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/raid1/www/Hosts/bankrupt/TCRLA_Public/011207.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 Friday, December 7, 2001, Vol. 2, Issue 239 Headlines B R A Z I L EMBRATEL: Bad Debt Provision Announcement Drops Stock Price ENRON CORPORATION: Petrobras Wants More Time To Study Buy Terms ENRON CORPORATION: Brazil Won't Interfere In Affiliates' Woes ENRON CORPORATION: Shareholders, Employees Plan Class Action TRANSBRASIL: Passengers Behind Order Freezing Money For Fuel C H I L E ENERSIS SA: Huge Debt Casts Doubt On Ability To Spend More LAN CHILE: Looking To Invest In Cargo Concessionaires In Uruguay M E X I C O GRUPO SIDEK: To Proceed With Second Auction On January 22 MEXICO: Agency Records Sharp Increase In Bankruptcy Filing P E R U SIDERPERU: Recovery Plan Calls for US$100M Financing For 7 Years - - - - - - - - - - =========== B R A Z I L =========== EMBRATEL: Bad Debt Provision Announcement Drops Stock Price ----------------------------------------------------------- Shares of struggling Brazilian telephone operator Embratel slid by 15 percent in Wednesday's trading, ending a short-lived 11 percent rally over the last three days, reports Bloomberg. According to analysts, the recent dive was expected after the company announced it will set aside US$252 million in fourth quarter provisions to cover unpaid bills and write-offs. "The news was very negative, not only for the amount of this extraordinary provision but mainly because the company said it will not reduce the bad debt provisions in the first half 2002," said Carolina Gava, analyst at BES Securities. "We were expecting some reduction in this number in the first half 2002," Ms. Gava said. Compared to other industry cohorts, Embratel's provision is considerably high, said Ms. Gava. This, plus the fact that it will maintain the provisions until the first half next year, was the reason for the reaction in the stock price. Embratel has already lost 67 percent of share value this year, making it the worst performing stock on the Bovespa index in 2001. Of the total provision, US$216 million will be used to cover doubtful accounts, while the US$35 million will represent the write off for obsolete equipment. ENRON CORPORATION: Petrobras Wants More Time To Study Buy Terms --------------------------------------------------------------- Apprehensions that Enron Corporation's stakes in two Brazilian power companies are currently used as collateral for its bonds have prompted Petrobras to postpone its planned acquisition of said stakes. According to the state-controlled oil company, it is proceeding with caution in this deal, as it might not be able to take over the assets immediately. The transaction, which was agreed in April and has already gained approval from Brazil's electricity regulator Aneel, is worth about US$240 million, Valor Economico said. The purchase would involve Enron's 25.4 percent and 33.8 percent stakes in Cia. Distribuidora de Gas do Rio de Janeiro and its sister company CEG-Rio, respectively. Valor Economico says Petrobras is carefully examining the terms of the purchase to ensure said assets are free from any encumberances. ENRON CORPORATION: Brazil Won't Interfere In Affiliates' Woes ------------------------------------------------------------- The Brazilian government is adopting a hands-off policy in regard to Enron Corporation's woes, leaving the local market to decide its fate, says Reuters. Mining and Energy Minister Jose Jorge de Vasconcellos said the government is not inclined to intervene, despite the fact that Enron's investment in Brazil represents a huge portion of its assets in Latin America. Enron's subsidiary, Elektro, is one of Brazil's biggest power generating companies. Conventional wisdom assumes it will be liquidated or sold to raise cash for the parent company. "The greater possibility is that a market solution would be found (for Enron's Brazilian assets)," says Mr. Vasconcellos. The lion's share of Enron's Latin American assets are in Brazil, but it also has varied gas and other utility holdings in Argentina, Mexico, Colombia, Venezuela, and Nicaragua. ENRON CORPORATION: Shareholders, Employees Plan Class Action ------------------------------------------------------------ Executives presiding over the fall of Enron Corporation will have to fend off a torrent of plaintiffs as well as creditors, according to Class Action Law Monitor. Enron employees filed class actions on charges that Enron executives, who should have known of Enron's financial frailties, encouraged them to invest retirement savings in Enron stock. To make matters worse, Enron allegedly "froze" out employees from changing their retirement plan investments from Oct. 17 to Nov. 19, during which time Enron shares continued spiral downward. Shareholders had already lined up to sue Enron over tumbling share prices on the heels of Enron's nearly $600 million downward restatement of 1997 through 2000 earnings. "Enron will spend a lot of time in court with shareholder and employee class actions and suits over the Dynegy debacle, all piling on with their bankruptcy proceedings," said Jennifer Vaughan, Esq., Executive Editor of Class Action Law Monitor. TRANSBRASIL: Passengers Behind Order Freezing Money For Fuel ------------------------------------------------------------ A group of passengers from Recife, Pernambuco caused Transbrasil SA Linhas Aereas to default on its payment to Royal Dutch/Shell, causing it halt operations temporarily this week. According to financial daily Valor Economico, citing an unnamed fuel supplier, the group obtained the court order that froze the carrier's account at Banco Itau. The frozen account is the one in which the carrier holds funds to pay its fuel suppliers. The report did not indicate the group's reason for freezing the account. The carrier claims the disruption is only temporary, claiming that flights will resume soon. ========= C H I L E ========= ENERSIS SA: Huge Debt Casts Doubt On Ability To Spend More ---------------------------------------------------------- Analysts doubt that energy holding company Enersis SA still has the money to go on a spending spree next year as it had earlier announced, reports El Diario and Estrategia. They say the company's US$9.6 billion debt incurred when it embarked on a similar spending binge in the 1990s makes this proposition highly unlikely. Deputy CEO Juan Ignacio Dominguez earlier disclosed that Enersis, a division of Spanish firm Endesa SA, plans to invest a total of US$700 million next year across Latin America. According to Mr. Dominguez, at least US$450 million will be invested in energy distribution infrastructure next year, which will include the completion of a hydroelectric plant in southern Chile and a transmission line to carry power between Brazil and Argentina. Mr. Dominguez said the company is also prepared to borrow US$500 million to US$1 billion in the next 12 to 18 months to finance its plan to buy companies in the region. LAN CHILE: Looking To Invest In Cargo Concessionaires In Uruguay ---------------------------------------------------------------- After recently inking a new deal with its pilot union, Chilean carrier Lan Chile is now focusing on its business with renewed vigor. According to Info Latina, the carrier is considering acquiring stakes in cargo company Aerolineas Brasileiras and Vimalcor S.A, both concessionaires of the cargo terminal in Montevideo City, Uruguay. Lan Chile plans to acquire 73.3% of the shares of ABSA and 50% of Vimalcor. At the moment, 50% of the shares of Vimalcor is already owned by Chilean investors and the other 50% by Uruguayan investors. =========== M E X I C O =========== GRUPO SIDEK: To Proceed With Second Auction On January 22 ---------------------------------------------------------- The auction of Grupo Sidek's other assets originally set for yesterday has been moved to January 22 to afford buyers more time to obtain approval from Mexico's Federal Competition Commission. The auction will involve the remainder of the company's 29 properties, which was not included in the last auction. A total of 18 tourism assets changed hands in the latest transaction that grossed US$183.5 million. Whether the eight hotel assets of Grupo Sidek will be included in the next auction remains unclear at this point. AMX Resort currently has a pending objection filed in a U.S. court, which is expected to rule this week. The company's assets include golf courses, marinas, condominiums and land, among others. For more information, contact Arturo Perez Courtade, Legal Director, or Alejandro Giordano Trejo, Deputy Director, both of Grupo Sidek, S.A. de C.V. by Phone: 011-523-678-5911 MEXICO: Agency Records Sharp Increase In Bankruptcy Filing ---------------------------------------------------------- The number of Mexican companies filing for bankruptcy has increased significantly over the past six months, jumping from 12 to 42, reports Mexico City daily Reforma. A total of 1,360 creditors are said to be involved in these bankruptcy proceedings and are owed roughly US$1.5 billion. According to Bankruptcy agency Ifecon President Luis Manuel Mejan, these proceedings could use up a full year before any company is declared bankrupt. Under the new Mexican bankruptcy law, creditors and companies are given a year to reach an agreement on the company's debts. Only when an agreement is not reached that the company is declared bankrupt. Ifecon provides specialists to arbitrate between companies and creditors in the process. ======= P E R U ======= SIDERPERU: Recovery Plan Calls for US$100M Financing For 7 Years ---------------------------------------------------------------- The debt-refinancing program for insolvent Peruvian integrated steel maker Siderperu is reportedly going to cost US$100 million over seven years, reports Lima business daily Gestion. The proposal, which will be presented to shareholders on Monday, would be a mix of fixed and variable payments and largely dependent on the country's performance, according to company officials. These variable payments would be mainly to financial institutions, the report said. The officials also disclosed that taking in a strategic partner is not currently contemplated, although it is not being ruled out. Shareholders on Monday will also need to decide whether or not to maintain its revolving credit facilities of up to US$10 million to sustain the company's ongoing development. Since August, the company has been under a form of bankruptcy protection to completely refinance itself. SidePeru is blaming the global steel crisis and market "confusion" for the company's woes. 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 301/951-6400. * * * End of Transmission * * *