/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020306.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 Wednesday, March 6, 2002, Vol. 3, Issue 46 Headlines A N T I G U A & B A R B U D A LIAT: Planned Cutbacks May Not Displace Workers Entirely A R G E N T I N A ARGENTINE CORPORATES: Fitch Ratings Reflect Increased Defaults BANCO GALICIA: Now Has Four Suitors In The Running HSBC ARGENTINA: May Pull Out of Argentina Altogether REPSOL YPF: S&P Cuts Ratings On Argentine Concerns TELECOM ARGENTINA: S&P Cuts Local Currency; Outlook Negative TELECOM ARGENTINA: Earnings Down 72% In 2001 B E R M U D A GLOBAL CROSSING: Berman DeValerio Class Action Sues Executives B R A Z I L ENRON: Commission Unveils Questionable Brazilian Operations GLOBO CABO: Shares Up On Expected Release Of Results This Week M E X I C O CINTRA: May Split Assets In Order To Carry Out Sale GRUPO ALFA: Goldman Sachs Analyst Cuts To "Market Perform" GRUPO MEXICO: S&P Lowers Ratings on Two Note Issues MINERA AUTLAN: Sinks Into The Red On Weaker Markets P A N A M A BLADEX: Appoints New Chief Operating Officer PYCSA PANAMA: Moody's Downgrades Ratings On US$130M Debt T R I N I D A D & T O B A G O BWIA: To Lay Off 140 Employees In Bid To Control Costs BWIA: Two New Aircraft Expected To Cost TT$1 Bln V E N E Z U E L A AES: Fitch Reviews Latin American Subsidiaries' Performance - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Planned Cutbacks May Not Displace Workers Entirely -------------------------------------------------------- David Stuart, director of marketing at regional carrier LIAT, revealed that the airline is examining "creative ways" of reducing its current staff compliment of approximately 770 to around 600, reports The Barbados Advocate. Stuart said the downsizing would not place employees on the breadline as LIAT is pursuing a joint venture initiative in Antigua, through which about 150 employees will be moved from directly under the airline and over to another company in which LIAT will have shares. Stuart said that the regional carrier has in place a voluntary redundancy program for staff members. According to him, the money has been secured and the separation package for these employees will be paid from an EC$30 million loan stemming from a bond issue. ================= A R G E N T I N A ================= ARGENTINE CORPORATES: Fitch Ratings Reflect Increased Defaults -------------------------------------------------------------- Fitch Ratings expects additional corporate debt defaults as the current operating environment is unsustainable for many Argentine public service (electricity, water, and natural gas) companies without some form of financial relief. The public utility sector of Argentina has been under tremendous financial pressure since the Argentine government implemented its emergency measures in January 2002. Almost immediately, affected companies sought to lessen the impact through renegotiation of concession contracts and/or tariff increases, but there was no governmental authority with which to negotiate until recently. The government decree 370, dated Feb. 22, 2002, established the commission responsible for concession contract renegotiations with the utilities. While the creation of the commission provides a central authority, the timetable for negotiations and recommendations will not improve the financial situation of the electric, gas, and water sectors anytime soon. The commission, presided by the Ministry of Economy, will have until mid-June to present the recommendations to the government. This extended time frame will not allow companies to receive much needed relief in the near term, likely prompting additional defaults. In addition, the Argentine President announced a proposal to introduce a new windfall tax on corporates with strong earnings during the last few years, with the goal of collecting US$2 billion for social assistance. While such taxes may receive populist support, they are likely not sufficient to provide the level of social assistance required and will not address the country's acute liquidity shortage and fiscal problems. In addition, adding another new tax will not compensate for Argentina's chronic under collection of existing taxes; Fitch estimates this tax leakage to be as high as 40%. Regardless, Fitch does not believe the corporate sector is able to viably absorb these potential new taxes given the negative impact of the emergency measures in the corporates cash flow and the already precarious financial position of many of the companies. Prior to the windfall tax, the emergency measures implemented by the Argentine government include: a floating exchange rate, prohibition of price and/or tariff adjustments based on foreign currency indexation; and granting the Executive authority to regulate prices of 'critical inputs, goods and services'. According to prevailing regulations, interest payments can be transferred abroad following the established procedures. However, in the cases of offshore principal payments, authorization of the Central Bank is required until May 9th, but the formal procedures have yet to be defined. Exceptions to this are principal payments to multilateral credit agencies and international organizations, which do not require authorization. These emergency measures have been detrimental to the financial flexibility and credit profiles of companies operating in the electricity, natural gas, and water sectors. The financial impact of the peso's devaluation has been significant. Most of Argentina's electricity companies have balance sheets loaded with external debt denominated in foreign currencies, principally US dollars. To service its external debt, electricity companies have to convert pesos into dollars at the floating rate, which has been floating at around two Argentine pesos per dollar. As a result, the peso's adjustment immediately increased corporate debt burden, increasing financial costs and pressuring the free cash flow generation ability of many of the segment's participants. This combination has eliminated the prospect of distributing dividends and formally closed external financing options for most of the industry's players. The result of these actions has been payment defaults on a select basis in part due to transferability restrictions and also due to lower cash flow in dollar terms. Further peso devaluation, power price controls, restricted local market refinancing options, difficulty in transferability, and the sector's vulnerability to additional political intervention will likely impair the capacity of these companies to service even scheduled interest payments in a timely manner. Without some type of compensation, additional payment defaults and a restructuring of most power companies related debt will be unavoidable. Many of Argentina's power players are owned and supported by large multinationals. While the possibility exists of receiving financial support from these parent entities, the Duhalde administration's actions have generated sufficient uncertainties to question the prudence of doing so in the absence of specific constructive sector policy recommendations. Argentine authorities have breached the spirit of the market-oriented reforms implemented during the last decade and have shaken international investor confidence. Companies with sizable investments who have a regional strategy and common creditors, both at the parent and local subsidiary level, may be more compelled to accommodate creditors to ensure future access to international bank and capital markets. However, if the Argentine government continues to expropriate value from these investments, parent companies may decide it is strategically better to delay financial support and may eventually walk away from these investments should the expected value reach zero. CONTACTS: Fitch Ratings Jason T. Todd, 1-312-368-3217 (Chicago) Giovanny Grosso, 1-312-368-2074 (Chicago) Ana Paula Ares or Cecilia Minguillon, +54 11 4327-2444, (Buenos Aires) James Jockle, 1-212-908-0547 (New York, Media Relations) BANCO GALICIA: Now Has Four Suitors In The Running -------------------------------------------------- Embattled Argentine bank Banco de Galicia, the largest private bank in the country, has seen its number of suitors double in recent days, according to a report by Business News Americas. Besides the previously reported UK-based HSBC and Argentine bank Banco Hipotecario, Brazil's Unibanco and another Argentine bank Banco Velox have also shown interest in taking control of Galicia. Galicia is being beset with liquidity problems due to the massive deposit outflow it experienced before a partial deposit freeze was imposed in December last year. The bank's owners are under serious pressure as the Argentine government slowly eases the deposit freeze in order to restart the economy and calm an outraged public. According to market observers, the Argentine public has much more confidence in the international banks operating in Argentina and the public banks, and that Galicia's lack of a strong international backer makes it a natural target for a deposit run once the public can withdraw money on a larger scale. Galicia and Goldman Sachs executives are on a road show in the US and Europe to convince international creditors to swap debt for shares with Galicia's owners - three Argentine families. Galicia spokespeople have indicated that the controlling families are willing to give up control in order to save the bank from bankruptcy. 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 HSBC ARGENTINA: May Pull Out of Argentina Altogether ---------------------------------------------------- HSBC Holdings Plc, Europe's largest bank by market value saw its full-year profits dented by $1 billion on provisions against loans in Argentina. As a result, its chairman, Sir John Bond, announced the bank is prepared to exit the beleaguered country. "The situation (in Argentina) changes from hour to hour. We may have to reassess our policy," Sir John said. Bad debt provisions in total, at US$2 billion, were double the previous year's figure. HSBC's pre-tax profits plunged 14 percent to US$8.8 billion compared with US$10.9 billion the previous year. The figure was accentuated by a US$520-million foreign currency trading loss after the Argentine Government's decision to introduce a punishing foreign exchange regime for banks. HSBC also made a general US$600 million provision against other loans in the country. HSBC had US$4.9 billion of Argentine exposure as of June 30 last year. REPSOL YPF: S&P Cuts Ratings On Argentine Concerns -------------------------------------------------- Repsol-YPF SA had its long-term corporate credit rating downgraded by Standard & Poor's Corp (S&P) to `BBB' from `BBB+' due to concerns about Argentina. Furthermore, S&P also lowered the Company's short-term corporate credit rating to A-3 from A-2. According to the ratings agency, the ratings outlook is negative. The downgrades follow the release of fourth quarter results on March 1 and "reflect Standard & Poor's view that the Argentinean economic and fiscal environment is deteriorating faster than expected and remains unpredictable, bearing on the company's business profile locally and leading to lower 2002 credit measures than required at previous rating levels," S&P said. S&P said it now estimates Repsol's 2002 ratios of funds from operations to debt, and EBITDA to interest, in the 25-30 percent and 5.5-6 times ranges, compared with the 30 percent and 6 times respective minimum levels expected for a `BBB+' rating. The downgrade also reflects continuing uncertainty over the negotiations with the Argentine government on local natural gas and refined product prices and on additional taxes, with the export duty starting with effect from March 1, S&P said. S&P noted that depreciation of the Argentine peso, potentially beyond its current level, "adds to cash-flow unpredictability." According to Emmanuel Dubois-Pelerin, an S&P credit analyst, S&P currently sees the `BBB' rating as "a floor, even under very stressful circumstances", and the negative outlook "purely reflects the remaining possibility of additional sharply negative actions from the Argentinean government." TELECOM ARGENTINA: S&P Cuts Local Currency; Outlook Negative ------------------------------------------------------------ Standard & Poor's said Monday it lowered its local currency corporate credit rating on Telecom Argentina STET-France Telecom S.A. (TECO), an Argentine-based integrated telecom provider, to double-'C' from triple-'C'-plus based on its increased refinancing risk within the context of very high uncertainty for the telecom industry in Argentina. The outlook is negative. The foreign currency rating remains 'SD' (selective default), given that exchange controls are preventing most Argentine companies from making payments on foreign indebtedness in a timely manner. As of September 2001, TECO had US$298 million in cash and short- term investments (at a Argentine peso 1:US$1 exchange rate) and US$3.4 billion in total debt. "TECO faces considerable challenges to successfully refinance its significant maturities in 2002. The challenges derive from the uncertainty about the future evolution of the exchange rate and its potential effect on inflation, economic activity, and collection; and, most importantly, the future renegotiation of contracts poses additional concerns," commented Standard & Poor's credit analyst Marta Castelli. TECO faces significant debt maturities of about US$1.2 billion in 2002, including a Euro 250 million bond in July 2002. In addition, the pricing mechanisms for tariffs included in TECO's license (dollar denomination and U.S.-inflation adjustment clauses) were abolished at the beginning of 2002. The government has established a period of 120 days for the renegotiation of the contract that appears too long considering the significant uncertainties regarding the future of the industry after tariffs were frozen earlier this year. Further complicating TECO's financial position is the fact that its debt is mostly denominated in foreign currency, thus the freeze and pesification of the tariffs creates a dramatic cash flow mismatch for the company. TECO is one of two incumbents telephone companies in Argentina, holding about 46% of total lines in service and 31% of total mobile subscribers. TECO provides integrated basic telecommunications services (local telephony as well as national and international long-distance service, mobile communications, and data transmission) throughout the country. The important investments carried out by TECO since privatization have allowed the company to consolidate its business position and diversify its revenue mix. TELECOM ARGENTINA: Earnings Down 72% In 2001 -------------------------------------------- For the first time since its privatization, Telecom Argentina reported a decrease in its earnings during the full year 2001. Telecom Argentina was split into the two companies, Telecom and Telefonica, when it was privatized. According to the Company, its net earnings during the period dropped 72 percent to ARS47 million (US$23.5 million) from the amount it posted in 2000. The Company's earnings dipped due to a decrease in usage prompted by the economic crisis, market analysts said. In a report issued to the Buenos Aires Stock Exchange, Telecom reported losses of ARS17 million (US$8.5 million) during the last quarter of 2001. During the first three quarters of 2001, Telecom registered accumulated earnings of ARS64 million (US$32 million). Its net income in 2000 was ARS166 million (US$83 million). Telefonica Argentina on Thursday from Madrid also reported losses of ARS35 million (US$17.5 million) for the fourth quarter. The social capital of Telecom Argentina, a company equally owned by France Telecom and Telecom Italia, is ARS984 million (US$492 million) with non-appropriated earnings of ARS414 million (US$207 million) and stockholders' equity of ARS2.37 billion (US$1.185 billion). ============= B E R M U D A ============= GLOBAL CROSSING: Berman DeValerio Class Action Sues Executives -------------------------------------------------------------- A securities class action is pending against several top officers of Global Crossing Ltd. (NYSE: GX) (OTC Bulletin Board: GBLXQ) who allegedly released false and misleading financial statements to investors, Berman DeValerio Pease Tabacco Burt & Pucillo said today. The class action was filed February 11, 2002 in the U.S. District Court for the Southern District of New York and seeks damages for violations of federal securities laws on behalf of all investors who bought Global Crossing stock from January 2, 2001 through October 4, 2001 (the "Class Period"). Berman DeValerio has represented investors in class actions for 20 years. To review the complaint and learn more about becoming a lead plaintiff, visit the firm's Website at www.bermanesq.com. The complaint charges five top Global Crossing managers with artificially inflating earnings by improperly recording and reporting cash and revenue from certain long-term lease contracts for the rights to use the company's fiber optic cable network. Simultaneously, the complaint says, Global Crossing entered into substantially similar agreements with the same companies to purchase bandwidth capacity from them in a different area. In essence, the complaint alleges that these swap transactions were improperly recorded to artificially inflate the company's financial results. At the same time, the company was carrying an increasingly heavy debt burden that was exacerbated by an ever-shrinking market for bandwidth. This forced the company to drastically lower its prices. The company was unable to offset the declining demand for bandwidth capacity with the sale of customized provider services because, unknown to investors, the defendants had no viable plan for establishing Global Crossing as a provider of these services, the complaint says. Also during the Class Period, the complaint says, the individual defendants and other Global Crossing insiders generated more that $149 million from insider stock sales. The full extent of Global Crossing's financial crisis began to emerge on October 4, 2001 when the company announced that its third quarter 2001 cash revenues were $400 million below expectations and that it was selling off its desktop trading systems division. The complaint says that investors were also stunned by the announcement that the company's expected recurring adjusted EBITDA would fall almost $300 million less than analyst expectation. In reaction to these statements, Global Crossing stock plunged 49% to $1.07 per share. CONTACTS: BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO Patrick T. Egan, Esq. 1-800-516-9926 Jeffrey C. Block, Esq. Patrick T. Egan, Esq. One Liberty Square Boston, MA 02109 (800) 516-9926 law@bermanesq.com =========== B R A Z I L =========== ENRON: Commission Unveils Questionable Brazilian Operations ----------------------------------------------------------- In Brazil, Enron used LJM, an investment company belonging to Enron's ex-finance director, to artificially reduce its share of the EPE energy company, and thus avoid having to report losses suffered by EPE. A report of the special commission investigating the financial activities of Enron recently revealed the information. The report explained that the process came about by selling Enron's 13 percent share in EPE to LJM for BRL11.3 million. Enron then repurchased the share for US$14.4 million, even though the assets of EPE in the Cuiaba thermoelectric plant had probably lost market value due to technical and environmental problems. This operation is being cited by the commission as just one example of how Enron's foreign assets were often evaluated above their true market value. Enron filed for bankruptcy protection early December 2001 in the largest Chapter 11 case ever after Dynegy Inc. abandoned its US$23 billion takeover of the Houston-based energy trader. CONTACTS: Mark Palmer of Enron Corp., +1-713-853-4738 Enron Corp. Investor Relations Dept. P.O. Box 1188, Suite 4926B Houston, TX 77251-1188 (713) 853-3956 Email: investor-relations@enron.com Enron Corp. Public Relations Dept. P.O. Box 1188, Suite 4712 Houston, TX 77251-1188 (713) 853-5670 GLOBO CABO: Shares Up On Expected Release Of Results This Week -------------------------------------------------------------- Globo Cabo SA, which is restructuring its debt-saddled business in a sluggish economy, saw its preferred shares rise 2.8 percent to BRL0.74 as it is expected to release fourth-quarter results this week, says Bloomberg. The cable television company's results are affected by the currency fluctuations since most of its debt is dollar denominated. In the last three months of the year, the real gained 16 percent, reducing Globo Cabo's financing costs. Carolina Gava, analyst with BES Securities is forecasting Globo Cabo to post BRL28 million net loss in the quarter, compared with implied consolidated net losses of BRL161.8 million in the same period a year ago. Globo Cabo is the biggest decliner this year among the 57 stocks on the Bovespa index, losing 22 percent, compared to a 6.1 percent decline by the Bovespa. The drop in share value reflects the Company's losses in cable TV and Internet subscribers, amplified by the general economic downturn affecting its bottom line. CONTACT: GLOBO CABO S.A. INVESTORS: Luis Henrique Martinez, 5511-5186-2684, lmartinez@globocabo.com.br, Marcio Minoru, 5511-5186-2811, minoru@globocabo.com.br, =========== M E X I C O =========== CINTRA: May Split Assets In Order To Carry Out Sale --------------------------------------------------- Corporativo Internacional de Transporte A�reo (Cintra), which controls the airlines Aerom�xico and Mexicana, will have to split its assets in order to carry out its sale. According to a report in Mexico City daily el Economista, the division could occur during an ordinary shareholders assembly to be held March 19, where a restructuring program will be proposed for approval. Director general of the Mexico City International Airport, Enrique Gonz lez, called on the Transport and Communications Secretariat (SCT) to define the situation with Cintra as soon as possible. "This is an important issue which the country is looking at within aviation policy, and I prefer that the head of the SCT make a statement on the matter," Gonzalez said. Also in the assembly, Cintra will designate the special delegates to ensure the fulfillment of the resolutions adopted by the assembly. Meanwhile, Jes�s Orozco, president of the Chamber of Deputies Communications Commission, urged the Federal Competition Commission (CFC) to reconsider a decision to split Cintra when it is sold. Orozco said the airline industry has done a complete about-face since that decision was made, and now may not be the best time to sell the company. "We should wait and see how 2002 develops to make the most sensible decision, considering alternatives to the sale, such as injecting funds and restructuring Cintra," Orozco said. CONTACTS: CINTRA Jaime Corredor Esnaola, Chairman Juan Dez-Canedo Ruiz, CEO Rodrigo Ocejo Rojo, CFO Xola 535, Piso 16, Col. del Valle 03100 M,xico, D.F., Mexico Phone: +52-5-448-8050 Fax: +52-5-448-8055 OR C.P. Francisco Cuevas Feliu, Investor Relations Xola 535, Piso 16 Col. del Valle 03100 M,xico, D.F. Tel. (52) 5 448 80 50 Fax (52) 5 448 80 55 infocintra@cintra.com.mx AEROMEXICO Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or mweitzman@aeromexico.com MEXICANA DE AVIACION Jenny Jenks, Marketing Director, International Division of Mexicana Airlines, +1-210-491-9764, or ennyjenks@mexicana.com GRUPO ALFA: Goldman Sachs Analyst Cuts To "Market Perform" ---------------------------------------------------------- Gordon Lee, an analyst at Goldman, Sachs & Co., downgraded steel and industrial conglomerate Alfa S.A. to "market perform" from "market outperform," reports Bloomberg, without giving further details. Recent reports suggest that Alfa's steel unit and its creditor banks expect to announce a final debt restructuring plan by the end of this month. Already, Hylsamex's creditor banks have 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. Hylsamex's creditor banks include Banamex-Citibank, BBVA Bancomer, Bayerische Hypo-Vereins Bank and JP Morgan Chase. 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 GRUPO MEXICO: S&P Lowers Ratings on Two Note Issues --------------------------------------------------- Standard & Poor's lowered its ratings on Grupo Mexico Export Master Trust No. 1's secured export notes series B-1, C, and D to triple-'C'-plus from double-'B'-minus. These ratings remain on CreditWatch, where they were placed on Nov. 9, 2001. In addition, ratings on the Grupo Minero Mexico S.A. de C.V. (GMM) guaranteed senior notes (series A and B), were also lowered to triple-'C'- plus from double-'B'-minus and remain on CreditWatch. The triple- 'A' rating on the Grupo Mexico Export Master Trust No. 1's series E notes, insured by MBIA Insurance Corp. (MBIA; triple-'A' financial enhancement rating) was affirmed. The downgrade of the uninsured series of the Grupo Mexico Export Master Trust No. 1, as well as the GMM senior notes, stems directly from the reduction in GMM's corporate credit rating to triple-'C'-plus from double-'B'- minus. As is the case with most future flow transactions, Standard & Poor's views the corporate credit rating of GMM (the originator of the securitized assets) as the best proxy for the likelihood that this entity will continue operating and exporting the securitized products. The rating on the structured finance transaction cannot, therefore, be any higher than the corporate credit rating of the issuing entity. The affirmed triple-'A' rating of the series E notes of the Grupo Mexico Export Master Trust No. 1 secured export notes program is based on the full financial guarantee provided by MBIA. The Grupo Mexico Export Master Trust No. 1 notes entered into early amortization in September 2001. Upon the occurrence of the accelerated amortization event, all collections from export sales committed to the payment of the secured export notes were trapped in the collection account. Initially, certificateholders waived the early amortization event until Jan. 9, 2002. After that date, proceeds from export sales were trapped in the collection account. On Feb. 15, 2002, the certificateholders again waived the early amortization event until March 28, 2002. Therefore, export sales are not currently trapped into the collection account. GMM is a subsidiary of Grupo Mexico S.A. de C.V. (Grupo Mexico), the world's third largest copper producer, as well as a producer of other base metals such as zinc, silver, lead, and gold. Grupo Mexico is also the majority owner of GMM, ASARCO Inc., and Southern Peru Copper Co. The reduction in the corporate rating of GMM reflects the continued financial flexibility deterioration both at GMM and ASARCO. (See related press release on Grupo Minero Mexico S.A. de C.V., published on March 1, 2002.) CONTACT: STANDARD & POOR'S, Mexico City Juan J. Flores, +52-55-5279-2020 Federico Mora, +52-55-5279-2036 MINERA AUTLAN: Sinks Into The Red On Weaker Markets --------------------------------------------------- Mexican manganese producer Cia Minera Autlan registered a loss of US$22.7 million (MXN207 million) in 2001, compared to a MXN17.8- million profit in 2000, due to shrinking markets. In 2001, Autlan, which mines and process manganese ore at several points in central and western Mexico, reduced its production by 13 percent compared to 2000, and also temporarily shutdown some of its operations in order to offset weaker demand. In a bid for fresh capital, Autlan hired France's Paribas bank in the second half of 2001 to help it search for a strategic investor, but has so far found no takers. It also announced plans to offload non-core assets, including a stable of properties throughout Mexico. Last month, Autlan's directors met with representatives from its creditor banks to present a plan for restructuring US$186 million in debt. The creditor banks are led by ABN Amro, BBVA Bancomer and Bank of Montreal. While a full plan is yet to be approved, the initial results of the meetings have been favorable. CREDITOR BANKS: BANK OF MONTREAL 100 King Street West 1 First Canadian Place, 18th Floor Toronto, ON M5X 1A1 Tel: 416-867-6656 Fax: 416-867-3367 Email: investor.relations@bmo.com URL: www.bmo.com GRUPO FINANCIERO BBVA BANCOMER Av. Universidad 1200, Col. Xoco, M,xico, D.F. Tel: (52) (55) 5621-4938 (52) (55) 5621-4966 Fax: (52) (55) 5621-7912 Email: investor.relations@bbva.bancomer.com Contacts: David S nchez-Tembleque ABN AMRO Investor Relations(HQ1191) Gustav Mahlerlaan 10 PO Box 283 1000 EA Amsterdam The Netherlands Tel. +31 (0) 20 628 78 35 Tel. +31 (0) 20 628 78 37 Email: investorrelations@nl.abnamro.com =========== P A N A M A =========== BLADEX: Appoints New Chief Operating Officer -------------------------------------------- Banco Latinoamericano de Exportaciones, S.A. (NYSE: BLX) (BLADEX) announced Monday the appointment of Jaime Rivera as Chief Operating Officer, effective March 11, 2002. Mr. Rivera, 48, joins BLADEX from Bank of America where he spent nearly 25 years in a commercial and investment banking career focusing on Latin America, with postings in the United States, Brazil, Argentina, Chile, Venezuela and Guatemala. His assignments afforded him direct responsibility for corporate and financial institutions business development, risk management, transaction structuring, country management and information technology. In his latest position with Bank of America, Mr. Rivera led the institution's highly reputed Miami-based Financial Institutions team, focusing on expanding the scope of the traditional correspondent banking functions to include capital raising, advisory and electronic banking solutions to a client set that included the most important banks in more than 25 countries in the Latin American region. Prior to his assignment in Miami, Mr. Rivera was posted in New York as a Managing Director of the Latin America Corporate Finance team. Jose Castaneda, Chief Executive Officer of BLADEX, said, "After a long search to fill this unique opportunity at BLADEX, we are extremely pleased to have found an individual whose professional experience and skills so closely match the strategic long-term needs of this organization. Jaime Rivera has a demonstrated record of leadership, creativity, relationship-building skills and intimate familiarity with the region. His customer-focused orientation to the business we are engaged in, combined with his motivational skills, extensive product knowledge and personal integrity, will be important for BLADEX's future success." Mr. Rivera commented: "I am extraordinarily pleased to be joining BLADEX, an institution with unquestionable expertise and commitment to supporting the growth of Latin America and its clients. The evolving financial services needs of banks and corporations operating in the region offer BLADEX a unique opportunity to further diversify and strengthen the quality and stability of its earnings, while adding significant shareholder value to its owners. I am looking forward to making a significant and immediate contribution to this effort." Born and raised in Guatemala City, Mr. Rivera holds an M.B.A. degree from Cornell University and an M.S. from Northwestern University. BLADEX, with approximately $5.9 billion in assets, is a specialized multinational bank established to finance trade in the Latin American and Caribbean region. Its shareholders include central banks from 23 countries in the region and 159 commercial banks (from the region, as well as outside the region) and private investors. Its mission is to channel funds for the development of Latin America and the Caribbean, and to provide integrated solutions for the promotion of the region's exports. BLADEX is listed on the New York Stock Exchange. CONTACTS: Carlos Yap S. Vice President, Finance and Performance Management BANCO LATINOAMERICANO DE EXPORTACIONES S.A. Head Office Calle 50 y Aquilino de la Guardia Apartado 6-1497 El Dorado Panama City, Republic of Panama Tel No. (507) 210-8581 Fax No. (507) 269 6333 E-mail Internet address: cyap@blx.com or William W. Galvin The Galvin Partnership 67 Mason Street Greenwich, CT 06830 U.S.A. Tel No. (203) 618-9800 Fax No. (203) 618-1010 E-mail Internet address: wwg@galvinpartners.com PYCSA PANAMA: Moody's Downgrades Ratings On US$130M Debt -------------------------------------------------------- PYCSA Panama SA, which has been in default since June 2001, saw the rating on its roughly US$130 million in debt downgraded by Moody's to `Ca' from `Caa3.' The cut in the rating reflects the Company's inability to meet debt service, unsuccessful attempts to restructure the debt and concerns about their ability to maintain the concession. Though in default since June 2001, it made partial payments in September and December of the same year. Based on current road usage projections of roughly 2 percent per year and assuming no construction of extensions to the existing concession, bondholders could expect to see roughly 74 percent of their expected principal and interest. However, project reserve funds are reportedly exhausted. Moody's is also concerned over the vague language in the concession contract regarding the rights of the government to void the concession in the event of bankruptcy or the concessionaire's financial or technical ability to meet the concession requirements. It is the latter that is particularly worrisome absent a restructuring. CONTACTS: PYCSA Proyecto y Control S.A. Vel zquez 31, 2� Planta 28001 - Madrid Espa�a Phone: +34914313403 Fax: +34915779705 E-mail: pycsam@lander.es BONDHOLDERS: 1. CREDIT SUISSE FIRST BOSTON - NEW YORK Eleven Madison Avenue New York, NY 10010 Tel: 1 212 325 2000 www.csfb.com Contacts: Richard E. Thornburgh, CFO John J. Mack, CEO CREDIT SUISSE FIRST BOSTON - LONDON One Cabot Square London E14 4QJ United Kingdom Tel: 011 44 20 7888 8888 Fax: 011 44 20 7888 1600 2. JOHN HANCOCK FINANCIAL SERVICES, INC. Investor Relations Dept. Post Office Box 111 Boston, MA 02117 Phone: 617-572-7353 Fax: 617-572-9799 http://www.jhancock.com 3. LOOMIS SAYLES & CO. - BOSTON (HEADQUARTERS) One Financial Center Boston, MA 02111 Phone: (617) 482-2450 Fax: (617) 357-6158 http://www.loomissayles.com LOOMIS SAYLES & CO. - NEW YORK 1251 Avenue of the Americas, 16th Floor New York, NY 10020 Phone: (212) 703-2600 Fax: (212) 703-2639 http://www.loomissayles.com ================================= T R I N I D A D & T O B A G O ================================= BWIA: To Lay Off 140 Employees In Bid To Control Costs ------------------------------------------------------ BWIA West Indies Airways announced it would lay off 140 employees in Trinidad and Tobago in an attempt to keep costs down as a result of the turbulence in the airline industry following the September 11 terrorist attack in the US. Frank Simpson, Vice-president of Employee Service, revealed among those to be laid off are pilots, management staff (executive, middle and supervisory), general administrative staff and maintenance workers. Flight attendants will not be affected, he said. Sampson said these latest changes follow a post-September 11 review of BWIA. He said the positions to be terminated are those considered redundant. "We have now determined in which positions and in what numbers we have a surplus to the organizational requirement," he explained. Sampson said discussions have been held with trade unions, which represent BWIA employees. The unions have been reportedly notified about the redundancies within the classifications contained in the collective agreements. A voluntary separation of employment package will be offered to persons in positions considered redundant. He said deadline for this package will be on Friday after which an assessment will be made on which VSEP applications will be accepted. However, the Aviation Communication and Allied Workers Union criticized the planned job cuts. "We're sure that the intention to lay off the workers is not justified," said union president, Christopher Abraham, adding that the union had not yet had time to study the plan. Additionally, about 31 employees who work outside Trinidad and Tobago, will also be affected by the lay offs. Sampson said discussions will be held with the unions representing these employees before any decision is made. BWIA first reacted to decline in the travel market by reducing flights by 10 percent, and subsequently cut travel agents' commission to 6 percent from 9 percent. Last October, BWIA carried 10,000 fewer passengers on its routes through the Caribbean, eastern United States, Toronto and England compared with the same period in 2000. Travel on the airline plummeted by 25,000 in November when compared to November 2000. Airline President Conrad Aleong estimates that if the decline in travel keeps up, the airline could lose $30 million of its average $260 million in annual revenue. BWIA: Two New Aircraft Expected To Cost TT$1 Bln -------------------------------------------------- Conrad Aleong, BWIA chief executive officer, announced the arrival of two new aircraft that could cost the company TT$1 billion, according to a report released by The Trinidad Guardian. In response, the Aviation, Communication & Allied Workers Union said that the purchase of any new aircraft at this time would be premature and unnecessary. Last month, BWIA strongly denied a January report by the International Lease Finance Corporation on its Web site that the airline had purchased any A340-300s. BWIA, at the time, would only admit that the airline was actively pursuing the acquisition of new aircraft to replace its ageing Lockheed L1011-500 Tristars. The airline also intends to retire its McDonnell-Douglas MD 83s. However, in a March 1 release to staff, Aleong announced they will be taking delivery of one A340-300 in June and a second in December. ================= V E N E Z U E L A ================= AES: Fitch Reviews Latin American Subsidiaries' Performance ----------------------------------------------------------- Despite investor concerns over AES' exposure to Latin America, its subsidiaries continue to operate normally and have not been affected by the credit pressures on AES. Fitch Ratings recently reduced ratings on AES' debt, citing concerns about high parent debt leverage and tight liquidity position. Fitch's analysis also pointed out AES' concentrated exposure to Latin America and the volatility inherent in these markets. The rating action incorporated Fitch's detailed evaluation of AES' largest Latin American subsidiaries and their expected cash flow. Particular emphasis is placed on Venezuela, Brazil, Chile, and Argentina. In an effort to add clarity to the picture of AES' investments in Latin America, Fitch is providing a brief update of the credit quality of these companies. Fitch provides international credit ratings on a number of AES larger investment in Latin America. Those AES subsidiaries rated by Fitch, their countries and current ratings are as follows: Company/Locale Currency Rating/ Foreign Currency Rating -Eletropaulo Metropolitana (Brazil) 'BBB-'/'BB-' -AES Tiete (Brazil) 'BBB-' Rating Watch Negative/'BB- -C.A. La Electricidad de Caracas (Venezuela) 'BB+'/'B+' -AES Gener (Chile) 'BBB'/'BBB' -AES Clesa (El Salvador) 'BBB-'/BB+ -AES Panama (Panama) 'BBB-'/'BBB-' The ratings of AES' Latin American subsidiaries are based on the stand-alone credit quality of each company and reflect the non- recourse nature to AES of their respective debt obligations. Thus, the credit ratings have not been affected by the recent downgrade of the senior unsecured rating of AES to 'BB' from 'BB+'. The ratings generally reflect the dominant positions of these companies in their respective countries, as well as their efficient, low cost operations. Further factored into the ratings are the exposure of these companies to currency, political, regulatory and economic risks in Latin America, and these companies' positive track record in responding to these risks. The ratings of the subsidiaries also take into consideration the ring-fencing and insulation these companies enjoy through local laws and regulations, which significantly limit the ability of any foreign proceedings to attach assets domiciled abroad. Additionally, in some cases, such as in Brazil where the company has acquired a concession, regulations generally prevent the impairment of credit quality for the sake of increased equity distributions. The structural insulation of these companies is supportive in assigning a stand-alone credit rating to AES' subsidiaries, and limits the AES' flexibility to receive extraordinary cash flows from subsidiaries. Importantly, Fitch's current ratings of AES incorporate these issues and have not changed since the rating action on Feb. 15, 2002. In Venezuela, Electricidad de Caracas (EDC) has been recently affected by the devaluation of the Bolivar, which has fallen 30%- 40% since year-end 2001. While the electricity law calls for semi-annual tariff adjustments that reflect changes in the exchange rate and inflation and monthly fuel prices, it may be difficult for EDC to realize the full increase in 2002 given the political impact of such an action. In lieu of direct tariff increases, other forms of compensation are possible, and may be more likely. Additionally, EDC has already identified some expense and capital expenditure reductions to help offset the impact of the devaluation. EDC's local currency rating is supported by solid credit-protection measures, which can absorb the effects of a devaluation and/or a lack of full increase in tariffs and continue servicing debt. Nevertheless, without some sort of tariff adjustment or other compensation, earnings and cash flow for 2002 would be reduced, which may pressure credit quality. Dividends to AES a re based on retained earnings from the previous periods, which Fitch estimates should approximate $100-$135 million for all of 2002. The ownership by AES has added benefits by its implementation of best practices that has and should continue to improve EDC's efficiency and cash flow. EDC's foreign currency rating was recently downgraded following Fitch's downgrade of the Bolivarian Republic of Venezuela's long-term foreign currency debt rating to 'B+' from 'BB-'. In Brazil, Eletropaulo and Tiete should benefit from an end to rationing and the government's constructive resolution to restore lost revenue related to the rationing program. Eletropaulo will receive the cash component of its margin recovery of revenues lost from the rationing program (booked in 2001 for accounting purposes). The end of rationing and an expected tariff adjustment in July should stabilize the company's revenues and cash flow. Eletropaulo's rating remains on Negative Rating Outlook primarily due to the company's sizable debt refinancings. However, the company continues to exhibit good access to the local capital markets and local and international bank markets. Holding company debt with BNDES at AES ELPA and AES Transgas is expected to be refinanced upon maturity, as dividends from Eletropaulo should flow unencumbered up to AES. These investments could require additional financial contribution from AES if the BNDES debt can not be refinanced. For AES Tiete, the end of rationing means a return to normal operations, with revenues collected based on its take-or-pay supply contracts and electricity supply supported by the total amount of electricity produced by the hydroelectric system. Debt service is manageable with operating cash flow. The Rating Watch status is expected to be resolved in the near term following a review of the financial condition from 2001 and reflecting an end to rationing. The credit quality of Gener, AES' Chilean investment, is supported by the company's strong position in the Chilean electricity market, its portfolio of thermal generating plants, its strategy of focusing on core electricity generation in Chile, conservative financial policies and experienced management. The credit rating also factors in the soundly administered regulatory system in Chile, as well as an economically strong and growing service area. The pending sale of Itabo, a power plant in the Dominican Republic, should be completed during the first quarter of 2002. Current credit protection measures are low for the rating category but are expected to improve to the levels reflective of the 'BBB' rating in the near term as a result of the restructuring. In Argentina, the financial impact of peso's devaluation impact on AES' investments has been significant. Most of Argentina's electricity companies have balance sheets loaded with external debt denominated in foreign currencies, principally US dollars. As a result, the peso's adjustment immediately increased corporate debt burden, reduced value from corporate entities, increased financial costs and pressured the free cash flow generation ability of many of the segment's participants. This combination has formally closed external financing options, as well as the desire for new investments. Fitch expects that AES and its subsidiaries will try to negotiate long-term plans to recapture some of the lost economic value of their enterprises. However, given the established timetable for negotiations of concessions and tariffs, any improvement in earnings and equity values will likely be delayed for at least four to six more months. While AES is not expected to contribute additional funds to the country, dividend flows from Argentine investments should not be expected. Located in the Republic of Panama, AES Panama is primarily a hydroelectric generation company. Its credit rating reflects the company's portfolio of existing assets and strong project economics and financial position. Credit risks that constrain the rating are AES Panama's exposure to hydrological conditions, commodity price risks, a relatively new and untested regulatory framework, and competitive pressures for new supply contracts. The rating of AES Panama does not rely on additional financial contribution from AES. In El Salvador, AES Clesa's credit quality (as well as that of CAESS, EEO, and Deusem) is supported by an operating environment similar to the other Latin American countries in which AES operates. As an electricity distributor in El Salvador, AES Clesa benefits from a constructive regulatory framework that provides for regulated tariffs for distributors. The company has a manageable debt service schedule and credit protection measures, while pressured recently, are expected to remain acceptable for the current rating. Strong sector fundamentals and continued demand growth should support revenues and cash flow for AES Clesa over the medium to long term. Additional details on each of the Fitch-rated AES subsidiaries is available on the Fitch Ratings web site at ' www.fitchratings.com'. CONTACTS: FITCH RATINGS Jason T. Todd, 1-312-368-3217 Daniel R. Kastholm, 1-312-368-2070 Mona Yee, 1-212-908-0557 Ellen Lapson, 1-212-908-0504 James Jockle, 1-212-908-0547 (Media Relations) *********** 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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