/raid1/www/Hosts/bankrupt/TCRLA_Public/020314.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
Thursday, March 14, 2002, Vol. 3, Issue 52
Headlines
A R G E N T I N A
ARGENTINE BANKS: Industry's Future Depends On Agency's Review
BANCO HIPOTECARIO: Restructured Notes To Be Rated 'CC'
PROVIDIAN FINANCIAL: Company Profile
SCOTIABANK QUILMES: CEO Counters Judge's Allegations Of Fraud
STEWART ENTERPRISES: Expects To Sell Argentine Ops This Year
STEWART ENTERPRISES: Company Profile
B E R M U D A
GLOBAL CROSSING: ST Telemedia Maintains Bid Despite Probe
GLOBAL CROSSING: US House Panel Probing Company Records
B O L I V I A
ENRON: Bolivian Unit To Continue With US$40 Mln Expansion Plan
ENRON: Bolivian Contract Now Under Investigation
B R A Z I L
GLOBO CABO: Shareholders Authorize BRL1 Bln Stock Sale
TELEMAR: Faces Bankruptcy Threat From Telephone Maker
VASP: Clinches Aircraft Acquisition Deal With Embraer
C H I L E
AES CORP.: May Put Chilean Gener Unit On The Block
EDELNOR: Fitch Drops Currency Ratings To 'C'; Default Imminent
TELEFONICA CTC: Sues Government To Recover Losses Over Rates
M E X I C O
DESC SA: Fenoquimia Files For Creditor Protection
DESC SA: Company Profile
GRUPO BITAL: ING Signs MoU to Acquire 17.5% Stake
- - - - - - - - - -
=================
A R G E N T I N A
=================
ARGENTINE BANKS: Industry's Future Depends On Agency's Review
-------------------------------------------------------------
A three-person committee is setting up a new state agency, which
will begin assessing which of Argentina's 87 banks will be shut
down following an April 15 deadline for depositors to decide
whether to convert frozen savings into bonds.
Finance Secretary Lisandro Barry leads the committee setting up
the new agency. Barry disclosed the structure may be modeled
after similar agencies created in Mexico and South Korea to
restructure banks. Also on the committee are central bank board
member Alejandro Henke and Osvaldo Cortesi, vice president of
state- owned Banco de Inversion y Credito Exterior SA, he said.
"After this process is over, some banks will be feasible and
others will not," Barry said. "Some banks will be closed, others
will be merged."
Barry declined to speculate on how many banks would shut down
after the agency's review.
According to Moody's Investors Service, the nation's banks, after
being forced to convert dollar deposits and loans at different
exchange rates, face losses of as much as US$56 billion since the
government's default on US$95 billion of bonds and devaluation of
the peso.
The government is counting on fresh loans of as much as US$20
billion from the International Monetary Fund and other lenders to
help finance the rebuilding of the banking system. The IMF has
said it wants to see a credible economic plan from Argentina, and
analysts said loan negotiations may take months.
The review by the new state agency will include the nation's two
biggest banks -- state-owned Banco de la Nacion and Banco de la
Provincia de Buenos Aires, Barry said.
BANCO HIPOTECARIO: Restructured Notes To Be Rated 'CC'
------------------------------------------------------
As a result of Banco Hipotecario's (BH) exchange offer for its
debt maturing during 2002, once the transaction is completed,
Standard & Poor's will place in 'D' the notes involved in the
tender offer. Immediately thereafter, the new notes will be rated
double-'C', as is the rest of the outstanding debt. The notes
involved in the transaction are the following:
- $133 million 12.25% notes maturing March 15, 2002, are
eligible to be exchanged for a new note with a principal
amount equal to 85% maturing March 15, 2005, paying 9% coupon.
The remaining 15% principal amount, together with accrued
interest through March 15, 2002, will be paid in cash at the
time of the settlement of the exchange; and
- ?100 million 9% notes maturing March 27, 2002, and ?100
million 8.75% notes maturing Oct. 18, 2002, are eligible to be
exchanged for a new note with a principal amount equal to 85%
maturing June 15, 2005, paying 8% coupon. The remaining 15%
principal amount, together with accrued interest through March
15, 2002, will be paid in cash at the time of the settlement
of the exchange.
Although none of the payments of BH's obligations were missed,
the securities will be considered in default. Since the
alternatives presented to bondholders are worse than if they paid
according to the original terms the tender offer constitutes what
Standard & Poor's considers a "distressed exchange." This doesn't
imply that it could not be in the interest of bondholders to
exchange the securities-since the bank would have a better chance
to continue servicing its debt after its completion-but rather
that the voluntary character of the exchange is affected by the
high probability of a complete default if the exchange is not
successful.
The bank entered into this process in an orderly fashion,
continuing with its debt service while it was structuring the
transaction. A method of exchange was devised that, despite a
loss of net present value of the holdings, does not require a
haircut in the principal owed, and involves a cash advance (or
partial payment of maturing principal owed). Banco Hipotecario's
debt restructuring reinforces the role of the financial market,
as the deal is transparent in its shortcomings for the
bondholder.
Banco Hipotecario is a public company. As of September 30, 2001,
the bank was the leader in the individual residential mortgage
loans segment, with a total portfolio of $4.1 billion (including
$424 million of securitized loans under management) and a market
share of about 40%.
ANALYST: Gabriel Caracciolo, Buenos Aires (54) 114-891-2100
CONTACT: BANCO HIPOTECARIO SOCIEDAD ANONIMA
151 Reconquista
Buenos Aires, Argentina
Phone: +54 011 4347 5546
http://www.hipotecario.com.ar
PROVIDIAN FINANCIAL: Company Profile
------------------------------------
NAME: Providian Financial Corp.
201 Mission Street
San Francisco, CA 94105
PHONE:(415) 543-0404
FAX:(415) 278-6028
WEBSITE: http://www.providian.com/
EXECUTIVE MANAGEMENT TEAM:
J. David Grissom, Chairman
Joseph Saunders, Pres, CEO and Director
Ellen Richey, Vice Chairman, General Counsel and Secretary
Susan Gleason, Vice Chairman, Operations and Systems
David Petrini, Acting CFO
INVESTOR RELATIONS:
Phone: 415-278-6170
415-278-4492
Equity: Jack Carsky
Phone: 415-278-4977
Fixed Income: Bill Horning
Phone: 415-278-4602
General Inquiry: Jennifer Tsang
Phone: 415-278-4282
TYPE OF BUSINESS: Providian Financial Corporation (Providian)
provides credit card loans, cardholder service products and
deposit products. Providian operates through the following
businesses: Integrated Card, Global E-Commerce, International and
First Select.
SIC: NATIONAL COMMERCIAL BANKS [6021]
EMPLOYEES: 12,449
TRIGGER EVENT: Providian incurred losses of up to US$481.2
million during the fourth of 2001 after several of its customers
defaulted on their loans amid a slumping economy. The San
Francisco-based company put its Argentine business on the block
in November as part of its survival efforts.
LATEST FINANCIAL STATEMENTS:
http://bankrupt.com/misc/Providian_Financial.txt
AUDITOR: Ernst & Young LLP
787 7th Ave.
New York, NY 10019
Phone: 212-773-3000
Fax: 212-773-6350
Last TCRLA Headline DATE: Monday, March 11, 2002, Vol. 3, Issue
49
SCOTIABANK QUILMES: CEO Counters Judge's Allegations Of Fraud
-------------------------------------------------------------
Alan Macdonald, Bank of Nova Scotia's chief executive officer in
Argentina, defended allegations brought by Judge Mariano Berges,
a criminal investigator, that his bank defrauded depositors,
reports Bloomberg.
Berges began investigating Scotiabank Quilmes and several other
banks after a woman complained about not having proper access to
her savings at her branch. Although the branch was not part of
the Scotiabank Quilmes chain, the judge is investigating all the
banks where the woman held accounts.
The investigation -- which alleges that the banks' actions forced
the government to freeze savings in December -- reflects an
attempt by Argentina to transfer blame for the country's economic
troubles, analysts said.
"This is part of the lynching of bankers; they want to blame them
now for restrictions that were imposed by the government," said
Boris Segura, chief economist at Atlantic Asset Management with
US$500 million of emerging market debt. His company sold US$5
million of its remaining Argentine debt early last year.
CONTACTS: SCOTIABANK QUILMES
Alan Macdonald
Chief Executive Officer
Phone: (54-11) 4338-8000
Fax: (54-11) 4338-8033
Mail: 6th Floor
Gral. J.D. Peron 564
(C1038AAL) Buenos Aires
Roy D. Scott
Vice-President and Managing Director, Latin America
Phone: (54-11) 4394-8726
Fax: (54-11) 4328-1901
Mail: P.O. Box 3955
C1000WBN Correo Central
Buenos Aires, Argentina
E-mail: scotiarep@sinectis.com.ar
AUDITORS: KPMG LLP
Av. Leandro N. Alem 1050, Piso 2
C1001AAS-Buenos Aires, Argentina
+54 (11) 4316 5700
PRICEWATERHOUSECOOPERS LLP
Buenos Aires Office
Cerrito 268
C1010AAF Buenos Aires
Mail Address :
Casilla de Correo Central 896
C1010AAF Buenos Aires
Argentina
Telephone: [54] (11) 4370 6000, 4370 6700, 4370 6900
Telecopier: [54] (11) 4370 6800, 4370 6339
Cordoba Office
PricewaterhouseCoopers
Boulevard Chacabuco 492
X5000IIR C>rdoba
Telephone: [54] (351) 420 2300
Telecopier: [54] (351) 420 2332
STEWART ENTERPRISES: Expects To Sell Argentine Ops This Year
------------------------------------------------------------
Stewart Enterprises, Inc. (Nasdaq NMS:STEI) announced Tuesday its
results for the first quarter of fiscal year 2002, further
reduction of its debt balance and implementation of Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets."
The Company announced that earnings for the quarter ended January
31, 2002 were $12.7 million, or $0.12 per share, compared to
earnings of $16.8 million, or $0.16 per share, for the first
quarter of fiscal year 2001. First quarter 2001 results exclude
the $250.0 million after-tax ($2.34 per share) cumulative effect
of the change in accounting principles recorded in the first
quarter of fiscal year 2001 as a result of implementing the
Securities and Exchange Commission's Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). Including the cumulative effect of the change in
accounting principles, the net loss for the first quarter of 2001
was $233.2 million or $2.18 per share.
Since the beginning of fiscal year 2001, the Company has reduced
its debt balance by 29 percent, from $946 million to $672
million. The Company's goal is to achieve a debt balance of about
$500 million, or approximately 2.5 times domestic EBITDA during
fiscal year 2003. EBITDA is defined as earnings before gross
interest expense, taxes, depreciation and amortization.
The Company previously announced the sale of its foreign
operations in Mexico, Australia, New Zealand and Northern Europe.
The Company has also sold its operations in Spain and has agreed
to sell its operations in Portugal subject to regulatory
approval, which the Company expects to receive. In total, the
proceeds from these transactions, including tax benefits,
represent about $145 million of the $200 million to $250 million
in total proceeds that the Company expects to receive from the
sale of all of its foreign operations. The Company has received
about $120 million in cash related to these sales and expects an
additional $20 million to $25 million, principally in tax
benefits and amounts in escrow, to be received in the future from
completed sales. The Company has not yet received any of the tax
benefits but expects to receive them throughout 2002 and 2003.
Net proceeds either have been or will be used to repay debt.
The sales of the Company's remaining foreign operations in
France, Canada and Argentina are expected to generate about $100
million, including tax benefits. The Company is having ongoing
discussions for the sale of these businesses and expects to close
these transactions this year.
William E. Rowe, President and Chief Executive Officer, stated,
"We plan to use future asset sale proceeds and tax benefits of
$120 million to $125 million plus $50 million to $55 million in
free cash flow to reduce our current debt balance from $672
million to approximately $500 million during fiscal year 2003."
The Company also announced that there was no impairment of asset
values recorded upon implementation of SFAS No. 142, which the
Company adopted effective November 1, 2001. SFAS No. 142 requires
that goodwill be tested for impairment at the "reporting unit"
level. Without clear guidance as to the definition of a
"reporting unit," the Company's initial understanding was that in
applying SFAS No. 142, it might be required to test asset values
at the individual facility level or at the level of all
businesses within a region. Consequently, the Company initially
estimated that it would incur a pre-tax noncash impairment charge
of between $100 million to $300 million for its domestic
operations. Since the Company's initial analysis, there has been
additional clarification and guidance on the application of this
pronouncement, including guidance related to the determination of
a reporting unit. This clarification has resulted in the
Company's evaluation of goodwill for its domestic operations at
the funeral and cemetery segment levels, which constitute the
Company's reporting units; accordingly, the adoption of SFAS No.
142 did not result in an impairment charge. The Company's foreign
asset values were not affected by the adoption of SFAS No. 142,
as all of the Company's operations held for sale have been
previously marked to their estimated fair value.
As a result of implementing SFAS No. 142, effective November 1,
2001, the Company no longer amortizes goodwill. The Company's
amortization of goodwill amounted to $4.8 million ($4.0 million
related to domestic operations) in the first quarter of fiscal
2001. As required by SFAS No. 142, the results for the prior
year's quarter have not been restated. Pro forma net earnings and
earnings per share adjusted for the non-amortization provisions
of SFAS No. 142 would have been $21.2 million and $.20,
respectively, for the three months ended January 31, 2001,
excluding the $250.0 million after-tax ($2.34 per share)
cumulative effect of the change in accounting principles recorded
in the first quarter of fiscal year 2001 as a result of
implementing SAB 101.
Once the Company adopted a plan to sell its foreign operations
and certain small domestic operations during the third quarter of
2001, it began segregating the operating results of these
businesses from the operations it plans to retain. The following
discussion and the supplemental schedules included in this press
release segregate the financial results in order to present the
Company's ongoing operating results and to provide more
comparable information for investors. The Company's "operations
to be retained" consist of those businesses it has owned and
operated for all of this fiscal year and last and which it plans
to retain ("existing operations") plus those businesses it has
opened during this fiscal year or last and plans to retain
("opened operations"). "Closed and held for sale operations"
consist of those that have been sold or closed during this fiscal
year or last and the businesses that are being offered for sale.
Total funeral revenues for the first quarter of fiscal year 2002
were $95.1 million compared to $107.4 million for the first
quarter of fiscal year 2001. The decrease from the prior year is
principally due to the disposition of the Company's foreign
operations and other assets. Total funeral revenues from the
Company's operations to be retained were $78.2 million compared
to $75.8 million in the first quarter of 2001. The increase in
revenue from the operations to be retained is due to a 3.7
percent increase in the average revenue per funeral call, which
was partially offset by a 2.7 percent decrease in the number of
funeral calls performed by these businesses. The average revenue
per funeral call for existing funeral operations increased 4.0
percent, and the number of funeral calls performed by these
operations decreased 3.9 percent for the quarter. The cremation
rate for the Company's existing operations was 37.5 percent for
the quarter.
Brian J. Marlowe, Chief Operating Officer, commented, "We believe
there are several factors contributing to our continued
improvement in the average revenue per funeral. We are continuing
our success in the development of strategies to enhance our
funeral business by offering value-added services tailored to
specific family needs. We've focused on funerals that celebrate
the life of each individual in a very personal way, and we're
having great success in helping families to realize some of the
things they can do from a service and remembrance standpoint. As
a result, we are experiencing considerable increases in our core
average revenue for all families served."
Excluding a 100-event decline resulting from low-end calls that
the Company elected not to perform, the number of funeral calls
performed by the Company's existing funeral homes declined 3.6
percent, or about two services per domestic location.
Mr. Marlowe added, "We feel that two calls per domestic funeral
home is insignificant, especially when you consider that the CDC
data shows that deaths across the country were down over 5
percent for the same period, which includes a decline of over 9
percent in the month of January."
Total cemetery revenues for the first quarter of fiscal year 2002
were $58.5 million compared to $69.3 million for the first
quarter of fiscal year 2001. Cemetery revenues from operations to
be retained were $57.0 million compared to $66.8 million in the
first quarter of 2001. The decline in revenue was principally due
to a decrease in property sales and merchandise deliveries.
For the first quarter of fiscal year 2002, the overall gross
margins from the Company's operations to be retained were 28.6
percent compared to 26.6 percent for the first quarter of fiscal
year 2001. For the first quarter of fiscal year 2002, the funeral
margins from the Company's operations to be retained were 30.3
percent compared to 24.5 percent for the first quarter of fiscal
year 2001, and the cemetery margins from the Company's operations
to be retained were 26.2 percent compared to 29.1 percent for the
first quarter of fiscal year 2001. Had the Company implemented
SFAS No. 142 in the first quarter of 2001, its funeral margins,
cemetery margins and gross margins of its operations to be
retained would have been 28.0 percent, 31.0 percent and 29.4
percent, respectively.
Funeral margins from operations to be retained improved due to
the increase in revenue, coupled with the close management of
funeral costs, as well as the elimination of $2.7 million of
goodwill amortization resulting from the adoption of SFAS No.
142. The decrease in cemetery margins was principally due to the
decrease in property sales and merchandise deliveries, coupled
with the high fixed cost nature of the cemetery business,
partially offset by the elimination of $1.3 million of goodwill
amortization resulting from the adoption of SFAS No. 142.
For the quarter, EBITDA (defined as earnings before gross
interest expense, taxes, depreciation and amortization) was $50.8
million compared to $63.3 million for the first quarter last
year. Gross interest expense was $17.0 million and investment
income was $0.1 million for the first quarter of 2002 compared to
gross interest expense of $15.4 million and investment income of
$2.1 million in the first quarter of 2001. Gross interest expense
increased due principally to an approximate 280 basis point
increase in the Company's average interest rate, partially offset
by a $216.5 million decrease in the average outstanding debt.
Depreciation and amortization was $13.4 million for the first
quarter of 2002 compared to $21.5 million in the first quarter of
2001. Domestic EBITDA, which is representative of operations to
be retained, was $47.7 million for the first quarter of 2002,
representing 35.0 percent of domestic revenue compared to $50.8
million, or 35.2 percent, in the first quarter of fiscal year
2001.
The Company announced that cash flow from operations for the
first quarter of 2002 was negative $2.0 million and free cash
flow (defined as cash flow from operations adjusted for
maintenance capital expenditures) was negative $4.1 million for
the first quarter of 2002.
Kenneth C. Budde, Chief Financial Officer, stated, "Our operating
cash flow this quarter is about $8 million less than last year,
but this is primarily due to a reduction in earnings before
taxes, an increase in interest payments and a reduction in
accounts payable due to the timing of vendor payments, offset by
a reduction of our investment in preneed activity. The timing of
our cash flow does not come in evenly throughout the year, and
our first quarter cash flow is historically not as strong as
subsequent quarters. In fact, our current cash balance has
increased by about $9 million since the quarter ended, and we are
maintaining our forecast of $60 million to $70 million in cash
flow from operations for this fiscal year."
In fiscal year 2002, the Company expects to achieve earnings of
$0.38 to $0.42 per share. The details of these expectations, and
the Company's second quarter earnings expectations, are included
on the last page of this release.
Mr. Rowe concluded, "We're well on the road to where we said we
wanted to be this year. With another quarter of solid operating
performance under our belt, and with continued progress in our
initiatives, our current objective is to position our Company for
future growth. We look forward to providing more of the specifics
of our growth plans later this year, as we near our debt
objective of $500 million. We are having discussions with
appropriate parties and preparing to grow our business through
third party affiliations and the construction of additional
funeral homes on cemeteries we own. We outlined our objectives
and made substantial progress in our debt reduction and cash flow
strategies last year. We are on track as we turn the first corner
of 2002, and 2003 should be an exciting year for us as we begin
to grow this Company again."
Founded in 1910, Stewart Enterprises is the third largest
provider of products and services in the death care industry in
the United States, currently owning and operating 476 funeral
homes and 159 cemeteries in North America, South America, and
Europe.
To see financial statements:
http://bankrupt.com/misc/Stewart_Enterprises.txt
STEWART ENTERPRISES: Company Profile
------------------------------------
NAME: Stewart Enterprises, Inc.
110 Veterans Memorial Blvd.
Metairie, LA 70005
PHONE: (504) 837-5880
FAX: (504) 834-3174
WEBSITE: http://www.stewartenterprises.com/profile/mission.cfm
EXECUTIVE MANAGEMENT TEAM:
Frank Stewart, Jr., Chairman
William Rowe, Pres, CEO, Director
Kenneth Budde, CFO, Exec. VP, Pres-Corp. Division, Director
Brian Marlowe, Exec. VP, COO, Director
Lawrence Hawkins, Exec. VP and Pres-Investors Trust, Inc.
CONTACT PERSON: Kenneth C. Budde, 504/837-5880
TYPE OF BUSINESS: Stewart Enterprises, Inc. is a provider of
funeral and cemetery products and services in the death care
industry. Through its subsidiaries, the Company provides a
complete range of funeral merchandise and services, along with
cemetery property, merchandise and services, both at the time of
need and on a pre need basis. Stewart Enterprises owns and
operates 674 funeral homes and cemeteries across the globe, in
the United States, Puerto Rico, Canada, Spain, Portugal,
Argentina and France.
SIC: SERVICES-PERSONAL SERVICES [7200]
EMPLOYEES: 8,100
=============
B E R M U D A
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GLOBAL CROSSING: ST Telemedia Maintains Bid Despite Probe
---------------------------------------------------------
Singapore Technologies Telemedia said it is sticking to its bid
for Global Crossing Ltd., despite ongoing investigations lodged
by the U.S. Securities and Exchange Commission into the
telecommunications firm and its relationship with the now-
bankrupt company.
However, in a Reuters report, ST Telemedia's President and Chief
Executive Officer Lee Theng Kiat expressed concern over the
investigations.
"We would like to see clarity and transparancy, and we would like
to know exactly what might have gone wrong over there," said Lee
Theng Kiat said.
Global Crossing filed for bankruptcy protection on January 28
listing US$12.4 billion in debt in papers filed with the court.
Hutchison Whampoa Ltd and ST Telemedia Pte Ltd agreed to offer
US$750 million to assume control of Global Crossing, but the bid
has been challenged by some shareholders who say it does not
reflect fair value of the Company's assets.
"We now await anxiously the conclusion of those investigations,"
Lee said, adding that ST Telemedia should be reasonably satisfied
of its status after the investigations.
"I don't think Hutch and ourselves would conclude the transaction
without being satisfied that the Company would not be tainted by
the conclusion of the investigations," Lee said.
ST Telemedia says it would be "very diligent" in its closing
documentation, should it manage to clinch the deal.
GLOBAL CROSSING: US House Panel Probing Company Records
-------------------------------------------------------
Global Crossing said Tuesday that it has received a request from
the United States House Energy and Commerce Committee for
financial records and documents. Global Crossing said that it is
reviewing the request and intends to provide the committee with
the documents it needs.
John Legere, chief executive officer of Global Crossing, stated,
"As we continue to move Global Crossing ahead, we look forward to
working with the Committee in connection with this request."
The committee's original request is available on the House Energy
and Commerce Committee's Web site at:
http://energycommerce.house.gov/107/news/03122002--513.htm.
ABOUT GLOBAL CROSSING
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing. On January 28, 2002, certain companies in
the Global Crossing Group (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York and
coordinated proceedings in the Supreme Court of Bermuda.
CONTACTS: GLOBAL CROSSING
Press Contacts:
Cynthia Artin
Vice President, Media Relations
+1 973-410-8421
cynthia.artin@globalcrossing.com
Becky Yeamans
Director, Media Relations
+1 973-410-8421
rebecca.yeamans@globalcrossing.com
Analysts/Investors Contact:
Ken Simril
+1 310-385-5200
investors@globalcrossing.com
=============
B O L I V I A
=============
ENRON: Bolivian Unit To Continue With US$40 Mln Expansion Plan
--------------------------------------------------------------
Bolivian hydrocarbons transport company Transredes will proceed
with a US$40-million expansion plan of the Yabog pipeline between
Yacuibe and Rio Grande despite its parent Enron's bankruptcy.
Enron has been seeking to sell its 25-percent stake in Transredes
for at least a year. Its partner in the venture, Anglo-Dutch
Shell, has the first right of refusal on any potential deal. Both
companies remain tight-lipped about the state of negotiations.
Brazil's Petrobras has also expressed an interest in acquiring
the stake, but has now received permission to build its own
pipeline alongside Yabog.
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
ENRON: Bolivian Contract Now Under Investigation
------------------------------------------------
An investigation into the alleged irregularities surrounding a
contract signed between bankrupt US energy company Enron and
Bolivia's state oil and gas company YPFB is now underway.
According to a report released by Business News Americas, the
Bolivian lower house commission, which lodged the investigation
last week, has 60 days to present its findings to the full house.
Current YPFB chairman Hugo Peredo is scheduled to appear before
the commission, which is chaired by congressman Armando de la
Parra, on March 18. Hydrocarbons superintendent Carlos Miranda
and ex-YPFB chairman and energy undersecretary Mauricio Gonzalez
are expected to follow Mr. Peredo in the proceedings.
Congressman Andres Soliz Rada said Miranda's input is required
owing to his role as energy undersecretary during the
administration of Gonzalo, who in turn is the key to the process
due to his role in contracting Enron as YPFB's partner.
===========
B R A Z I L
===========
GLOBO CABO: Shareholders Authorize BRL1 Bln Stock Sale
------------------------------------------------------
Instead of a rights offering that had been expected, shareholders
of Globo Cabo SA, Brazil's largest cable television operator,
approved a public share sale to raise new equity capital in order
to pay off company debt.
According to a Bloomberg report, shareholders approved the sale
of BRL1 billion (US$425 million) in stock to pay off debt, which
at the end of September 2001, stood at BRL1.82 billion, 60
percent of which is denominated in foreign currency.
"We have been in negotiations over this funding for a while,"
said Luiz Antonio Viana, Globo Cabo's chief executive. "Given the
strong depreciation of the real against the dollar last year, we
also decided to reduce personnel, reprogram costs and take other
measures to cut down expenses."
To assure Globo's share sale, Organizacoes Globo, Latin America's
largest media company, guaranteed the purchase of BRL540 million
in stock. Shareholders RBS Participacoes guaranteed it would
purchase of BRL56 million in stock, Bradespar SA BRL95 million
and the Brazilian development bank, known as BNDES, BRL284
million.
Globo Cabo has about BRL514 million in bonds maturing this year,
BRL373 million maturing in 2003 and about BRL400 million in 2004.
Last year, Roberto Irineu Marinho, chairman of Organizacoes Globo
that holds 44 percent of Globo Cabo, said that the media
conglomerate was seeking a strategic partner for the cable
television unit.
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,
BRADESPAR S.A.
Av. Brigadier General Faria Rasp,
3064 - 6§ to walk, Itaim Bibi
Sao Paulo - SP
Brazil
Phone: 55 11 3049-3900
Fax: 55 11 3049-3935
E-mail: bradespar@bradespar.com
Home Page: http://www.bradespar.com.br/
Contacts:
Mario Teixeira, President
Marcelo Moraes, Investor Relations
BNDES
BNDES Main Office
Av. Republica do Chile,
100 Rio de Janeiro - RJ
Phone: (021) 2277-7447/6978
Contacts: Enterprise Information Center
Main Office
Av. Rep£blica do Chile,
100 - 13§ andar - Sala 1301
Tel.: (21)2277-8888
Fax: (21) 2220-2615
Email: contact@bndes.gov.br
TELEMAR: Faces Bankruptcy Threat From Telephone Maker
-----------------------------------------------------
Rio de Janeiro-based operator Tele Norte Leste Participacoes SA
(Telemar) is facing the threat of bankruptcy proceedings from one
of its creditors. Telmar is in the midst of dealing with dropping
share values from concerns over swelling debt.
Telephone manufacturer Monytel warned it will make a claim for
the bankruptcy of Telemar concerning a BRL10-million debt that it
is owed.
Telemar's preferred shares lost 11.13 percent (BRL1.5 billion) in
early March, following a meeting by directors of the Company with
analysts to discuss the Company's figures for 2001.
The meeting failed to resolve many doubts about the report,
particularly the increase in net debt and the decision to carry
over BRL2.4 billion in debts from 2001 to 2002. The amount of
working capital to be allocated to cell phone services this year
was also not divulged.
Overall, the analysts are concerned about the lack of figures
necessary to complete projections. They also believe that the
Company will not have sufficient cash generated from operations
to cover its needs this year.
Another concern is the amount that Telemar owes to suppliers.
Telemar said that all its contracts with suppliers are being
renegotiated following an audit by Ernst & Young in January,
which found irregularities.
No information has been forthcoming about the nature of these
irregularities.
CONTACTS: ERNST & YOUNG INTERNATIONAL
787 7th Ave.
New York, NY 10019
Phone: 212-773-3000
Fax: 212-773-6350
Home Page: http://www.eyi.com
Contacts:
James Turley, Global Chairman
William L. Kimsey, CEO
VASP: Clinches Aircraft Acquisition Deal With Embraer
-----------------------------------------------------
Brazilian air transportation company Vasp announced it has
negotiated with Brazilian aircraft manufacturer Embraer for the
acquisition of 30 ERJ-170s with 70 seats, to be used in shorter
lines. According to a report by O Globo, the US$22 million model
will be tested and delivered on the second half of 2003. The
company intends to pay for the planes within 20 years through an
operating lease.
Vasp is reportedly close to reaching an agreement on debt owed to
commercial bank Banespa (Santander). The company's current debts
total BRL1.9 billion.
CONTACTS: VASP
(For Investors)
Cesis Canhedo, Chief Financial Officer
PraOa Comandante Lineugomes, s/n
04626-910 Sao Paulo, Brazil
Phone: +55-11-532-3000
Fax: +55-11-533-0444
=========
C H I L E
=========
AES CORP.: May Put Chilean Gener Unit On The Block
--------------------------------------------------
U.S. power company AES Corp. is still considering the sale of its
Chilean electricity generator as it seeks to shed as much as
US$1.5 billion in assets, mostly in Latin America, said Andres
Gluski, the company's top executive in Chile. The utility in
question is Gener SA, although AES hasn't yet formally put Gener
up for sale.
Gluski said several investment banks had recently carried out due
diligence of AES Gener, though added that these were routine
procedures that might lead to new credit for the company.
"It's important we keep our rating (BBB risk rating) and have
offers for financing new projects," he said.
Any additional credit the company receives will be used for
restructuring debt only, Gluski said.
Last year, AES Gener said it would invest between US$1 billion
and US$2 billion in Chile over the next five years. However, this
amount will have to be revised due to the economic global
slowdown and AES Corp.'s current financial difficulties, the
executive said.
AES Corp. took over Gener in late December 2000, winning a long
takeover fight with Duke Energy Corp. Since then, AES sold
Gener's power plants in Argentina and cut half the workforce. In
addition, the company divested of a port and other non-
electricity businesses owned by Gener.
AES started to divest assets in February as part of a plan to
strengthen its balance sheet and reassure investors about its
capacity to pay back an US$18-billion debt load.
All of its assets were under consideration for sale, but, so far,
the only sale in Latin America was the Itabo thermoelectric plant
in the Dominican Republic.
CONTACTS: AES Corporation
Kenneth R. Woodcock
Roger W. Sant, Chairman
Dennis W. Bakke, President, CEO, and Director
Barry J. Sharp, EVP Large Utilities, CFO, and COO
THEIR ADDRESS:
AES Corp.
1001 N. 19th St.
Arlington, VA 22209
Phone: 703-522-1315
Fax: 703-528-4510
URL: http://www.aesc.com
EDELNOR: Fitch Drops Currency Ratings To 'C'; Default Imminent
--------------------------------------------------------------
Fitch Ratings has downgraded the local and foreign currency
ratings of Empresa Electrica del Norte Grande S.A. (Edelnor) to
'C' from 'CCC' and maintains its Rating Watch Negative status. A
'C' indicates that default is expected in the near future.
Approximately US$340 million of debt is affected.
The revised rating reflects the expected payment default by
Edelnor or completion of a renegotiation of terms of Edelnor's
international debt with a majority of Edelnor's bondholders in
the near term. Edelnor's next debt service payment of US$9.687
million is due March 15, 2002. Since FS Inversiones acquired
Mirant's 82% stake in Edelnor in January 2002, the investment
firm has been seeking to restructure the company's debt. While a
renegotiation may avoid a potential bankruptcy, it will be
considered a default on the current bonds. Alternatively, Edelnor
does not have sufficient cash balances to meet debt service, and
is unlikely to generate enough cash in the first quarter from
operations.
Edelnor is a Chilean electric generating and transmission company
that supplies electricity under long-term purchased power
agreements to distribution companies and large industrial
consumers in Chile's northern region. Belgium's Tractebel has the
option to buy FS Inversores' shares in Edelnor until March 31,
2002.
Contact: Jason T. Todd 1-312-368-3217 or Giovanny Grosso 1-312-
368-2074, Chicago; or Carlos Diez +562-206-7171, Chile.
Media Relations: James Jockle 1-212-908-0547, New York.
TELEFONICA CTC: Sues Government To Recover Losses Over Rates
------------------------------------------------------------
In a last ditch attempt to recover losses after the government
rejected its petition to scrap a five-year rate cut, Telefonica
CTC Chile filed a suit against the Chilean government.
The US$274-million suit was filed in a Santiago court seeking to
recover damages for shareholders, including Telefonica SA of
Spain, which owns 43.6-percent of the Company.
In the suit, the Company claimed that errors in the government-
imposed reduction in its calling fees in 1999 cost it US$200
million in lost revenue.
However, analysts believe that Telefonica CTC has a very slim
chance of winning this case, considering that its prior appeals
have failed.
"I don't think that they'll receive compensation," said Maria
Teresa Ibanez, an analyst at the brokerage arm of Banco Santiago
SA, who has "hold" on the Company's shares.
Telefonica CTC's shares fell 1.8 percent to CLP2,420, paring a
10.5 percent gain for the year, as the Chilean benchmark index of
40 stocks dropped 0.9 percent. The telephone company's U.S.-
traded shares fell 14 cents to US$14.6.
===========
M E X I C O
===========
DESC SA: Fenoquimia Files For Creditor Protection
-------------------------------------------------
After racking up an undisclosed amount of losses, Fenoquimia, a
chemical unit of Mexican industrial group Desc SA, filed for
creditor protection in a Mexican court. The company blames a
downturn in the global petrochemical industry for its current
financial distress.
According to Desc, the filing would not have a negative impact on
its earnings because the Fenoquimia unit was only a tiny part of
the Company.
The unit, which makes phenol used to produce acrylic, is one of
six small companies that Desc plans to sell or shut down, said
Marc McCarthy, an analyst with Bear, Stearns & Co. in New York.
"There's more to come," said McCarthy, adding that Fenoquimia was
already selling equipment and transferring its clients to
competitors in the U.S.
Desc, battling a challenging business climate because of the
economic slowdown in North America and the strength of the
Mexican peso, is in the midst of a corporate restructuring aimed
at improving productivity and administrative efficiency. The
Company ended 2001 with US$942 million in debt.
Desc's sales in 2001 dropped 15 percent to MXN20.7 billion from a
year earlier. Operating profits, a key measure of a Mexican
company's profitability, slumped 29.5 percent to MXN1.67 billion.
CONTACTS: DESC, S. A. DE C. V.
Paseo de los Tamarindos # 400-B
Mexico, D.F. 05120
Phone: (5255) 261-80-00
Fax: (5255) 261-80-96
desc@mail.desc.com.mx
Arturo D'Acosta Ruz, Chief Financial Officer
Tel: (5255) 261 8000
Alejandro de la Barreda, Investor Relations
Tel: (5255) 261 8000 ext 2806
abarredag@mail.desc.com.mx
Adriana Estrada Vergara, Investor Relations
Tel: (5255) 261 8000 ext 2846
aestradav@mail.desc.com.mx
DESC SA: Company Profile
------------------------
NAME: Desc, S.A. de C.V.
Paseo de los Tamarindos
400-B, Bosques de las Lomas
05120 M‚xico, D.F., Mexico
FAX: +52-55-5261-8096
PHONE: +52-55-5261-8000
E-MAIL: desc@mail.desc.com.mx
WEBSITE: http://www.desc.com.mx
EXECUTIVE MANAGEMENT TEAM:
Fernando Mestre, Chairman and CEO
Luis Tellez, Executive Vice-President
Vicente Bussutil, Vice-President (Food)
Emilio Saeb, Vice-President (Automotive Parts)
Andres Samblancat, Vice President (Real Estate)
INVESTOR RELATIONS:
Contacts In Mexico:
Arturo D'acosta Ruiz
Chief Financial Officer
Tel: (5255) 261 8000
Alejandro De La Barreda
Investor Relations
Tel: (5255) 261 8000 Ext 2806
Abarredag@Mail.Desc.Com.Mx
Adriana Estrada Vergara
Investor Relations
Tel: (5255) 261 8000 Ext 2846
Aestradav@Mail.Desc.Com.Mx
TYPE OF BUSINESS: Desc, S.A. de C.V., organized in 1973, is a
Mexican diversified holding company engaged in four principal
lines of business: automotive parts, chemicals, food and real
estate. With the exception of the food business, these businesses
are conducted through the Company's principal wholly owned
subsidiaries, Unik, Girsa and Dine, each of which is a holding
company with no significant operations. The Company's food
business was conducted through its wholly owned subsidiary,
Agrobios, S.A. de C.V. until December 1999, when Agrobios was
merged with and into Desc. As a result of the merger, the
Company's food business now is conducted through four principal
operating subsidiaries: Agroken, S.A. de C.V. (pork), Aquanova,
S.A. de C.V. (shrimp), Grupo Corfuerte, S.A. de C.V. (branded
foods in Mexico) and Authentic Acquisition Corp., Inc. (branded
foods in the United States).
SIC: WHOLESALE-GROCERIES & GENERAL LINE [5141]
Chemicals - Plastics & Fibers
Food - Miscellaneous Food Products
Real Estate - Real Estate Development
EMPLOYEES: 22,320 (last reported count)
SALES: $2.30 billion (as of March 11, 2002)
TOTAL ASSETS: $3,248.3 million (Q ended Sept. 30, 2001)
TOTAL LIABILITIES: $ 2,253.8 million (Q ended Sept. 30, 2001)
REVENUES: $ 1,734.1 million (Q ended Sept. 30, 2001)
PUBLIC SECURITIES: 1.369 billion total common shares outstanding
(as of Q ended Sept. 30, 2001)
GRUPO BITAL: ING Signs MoU to Acquire 17.5% Stake
-------------------------------------------------
ING (NYSE: ING) announced Tuesday it has signed a memorandum of
understanding, subject to negotiating final agreements, with the
Mexican financial services company Grupo Financiero Bital (Bital)
for an intended investment of USD 200 million in the company. The
intended investment, which would also be subject to regulatory
approval, represents an economic interest of 17.5% in Bital, one
of the leading retail banks in the Mexican market. The
transaction, when completed, will solidify ING's bancassurance
strategy in Mexico.
Since 1998, ING has owned a 49% stake in a bancassurance joint
venture with Bital, which enables ING to distributes insurance
products through Bital's branches. The co-operation between ING
and Bital dates back to 1997, when both companies established
Afore Bital, one of the largest pension funds in Mexico. In
October 2000, ING acquired Bital's interests in Afore Bital.
The intended investment is part of a capital-raising program by
Bital. It is expected that institutional investors and Bital's
current owners will participate in this program. ING anticipates
the transaction will be completed in the second quarter of this
year.
ING's presence in Mexico: Besides the above-mentioned
bancassurance joint venture and pension fund activities, ING
acquired the insurance company Seguros Comercial America in 2001.
With a 21% market share of the Mexican life and health insurance
market and a 33% market share for property and casualty
insurance, Comercial America is the largest insurance company in
Mexico. Following the acquisition ING rebranded the company ING
Comercial America. This rebranding also included Afore Bital. ING
is also active in wholesale banking (ING Barings) and in asset
management (ING Investment Management).
CONTACT: ING GROUP
Joyce Hulst, Corporate Communications,
+ 31 20 541 5469
ING AMERICAS
Dianne Bernez, Corporate Communications,
+ 1 770 618 3910
Adriana Jaramillo, Edelman Public Relations - Mexico,
+525 566 2822 ext.244, for ING Group
***********
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 Ma. Cristina Canson, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
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