/raid1/www/Hosts/bankrupt/TCRLA_Public/011212.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 12, 2001, Vol. 2, Issue 242
Headlines
A R G E N T I N A
GRUPO GALICIA: Investors Refuse To Gamble, Stock Keeps Falling
IMPSA: Stringent Government Ruling Sparks Bond Payment Default
B R A Z I L
BELL CANADA: Files Final Prospectus For Rights Offering
CELG: Goias State Wants Privatization To Come In Feb 2002
EMBRAER: Legacy Jet Is Certified By CTA
EMBRAER: Developing New Revenue Sources From New Lines
EMBRATEL: Awaits Regulator's OK To Operate Fixed Line Services
SHARP: Brazilian Justice Shuns Restructuring Program
TRANSBRASIL: Eyes Return to the Skies by Selling Some Planes
VARIG: Renegotiates Debt With Fuel Distributor
C H I L E
DISPUTADA MINE: Seven Firms To Submit Tender Offers Dec. 21
C O L O M B I A
AVIANCA: Ruling On Merger With Aces To Come This Week
ENRON: Colombian Subsidiary Unaffected By Parent Financial Woes
M E X I C O
ATLANTICO: Bital's Ownership Suffers Setback
BITAL: No Stumbling Block Perceived In Achieving Financing Goals
BITAL: ING May Help In Completing Financing Program
EMPRESAS ICA: Quinana Wants Independent Oversight On Projects
SANLUIS: Bondholders Seek Priority On Debt Payments
TMM: Expects Better Performance Next Year Amid Growth Prospects
P A R A G U A Y
ANTELCO: Chamber of Deputies Questions Firm's Cheap Price Tag
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A R G E N T I N A
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GRUPO GALICIA: Investors Refuse To Gamble, Stock Keeps Falling
--------------------------------------------------------------
Investor uneasiness continues to drag down the share value of
Grupo Financiero Galicia SA, despite denial regarding a rumored
bond payment default. The bank's shares dropped further to 42.1
centavos in Monday's trading, leading losers during yet another
anemic trading day.
Concerns that the Argentine-owned bank will be unable to keep
depositors are blamed for the anxiety hanging over investors
throughout the day.
At present, the government is limiting bank withdrawals to
prevent money from leaving the country which, according to
analysts, is adding to investor wariness.
IMPSA: Stringent Government Ruling Sparks Bond Payment Default
--------------------------------------------------------------
Argentina's Industria Metalurgicas Pescarmona SA (Impsa) failed
to make an interest payment of about $7 million, reports
Bloomberg. The interest on the 9 1/2 percent bond that matures
next year was originally due November 30, and a grace period
allowing later payment ended Monday. The company sold $150
million of the securities in 1997.
Failure to make the payment comes after the government issued a
ruling, which was implemented Dec. 1, requiring any company or
person transferring money overseas to first get central bank
approval. Argentina prohibits most wire transfers abroad, limits
bank withdrawals and restricts people from carrying large amounts
of cash out of the country in a bid to avert a banking collapse
and devaluation of the peso after depositors pulled $1.3 billion
from banks in one day.
Impsa, which exports auto parts and power generators, sent a
statement to the Buenos Aires Stock Exchange, saying it is
awaiting authorization from the central bank.
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B R A Z I L
===========
BELL CANADA: Files Final Prospectus For Rights Offering
-------------------------------------------------------
Bell Canada International Inc. (``BCI'' or the ``Corporation'')
announced Friday that it has filed a final short form prospectus
with the securities commissions of each of the provinces of
Canada and with the Securities and Exchange Commission in the
United States in connection with a rights offering to holders of
its common shares for gross proceeds of approximately $440
million Canadian dollars.
BCE Inc., the indirect majority shareholder of the Corporation,
has agreed to exercise or cause to be exercised all of the rights
issued to it, as well as all remaining unexercised rights, if
any, in order that BCI receives the maximum gross proceeds of the
offering.
Registered holders of common shares of BCI at the close of
business on December 18, 2001 will be entitled to receive one
right for each common share held. Each holder of 17.95 rights
will be entitled to subscribe for a unit at a price of $100 per
unit at or before 4:00 p.m. on January 11, 2002. The units
consist 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.
BCI intends to use the proceeds of the rights offering received
in February 2002 to pay the accrued interest owed to holders of
BCI's 6.75% and 6.50% convertible unsecured subordinated
debentures due February 15, 2002, 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.
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: Media:
Peter Burn
Vice-President, Corporate Affairs
Phone: (514) 392-2357
Peter.burn@bci.ca
or
Investors:
Brian Quick
Vice-President, Finance
Phone: (514) 392-2369
brian.quick@bci.ca
CELG: Goias State Wants Privatization To Come In Feb 2002
---------------------------------------------------------
The government of Brazil's Goias state is now stepping up its
efforts in order to conclude the privatization auction of
integrated power company Celg by February 2002.
In a Business News Americas report, Celg president Jose Walter
Vazquez said, "The government of Goias is working with two
simultaneous alternatives: one is the possibility of new factors
in the area of regulations or an agreement on the losses incurred
by companies as a result of rationing, or any other factor that
encourages investors to invest in the market. In this case, we
would program the auction for February 2002."
"The other alternative we are working on is, in the absence of
any such breakthroughs in the sector, negotiating the transfer of
Celg to the federal government, the company's largest creditor,"
Vasquez added.
According to Vasquez, the sector needs more transparent and long-
term regulations to attract interested companies in the case of
Celg or any other Brazilian electricity company.
"These things are very important for investors, despite Celg's
enormous growth potential in its concession area, one of the
country's fastest-growing regions in terms of its economy and
population," he said.
Goias state had planned to sell 89 percent in Celg on December 18
but it failed to attract bidders for the Company because a
weakening currency and power rationing have increased losses in
the utility.
Celg, which sells electricity to 1.9 million people in the
country's midwest, is expected to post a loss of 160 million
reais this year.
EMBRAER: Legacy Jet Is Certified By CTA
---------------------------------------
In a company press release, Embraer announced its latest
achievements from the production line. The Legacy, Embraer's
executive jet and the first Brazilian-made aircraft in this
category, received Monday from Brazil's Aerospace Technical
Center (CTA) its official Type Certification. The certificate was
handed by Brig. Maj. Tiago da Silva Ribeiro, chief of the CTA to
Embraer's President and CEO Maur¡cio Botelho, in a ceremony held
in Embraer's manufacturing plant.
The event highlights the accomplishment, within schedule, of one
more stage of the development program of Embraer's new product,
and reflects the hard work and dedication of tens of technicians
and engineers from Embraer and the Industrial Promotion and
Coordination Institute (IFI), CTA's branch entitled for the
certification of aircraft on Brazilian territory.
The next and final stages of the type certification process are
the obtaining of type certification from the U.S.'s FAA and
Europe's JAA, due to happen in the coming months.
The Legacy program was officially launched during the Farnborough
Air Show, in England, on 23 July 2000, as. U.S.', Phoenix, AZ-
based Swift Aviation was simultaneously announced its launch
customer by placing an order totalling.25 firm and 25 options.
The Legacy Executive lies in the super mid-size category, but its
cabin volume of 1,410 cu. ft (40 cubic meters), typical of a
larger sized craft and some 60 percent larger than its direct
competitors, provides it the largest and most comfortable
passenger cabin in category, a competitive edge over aircraft
such as Bombardier Continental, Gulfstream 200 and Raytheon
Horizon. The airplane's price, US$ 19.8 million, makes it second
to none in cost-benefit ratio according to Embraer.
Legacy program's sales and order book logs 48 firm orders and 44
options to date, spread between Executive (for up to 14
passengers) and Shuttle (up to 19 passengers) versions.
The world market of business aviation for the next 10 years is
estimated in 6,000 aircraft, of which 2,500 are of the Super Mid-
Size segment, where the Legacy is a player. Embraer is planning
to produce 240 Legacies in this time span.
To see company's latest financial statements:
http://www.bankrupt.com/misc/Embraer.pdf
CONTACTS: Investor Relations Department
Phone: 55-12-3945-1216
e-mail: mercapit@embraer.com.br
Press office
Phone: +55 12 3945 1311
Fax: + 55 12 3945 2411
Press office mgr. Bob Sharp
bob.sharp@embraer.com.br
Press officer Wagner Gonzalez
wagner.gonzalez@embraer.com.br
EMBRAER: Developing New Revenue Sources From New Lines
------------------------------------------------------
Brazil's Empresa Brasileira de Aeronautica SA (Embraer), the
world's fourth-largest commercial aircraft maker, plans to
deliver 18 of its new Legacy-brand corporate jets next year,
reports Bloomberg.
Beginning 2003, Embraer expects to deliver 24 of the Legacy jets
a year, said Mauricio Botelho, Embraer's president and chief
executive officer. The average price for a jet in the Legacy
series is $20 million.
Embraer is seeking to develop new sources of revenue to reduce
its reliance on sales of passenger aircraft to commercial
airlines.
That task has become more important in the wake of Sept. 11
terrorist attacks in the U.S. as its clients delayed planned
deliveries of the company's 60-seat, ERJ-145 model regional jet,
its main source of revenue.
EMBRATEL: Awaits Regulator's OK To Operate Fixed Line Services
--------------------------------------------------------------
Brazilian telephone company Embratel, which is controlled by
WorldCom Inc., on Friday requested licenses from market regulator
Anatel to operate local fixed line services throughout the
country, according to a Reuters report.
The Company has given Anatel 90 days to respond to its request.
Embratel had originally requested the licenses in June, but it
sent a new request in light of having met the operating targets
early.
"Embratel had intended to offer local service as of the first of
January, 2002. However, the need for the license, interconnection
contracts, blocks of telephone numbers and to program local
operation networks prevented this from happening," Vice-President
of local services for Embratel, Purificacion Carpinteyro, said in
a statement.
Meanwhile, the company is also waiting for Anatel to verify that
it has met universal service targets that will give it the green
light to operate local services next year.
To see company's financial statements:
http://www.bankrupt.com/misc/Embratel.pdf
CONTACT: Embratel Participacoes S.A.
Investor Relations
Silvia M.R. Pereira, (55 21) 2519-9662
fax: (55 21) 2519-6388
invest@embratel.com.br
or
Press Relations
Wallace Borges Grecco, (55 21) 2519-7282
fax: (55 21) 2519-8010
cmsocial@embratel.net.br
SHARP: Brazilian Justice Shuns Restructuring Program
----------------------------------------------------
The Brazilian justice rejected Sharp's restructuring program,
reports South American Business Information.
According to the report, the restructuring program included a
strategy that would have allowed the company to search for
partners to keep its operations.
Sharp has been facing a bankruptcy proceeding in Brazil since
March last year when it posted debts of R$645 million owed to
banks and suppliers.
The Company failed to settle the installment of its debt which
was due in March 2001.
TRANSBRASIL: Eyes Return to the Skies by Selling Some Planes
------------------------------------------------------------
Momentarily-grounded airline Transbrasil SA Linhas Aereas is
hoping to sell up to three planes in order to meet its
obligations and resume flights soon, financial daily Valor
Economico says.
Citing union leader Paulo Pereira da Silva, the report said the
plan will involve selling the planes and then getting them back
on lease basis to save costs.
Silva met with Transbrasil chairman Celso Cipriani last week,
according to the report.
Transbrasil was forced to halt flights early last week after
running out of cash to pay for fuel. An attempt to get US$68.8
million in aid from the government was rebuffed, leaving it no
other choice but to sell assets to raise cash.
VARIG: Renegotiates Debt With Fuel Distributor
----------------------------------------------
Varig has already renegotiated its R$160 million debt with BR
Distribuidora, a subsidiary of Petrobras, reveals South American
Business Information.
Varig, which will now be paying R$3 million per month to the fuel
distributor, took the step in order to ensure its ongoing supply
of fuel.
As of June, Varig's debt had swelled to $1.3 billion. Like most
airlines, Varig continues to struggle with current exchange rate
difficulties and the crisis in the air travel sector.
CONTACT: VARIG Brazilian Airlines, Miami
Jeff Kriendler, 305/866-2115
email: jkriendler@aol.com
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C H I L E
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DISPUTADA MINE: Seven Firms To Submit Tender Offers Dec. 21
-----------------------------------------------------------
There are now a total of seven companies vying for the auction of
Exxon Mobil Corp.'s Disputada de las Condes copper mine, says
South American Business Information.
These companies are: the English company Rio Tinto (owner of a 30
percent stake of Minera Escondida); Codelco; Luksic group; South
African company Angloamerican; the consortium formed by Phelps
Dodge-Sumitomo-Glencore; the Brazilian company Cia. Vale do Rio
Doce and the multinational company BHP-Billiton.
The companies will submit their tender offers on December 21.
According to market analysts, the offers should vary between
US$800 million and US$1 billion.
Disputada de Las Condes has a 253mtpy copper production. In
recent years, the company did not have good financial results due
to the low ore minerals produced and depressed copper prices.
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C O L O M B I A
===============
AVIANCA: Ruling On Merger With Aces To Come This Week
-----------------------------------------------------
An unnamed official from Colombia's Civil Aviation agency said
that the ruling on the proposed merger of the country's two
largest airlines is likely to come before the end of the week,
says Reuters.
The merger would create a $700 million holding company with 64
planes and near-total control of most domestic passenger and
cargo routes. Colombia's debt-ridden flagship airline Avianca
sees it as the key to its survival.
Valores Bavaria, the conglomerate that controls Avianca, has
pumped $200 million in the last two yeas to keep the airline
flying. Avianca's losses increased to $112 million during the
first nine months of the year, up from about $87 million in the
same period of 2000. It is forecasting losses of about $171
million for 2001.
The government's anti-monopoly office in June shot down the
proposed merger, saying it would create a monopoly but Avianca
and Aces appealed the decision. The government-run agency has
asked the companies how they would divide airport facilities and
flight routes if they were allowed to merge.
ENRON: Colombian Subsidiary Unaffected By Parent Financial Woes
---------------------------------------------------------------
Speculation continues among analysts that Colombian broadband
services provider Promigas Telecomunicaciones, just like the rest
of Enron's subsidiaries, may find it difficult to raise financing
without the parent company's backing and prestige, reports
Business News Americas.
However, Roberto Alcocer, the Colombian subsidiary's CEO,
countered the speculations, saying, "for our purposes (Enron's
collapse) does not mean any inconvenience."
Promigas Telecomunicaciones recently sold network capacity to 70
percent of Colombia's telcos and expects to sign up the rest.
In October, the company planned to launch operations in second
tier cities during 1H02, which remains in a study phase, Alcocer
said.
Promigas Telecomunicaciones launched service in the cities of
Cartagena and Barranquilla in October and will target second tier
cities because major cities are already "well-wired", he added.
Alcocer expects Promigas Telecomunicaciones to generate revenues
of US$3 million by the end of 2002, and reach break even by the
end of 2003.
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M E X I C O
===========
ATLANTICO: Bital's Ownership Suffers Setback
--------------------------------------------
Banco del Altantico will not go into the hands of Grupo
Financiero Bital even if it has already signed an agreement with
the bank bailout agency IPAB for the final financing and sale of
Atlantico.
According to a report by Mexico City daily Reforma, the ownership
of Atlantico won't be passed unto Bital unless the lawsuit
brought against the bank by Celia Reyes is completed within 60
days.
In this case, Bital will take possession of all of Atlantico's
assets and debts, but will leave Atlantico legally intact in
order to face the lawsuit.
A few months ago, Reyes lodged legal proceedings against
Atlantico for payment of an exorbitant sum for the supposed
earnings of a minor investment.
The legal battle, which analysts have called absurd, turned out
to be difficult for Atlantico.
Finance ministry's Jose Antonio Meade had earlier warned that the
case is critical to Bital because a losing verdict will mean a
loss of more than 600 billion pesos.
However, IPAB head Julio Cesar Mendez said that with the
contingency, the agency is not avoiding its responsibility to the
lawsuit, and is allowing Bital to remain free from its effects.
BITAL: No Stumbling Block Perceived In Achieving Financing Goals
----------------------------------------------------------------
Jonathan Davis, president of financial regulator the National
Banking and Securities Commission (CNBV), doesn't see any
possible glitches that may block Grupo Financiero Bital from
completing its financing goal. Bital expects to raise close to
$300 million, says Mexico City daily Reforma.
"They are moving ahead. I really don't believe that they will
have any problem raising this quantity of capital," Davis said.
Bital and bank bailout agency IPAB signed an agreement last week
that could ultimately complete the process, began in 1997, to
acquire Banco de Atlantico, which would allow Bital to get on
with its financing program.
According to Bital Chairman Luis Berrondo: "The signed agreement
is a clear signal of certainty for the arrival of new capital.
Now we will be able to consolidate the negotiations that we began
months ago with potential investors."
BITAL: ING May Help In Completing Financing Program
---------------------------------------------------
Grupo Financiero Bital is likely to reach an accord with ING
Baring to provide part of the resources that Bital needs to
complete its financing program, reports Mexico City daily El
Universal.
Unnamed sources revealed that current investors BSCH and Banco
Portugues could sell their stakes to ING as part of the
operation.
Bital has agreed with bank bailout agency IPAB to reach a
capitalization level of 8 percent by the end of May, and 10
percent three months later.
Several months ago, Bital hired Credit Suisse First Boston (CSFB)
to look for possible investors.
EMPRESAS ICA: Quinana Wants Independent Oversight On Projects
-------------------------------------------------------------
Bernado Quintana, president of construction company Empresas ICA
Sociedad Controladora, S.A. de C.V. (ICA), wants an independent
body to manage infrastructure projects, reports Mexico City daily
Reforma.
According to the Company's head, the removal of the management of
public works projects to an independent body would prevent them
from being used as political currency during election campaigns.
"Infrastructure projects are long term. As a result, the
financial maturity of their investments is as well. . . . It's
difficult for more political officials to put their interests in
projects that will be completed after electoral terms," said
Quintana.
ICA recently had its debt ratings downgraded by Moody's. The
ratings agency, however, removed the Company's debt ratings from
watchlist status, but maintained a negative outlook.
The downgrades and negative outlook reflected ICA's continuing
difficulties in generating positive earnings and revenue growth
and the nascent liquidity pressures as the Company relies on
asset sales and cash reserves to pay down maturing short term
debt.
Moody's said it will continue to monitor closely ICA's prospects
for business in Mexico and other Latin American countries, its
strategy for restoring growth and for continuing to delever the
balance sheet, and for restructuring its bank facilities and
building liquidity.
SANLUIS: Bondholders Seek Priority On Debt Payments
---------------------------------------------------
Bondholders of Sanluis Corporacion SA may push for open
negotiations on the payment of a $200-million bond that the
Mexican auto-parts maker defaulted on in September, says
Bloomberg.
According to the bondholders, Alberto Franco, chief of Latin
American trading at HWF Capital LP, will lead an informal
steering committee that has gathered support from investors
holding $150 million of the bonds.
"We are doing due diligence to ascertain what is available to us
if we were to accelerate the process," said Franco.
The Company has said it will give priority to payment on more
than $260 million in bank debt held by the operating companies.
According to Hector Amador, Sanluis director of investors
relations, the Company is holding regular talks with creditors of
the operating divisions, a group headed up by J.P. Morgan Chase &
Co., in an effort to allow the company to continue earning money
and avoid a shutdown of operations until demand for auto parts
picks up.
Franco revealed bondholders have hired legal counsel both in New
York and Mexico. If investors force Sanluis to seek court-ordered
creditor protection, the case will fall under a Mexican
bankruptcy law modified last year that gives the company one year
to settle. The previous law had no time limit.
To see company's financial statements:
http://www.bankrupt.com/misc/Sanluis.pdf
TMM: Expects Better Performance Next Year Amid Growth Prospects
---------------------------------------------------------------
Mexican multi-modal transportation and logistics firm Grupo
Transportacion Maritima Mexicana (BMV:TMM) is reportedly poised
to reverse its first half debacle this year, says El Economista.
The group is eyeing to cash in on a projected 50 percent growth
in load volume during the first half next year by investing US$9
million on 200 road railer trailers. The firm expects volume to
shoot up to 600 a week compared to 400 this year.
Road railer technology allows 53-foot train cars to double as
highway trailers, affording train access to companies that are
not located close to railways.
During the first half of this year, the company absorbed a 55
percent decline in net profits owing to a whooping 124 percent
rise in integrated financial costs.
Meanwhile, the company says it is planning to convert US$25
million into securities to afford the company "greater financial
flexibility" to help meet its obligations.
===============
P A R A G U A Y
===============
ANTELCO: Chamber of Deputies Questions Firm's Cheap Price Tag
-------------------------------------------------------------
Selling national telephone company Antelco at a substantial
discount apparently does not sit well with the Paraguayan Chamber
of Deputies.
According to South American Business Information, the chamber is
calling for a probe on the privatization plan that pegs the price
of Antelco, now known as Copaco, at just US$220 million.
Members of the chamber believe the company could easily be worth
between US$800 million and US$1 billion. They are asking the
federal government to investigate the disparity.
Market observers, however, say bids for Copaco will only range
from US$300 million to US$350 million.
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.
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