/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020412.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, April 12, 2002, Vol. 3, Issue 72 Headlines A R G E N T I N A AGUAS ARGENTINAS: Delays Construction Loan Repayment BANCO FRANCES: Chairman Collar Zabaleta Steps Down GRUPO VELOX: Dutch Partner To Extend Rescue Financing IMPSA: Extends Exchange Offer Expiration Two Weeks TELECOM ARGENTINA: To Bid For Paraguayan Telephony Services B E R M U D A FLAG TELECOM: Restructuring Prompts Fitch Downgrade To 'D' FLAG TELECOM: Company Profile GLOBAL CROSSING: More Bidders Surface By E-Mail Mistake GLOBAL CROSSING: Warns Of $8B Write-Down; Seeks CEO's Pay Cut MUTUAL RISK: President Resigns After 23 Years B R A Z I L CEMAR: Awaits Aneel's Response On Appeal To Cut Extra Tax SUPERVIA: Gets 30-Day Extension To Cover Electricity Bills TRANSBRASIL: Court To Hear Bankruptcy Case Filed By GE VARIG: Launching Road Show To Sell Restructuring Plan C H I L E AES GENER: Fitch Downgrades `BBB-` On Divestiture Delays MANQUEHUE NET: Three Potential Investors Sited M E X I C O GRUPO MEXICO: Moody's Cuts GMM's Ratings On Liquidity Fears TRIBASA: Treasury Forgoes Collection Of US$303 Mln In Back Taxes INVERWORLD: Liquidator Sues Deloitte & Touche For $200M P E R U PESQUERA CAROLINA: Creditors Meet To Review Restructuring Plan V E N E Z U E L A PDVSA: S&P Rates PDVSA Finance Notes BBB-; CreditWatch Negative - - - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Delays Construction Loan Repayment ----------------------------------------------------- Aguas Argentinas informed Argentinean stock market authorities of its decision to temporarily postpone the repayment of its project finance debt, which was mainly incurred with multilateral institutions. Instead, Aguas Argentinas says it will dedicate its financial resources to ensuring the continuity of the services it provides to 8 million inhabitants of Buenos Aires. This decision falls within the framework of a renegotiation provided for within Argentinean Public Urgency legislation, over a period of 180 days starting from March 2002, after the 1:1 parity of the US dollar with the Argentinean peso was rescinded. Aguas Argentinas intends to develop and propose a plan to reestablish the economic and financial balance of the concession contract, in association with the public authorities. Over the last 9 years, Aguas Argentinas made investments that, in particular, gave a further 2.7 million inhabitants access to the town's water supply. The total duration of the contract is 30 years. SUEZ (NYSE: SZE) owns 46% of Aguas Argentinas. Suez is a global services group and leading international player in the Energy, Water, and Waste Services businesses. The Group has 190,000 employees at work in 130 countries. It generated 2001 revenues of EUR 42.4 million, 54.6% of which originated outside the Group's domestic markets of France and Belgium. Suez is listed on Euronext Paris and Euronext Brussels, as well as on the Luxembourg, Zurich and New York Stock Exchanges. It is the only name from its sector represented on every major international index: MSI Europe (Morgan Stanley Index), FTSE Eurotrop 100, Eurostoxx 50 and the CAC 40. According to the World Investment Report 2001 (United Nations Conference on Trade and Development - UNCTAD), Suez is ranked 19th in the world among companies with the greatest international presence, and 2nd among French companies so listed. CONTACT: SUEZ Media: Antoine Lenoir Phone: +331-4006-6715 or Investors: Arnaud Erbin Phone: +331-4006-6489 or Belgium Guy Dellicour Phone: +322-507-02-77 INTER-AMERICAN DEVELOPMENT BANK 1300 New York Avenue, NW Washington, DC 20577 United States of America Phone: 202-623-1000 E-mail: pic@iadb.org Contacts: Enrique V. Iglesias, President K. Burke Dillon, Executive Vice President For Investors: Hakan Lon`us, Chief, Funding Section Phone: +1-202-623-2441 E-mail: hakanl@iadb.org Office in Argentina: INTAMBANC Calle Esmeralda 130, pisos 19 y 20 Casilla de Correo N 181 Sucursal 1 Buenos Aires, Argentina Phone: 320-1800 320-1803 Fax: 320-1830 320-1831 Contact: Jorge Elena, Representative Juan Jose Olivella, Deputy Representative BANCO FRANCES: Chairman Collar Zabaleta Steps Down -------------------------------------------------- BBVA Banco Frances announced Wednesday that the Board of Directors has approved the resignation submitted by Mr. Gervasio Collar Zabaleta as Chairman of the Board and as a member of the Board of Directors of Banco Frances. Mr Collar Zabaleta has also resigned as a member of the Board of Directors of all other companies in the BBVA Group. CONTACT: BANCO FRANCES Maria Elena Siburu de Lopez Oliva Investor Relations Manager, in Argentina Tel. 5411-4341-5035 E-mail: mesiburu@bancofrances.com.ar Maria Adriana Arbelbide Investor Relations Tel. 5411-4341-5036 E-mail: marbelbide@bancofrances.com.ar GRUPO VELOX: Dutch Partner To Extend Rescue Financing ----------------------------------------------------- Help is within reach for Grupo Velox, the Argentinean partner of the Dutch company Royal Ahold in the Disco and Santa Isabel supermarkets, which is on the verge of default. In a recent meeting held with investors, Royal Ahold predicted it might need to invest US$492 million (ARS1.353 billion, or EUR557 million) to help Velox head-off a default. However, the move implies that the Dutch group will increase its share in Disco from 55.9 percent to 99.9 percent. Therefore, the Peirano family, who owns Velox, would reduce its share from 44.1 percent to only 0.01 percent. IMPSA: Extends Exchange Offer Expiration Two Weeks -------------------------------------------------- Industrias Metalurgicas Pescarmona S.A.I.C. y F. (the "Company" or "IMPSA") announced the extension of its pending exchange offer (the "Offer") for all U.S. $137.6 million of its outstanding 9- 1/2% Notes due May 31, 2002 (144A - CUSIP No. 45647WAB9, and Reg S - ISIN No. US45647XAB73) (the "Notes"). The expiration date for the Offer has been extended from 5:00 p.m., New York City time, on April 10, 2002, to 5:00 p.m., New York City time, on April 24, 2002. The Company also announced that, in response to ongoing discussions with its bondholders, it has amended certain terms of the Offer related to the financial covenants of the new notes to be issued thereunder (the "Exchange Notes"). These changes would reduce the thresholds that would entitle bondholders to receive the contingent extraordinary cash payment. The Offer remains subject to certain conditions, including the consent of the Company's lenders to permit IMPSA to provide a subsidiary guarantee with respect to the Exchange Notes. The Company has amended the Offer to provide that the subsidiary guarantee to be granted in respect of the Exchange Notes will be granted by Planeta Brillante, S.A., a wholly-owned subsidiary of the Company organized under the laws of the Kingdom of Spain, rather than by Rerum Novarum, S.L. The complete terms of the Offer are contained in the Offering Memorandum dated March 14, 2002 and the Supplement thereto dated April 11, 2002. The Company also announced that as of 5:00 p.m., New York City time, on April 10, 2002, it had received tenders from holders of U.S. $86.0 million in aggregate principal amount of the outstanding Notes, representing approximately 62.5% of the outstanding Notes. IMPSA is continuing to seek tenders from bondholders who have not yet participated in the Offer with the goal of obtaining full participation. The Offer continues to be subject to a 95% minimum participation condition. Banc of America Securities LLC is the exclusive dealer manager for the Offer. D.F. King & Co., Inc. is the information agent and Bankers Trust is the exchange agent. Information concerning the terms and conditions of the Offer may be obtained by calling D.F. King at (800) 735-3591 or Banc of America Securities at (1) 888- 292-0070 (U.S. toll-free) or (1) 704-388-4807 (from outside the U.S.). The Exchange Notes will not be registered under the United States Securities Act of 1933, as amended, and will only be offered in the U.S. to qualified institutional buyers and accredited investors in private transactions, and outside the U.S. to persons other than U.S. persons in offshore transactions. The Exchange Notes will be authorized by the Argentine Comision Nacional de Valores for their public offering in Argentina. CONTACT: D.F. King at +800-735-3591; or Banc of America Securities at +1-888-292-0070 (U.S. toll-free) or +1-704-388-4807 (from outside the U.S.) TELECOM ARGENTINA: To Bid For Paraguayan Telephony Services ----------------------------------------------------------- Telecom Argentina Stet France Telecom SA, Argentina's No. 2 phone carrier, will participate in the bid for fixed basic telephony services in Paraguay, according to a report by South American Business Information. The Paraguayan bid reportedly has a base price of US$400 million. The move seems untimely given that the Company recently said it would suspend principal payments on US$3.2 billion in debt, blaming the nation's crumbling currency and uncertain regulatory environment. As of Dec. 31, 2001, Telecom Argentina's total debt amounted to approximately US$3.2 billion with more than 90 percent denominated in US dollars. The liabilities consist of approximately US$1.6 billion of senior unsecured notes, nearly US$900 million of vendor financing and US$730 million of bank loans. CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM) Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Repoblica Argentina Phone: +54 11 4968 4000 Home Page: http://www.telecom.com.ar Contacts: Alberto J. Ricciardi, Chief Financial Officer Elvira Lazzati, Finance Director Pedro Insussarry, Investor Relations Manager Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 Email: inversores@intersrv.telecom.com.ar ============= B E R M U D A ============= FLAG TELECOM: Restructuring Prompts Fitch Downgrade To 'D' ---------------------------------------------------------- Fitch Ratings has downgraded the Senior Unsecured debt rating of Flag Telecom Holdings Limited (FTHL) to 'D' (default) from 'B+' following today's announcement of a proposed restructuring in respect of the obligations of FTHL and its subsidiaries. The 'BB+' rating of Flag Limited is also downgraded to 'D'. Both ratings are removed from the Rating Watch Negative that was put in place on 13 February 2002 after announcements in the company's preliminary fourth quarter and full year results statements, highlighting management's concerns about the group's ongoing liquidity. The restructuring proposal affects approximately USD257 million of Flag Atlantic bank debt, the US$430mn 8 1/4% Flag Limited Senior Notes due 2008 and the USD300m and EUR300m FLAG 11 5/8% Senior Notes due 2010. The terms of the proposal, which have yet to be approved by the group's creditors, envisage a combination of cash, equity and/or new senior notes in respect of the currently outstanding debt obligations. Contact: Stuart Reid, London Phone: +44 (0)20 7417 4323 David Staples, London Phone: +44 (0)20 7417 4282 FLAG TELECOM: Company Profile ----------------------------- NAME: Flag Telecom Holdings Limited 41 Cedar Ave. Hamilton HM 12, Bermuda PHONE: 441-296-0909 FAX: (441) 296-0938 EMAIL: irelations@flagtelecom.com WEB SITE: http://www.flagtelecom.com EXECUTIVE MANAGEMENT TEAM: Andres Bande, Chairman and Chief Executive Officer Edward McCormack, Deputy Chairman and COO Michel Cayouette, Chief Financial Officer Kees van Ophem, General Counsel and Secretary TYPE OF BUSINESS: FLAG Telecom Holdings Ltd. is a global network services provider and independent carriers' carrier, providing a range of products and services to the international carrier community, application service providers (ASPs) and Internet service providers (ISPs) across a global network platform optimized to support the next generation of Internet protocol over optical data networks. SIC: Telecommunications - Miscellaneous Services to Communication Providers EMPLOYEES: 266 (last reported count) NUMBER OF SHARES OUTSTANDING: Approximately 134 million AUDITOR: Arthur Andersen P.O. Box HM 1553 Hamilton HMFX Bermuda Phone: 1 441 295 0001 Fax: 1 441 292 1142 E-mail: bermuda@andersen.com To see financial statements: http://bankrupt.com/misc/Flag_Telecom.txt GLOBAL CROSSING: More Bidders Surface By E-Mail Mistake ------------------------------------------------------- Lawyers for Global Crossing inadvertently revealed the identities of more than 50 potential bidders for the bankrupt Bermuda-based fiber-optic network operator. According to an AP report, in an e-mail sent March 28 to detail parts of the bidding process for each bidder, an employee of the New York law firm Weil, Gotshal & Manges copied the names of all interested parties, each of which had signed confidentiality agreements. A copy of the e-mail, later obtained by the New York Times, which published the contents and addresses on Wednesday, revealed that telecommunications firms Verizon Communications, Deutsche Telekom, Telefonica of Spain, Telefonos de Mexico and France Telecom, were among the potential buyers. Smaller telecoms identified as possible bidders on all or parts of Global Crossing's 100,000-mile fiber-optic network included Level 3 Communications of Broomfield, Colo. and Net2Phone of Newark, New Jersey, the Times said. Financial firms on the list included the Washington-based Carlyle Group, Credit Suisse First Boston and the Canadian Imperial Bank of Commerce, the Times added. The breach of confidentiality is an embarrassment for Weil, Gotshal. The firm billed Global Crossing more than US$1.5 million in legal fees and related expenses in its first month of work on the bankruptcy, the Times said. LAWYERS: WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY 10153 Phone: 212-310-8000 Fax: 212-310-8007 Home Page: http://www.weil.com Contact: John Neary, Executive Director E-mail: john.neary@weil.com Peter Columbus, Manager of Public Affairs E-mail: peter.columbus@weil.com GLOBAL CROSSING: Warns Of $8B Write-Down; Seeks CEO's Pay Cut ------------------------------------------------------------- Global Crossing Ltd. is requesting bankruptcy court approval for an employment agreement with Chief Executive Officer John J. Legere that would cut the executive's salary during the Company's restructuring, says Dow Jones. The agreement would cut Legere's salary by 30-percent, from US$1.1 million to US$770,000. However, the agreement also stipulates an annual bonus equal to 125 percent of his base salary if he meets certain performance goals. A hearing is scheduled for May 1 before the U.S. Bankruptcy Court in Wilmington, Del. and objections may be filed through April 18. Meanwhile, the struggling voice and data carrier also said in Tuesday's court filing that it will take an US$8-billion goodwill write-down in the fourth quarter to reflect the drop of the value of intangible assets like reputation. The bankrupt telecom also warned that it will take a future multi-billion dollar write-off of tangible assets, like its underutilized network, but did not say when. In its first monthly financial report since filing for Chapter 11 bankruptcy protection on Jan. 28, Global Crossing posted a net loss of $US152 million for the month ending February 28, 2002. CONTACT: GLOBAL CROSSING Press Contacts: Becky Yeamans +1 973-410-5857 rebecca.yeamans@globalcrossing.com Cynthia Artin +1 973-410-8820 cynthia.artin@globalcrossing.com Analysts / Investors Contact: Ken Simril +1 310-385-5200 investors@globalcrossing.com MUTUAL RISK: President Resigns After 23 Years --------------------------------------------- Mutual Risk Management (MRM) announced Wednesday that John Kessock Jr. has resigned as President and a Director of the Company in order to pursue personal interests. Mr. Kessock has served the Company for 23 years in various executive capacities and was instrumental in introducing the Insurance Profit Center (IPC) rent-a-captive facility in the early 1980's. Robert A. Mulderig, MRM's Chairman and CEO said, "John played a key role in building the Company over the years, particularly the sales and marketing of the IPC product. We wish him all the best in his future endeavors." Mutual Risk Management Ltd. provides risk management services to clients in the United States, Canada and Europe seeking alternatives to traditional commercial insurance for certain of their risk exposures, as well as financial services to individuals and other companies. CONTACT: MUTUAL RISK MANAGEMENT LTD. Robert A. Mulderig, Chairman and CEO Fran Tucker, Investor Relations 800/772-0849 or 441/295-5688 Joel Weiden, Media Contact 212/515-1970 =========== B R A Z I L =========== CEMAR: Awaits Aneel's Response On Appeal To Cut Extra Tax --------------------------------------------------------- Brazil's Maranhao state distributor Cemar (Companhia Energetica do Maranhao) is yet to obtain a response from the Brazilian electricity regulator Aneel (Agencia Nacional de Energia Eletrica) regarding its appeal for a reduction of an added tax. Cemar, which employs about 1,500 people and delivers electricity to about 1.04 million customers in the northeastern state of Maranhao in Brazil, is fighting to get out of its financial crisis. Central to the Company's plan is a focus on controlling fraud, defaults and moving ahead with the negotiations for the payment of its debts. Cemar has liabilities totaling BRL40 million due to default. The Company is also negotiating a BRL14-million loan owed to the BNDES (Banco Nacional de Desenvolvimento Economico e Social). Cemar's primary creditors are Eletronorte and Eletrobras to which it owes a total of BRL43.5 million in debts. CONTACT: BNDES Main Office Av. Republica do Chile, 100 Rio de Janeiro - RJ Phone: (021) 2277-7447/6978 Home Page: http://www.bndes.gov.br/english/welcome.htm CREDITORS: Centrais Eletricas Brasileiras S.A. - ELETROBRAS Avenida Presidente Vargas 409, 13 Andar 20071-003 Rio de Janeiro Brazil Phone: (21) 2514-5151 Fax: +55-21-2242-2697 Home Page: http://www.eletrobras.gov.br Contacts: Cladio da Silva avila, President Jose Alexandre Nogueira de Resende, Director of Financial and Market Relations Investor Relations Division Phone: (0XX21) 2514-6207 / 2514-6333 Av. Presidente Vargas, 409 - 9� andar 20071-003 - Rio de Janeiro - RJ Email: arlindo@eletrobras.gov.br CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE Av. Presidente Vargas, 489 -13� andar. 20071-003- Rio do Janeiro RJ Phone: + (55+61) 429 5139 Fax: +(55+61) 328 1373 E-mail: elnweb@eln.gov.br Home Page: http://www.eln.gov.br/ Contact: Mr. Arlindo Soares Castanheira, Investor Relations Phone: 55 21 2514.6331 55 21 2514.6333 Fax: 55 21 2242.2694 E-mail: arlindo@eletrobras.gov.br SUPERVIA: Gets 30-Day Extension To Cover Electricity Bills ---------------------------------------------------------- A Rio de Janeiro court gave Supervia, operator of the metropolitan train system in the Brazilian state, 30 days to pay BRL25 million in debt owed the electricity utility Light, says O Globo in a report. The train company has become Light's largest debtor after failing to pay electricity bills for 17 months. Supervia claimed that the state government failed to fulfill parts of the agreement which accompanied the granting of the rights to operate the system. In dispute are amounts arising from passing on BRL232 million in costs associated with insurance, the reimbursement of fares to compensate for free trips for students and seniors and the promise of delivery of 48 new trains, of which only 20 have been delivered. Supervia is controlled by the banks Proper and Pactual, international investment funds and the Spanish group Construcciones y Auxiliar de Ferrocarriles. CONTACT: SuperVia Marco Simoes, SuperVia Director Phone: (021) 588 9494) CONSTRUCCIONES Y AUXILIAR DE FERROCARRILES S.A. Padilla, 17 - 6� 28006 Madrid, Spain Phone: +34-91-435-25-00 Fax: +34-91-436-03-96 Home Page: http://www.caf.es Contact: Jose Maria Baztarrica Garijo, Chairman and CEO TRANSBRASIL: Court To Hear Bankruptcy Case Filed By GE ------------------------------------------------------ A Brazilian Court is set to hear by mid-April a bankruptcy claim made by GE against Transbrasil, reports O Estado de Sao Paulo. As a result of the hearing, the two companies are expected to come to an agreement regarding the US$20 million Transbrasil owes to GE. This is expected to be based on the sale of tax credits, which the airline has to a GE subsidiary in Brazil. Transbrasil still owes BRL35 million in salaries to employees and the time frame to pay this debt has already expired. In order to cover this debt, the Company will initiate the process of selling one of its Boeing 767s. Meanwhile, state airport management company Infraero, to which Transbrasil owes BRL115 million, has been trying to take over control of areas in airports formerly used by the defunct airline. CONTACT: Antonio Celso Cipriani, CFO Rua Geral Pantaleao Telles, No. 4, Jardim Aeroporto 04355-040 Sao Paulo, Brazil Phone: +55-11-533-7111 Fax: +55-11-543-9083 VARIG: Launching Road Show To Sell Restructuring Plan ----------------------------------------------------- Brazil's largest airline, Via�ao A�rea Rio-Grandense (VARIG), which has been struggling to fly amid heavy debt, high costs, and lost routes, announced a restructuring plan aimed at getting the Company out of its predicament. As part of the plan, the Company will launch a road show in the middle of this month in order to attract institutional investors, with the goal of raising US$400 million to cover part of its US$900-million debt. Moreover, routes will be reorganized, and the 50 seat Embraer ERJ-145 jets will be introduced on the Rio/Sao Paulo route, with the goal of optimizing capacity and frequency on the route. Other features of the Company's new strategy also include increasing presence in the European and Japanese markets, selling advertising space on aircraft fuselages and increasing quality of service. The Company has also recently introduced electronic ticketing, which allows customers to buy tickets on the Internet and is expanding the services linked to its Smiles frequent flier plan. CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.) Rua 18 de Novembro No. 800, Sao Joao 90240-040 Porto Alegre, Rio Grande do Sul, Brazil Phone: (51) 358-7039/7040 (51) 358-7010/7042 Fax: +55-51-358-7001 Home Page: www.varig.com.br/english/ Contacts: Dorival Ramos Schultz, EVP Finance and CFO E-mail: dorival.schultz@varig.com.br Investor Relations: Av. Almirante Silvio de Noronha, n 365-Bloco "B" - s/458 / Centro Rio de Janeiro, Brazil ========= C H I L E ========= AES GENER: Fitch Downgrades `BBB-` On Divestiture Delays -------------------------------------------------------- Fitch Ratings has downgraded the foreign and local currency ratings of AES Gener S.A. to 'BBB-' from 'BBB' and assigned a Negative Rating Outlook. The rating action primarily reflects the continued pressure on AES Gener's consolidated credit quality from its ownership of Chivor, TermoAndes and InterAndes. The inability to divest TermoAndes and InterAndes and the expectation that the company will maintain its ownership in these assets over the near- to medium-term moderate the inherent credit strengths found in its Chilean operating assets, which have shown marked improvement recently. Consolidated interest coverage ratios have been very low for the previous rating category. Fitch's rating of AES Gener incorporated the expectation that the company would complete the divestiture or transfer of a majority of its non-core assets, including Chivor, InterAndes and TermoAndes, and that the company would be primarily, if not exclusively, operating in the Chilean electricity market. The divestitures have not occurred completely as planned and will somewhat delay the expected financial improvement. The Negative Rating Outlook primarily reflects the continued consolidation of Chivor, concern regarding the refinancing of Chivor's past due obligations and the power purchase costs with TermoAndes and InterAndes. A change in the Rating Outlook to Stable may result from the future use of asset sale proceeds and available free cash flow to reduce debt levels and/or other financial obligations. Following its acquisition by AES Corporation (AES) in December 2000 and January 2001, AES Gener embarked on a strategy to primarily focus on thermal generation in Chile and divest many of its international investments and stakes in ports and other non- core assets. AES Gener sold many of its non-core, non-Chilean assets and used the proceeds to upstream associated dividends and funds to AES to help finance its acquisition of AES Gener, as expected. AES Gener benefits from its project-like structural characteristics, including long-dated PPAs with financially strong customers and fuel supply contracts that lower business risk and offset lower than average consolidated credit protection measures. Credit protection measures are expected to improve over the next year as the company benefits from continued demand growth in Chile, which should offset the reduction in regulated energy prices, a constructive regulatory environment and a contractually stable base of revenues. Consolidated results will still reflect the financial burden of its international investments until they are sold or transferred, or materially improve their individual financial performance. If consolidated results are not improved it could further pressure credit fundamentals. AES Gener reported consolidated credit protection measures, as measured by EBITDA-to-interest, of 1.8 times (x). While these levels are still low for the current rating category, the credit rating reflects the recent and prospective solid operational results from AES Gener's Chilean operations, which are being dragged down by the continuation of the TermoAndes power purchase agreement and the consolidation of Chivor. The negative effect on AES Gener associated with TermoAndes and InterAndes may decline due to the expected increase of the dispatch capacity permitted in the SING in northern Chile and the possible reduction of the operational costs in view of ongoing gas contract negotiations. At year-end 2001, AES Gener had a leveraged consolidated balance sheet with total debt-to-capital of 58% up from 54% in 2000, reflecting a $400 million reduction in both debt and equity levels from the sale of previously-consolidated assets. With the exception of Chivor, which is non-recourse to AES Gener, liquidity issues for AES Gener are not an immediate concern as AES Gener's debt service profile is manageable until 2005 when the company's $477 million convertible bond matures and in 2006 when the $200 million Yankee bond matures. AES Gener continues to work toward refinancing past due Chivor debt of approximately $335 million. The financing structure will likely prohibit distribution of dividends for the coming years. An agreement is expected in the near term, however uncertainty will remain until the transaction is closed. Longer term, debt levels may fluctuate to support the company's expansion program, most immediately represented by the repowering of the company's Renca diesel-fired generating plant planned for completion during 2003. The repowering of the plant and its conversion to natural gas is positive for the company and will materially improve the level of dispatch of the plant. Generally, dividends will be a minimum of 30% of net income, as required by Chilean law. Given the 2001 net loss reported under Chilean GAAP, the company will not pay any dividends based on 2001 results. During 2001, AES Gener paid dividends in the amount of US$210 million based on 2000 net income, retained earnings and dividend reserves. For 2002, dividend payments may be made quarterly, depending on financial results. Capital reductions at AES Gener are precluded by the convertible bond indenture. AES Gener is the second largest electricity generation group in Chile in terms of operating revenue and generating capacity with an installed capacity of 1,757 MW composed of 1,512 MW of thermal and 245 MW of hydro generating capacity. The company operates most of the thermal electric power plants in the country. AES Gener serves both the Central Interconnection System (SIC) and Northern Interconnection System (SING) through various subsidiaries and related companies. AES Gener is 98.65%-owned by AES. CONTACT: FITCH RATINGS Jason T. Todd, 312/368-3217 (Chicago) Giovanny Grosso, 312/368-2074 (Chicago) Carlos Diez, +011-562-206-7171 (Santiago) Media Relations: James Jockle, 212/908-0547 (New York) MANQUEHUE NET: Three Potential Investors Sited ---------------------------------------------- Three telecom operators Telsur, GTD, and CMET are believed to be vying for a strategic partnership with Chilean telecommunications company Manquehue Net. Telsur is looking for a foothold in Santiago; GTD Teleductos, while focused in the corporate segment, is also aimed at becoming an integrated operator; and CMET local telephone company could also bid for partnership. Manquehue Net recently hired investment bank ABN Amro (ABN) to help it find a strategic partner after its foreign shareholders, U.K. utility National Grid Group PLC (NGG) and Williams Communications Group (WCGR) revealed plans to sell their 30 percent and 16.4 percent stakes, respectively. Manquehue Net's primary assets include 100,000 fixed lines spread over 22 communes in Santiago, specifically the high income household customers. The Company has a 2.8-percent penetration Chile, and 4 - 6 percent in the Metropolitan Region, while it has a 22-percent share in the Internet ADSL access segment. Manquehue Net registered a net loss of CLP11.34 billion in 2001, compared with a net profit of CLP224 million in 2000. To see financial statements: http://bankrupt.com/misc/Manquehue.doc =========== M E X I C O =========== GRUPO MEXICO: Moody's Cuts GMM's Ratings On Liquidity Fears ----------------------------------------------------------- Due to the continued difficulties of Grupo Minero Mexico (GMM) in reaching a restructuring agreement with its creditors and the ongoing and severe deterioration of the Company's liquidity position, Moody's Investors Service downgraded several of its transactions. The ratings affected are: Issuer: GRUPO MEXICO EXPORT MASTER TRUST NO.1 - U.S. $100,000,000 Secured Notes Series B-2, downgraded to Caa3 from Caa1 - U.S. $200,000,000 Secured Notes Series C, downgraded to Caa3 from Caa1 - U.S. $80,000,000 Secured Notes Series D, downgraded to Caa3 from Caa1 - U.S. $220,000,000 Secured Notes Series E, downgraded to Caa3 from Caa1 Issuer: Grupo Minero Mexico, S.A. de C.V. - U.S. $375,000,000 Series A Guaranteed Senior Notes, downgraded to Ca from Caa2 - U.S. $125,000,000 Series B Guaranteed Senior Notes, downgraded to Ca from Caa2 GMM's liquidity has been hampered by the trapping of export collections by the SEN holders after the waiver previously given expired on March 28, 2002; and weak copper prices that, although having recovered somewhat from the low levels of November, 2001, are still putting pressure on the Company's earnings, cash flow and receivable generation, says Moody's. In addition, the strike by workers at GMM's four mining operations in Mexico, which has been settled at three of the mines but remains ongoing at the La Caridad mining, smelting and refining facility is expected to impact production, which will likely have a follow-on impact on liquidity. Debt protection measures weakened considerably, particularly as GMM continues to have a sizable debt burden, with total debt of U.S.$1.3 billion as of December 30, 2001. Moody's notes that, given the current liquidity situation, creditors' willingness to restructure their debt obligations is a critical element and GMM's ability to meet debt service requirements is poor. The Secured Notes are secured by a note issued by Mexico Desarrollo Industrial Minero, S.A. de C.V. (Medimsa), joint and several guarantees issued by certain principal subsidiaries of Medimsa, and collateral pledged by Medimsa and the guarantors, including export receivables arising from export sales of copper, zinc, lead and other metals and metal by-products. Medimsa and the guarantors are 100 percent indirectly owned subsidiaries of Grupo Mexico, S.A. de C.V. The Guaranteed Senior Notes are direct, unsecured obligations of GMM and the guarantors, which include all of GMM's principal operating subsidiaries. Contact: New York Linda Stesney Managing Director Structured Finance Group Moody's Investors Service New York Maria Muller VP - Senior Credit Officer Structured Finance Group Moody's Investors Service TRIBASA: Treasury Forgoes Collection Of US$303 Mln In Back Taxes ---------------------------------------------------------------- Despite the Mexican Treasury's need to raise tax revenues, the tax collecting agency is allowing Tribasa to delay payment of some MXN2.74 billion (US$303 million) in back taxes. The taxes owed comprise about 25 percent of the Company's total debt, reports Diario de Yucatan. On March 26, a judge ordered Tribasa to suspend payment on its obligations. However, the judge also ordered it to continue meeting its payroll and to pay taxes and social security contributions. The judge's orders came after Banco del Atlantico bank, Bank of America and BBVA Bancomer petitioned the court to call a creditors meeting. As a result, Tribasa was granted 185 days in which to consolidate its debts and negotiate settlements with its creditors. Failure to meet obligations by the end of this period will result in bankruptcy proceedings for Tribasa. Meanwhile, it has been confirmed that David Penaloza Sandoval, Chairman of Tribasa's board, was on the run from law enforcement officials after a federal judge released an arrest warrant regarding an alleged fraud committed against State credit organization Nafin for some US$30 million. In the face of the crisis enveloping Tribasa, the government of Estado de Mexico plans to bailout two highways that are currently under concession and operated by Tribasa, said state Secretary of Communications and Transport Guillermo Cano Garduno. CONTACT: GRUPO TRIBASA, S.A. DE C.V. Bosque de Cidros No. 173, Bosques de las Lomas 05120 Mexico, D.F., Mexico Phone: +52-55-5229-7400 Fax: +52-55-5229-7430 E-mail: tribasa@tribasa.com.mx Home Page: http://www.tribasa.com.mx Contacts: David Sandoval, Chairman and President Salvador Linares, Chief Executive Officer Adriana De Penaloza, Vice Chairman Fernando Ochoa, Corp. Director of Construction Gustavo Carbajal, Corp. Director of Admin. and Control INVERWORLD: Liquidator Sues Deloitte & Touche For $200M -------------------------------------------------------- The liquidator of the InverWorld estate has filed a $200 million lawsuit against accounting giant Deloitte & Touche LLP over its role in the 1999 collapse of the InverWorld investment companies. An announcement was released Wednesday by Diamond McCarthy Taylor & Finley outlining the action. The suit, filed on April 4 in federal bankruptcy court in San Antonio, accuses Deloitte & Touche -- the former auditor for InverWorld principal I.G. Services LTD -- of gross negligence. "InverWorld's books should have raised some serious red flags," Diamond says. "But Deloitte missed them. Now InverWorld's investors are paying a high price for their negligence. Had Deloitte been more diligent -- had they done their job -- InverWorld would not have been able to carry out its fraudulent schemes." Although the suit seeks actual damages of at least $200 million, the final damages claim may be in excess of $300 million, says Allan Diamond, a co-founder of Diamond McCarthy Taylor & Finley. Diamond, along with William T. Reid, is counsel to Len B. Blackwell, a PricewaterhouseCoopers partner who serves as the liquidator and bankruptcy trustee for I.G. Services, which filed for bankruptcy protection in 1999. About 1,200 InverWorld investors, mostly clients from Mexico, lost approximately $325 million in the allegedly fraudulent investment scheme. Two of the company's top executives, Jose Zollino and George Fahey, were arrested last April and charged with masterminding a conspiracy to defraud investors. Fahey has already pleaded guilty. Zollino is expected to go to trial this summer. CONTACT: Amy Hunt of Androvett Legal Media, +1-800-559-4534, or amy@legalpr.com, for Diamond McCarthy Taylor & Finley ======= P E R U ======= PESQUERA CAROLINA: Creditors Meet To Review Restructuring Plan -------------------------------------------------------------- The creditors of the Peruvian fishing company Pesquera Carolina are expected to meet soon in order to discuss the Company's restructuring plan, according to South American Business Information. The Company's plan calls for the sale of three fishing ships in an effort to generate an expected US$5.4 million. The proceeds would then be passed on to Interbank, in exchange for a US$1.1 million capital injection and cancellation of US$10 million in debts & interest. Presently, three of Pesquera Carolina's seven fishing boats are operational. Pesquera Carolina's income was reduced by 12 percent to US$14.4 million in 2001, from US$16.4 million in 2000. However, it managed to post 23.4 percent growth in fish flour production, totaling 25,217 m tons. Pesquera Carolina listed liabilities of US$55 million at year-end 2001. ================= V E N E Z U E L A ================= PDVSA: S&P Rates PDVSA Finance Notes BBB-; CreditWatch Negative --------------------------------------------------------------- Standard & Poor's on Wednesday placed its triple-'B'-minus ratings on the senior unsecured notes issued by PDVSA Finance Ltd., a wholly owned subsidiary of Petroleos de Venezuela S.A. (PDVSA), on CreditWatch with negative implications. The CreditWatch placement affects $3.6 billion of U.S. dollar- denominated notes and 200 million in euro- denominated notes (see list). The CreditWatch placement indicates the increased probability of a downgrade if the current dispute between workers at PDVSA and the Venezuelan government leads to a substantial decline in output. A downgrade of the notes will depend on Standard & Poor's assessment of any impairment of the short- and long-term production capacity of PDVSA, which is threatened by the unexpectedly severe reaction of PDVSA management to the government's politically motivated changes in senior management and the board of directors. According to PDVSA, current work stoppages have not affected crude oil export volumes to designated customers, although independent reports indicate otherwise. According to Standard & Poor's analysis, exports would have to be halted for almost two months to trigger a covenant violation or more than six months to trigger a payment default, which is unlikely given the strong economic incentives for the government of Venezuela to ensure an orderly continuation of oil exports. While government and/or military action could restore export flows in the short term, Standard & Poor's is concerned that the recent dispute -- if not resolved amicably -- still could translate into a reduction in the company's long-term production capacity through many mechanisms, including (but not limited to) ongoing acrimonious relations between the government and PDVSA's workers, the draining of PDVSA's managerial and intellectual talent, and constrained access to capital. The ability of PDVSA to consistently export is critical to the transaction's investment- grade ratings as it underpins its strong financial parameters. PDVSA's export capacity and the transaction's strong financial parameters are still well above PDVSA and the Bolivarian Republic of Venezuela's single-'B' long- and short- term foreign currency ratings. The outlook on PDVSA and the government's foreign currency ratings is negative. Standard & Poor's requirements for investment-grade future flow transactions to maintain liquidity reserves equal to at least three month's debt service and to have strong cash flow coverage of debt service help to reduce the risk of either payment default or covenant breaches that could result from events such as a prolonged strike by PDVSA workers. The liquidity account is currently fully funded and available to cover the next debt service payment in May, if necessary. While the coverage levels have dropped to 11 times (x) from 19x in December, the drop is more a result of an increase in principal amortization beginning in May than a result of a reduction in receivables generation. According to PDVSA, while OPEC cuts have reduced the level of receivables flowing through the transaction, the company has added designated customers to the program in order to maintain a ratio of collections over debt service greater than 10x. RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS PDVSA Finance Ltd. Issue Rating Class A 6.45% notes due 2004 BBB- Class B 6.65% notes due 2006 BBB- Class C 6.80% notes due 2008 BBB- Class D 7.40% notes due 2016 BBB- Class E 7.50% notes due 2028 BBB- Class F 8.75% notes due 2004 BBB- Class G 6.25% notes due 2006 BBB- Class H 9.40% notes due 2007 BBB- Class I 9.75% notes due 2010 BBB- Class J 9.95% notes due 2020 BBB- Class K 8.50% notes due 2012 BBB- CONTACT: STANDARD & POOR'S Nancy Gigante Chu Tel. +1-212-438-2429 Bruce Schwartz, CFA Tel. +1-212-438-7809 Jose Coballasi Tel. +52-55-5279-2014 *********** 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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