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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, January 4, 2002, Vol. 3, Issue 3
Headlines
A R G E N T I N A
AZURIX BA: Enron Effects Delayed, Facilitates Smooth Transition
FOREX MARKETS: Market Suspension Stands Indefinitely, CB Says
B R A Z I L
ACESITA: Equipment Tests Begin On Time
EMBRATEL: Following Horrible Year, One of Top Picks for 2002
iLOGISTIX: January 11 Buyout Will Enhance LatAm Operations
iLOGISTIX: Zomax Signs Letter of Intent to Purchase Assets
ILOGISTIX: Company Profile
LIGHT: Negotiates With Suppliers Over Diversification Project
TRANSBRASIL: Running Out Of Time To Retain License
C H I L E
EDELNOR: Mirant Chile Completes US$4.5M Sale
ENERSIS: Fails To Take Chilectra Off The Bourse
P A N A M A
COVANTA ENERGY: Allied Buys Panamanian Fueling Operations
COVANTA ENERGY: S&P Places Ratings on Watch Neg
- - - - - - - - - -
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A R G E N T I N A
=================
AZURIX BA: Enron Effects Delayed, Facilitates Smooth Transition
---------------------------------------------------------------
Azurix BA, which is controlled by recently bankrupt Enron, was
due to step down this month as the waterworks concessionaire for
Argentina's Buenos Aires Province.
However, in a report by Business News Americas, a provincial
official revealed that the Enron-controlled Azurix will continue
to provide services for the next three months. According to the
official from the Buenos Aires Works & Public Services Ministry,
Azurix and the province will use the remaining months to work on
a smooth transition and iron out financial differences.
Right now, authorities are trying to decide which of two possible
directions would be most beneficial once Azurix leaves: launching
an auction to select a new private operator or turning waterworks
services over to the province.
Azurix, which has been plagued with quality and service related
problems, began its 30-year concession to serve 2.5 million
residents of 49 districts in 1999, but called short its tenure
due to the province's alleged "serious breaches" of concession
terms.
AZURIX CONTACT: Diane Bazelides
(713) 345-5209
FOREX MARKETS: Market Suspension Stands Indefinitely, CB Says
-------------------------------------------------------------
The Central Bank announced that the Argentine currency markets,
which have been closed since Dec 21 to prevent capital flight and
a liquidity crisis, are to remain suspended, reports AFX. The
central bank didn't give any details on the length of the
prolonged suspension. The foreign exchange holiday was enforced
from Dec 21, due to the incidents that led Fernando de la Rua to
resign as president.
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B R A Z I L
===========
ACESITA: Equipment Tests Begin On Time
--------------------------------------
Marcos Marcal, spokesperson of Acesita, revealed that tests have
started on schedule with new equipment and process changes at the
Brazilian specialty steelmaker's Timoteo mill in Minas Gerais
state, reports Business News Americas.
The focus is on increasing stainless steel's share of its
800,000tpy production capacity.
"The final piece of equipment was installed on December 31,
exactly on schedule, and testing it started the following day,
January 1, as planned," Marcal said.
"But I can't tell you how long the ramping up period will be as
that's not precise. It all depends on how the new equipment
performs and what adjustments have to be made. But we expect the
period to be weeks, rather than months," he said.
The new equipment and changes will mean cold-rolled stainless
steel production will rise to 300,000tpy from 220,000tpy, while
overall stainless steel target capacity will increase to
500,000tpy from 300,000tpy.
Acesita was acquired by Usinor in 1998. Since then, the Company
has undergone a process of technological, operational and
financial restructuring. The process appears to have produced
better results to the Company.
CONTACT: HEAD OFFICE
AvŠ. Joao Pinheiro, 580 - Centro
Belo Horizonte, MG, Brasil
CEP - 30130-180
Phone: 55 - 31 - 3235-4200
Fax: 55 - 31 - 3235-4294
EMBRATEL: Following Horrible Year, One of Top Picks for 2002
------------------------------------------------------------
Brazil's largest long-distance phone company Embratel
Participacoes SA's stock is among Guilherme Sand's top picks for
2002, says Bloomberg.
Guilherme Sand helps manage 160 million reais ($69 million) in
equities at Solidus Brokerage in Porto Alegre.
Embratel's shares lost 67 percent in 2001, closing at 9.9 reais,
and were the worst-performing stock in the index.
"Embratel came with bad surprises to investors in 2001 but at
this price level it's a very interesting investment in the long
term," Sand said. "The company will probably not make any other
provisions for bad debt."
Embratel said a month ago it will set aside 520 million reais for
provisions against invoices it believes won't be paid.
CONTACTS: Rua Presidente Vargas, 1012
Centro - Rio de Janeiro - RJ
CEP: 20179-900
Tel: 2519 9662
Fax: 2519 6388
E-mail: invest@embratel.com.br
Silvia Pereira
Investor Relations Manager
silvia.pereira@embratel.com.br
Marcos Baptista
marcos.baptista@embratel.com.br
Graziela Fortunato
graziela.fortunato@embratel.com.br
Marcio Debellian
debellian@embratel.com.br
iLOGISTIX: January 11 Buyout Will Enhance LatAm Operations
----------------------------------------------------------
iLogistix Latin American director Nelson Nalver expects this
Friday's buyout of the Company to reinforce rather than hinder
the supply chain services provider's operations in Brazil and
Mexico, reports Business News Americas.
According to iLogistix Trustee Brad Sharp, although the winning
bidder will have control over the Company's future focus in terms
of satellite operations, the import of new capital from a
financially stronger company will revive Latin American
operations.
The successful buyer would retain original iLogistix teams in
Brazil and Mexico, which together account for just over 3 percent
of total revenue, Nalver said, without disclosing revenue
figures.
The Fremont-based "click and mortar" company filed for Chapter 11
bankruptcy protection in March 2001. According to attorney David
Neale, listed in the court papers as the Company's attorney for
the filing, Ilogistix said it has in excess of $100 million in
debt and about $192 million in assets.
iLOGISTIX: Zomax Signs Letter of Intent to Purchase Assets
----------------------------------------------------------
Zomax Incorporated (Nasdaq: ZOMX) announced Monday the signing of
a Letter of Intent to purchase substantially all the assets of
Software Logistics Corporation, dba iLogistix. iLogistix provides
supply chain services to leading technology companies, including
procurement, inventory management, assembly, fulfillment, e-
commerce, and distribution services. iLogistix has operating
facilities in the United States, The Netherlands, Singapore,
Taiwan, Mexico, and Brazil.
iLogistix is currently operating under the protective provisions
of Chapter 11 of the U.S. Bankruptcy Code while it pursues the
sale of its business. Under the Letter of Intent with the Trustee
of the Bankruptcy Court, Zomax will, subject to approval of the
Bankruptcy Court, become the leading bidder and will attempt to
agree to a definitive asset purchase agreement with the Trustee
by January 11, 2002. The purchase price agreed to be paid by
Zomax will be based primarily on iLogistix's working capital
assets as of the closing date. If a definitive agreement is
signed, an auction process will be instituted by the Trustee in
the third week of January, 2002. Under this process, other
suitors may submit bids. Zomax may, but is not obligated to,
participate in the additional bidding rounds. The Trustee, in
consultation with the secured lenders, will determine the winning
bidder. There is no guarantee that Zomax will be able to
negotiate a definitive agreement for the purchase of the assets
of iLogistix or that, if a definitive agreement is signed, Zomax
will be the winning bidder.
Zomax is a leading international outsource provider of process
management services. The Company's fully integrated services
include "front-end" E-commerce support, call center and customer
support solutions; DVD authoring services; CD and DVD mastering;
CD and DVD replication; supply chain and inventory management;
graphic design; print management; assembly; packaging;
warehousing; distribution and fulfillment; and RMA processing.
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "ZOMX."
CONTACT: Zomax Inc.
Jim Anderson, Chairman and CEO
or
John Gelp, EVP and CFO
+1-763-553-9300
ILOGISTIX: Company Profile
--------------------------
NAME: iLogistix
48301 Lakeview Blvd.
Fremont, CA. 94538
TELEPHONE: (510) 656-8000
FAX: (510) 438-9486
EMAIL: sales@iLogistix.com
WEBSITE: http://www.iLogistix.com
TYPE OF BUSINESS: iLogistix is an integrated value chain design,
implementation and management company
providing a complete line of traditional and
eCommerce turnkey services through its global
network of world class operation centers.
SIC: Computer Software & Services - Information Technology
Consulting Services
EMPLOYEES: 500+ full-time, 2000 flexible, worldwide
TRIGGER EVENT: Having revamped management and expanded
aggressively in an effort to enter Asian markets,
the company found itself considerably in debt to
suppliers, prompting it to file for Chapter 11
bankruptcy protection.
CEO: Marta Weinstein
VP WORLDWIDE BUSINESS-OPERATIONS: Amad Doratotaj
CFO/VP-ADMIN. AND HUMAN RESOURCES: Bill Downey
BRAZILIAN OFFICE: Logistix do Brazil Ltda.
Av. Pompeia, 2210 - Pompeia
Sao Paulo/SP, Brazil
CEP: 05022-001
Phone: 55 11 3675 1204
Fax: 55 11 3873 3033
LIGHT: Negotiates With Suppliers Over Diversification Project
-------------------------------------------------------------
Light, a Brazilian power distribution company, is looking to
diversify operations from 2003 and beyond. According to a report
released by Gazeta Mercantil, the Brazilian utility is now in
negotiations with services and equipment suppliers over its
future plans.
Light aims to supply to energy consumers a package that includes
refrigerators for households and thermal turbines for industrial
consumers.
The goal is to get ready to the deregulation of the energy
market, to be effective from 2003 onwards, for customers between
13,800 - 25,000 volts.
To date, Light, which is controlled by EDF, has $2.8 billion in
debt, of which 87 percent is denominated in dollars.
TRANSBRASIL: Running Out Of Time To Retain License
--------------------------------------------------
Embattled Brazilian airline Transbrasil only had until Thursday
to resume operations in order to avoid losing its licenses to
other companies, according to O Globo.
The airline, which suspended operations on 3 November 2001 due to
a lack of fuel, is yet to announce whether or not it will resume
its flights.
In December, Transbrasil embarked on a restructuring effort in
order to cut costs and get back in the air after Shell oil cut
off their fuel when bills went unpaid.
Transbrasil is saddled with nearly $350 million in debt.
CONTACT: Antonio Celso Cipriani, CFO
Rua Geral Pantaleao Telles, No. 4,
Jardim Aeroporto
04355-040 Sao Paulo, Brazil
Phone: +55-11-533-7111
Fax: +55-11-543-9083
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C H I L E
=========
EDELNOR: Mirant Chile Completes US$4.5M Sale
-------------------------------------
Mirant (NYSE: MIR) announced Wednesday that its Chilean
subsidiary, Mirant Chile S.A., completed the sale of its interest
in Empresa Electrica del Norte Grande S.A. (Edelnor) to F.S.
Inversiones, Limitada for a price of US$4.5 million.
Edelnor is one of the main power generators in northern Chile,
where much of the country's huge copper mining industry is
located. The 760-megawatt company has outstanding debt of $340
million and liquidity problems, Mirant revealed.
Mirant is a leading, global competitive-energy company. We
deliver value by integrating an extensive portfolio of power and
natural gas assets with marketing and risk management expertise.
Mirant has facilities in North America, the Caribbean, Europe and
Asia, and operates one of the world's largest energy commodity
trading organizations from its headquarters in Atlanta.
CONTACT: Mirant
MEDIA: Jason Cuevas, +1-678-579-6017
INVESTORS: John Robinson, +1-678-579-7782
ENERSIS: Fails To Take Chilectra Off The Bourse
-----------------------------------------------
Enersis four-month attempt to buy 2 percent of Chilectra's shares
to take it off the stock exchange went down the drain when IM
Trust bought Chilectra's certificates for $2,200.1 each, toppling
Enersis offer of $2,2000 per share.
Word on the market suggested that Sebastian Pinera, an
entrepreneur, was behind the IM Trust move with the aim of
selling them later to Enersis at higher prices.
During the takeover bid, Enersis was able to buy only 800,000
Chilectra shares (0.0096 percent) out of 165.820.402 on the
market.
Current Chilean stock exchange market laws stipulate that a
company stops trading on the stock exchange market if it has 500
shareholders or less.
After Enersis took over Chilectra at the end of the year 2000 by
reaching a 98.76 percent stake of the company, there were some
6,582 shareholders left.
Although the amount of shares bought by IM Trust was not
reported, market sources believe it should be close to a 1-
percent stake.
CONTACT: Domingo Valdes
General Counsel, Enersis S.A.
Santo Domingo 789
Santiago, Chile
Phone: (562) 688-6840
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P A N A M A
===========
COVANTA ENERGY: Allied Buys Panamanian Fueling Operations
---------------------------------------------------------
Covanta Energy Corporation (NYSE:COV) announced Wednesday that it
has completed the sale of the major portion of its aviation
fueling business to Allied Aviation Holdings Corporation, an
affiliate of Tampa Pipeline Corporation. The sale included all of
Covanta's aviation fueling operations at 19 airports in the
United States, Canada and Panama, but did not include Covanta's
operations at the three major New York City area airports.
Under the terms of the transaction, Covanta received $15.2
million in cash from Allied Aviation Holdings. Due to tax
loss carryforwards, the after-tax cash proceeds also
aggregate $15.2 million.
Separately, Allied Aviation Holdings Corporation has also
agreed to acquire Covanta's aviation fueling operations at
the three major New York City area airports. The completion
of that transaction has been delayed by various factors,
including the events of September 11, 2001. Covanta expects
to work with Allied Aviation Holdings Corporation and the
Port Authority of New York and New Jersey to complete the
sale of these operations, but at this time no estimate can
be given for a closing date.
These transactions substantially complete the divestment of
Covanta Energy's aviation-related assets. Covanta Energy
had previously announced the completed sales of its cargo
and ground handling businesses, fixed based operations and
private air businesses, and airport privatization
investments in Argentina and the Dominican Republic.
The closing of the fueling transaction is helpful to the
Company's short-term liquidity position. However, the
Company nonetheless still believes it will need covenant
waivers beyond January 31, 2002, and access to short term
liquidity, as noted in its press release of December 21,
2001.
Update on California Receivables
Covanta also provided the following update on accounts
receivables owed to the Company by California utilities,
Southern California Edison (SoCal) and Pacific Gas &
Electric (PG&E). Covanta owns and/or operates 15 plants in
California, with a total megawatt output, net to Covanta,
of 226 megawatts sold principally to SoCal and PG&E.
As of March 31, 2001, Covanta had accrued $74 million in
receivables from the two California utilities, $55 million
from SoCal and $19 million from PG&E. In addition, the
Company had established a reserve of $19 million against
these past-due amounts. During the second quarter of 2001,
the Company received $4 million as a partial payment from
SoCal. SoCal has announced its intention to pay all past
due receivables in the first quarter of 2002. The Company
is also in the process of executing agreements with PG&E to
be paid past-due amounts over a 12-month period starting
January 2002.
As previously reported, on October 30, 2001 the Company
transferred $14.9 million of PG&E receivables to a
financial institution for $13.4 million. Of this amount,
$8.5 million was paid to Covanta in immediate cash. Of the
balance, $4.9 million, which related to receivables to
which there are pricing disputes, was placed in escrow
until the resolution of those disputes or the conclusion of
the PG&E bankruptcy. The remaining $1.5 million represents
the 10% discount charged by the financial institution.
In addition, Covanta has transferred $30.9 million of
receivables due from SoCal to a financial institution. Of
the total transferred, $21.7 million was paid to Covanta in
cash in the first two weeks of December, and was considered
by the Company in its liquidity update press release of
December 21, 2001. The balance, less a discount of 6.75%
($2.1 million) for the financial institution, was placed in
escrow until the resolution of certain pricing issues by
the California Public Utility Commission (CPUC).
In addition to the accounts receivables, beginning in
Spring 2001, the California utilities have been making
current payments to Covanta for their purchases since that
time.
Covanta Energy Corporation is an internationally recognized
designer, developer, owner and operator of power generation
projects and provider of related infrastructure services.
The Company's independent power business develops,
structures, owns, operates and maintains projects that
generate power for sale to utilities and industrial users
worldwide. Its waste-to-energy facilities convert municipal
solid waste into energy for numerous communities,
predominantly in the United States. The Company also offers
single-source design/build/operate capabilities for water
and wastewater treatment infrastructures. Additional
information about Covanta can be obtained via the Internet
at www.covantaenergy.com, or through the Company's
automated information system at 866-COVANTA (268-2682).
CONTACT: Investor Relations:
Covanta Energy Corporation
Louis M. Walters, 973/882-7260
or
Media Relations:
Kekst & Company
David Lilly, Eric Berman
212/521-4800
COVANTA ENERGY: S&P Places Ratings on Watch Neg
-----------------------------------------------
Standard & Poor's on Dec. 28, 2001 placed its triple-'B' long-
term corporate credit and unsecured debt ratings, as well as its
triple-'B'-minus subordinate debt rating on Covanta Energy Corp.
on CreditWatch with negative implications.
The CreditWatch placement followed Covanta's announcement that it
was reviewing options to strengthen short-term liquidity and to
increase shareholder value. Covanta Energy has not yet
implemented a recapitalization plan, which Standard & Poor's had
expected to occur in mid-2001. The recapitalization plan provided
for the issuance of $250 million to $300 million of common stock,
which was to be used to pay down corporate debt and provide the
company with additional cash for general corporate purposes. The
postponement of the common stock issuance and the delay in
selling some noncore assets have caused the company to violate
cash covenants in its master credit facility. As such, Covanta
has had to seek waivers from its banks. While the company's banks
have waived the covenant violations through January 2002, Covanta
needs to formulate and execute a credible recapitalization plan
in the near term to handle this liquidity problem and to repay a
convertible debenture coming due in early 2002.
If the company does not soon implement an adequate plan, a
downgrade to noninvestment-grade levels may ensue. Standard &
Poor's still views the company's underlying energy business as a
strong cash flow generator, but current liquidity levels and
leverage cannot sustain the triple-'B' rating. Should Covanta
issue common stock, sell noncore assets, and pay down debt,
Standard & Poor's could remove the CreditWatch listing and affirm
the rating.
CONTACT: Standard & Poor's, New York
Scott Taylor, 212/438-2057
or
Peter Rigby, 212/438-2085
or
Arthur F Simonson, 212/438-2094
COVANTA ENERGY: Company Profile
-------------------------------
NAME: Covanta Energy Corp.
40 Lane Road
Fairfield, NJ 07004
TELEPHONE: (973) 882-9000
FAX: (973) 882-9121
WEBSITE: http://www.covantaenergy.com/
TYPE OF BUSINESS: Covanta Energy Corporation (NYSE: COV) is an
internationally recognized developer, owner
and operator of power generation projects and
provider of related infrastructure services.
The Company's independent power business
develops, structures, owns, operates and
maintains projects that generate power for
sale to utilities and industrial users
worldwide. Covanta Energy's waste-to-energy
facilities convert municipal solid waste into
energy for numerous communities, predominantly
in the United States.
SIC: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991]
EMPLOYEES: 4,700 (last reported count)
TOTAL CURRENT ASSETS: $686.1 million (as of Sept. 30, 2001)
TOTAL CURRENT LIABILITIES: $654.5 million (as of Sept. 30, 2001)
CHAIRMAN, BOD: George L. Farr
PRES. & CEO: Scott G. Makin
CONTACT: Jeffrey R. Horowitz
Senior VP-Legal Affairs and Secretary
Phone: (973) 882-9000
COUNSEL: Cleary, Gottlieb, Steen & Hamilton
New York Office
One Liberty Plaza
New York, NY 10006-1470
Tel: 212-225-2000
Fax: 212-225-3999
Washington Office
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006-1801
Tel: 202-974-1500
Fax: 202-974-1999
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 2002. 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 * * *