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/raid1/www/Hosts/bankrupt/TCRLA_Public/011205.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, December 5, 2001, Vol. 2, Issue 237 Headlines A R G E N T I N A FARGO SA: S&P Affirms Corporate Rating Despite Missed Payment B O L I V I A COTEL: Telecom Agency May Throw Detecon Out ENRON: Vintage Petroleum Announces Minimal Exposure to Enron B R A Z I L BELL CANADA: Recapitalization Plan Includes America Movil MOU BELL CANADA: Moody's Places Ratings On Review For Downgrade ELETROPAULO METROPOLITANA: Fitch Affirms Ratings; Outlook Neg ENRON: Selling Brazilian Assets May Be Difficult Business TRANSBRASIL: To Keep Flying Despite Creditor Pressures VARIG: Considering Every Option To Slash Debt; May Sell Rio-Sul C H I L E EDELNOR: Mirant Chile Subsidiary Receives Offer for Equity G U Y A N A GA 2000: Recent Legal Suits Seek Over $15M In Damages M E X I C O AEROMEXICO/MEXICANA: Chamber of Deputies To Vote On Support Plan BANCRECER: Banorte To Finalize Acquisition This Week BANCRECER: Banorte To Allot 1.046B Pesos For Restructuring GRUPO MEXICO: Asarco Pays $50M On Bonds; Talks Terms With Banks GRUPO MEXICO: SPCC Will Issue Up to $750M in Bonds STARMEDIA NETWORK: Stull, Stull & Brody Files Class Action Suit P A N A M A CHIQUITA BRANDS: Panamanian Units Unfazed Amid Bankruptcy Filing - - - - - - - - - - - ================= A R G E N T I N A ================= FARGO SA: S&P Affirms Corporate Rating Despite Missed Payment ------------------------------------------------------------- Exxel Group's bakery unit Cia de Alimentos Fargo SA said it has missed a second installment of $2 million due Nov. 1 on a $30- million unrated bank facility, AFX-Europe reports. Even so, Standard & Poor's maintained its selective default rating on Fargo. The ratings agency also retained its CreditWatch with negative implications placement of the Company's CCC senior unsecured debt rating. S&P explained that the possibility of the said default "was already incorporated in the analysis," which resulted in the CreditWatch placement of the CCC rating on Fargo's $120-million senior unsecured notes due 2008. The CreditWatch reflects "concerns about Fargo's heightened risk of a generalized default arising from the delays and uncertainties in renegotiating the defaulted debt," the ratings agency said. A potential acceleration on the defaulted loan by the creditor, and the upcoming amortization payments on the defaulted loan for $4 million in May (increases) the risk of triggering cross- default clauses with the $120-million notes, it said. Fargo's financial flexibility is strongly affected by the "missed payment, the burdensome annual interest expense charges vis a vis a very weak financial performance, and by the domestic market credit crunch," it added. ============= B O L I V I A ============= COTEL: Telecom Agency May Throw Detecon Out -------------------------------------------- The national telecoms agency Sittel may be compelled to kick out German telecom consulting firm Detecon and take over the management of Bolivian telephone company Cotel, reports La Razon. The possibility of the occurrence is not that far, as Cotel's workforce are now complaining about Detecon's inefficient management and claimed that there were glitches in the Company's operating systems the day, when the Bolivian telecoms market was being opened. According to Cotel sources, the contract signed with Detecon, which is majority owned by Deutsche Telecom and Deutsche Bank, is illegal. Detecon signed a five-year contract in May to administer Cotel in return for US$138,000 in monthly management fees. La Paz-based Cotel was intervened by Bolivia's telecoms regulator Sittel last year in August after service was jeopardized by a nine-day strike by employees protesting corruption and staff cuts. ENRON: Vintage Petroleum Announces Minimal Exposure to Enron ------------------------------------------------------------ In an official company press release, Vintage Petroleum, Inc. (NYSE: VPI) reported Monday that the company has no derivative contracts with Enron but does have minimal credit exposure to certain affiliates of Enron Corp. No amounts are currently past due to Vintage from these companies. Vintage estimates that it has pre-tax credit exposure to Enron North American Corp. of approximately $300,000. This company recently filed a voluntary petition for Chapter 11 reorganization in U.S. bankruptcy court along with Enron Corp. and certain of its other subsidiaries. Vintage has credit exposure to other Enron subsidiaries and partnerships not included in the recent U.S. Chapter 11 filings. The company currently estimates that its pre-tax credit exposure to EOTT Energy Partners, L.P. is approximately $1.7 million. In addition, a term contract with EOTT will require Vintage to deliver an estimated 1,000 barrels of crude oil per day to EOTT for the period of December 2001 through October 2002, which will result in a future credit exposure of approximately two months of production, or only 60,000 barrels of crude oil, until such contract is terminated. In South America, Vintage currently estimates it has credit exposure of approximately $450,000 to an Enron affiliate for certain gas sales in Bolivia. In addition, the company's contract with the Enron affiliate in Bolivia requires Vintage to deliver between 8,500 and 17,000 MMBtu per day for December 2001 through February 2002, unless earlier terminated. Vintage Petroleum, Inc. is an independent energy company engaged in the acquisition, exploitation, exploration and development of oil and gas properties and the marketing of natural gas and crude oil. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange under the symbol VPI. CONTACT: Robert E. Phaneuf, Vice President Corporate Development of Vintage Petroleum, Inc., +1-918-592-0101 (VPI) =========== B R A Z I L =========== BELL CANADA: Recapitalization Plan Includes America Movil MOU -------------------------------------------------------------- - BCI commences $440 million Rights Offering - Short term obligations totalling approximately $656 million to be settled through issuance of BCI common shares Bell Canada International Inc. ("BCI") (NASDAQ:BCICF) (TSE:BI.) Monday announced a Recapitalization Plan which will enable the Company to meet its short-term funding commitments, as well as a complementary plan which will result in the reorganization of the Latin American joint venture, Telecom Americas Ltd. ("Telecom Americas") into a company focused on the Brazilian mobile wireless market. BCI's Chairman and CEO, Bill Anderson, stated, "The execution of the BCI Recapitalization and Telecom Americas Reorganization Plans will put both companies on more solid financial footing and allow BCI and Telecom Americas the opportunity to create value in the future for the benefit of BCI's stakeholders." THE BCI RECAPITALIZATION PLAN BCI has financial obligations maturing through April 30, 2002 (the "short-term obligations") in an aggregate amount of approximately $1.3 billion, which significantly exceed its cash on hand and committed sources of funds. Of this amount, approximately $626 million will be settled in cash and by amending BCI's bank credit facilities, while $656 million will be settled through the issuance of Common Shares. The short-term obligations which will be settled through the issuance of Common Shares include: a put right held by affiliates of the American International Group ("AIG") in the amount of approximately $178 million which is exercisable for one year commencing after December 10, 2001; principal and interest in the amount of approximately $78 million owing under a loan from BCI's majority shareholder, BCE Inc. ("BCE"); and principal in the amount of $400 million owing under BCI's 6.75% and 6.50% convertible unsecured subordinated debentures due February 15, 2002 (the "1999 Debentures"). Absent the Recapitalization Plan, the settlement of $656 million of short-term obligations through the issuance of Common Shares would cause a change of control under the covenants of certain of BCI's debt instruments. In this case, approximately $1.1 billion of indebtedness would be accelerated and would be required to be settled in cash, including the $626 million referred to above. The BCI Recapitalization Plan has been undertaken to settle BCI's short-term obligations, avoid the acceleration of other indebtedness and provide all shareholders with an opportunity to benefit in any future recovery in the values of BCI's Latin American communications companies. The transactions within the BCI Recapitalization Plan include the following. - A $440 million Rights Offering of Units consisting of Principal Warrants and anti-dilutive Secondary Warrants, with Common Shares to be issued on February 15, 2002 upon the exercise of the Principal Warrants. This Rights Offering will be priced at a 49% discount to the weighted average trading price of BCI Common Shares for the 20-day period ending February 8, 2002. - Settlement of obligations totalling approximately $656 million by the issuance of BCI Common Shares. - The amendment and restatement of BCI's existing Credit Facility in the reduced amount of $230 million but with an extended maturity date to March 2003. - A commitment by BCE to backstop the $440 million Rights Offering, i.e. to exercise all of its own rights plus any other rights which would otherwise not be exercised. - A commitment by BCE to top up its shareholding in BCI to 51% on February 15, 2002 in the event that it would otherwise fall below 51% giving effect to the Rights Offering and the settlement of $656 million of BCI's obligations by the issuance of Common Shares. This commitment, together with the other anti-dilutive provisions, will ensure that the change of control covenants in BCI's debt instruments are not triggered. The BCI Recapitalization Plan envisages that all the transactions described above will be effective on February 15, 2002, except for the settlement of the AIG put right. BCI intends to use the proceeds of the Rights Offering received in February 2002 to pay the accrued interest owed to holders of the 1999 Debentures, reduce outstanding indebtedness under its existing credit facility, fund its guarantee of an April 2002 Telecom Americas' obligation relating to the acquisition of Tess S.A., a Brazilian cellular company, and for general corporate and investment purposes. An Independent Committee of the Board was appointed to consider the Recapitalization Plan. Based on the advice of independent legal and financial advisors, the Independent Committee recommended that the Board approve the Recapitalization Plan. BCI has filed a preliminary prospectus relating to the Rights Offering with the Securities Commissions of each of the provinces of Canada. The Rights Offering is subject to regulatory approval and the Rights may not be sold nor may offers to buy be accepted prior to the time of final regulatory approval of the Rights Offering. English and French versions of the preliminary prospectus can be found at www.bci.ca. THE TELECOM AMERICAS REORGANIZATION PLAN In order to address the funding requirements of Telecom Americas, BCI has signed a binding memorandum of understanding with its partners in Telecom Americas, America Movil S.A. de C.V. of Mexico ("America Movil") and Texas-based SBC International, Inc. ("SBC"), to reorganize Telecom Americas into a company focused on the provision of mobile wireless services in Brazil, the largest market in Latin America. The Reorganization Plan is conditional on obtaining regulatory approvals and third party consents. The Reorganization Plan will include the following transactions: - Telecom Americas will transfer its 77.1% indirect interest in Communicacion Cellular S.A. - Comcel S.A. to America Movil; - America Movil will transfer cash and its 41% indirect interest in Algar Telecom Leste S.A. ("ATL") to Telecom Americas; - Telecom Americas will transfer its 75.6% indirect interest in Canbras Communications Corp. to BCI; - Telecom Americas will transfer its 60% indirect interest in Techtel-LMDS Communicaciones Interativas, S.A. to America Movil; and - Telecom Americas will distribute its interest in Genesis Telecom C.A. equally to BCI and America Movil. In addition, Telecom Americas is also pursuing other measures to position it for long-term growth by increasing operating efficiencies and improving its financial profile. The Reorganization Plan will address, in part, the funding requirements of Telecom Americas' operating companies by reducing their aggregate level of debt. If the Reorganization Plan is not completed, Telecom Americas may face significant additional funding requirements. In that case, BCI could be required to make additional contributions to Telecom Americas, which would increase the risk of substantial dilution of its interest. Upon the execution of the Reorganization Plan, Telecom Americas will own interests in 4 Brazilian B Band cellular operations serving approximately 4 million subscribers in territories of Brazil with a population of approximately 60 million. The interests include 100% of ATL in the States of Rio de Janeiro and Espirito Santo, 100% of Tess S.A. in the State of Sao Paulo, 81% of Telet S.A. in the State of Rio Grande do Sul and 81% of Americel S.A. in the Central West region, which includes the Federal District of Brasilia. Bell Canada International owns and develops advanced communications companies in markets outside Canada, with a focus on South America. A subsidiary of BCE Inc., Canada's largest communications company, BCI is listed on the Toronto Stock Exchange under the symbol "BI" and on the NASDAQ National Market under the symbol BCICF. Visit BCI's Web site at www.bci.ca. CONTACT: Bell Canada International Inc. Peter Burn (Media), 514/392-2357 E-mail: peter.burn@bci.ca OR Bell Canada International Inc. Brian Quick (Investors), 514/392-2369 E-mail: brian.quick@bci.ca BELL CANADA: Moody's Places Ratings On Review For Downgrade ----------------------------------------------------------- Moody's Investors Service placed Bell Canada International's (BCI) senior unsecured notes (B2), unsecured convertible subordinated Debentures (B3), B2 issuer rating and senior unsecured rating on review for downgrade, the ratings agency said in a press release. Moody's action follows BCI's announcement of a refinancing plan. "While this should assure adequate funding of BCI's cash needs until March, 2003, at that point the Company's remaining debt of approximately C$730 million will largely be supported by a slightly reduced ownership in a restructured Telecom Americas Limited (TAL), plus a 27.7% interest in Axtel and a 75.6% interest in Canbras. These investments are not expected to generate cash for BCI's ongoing needs for the foreseeable future," Moody's said in the release. "Therefore, BCI would need to liquidate assets to satisfy remaining debt, although values and marketability of the investments remain problematic today," Moody's added. Moody's said its review will focus on the implications of the proposed transactions for the remaining obligations, including the valuation of TAL, Axtel and Canbras and debt repayment alternatives. ELETROPAULO METROPOLITANA: Fitch Affirms Ratings; Outlook Neg ------------------------------------------------------------- Fitch has affirmed the 'BBB-' international local currency rating and 'BB-' foreign currency rating of Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A. (Eletropaulo) and revised the local currency Rating Outlook to Negative from Stable. The foreign currency rating remains on Rating Outlook Negative in accordance with the foreign currency rating of the Brazil sovereign debt. The Negative Rating Outlook reflects the potential negative economic and liquidity effects of current and prospective market conditions, Eletropaulo's increasing leverage position resulting from the devaluation of the real, and uncertainty regarding recovery amounts of revenue losses from the mandatory rationing program. These risks are partially offset by an expected increase in Eletropaulo's revenue base, improved regulations (reflective in the creation of a regulatory tracking account) and Eletropaulo's continued use of hedging instruments to protect against severe adverse currency fluctuations. Since implementation of rationing measures in June 2001, Fitch has closely monitored the relevant impacts and evolution of resolve to the current deficit situation. Thus far, the government mandated rationing program has affected Eletropaulo's revenues, and to a larger degree cash flow, temporarily pressuring credit protection measures. The two most important financial impacts of the rationing program are distribution revenue loss due to lower consumption and accounting revenue gains (not yet collected) due to the application of Annex V. Annex V refers to the rules imposed when rationing occurs and spot prices exceed the R$150/MWh at August 1998 and adjusted by inflation, as has been the case since June 2001. Given the current average 20% rationing program, under Annex V as detailed in the initial supply contracts, generators will only produce 80% of base levels, but are still required to supply 85% of contracted levels. Effectively, generators must purchase the additional 5% on the spot market, generally from the distributors, to meet their contractual obligations. Annex V was originally crafted to help mitigate the revenue loss to distributors due to lower consumption in the event of rationing. Due to a nonfunctioning wholesale electricity market, the financial transactions related to Annex V have not been cleared, resulting in temporary reductions in cash flow to distributors, including Eletropaulo. To date, revenues have been reduced by the rationing program with consumption reductions in June (26.0%), July (25.9%), August (23.2%), and September (26.3%) in comparison to 2000 monthly figures. On the 22nd of November of this year, the Brazilian government reduced the rationing target down from 20% to between 7%-12% of consumption for the southeastern region in which Eletropaulo operates. However, it remains unclear at this point if rationing measures will be necessary in 2002 and their resulting financial effects on the company. It appears there is a solution finally within reach that supports the credit quality of market participants. The plan essentially calls for a recovery for distributors of lost revenues due to rationing. While details remain uncertain, it is expected that distributors will be allowed to book the associated 'margin compensation' in 2001 and will recover a majority of actual cash over four months beginning in December, with the remainder recovered through subsequent tariff increases. The financing is expected to come from BNDES in the form of loans to be repaid over 3-5 years through guaranteed annual tariff increases. Under the agreement, it is anticipated that Annex V will no longer be applied, a positive for generators. A final agreement has not been reached, but is expected in the near term. Separately, Eletropaulo is expected to realize an increase in revenues and cash flow going forward of up to R$240 million annually due to a recent resolution limiting subsidies to only true low-income customers. Low-income customers will now have to prove they should qualify for low-income subsidies. Eletropaulo expects that only 500,000 of the previously 2.7 million customers will classify as low income. Without any associated costs, this income should contribute directly to EBITDA and earnings. On the regulatory front, Aneel, the industry regulator, recently agreed to the creation of a tracking account to monitor the fluctuations of non-controllable costs, primarily CCC and Itaipu energy costs, with the balance adjusted by an interest factor. The tracking account will then be used for the basis of annual tariff revisions. While the creation of the account does not fully avoid the inherent lag, the ability to monitor actual costs and recover time value of money removes the yearly step of negotiating the costs to be included from tariff revisions. Eletropaulo's debt-to-capital remains high at 70% on a consolidated basis (including the R$2.0 billion unfunded pension liability) as of September 2001, representing an increase from 2000. Debt levels have remained relatively flat in U.S. dollar (USD) terms since year-end 2000, but have increased in reais reflecting the devaluation of the currency. Slightly above half of Eletropaulo's debt is in the short-term, of which 73% is in U.S. dollar. The sizeable portion in U.S. dollar illustrates the potential cash implications on financial costs due to exchange rate volatility. The company partially mitigates its foreign currency exposure through the local futures market, with approximately 75% of its U.S. dollar exposure currently hedged. The company closes swaps where it is long USD interest rate (7.5%) and short the local interest rate, CDI (19%). Tenors range from 1-2 years; most of the company's debt is medium-term. The market is very liquid as the company has had no difficulty in opening or closing positions even in volatile moments. The company is expected to maintain an acceptable currency hedging strategy for 70%?80% of foreign currency debt going forward to reduce the financial impact of currency devaluation. Further devaluation of the real will nevertheless result in greater leverage as equity is expected to grow marginally over the near term. Eletropaulo is one of the largest electricity distributors in Latin America with a sales volume of 37,506 GWh in 2000 and 25,218 GWh through September 2001. The company received a 30-year exclusive concession to distribute electricity to a service territory that includes 24 municipalities in the greater Sao Paulo metropolitan area. It was privatized on April 15, 1998. Since privatization, Eletropaulo has been owned by LightGas, a subsidiary of Light. Light owns 77.81% of the company's voting shares and 30.97% of total capital. Light is controlled by AES Corporation (AES) and Electricite de France (EdF). CONTACT: Fitch, Chicago Jason T. Todd, 312/368-3217 Daniel R. Kastholm, CFA, 312/368-2070 or Jayme Bartling, +011 55 11 287-3177, Sao Paulo ENRON: Selling Brazilian Assets May Be Difficult Business --------------------------------------------------------- Analysts expect Enron Corp., which filed for U.S. Chapter 11 bankruptcy protection from creditors on Sunday, to sell its Brazilian assets, says Reuters. However, these analysts believe the Company will have a hard time getting a decent return on those assets given its dire financial straits and Brazil's economic slump. Brazilian state oil giant, Petrobras, opened the way Monday for other possible Enron asset suitors. Petrobas decided to rethink potential acquisitions of stakes in two gas distributors in Rio de Janeiro state. "Petrobras has not pulled out," a spokesman from the company said, adding, "We continue to evaluate, considering the change in scenario and different situation." The move to reconsider the purchases of CEG and CEG Rio suggests Petrobras may be holding out for a lower price, a strategy, analysts say, that may be repeated if Enron puts its Latin American assets on the market. "The natural road would be to sell those (Brazilian) assets...the question is, how easy it will be to sell them?" said Pedro Batista, an energy analyst at Banco Pactual. "In this scenario their bargaining power is weaker." To see company's financial statement: http://www.bankrupt.com/misc/Enron.pdf CONTACT: Mark Palmer of Enron Corp., +1-713-853-4738 TRANSBRASIL: To Keep Flying Despite Creditor Pressures ------------------------------------------------------ Transbrasil suffers another financial blow as its uniform supplier attempted to force it into bankruptcy court last week. The recent move follows General Electric Corp similar application to take back planes it had leased just a few months ago. According to a Valor Economico report, the Calcados Edron's company petitioned the Transbrasil's bankruptcy, claiming R$18,000 in an unpaid bill for 1,000 pairs of women's shoes for its employees. The payment is said to be one year overdue. Despite the embarrassments, Transbrasil said it won't stop providing service and denied rumors it's just a few days away from suspending all flights. "This isn't going to happen - we're going to keep on offering service," said a Transbrasil spokesman. VARIG: Considering Every Option To Slash Debt; May Sell Rio-Sul --------------------------------------------------------------- The Rubem Berta Participacoes foundation, the holding company that controls Viacao Aerea Rio-Grandense SA (Varig), is exploring all the options that will help see the airline reduce its debt, reports AFX-Europe. According to the foundation's chairman and Varig executive vice- president, Yutaka Imagawa, the foundation may put on the block some assets, units or stakes, or maybe, recapitalize some units. If necessary, the foundation would resort to selling the Rio-Sul unit just to save the group. Reports have it that Varig will formally appoint in the next few weeks an adviser to handle the sale of a stake in the company. CONTACT: VARIG Brazilian Airlines, Miami Jeff Kriendler, 305/866-2115 email: jkriendler@aol.com ========= C H I L E ========= EDELNOR: Mirant Chile Subsidiary Receives Offer for Equity ---------------------------------------------------------- In a company press release, Mirant Chile S.A., a subsidiary of Mirant, announced receiving an offer from Inversiones y Asesorias Titanium Limitada for all of Mirant Chile's shares in Edelnor. The Mirant Chile shares represent 82.34 percent of the outstanding shares of Edelnor. The terms of the offer include a purchase price of US$2.5 million for Mirant Chile's interest in Edelnor, payable by a promissory note. Mirant Chile currently intends to accept the offer between December 17th and 19th, unless it receives another offer determined by Mirant Chile to be more beneficial to it. The sale of Mirant Chile's Edelnor shares is consistent with Mirant's prior statements regarding Mirant Chile's intention to sell its interest in Edelnor. Mirant (NYSE: MIR) is one of the world's leading competitive energy providers. Headquartered in Atlanta, the company has integrated energy operations in North and South America, Europe and Asia. A leader in energy risk management and marketing of power, natural gas and other energy commodities, Mirant has one of the industry's largest energy commodity trading floors. We see the opportunity to change the world with our energy. Come see how at www.mirant.com . To see company's financial statement: http://www.bankrupt.com/misc/Edelnor.pdf CONTACT: EDELNOR Jason Cuevas, +1-678-579-6017 MIRANT Media: Chuck Griffin, +1-678-579-7814, Investors: John Robinson, +1-678-579-7782 =========== G U Y A N A =========== GA 2000: Recent Legal Suits Seek Over $15M In Damages ----------------------------------------------------- Attorney-at-law Saphier Husain filed a suit against the collapsed Guyana Airways 2000 (GA 2000), reports The Guyana Chronicle. Husain is seeking to recover $70,420, which he claimed that the airline received from him last May as fare from Toronto to Georgetown. He alleged that the carrier took the money although it was already aware that it could not meet its financial commitments. Another defendant named in the suit, which seeks damages in excess of $15 million, is Ronald Ali, who was named receiver of the failed company. Husain is seeking an injunction to restrain the defendants jointly and severally, by themselves, their servants or agents and everyone of them from selling, transferring, disposing of or in any way dealing with the movable and immovable assets and property of GA 2000, whatever and wherever situated, unless the sum of $15M is deposited with the Supreme Court Registrar, pending the hearing and determination of the case. The matter will be called for report in Bail Court on December 11. Among other things, Husain is also seeking: - The discharge of Ali as receiver, in accordance with Section 279 (a) of the Companies Act of Guyana; - an investigation and inquiries into GA 2000 and Demerara Bank Ltd; - an examination of the directors; - an order that the defendants produce a financial statement for the six months prior to May 4, 2001; - the bank statement of GA 2000 for accounts in Canada, United States and Guyana for the six months before May 4, 2001; - minutes of meetings on debentures for three months prior to May 4, 2001 and - emoluments, allowances etc of the directors for the six months prior to May 4, 2001. =========== M E X I C O =========== AEROMEXICO/MEXICANA: Chamber of Deputies To Vote On Support Plan ---------------------------------------------------------------- Communications and Transport commission member Emilio Goicoechea informed that the Chamber of Deputies is expected to vote this week on the proposal to authorize the federal government to provide up to a billion pesos in support to safeguard the nation's airlines, reports Mexico City daily Reforma. According to Goicoechea, the proposal is still stuck in the Finance and Communications commissions, although consensus has been reached. Some airline executives believe that the proposal could be rejected by legislators if it appears to favor only Mexicana and Aeromexico, the airlines belonging to government-owned holding company Cintra. According to Aviacsa CEO Eduardo Morales Mega, Mexico's smaller airlines will protest if the support won't be made available to the entire industry. If "it looks like this is a support directly to Cintra, we'll have to protest directly against that," said Morales. Meanwhile, Mexicana and Aeromexico spokespeople said the expected funds will not constitute an airline bailout, but rather support for higher insurance premiums. CONTACT: AEROMEXICO Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or mweitzman@aeromexico.com MEXICANA DE AVIACION Jenny Jenks, Marketing Director, International Division of Mexicana Airlines, +1-210-491-9764, or ennyjenks@mexicana.com BANCRECER: Banorte To Finalize Acquisition This Week ---------------------------------------------------- Grupo Financiero Banorte is expected to make a 1.237-billion-peso payment this week to bank bailout agency IPAB signaling finality in its acquisition of Bancrecer, says Mexican financial daily El Economista. The expected payment represents 75 percent of Banorte's 1.650- billion-peso offer for Bancrecer in September. With the completion of the deal, Banorte, the only 100-percent Mexican bank, will begin a battle with Santander-Serfin for third place in the banking sector, with only a small difference between the size of the two institutions' assets. Banorte, with Bancrecer, has 13.1 percent of Mexico's bank deposits, putting it in third place, with a base of 4.2 million accounts and 131.5 billion pesos in deposits. BANCRECER: Banorte To Allot 1.046B Pesos For Restructuring ---------------------------------------------------------- Grupo Financiero Banorte plans to spend 1.046 billion pesos over the next two years to restructure and integrate Bancrecer, reports Mexican financial daily El Economista. Accordingly, Banorte plans to reduce Bancrecer's workforce by a third of its current size, meaning cuts of 2,300 of its 6,613 employees. Some analysts have said Banorte's acquisition of Bancrecer is elevating the institution's risk, since the deal includes accepting some 45 billion pesos in government and IPAB debt, which added to Banorte's current portfolio of 92.8 billion pesos, more than half of Banorte's assets. GRUPO MEXICO: Asarco Pays $50M On Bonds; Talks Terms With Banks --------------------------------------------------------------- In a company press release, Asarco, Inc., a subsidiary of Grupo Mexico S.A. de C.V., announced the payment of $50 million plus interest on its public bond issue, which matured Monday. Under the bond program issued by Asarco, the next payment is due in 2003 followed by a payment in 2013. In the coming days, Asarco also will hold meetings with a group of creditors, headed by Chase Manhattan Bank, on its $450 million revolving credit agreement, which was granted in 1999 in order to pay previously acquired debt with said banks. The credit agreement matures in November 2002. Asarco has paid on time 100 percent of the credit interests associated with this agreement. In the meetings, Asarco will negotiate adjustment of terms and conditions of the revolving credit agreement since the company failed to comply with some financial ratios, as previously announced Nov. 6. These failures derived from the steep drop in the copper price, which reached 60 cents per pound in early November, the lowest in current terms since 1987, and to the fall of the market price of shares of the company's mining subsidiaries. These facts, along with the restructuring of operations and the liquidation of non-core assets and companies, resulted in the reduction of Asarco's inventories and receivables, thus negatively affecting the "borrowing base" provided for in such credit. Grupo Mexico expects that these negotiations will be satisfactory, helping to reestablish the positive commercial relationship between Asarco and its banks. They also should allow Asarco to reach a favorable operating position and meet required conditions and financial ratios. Asarco is a major producer of copper, gold, silver, nickel and various specialty metals. The 102-year old company is a subsidiary of Americas Mining Corporation (AMC), established last year as Grupo Mexico's mining division. AMC is among the world's largest integrated mining and refining companies and the third- largest producer of copper. It includes Grupo Mexico's interests in Asarco, Inc. (100 percent), Minera Mexico (98.8 percent) and Southern Peru Copper Corp. (54.2 percent). Minera Mexico, based in Mexico City, is the largest mining company in Mexico and among the world's lowest-cost producers of copper, zinc and silver. Southern Peru Copper Corp., based in Lima, also is among the world's lowest-cost copper producers. CONTACT: Asarco Clay Allen, 602/977-6515 GRUPO MEXICO: SPCC Will Issue Up to $750M in Bonds --------------------------------------------------- Southern Peru Copper Corp. (NYSE: PCU and LSE: PCUC1) announced Monday that the "Comision Nacional de Empresas y Valores (CONASEV)" authorized on Nov. 30 the expansion of the company's "First Program of Southern Peru Bonds" up to $750 million (U.S.), or its equivalent in the respective issuance currency. Proceeds will be used to finance the expansion and modernization of operations at the Toquepala and Cuajone copper mines and concentrators, at the Ilo copper smelter, and other projects, including feasibility studies, and the financing of SPCC's Corporate Development Plan in Peru. The bonds will be issued according to SPCC's plans. Southern Peru Copper Corp. is one of Peru's largest companies and one of the 10 largest copper producers worldwide. The ownership of SPCC shares either directly or indirectly through subsidiaries includes Grupo Mexico, S.A. de C.V. (54.2 percent), Cerro Trading Co. (14.2 percent), Phelps Dodge Corp. (14 percent) and other shareholders (17.6 percent). Grupo Mexico operates SPCC as a unit of its recently formed mining division, Americas Mining Corp. (AMC). AMC is among the world's largest integrated mining and refining companies and the third-largest producer of copper. It includes Grupo Mexico's interests in Asarco, Inc. (100 percent), Minera Mexico (98.8 percent) and Southern Peru Copper Corp. (54.2 percent). CONTACT: ASARCO Clay Allen, 602/977-6515 STARMEDIA NETWORK: Stull, Stull & Brody Files Class Action Suit --------------------------------------------------------------- The following is an announcement from the law firm of Stull, Stull, & Brody: Notice is hereby given that a class action lawsuit was filed December 3, 2001, in the United States District Court for the Southern District of New York, on behalf of purchasers of the securities of StarMedia Network Inc. ("StarMedia") (NASDAQ:STRM) between April 11, 2000 and November 19, 2001, inclusive. The complaint asserts claims against defendants StarMedia Network Inc., Fernando J. Espuelas and Steven J. Heller. 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 subsidiaries, 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 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. CONTACT: Stull, Stull & Brody Tzivia Brody, Esq., 1-800-337-4983 =========== P A N A M A =========== CHIQUITA BRANDS: Panamanian Units Unfazed Amid Bankruptcy Filing ---------------------------------------------------------------- U.S.-based Chiquita Brands International's recent bankruptcy filling will leave no effect on its Panamanian affiliates - Puerto Armuelles Fruit Company (PAFCO) and Bocas Fruit Company (BFC), Panamanian deputy trade minister Temistocles Rosas said in an EFE report. According to Rosas, Chiquita had a fairly independent system of operations in Panama. The most important thing was the firm's agreement with Panamanian workers to maintain production levels, the minister added. Chiquita, Rosas noted, had also sought to remedy the situation brought about by the lack of production at the Ceiba, Malagueto and Guayacan plantations, which were closed this year because of low yields, according to the Company. "What we have heard from the workers' representatives is that a step has been taken to increase production and we will see what steps Chiquita takes, because it's the Company that owns the rights to market the product in Europe," Rosas explained. Chiquita Brands International filed for Chapter 11 bankruptcy on Nov. 28 as part of an agreement with creditors to reduce its debt by $700 million. To see company's financial statement: http://www.bankrupt.com/misc/Chiquita.pdf CONTACT: James B. Riley, Senior Vice President and Chief Financial Officer, +1-513-784-6307, or William T. Sandstrom, Director of Investor Relations +1-513-784-6366, both of Chiquita Brands International 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 * * *