/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020201.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, February 1, 2002, Vol. 3, Issue 23 Headlines A R G E N T I N A ARGENTINE BOND ISSUERS: Potential Defaults Hinge On Govt. Bill ARGENTINE BANKS: Fitch Says BK Law Will Result In Defaults ARGENTINE CORPORATIONS: Bankruptcy Bill Leaves Fate In CB's Hands YPF/REPSOL: Fitch Says Oil, Gas Sector Suffers From Devaluation TRANSENER: Operation Likely To Affect National Grid B E R M U D A GLOBAL CROSSING LTD.: Company Profile GLOBAL CROSSING: NYSE Delists, Stock To Trade On OTCBB GLOBAL CROSSING: Despite Demise, Officials Defend Vision B R A Z I L ELETROPAULO METROPOLITANA: S&P Lowers Ratings On Mounting Debt ENRON: Yet To Sell Brazilian Assets To Pay Debt TRANSBRASIL: Govt. Suspends Resumption Pending Clarifications C H I L E TELEFONICA CTC: Chile Denies Request To Boost Rates TELEX CHILE: Shareholders Approve US$387MM Capital Boost M E X I C O AEROMEXICO: Economic Woes Prompt 11% Drop In Fares BITAL: Announces Increase In 4Q01 Net Earnings MEXICAN AIRLINES: Looking To Quash Asur's Rate Increases V E N E Z U E L A SIDOR: Initiates Labor Talks To Find Financial Balance - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BOND ISSUERS: Potential Defaults Hinge On Govt. Bill -------------------------------------------------------------- International credit rating agency Moody's Investors Service believes that the bill banning most external payments will put 26 Argentine bond issuers at risk of default, reports Business News Americas. "The bill bans external transfers with the exception of export- related transactions, effectively prohibiting firms from paying debt obligations to foreigners," said Moody's sovereign risk unit managing director Vincent Truglia and bond default research head David Hamilton. "However, the proposed law does allow exemptions. Some of these firms may avoid default due to the capital controls if they are allowed a discretionary exemption or if they can use offshore earnings to meet foreign debt payments," they explained. Among the issuers, which Moody's consider to be at risk, are the companies from the oil & gas sector such as, Pecom Energia, YPF, Transportadora de Gas del Sur, Camuzzi Gas Pampeana, Camuzzi Gas del Sur, MetroGas and Pan American Energy. CONTACTS: Pecom Energia S.A. de Perez Companc S.A. Maipo 1 - Piso 22 - C1084ABA Buenos Aires, Argentina Phone: (54-11) 4344-6000 Fax: (54-11) 4344-6315 URL: http://www.pecom.com REPSOL YPF/YPF Alfonso Cortina De Alcocer, Chairman & CEO Ramon Blanco Balin, Vice Chairman Carmelo De Las Morenas Lopez, CFO Their Address: Paseo de la Castellana 278 28046 Madrid, Spain Phone +34 91 348 81 00 Home Page: http://www.repsol.com or Av. Roque S enz Pe a, 777. C.P 1364. Buenos Aires Argentina TRANSPORTADORA DE GAS DEL SUR S.A (TGS) Gonzalo Castro Olivera, Investor Relations email: gonzalo_olivera@tgs.com.ar Maria Victoria Quade, Investor Relations email: victoria_quade@tgs.com.ar Tel: (5411) 4865-9077 Walter F. Schmale, Chairman Eduardo Ojea Quintana, Vice Chairman and CEO Claudio Schuster, CFO Their Address: Transportadora de Gas del Sur S.A. (TGS) Don Bosco 3672, 6th Fl. C1206ABD Buenos Aires, Argentina Phone: +54-11-4865-9050 Fax: +54-11-4865-7154 METROGAS Alberto Alfredo Alvarez, President William Harvey Adamson, First VP Gen. Director Enrique Barruti, HR Director Fernando Aceiro New Bus. Director Luis Domenech Admin. and Fin. Director Their Address: G. Araoz de Lamadrid 1360 1267 Buenos Aires, Argentina Phone: (800) 422-2066 Fax: (201) 262-2541 Email: info@metrogas.com.ar ARGENTINE BANKS: Fitch Says BK Law Will Result In Defaults ---------------------------------------------------------- Fitch Ratings believes that, should the proposed bankruptcy legislation be signed into law, defaults and restructuring of most companies' foreign currency debt would be the result in Argentina. Furthermore, the new rules would formally close external financing options for most corporates. The proposed legislation prohibits the transfer of dollars abroad, except for those entities holding multilateral-sponsored obligations and corporates with US dollar export revenues. The economic and financial viability of several Argentine companies has already been compromised following the impact of the prolonged recession, government debt default, currency devaluation, restrictions on bank withdrawals and transferability outside of Argentina and the implementation of the currency transfer controls. In addition, the emergency measures published by the government, which are still uncertain, further increase the Argentine risk perception by international investors. These circumstances have affected the normal development of both the industrial and service sectors, essentially paralyzing the national economy. The ongoing restrictions to the transferability of foreign currency has forced several companies into technical default, although many of these companies still have the capacity to service the scheduled interest and principal payments in a timely manner. Fitch expects this situation to worsen if the bankruptcy legislation is approved. While financial flexibility and credit profile of Argentine companies has been deteriorating due to differences between income in pesos and the exposure to debt- denominated in dollars, the transferability law will accelerate the defaults in the corporate sector. Furthermore, Fitch believes that the sovereign's decision to default, coupled with ensuing measures such as the proposed bankruptcy law, may have reduced the stigma associated with such an action and has facilitated a company's decision to opt for a measure deemed unthinkable a few months ago. While most companies will have no option but to default, those with export funds and/or obligations with multilateral institutions may ultimately be faced with a willingness decision. Under the prevailing uncertainties, Fitch is monitoring the international ratings assigned to Argentine corporates, maintaining them all on Rating Watch Negative. The enactment of the bankruptcy legislation would result in the immediate downgrade of most, if not all, companies' foreign and local currency debt ratings. CONTACTS: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago Ana Paula Ares +54 11 4327-2444 Dolores Teran +54 11 4327-2444, Buenos Aires. MEDIA RELATIONS James Jockle 1-212-908-0547, New York. ARGENTINE CORPORATIONS: Bankruptcy Bill Leaves Fate In CB's Hands ----------------------------------------------------------------- The fate of the Argentine corporations on the verge of huge debt defaults is now in the hands of the Central Bank following Congress' proposal Wednesday of a diluted bankruptcy bill. The new law is opposed by the International Monetary Fund (IMF). According to a report released by Reuters, while the Lower House of Congress left out a clause banning transfers of funds abroad that would have given many corporations no choice but to default on debts, existing legislation means such transfers must still be approved by the Central Bank. The bankruptcy bill, which still requires President Eduardo Duhalde's signature before becoming law, suspends creditor action for 180 days and also gives banks 90 days to renegotiate debts before having to write them off as a loss. Foreign lawyers and experts alike have been critical of the bankruptcy act, saying it strips creditors of their rights and could deter foreign lending in the future. IMF chief Horst Koehler had said the bill was a bad decision and should be avoided. YPF/REPSOL: Fitch Says Oil, Gas Sector Suffers From Devaluation ---------------------------------------------------------------- The emergency measures announced by the Argentine government will be detrimental to the financial flexibility and credit profiles of companies operating in the nation's hydrocarbon industry, according to a special report by Fitch Ratings, the international rating agency. 'The risk of inflation, coupled with the unsettled restructuring of public service tariffs, potential difficulties in accessing foreign exchange, ongoing hard currency capital investment requirements and vulnerability to additional political intervention, may quickly erode the industry's competitiveness,' said Alejandro Bertuol, Senior Director, Fitch. 'Additionally, most of Argentina's energy companies have balance sheets loaded with leverage denominated in foreign currencies, and the peso's adjustment immediately increased corporate debt burdens and is expected to pressure the free cash flow generation ability of many of the segment's participants.' According to the new report, 65-85% of the estimated operating expenses of the leading local oil companies are denominated in pesos. For some players, this structure offsets some of the adverse effects of the devaluation. In the case of hydrocarbon exporters such as YPF, for example, the predominance of local currency-denominated expenses serves to boost near-term competitiveness in U.S. dollar-terms. Devaluation-driven gains, however, may not be sustainable over the medium-term. As of year-end 2000, crude oil and derivative product exports totaled US$2.8billion and US$1.4billion, respectively. Thus, implementation of a proposed 25% tax on the aggregate US$4.3 billion total would only generate US$1.06 billion, a fraction of the estimated fiscal requirements of the proposed financial sector bailout. 'The financial viability and ramifications of such a scheme, however, depend in part on the behavior of international crude oil prices, the floating peso's rate of depreciation and domestic aggregate demand,' said Bertuol. 'As with the upstream segment, the uncertainty associated with Argentina's outlook will likely foster an emphasis on expanding export markets for downstream products and a review of planned investment programs.' CONTACT: Alejandro Bertuol 1-212-908-0393, New York MEDIA RELATIONS James Jockle 1-212-908-0547, New York TRANSENER: Operation Likely To Affect National Grid --------------------------------------------------- National Grid is privately admitting its operation of Transener, the largest power transmission company in Argentina, is likely to be adversely affected by recent events, according to a report in the Evening Standard. "With the fluid economic situation in Argentina, we are obviously continuing to monitor the situation closely," said an unnamed National Grid spokesman in response to speculations that Transener is suffering from power bills not being paid after the collapse of the Argentine economy. "We recognize that where there are currency controls in place, there is always the possibility that payment defaults could occur. The economic situation is not yet settled enough for us to assess the financial impact on Transener," the spokesperson added. National Grid is believed to have sunk at least GBP110 million into Transener and holds the operating license for it through a 42.5 percent stake in Transener's majority shareholder Citelec. Transener recently had its ratings downgraded by Standard and Poor's. The ratings affected were: To From - Local currency issuer credit ratings CCC-/Negative/-- CCC+/Negative/-- - Foreign currency issuer credit ratings SD/NM/-- CC/Negative/-- ============= B E R M U D A ============= GLOBAL CROSSING LTD.: Company Profile ------------------------------------- NAME: Global Crossing Ltd. Wessex House 45 Reid St Hamilton, HM 12 Bermuda PHONE: +1 (441) 296-8600 HOME PAGE: http://www.globalcrossing.com EMAIL: investors@globalcrossing.com EXECUTIVE MANAGEMENT TEAM: Gary Winnick, Founder & Chairman John Legere, CEO Dan Cohrs, CFO Joseph Perrone, Executive VP for Finance INVESTOR RELATIONS: Ken Simril, VP Of Investor Relations Investor Hotline: (800)836-0342 Tel. (310)385-5200 Fax. (310)385-3720 Email: investors@globalcrossing.com TRANSFER AGENT INFORMATION: EQUISERVE at (781)575-2000 OR (877)425-4259 SHAREHOLDER SERVICES: ARLENE BELL at (973)410-8581 TYPE OF BUSINESS: Founded March 1997, Global Crossing Ltd. (NYSE:GX) provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing (NYSE:AX). SIC: Utilities & Telecommunications EMPLOYEES: 12,400 TOTAL ASSETS: $25,511 (in millions) 3 mos. ended Sep. 30, 2001 TOTAL LIABILITIES: $14,639 (in millions) 3 mos. ended Sep. 30, 2001 REVENUES: $793 (in millions) 3 mos. ended Sep. 30, 2001 PUBLIC SECURITIES: 909.7 million shares outstanding as of Sep. 30, 2001 AUDITOR: Andersen 33 W. Monroe Chicago, IL 60603 Tel: 1 312 580 0033 Fax: 1 312 507 6748 www.andersen.com CREDITOR: J.P. Morgan Chase & Co. Citibank LEGAL ADVISORS: Gibson, Dunn & Crutcher LLP Los Angeles Office Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071-3197 Telephone: 213-229-7000 Fax: 213-229-7520 Simpson Thacher & Bartlett 10 Universal City Plaza - Suite 1850 Los Angeles, CA 91608 Phone: 818-755-7000 Fax: 818-755-7009 FINANCIAL ADVISORS: Morgan Stanley Dean Witter Morgan Stanley 1585 Broadway New York, NY 10036 Telephone: (212) 761-4000 Fax: (212) 761-0086 GLOBAL CROSSING: NYSE Delists, Stock To Trade On OTCBB ------------------------------------------------------ Global Crossing announced Wednesday the company's common stock began trading on the OTC Bulletin Board (OTCBB), effective as of the opening of business on January 29, 2002. The OTCBB is a regulated quotation service that displays real-time quotes, last- sale prices and volume information in over-the-counter (OTC) equity securities. OTCBB securities are traded by a community of market makers that enter quotes and trade reports. The company's common stock will trade under the ticker symbol of GBLXQ. On January 28, 2002, Global Crossing and certain of its affiliates (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. CONTACT: Global Crossing Press Contact Becky Yeamans +1 973-410-5857 rebecca.yeamans@globalcrossing.com Analysts/Investors Contact Ken Simril +1 310-385-5200 investors@globalcrossing.com GLOBAL CROSSING: Despite Demise, Officials Defend Vision -------------------------------------------------------- Officials of the Bermuda-based Global Crossing Ltd. defended Gary Winnick's strategy -- wrapping the globe in 100,000 miles (160,000 kilometers) of fiber-optic cable and selling it directly to telecoms and Internet service providers -- saying it was a sound move. "In the last six months, it's almost a perfect storm kind of environment. Everything crashed at once," said Dan Cohrs, Global Crossing's chief financial officer. Winnick, a former Wall Street financier, started Global Crossing Ltd. in 1997. Within a year or so, the Company was selling space on its high-speed voice and data link. It raised billions of dollars and created a global fiber-optic network. The vision propelled Winnick and many of his early investors into the realm of the super wealthy. Winnick briefly was known as the richest man in Los Angeles, with an estimated worth of US$6 billion. However, that early promise came to a crashing halt in the face of recession, rising debt, a drop in demand for high-speed data transmission and the collapse of other upstart telecom firms that soured the banking environment. Early this week, after racking up debts of US$12.4 billion, Global Crossing filed for bankruptcy protection in one of the largest corporate failures ever. Today, lenders that include J.P. Morgan, Merrill Lynch, Citigroup and SBC Communications are scrambling to recover a fraction of their original investments. Global Crossing spent nearly US$15 billion over the last five years to build the most far-reaching and up-to-date fiber network in the world. It spans four continents and 27 countries and claims more than 100,000 customers. Shareholders, who helped make Global Crossing a company worth US$55 billion in its heyday, are unlikely to recoup anything, the Company said. Stock that was once above US$60 a share now trades for pennies. =========== B R A Z I L =========== ELETROPAULO METROPOLITANA: S&P Lowers Ratings On Mounting Debt -------------------------------------------------------------- Standard & Poor's lowered its local currency rating to double- 'B'-minus from double-'B', and its national scale rating to br- single-'A' from br-single-'A'-plus on Eletropaulo Metropolitana Eletricidade de Sao Paulo (Eletropaulo). The outlooks for the local currency and national scale ratings remain negative. The foreign currency rating is affirmed at double-'B'-minus/negative. These actions reflect an increasing debt burden, as well as significant near-term refinancing risk. On July 21, 2001, Electricite de France (double-'A'-plus/Negative) and The AES Corp. (double-'B'/Stable) signed a restructuring agreement to redistribute their equity interests in LIGHT-Servicos de Eletricidade S.A. and Eletropaulo, respectively; Eletropaulo is indirectly owned through AES Elpa (previously LightGas Ltda.). The transaction was approved on October 10, 2001, by the electric utility regulator, and is expected to be consummated by the end of February 2002. AES Elpa retains US$539 million of the original Eletropaulo acquisition financing debt. In addition, another interim holding company, Transgas, was formed during 2000 to acquire preferred stock shares of Eletropaulo. The remaining liability, totaling BrR1.1 billion, will be paid off over two years. These additional holding company obligations are viewed as obligations of Eletropaulo because cash generated at Eletropaulo will service them. Furthermore, Eletropaulo has a large, unfunded pension obligation, which is viewed as debt, as well as several firm purchased power commitments, which are considered debt-like. Adjusting for these liabilities, funds from operations (FFO) interest coverage and FFO to debt are expected to approximate only 2 times (x) and 10%, respectively, during the next several years. FFO interest coverage and FFO to debt (adjusted for off- balance-sheet liabilities) were only 2.3x and 14%, respectively, for 2000. Eletropaulo is the electric distribution company for the city of Sao Paulo, Brazil, and surrounding areas. Its ratings reflect the challenges of operating in an emerging market and in an industry in transition. Eletropaulo is highly leveraged when off-balance- sheet liabilities are included, with adjusted total debt to capital expected to average 80% over the next five years. Eletropaulo has risk from currency fluctuations (about 60% of third-party debt), although 83% of cross-border debt was hedged in September 2001. Offsetting these weaknesses are a stable service area, a 30-year monopoly to distribute electricity in the most developed region in Brazil, and strong operating parameters; energy losses of 9% are low for a Brazilian distributor. Eletropaulo's customer base has a large residential component, with high consumer incomes compared to the rest of Brazil. Demand in this sector, the most profitable one for Eletropaulo, is the least affected by economic cycles. Standard & Poor's considers regulatory risk in Brazil to be high, despite some positive developments. The government has negotiated a settlement with distributors, whereby distributors will recover the bulk of revenues lost due to energy rationing, which was imposed in June 2001 because of Brazil's energy crisis; Eletropaulo's sales volume declined by 25% in the third quarter of 2001 compared to the same period in 2000. Per the recently announced Energy Market Agreement, Eletropaulo will recover lost revenues via an extraordinary tariff (6% on average) to be recovered over three years. About 90% of the cash is expected to be advanced by Banco Nacional de Desenvolvimento Economico (BNDES), with the first tranche (one-third of total loan) to be disbursed in February and the remainder when the Energy Market Agreement is signed by all participants. Such loan will be repaid with revenues from the tariff increase. The settlement will also compensate Eletropaulo for noncontrollable costs (parcel A) incurred in 2001. Annual tariff reviews have been in accordance with concession contract guidelines; Eletropaulo received a 16.61% increase in July 2001. However, annual rate increases have not ensured full recovery of noncontrollable costs, such as large power purchases from Itaipu (a company owned by Paraguay and Brazil), which is linked to the dollar. A recently created task force has introduced an indexing mechanism that will track costs from 2002 onward. OUTLOOK: NEGATIVE The negative outlook reflects concerns over Eletropaulo's refinaning risk. Given the high current interest rate environment, Eletropaulo has opted not to fix debt at term and has used short-term instruments to rollover its debt. This exposes the company to material refinancing risk (46% of debt matures in 2002). While Eletropaulo has demonstrated strong access to bank and capital markets in the past, higher capital markets volatility in 2002 due to presidential elections in Brazil and the crisis in Argentina could increase cost of financing and even make access to foreign markets difficult for the second half of the year. Analyst: Anna Paula Dal Secco, Sao Paulo (55) 11-5501-8955 Cheryl E Richer, New York (1) 212-438-2084 CONTACTS: ELETROPAULO METROPOLITANA Luiz D. Travesso, Chairman and President Orestes Gon�alves Jr., VP Finance/Investor Relations THEIR ADDRESS: Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br ENRON: Yet To Sell Brazilian Assets To Pay Debt ----------------------------------------------- Swiss investment bank UBS Warburg will take over Enron Corp.'s trading business, and rival Dynegy Inc. expects this week to acquire one of the fallen energy giant's most prized assets: the 16,500-mile Northern Natural Gas Pipeline system, the Associated Press reports. The move will leave Enron with all or part ownership of three smaller pipelines and several money-losing assets that are also up for sale to help pay company debt. Those assets include power operations in Brazil and India, Enron's broadband unit and Azurix Corp., which owns, operates and manages water and wastewater systems. Stephen Cooper, the veteran restructuring specialist chosen to take the helm of embattled Enron Corp., expressed confidence that the fallen energy giant is strong enough to survive bankruptcy, even without its trading business. "It's certainly not going to be easy, there will certainly be a number of speed bumps and potholes, but ... from hindsight, hopefully in the not too-far-distant future, we'll be able to say this worked out as well as it possibly could have worked out for all parties' interests," Cooper said. Cooper said Enron's current organization, its businesses, its customer base and liquidity remain adequate to survive its Chapter 11 filing and some day emerge, although smaller and without its flagship trading platform. TRANSBRASIL: Govt. Suspends Resumption Pending Clarifications -------------------------------------------------------------- The Brazilian government is yet to approve the resumption of Transbrasil's operations pending a clear documentation of the recent ownership change for the airline. In addition, officials expect clarification of exactly where the new influx of capital for the airline has come from, reports South American Business Information. Transbrasil's new owner, Dilson Prado da Fonseca, has not yet established contact with Shell or BR Distribuidora to negotiate fuel supplies for the airline, which were cut off for non-payment of bills in December. Transbrasil owes BRL4 million to Shell and BRL14 billion to BR. Prado has said that he would use the initial capital, from a debenture issue, to pay the fuel companies, passengers with tickets and the Company's employees. Word on the street is a deal may be in the works with a US freight carrier such as Fedex or Atlas, or that the sale of the company is a ruse by which the previous owner can avoid having goods seized by creditors. ========= C H I L E ========= TELEFONICA CTC: Chile Denies Request To Boost Rates --------------------------------------------------- Telefonica CTC Chile suffered a big blow when the government shunned its bid to overturn a reduction in calling rates. The country's largest telephone company calls the decision "disconcerting and inadequate." According to a Bloomberg report, Chile's Economy Minister Jorge Rodriguez and Transport Minister Javier Etcheberry informed Telefonica CTC in a letter that they had rejected Telefonica CTC's request to revise its rates. The decision, which came after almost three years of haggling, leaves Telefonica CTC, a former state-run monopoly, empty-handed. Telefonica CTC has suffered three years of losses due to the reduction in calling rates. The Company, a division of Telefonica SA of Spain, lost 173.7 billion pesos ($256 million) from 1999 through the first nine months of last year as revenues continually fell. It plans to report fourth quarter earnings this week. The rejection is a blow to Bruno Philippi, who was named chairman of Telefonica CTC in March in an effort to reverse losses and persuade the government to stop fixing the Company's rates. Analysts said the lower fees would crimp earnings until the decree expires in 2004. Last year, Telefonica threatened to sue the government if its appeal was denied. CONTACTS: Bruno Phillippi Irarr zabal, Chairman Claudio Mu�oz Zuniga, CEO Julio Covarrubias Fernandez, CFO Ver�nica Gaete, Financial Analyst Mar�a Jos� Rodr�guez, Financial Analyst Florencia Acosta, Financial Analyst Gisela Escobar, Head of Investor Relations THEIR ADDRES: Compa��a de Telecomunicaciones de Chile S.A. Av. Providencia 111, Piso 2 Santiago, Chile Phone: +56-2-691-2020 Fax: +56-2-691-2392 URL: http://www.ctc.cl TELEX CHILE: Shareholders Approve US$387MM Capital Boost -------------------------------------------------------- Telex-Chile's shareholders officially agreed to a CLP263-billion (US$387 million) capital increase for the company. The deal marks the start of a three-stage process of a shareholders' pact whereby US-based investment fund Southern Cross is to up its stake in the Chilean telecoms operator, Business News Americas reports. The amount approved is CLP14 billion more than what the board announced at an extraordinary general meeting held Wednesday. Southern Cross is yet to embark on a US$106-million debt buy-back program that will slash the Company's debt to US$10 million - US$12 million, and a public tender offer for Telex shares in February, in order to consummate the pact. Southern Cross expects to subscribe for US$100 million worth of the capital increase, subsequently taking control of Telex about 30 days after the public tender, said Southern Cross representative Raul Sotomayor. The debt acquisition program includes a US$10-million cash injection from Southern Cross, Sotomayor said, adding that the US fund is seeking a US$15-million line of credit. In the meantime, according to Telex Chairman Juan Pablo Roman, the board will set up a committee to handle operations during the change in ownership. Investment banks and creditors took over 51 percent of Telex in October 1999 from the Ibanez and Radic families as part of a series of measures designed to recoup their investments. Telex had debts of US$220 million and was forced to sell its mobile and local telephony subsidiaries as part of the financial restructuring. =========== M E X I C O =========== AEROMEXICO: Economic Woes Prompt 11% Drop In Fares -------------------------------------------------- Aeromexico, which is controlled by government-owned holding company, has seen its fares decrease by 11 percent since October 2000 as a consequence of the economic slowdown and declining demand, reports Mexico City daily Reforma. Aeromexico Marketing Director Alejandro Yberri said that little ground was recovered during the most recent tourist season. "Demand for airline services is linked to countries' economic growth. We've registered a light recovery, but we are still 14 percent or 15 percent down with respect to the year before," said Yberri. Meanwhile, Yberri announced that the airline will invest US$350,000 to put emergency medical equipment on planes. BITAL: Announces Increase In 4Q01 Net Earnings ---------------------------------------------- Consolidated net earnings at Mexican financial group Grupo Financiero Bital climbed to MXN98.0 million in 4Q01 from MXN90.4 million in the same period in the previous year, reports Reuters. The group's banking unit posted fourth-quarter net earnings of 80.5 million pesos, compared with 143.9 million pesos a year earlier, the group said in a news release. The group's capitalization index stood at 13.13 percent at the end of the fourth quarter, up from 12.26 percent at the end of 2000. The past due loan portfolio was 7.0 percent of total loans at the end of 2001, an improvement over the 7.1 percent reported at the end of 2000 and 7.3 percent at the end of the third quarter of 2001. Bital has languished as one of the most poorly capitalized banks in Mexico. CONTACTS: Engr Luis Berrondo Avalos, Chairman Atty Jaime Ruiz Sacristan, CEO German Osuna Castelan, General Manager Finance Atty Fenando Ysita Del Hoyo, Secretary THEIR ADDRESS: Grupo Financiero Bital SA de CV Paseo de la Reforma No 243 Cuauhtemoc Mexico DF 06500 Mexico Phone +52 5 721 5286 Home Page http://www.bital.com.mx MEXICAN AIRLINES: Looking To Quash Asur's Rate Increases -------------------------------------------------------- Aeromexico, Mexicana, Aerolitoral and Aeromar launched a suit against the Communications and Transport ministry, reports Mexico City daily Reforma. The suit seeks to nullify airport management company Asur's rate increases registered in the second half of 2001. However, Asur Finance Director Adolfo Castro Rivas said the suit is not against his company. According to him, the rate increases are based on regulations, fixed by an operations committee, and finally approved by the ministry. As of June 1, 2001, Asur's various rates were increased by between 6 and 10 percent after remaining static for the previous 24 months, said Castro. The airlines have refused to pay some MXN4 million related to the increased fees. CONTACTS: 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 ================= V E N E Z U E L A ================= SIDOR: Initiates Labor Talks To Find Financial Balance ------------------------------------------------------ Venezuelan integrated steelmaker Sidor managed to start wage negotiations in a "harmonious environment." The Company is making a bid to preserve the its financial health, said chairwoman Maritza Izaguirre. Izaguirre said that SIDOR has learned from its mistakes in the past, citing 2001 when an impasse in talks led to a bitter 22-day stoppage with strikers padlocking the steel mill's gates, followed by threat of a national strike. Since then, the global steel market has gotten tougher, prices have fallen and Ciudad Guayana-based Sidor has defaulted to the tune of US$31.3 million on loan repayments. Its majority shareholder, multinational consortium Amazonia, defaulted by US$8.1 million. "We have learned from past errors and now both parties are talking under the premise that the Company is going through a series of adjustments caused by variations in the global steel market, which has led to the union being more receptive," she said. The steel crisis has already led the company to ditch plans for investing another US$360 million to take capacity to 4Mtpy within two years. SIDOR currently expects to limit the increase to 3.1Mtpy. Investments and process improvements expanded capacity by 17 percent to 2.8Mtpy in 2000-01. *********** 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, Edem Psamathe P. Alfeche and Fe Ong Va�o, 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 * * *