/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020219.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, February 19, 2002, Vol. 3, Issue 35 Headlines A R G E N T I N A BGN: Dersdner Chairman May Step Down From Supervisory Role BNL: S&P Outlook Slips To Negative From Stable CENTRAL PUERTO: Suspends Debt Payments To Renegotiate US$300 Mln NII HOLDINGS: Preliminary 01 Results Include Bankruptcy Warning NII HOLDINGS: Company Profile REPSOL YPF: Argentine Oil Export Tax To Upset Profits CENTRAL BANK: S&P Issues Multilateral Payments Policy Comments B E R M U D A GLOBAL CROSSING: Stock In Employees' 401(k) Subject of Lawsuit GLOBAL CROSSING: Cauley Geller Files Securities Class Action B R A Z I L BELL CANADA: Issues Shares as Part of Recapitalization Plan EMBRAER: Canada Stands By WTO Ruling Without Appeal C O L O M B I A AVIANCA-ACES: Merger Formula Ready Within A Fortnight BANCAFE: Swings Back To Profitability SEVEN SEAS: Allocation Set Between Series A Notes, Warrants M E X I C O CINTRA: Fitch Comments On Airlines' Trust Certificates INSILCO HOLDING: Defaults on Debt Payment, Negotiations Begin RHI REFRACTORIES: A.P. Green To Close Mexican Facility in Ch 11 RHI REFRACTORIES: Company Profile V E N E Z U E L A AES CORP: Fitch Downgrades Ratings On Multiple Issues CENTRAL BANK: S&P Sees Danger In Venezuela's Floating Ex Rate - - - - - - - - - - ================= A R G E N T I N A ================= BGN: Dersdner Chairman May Step Down From Supervisory Role ---------------------------------------------------------- Bernd Fahrholz, chairman of Allianz AG unit Dresdner Bank, wants to relinquish his role as supervisory board member of the embattled Banco General de Negocios (BGN), reports AFX. Dresdner Bank owns 25.6 percent in BGN, the Argentine bank recently been accused by judges of having sent at least US$70 million in funds out of the country following the imposition of banking controls on December 1, last year. BGN's other major shareholders include Credit Suisse and JP Morgan-Chase. BNL: S&P Outlook Slips To Negative From Stable ---------------------------------------------- Standard & Poor's revised Friday to negative from stable its outlook on Italian Banca Nazionale del Lavoro SpA (BNL) in view of the bank's significant presence in Argentina and limited financial flexibility. The rating agency believes BNL's current position leaves it reduced room to address potential further deterioration in its Argentinian operations. At the same time, S & P affirmed all its ratings on BNL, including its triple-'B'- plus long-term and 'A-2' short-term counterparty credit ratings, reflecting continuing improvement in the bank's domestic performance. BNL's exposure to Argentina is mostly concentrated in its local banking subsidiary, Banca Nazionale Del Lavoro S.A. (SD/--/SD), which had a total balance sheet in excess of $3 billion at year- end 2001. As a consequence of the group's announcement that it will provision EUR527 million in its 2001 accounts in order to discount to zero the value of the investment in Argentina -- including subordinated loans from the parent company ($100 million) -- BNL's annual profits will be almost entirely absorbed. Standard & Poor's believes, however, that due to the very difficult and uncertain Argentinian economic context, further support for the local subsidiary could be necessary. The ratings on BNL reflect ongoing improvements in the bank's internal organization and marketing policy, which are helping the bank to reach its medium-term targets in terms of higher operating efficiency and profitability. Standard & Poor's also takes into account, however, BNL's still-mediocre financial profile, characterized by a weak capital base and domestic asset quality that, despite gradual improvements, remains weaker than that of the bank's main rated peers. OUTLOOK: NEGATIVE The ratings on BNL could be lowered if the situation in Argentina worsens, resulting in an additional need to support the local subsidiary and a consequent weakening of BNL's overall financial position. Standard & Poor's does not expect, however, any significant deterioration in BNL's domestic financial profile as a result of the current slowdown in the Italian economy. A complete list of ratings on BNL is available on RatingsDirect, Standard & Poor's on-line credit research service, or by calling the Standard & Poor's ratings desk on (33) 1-4420-6705. CONTACT: Bernard de Longevialle, Milan, +39-02-72111-212 Christian Frigerio, Paris, +33-1-4420-6687 CENTRAL PUERTO: Suspends Debt Payments To Renegotiate US$300 Mln ---------------------------------------------------------------- Central Puerto Sociedad Anonima suspended payments on all financial obligations as a result of the economic downturn in Argentina, said Central Puerto CEO Horacio Turri in a Business News Americas report. "We decided to renegotiate all our financial obligations. No payments will be made while those negotiations are taking place," Turri said. Central Puerto's debts total US$300 million, including US$120 million with French bank Sofax, 100-percent owned by Central Puerto's majority owner Totalfinaelf; US$110 million with the Bank of America with guarantees from US-based Exim Bank; US$11.5 million with Bankboston; and US$60 million with a syndicate of banks. Of the smallest loan, US$50 million is in dollars and US$10 million is a peso-denominated loan from Banco de la Provincia de Buenos Aires. However, the Company said that operations are to continue normally and efficiently, adding that it will honor all is commercial obligations. Previously, the company had told the Buenos Aires stock exchange that it would not make repayments totaling US$19.1 million on two bank loans. The first, due February 15, was for US$7.5 million for principal and interest on a May 1998 loan from Bank of America National Trust and Savings Association, the First Security National Association and the US Export-Import bank. The second payment is for US$11.6 million and was due February 22 under the terms of a February 2001 loan from Bankboston. Central Puerto Sociedad Anonima is in the generation, transportation, distribution, production, marketing, commercialization, import and in block sale of electric energy and provision of technical and consultancy services. CONTACTS: CENTRAL PUERTO Jacques Chambert Loir, CEO 2701 Avenida Tomas A Edison Buenos Aires, Argentina Phone +54 1 317 5074 Home Page http://www.centralpuerto.com CREDITORS: Banco de la Provincia de Buenos Aires San Mart》 137 (C1004AAC) Buenos Aires, Repηlica Argentina Tel. 054 (011) 4347-0000 Bank of America - Corporate Headquarters Bank of America Corporate Center 100 North Tryon Street Charlotte, North Carolina 28255 www.BankofAmerica.com Contacts: Ken Lewis, Chairman & CEO SOFAX www.sofax.de Bankboston http://www.bankboston.com.ar/ NII HOLDINGS: Preliminary 01 Results Include Bankruptcy Warning --------------------------------------------------------------- In its official news release, NII Holdings, Inc., announced Saturday its preliminary consolidated financial results for the full-year 2001 including operating revenues of $680 million, a consolidated operating cash flow loss (earnings before impairment and restructuring charges, interest, taxes, depreciation and amortization) of $100 million and approximately 1.19 million global proportionate subscribers. Consolidated operating revenues rose 106% from $330 million in 2000 to $680 million in 2001. Fourth-quarter 2001 revenues grew to $194 million, a 64% increase over the same period in 2000. At the end of 2001, NII Holdings had 1.19 million global proportionate subscribers. The company added 27,400 subscribers during the fourth quarter of 2001 and 479,000 subscribers during the year. During the fourth quarter, NII Holdings implemented cash preservation initiatives, which included reduced subscriber growth among other measures designed to improve cash flow. The subscriber base was also adjusted due to the sale of our minority position in Telus Corporation during the fourth quarter of 2001. Consolidated operating cash flow loss (earnings before impairment and restructuring charges, interest, taxes, depreciation and amortization) for the entire year was reduced by 25% from a $133 million loss in 2000 to a $100 million loss in 2001. During the fourth quarter, the consolidated operating cash flow loss was $4 million, an 88% improvement over the same period last year. The Company's operating subsidiaries in Argentina failed to make a December 31, 2001 scheduled payment of $8.3 million in principal to a group of banks under its Argentine credit facility. As of December 31, 2001, the aggregate principal balance outstanding under the Argentine facility was approximately $108 million and the aggregate principal balance outstanding under the vendor financing facilities was approximately $382 million. NII Holdings is in discussions with its various creditors regarding the restructuring of its debt obligations, which could include such matters as a potential sale of strategic assets, reorganization under Chapter 11 of the United States Bankruptcy Code or other measures, and has retained the investment banking firm Houlihan Lokey Howard & Zukin Capital to assist it in exploring strategic alternatives. As a result of its cash preservation initiatives and proposed debt restructuring, NII Holdings has revised its business plan, and as a result, expects to record pre-tax non-cash impairment and restructuring charges for the full year 2001 of between $1 billion and $2 billion in accordance with Statement of Financial Accounting Standards No. 121. The amount of the charge will be finalized in our annual report on Form 10-K expected to be filed by April 1, 2002 and will be determined based on the expected outcome of the proposed debt restructuring efforts at that time. NII Holdings, Inc. has wireless operations and investments in Mexico, Argentina, Brazil, the Philippines, Peru and Chile. CONTACTS: NII HOLDINGS, INC. Mario Carotti, 305/441-0818 or Nextel Communications, Inc. Paul Blalock, 703/433-4300 FINANCIAL ADVISER: Houlihan Lokey Howard & Zukin Capital Franklin W. "Fritz" Hobbs, CEO 1-800-788-5300 toll free Website: www.hlhz.com NII HOLDINGS: Company Profile ----------------------------- NAME: Nextel International Inc. 10700 Parkridge Blvd., Ste. 600 Reston, VA 20191 PHONE: 703-390-5100 FAX: 703-390-5149 WEBSITE: http://www.nextelinternational.com EXECUTIVE MANAGEMENT TEAM: Daniel F. (Dan) Akerson, Chairman Steven M. Shindler, CEO and Director Lo van Germert, President and COO INVESTOR RELATIONS: Byron R. Siliezar, VP and CFO TYPE OF BUSINESS: NII Holdings, Inc. (www.nextelinternational.com) is a subsidiary of Nextel Communications, Inc. NII Holdings is a holding company for investment and operations in international markets. It is one of the world's leading providers of fully integrated wireless communication services designed to meet the needs of business customers in these selected international markets. Principal operations are in major business centers and related transportation corridors of Argentina, Brazil, Mexico and Peru. SIC: Wireless Telecommunications EMPLOYEES: 3,600 SALES: $330 Million (2000) TOTAL ASSETS: $2,869,247 as of Sept. 30, 2001 (in thousands) TOTAL LIABILITIES: $3,320,302 as of Sept. 30, 2001 (in thousands) PUBLIC SECURITIES: 270,382,103 Total Number of Shares Outstanding on October 31, 2001, Class B Common Stock. FINANCIAL ADVISOR: Houlihan Lokey Howard & Zukin Capital Franklin W. "Fritz" Hobbs, CEO 1-800-788-5300 toll free Website: www.hlhz.com AUDITOR: Deloitte & Touche LLP 1750 Tysons Boulevard McLean, VA 22102 Tel: 703-251-1238 Fax: 703-251-3400 LEGAL ADVISOR: Jones Day Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, OH 44114 Tel: 216.586.3939 Fax: 216.579.0212 Robert H. Rawson, Partner REPSOL YPF: Argentine Oil Export Tax To Upset Profits ----------------------------------------------------- The Argentine administration decided on Wednesday to impose a 20- percent tax on oil exports and a 5-percent levy on oil derivatives. Although the decision to impose the tax had already been announced as part of a package of anti-crisis measures presented last month, the size of the tax came as a surprise to Spanish oil group Repsol YPF SA. "In the wake of the talks between the Argentine government and the petrol companies, we were expecting the tax to be lower than 20 percent," said a Repsol YPF spokeswoman. The spokeswoman said Repsol YPF is currently studying the impact on 2002 earnings of the new measure, but early indications are that the introduction of the tax will have a negative impact on the balance sheet of Repsol YPF. Analysts believe that it could reduce its operating profit by five 5 percent. CENTRAL BANK: S&P Issues Multilateral Payments Policy Comments -------------------------------------------------------------- The latest regulation issued by Argentina's Central Bank clears up past ambiguities involving company payment transfers to multilateral agencies and could allow private companies to make foreign currency-denominated debt payments to those agencies without previous authorization from the Central Bank. This policy is in keeping with the treatment of private sector debt to multilaterals in earlier episodes of financial stress, both in Argentina and in other countries, and is in accord with Standard & Poor's expectations, said Jorge Solari, director of Standard & Poor's Structured Finance group in Buenos Aires. "Full and timely debt payments to these organizations can now be made if the regulation is implemented as issued," Mr. Solari noted, "and if the regulation is not modified in the near future, which is a possibility we cannot completely rule out given the frequency of changes in the foreign-exchange regime in recent weeks." In addition, for companies to make debt service payments to the multilaterals they must have the ability and willingness to pay, i.e., the pesos necessary to purchase the foreign exchange. This ability and willingness have been affected by the impact of a halted economy, devaluation, a freeze on tariffs, significant future regulatory risk, and illiquidity throughout the financial system. The Central Bank regulations, Comunicacion "A" 3471, provide the framework for the exchange control regime, including a system of freely floating exchange rates. The regulations also facilitate some operational procedures for payment of other financial obligations that previously were very limited by constraints on foreign-exchange transfers, difficulties in obtaining dollars even at the market rates, restrictions on the free use of bank deposits, and the various and prolonged bank- and foreign- exchange holidays declared by the government. Standard & Poor's rates five transactions backed by loans from preferred creditors. The borrowers in these transactions are three utility companies: Transportadora De Gas del Norte (TGN), Aguas Argentinas S.A. (Aguas), and Transportadora de Gas del Sur (TGS). The International Finance Corporation (IFC) has two loans to TGN, which have been securitized in TGN IFC Trust I and II. The transactions are rated 'CC', while both local and foreign currency ratings of the company are rated 'SD', or selective default. TGN is rated 'SD' because, on Jan. 23, 2002, it failed to make a US$3.3 million payment on the IFC loans. However, neither of the structured transactions missed their debt service payments, as payments to investors were made from offshore letters of credit (LOCs). There are currently no funds remaining from the LOCs to make the upcoming Feb. 25 payment; therefore, this payment will depend on the company's ability and willingness to convert and transfer the necessary dollar amounts. The other three preferred creditor transactions are backed by loans from the Inter-American Development Bank to Aguas and TGS, which are rated 'CCC-'. Principal and interest payments are due semiannually on these transactions, and the next payment is due in May. Again, assuming the Central Bank's regulation concerning payments to multilaterals is not changed, all future payments on these transactions will solely depend on the company's willingness and ability to make the payments. For additional information on any of these deals or regarding Central Bank or governmental regulations please contact the analysts listed above. CONTACT: Jorge Solari, Buenos Aires, +54-114-891-2114 Juan Pablo De Mollein, Buenos Aires, +54-114-891-2113 Diane Audino, New York, +1-212-438-2388 Larry Hays, Ph.D., New York, +1-212-438-7347 ============= B E R M U D A ============= GLOBAL CROSSING: Stock In Employees' 401(k) Subject of Lawsuit -------------------------------------------------------------- A class action lawsuit was filed in the United States District Court for the Central District of California, Western Division on behalf of all participants and beneficiaries of the Global Crossing Employees' Retirement Savings Plan ("Plan"), a 401(k) plan operated and administered by Global Crossing, Ltd. ("Global Crossing" or the "Company"). Defendants are the administrators and directors of the Plan and the Company's directors (collectively, "defendants"). Plaintiff brings this action on behalf of himself and a class which consists of all current and former employees and any beneficiaries who are or were participants in the Plan at any time since September 28, 1999 (the "Class"). The complaint charges that defendants breached their fiduciary duties and ERISA disclosure requirements by failing to disclose to Plan participants that maintaining concentrated investments in Company stock was imprudent and exposed participants to unreasonable risks of loss and injury. As alleged in the complaint, defendants encouraged their employees to invest their retirement monies in the Company's common stock, while defendants proceeded to sell their own Company stock reaping profits over $140 million. As further alleged, defendants failed to provide plaintiff and other Plan participants with adequate information about the Company's true financial condition despite offering the Company's stock as a prudent Plan investment. Specifically, defendants failed to disclose that: Global Crossing was experiencing declining demand for bandwidth; its operating performance was artificially inflated through improper accounting for transactions with other telecom companies; its efforts to provide managed network outsourcing services was failing; and as the Company's liquidity position and revenues declined, so did the Company's ability to service its large debt. Plaintiff seeks to recover damages on behalf of Class members and is represented by the law firm of Stull, Stull & Brody who has significant experience and expertise in prosecuting class actions on behalf of investors and shareholders. Members of the class described above may, no later than 60 days from February 4, 2002, move the Court to serve as lead plaintiff. For questions or more information, contact: Michael Braun at Stull, Stull & Brody at 888-388-4605 or via e-mail at info@secfraud.com CONTACT: Stull, Stull & Brody, Los Angeles Michael Braun, 888/388-4605 e-mail: info@secfraud.com GLOBAL CROSSING: Cauley Geller Files Securities Class Action -------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced Friday that it had filed a class action lawsuit in the United States District Court for the Western District of New York on behalf of purchasers of Global Crossing, LTD. ("Global" or the "Company") (NYSE:GX) (OTCBB:GBLXQ) common stock during the period between April 29, 1999 and October 4, 2001, inclusive (the "Class Period"). The class period is being expanded to include purchases of publicly traded securities between February 14, 1999 and October 4, 2001, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on the firm's Website at http://www.classlawyer.com/pr/global-- crossing.pdf. The complaint charges certain of Global's officers and directors violated the Securities Exchange Act of 1934. Due to its recent bankruptcy filing, Global Crossing is not named as a defendant in the action. The complaint charges that during the Class period, defendants issued false and misleading statements, press releases, and SEC filings concerning Global's financial condition, as well as the Company's ability to generate sufficient Cash Revenue from new revenue sources considering the failing market for broadband access. Prior to the disclosure of Global's true financial condition, the Individual Defendants and other Global insiders sold holdings of Global's common stock for proceeds of more than $149 million. In addition, during the Class Period defendants caused the Company to sell notes on favorable terms to itself which generated $1 billion in investor capital. On October 4, 2001 Global announced that Cash Revenues in the third quarter would be approximately $1.2 billion, $400 million less than the $1.6 billion expected by analysts and forecast several times earlier in the year by defendants. In addition, Global and the defendants stated that they expected recurring adjusted EBITDA to be "significantly less than $1000 million" compared to forecasts of $400 million made several times earlier in the year. Following this series of announcements, Global's share price plummeted nearly 50% to $1.07 per share on extremely heavy trading volume. Subsequently, with its stock trading at well under a dollar per share of common stock, Global filed for Chapter 11 Bankruptcy protection on January 28, 2002 after becoming unable to service its debt. Purchasers of Global publicly traded securities between February 14, 1999 and October 4, 2001, inclusive, may join this class action online at http://www.classlawyer.com/sign--up.html.Any member of the purported class may move the Court to serve as lead plaintiff through Cauley Geller Bowman & Coates, LLP or other counsel of their choice, or may choose to do nothing and remain an absent class member. CONTACTS: CAULEY GELLER BOWMAN & COATES, LLP Investor Relations Department: Jackie Addison Sue Null Shelly Nicholson Their Address: P.O. Box 25438 Little Rock, AR 72221-5438 Toll Free: 1-888-551-9944 E-mail: info@classlawyer.com =========== B R A Z I L =========== BELL CANADA: Issues Shares as Part of Recapitalization Plan ----------------------------------------------------------- In an official company press release, Bell Canada International Inc. ("BCI") announced Friday that it issued 4,718,290,245 common shares on February 15 pursuant to the recapitalization plan announced by BCI on December 3, 2001. The weighted average price of BCI shares for the 20-day trading period of January 14, 2002 to February 8, 2002 was $0.2888 per share (the "Weighted Average Price"). Upon the automatic exercise of the principal warrants issued to BCI shareholders who exercised their rights in the recently- completed rights offering of BCI, 2,988,986,201 common shares were issued at a price of $0.147288 per share, representing a 49% discount to the Weighted Average Price. In addition, 1,457,938,474 common shares were issued in payment of the principal amount of $400 million owing under BCI's 6.75% and 6.50% convertible debentures at a price of $0.27436 per share, representing a 5% discount to the Weighted Average Price, and 271,365,570 common shares were issued to BCE Inc. ("BCE") with respect to the conversion of the principal and interest of approximately $78 million owing under a convertible loan to BCI at a price of $0.2888 per share. BCE's percentage ownership interest in BCI is 62.2% following the issuance of these shares. The number of BCI common shares issued on February 15 does not reflect any shares that may be issued to American International Group, Inc. or any of its affiliates in satisfaction of its put right and pursuant to the exercise of the anti-dilutive secondary warrants which were issued to BCI shareholders who exercised their rights. BCI, through Telecom Americas, owns and operates 4 Brazilian B Band cellular companies serving more than 4.3 million subscribers in territories of Brazil with a population of approximately 60 million. BCI is 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 our Web site at www.bci.ca. CONTACT: Bell Canada International Inc. Brian Quick Vice-President, Finance (514) 392-2369 brian.quick@bci.ca EMBRAER: Canada Stands By WTO Ruling Without Appeal --------------------------------------------------- In an effort to preserve efforts to settle a dispute over aircraft subsidies with Brazil, Canadian Trade Minister Pierre Pettigrew decided against making an appeal to a World Trade Organization ruling that low-interest government loans to a Bombardier Inc. customer for jetliner purchases broke subsidy rules, says Bloomberg. "There's not a lot they could get out of an appeal," said Marc Busch, a professor who studies the WTO at Queen's University in Kingston, Ontario. "To unnecessarily drag it out on the eve of settlement wouldn't make a lot of sense." Talks to end the six-year-old dispute broke off a year ago when Canada offered Air Wisconsin Corp. cut-rate loans in return for placing a $1.68 billion order for 50-seat regional jets with Bombardier instead of Brazil's Empresa Brasileira de Aeronautica SA (Embraer). Negotiations resumed this month after the 144- member WTO's January ruling. However, despite the ruling, Pettigrew and other officials have said Canada will honor the Air Wisconsin loan and a similar package given to Northwest Airlines Corp. to buy 75 Bombardier jets. CONTACTS: EMBRAER Bob Sharp, Press office mgr. bob.sharp@embraer.com.br OR Wagner Gonzalez, Press officer wagner.gonzalez@embraer.com.br Phone +55 12 3945 1311 Fax + 55 12 3945 2411 =============== C O L O M B I A =============== AVIANCA-ACES: Merger Formula Ready Within A Fortnight ----------------------------------------------------- The formula for the merger between Colombian airlines Avianca and Aces will be defined within the next two weeks, reports Portafolio. Mckinsey & Company is designing the merged operation's organization. In addition, during the time, two separate funds will be created. Shareholders of both airlines will tender put up 75 percent of shares in the funds. Subsequently, the shares will be split into two lots of 37.5 percent in order, preventing any parties from taking control of the funds. Besides the creation of the funds, a holding company will also be established to manage the two airlines. The yet-to-be- created holding company's president will be Juan Emilio Posada. Korn Ferry has also been hired to work on the future employment line-up. At the end of 2001, Avianca employed 3,500 workers, while Aces employed 2,043. The looming merger, approved by the government last year following months of deliberation, is considered vital for the companies' continued survival. The deal will create a firm with combined assets of $700 million. The airlines plan to integrate their services by May 20, but all three brand names will continue to be used. Aces estimates its 2001 losses at COP13 billion when it had hoped to post profits of COP2 billion this year. By August (pre-New York terrorism), it was already down by COP5.5 billion. In January, the embattled Avianca raised US$209.4 million after two of its shareholders, Valores Bavaria and Fenicia, bought new shares worth $196.6 million and US$12.8 million, respectively. Valores Bavaria and Inversiones Fenicia are both controlled by Colombian businessman Julio Mario Santo Domingo. In November, Valores Bavaria, already Avianca's controlling shareholder, approved the share issue as part of plans to ensure that the airline's net assets, which at the time totaled negative US$216 million, turned positive. CONTACTS: Mckinsey & Company Maip� 1210 - piso 4 1006 Buenos Aires, Argentina Voice: 54 (11) 4 318 3900 Fax: 54 (11) 4 318 3973 www.mckinsey.com Korn Ferry International Contact: Spencer Davis, VP Investor Relations 1800 Century Park East, Suite 900 Los Angeles, CA 90067 Tel. (310) 556-8553 www.kornferry.com BANCAFE: Swings Back To Profitability ------------------------------------- The Colombian Securities Superintendency announced that state- owned bank Bancafe, the country's third-largest bank, was able to reverse the losses made in year 2000 by posting profits of COP2.2 billion in 2001, reports Reuters. Bancafe was supposed to be privatized last year under the terms of Colombia's loan accord with the International Monetary Fund. However, in December, the government said it would only undertake the sale when market conditions improved. To liquidate Bancafe, with its book value is COP455 billion, would be very costly, according to a previous TCR-LA report. The Colombian government will take on the pensions deficit so that any buyer would be acquiring a healthy bank. SEVEN SEAS: Allocation Set Between Series A Notes, Warrants ------------------------------------------------------------ Seven Seas Petroleum Inc. (Amex: SEV) announced the allocation of the issue price between the Series A Senior Secured Notes and Warrants that were issued as a part of the rights offering to shareholders in December 2001. On December 14, 2001, the Company issued, at a purchase price of $104.75, units comprised of a $100 Series A Senior Secured Note and a Warrant to purchase approximately 56 shares of common stock at an exercise price of about $1.78 per share. As previously disclosed in U.S. Securities and Exchange Commission (SEC) filings, all of these warrants have an anti-dilution clause that would require the Company to reset the warrant exercise price in the event the Company issued common stock at a price less than $1.78 per share. This event would trigger the reset of the warrant exercise price below $1.78 per share. Additional information on this matter can be found by reviewing the Master Warrant Agreement and the Chesapeake Warrant, which were filed as exhibits to the Company's registration statement on Form S-2 for the rights issue. An independent business valuation firm contracted by the Company recently issued a report on the fair market value of the Series A Notes and Warrants at the time of issuance. Based on this fair market valuation, the allocation of the $104.75 issue price of the unit is 95.13% to the Series A Note and 4.87% to the Warrant. The Company expects to list on the American Stock Exchange (Amex) the shares underlying the warrants issued to Chesapeake Energy Corp. in July 2002 and the purchasers of the Series A Notes in December 2002. However, such approval is contingent on the shares being issued in conformance with Amex rules. Seven Seas Petroleum Inc. is an independent oil and gas exploration and production company operating in Colombia, South America. The Company's primary emphasis is on the development and production of the Guaduas Oil Field and exploration of the Subthrust Dindal Prospect, both of which are located in Colombia's prolific Magdalena Basin. CONTACT: Bryan Sanchez, Investor Relations, +1-713-622-8218 =========== M E X I C O =========== CINTRA: Fitch Comments On Airlines' Trust Certificates ------------------------------------------------------ Cintra, S.A. de C.V., the holding company for Mexicana de Aviacion, S.A. de C.V. (Mexicana) and Aerovias de Mexico, S.A. de C.V. (Aeromexico), recently announced the completion of negotiations with the creditors of Mexicana's $80 million trust certificates due 2006 and Aeromexico's $65 million trust certificates due 2006. Mexicana and Aeromexico entered into negotiations with the creditors of the trust certificates after their financial ratios declined below minimum covenant levels required by the trust certificates. As a result of the negotiations, Mexicana will prepay the outstanding amount of its $80 million trust certificates with proceeds from a recently acquired $110 million bank loan. This transaction is expected to be completed this week. Aeromexico has obtained financial covenant waivers that will allow the company to maintain the $65 million trust certificates. The original terms of the trust certificates, including the coupon and the amortization schedule, remain unchanged. The trust certificates are secured by current and future U.S. dollar receivables generated by airline ticket sales in the United States owed to Mexicana and Aeromexico. In addition, the trust certificates include a surety bond provided by Centre Solutions, which unconditionally and irrevocably commits to cover any shortfalls of scheduled principal and interest payments for the lives of the transactions. The results of the negotiations remove uncertainty surrounding liquidity issues faced by Mexicana and Aeromexico. The results of the negotiations have a neutral effect on the overall credit quality of Mexicana and Aeromexico, which have come under pressure as a result of the current global airline downturn. Both airlines have experienced a decline in profitability over the past several months, particularly after the September 11th events. The United States accounts for close to half of Mexicana's revenues and one third of Aeromexico's revenues. Both airlines have responded to the contraction in United States passenger traffic demand by reducing the number of flights to the United States as well as by reducing their labor force and aircraft fleet capacity. EBITDAR/Interest+Rents, which averaged 1.5 times (x) over the past several years for both airlines, has decreased to an estimated 1.0x in 2001 due to the negative operating environment and is not expected to significantly improve during the first half of 2002. A recovery in profitability is dependent on a rebound in passenger demand and continued low fuel prices. In addition to the trust certificates, both companies maintain long-term bank loans secured by aircraft. Both companies are current on their bank loans. There are no significant debt maturities over the next 12 months. Mexicana currently maintains cash balances of approximately $20 million (before the newly acquired bank loan is taken into consideration), while Aeromexico currently maintains cash balances of approximately $150 million. Fitch currently maintains 'AA' Rating Watch Negative ratings on Aeromexico's $65 million trust certificates. Until the payoff date, Fitch also maintains 'AA' Rating Watch Negative ratings on Mexicana's $80 million trust certificates. Fitch's 'BB' Rating Watch Negative unsecured foreign currency ratings for both Mexicana and Aeromexico remain under review. CONTACT: Fitch Ratings Guido Chamorro, 312/368-5473 or Samuel Fox, 312/606-2307, Chicago; or Giovanna Caccialanza, 212/908-0898, New York Media Relations: James Jockle, 212/908-0547, New York INSILCO HOLDING: Defaults on Debt Payment, Negotiations Begin -------------------------------------------------------------- Insilco Holding Co. (OTCBB:INSL) said Friday that in connection with its earlier decision to seek outside assistance in the review of its strategic alternatives, the Company will utilize the 30-day grace period under the indenture governing its 12% Senior Subordinated Notes due 2007, and will not make its scheduled $7.2 million interest payment due February 15, 2002. The failure to make the required interest payment within the 30- day grace period will create an event of default under the indenture governing the notes and the senior credit facility. Further, the Company will seek formation of an ad hoc committee of its note holders to participate in discussions with Insilco and its senior secured lenders concerning Insilco's strategic alternatives, including a consensual restructuring of its capital structure. As with any negotiation, no assurance can be given as to when and if the Company will succeed in concluding any such agreement with its stakeholders. Insilco currently has approximately $24 million in cash and cash equivalents. The Company emphasized that all of its business units are operating, and will continue to operate, as usual. Moreover, the Company stated that its financial resources currently enable it to pay in a timely manner all the operating and trade obligations associated with conducting its businesses. David A. Kauer, President and CEO of Insilco, said, "We currently have the resources to continue providing our customers with the high quality products and services to which they are accustomed, and we are committed to all current and future projects. "Our core businesses remain sound. However, the cyclical weakness in our primary markets has created a challenge for the Company given its current capital structure, which entails substantial debt-servicing at the corporate level. To assist the Company in evaluating the best way to address this situation, we recently sought the assistance of financial advisors. Insilco and our advisors look forward to working with the Company's senior secured lenders and note holders to develop a capital structure that will allow Insilco to capitalize on our strong customer relationships, broad product line and global operating presence when our primary markets rebound," he concluded. Insilco Holding Co., through its wholly-owned subsidiary Insilco Technologies, Inc., is a leading global manufacturer and developer of a broad range of magnetic interface products, cable assemblies, wire harnesses, high-speed data transmission connectors, power transformers and planar magnetic products, and highly engineered, precision stamped metal components. Insilco maintains more than 1.5 million square feet of manufacturing space and has 21 locations throughout the United States, Canada, Mexico, China, Northern Ireland, Ireland and the Dominican Republic serving the telecommunications, networking, computer, electronics, automotive and medical markets. For more information visit our sites at www.insilco.com or www.insilcotechnologies.com. CONTACT: Insilco Holding Co. Investors: Michael R. Elia, 614/791-3117 or Melrose Consulting Media: Melodye Demastus, 614/771-0860 RHI REFRACTORIES: A.P. Green To Close Mexican Facility in Ch 11 --------------------------------------------------------------- RHI Refractories Holding Company announced Friday that three of its businesses, Global Industrial Technologies, Inc. (GIT), Harbison-Walker Refractories Company, and A.P. Green Industries, Inc., as well as a number of their subsidiaries, yesterday filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. These businesses provide high- grade fireproof ceramic refractory products and services for high-temperature applications in the cement and lime, energy, chemicals, non-ferrous metals, glass, iron and steel, and environmental technology industries. RHI said the Chapter 11 filings were necessary to help the businesses manage through the current severe economic climate and the meteoric rise in the number of asbestos-related legal claims filed against Harbison-Walker and A.P. Green. The petitions were filed in the U. S. Bankruptcy Court for the Western District of Pennsylvania. North American Refractories Company (NARCO) previously filed Chapter 11 on January 4, 2002. GIT, Harbison-Walker, and A.P. Green are seeking court approval of a new $35 million debtor in possession financing facility that they believe would provide adequate capital to these businesses to meet future obligations to customers, vendors and employees. This facility is in addition to the $20 million debtor in possession financing facility obtained by NARCO, which has received interim court approval. On Jan. 4, 2002, RHI Refractories Holding Company announced a major restructuring plan to reduce debt, lower costs and increase efficiency at its core North American businesses, citing the negative impact of the slowing economy, sharply lower demand from the financially-troubled U.S. steel industry, and increasing asbestos litigation. "In the past month, facing tough market conditions and a proliferating number of asbestos claims, we reached the conclusion that Chapter 11 reorganization would also be necessary for GIT, Harbison-Walker and A.P. Green in order to strengthen the financial stability of these businesses," said Guenter Karhut, chief executive officer of RHI Refractories Holding Company. "RHI remains strongly committed to aligning our core businesses to serve key markets with products and services that exceed customer expectations. These businesses will continue operations and customer service during the reorganization process." As part of last month's announcement, RHI Refractories Holding Company stated that it would close or consolidate some facilities to reduce production capacity and redundancies. To date, the company has taken steps to reduce the workforce at its North American businesses by approximately 20 percent through layoffs and through the planned closings of A.P. Green's facility in Mexico, Missouri; and NARCO's facility in Cincinnati, Ohio. Additionally, NARCO's facilities in Ione and Indian Hill, California will also be closed or sold in the near future. The company continues to evaluate its businesses and facilities for potential cost savings and manufacturing efficiencies in order to better serve its customers and markets. CONTACT: RHI Refractories Holding Company Jonathan D. Bonime Tel. +1-412-562-6272 RHI REFRACTORIES: Company Profile -------------------------------- NAME: RHI Refractories Twin Tower Wienerbergstrasse 11 A-1100 Vienna P.O.Box 143, A-1011 Vienna Austria PHONE: +43/050 213 6123 FAX: +43/050 213 6130 WEBSITE: http://www.rhi.at EXECUTIVE MANAGEMENT TEAM: Dr. Helmut Draxler, CEO & Chairman of the Board of Management Dr. Andreas Meier, COO Dr. Eduard Zehetner, CFO INVESTOR RELATIONS: Dkfm. Markus Richter, Investor Relations E-mail: markus.richter@rhi-ag.com TYPE OF BUSINESS: The RHI Group is the world's most dynamic refractories producer. The group's entire refractories business is conducted under the umbrella brand "RHI Refractories". RHI Refractories' refractory products and brands include Veitscher, Radex, Didier, DINARIS, Dolomite Franchi, Refel, NARCO, Harbison- Walker and Zircoa. These brands have a long-standing international reputation for superior quality and innovative technology. RHI Refractories is managed from RHI AG's headquarters in Vienna, Austria. SUBSIDIARY: APGREEN DE MEXICO S.A. DE C.V. Planta y Oficinas Generales Carretera Monterrey - Colombia Km. 23.2 Salinas Victoria, N.L. C.P. 64000 Tel. 01 (81) 8237-0282; 01 (81) 8237-0570 Fax 01 (81) 8237-0580 www.apgreen.com EMPLOYEES: 2,400 SALES: 2,193.60 Euro Millions (2000) TOTAL ASSETS: 1,153.60 Euro Millions (2000) TOTAL LIABILITIES: 2,334.4 Euro Millions (2000) ================= V E N E Z U E L A ================= AES CORP: Fitch Downgrades Ratings On Multiple Issues ----------------------------------------------------- Fitch Ratings has downgraded The AES Corp.'s (AES) senior unsecured debt to 'BB' from 'BB+' and has removed AES' ratings from Rating Watch Negative. Fitch has also downgraded AES' corporate revolver and ROARS to 'BB' from 'BB+', senior subordinated debt to 'B+' from 'BB', convertible junior debentures and trust convertible preferred securities to 'B' from 'B+'. The rating action concludes a review of AES' credit that Fitch began in December of last year. The Rating Outlook for all of the issues listed above is Negative, reflecting the company's tight liquidity situation in the next 12-18 months and AES Corp.'s exposure to the Venezuela Bolivar, which started floating freely against the US dollar Wednesday Feb. 13. Due to Fitch's policy regarding the linkage of ratings of subsidiaries with those of a lower-rated parent, Fitch has also downgraded the ratings of AES' subsidiaries IPALCO Enterprises, Indianapolis Power and Light (IP&L), CILCORP and Central Illinois Light Company (CILCO). These ratings are removed from Rating Watch Negative. While IPALCO and IP&L's new Rating Outlook is Stable, CILCORP and CILCO are placed under Rating Watch Evolving to reflect the pending sale by AES. AES' ratings were placed on Rating Watch Negative in late December 2001 due to concern over the company's lack of short- term liquidity and the pending refinancing of two debt facilities associated with two subsidiaries. In early 2002 the company successfully refinanced or extended maturities of these two financings. The new ratings reflect the high consolidated leverage and high parent company leverage, the challenge of lower profitability from merchant power exposures in the US and UK, the parent company's investment concentrations in various emerging markets, as well as the benefits of significant portfolio diversification. Fitch's ratings also take into consideration recent actions by AES management to tighten controls, conserve cash, and reduce strains on corporate liquidity. AES still faces refinancing risk at the parent level as it has a $300 million senior note maturing in December 2002, a $850 million bank revolving facility in March 2003 and a $425 million bank loan in August 2003. At the same time, AES' liquidity situation could be improved if it succeeds in plans to monetize certain assets in 2002. The effective devaluation of the Venezuelan Bolivar could have significant impact on AES' parent cash flow as its Venezuela subsidiary, C.A. La Electricidad de Caracas (EDC, Fitch Foreign Currency Rating 'BB-'), had been projected to contribute over 10% of total parent cash flow in 2002. Currently EDC has a semi-annual tariff adjustment mechanism based on changes in inflation, foreign exchange rates and fuel costs. Parent cash flow from EDC could be affected by the timing under which EDC would recover the full amount of devaluation. AES' exposure to any one market or currency is mitigated by the diversified portfolio of investments in different countries and currencies. The AES Corp., founded in 1981, is among the world's largest power developers. It generates and distributes electricity and is also a retail marketer of heat and electricity. AES owns or has an interest in 182 plants, with more than 63,000 megawatts, in 31 countries and also distributes electricity in 11 countries through 21 distribution companies. The ratings of IPALCO, IP&L, CILCORP and CILCO are as follows: INDIANAPOLIS POWER & LIGHT CO. (IP&L) --First mortgage bonds and secured pollution control revenue bonds downgraded to 'BBB' from 'BBB+'; --Senior unsecured debt downgraded to 'BBB-' from 'BBB'; --Preferred stock downgraded to 'BBB-' from 'BBB'; --Commercial paper remains unchanged at 'F2'; --Rating Outlook Stable, formerly on Rating Watch Negative. IPALCO --Senior unsecured debt downgraded to 'BBB-' from 'BBB'; --Commercial Paper remains unchanged at 'F2'; --Rating Outlook Stable, formerly on Rating Watch Negative. CENTRAL ILLINOIS LIGHT CO. --First mortgage bonds and secured pollution control revenue bonds downgraded to 'BBB' from 'BBB+'; --Senior unsecured debt to 'BBB-' from 'BBB'; --Preferred stock downgraded to 'BBB-' from 'BBB'; --Commercial paper remains unchanged at 'F2'; --Rating Watch Evolving to reflect pending sale by AES, formerly on Rating Watch Negative; CILCORP --Senior unsecured debt downgraded to 'BBB-' from 'BBB'; --Rating Watch Evolving to reflect pending sale by AES, formerly on Rating Watch Negative. CONTACT: Fitch Ratings Mona Yee, 1-212-908-0557 Ellen Lapson, 1-212-908-0504 James Jockle, 1-212-908-0547 (Media Relations) CENTRAL BANK: S&P Sees Danger In Venezuela's Floating Ex Rate ------------------------------------------------------------- The announcement earlier week of a floating exchange rate regime in Venezuela means trouble for the country's banking system, said global rating agency Standard & Poor's. "Since the announcement, we have already seen the foreign exchange (fx) rate drop 24% from last week's closing level, before rebounding somewhat yesterday on Central Bank intervention," said David Olivares, an Associate with Standard & Poor's financial services ratings in Mexico City. "Accordingly, interest rates on commercial loans peaked near 100%. The high uncertainty prevailing in the economy and the loss of confidence are likely to drive the fx rate well over VB1000 per US dollar." While the sharp increase in interest rates should benefit intermediation margins, with banks able to get spreads as wide as 40 percentage points, the negative effect on asset quality will be more significant given the weak loan portfolios. High interest rates will curb customers' capacity to service their debts, driving problem loan ratios in the system up from the 7.1% (including restructured loans) reported at year-end 2001. The effect of a floating bolivar on capital will also be negative, and capital ratios will be pressured downward due to the appreciation of dollar-denominated assets and liabilities. Liquidity pressures in the system will continue. Banks have been facing significant deposit withdrawals as a consequence of the volatile economy and the lack of confidence in the system. The more difficult future operational environment is likely to prevent most Venezuelan banks from developing their business in a profitable and conservative manner. The expected peak in inflation will erode both their profits and capital. Standard & Poor's will continue to closely monitor the Venezuelan financial system under these new conditions. Standard & Poor's is a leader in providing highly valued financial data, analytical research and investment and credit opinions to the global capital markets. With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.standardandpoors.com. CONTACTS: Standard & Poor's David Olivares, Mexico City, +52-55-5279-2006 Ursula M. Wilhelm, Mexico City, +52-55-5279-2007 Roger B. Taillon, New York, +1-212-438-7400 *********** 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. 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