
on the nine-month results: "We anticipated the results of the
first nine months. They are no surprise. The Federally-mandated
energy-rationing program has obviously presented a financial
hardship for CEMIG. We nevertheless accept our responsibility as
citizens to help our country emerge strongly from its combined
currency and energy crises. I am confident that as conditions
improve, CEMIG will snap back."
Chief Financial Officer Cristiano Barros had this comment:
"Cemig's goal during this difficult period of recovery from twin
currency and energy crises is to remain transparent to the
financial markets, and fully supportive of our investors."
On September 18, 2001, CEMIG's Level II American Depositary
Receipts (ADRs) began trading on the New York Stock Exchange,
Inc. (NYSE). Each ADR represents 1,000 Preferred Shares of CEMIG.
In determining CEMIG's financial eligibility for listing, the
NYSE relied on certain adjustments to CEMIG's financial data.
CEMIG's listing application, which includes the adjustments to
CEMIG's financial data, is available from the NYSE upon request.
To see company's financial statements:
CONTACT: Luiz Fernando Rolla, Investors Relations of CEMIG,
+011-5531-299-3930, Fax, +011-5531-299-3933 or
Vicky Osorio of The Anne McBride Company,
+1-212-983-1702, Fax, +1-212-983-1736, or
firstname.lastname@example.org, for CEMIG
ENRON: May Use Interests In Power Plants To Support Loan
Embattled energy trading company Enron Corp. may use its minority
interests in power plants in order to secure a restructured a
$690-million loan agreement, a source familiar with the plan
revealed in a Reuters report.
Enron disclosed early this week that it is up against a deadline
of Nov. 26 to deliver collateral to secure the debt owed to a
third party in one of its many partnerships.
If not, the partner has the right to liquidate all of the assets
of the partnership, which include a Brazilian natural gas company
that Enron was counting on selling to raise $250 million in cash.
This week, Citigroup Inc., which arranged the original $690
million loan, worked with the nearly 20 other banks to extend the
payment schedule to mid-December.
Discussions on re-pricing the loan are continuing, but the rate
is likely to be similar to the terms of a new $1 billion line of
credit for Enron.
Enron revealed Wednesday that it secured the remaining $450
million in credit for this previously announced $1 billion line.
The loan was lead by Citibank, which is advising Enron in its
merger with Dynegy through its Salomon Smith Barney brokerage,
and J.P. Morgan Chase & Co., which is also advising Enron on its
merger with Dynegy.
To see company's financial statement:
ENRON: Investors Doubt Viability Through Completion of Merger
Wednesday's news that Enron Corp. has secured the remaining $450
million of a new $1 billion credit line did little to assuage
investors' fears that the company may not be able to stay afloat
long enough to complete its merger with rival Dynegy Inc.,
Reuters said in a report.
Enron shares tumbled 33 percent in early trading on Wednesday,
following a 22.8 percent drop on Tuesday, amid concerns over the
company's liquidity and growing questions over whether the
proposed takeover by Dynegy will go ahead.
"The Dynegy deal will take a long time and a lot of things could
happen over that time period. Dynegy did their homework, but if
they missed anything, they have a number of exit opportunities,"
said Fulcrum Global Partners analyst Michael Barbis.
According to Wall Street analysts, Enron is losing market share
because of credit concerns from its trading partners and
questions over Dynegy Inc.'s takeover offer.
"Enron is definitely losing market share on credit concerns. Cash
needs to run the business have now increased. The market
perceives Enron as needing more cash," said Barbis.
FAZENDAS REUNIDAS: To Make Creditors Partners In New Company
The Brazilian Fazendas Reunidas Boi Gordo S.A. will ask its
creditors to become partners of another company to be created
under the name Global Pecuaria S.A., Gazeta Mercantil reported.
The company is taking these steps in an attempt to exit from a
bankruptcy process it has been confronted with since mid October.
The new company will be created with a goal of solving the
company's financial problems. The company's liabilities were
listed at R$780 million against assets of R$500 million.
FURNAS: Government Delays Privatization On Economic Downturn
The planned privatization of Furnas Centrais Eletricas will not
push through early next year due to the global economic
recession, reported Gazeta Mercantil.
According to the report, the government feels the move might not
lead to favorable terms due to the present energy crisis the
country is experiencing.
The government cites its failure to dispose of Copel as an
example of what might become of Furnas. Investors twice snubbed
Copel's auction, claiming its price tag was much too high.
Furnas is currently carrying a R$700-million debt load, which the
government hopes to trim through its privatization. The original
schedule for the auction was first quarter next year.
The report did not indicate when the government hopes to revive
TELEMAR: Cell Phone Company To Begin Operations April 2002
Luiz Eduardo Falco, the chairman of Telemar's cell phone company
Telemar PCS, announced that the company will begin operating in
April next year in 120 cities of 16 states where Telemar already
provides fixed phone services, Jornal do Commercio reported.
The company already made contracts with more than 500 stores and
retail outlets for the sale of Telemar's cell phone equipment.
Telemar PCS will also provide short message services and the
roaming deals were already made with TIM (Telefonica Italia
Mobile) and will cover the whole Brazilian territory.
Telemar PCS is to start operating with 1,600 towers in the 16
states, being 400 shared with TIM. Telemar expects the number of
cell phone users to jump from 14 million to 25 million in the
states within the next three years.
TELETRUST: Brazilian Pension Funds Seek Bankruptcy Status
The five major pension funds of Brazil - Previ, Valia, Petros,
Funcef and Sistel - called for the bankruptcy of Teletrust de
Recebiveis, part of Banco Marka, the Brazilian banking group
owned by Salvatore Cacciola, O Globo reported.
Teletrust reportedly owes the pension funds R$160 million for a
debenture purchased in 1994 that was guaranteed by telephone
At the time the money was lent to Teletrust, telephone lines cost
$500. The projection was that lines would cost R$1,500 each when
the debentures matured. However, in 1995, the federal government
ruled that lines would cost a maximum of R$120, substantially
reducing the value of the Teletrust debentures.
According to Cacciola's lawyer, the privatization of telecom
operators in 1998 resulted in Teletrust having to deal with many
breaches of contract and finding it difficult to honor its
VARIG: Opts To Defer Currency Exchange Losses
Varig, with the approval of the CVM (Comissao de Valores
Mobiliraios), exercised its option to defer currency exchange
losses and not present them in its financial figures, Valor
The company justified the move on the grounds that it is
compatible with the amortization schedule of the debts and the
compensation it gets from income received outside the country.
However, despite deferring some R$494.5 million until 2004, the
company still posted a loss of R$99.1 million in the third
quarter. Net income grew 14.3 percent in the quarter to R$1.6
billion, but this was offset by a 41.4-percent increase in costs
equaling R$1.2 billion.
The quarterly numbers also included a 5.4-percent drop in ticket
sales and a 2.7-percent drop in international ticket sales.
Varig continues to struggle with current exchange rate
difficulties and the crisis in the air travel sector.
C H I L E
STARMEDIA NETWORK: Milberg Weiss Files Class Action Suit
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP
announced that a class action lawsuit was filed on November 20,
2001, on behalf of purchasers of the securities of StarMedia
Network Inc. ("StarMedia" or the "Company") (NASDAQ: STRM)
between April 11, 2000 and November 19, 2001, inclusive (the
"Class Period'). A copy of the complaint filed in this action is
available from the Court, or can be viewed on Milberg Weiss'
website at: http://www.milberg.com/starmedianetwork/
The action is pending in the United States District Court for the
Southern District of New York, located 500 Pearl Street, New
York, NY 10007, against defendants StarMedia, Fernando J.
Espuelas (CEO and Chairman) and Steven J. Heller (Chief Financial
The complaint charges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between April 11, 2000 and
November 19, 2001 concerning the Company's financial performance.
The complaint alleges that Starmedia reported artificially
inflated financial results in press releases and filings made
with the SEC by improperly recognizing revenue in violation of
Generally Accepted Accounting Principles ("GAAP"). Specifically,
the complaint alleges that two of the Company's primary
subsidiary, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V,
had engaged in improper accounting practices which had the effect
of materially overstating StarMedia's reported revenues and
earnings by at least $10 million. On November 19, 2001, as
alleged in the complaint, Starmedia issued a press release
announcing that based on the "preliminary" results of an internal
investigation into its accounting practices, it expects to
restate its financial statements for fiscal year 2000 and the
first two quarters of 2001 and that those financial statements
should not be relied upon. The Company further reported that its
Chief Financial Officer had "resigned." Immediately following the
announcement of the restatement, the NASDAQ Stock Market halted
trading in StarMedia stock, pending the receipt of additional
information from the Company. StarMedia stock last traded at
$0.38 per share, which is 98.5% less than the Class Period high
of $25.50, reached on April 11, 2000.
If you bought the securities of StarMedia between April 11, 2000,
and November 19, 2001, you may, no later than January 21, 2002,
request that the Court appoint you as lead plaintiff. A lead
plaintiff is a representative party that acts on behalf of other
class members in directing the litigation. In order to be
appointed lead plaintiff, the Court must determine that the class
member's claim is typical of the claims of other class members,
and that the class member will adequately represent the class.
Under certain circumstances, one or more class members may
together serve as "lead plaintiff." Your ability to share in any
recovery is not, however, affected by the decision whether or not
to serve as a lead plaintiff. You may retain Milberg Weiss
Bershad Hynes & Lerach LLP, or other counsel of your choice, to
serve as your counsel in this action.
Milberg Weiss Bershad Hynes & Lerach LLP (
http://www.milberg.com)is a 190-lawyer firm with offices in New
York City, San Diego, San Francisco, Los Angeles, Boca Raton,
Seattle and Philadelphia, and is active in major litigations
pending in federal and state courts throughout the United States.
Milberg Weiss has taken a leading role in many important actions
on behalf of defrauded investors, consumers, and others, and has
been responsible for more than $20 billion in aggregate
recoveries. Please contact the Milberg Weiss website for more
information about the firm. If you wish to discuss this action
with us, or have any questions concerning this notice or your
rights and interests with regard to the case, please contact the
Steven G. Schulman or Samuel H. Rudman One Pennsylvania Plaza,
49th fl. New York, NY, 10119-0165 Phone number: (800) 320-5081
Email: starmedianetworkcase@milbergNY.com Website:
CONTACT: Milberg Weiss Bershad Hynes & Lerach LLP
Steven G. Schulman or Samuel H. Rudman, 800/320-5081
D O M I N I C A N R E P U B L I C
DOMINICANA AIRLINES: Aeropostal Making Required US$1M Deposit
Aeropostal, the company whose affiliate won the privatization bid
for Dominicana Airlines, is now in the process of making a US$1-
million deposit in order to meet its contractual obligations,
Aeropostal Director Jose Manuel Mustafa said in a DR1 Daily News
The director's announcement came following recent reports that
Aeropostal has not paid the deposit required to close the tender
operation. This consequently led tourism advisor to the Executive
Branch Enrique de Marchena and former secretary of Foreign
Relations Victor Gomez Berges to believe that the contract should
be nullified for breach of contract.
Manuel Mustafa denied delays in the fulfillment of terms of the
contract and said the company has already started to recruit
personnel to start its flight operations.
M E X I C O
GRUPO MEXICO: SPCC Requests S&P To Reconsider Rating Cut
Southern Peru Copper Corp (SPCC) informed the Lima Stock Exchange
that it has asked the international credit-rating agency Standard
& Poor's to reconsider a downgrade it gave the company, Business
News Americas said in a report.
SPCC, which is 54.3 percent owned by Mexico City-based mining-
transport Grupo Mexico via the group's US subsidiary Asarco, had
its US$150 million, 7.5 percent secured export notes due 2007
lowered by S&P to `BB-' from `BB+' placing it on CreditWatch with
S&P's move to cut the ratings was part of a general downgrade on
various ratings in Grupo Mexico's (G-Mex) "empire."
"SPCC does not agree with the said rating and has asked S&P to
reconsider, which it [S&P] is doing," the company told the
SPCC asserted that it, Asarco and G-Mex are legally independent
companies, while SPCC's minority shareholders - Marmon Group
(14.2 percent), Phelps Dodge Overseas Capital Corp (14 percent)
and 17.5 percent free float - have important legal rights and
safeguard their rights as minority shareholders.
P A R A G U A Y
ANTELCO: BRP Likely To Participate In Bidding
Brazilian fixed line holding company Brasil Telecom Participacoes
(BRP) may possibly bid for Paraguayan state-run operator Antelco,
Business News Americas said in a report.
BRP CEO Henrique Neves revealed that a team is currently
performing due diligence on Antelco. The company's participation
is by no means guaranteed as the Paraguayan government has yet to
set rates and the regulatory environment, as well as the auction
rules, Neves said.
Antelco, which has 297,000 lines, is scheduled for privatization
in March 2002. The Paraguayan telephone company is considered one
of Latin America's least advanced, given its lack of coverage and
outdated technology. The company's bloated payroll was recently
cut from 6,000 to 5,000 workers prior to the start of the
T R I N I D A D & T O B A G O
YORK RESEARCH: Terminates Trinidad Project Deal With NRG Energy
In a company press release, York Research Corporation (Nasdaq:
YORK) ("York") announced Wednesday the termination by NRG Energy,
Inc. of the agreement for the sale of York's wholly-owned
Trinidad Project. Concurrently, the Standstill Agreement with the
holders of more than two-thirds of the $150,000,000 12% Senior
Secured Bonds that were due October 30, 2007 issued by York Power
Funding (Cayman) Limited also terminates.
It is management's intent to continue to pursue negotiations with
the bondholders and creditor groups, as well as continuing to
explore the sale or refinancing of the Trinidad Project and
York's other assets. There can be no assurance that any such
negotiations will be successful.
York develops, constructs, and operates cogeneration and
renewable energy projects.
To see company's latest financial statement:
CONTACT: Corporate Communications, York Research Corporation,
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 * * *