/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020305.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, March 5, 2002, Vol. 3, Issue 45 Headlines A R G E N T I N A BANCO GALICIA: Banco Hipotecario, HSBC Head To Head Over Control EL SITIO: Parent Denies Imminent Closure ENRON: Seeks To Recoup US$500 Mln In Azurix Investments REPSOL YPF: Set Aside EUR2.73 Bln For Argentina In FY 2001 B E R M U D A DELPHI INTERNATIONAL: Sets Dates For Liquidation Distribution GLOBAL CROSSING: Fleet Bank Objects To $750M Offer GLOBAL CROSSING: Defers Release Of 4Q, FY 2001 Results GLOBAL CROSSING: Contract Suggests Political Influence GLOBAL CROSSING: Former Exec Drags 13 Companies Into Lawsuit GLOBAL CROSSING: Appointment To Audit Committee Questioned GLOBAL CROSSING: Another Bidder Joins The Fray GLOBAL CROSSING: Zwerling, Schachter Announces Class Action Suit B R A Z I L EMBRAER: Declares Preferred Dividend to Common Shares EMBRATEL: May Sell Non-strategic Assets To Raise Funds THE JPM COMPANY: Files Ch. 11 Petition; Selling Brazilian Ops THE JPM COMPANY: Company Profile VARIG: To Put Larger Planes On NY-Sao Paulo, Miami-Manaus Routes C H I L E DISPUTADA: Codelco Abandons Purchase Plans ENERSIS: To Cut Investments By 9% This Year Amid Argentine Woes C O L O M B I A AVIANCA-ACES: Merger, Integration Completed TELECOM: Loses Almost US$19 Mln Due To FARC Attacks VALORES BAVARIA: Blames Avianca For Its 4Q Loss M E X I C O BANCA QUADRUM: IPAB Commences Liquidation Process GMM: Fitch Cuts Ratings To 'B'; Watch Negative GRUPO TELEVISA: Issuing New Bonds To Finance Debt Swap HYLSAMEX: To Release Final Debt Restructuring Plan By March-End ISPAT MEXICANA: S&P Affirms `CC' on Export Trust No. 96-1 Certs - - - - - - - - - - ================= A R G E N T I N A ================= BANCO GALICIA: Banco Hipotecario, HSBC Head To Head Over Control ---------------------------------------------------------------- Besides Britain's HSBC Holdings Plc, U.K.'s largest bank, Argentina's Banco Hipotecario is also looking to acquire a controlling stake in Banco de Galicia y de Buenos Aires, reports Reuters. "Banco Hipotecario is fighting hand to hand with HSBC for control of Banco Galicia. The deal will be determined on Wednesday," said a source close to talks, who asked not to be named. The financially troubled Grupo Financiero Galicia SA unit has been pummeled by a run on deposits amid nationwide financial chaos. The bank put up for sale a substantial part of its loan portfolio to solve its liquidity problems, while Goldman Sachs is seeking a possible buyer. Meanwhile, recent reports also suggest that Galicia may have found an investor to recapitalize its operations and hopes foreign aid may come soon after provincial governors signed a tax-sharing deal. Argentina's government signed a tax-sharing deal last Wednesday with most of its provinces after weeks of drawn-out talks. The deal is essential for the bankrupt nation to win up to US$25 billion in vital IMF aid in part to shore up its ailing banks. Analysts believe that Galicia needs a foreign owner or government bailout to regain depositor confidence. A takeover would likely depend on Argentina's government presenting a clearer plan to rebuild the country's financial system after a devaluation and US$95 billion debt default left banks with billions of dollars of losses, they said. Already, international banks face billions in losses from Argentine loans. CONTACTS: BANCO DE GALICIA Y BUENOS AIRES Teniente General Juan D. Peron 456, Piso 3 1038 Buenos Aires, Argentina Phone: +54-11-4343-7528 BANCO HIPOTECARIO SOCIEDAD ANONIMA 151 Reconquista Buenos Aires, Argentina Phone: +54 011 4347 5546 http://www.hipotecario.com.ar HSBC PRIVATE EQUITY (ASIA), LTD. 68 Upper Thames Street London EC4V 3BJ Phone:(44) 20 7336 9955/(44) 20 7336 9961 www.ib.hsbc.com/PrivateEquity GOLDMAN SACHS 85 Broad Street New York, New York 10004 Phone:(212) 902-1000(P) www.gs.com EL SITIO: Parent Denies Imminent Closure ---------------------------------------- A spokesperson for Claxson denied rumors that the Spanish- and Portuguese-language content provider is going to close its Web portal El Sitio (www.elsitio.com). In a report released by Business News Americas, the spokesperson announced that El Sitio will continue operating in home base Argentina and elsewhere in Latin America. "While it is true that there have been significant adjustments affecting the staff of the Internet department for market and strategic reasons, El Sitio's service continues to operate in Argentina, Mexico, Chile, Uruguay and Brazil," the spokesperson said. The restructuring process forms part of the migration of El Sitio away from a horizontal portal toward an entertainment site that will serve as a digital platform for Claxson's radio and TV stations, the spokesperson added. This is the second time in the last five months that Claxson has publicly denied rumors over El Sitio's imminent closure. El Sitio was hit hard by the April 2000 dotcom crash. Last September, shareholders approved a merger with Ibero-American Media Partners II Ltd (IAMP) to form Claxson Interactive Group Inc, even though they only ended up with 20 percent of the new company instead of 34 percent as originally agreed. Claxson is an integrated provider of branded entertainment content targeted to Spanish and Portuguese speakers around the world. The company has a portfolio of popular entertainment brands that are distributed over multiple platforms through Claxson's combined assets in pay television, broadcast television, radio and the Internet. Claxson was formed through the merger of El Sitio and assets contributed by the Cisneros Group and funds affiliated with Hicks, Muse, Tate & Furst Inc. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero American countries and in the United States. ENRON: Seeks To Recoup US$500 Mln In Azurix Investments ------------------------------------------------------- Enron Corp.'s water division is trying to recover about US$550 million it has invested in the water and wastewater systems in the province of Buenos Aires, the Wall Street Journal reveals. Enron's Argentine waterworks subsidiary Azurix won a 30-year concession in June 1999 under which it would pay the province US$439 million to operate its water system. However, the company decided to return the concession to Buenos Aires after its analysis showed that the conditions of the contract were not met. "We paid US$438 million and invested US$200 million. The Company was seeking small compensation, about a third from the province of Buenos Aires, but it did not happen," according to an Azurix official. Buenos Aires plans to operate the Company while preparing to call a new international bidding round within six months. Government officials assured that the change won't affect water supplies to the 2.5 million Buenos Aires residents the Company currently serves. CONTACTS: AZURIX NORTH AMERICA (HEADQUARTERS) 100 King Street West P.O. Box 57159 Jackson Station Hamilton, Ontario L8P 4X1 Phone: 888-776-7306 Fax: 905-521-9613 www.azurix.com Contacts: Stan Spencer, Senior VP, Marketing & Regional Operations Phone: 905-521-1988; 888-776-7306 Email: sspencer@azurix.com Phil Sidhwa, Regional Manager - Canada Phone: 905-521-1988; 888-776-7306 Email: psidhwa@azurix.com REPSOL YPF: Set Aside EUR2.73 Bln For Argentina In FY 2001 ---------------------------------------------------------- Spain's Repsol YPF SA, one of the world's top 10 oil companies, revealed it provisioned EUR2.738 billion for the Argentine crisis in 2001, reports AFX. Repsol said it had allocated EUR1.29 billion from pretax profits for 2001 to pay for new measures set for the oil sector in Argentina, and also took a 1.45-billion-euro asset writedown. Argentina accounts for about half of its business. Now that the government unpegged the peso currency from the dollar and slapped a 20-percent tax on oil exports in an attempt to pull itself out of a crippling economic crisis, Repsol is taking steps to offset the impact. But the earnings slide and the provisions were widely predicted by analysts, some of whom expressed a bullish outlook for a stock that has slid 13 percent since January while the European energy sector has gained 6 percent. "They've delivered on their production target, and the disposals are coming through," said analyst Doug Leggate of Commerzbank. "Whatever way you look at it, Argentina is in the price now." According to Repsol Chairman Alfonso Cortina, the firm planned to speed up cost-cutting and trim investment this year in an attempt to ease the burden of the Argentine economic crisis on its accounts. "The economic environment in Argentina is still uncertain and in this sense the Company cannot evaluate...the impact in any detail as we would like," he said. Repsol said its debt fell EUR3.84 billion in 2001 to end the year at a net EUR16.56 billion. A large proportion of the debt stems from its US$15 billion purchase of Argentine oil producer YPF in 1999. CONTACTS: REPSOL 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 ============= B E R M U D A ============= DELPHI INTERNATIONAL: Sets Dates For Liquidation Distribution ------------------------------------------------------------- In an official press release, Delphi International Ltd. (in voluntary liquidation) (the "Company") (Nasdaq: DLTDF) announced Friday that it has set a record date of March 8, 2002 (Record Date"), for the purposes of determining those common shareholders who shall be entitled to a liquidation distribution, which has been determined by the liquidator of the Company to be in the amount of $3.00 per outstanding common share. The Company expects that the liquidation distribution will be made on or before March 22, 2002. The Company also announced that its common shares will be de-listed from Nasdaq at the end of trading on March 8, 2002. Finally, the Company announced that a Final General Meeting of the Company will be held in Hamilton, Bermuda on March 28, 2002. Delphi International Ltd. (in voluntary liquidation) is the parent of Oracle Reinsurance Company Ltd. (in voluntary liquidation). CONTACT: Colin O'Connor (Liquidator) of Delphi International Ltd., +1-441-295-4142 (DLTDF) GLOBAL CROSSING: Fleet Bank Objects To $750M Offer -------------------------------------------------- Fleet National Bank, one of the major creditors of Global Crossing, has objected to the US$750-million buyout proposal presented by the telecom firm, reports the Associated Press. Fleet, which filed its objection Friday in U.S. Bankruptcy Court in the Southern District of New York, suggested that the price is too low. Additionally, Fleet stated in the filing that recent revelations by the New York Times that two Global Crossing directors, including chairman and founder Gary Winnick, secretly invested US$25 million in a firm effectively controlled by Singapore Technologies "suggest strongly that the Investment Proposal may be tainted by collusion and self-dealing." On January 28, Global Crossing presented a bankruptcy plan under which Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia would inject US$750 million for a 79 percent stake in the Company. Creditors would receive the remaining 21 percent and US$300 million in cash. Fleet reasoned that because Global Crossing has more than US$600 million of cash on hand, the buyout price would amount to less than US$150 million. Fleet, in the filing, also objected to the termination and expense reimbursements fees of US$50 million promised to Hutchison and Singapore Technologies, which it said amounts to 33 percent of the net cash offered creditors. Fleet, a subsidiary of FleetBoston Financial Corp., claims Global Crossing owes it US$77 million. GLOBAL CROSSING: Defers Release Of 4Q, FY 2001 Results ------------------------------------------------------ Under attack for alleged accounting improprieties, bankrupt Bermuda and California-based voice and data carrier Global Crossing Ltd. deferred the release of its fourth quarter and full year 2001 results in order to complete the filing of its annual report on Form 10-K, according to an article released by Internet.com. Global Crossing, which was supposed to release the results Tuesday, explained that it is still evaluating the appropriate write-down of certain of its tangible assets. It also noted that the accounting treatment of certain of its capacity transactions is under investigation by an independent committee of its board of directors, the U.S. Securities and Exchange Commission, and the U.S. Attorney's Office for the Central District of California. The Company said it expects revenue from continuing operations in the fourth quarter to amount to about US$804 million, including service revenue of about US$764 million. For the full year of 2001, the Company expects to report revenue from continuing operations of about US$3.2 billion, including about US$3.1 billion in service revenue. However, Global Crossing also said it expects to report a "significant" net loss applicable to common shareholders for the fourth quarter and for 2001. The Company said the 2001 loss will reflect items previously reported during the first three quarters, including restructuring charges of US$294 million, US$545 million related to the impairment of goodwill associated with its Global Marine unit, and about US$2 billion due to the write down of its equity investment portfolio, including its investment in Exodus Communications. Moreover, the Company said its net loss for both the fourth quarter and the full year is expected to reflect the write-off of its remaining goodwill and other identifiable intangible assets (about US$8 billion), as well as a multi-billion dollar write- down of its tangible assets. The Company explained the write-off of goodwill and other identifiable intangible assets and write- down of tangible assets will be non-cash charges. The Company also said it holds about US$1.5 billion in cash in its bank accounts on a consolidated basis as of Feb. 25, 2002, including about US$492 million of cash in Asia Global Crossing bank accounts and about US$327 million in other bank accounts that are restricted. However, the Company noted those amounts do not represent Generally Accepted Accounting Principles (GAAP) cash balances. GLOBAL CROSSING: Contract Suggests Political Influence ------------------------------------------------------ The Pentagon slackened the security requirements for a planned network in a way that let Global Crossing Ltd. remain in the bidding for the lucrative contract, says the New York Times. Last July, the Pentagon chose Global Crossing as the winner of the three-year contract to develop a network to link 6,000 scientists working on military projects. The contract was valued at US$137 million initially and up to US$450 million with options. However, competing bidders, including AT&T Corp., Qwest Communications International Inc., Sprint Corp. and WorldCom Group, complained that Global Crossing, which is incorporated in Bermuda and is a newcomer to the military industry, did not have secure American operations or workers who had received requisite background checks to manage sensitive information, as the contract specified. This prompted officials to delay the award. When Pentagon officials reopened the competition, they dropped the demand that workers who manage the network have clearances to deal with secret information, in effect removing an obstacle for Global Crossing. Since Hutchison Whampoa Ltd. of Hong Kong and a unit of Singapore Technologies proposed to buy Global Crossing, it appeared that it would be difficult for the government to award the contract, which involves the transmission of military data, to a company that may come under the control of foreign concerns, says the Times' report. It now appears that Global Crossing's political contributions and high-level connections may have had bearing on the lifting of the security clearance provision, the Times suggests. GLOBAL CROSSING: Former Exec Drags 13 Companies Into Lawsuit ------------------------------------------------------------- Roy Olofson, a former Global Crossing finance executive who filed legal proceedings against the Company for defaming him lists 13 companies he claims engaged in questionable deals with Global. Olofson claims he was fired for raising concerns about how the Company booked revenue, reports USA Today. Although Olofson's attorneys don't have clues whether these companies did anything wrong, analysts say they will be scrutinized. "All you have to do is look at the hysteria over everyone's accounting following Enron to realize" how much of an impact market uncertainty and fear has on valuations, says Standard & Poor's analyst Craig Shere. Olofson, who filed his lawsuit in federal court in Los Angeles, claimed top executives ignored his concerns, then got him fired. The lawsuit names Global Crossing Chairman Gary Winnick, Chief Financial Officer Dan Cohrs, former CEO Thomas Casey and finance executive Joseph Perrone as defendants. Olofson seeks unspecified damages, but his law firm, O'Neill Lysaght & Sun, expects millions. Olofson's lawsuit alleges that Global inflated its revenue by engaging in "sham" swaps of capacity with other telecom firms. More than 65 percent of Global's US$1.1 billion in network capacity sales in the first half of 2001 were to customers that were also selling capacity to Global, the lawsuit says. GLOBAL CROSSING: Appointment To Audit Committee Questioned ---------------------------------------------------------- Investors are skeptical over the appointments of Maria Elena Lagosimo, one of the heads of J.P. Morgan Private Bank, and Eric Hippeau, Softbank Capital Partners' managing partner, to the audit committee of Global Crossing, relates the Wall Street Journal. Their concern centers mainly to the possibility that their dual duties will generate a conflict of interest. J.P. Morgan Private Bank has been Global Crossing's private banker, while Softbank Capital has invested about US$340 million in Asia Global Crossing, Global's subsidiary. Global Crossing's Chairman Gary Winnick's tendancy to nominate major shareholders, business clients and personal friends as members of the company's board and, particularly, its audit committee, has spurred great apprehensions among investors. Mr. Winnick's actions seemed to have defied the policy on good corporate-governance, as well as the rules formulated by the New York Stock Exchange and the Securities Exchange Commission. Global Crossing has defended Mrs. Lagomasino's appointment to its board, saying that it had been sanctioned by an outside counsel. GLOBAL CROSSING: Another Bidder Joins The Fray ---------------------------------------------- An investment firm that specializes in buying failed technology companies is expected to file early this week a competing offer for Global Crossing in U.S. Bankruptcy Court in the Southern District of New York, according to an AP report. Los Angeles-based Gores Technology Group is yet to disclose how much it will offer for the acquisition of the bankrupt telecommunications firm, but it must beat a US$750 million reorganization offer submitted by Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia. According to the terms of Global Crossing's bankruptcy rescue proposal, the minimum Gores could offer would be US$800 million, including a US$40 million penalty fee for the two Asian companies. It's not known what Gores plans to do with Global Crossing, but rumor has it that it will try to salvage the Company's US$12 billion worldwide fiber optic network. A group of shareholders has earlier proposed raising US$5.5 billion over the next three years to pay creditors. However, independent financial experts doubt they would be able to do that given the public's lack of faith in Global Crossing. GLOBAL CROSSING: Zwerling, Schachter Announces Class Action Suit ---------------------------------------------------------------- Zwerling, Schachter & Zwerling, LLP ("Zwerling Schachter") announced Friday that a class action lawsuit was filed in the United States District Court for the Southern District of New York, on behalf of all persons and entities who purchased the common stock of Global Crossing, Ltd. ("Global" or the "Company") (OTC Bulletin Board: GBLXQ; formerly NYSE: GX) between April 28, 1999 and January 28, 2002, inclusive (the "Class Period"). The Complaint alleges that certain of Global's officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations during the Class Period, thereby artificially inflating the price of Global common stock. The Complaint alleges, among other things, that defendants misled investors: (1) by issuing false and misleading financial statements in violation of Generally Accepted Accounting Principles; (2) improperly recorded revenue on the Company's bandwidth trading contracts; (3) substantially overstated reported earnings and (4) failed to disclose the nature of certain swap transactions entered into during the Class Period. This misconduct caused the market prices of Global's common stock to be artificially inflated during the Class Period. Furthermore, while the Company's shares were artificially inflated, the Individual Defendants and other Global insiders engaged in insider selling of Global common stock for proceeds in excess of $144 million. On January 28, 2002, Global filed for Chapter 11 Bankruptcy protection after becoming unable to service its debt. CONTACTS: ZWERLING, SCHACHTER & ZWERLING, LLP Shaye J. Fuchs, Esq. Tel. 1-800-721-3900 Email: sfuchs@zsz.com Jayne Nykolyn, Senior Paralegal Tel. 1-800-263-7337 Email: jnykolyn@zsz.com =========== B R A Z I L =========== EMBRAER: Declares Preferred Dividend to Common Shares ----------------------------------------------------- Empresa Brasileira de Aeronautica S.A. (NYSE: ERJ) (Bovespa: EMBR3 EMBR4) hereby informs that at a Special Shareholders' Meeting held on March 1, 2002, the distribution was approved of dividend in preferred shares to all holders of its common shares and preferred shares on the reference date of March 1, 2002. The shares issued by the Company shall be traded on the Sao Paulo Stock Exchange, after the dividend, beginning March 4, 2002. This dividend results from the incorporation into the corporate capital the sum of R$342,295,494.30 registered in "Reserve for Investments and Working Capital," a statutory profit reserve. The Company will issue 88,430,168 new preferred shares, with 0.142106 preferred shares attributed to each existing common share and to each existing preferred share (dividend of 14.2106% in preferred shares). The issue price of the preferred shares derived from the reserve capitalization has been established based on the book value of the Company's shares on September 30, 2001. The preferred shares attributed as a stock dividend will have the same characteristics as the existing preferred shares of the Company. The new preferred shares will not be entitled to a dividend in connection with the year ended December 31, 2001. The stock dividend will result in an increase in the amount of preferred shares outstanding and will potentially increase the liquidity of such preferred shares in the market. The increase in the number of preferred shares resulting from the payment of the stock dividend will ensure the Company's ability to issue preferred shares in larger proportions in future capital increases, taking into account that the amendments to the corporations laws implemented by Law No. 10,303/2001 established that existing corporations could maintain a proportion of up to 2/3 of preferred shares from the total number of issued shares. Once the stock dividend is implemented, the Company shall be entitled to maintain, including in future capital increases, the existing proportion between the number of preferred shares and the total number of issued shares, as established immediately after the stock dividend. After the stock dividend, the subscribed and paid in corporate capital of EMBRAER shall be of R$1,645,838,596.07 (one billion, six hundred and forty- five million, eight hundred and thirty- eight thousand, five hundred and ninety-six reais and seven cents), comprised of 710,713,042 shares, without par value, of which 242,544,448 are common shares, including one class of special shares, and 468,168,594 are preferred shares. Delivery of the stock dividend The shares resulting from the stock dividend approved at the Special Shareholders' Meeting shall be registered in the relevant entry for each shareholder as of March 6, 2002, and the shareholders holding ADSs -- American Depositary Shares -- on the New York Stock Exchange (NYSE) shall have the ADSs registered in their respective portfolios on March 12, 2002. CONTACT: Antonio Luiz Pizarro Manso, Executive Vice President & CFO of EMBRAER, 011-5512-3927-1216, or e-mail, mercapit@embraer.com.br (ERJ) EMBRATEL: May Sell Non-strategic Assets To Raise Funds ------------------------------------------------------ Embratel Participacoes, a leading Brazilian long-distance phone company, is looking to raise between BRL100 million and BRL200 million (US$42 million - US$83 million), said Embratel vice president of finance, Jose Maria Zubiria, in a Reuters report. Accordingly, the Company is considering the sale of non-strategic assets, perhaps including its payment clearing unit, in an effort to raise the funds. Embratel plans to spend BRL100 million on local telephony in 2002 when it hopes to get regulatory approval from the government to operate local services. Earlier this month, Embratel posted a BRL554-million loss for 2001 due to nonpayment of bills, currency depreciation, and structural changes amid a slowdown in Latin America's biggest economy. According to Zubiria, the Company plans to maintain its debt level at BRL3.7 billion in 2002 and reduce investments by 27 percent to BRL1.1 billion with cuts in infrastructure spending. Internet spending would remain on par with 2001 levels. Moreover, the Company aims to increase revenue from data transmission by between 5 and 15 percent in 2002 and combat the nonpayment of bills, which hit the Company in 2001 by issuing bills with regional operators. Embratel has already closed a deal to issue bills jointly with Brazil's biggest fixed-line phone company Telemar, and is negotiating to do the same with Spain's Telefonica and Brasil Telecom. To see Embratel's financial statements: http://bankrupt.com/misc/Embratel.doc CONTACT: Embratel Participacoes S.A. Silvia M.R. Pereira Investor Relations tel: (55 21) 2519-9662 fax: (55 21) 2519-6388 email: silvia.pereira@embratel.com.br or invest@embratel.com.br or Helena Duncan/Mariana Palmeira Press Relations tel: (55 21) 2519-3653/3654 fax: (55 21) 2519-8010 email: hduncan@embratel.com.br or mpalm@embratel.com.br THE JPM COMPANY: Files Ch. 11 Petition; Selling Brazilian Ops ------------------------------------------------------------- The JPM Company (OTCBB:JPMXE) announced Friday that it has filed a Chapter 11 in the United States Bankruptcy Court for the District of Delaware. Also filing were three subsidiaries: The JPM Company of Delaware, Inc.; JPM Technologies, Inc.; and Denron Inc. The Chapter 11 proceedings allow the Company to continue to operate its facilities while simultaneously conducting an expedited sales process on a competitive bid basis for its remaining operations. JPM believes that using the procedures and protections available under the Bankruptcy Code will afford it the likeliest possibilities of finding financially sound purchasers of the operations as going concerns with substantially all of the workforce in place. However, as a requirement of law, employees in Lewisburg and Beaver Springs, Pennsylvania have been issued Worker Adjustment and Retraining Notification Act ("WARN") notifications informing them The JPM Company will no longer be their employer in sixty days. In addition to its Lewisburg and Beaver Springs, Pennsylvania operations, JPM will also be offering for sale its operations in Singapore, Europe (Germany and the Czech Republic) and Brazil. As previously announced, JPM has been working with its bank lenders to sell assets to generate cash to reduce bank debt. In the past three months, JPM has sold its Mexican and Canadian operations. The proceeds of the sale of the Mexican and Canadian operations were used to repay a portion of JPM's bank debt. JPM similarly expects that the net proceeds of the additional asset sales will go to creditors and that there will be no amounts allocated to the JPM shareholders. The JPM Company is a leading independent manufacturer of cable assemblies and wire harnesses for original equipment manufacturers and contract manufacturers in the telecommunications, networking, computer and business automation sectors of the global electronics industry. The decision to sell its businesses and commence a Chapter 11 case was precipitated by a combination of many events, all of which resulted in substantial demands on JPM's limited cash flow. JPM suffered a decrease in revenue attributable to lower sales to substantially all of its customers, particularly those in the struggling telecommunications industry. JPM had made significant debt-financed investments in growth opportunities. The decline in sales could not be balanced with a sufficient reduction in operating costs, thereby leaving JPM with debt far in excess of its current capacity to meet its obligations to its banks. In order to move forward with the sale of JPM's remaining operations, JPM's banks have agreed to ongoing use of cash in accordance with a budget submitted to the Bankruptcy Court. JPM believes that the support being provided by its banks will be sufficient to permit payment in full of all expenses incurred in operating the business after the bankruptcy filing until such time as its operations are sold. John Mathias, Chairman of JPM stated: "We deeply regret to be in the process of selling a business that my father founded in 1949. From a small start, my family and our dedicated employees nurtured JPM into a public company with annual revenues in excess of $170 million for the fiscal year ended 2000. Unfortunately, we now find the marketplace in which we operate so depressed we must sell JPM for the benefit of our creditors. We continue to work to maximize value and are hopeful, based upon the parties we expect will participate in the bankruptcy sale process, to see an environment that causes spirited bidding for our U.S. facilities as going concerns so that our loyal and talented workforce will still remain employed." COMPANY COUNSEL: Neal Colton, Esquire Cozen O'Connor 1900 Market Street Philadelphia, PA 19103 (215) 665 2060 CONTACT: The JPM Company, Lewisburg Kevin Bratton David Surgala 570/524-8526 THE JPM COMPANY: Company Profile -------------------------------- NAME: The JPM Company (OTCBB:JPMXE) 155 North 15th Street Lewisburg, PA 17837 PHONE: (570) 524-8225 FAX: (570) 524-8181 WEBSITE: http://www.jpmco.com EXECUTIVE MANAGEMENT TEAM: John Mathias, Chairman & CEO John Fitzgibbons, President & COO James Mathias, Vice Chairman Kevin Bratton, CFO Wayne Bromfield, Exec. VP, Gen. Counsel, Corp. Sec. INVESTOR RELATIONS: David J. Surgala, Treasurer Phone: (570) 524-8549 Email:dsurgala@jpmco.com TYPE OF BUSINESS: The JPM Company (OTCBB:JPMXE) is a leading independent manufacturer of cable assemblies and wire harnesses for original equipment manufacturers and contract manufacturers in the telecommunications, networking, computer and business automation sectors of the global electronics industry. Headquartered in Lewisburg, Pennsylvania; JPM also has facilities in Beaver Springs, Pennsylvania; Guadalajara, Mexico; Toronto and Calgary, Canada; Sao Paulo, Brazil; Leuchtenberg, Germany and Bela, Czech Republic. SIC: Electronics - Computer Boards, Cards & Connector Products EMPLOYEES: 3,692 LATEST FINANCIAL STATEMENTS: http://bankrupt.com/misc/TheJPMCompany.doc PUBLIC SECURITIES: Approximately 7.5 million shares FINANCIAL ADVISOR: Lehman Brothers Holdings Inc. 399 Park Avenue, 15th floor New York, NY 10022 Telephone: (212) 526-8381 E-mail: sbutler@lehman.com Contacts: Richard S. Fuld, Jr., CEO Shaun K. Butler, Investor Relations LEGAL ADVISOR: Cozen O'Connor 1900 Market Street Philadelphia, PA 19103 Phone: (215) 665 2060 www.cozen.com Contact: Neal Colton, Esquire AUDITOR: PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 Phone: (212) 596-7000 Fax: (212) 596-8910 http://www.pwcglobal.com/ ANALYSTS COVERING THE JPM COMPANY: Advest Scot C. Robinson (312) 385-4924 BC Ziegler and Company Reik W. Read (414) 270-4477 Janney Montgomery Scott Richard G. Jacobs (215) 665-6485 Needham & Company, Inc. Theodor K. Kundtz (212) 705-0381 James A. Ricchiuti (212) 705-0380 Red Chip Review Jeff Tryka (503) 417-2569 VARIG: To Put Larger Planes On NY-Sao Paulo, Miami-Manaus Routes ---------------------------------------------------------------- Signaling increased passenger demand on two of its North American routes to Brazil, VARIG Brazilian Airlines announced last Friday that it would assign larger aircraft on both its daily New York (JFK)-Sao Paulo and weekly Miami-Manaus flights effective March 04. The announcement was made by the carrier's Director-North America Vicente Cervo who noted that positive traffic growth has been recorded in recent weeks as economic indicators improve in Brazil and the United States. "We are encouraged by the steady recovery of business and leisure travel since of the depths of last fall's dramatic drop-off," Cervo said. "Consistent with actions taken globally by virtually all other major airlines, VARIG had reduced capacity to respond to the crisis in confidence by air travelers. As conditions continue to improve, we are gradually re-adjusting our flight patterns to accommodate greater demand," he added. CONTACT: VARIG Brazilian Airlines, Miami Jeff Kriendler, 305/866-2115 Email: jkriendler@aol.com ========= C H I L E ========= DISPUTADA: Codelco Abandons Purchase Plans ------------------------------------------ Exxon Mobil Corp.'s plan to sell Disputada de Las Condes copper mine in central Chile suffered a set back after Chile's Codelco, the biggest copper producer, said it dropped out of the bidding. According to a report by Bloomberg, Codelco made the decision after Exxon Mobil said that Codelco's latest offer for Disputada was too low. Codelco had been competing for the mine with companies including Brazilian mining company Cia. Vale do Rio Doce and Anglo American Plc. Previous reports have suggested that Codelco had sought bank loans to supposedly finance US$1 billion to US$1.2 billion for the upcoming tender. Codelco wanted to purchase Disputada because the mine is close to its Andina copper mine in the Andes mountains. An acquisition would have allowed it to share processing equipment and other expenses at the two mines while increasing its production. Exxon Mobil put the mine up for sale last year as part of a plan to shed its non-oil businesses. In recent years, Disputada has endured poor financial results due to low mineral production levels and depressed copper prices. ENERSIS: To Cut Investments By 9% This Year Amid Argentine Woes --------------------------------------------------------------- Enersis SA, South America's second-biggest energy company, plans to cut investment in the region by 9 percent to US$650 million this year, from the US$712 million it has spent last year, says Bloomberg. The reduction in investment follows Argentina's devaluation, which has trimmed the Company's earnings. A devaluation and recession in Argentina may reduce Enersis' earnings this year by as much as US$100 million, before interest, taxes, depreciation and amortization, said Enersis Deputy Chief Executive Officer Juan Ignacio Dominguez. Energy demand in Argentina has slumped 6 percent this year, indicating that the economy contracted even more steeply, Dominguez said. That drop will curb investment at the Company, analysts said. "They have less cash to work with because of Argentina," said Maria Teresa Ibanez, an analyst at the brokerage arm of Banco Santiago SA. Enersis, a division of Endesa SA of Spain, will make less money after the Argentine government converted energy prices into pesos from dollars following its devaluation of the currency, which has weakened by more than half this year. The changes will reduce revenue from Edesur SA, Enersis' biggest foreign unit, and Enersis' generators in Argentina. CONTACTS: ENERSIS S.A. Santo Domingo 789 Santiago, Chile Phone: (562) 688-6840 www.enersis.cl Contacts: Alfredo Llorente, Chairman Enrique Garcia, CEO Rafael Miranda, Vice Chairman Mauricio Balbontin, CFO Domingo Valdes, Gen. Counsel =============== C O L O M B I A =============== AVIANCA-ACES: Merger, Integration Completed ------------------------------------------- Avianca, Colombia's largest airline, and former rival Aces SA completed an integration that will allow the companies to cut costs and improve their ability to compete, reports Bloomberg. Mckinsey & Company designed the merged operation's new organization. Korn Ferry was hired to work on the merged operation's employment line-up. At the end of 2001, Avianca employed 3,500 workers, while Aces employed 2,043. The merger, approved by the government last year following months of deliberation, is considered vital for the companies' continued survival. Avianca lost 278 billion pesos last year, down from 414 billion pesos a year earlier. Aces estimates its 2001 losses at COP13 billion when it had hoped to post profits of COP2 billion this year. 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 TELECOM: Loses Almost US$19 Mln Due To FARC Attacks --------------------------------------------------- Colombia's Telecom, which provides long distance, local and Internet services, disclosed a loss of nearly US$19 million in the past week due to attacks by Revolutionary Armed Forces of Colombia (FARC) guerrillas against seven transmission towers, reports EFE. Rebels have dynamited telecoms networks in the provinces of Caqueta, Boyaca, Arauca, Norte de Santander, Cundinamarca and Tolima since the government called off peace negotiations last week. Guerrillas have disrupted telecommunications in more than 150 towns in those provinces. In addition to the Telecom installation, a cellular telephone antenna was damaged. In late February, Colombian finance ministry's public credit director Juan Mario Laserna announced that Telecom is expected to issue bonds worth US$300 million in the second half of this year. The Company will be issuing the bonds to cover its share of the costs incurred by joint ventures with foreign equipment vendors. The issue would be dependent on the vendors' acceptance of terms proposed by Telecom in January, based on the government's December offer to allow Telecom to take out US$600 million in debt if it can renegotiate the contracts. Colombia's weak economy caused the Company's revenues to fall short of expectations, saddling it with US$1.56 billion in liabilities under the terms of the joint venture contracts. VALORES BAVARIA: Blames Avianca For Its 4Q Loss ----------------------------------------------- Valores Bavaria SA, Colombia's largest diversified holding, posted a loss of COP738.6 billion (US$319.7 million) in the fourth-quarter 2001, compared to a profit of COP46.3 billion in the same period in the previous year, reports Bloomberg. Furthermore, the Company revealed a 68-percent drop in its revenue to COP13.7 billion from COP42.5 billion a year earlier. In an official statement, the Bogota-based company said about 65 percent of the losses can be attributed to "those actions aiming at restructuring our airline Avianca SA," including a capital increase and debt write-off that cost COP881 billion last year. "It's easy to blame Avianca on the losses, but the reality is that some of Valores' businesses show they must be overhauled as soon as possible," said Corredores Asociados SA equity analyst Willington Ospina. Javier Aguirre, Valores's president, recently revealed plans to sell assets and reduce the holding's stake in those businesses that "don't increase shareholders' value." Valores has an investment portfolio that ranges from a 34 percent stake in the Colombian unit of BellSouth Corp. to Sofasa SA, the local assembler for Renault and Toyota vehicles. Valores, which controls 91 percent of Avianca, has seen its stock lose 88 percent of its value in the past 12 months. =========== M E X I C O =========== BANCA QUADRUM: IPAB Commences Liquidation Process ------------------------------------------------- Mexico's Bank Savings Protection Institute (IPAB) will now begin the process of liquidating Banca Quadrum after its shareholders failed to find a new partner, nor contribute the funds needed to cover the bank's lack of capital. The process marks the first time that IPAB has directly intervened in and liquidated an operating bank. "The most important thing is that throughout the process we have been well-coordinated with all the financial authorities and we are carrying out the fastest bank intervention that Mexico has ever seen, even though the process has been far from simple," said Pablo Escalante, vice president of the CNBV. Quadrum would be transferred to IPAB in a matter of days, as it only remains for the Treasury Secretariat to revoke the bank's authorization to act as a bank, Escalante said. To see company's financial statements: http://bankrupt.com/misc/Bancaquadrum.doc CONTACT: Ernesto Rodriguez, Investor Relations Tel. +011-52-55-5284-5693 Email: erodrigu@quadrum.com.mx GMM: Fitch Cuts Ratings To 'B'; Watch Negative ---------------------------------------------- Fitch Ratings has downgraded Grupo Minero Mexico's (GMM) secured export notes (SENs) to 'B+' from 'BB' and its unsecured bonds to 'B' from 'BB-'. The rating action affects approximately $550 million of SENs and $450 million of unsecured bonds. All ratings are on Rating Watch Negative. The rating action reflects the company's continued tight liquidity position and protracted negotiations with its creditors. While the company continues to work with its lenders to renew credit facilities and extend a portion of upcoming debt maturities, ongoing negotiations between the company and the various creditors has increased the uncertainty and risk of satisfactorily resolving liquidity and debt amortization issues in a timely fashion. Depending upon the final outcome of these negotiations and the ultimate debt maturity/profile of the company, the credit ratings could be adjusted. At this time, GMM continues to remain current on its interest and principal payments under outstanding capital markets obligations consisting primarily of about $550 million in secured export notes (SENs), and about $450 million of unsecured bonds due in 2008 and 2028. GMM is negotiating extensions and/or new facilities for much of its bank debt due in 2002-2004; a portion of some of the bank facilities have expired or will become due in the near future. In 2002 and 2003, GMM has approximately $260 million of SENs that mature and about $200 million of bank obligations that come due. In addition, GMM faces annual interest payments of about $38 million on its unsecured bonds. Fitch's ratings incorporate the expectation that GMM will not refinance its obligations until the debt structure of its sister company, Asarco, is altered. This will likely occur during March 2002. The most important obligation that needs to be refinanced at Asarco is a $450 million credit facility that comes due in November 2002. A number of lenders have credit exposure to both Asarco and GMM. Fitch continues to believe that the company will be able to successfully complete these negotiations and transactions as a result of the expected monetization of Grupo Mexico's, (the indirect parent company of both Asarco and GMM) 74% ownership stake in Grupo Ferroviario Mexicano, S.A. de C.V. (GFM). Grupo Mexico may either sell part or all of GFM or raise funds for GMM and Asarco by obtaining a loan that is collateralized by the shares of GFM. Depending upon whether one, or both of these options are pursued, Grupo Mexico should be able to generate between $400 million-$800 million that could be used to recapitalize GMM and Asarco. If the negotiations at Asarco continue well into the second quarter of 2002, or if Grupo Mexico does not utilize its stake in GFM to raise cash during this time period, the ratings on the SENs and unsecured bonds will likely be further revised downward. GMM's long-term credit ratings incorporate the cyclical nature of the copper industry, which is currently near the trough of the cycle. During the second half of 2001, copper prices averaged near $0.65 per pound, but recently rebounded to approximately $0.70 per pound. Due to the sluggish global economic outlook for this year, copper prices are expected to remain in the low to middle $0.70 per pound range. GMM's copper mining assets, competitive cost structure and long- term business fundamentals should allow the company to produce reasonably healthy cash flows at more normal copper prices versus today's depressed prices. CONTACT: Fitch Ratings Anita Saha CFA, 312/368-3179 Joe Bormann CFA, 312/368-3349 Daniel Kastholm, 312/368-2070 James Jockle, 212/908-0547 (Media Relations) GRUPO TELEVISA: Issuing New Bonds To Finance Debt Swap ------------------------------------------------------ Grupo Televisa S.A., the largest media company in the Spanish- speaking world and a major player in the international entertainment business, was expected to launch a US$300-million bond in the United States early this week. The funds are expected to be used to finance a debt swap, says Mexico City daily el Economista. According to sources close to the operation, the bond will have a term of 10-30 years and the proceeds will be used to pay U.S. company Univision for a 10 percent additional acquisition of capital. Televisa plans to use the bond to refinance a previous bond, which expires in December 2002 for US$276 million. Televisa owns 15 percent of Univision. It originally used the US$276 million to pay part of the US$376 million price tag for an increase in its stake in the U.S. company. JP Morgan, Citibank and Deutsche Bank have been hired to act as agents in the operation. CONTACTS: Emilio Azcarraga Jean Chairman, President & CEO Alejandro Burillo Azcarraga, Vice Chairman Address: GRUPO TELEVISA, S.A. Av. Vasco de Quiroga No. 2000 Colonia Santa Fe 01210 Mexico, D.F., Mexico PHONE: (525) 261-2000 WEBSITE: www.televisa.com HYLSAMEX: To Release Final Debt Restructuring Plan By March-End --------------------------------------------------------------- Steel and industrial conglomerate Grupo Alfa SA revealed that its steel unit, Hylsamex SA, and its creditor banks expect to announce a final debt restructuring plan by the end of this month, reports Business News Americas. After a series of meetings, Hylsamex's creditor banks have finally agreed to the Company's proposal to pay off its debts in two broad loans: a US$362-million sum to be paid back over seven years with a two-year grace period, and a US$265-million loan to be paid back over eight years with a four-year grace period. Both would be subject to an interest rate of LIBOR plus 400 basis points. Alfa will back US$78 million of Hylsamex's debt through direct credit and corporate guarantees. The banks also discussed ways to make payments on a US$300 million eurobond issue and MXN675 million (US$73.8 million) of medium-term debts. The creditor banks had agreed in principle to the plan in December last year. Hylsamex's creditor banks include Banamex-Citibank, BBVA Bancomer, Bayerische Hypo-Vereins Bank and JP Morgan Chase. The Monterrey-based company and its subsidiaries have US$1.4 billion in outstanding debt. Its ability to pay that debt has been severely reduced by low steel prices and falling U.S. demand for imports. The price Hylsamex gets for exporting hot rolled flat steel to the U.S. has plummeted 30 percent since March 2000 to US$235 per short ton. Flat steel is used by the auto industry and appliance manufacturers. The Company has been looking without success for a partner to help alleviate its debt problems, leading it to seek a debt restructuring agreement with creditors. CREDITOR BANKS: BAYERISCHE HYPO- UND VEREINSBANK AG Am Tucherpark 14 D-80538 M�nchen Aktion�rs-Hotline*: 00800 - 378 000 00 (*kostenfrei und nur aus D, A, CH) Tel: +49 (89) 3 78 - 2 52 76 Fax: +49 (89) 3 78 - 2 40 83 Email: ir@hvbgroup.com http://www.hypovereinsbank.de Contacts: Christian Becker-Hussong Phone: +49 (89) 3 78 - 2 82 35 Email: Christian.Becker-Hussong@hvbgroup.com Susan Eckenberg Phone: +49 (89) 3 78 - 2 91 85 Email: Susan.Eckenberg@hvbgroup.com JP MORGAN CHASE 60 Wall Street New York, NY 10260 Phone: (212) 483-2323/648-5545 http://www.jpmorgan.com BBVA BANCOMER Av. Universidad 1200, Col. Xoco, M�xico, D.F. Phone: (52) (55) 5621-7912 http://www.bancomer.com.mx/ Contacts: David S nchez-Tembleque Tel: (52) (55) 5621-4938 Email:investor.relations@bbva.bancomer.com Jos� de Jes�s G�mez Dorantes Tel: (52) (55) 5621-4718 Araceli Espinosa Elguea Tel: (52) (55) 5621-2718 ISPAT MEXICANA: S&P Affirms `CC' on Export Trust No. 96-1 Certs --------------------------------------------------------------- Standard & Poor's affirmed its double-'C' rating on the structured export certificates of Imexsa Export Trust No. 96-1 (Imexsa), a subsidiary of Ispat International N.V. The rating on the certificates remains on CreditWatch. The rating affirmation reflects the fact that Imexsa has extended its exchange offer for the restructuring negotiations with the holders of the export certificates due in 2003 until March 11, 2002. The restructuring entails a moratorium on all capital repayments until 2005. The exchange offer was originally scheduled to expire on Feb. 22, 2002, but was extended until Feb. 28, 2002. Standard & Poor's views the restructuring as a transaction default due to the coercive nature of the exchange -- investors have little choice but to accept it -- and because investors would not receive full and timely payment of the originally scheduled debt service. As a result, the rating on the structured export certificates will be lowered to 'D' upon completion of the exchange. Standard & Poor's will closely monitor the progress of the restructuring negotiations. The payment to investors made recently was covered with the proceeds from the reserve LOC. The structured export certificate transaction is based on a long-term supply contract between Imexsa and Mitsubishi Corp., in which the latter is required to purchase enough shipments of steel slabs from Imexsa at the then- prevailing market price to cover 1.3 times the maximum debt service for each quarterly debt service period. Currently, Imexsa is not shipping any steel slabs to Mitsubishi, which constitutes a breach of a transaction covenant. Therefore, investors are now fully dependent on Imexsa's ability and willingness to make payments on the structured export certificates outside of original transaction structure. Because of this dependence on the underlying issuer, Imexsa, the transaction rating has been set consistent with the company's double-'C' local currency rating. The next payment by Imexsa is due on May 31, 2002. In the last year, Imexsa has faced difficult steel slab market conditions, high-energy prices that have reduced its profit margins, and a strike that lasted from Dec. 20, 2001 until Jan. 17, 2002, causing the stoppage of all production of the steel slabs that constitute the securitized assets. The structured export certificates entered into early amortization after being downgraded to double-'B'-minus on Nov. 23, 2000. CONTACT: Juan J Flores, Mexico City (52) 55-5279-2020 Olivier Beroud, London (44) 20-7826-3508 Federico Mora, Mexico City (52) 55-5279-2036 *********** 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. 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