/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/011218.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 Tuesday, December 18, 2001, Vol. 2, Issue 246 Headlines A R G E N T I N A CAMUZZI GAS: To Redeem US$130M In Bonds With Shareholder Loan B R A Z I L CELESC: Decision On Celesc Vote Expected December 19 EMBRAER: Sells $1.1B In Legacy Jets To Indigo EMBRAER: Investors Applaud Indigo Deal, Shares Climb FAZENDAS REUNIDAS: CVM Fines 3 Directors For Irregular Contracts GLOBO CABO: Popularity of VHF Service Hinders Growth TRANSBRASIL: Unable To Renew Varig Deal, Passengers Stumped TRANSBRASIL: BR Distribuidora Says No Fuel Due To R$12.7M Debt VARIG: Union Chairman Predicts Job Cuts To Take Place Soon C H I L E HABITACOOP: Staggers On The Edge Of Insolvency C O L O M B I A ENRON: Colombian Interest To Remain Unaffected PAZ DEL RIO: On The Road To Recovery G U A T E M A L A COUNTRY STYLE: Guatemalan, Brazilian Outlets To Remain Open M E X I C O GRUPO DINA: Multivalores Hired To Handle Share Repurchase MEXICAN AIRLINES: Congress Gives Airline Bill Final Approval P E R U SIDERPERU: Refinancing Plan Gets Approval From Shareholders - - - - - - - - - - ================= A R G E N T I N A ================= CAMUZZI GAS: To Redeem US$130M In Bonds With Shareholder Loan ------------------------------------------------------------- Argentine gas distributors Camuzzi Gas Pampeana and Camuzzi Gas del Sur plan to pay back a US$130-million bond that comes due this month through a shareholder loan, according to a report by Business News Americas. Camuzzi Gazometri SpA of Italy has a 56.91 percent stake in the local companies, while Sempra Energy of the U.S. holds the balance of the shares. The two gas distribution firms serve clients in Buenos Aires and La Pampa provinces and southern Argentina. Their U.S. and Italian owners provided the loan because private banks were demanding rates that weren't "reasonable," said Maurizio Cei, Camuzzi Gazometri's chief financial officer. Local companies have had difficulty re-financing debt due to an economic crisis that has kept lending rates high. The country is in the midst of a four-year economic recession. Argentina's government is close to a default on its US$132 billion in debt obligations and is trying desperately to reduce a budget deficit and gain access to IMF funds. =========== B R A Z I L =========== CELESC: Decision On Celesc Vote Expected December 19 ---------------------------------------------------- Brazil's Santa Catarina legislative assembly (AL) will decide December 19 when it will vote on the restructuring of distributor Celesc, reports Business News Americas. According to an AL presidency source, the vote could well be in an extraordinary session in January, as the original allocated time for it expired December 14. The AL's finance committee must approve the Celesc project before it is voted in full session, the source added. The government of Santa Carina's restructuring project contemplates splitting the company's assets and creating generation and telecommunications units that would be sold off, while a distribution unit would remain in Santa Catarina government hands. Santa Catarina government controls 50.18 percent of Celesc, and the other large shareholder is Banco do Brasil (BB) pension fund Previ with almost 12 percent. EMBRAER: Sells $1.1B In Legacy Jets To Indigo --------------------------------------------- Last Wednesday, day one of the National Business Aviation Association (NBAA) Annual Meeting, a milestone deal was reached between Embraer and Chicago-based Indigo, a corporate jet service company. In an official press release, Embraer announced details constituting a firm order for 25 Legacy Corporate Shuttles, with options for 50 more. The sale amounts to US$ 1.1 billion. The deal is contingent on Indigo successfully obtaining financing for the order. The first delivery is expected in August 2002. The largest sale at NBAA 2001 so far, the Indigo deal marks yet another success in the roll out of Embraer's first corporate jet, the super mid-size Legacy. "It is very satisfying to be chosen to play an integral role in Indigo's expansion," said Sam Hill, Executive Vice President of Embraer, Business Aviation market, "and to have the sale finalized here at NBAA is great news. We were already looking forward to bringing the Legacy to the U.S.; this is a great reception." A division of NewWorldAir Holdings, Inc., Indigo provides an executive-level travel experience to frequent business travelers. Backed by Lunn Partners LLC and in part by American Express, Indigo currently operates between Chicago's Midway airport and New Jersey's Teterboro airport. That service will be expanded as the new Legacy Corporate Shuttles in 18-seat configuration are added to the fleet. "We've been very pleased to work with Embraer", said Peter Pappas, Chairman and CEO of Indigo, "and we feel great about choosing the Legacy. It was a decision made after careful study and I'm confident that our very demanding customers will be happy with our choice of aircraft." With the announcement of the Indigo deal, the Legacy order book now stands at 73 firm orders and 94 options. CONTACTS: 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: Investors Applaud Indigo Deal, Shares Climb ---------------------------------------------------- Shares of Empresa Brasileira de Aeronautica SA climbed 3.2 percent to 12.50 reais following announcement that it won orders worth $1.1 billion for its new corporate jet, says Bloomberg. "This order is the confirmation that Embraer was right when it said demand for compact jets would rise," said Fabio Galdino de Carvalho, equity manager at Sudameris Corretora in Sao Paulo. "The sale is significant and changes the perspective for Embraer." Prior to the sale to Indigo, Embraer had 44 firm orders for the Legacy and 48 options, with most sales coming from the U.S. market. "This is obviously very good news for the company," said Carl Weaver, analyst for Bear Stearns in Sao Paulo, who expects an upward revision in Embraer's earnings outlook after the order. Embraer stock was severely punished by a sharp drop in air travel following the hijacked airplane attacks on the United States. But it has partially recovered in the past two months as demand for regional commuter aircraft seemed to improve. FAZENDAS REUNIDAS: CVM Fines 3 Directors For Irregular Contracts ---------------------------------------------------------------- Fazendas Reunidas Boi Gordo was dealt with another blow last week when the Brazilian stock market commission (CVM) fined three of its directors last week. According to an O Globo report, the three directors, namely Paulo Roberto Andrade, Antonio Carlos de Andrade and Klecius Antonio dos Santos were fined for issuing irregular collective investment contracts between September 1999 and March 2001. Paulo Roberto de Andrade was fined R$28.186 million, equivalent to ten percent of the value of the issues (R$211.863 million), while Antonio Carlos de Andrade and Klecius Antonio dos Santos were each fined R$1.409 million. The Company will appeal against the fines. Fazendas Reunidas has been in a bankruptcy process since mid October, and owes investors R$1.3 billion. GLOBO CABO: Popularity of VHF Service Hinders Growth ---------------------------------------------------- Ten years ago, Brazil's most popular television network Organizacoes lobo SA started building a massive cable television network, according to FT Information. Subsequently, the company was able to raise about $200 million by listing on the New York stock exchange and attracted blue-chip investors such as Microsoft Corp. However, its cable television unit, Globo Cabo, has only 1.5 million subscribers even though it has the capacity to reach 6.4 million homes. According to analysts, the biggest obstacle to Globo Cabo's growth is the popularity of its own terrestrial television service. TRANSBRASIL: Unable To Renew Varig Deal, Passengers Stumped ----------------------------------------------------------- About 400,000 passengers will not be able to fly after the Brazilian airline Transbrasil failed to renew a deal with Varig and its regional companies - Rio Sul and Nordeste - for the endorsement of tickets, reports O Globo. Transbrasil said it will negotiate the deal and will inform the passengers of how to proceed. Transbrasil needs a fuel credit from the government worth R$15 million in order to resume operations. The company submitted a management project to the Ministry of Development, Industry and Foreign Affairs, under which, would operate with five planes. TRANSBRASIL: BR Distribuidora Says No Fuel Due To R$12.7M Debt -------------------------------------------------------------- Fuel Distributor BR Distribuidora will not supply fuel to the Brazilian airline Transbrasil claiming that the carrier has a debt totaling R$12.7 million, South American Business Information reports. Brazil's No. 4 airline Transbrasil has been stepping up its negotiation efforts with suppliers, creditors and the government in hopes of winning fuel credits that would allow it to restart operations. Last week, the Company said it would present to the government its new restructuring plan, calling for new staff cuts. However, employees have threatened to go on strike in case the airline insists on laying off 10 percent of its 2,200 employees. Transbrasil has already dismissed 3,000 people. The company has a pending labor debt of R$25 million. The restructuring plan also calls for an additional drop in flights. Already, Transbrasil is down to half of its flights compared to last year. VARIG: Union Chairman Predicts Job Cuts To Take Place Soon ---------------------------------------------------------- Uebio Jose da Silva, chairman of the Sao Paulo air transport union, suggested that Varig could start cutting jobs at any moment, reports O Globo. The Brazilian flagship airline had previously announced 1,700 job cuts straight after the September 11 terrorist attacks in the US. 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 ========= C H I L E ========= HABITACOOP: Staggers On The Edge Of Insolvency ---------------------------------------------- The once-solid S&L bank Habitacoop is now on the edge of insolvency after hemorrhaging debts amounting to 33 billion pesos (US$60.7 million), reports Business News Americas. Accordingly, bad investments, among them speculation in urban- development real estate, have led the Company to its present predicament. The bank jeopardized 20.2-billion-peso savings belonging to the cooperative's 13,000 members during 1995-98 when it invested in real estate building projects for higher income segments of the population, according to an unnamed source. "It started these buildings with a very low percentage of clients prepared to buy," the source said. The losses from these projects practically ate up all of its reserves, and what the cooperative had achieved during its 20- years of existence fell apart in two or three years. By mid-1998 the cooperative had debts of US$120 million, the source revealed. However, between 1999-2001, Habitacoop managed to reduce debts to US$60.7 million under the leadership of a new CEO. But still, the S&L's financial situation remains extremely precarious. The situation was exacerbated by a potential conflict of interest as the head of the government's cooperative regulatory agency, Carlos Rubio, has a close relative on Habitacoop's board of directors in the form of his father. According to Economy Minister Jorge Rodriguez Gossi, the government will hand out subsidies to help Habitacoop clients. =============== C O L O M B I A =============== ENRON: Colombian Interest To Remain Unaffected ---------------------------------------------- Antonio Martinez, chairman of Promigas, disclosed that the bankruptcy filing of US-based energy firm Enron does not affect the financial situation of Colombian gas transport company, reports Business News Americas. Enron owns 42.9 percent of Promigas. The following points, according to Martinez, insulate Promigas from Enron's downfall: - The Colombian legislation states that Promigas is not subordinated to Enron despite the latter's control of the company. - Promigas does not receive income or loans from Enron. - Promigas generates income by transporting natural gas, which is in turn guaranteed by long-term contracts with industrial clients. It receives further income from investments in gas and fuels transport and distribution, and telecommunications. These sectors have high growth potential. - Promigas is established as a Colombian company, has over 900 shareholders and 25 years experience. - Promigas resources are efficiently managed, as shown in the company's financial results. - Credit rating agency Duff & Phelps rated a Promigas bond issue AAA. - Barranquilla-based Promigas controls over 63% of all distribution networks in Colombia. To see Enron's financial statement: http://www.bankrupt.com/misc/Enron.pdf CONTACT: Mark Palmer of Enron Corp., +1-713-853-4738 PAZ DEL RIO: On The Road To Recovery ------------------------------------ Colombian steel company Paz del Rio is in the process of economic recovery and subject to the procedures of Law 550, a type of bankruptcy protection. In an interview with Business News Americas, Carlos Pinzon, the Boyaca-based company's acting president, related that the process of Law 550 is in two stages of four months each. The first has already been completed with a hearing at which some creditors raised objections that have prevented the Company from initiating the second stage, Pinzon said. The three largest creditors who presented objections were Minercol [state mining authority], the social security agency and retirement and pension fund Colpatria, which means the Company's regulator will have to decide who is right, the Company or the creditors. The decision regarding the matter is expected by January 29, and the Company is hoping to be able to start the second four-month stage at that point. According to the acting president, Paz del Rio is operating normally at the moment -- sales have increased. In September, sales were very good. In October, they were up a bit more, and in November, they again increased slightly. "So I believe this year, despite the difficult situation of the Colombian economy, the Company is going to register better results than expected," Pinzon said. "When a company is losing money you cannot speak of good results, but there are indications of a recovery, which suggest net losses this year will be less than last year," Pinzon added. Paz del Rio entered into bankruptcy protection in 1995 and, thanks to economic agreements with its creditors, was able to apply for Law 550, which gives it a new chance to stay in the market. Through the receiver it is now trying to reach agreement with its creditors, to whom it owes more than US$47 million, and with its workers and retired employees, whose pension debt is more than US$85 million. ================= G U A T E M A L A ================= COUNTRY STYLE: Guatemalan, Brazilian Outlets To Remain Open ----------------------------------------------------------- Country Style Food Services Inc., the third largest coffee and doughnut franchiser in the Canadian quick service restaurant industry, received a "stay Order" on December 13, 2001, from the Ontario Superior Court of Justice under the Companies' Creditors Arrangements Act, reports Canada NewsWire Accordingly, the order gives the struggling doughnut and coffee chain a chance to restructure. Deloitte & Touche Inc. will serve as the Court-appointed monitor. Country Style's financial performance has deteriorated as a result of an increasing number of poor locations and under- performing franchises. Under the Order, the company will close many of its under- performing outlets immediately and refocus its energies on growing and supporting the remaining healthy core of profitable stores. "The Court Order helps make it possible for us to restructure our current business and secure the foundation for growth and prosperity," stated Pat Gibbons, Country Style's new President since September 10, 2001. "We are committed to serving customers in markets across Canada. We have critically examined the performance of all locations. Every store was assessed on its ability to generate consumer traffic, present an inviting and consistent Country Style atmosphere and meet sales objectives. "The company will continue to operate over 150 strong locations that will ensure our customers receive high quality products and excellent service. These stores will continue to contribute positively to our business, providing the base from which we intend to revitalize Country Style," he said. Country Style operates from 350 locations in Canada, including kiosks at Sunoco and Shell gas stations. These locations are not affected by the restructuring. Likewise, the company's 100 foreign outlets in locations including Malta, Guatemala and Brazil, as well as 60 Buns Master bakery locations, will remain open. CONTACT: Lynn Cook, Deloitte & Touche, (416) 874-3654 =========== M E X I C O =========== GRUPO DINA: Multivalores Hired To Handle Share Repurchase --------------------------------------------------------- Grupo Empresarial G SA, which owns about 55 percent of Mexican truck maker Consorcio G Grupo Dina SA, hired securities firm Multivalores Casa de Bolsa SA to help it buy the shares it doesn't own and remove them from the Mexican stock exchange, reports Bloomberg. Empresarial expects to carry out the share repurchase, which was first announced in August, in the first quarter of next year. The move will give minority shareholders the chance to exit a company that is struggling to pay its debts and has closed down its truck-making operations because of a lack of cash. "We are elaborating the filing and are waiting for the opinion of our lawyers," said Mauricio Mendoza, Dina's legal director. "This offer is directed to all shareholders, regardless of where they are located." The purchase of the shares is the latest in a series of steps that have led to the gradual dismantling of what was once the only Mexican-owned truck and bus maker. Removing the shares from the stock exchange will allow the company to stop paying listing fees. MEXICAN AIRLINES: Congress Gives Airline Bill Final Approval ------------------------------------------------------------ The Mexican Congress gave final approval on Friday night to a US$107 million assistance package for the country's airlines, reports Reuters. Accordingly, the package allows the government to loan money to Mexico's airlines, helping them cope with a weak market and higher insurance costs against the risk of war and terrorism in the wake of the attacks. Nine airlines, including market leaders Aeromexico and Mexicana de Aviacion, are expected to receive the assistance package. The 180-day loans, to be deducted from this year's public spending, will be administered by a national development bank. ======= P E R U ======= SIDERPERU: Refinancing Plan Gets Approval From Shareholders ----------------------------------------------------------- Peruvian integrated steelmaker Siderperu informed the country's stock exchange that its shareholders have agreed to a proposed refinancing of the Company's debt, says Business News Americas. The Company did not provide details of the terms. However, a report released earlier this month suggested that the preliminary plan called for Siderperu to pay off the US$100 million over seven years and renew revolving credit facilities of up to US$10 million to maintain the Company's healthy development. Siderperu went into a form of bankruptcy protection to completely refinance itself in August, blaming the global steel crisis and market "confusion" about the Company's viability. 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 * * *