/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020415.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 Monday, April 15, 2002, Vol. 3, Issue 73 Headlines A R G E N T I N A AGUAS ARGENTINAS: Suspends Debt Payments; S&P Cuts Ratings BGN: Shareholders Seek Central Bank Approval For Liquidation CAPEX SA: Defaults; Fitch Downgrades Ratings To 'DD' From 'C' IMPSA: Signs Deal With Cemig For the Supply of Turbines B E R M U D A FLAG TELECOM: Cauley Geller Files Securities Class Action Suit FLAG TELECOM: Schiffrin & Barroway, LLP Files Class Action Suit FLAG TELECOM: Moody's Cuts Rating On Proposed Debt Restructuring GLOBAL CROSSING: Seeks Approval To Pay US$15M Retention Bonuses TYCO INTERNATIONAL: Plastics Unit To Go On The Block By July B R A Z I L AES CORP.: Eletropaulo Seeks Actuarial Liability Extension BCP: Default Goes Uncured; Owners Continue Negotiating EMBRATEL: Pursues Legal Fight Over Inflated Interconnection Fees VARIG: Resumes Miami-Belem Flights as Demand Picks Up C H I L E DISPUTADA: Exxon Still Considering Anglo American Bid ENAMI: Smaller Mines Contest Ventanas Transfer To Codelco MANQUEHUE NET: Fitch Cuts Bond Ratings; Outlook Negative C O L O M B I A BANCAFE: Colombia's Woes May Hinder Privatization M E X I C O DESC: Reports 7% Drop In 1Q02 Operating Income GRUPO ALFA: Considers Selling Major Assets To Reduce Debt GRUPO MEXICO: EPA To Cover Cleanup Of the Ruston Smelter Site U R U G U A Y PLUNA SA: Uruguay, Varig Announce Rescue Plan V E N E Z U E L A PDVSA: Restores Operations, Workforce; Begins Transition - - - - - - - - - - ================= A R G E N T I N A ================= AGUAS ARGENTINAS: Suspends Debt Payments; S&P Cuts Ratings ---------------------------------------------------------- Aguas Argentinas' recent announcement that it will suspend debt payments prompted international credit rating agency Standard and Poor's (S&P) to downgrade the Company's ratings, said S&P credit analyst Sergio Fuentes. S&P cut the Argentine water utility's local and foreign currency corporate credit ratings to 'D' from 'SD' (selective default). According to the ratings agency, Aguas' debt repayment capacity has been substantially diminished because of the strong and continuing devaluation of the Argentine peso, which followed the end of convertibility, while tariffs were frozen without allowing for any compensating adjustments. Combined with the lack of liquidity in the financial system, the Company's financial condition has worsened, S&P noted. Aguas' French parent company Suez, which announced the payment suspension Wednesday, explained that the utility will dedicate its financial resources to ensuring service continuity. Suez added that Aguas intends to develop and propose a plan to reestablish the economic and financial balance of the concession contract, in association with the public authorities. Aguas Argentinas provides potable water and sewerage services to some nine million residents in Buenos Aires and 13 surrounding municipalities. Its 30-year concession began May 1993. 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 BGN: Shareholders Seek Central Bank Approval For Liquidation ------------------------------------------------------------ Banco General de Negocios's (BGN) primary shareholders have requested that the Central Bank liquidate the Argentine bank while allowing sister banks Nuevo Banco de Santa Fe (NBSF) and Banco Comercial del Uruguay to continue normal operations, relates Business News Americas. Credit Suisse First Boston (CSFB), Dresdner Bank and JP Morgan Chase are attempting to reach an agreement with the central bank that will allow NBSF and BCU to carry out a formal separation from BGN. Simultaneously, the assets and liabilities of BGN would be transferred to NBSF, along with the resources necessary to cover BGN's depositors. BGN is at the center of an investigation, which included the arrest of the Argentine bank's vice president, Carlos Roh, on charges that he illegally siphoned up to US$250 million out of the country after Argentina's government imposed capital and deposit controls on December 3 last year. CONTACTS: BANCO GENERAL DE NEGOCIOS SA Esmeralda 120 Capital Federal 1035 Buenos Aires, Argentina Phone: 011-4394-3003 Fax: 011-4320-6138 Email: interbank@bancobgn.com URL: http://www.bancobgn.com DRESDNER BANK LATEINAMERIKA AG Neuer Jungfernstieg 16 20354 Hamburg, Germany Tel.: (+49 40) 3595-0 Fax: (+49 40) 3595 3314 Telex: 214 236-0 dl d S.W.I.F.T. DRES DE HL E-Mail: public-relations@dbla.com CREDIT SUISSE GROUP P.O. Box 1 CH-8070 Zurich Tel. +41 (1) 212 16 16 Fax. +41 (1) 333 25 87 Contact: Lukas Muehlemann, chairman & CEO J.P. MORGAN CHASE & CO. Investor Relations J.P. Morgan Chase & Co. 270 Park Avenue New York, NY 10017-2070 (1-212) 270-6000 URL: www.jpmorganchase.com CAPEX SA: Defaults; Fitch Downgrades Ratings To 'DD' From 'C' ------------------------------------------------------------ Fitch Ratings has downgraded the foreign and local currency ratings of Capex S.A. to 'DD' from 'C'. The rating actions follow Capex's default on interest payments due under the company's floating rate note (FRN) and trade facilities. The default was prompted by the absence of the required approval from the central bank (Banco Central de la Republica de Argentina, BCRA) to transfer the corresponding interest payments. Capex's financial flexibility has been adversely affected by the devaluation, implementation of transfer and convertibility controls, pesofication and effects stemming from the government's default. At present, Capex, as well as other market participants, is negotiating with the Argentine government in the hopes of recovering the value effectively expropriated from the company through Public Emergency Law No. 25.561. The outcome of the negotiations remains uncertain. Capex is 55% owned and controlled by Capsa S.A. (CAPSA) with the remainder of the common stock being listed of the Buenos Aires and Luxembourg Stock Exchanges. Capsa is 55% owned by the Gotz family and 45% owned by El Paso Energy (EPG), a U.S.-based energy company that has operations in interstate natural gas transmission, gas gathering and processing, energy marketing, and international energy infrastructure development. EPG and Capex are strategic partners that expect to invest in oil and gas and power projects in Latin America. CONTACT: Fitch Ratings Cecilia Minguillon or Ana Paula Ares Phone: +54 11 4327-2444 Jason T. Todd Phone: 1-312-368-3217 Alejandro Bertuol Phone: 1-212-908-0393 James Jockle Phone: 1-212-908-0547 (Media Relations) CAPEX SA Melo 630 (1638) Vicente L¢pez Buenos Aires Argentina Tel./Fax: (54-11) 4796-6000 E-mail: info@capex.com.ar Contact: Enrique Gotz, Chairman Alejandro Gotz, Vice-Chairman Pablo Gotz, Director IMPSA: Signs Deal With Cemig For the Supply of Turbines ------------------------------------------------------- Brazil's Minas Gerais state integrated power company Cemig has agreed to supply turbines for Impsa's US$16-million, 23MW Pai Joaquim small-scale hydro project in Minas Gerais state, reports Business News Americas. Impsa will sign an additional two contracts in Brazil worth US$52 million for two turbines by month-end. "Although this isn't one of the biggest projects we've worked on in Brazil, at this moment it has the symbolic value of showing that Argentine companies that have been working in this country for years, retain the confidence of clients despite the crisis," Impsa's Brazil president Alfredo Collado said. Impsa is on the verge of closing an agreement with investors, one of the first successful refinancing cases of an Argentine company in default. The Company's offer includes 2 new bonds, one of which would cover 50 percent over the nominal value of the previous bond. About 66 percent of the shareholders have accepted the offer so far. Impsa's default started last December when it failed to pay nearly US$7 million in interests for a US$137.6 million bond. CONTACTS: IMPSA Latin America Roberto Arancibia Rodr¡guez Pe¤a 2451 (5503) Godoy Cruz, Mendoza, Argentina. Tel: +54-261 4131300 Fax. +54-261 4131416 - 4131423 arancibi@impsa.com.ar Julio Bermant Av. Eduardo Madero 940, piso 19 (1106) Buenos Aires, Argentina. Tel.: +54 11 50770888 Fax: +54 11 50770835 bermant@impsa.com.ar Brazil Luis Garc¡a Av. Alvarez Cabral, 344 18§ andar - Conjuntos 1801-1802, Cep 30170-000 - Centro - Belo Horizonte - MG - BRAZIL ph: +55 31 273-2254 fx: +55 31 273-9734 luis_garcia@osite.com.br Europe Hanspeter Hauser Tribschenstrasse 7, Ch-6005 Lucerne - SWITZERLAND Tel: (+41-41) 3600864 Fax: (+41-41) 3603103 hugal@acces.ch ============= B E R M U D A ============= FLAG TELECOM: Cauley Geller Files Securities Class Action Suit -------------------------------------------------------------- The Law Firm of Cauley Geller Bowman & Coates, LLP announced Thursday that a class action has been filed in the United States District Court for the Southern District of New York on behalf of purchasers of FLAG Telecom Holdings, Ltd. (Nasdaq: FTHL) ("FLAG" or the "Company") common stock during the period between March 23, 2001 and February 13, 2002, inclusive (the "Class Period"). A copy of the complaint filed in this action is available from the Court, or can be viewed on the firm's website at http://www.classlawyer.com/pr/flag.pdf. The complaint charges FLAG, Andres Bande (CEO and Chairman), Edward McCormack (Chief Operating Officer), Andrew Evans (Chief Technology Officer) and Larry Bautista (Chief Financial Officer until August 2001) with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that throughout the Class Period, FLAG reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, FLAG was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that FLAG was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable -- the so-called dark fiber swap. The complaint alleges that as a result of these transactions, FLAG artificially inflated its operating results and materially misrepresented its financial results at all relevant times. CONTACT: CAULEY GELLER BOWMAN & COATES, LLP Investor Relations Department: Jackie Addison, Sue Null or Shelly Nicholson P.O. Box 25438 Little Rock, AR 72221-5438 Toll Free: 1-888-551-9944 E-mail: info@classlawyer.com FLAG TELECOM: Schiffrin & Barroway, LLP Files Class Action Suit --------------------------------------------------------------- The following statement was issued Thursday by the law firm of Schiffrin & Barroway, LLP: Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of all purchasers of the common stock of FLAG Telecom Holdings, Ltd. ("FLAG" or the "Company") (Nasdaq: FTHL) from March 23, 2001 through February 13, 2002, inclusive (the "Class Period"). The complaint charges FLAG Telecom Holdings, Ltd., Andres Bande (CEO and Chairman), Edward McCormack (Chief Operating Officer), Andrew Evans (Chief Technology Officer) and Larry Bautista (Chief Financial Officer until August 2001) with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that throughout the Class Period, FLAG reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, FLAG was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that FLAG was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable -- the so-called dark fiber swap. The complaint alleges that as a result of these transactions, FLAG artificially inflated its operating results and materially misrepresented its financial results at all relevant times. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, LLP, which has significant experience and expertise prosecuting class actions on behalf of investors and shareholders. For more information on Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com/cgi/signup.cgi. For questions concerning this notice, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com. CONTACT: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. Stuart L. Berman, Esq. Three Bala Plaza East Suite 400, Bala Cynwyd, PA 19004 Tel. 1-888-299-7706 (toll free) or 1-610-667-7706 E-mail: info@sbclasslaw.com FLAG TELECOM: Moody's Cuts Rating On Proposed Debt Restructuring ---------------------------------------------------------------- Moody's Investors Service affirmed Flag Telecom Holdings Ltd's senior unsecured and issuer ratings at Ca while cutting its senior implied rating to Ca from Caa2, relates AFX. The agency also lowered Flag Ltd's senior unsecured rating to Ca from Caa3 and withdrew the Company's senior secured loan facility rating. The action follows Flag Telecom's recently proposed debt restructuring which, if approved, "would result in a recovery value to existing debt holders within the parameters of the new ratings." Moody's added that the new ratings "are predicated on the proposed restructuring being accepted by all parties and the ratings could be lowered further in the event the proposal is rejected or the terms and conditions of the proposal are changed in any way." Under Flag's proposal, the Company would exchange: (a) The FLAG Atlantic Bank debt of approximately US$257 million for approximately US$70 million in cash and new common equity of FLAG; (b) US$430 million of FLAG Limited 81/4% Senior Notes due in 2008 for approximately US$170 million of New Senior Notes of FLAG; and (c) $US300 million and Euro 300 million of FLAG 11 5/8% Senior Notes due in 2010 for approximately US$150 million in cash, approximately US$40 million of New Senior Notes of FLAG and new common equity of FLAG. Under the Proposal, all trade creditors and equipment suppliers would be paid in full in the ordinary course of business or through vendor financing. The Proposal anticipates that, as is common in restructurings of this type, existing common equity holders will be substantially diluted. To see financial statements: http://bankrupt.com/misc/Flag_Telecom.txt CONTACT: FLAG Telecom David Morales, +44 20 7317 0837 Dmorales@flagtelecom.com or Investors: Sloane & Company Charles Southworth, 212/446-1892 Cedar House, 41 Cedar Avenue Hamilton HM12, Bermuda Phone: (441) 296-0909 Fax: (441) 296-0938 Email: irelations@flagtelecom.com Contacts: Andres Bande, Chairman/CEO Michel Cayouette, CFO GLOBAL CROSSING: Seeks Approval To Pay US$15M Retention Bonuses --------------------------------------------------------------- Embattled Bermuda-based fiber-optic network operator Global Crossing Ltd. is seeking approval from the bankruptcy court to pay up to US$15 million in retention bonuses, reports Dow Jones. In a filing made Wednesday with the U.S. Bankruptcy Court in Manhattan, Global Crossing explained that the proposed retention plan would provide US$10 million in payments to 304 employees considered to be vital to the Company's business or restructuring efforts. The remaining $5 million would go into a discretionary pool for other employees who, in the judgement of Global Crossing's chief executive, are or will become essential to the reorganization efforts, the filing said. Half of the money would be available immediately, with the other half being accessible on the approval of the committee representing the Company's unsecured creditors. A hearing on the telecommunications provider's request on the retention bonuses is scheduled for May 13 before Bankruptcy Judge Robert E. Gerber. Objections to the motion are due May 3. 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 TYCO INTERNATIONAL: Plastics Unit To Go On The Block By July ------------------------------------------------------------ Executives of Tyco International Ltd. are still optimistic that the Company will be able to sell of its plastics division by the end of June, relates the Associated Press. "From our point of view we're still on track with where we thought we were," said Brad McGee, a Tyco executive vice president. The announcement came in response to reports that the sale, expected to bring about US$3 billion, has been delayed by the lack of audited financial reports for the division. Tyco stock has been troubled by worries about the Company's accounting practices and debt load following Enron Corp.'s collapse. News of delays in completing the audit could make some investors assume that auditors were finding irregularities, said Rob Plaza, an analyst with Morningstar Inc. in Chicago. "(The news) could be something the market will look at and expect the worst," Plaza said. McGee was quick to quash such expectations. "To suggest that there's been a delay in the audit due to accounting issues is absurd," he said. Tyco, based in Bermuda but run from Exeter, wants to sell the plastics unit and use the proceeds to reduce debt. Several potential bidders for the division have been identified, including Madison Dearborn Partners Inc., Clayton, Dubilier & Rice Inc., Kohlberg Kravis & Roberts Co. and the Blackstone Group. CONTACT: TYCO INTERNATIONAL (U.S.) INC. One Tyco Park Exeter, NH 03833 Phone: 603-778-9700 Home Page: http://www.tyco.com Contact: L. Dennis Kozlowski, Chairman, President, and CEO Mark H. Swartz, EVP and CFO Corporate Office Tyco International Ltd. The Zurich Centre, Second Floor 90 Pitts Bay Road Pembroke HM 08, Bermuda Phone: 441-292-8674 =========== B R A Z I L =========== AES CORP.: Eletropaulo Seeks Actuarial Liability Extension ---------------------------------------------------------- Brazilian distributor Eletropaulo, which is controlled by US- based AES Corp., is negotiating with the CVM (Comissao de Valores Mobiliarios) to delay posting actuarial liabilities of BRL2.4 billion. The Company hopes to extend the period of time until it from five years to fifteen. The dollar amount at issue relates to post employment benefits connected with its pension fund. Eletropaulo is seeking the deferral in order to avoid having to register an annual liability of BRL480 million. The additional burden could have a negative effect on its profitability and may compromise its ability to pass on dividends to AES. Its US-based parent is in need of the resources to reassure investors about its capacity to pay back US$22 billion in debt, as well as strengthen its balance sheet. However, Eletropaulo's chances for success are slim as CVM is unlikely to permit such request over concerns of creating a precedent for other companies. CONTACTS: ELETROPAULO METROPOLITANA Luiz D. Travesso, Chairman and President Orestes GonOalves Jr., VP Finance/Investor Relations THEIR ADDRESS: Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br 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 BCP: Default Goes Uncured; Owners Continue Negotiating ------------------------------------------------------ US-based telco Bellsouth and Brazil's Banco Safra are still in negotiations to decide how to resolve the present default condition on US$375 million debt by their mobile subsidiary BCP on March 28, a Bellsouth spokesperson confirmed to Business News Americas. Bellsouth's current position refutes last week's reports that both the parties have reached a funding agreement for their struggling Brazilian wireless unit. An impasse between the two sides about the money-losing carrier's needs forced BCP to default on a US$375-million debt payment, an event, which according to Standard & Poor's, would potentially trigger payment accelerations on as much as US$1.6 billion of the Company's debt. Bellsouth and Safra are BCP's largest shareholders, each owning 44.5 percent of the Company. The default came amidst continuing speculation about the possible buyout of BCP by a larger wireless group. CONTACT: BELLSOUTH CORPORATION 1155 Peachtree St. NE Atlanta, GA 30309-3610 Phone: 404-249-2000 Fax: 404-249-5599 Home Page: http://www.bellsouth.com Contacts: Investor Relations Phone (US): 800.241.3419 Fax: 404.249.2060 E-mail: investor@bellsouth.com BCP TELECOMUNICACOES Rua Florida, 1970 4o andar Sao Paulo - SP Tel: 55 11 5509-6428 Fax: 55 11 5509-6257 Home Page: http://www.bcp.com.br EMBRATEL: Pursues Legal Fight Over Inflated Interconnection Fees ---------------------------------------------------------------- Embratel, a leading Brazilian long-distance phone company, is taking matters to court against fixed line operators for charging inflated interconnection fees. The legal proceeding, which was scheduled for Friday, is filed against operators Telefonica, Brasil Telecom, and Telemar. Embratel regulatory VP Purificacion Carpinteyro has asked the government to settle the dispute and has requested an emergency status for the issue. Embratel recently concluded its primary financing program for 2002. The major part of the program consisted of a syndicated loan of US$270 million. A total of US$240 million has already been internalized by the Company, and another US$30 million is being finalized. An additional US$35 million of trade-related financing is being structured and will complete Embratel's core financing needs for 2002. Embratel ended the first quarter of 2002 with a cash position of R$662 million, having paid approximately US$409 million of interest and principal during the quarter. Embratel provides customers in Brazil with a wide array of advanced communications services over its own network. Service offerings include: advanced voice, high-speed data communication services, Internet, satellite data communications and corporate networks. The Company's network has countrywide coverage, with 28,868 km of fiber-optic cables comprising 1,068,657 km of optic fibers. CONTACT: EMBRATEL Investor Relations Silvia M.R. Pereira Phone: 55-21-2519-9662 Fax: 55-21-2519-6388 E-mail: silvia.pereira@embratel.com.br invest@embratel.com.br Press Relations Helena Duncan Phone: 55-21-2519-3653 Fax: 55-21-2519-8010 E-mail: hduncan@embratel.com.br OR Mariana Palmeira Phone: 55-21-2519-3654 Fax: 55-21-2519-8010 E-mail: mpalm@embratel.com.br VARIG: Resumes Miami-Belem Flights as Demand Picks Up ----------------------------------------------------- VARIG Brazilian Airlines will resume its flights between Miami and Belem effective May 18, offering yet another option for international travelers departing Miami. The resumption of flights which were suspended in the aftermath of the terrorist attacks in the United States in the fall of 2001, will coincide with the airline's 75th anniversary celebration which will take place throughout the month of May, according to Vicente Cervo, VARIG'S Director-North America. "We are responding to customer demand," Cervo said. "Belem is an important commercial capital and offers tourists a variety of interesting excursions on the mouth of the Amazon River. Slightly over 5 hours from Miami, Belem is the northern gateway to Brazil and is a convenient stop for eco-tourists planning to explore the Amazon Rain Forest," he added. The Varig airline group, which includes regional carriers Rio- Sul, Nordeste and Pluna, is seeking new sources of revenue after posting a BRL480.9 million (US$211.6 million) loss last year. The airline offers flights to more than 100 destinations throughout South America and also has routes to Europe and Asia. CONTACT: VARIG Brazilian Airlines, Miami Jeff Kriendler, 305/866-2115 jkriendler@aol.com ========= C H I L E ========= DISPUTADA: Exxon Still Considering Anglo American Bid ----------------------------------------------------- Exxon Mobil is still analyzing the offer made by Anglo American to acquire a 49-percent stake in Disputada de Las Condes. Anglo American is now the only one left in the race for the major mining company's assets, with a US$1.3-billion offer, after Chilean state owned copper major Codelco dropped out. Exxon Mobil has put the mine up for sale since last year as part of a plan to shed its non-oil businesses. In recent years, Disputada has endured poor financial results due to low mineral production levels and depressed copper prices. Disputada runs the Los Bronces and El Soldado copper mines and a smelter called Chagres in central Chile. ENAMI: Smaller Mines Contest Ventanas Transfer To Codelco --------------------------------------------------------- Ovalle mining association, an organization of small-scale miners, is concerned over Enami's decision to transfer Ventanas copper smelter-refinery to Codelco, the state copper corporation. State-owned Enami is considering the option in order to reduced its US$480 million debt load. The workers association in Chile's central-north Region IV contends that this step could lead to handing over other assets, such as Enami's Matta processing plant and Paipote smelter. In the associations view, such a move would end Enami's support to small-scale miners, implying the death of small and medium scale mining in Chile. State-owned Enami and the Chilean government are still in talks over a possible solution for Enami's debt. Other options include the acquisition of a partner for Ventanas, getting US$160 million tax credits due to Enami back from the government, and having the state guarantee its debt. Ventanas is Enami's principal asset and is currently producing 450,000t/y of electrolytic copper. Enami also operates the Paipote smelter in northern Chile's Region III. A large part of the debts derive from environmental clean-up programs at the two smelters. CONTACT: CORPORACION NACIONAL DEL COBRE (CODELCO) Huerfanos 1270, Santiago, Chile Phone: 56(2) 690 3000 (Information) Fax: 56(2) 690 3059 E-mail: comunica@stgo.codelco.cl Home Page: http://www.codelcochile.com Contacts: Juan Villarzu Rohde, President and CEO Juan Eduardo Herrera Correa, Chief Financial Officer ENAMI (Empresa Nacional de Mineria) MacIver 459, Santiago, Chile Phone: 637 52 78 637 50 00 Fax: 637 54 52 Email: webmaster@enami.cl Home Page: www.enami.cl/ Contact: Jorge Rodriguez Grossi, President MANQUEHUE NET: Fitch Cuts Bond Ratings; Outlook Negative -------------------------------------------------------- Credit rating agency Fitch lowered the rating for bonds issued by Chilean Manquehue Net from BBB to BB+, with a negative outlook. The action was prompted by Fitch's assessment of the local exchange carrier's delicate financial situation, and the Company's difficulty in continuing its growth plan. Manquehue had a net loss of CLP11.3 billion (US$17.3 million) in 2001, which is equivalent to a 10-percent cut in the Company's average equity. Concurrently, revenues were affected by the deceleration of Chile's economy. Fitch also lowered the ratings due to the uncertainty of the future of the Company's ownership structure. UK-based National Grid, which owns a 30-percent stake in the Company, is searching for buyers for its 50 percent stake in Argentina-based carrier of carriers Silica Networks as well as some or all of its 50 percent in Brazilian long distance operator Intelig. US-based network operator Williams Communications, owner of a 16.5 percent stake in Manquehue, is itself undergoing financial difficulties. The shareholder structure also stands to change if Manquehue is successful in its search for a new strategic partner -- a move, which may dilute the above shareholders' ownership or replace them altogether. Manquehue's other shareholders are Chilean gas distributor Metrogas (25.6 percent); the local Rabat family (21.2 percent); and investment fund Xycom. To see financial statements: http://bankrupt.com/misc/Manquehue.doc =============== C O L O M B I A =============== BANCAFE: Colombia's Woes May Hinder Privatization ------------------------------------------------- Analysts believe that Colombia's troubled economy, as well as the country's unstable political situation, could derail the government's plan to privatize the country's largest bank Bancafe this year, says a report released by Business News Americas. The government, according to Bancafe chairman Pedro Nel Ospina, is now considering three alternatives for Bancafe: continue to run it as a state bank; privatize the bank in its entirety; or bring in a strategic partner to introduce capital and know-how. "I believe the first alternative is the most likely," said Santander Investment banking analyst Felipe Hernandez in Bogota. "I don't think we (Colombia) will be able to sell it," agreed the senior economic research analyst at local brokerage Corredores Assoicados, Ricardo Duran. Colombia is currently in a very dire financial situation, with unemployment rate at 16.4 percent and urban unemployment even worse at 18.8 percent. The existing condition seems likely to continue, with international rating agency Moody's last week lowering its country outlook from stable to negative. Fellow rating agency Standard & Poor's already had a negative outlook, while Fitch maintains its stable outlook. Political strife and war have scared off foreign investors in the past. Subsequently, Colombia has fallen from international investor grace since the peace process between the government and guerillas officially ended on February 20. According to Duran, Colombia's current war situation could escalate in the next couple of months because the leading presidential candidate for May 26 elections, Alvaro Uribe Veliz, has said he will crack down on the guerillas. "The moment is not very opportunistic to sell Bancafe - or any company in Colombia," Duran said. "If we could not sell the bank when there was not a war going on, what are the chances of selling it today?" Bancafe chairman Nel Ospina said he expects the bank post net income of COP20 billion (US$8.8 million) this year due to improvements in efficiency and customer service, which are part of the government's efforts to make Bancafe more attractive to potential foreign investors. Colombia's government said initial contacts had been made with an international financial group at the Inter-American Development Bank's annual meeting in Brazil last month, which had expressed interest in buying Bancafe or purchasing part of the bank. Duran said the government announcements have never included anything concrete like a name or an offer. Bancafe is Colombia's fourth largest bank in terms of assets, trailing its private sector rivals Bancolombia, Banco de Bogota and BBVA Banco Ganadero. Colombian authorities have been seeking to sell Bancafe for two year now because of the bank's drain on public finances. CONTACT: BANCAFE Street 28 Not 13 To 15 Bogota District of Colombia Phone: 5600999 EXT. 4338 E-mail: ma.pulido@bancafe.com.co Fax: 336 76 77 Home Page: www.bancafe.com Contact: Pedro Nel Ospina Santamaria, Legal Representative 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 =========== M E X I C O =========== DESC: Reports 7% Drop In 1Q02 Operating Income ---------------------------------------------- Mexican industrial conglomerate Desc SA said Thursday that sluggishness in the auto parts and chemical sectors, seasonal factors and a strong currency pressured operating income and sales in the first quarter, relates Dow Jones. The Mexico City-based company said preliminary results show operating income at US$39 million compared with US$42 million for the same quarter in 2001. Sales are expected to fall by 7.5 percent, to US$505 million from $546 million in the year-earlier period. Earnings before interest, taxes, depreciation and amortization dropped 5.5 percent, to US$69 million, from US$73 million last year due to a gain in the currency that crimped Desc's export competitiveness. Desc's chemical unit was hit hardest, with a 25-percent drop in operating income to US$9 million. Operating income at the auto parts, the company's largest unit, fell 6.9 percent to US$27 million. Desc 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. 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 GRUPO ALFA: Considers Selling Major Assets To Reduce Debt --------------------------------------------------------- Mexican industrial conglomerate Grupo Alfa is likely to relinquish control of Hylsamex to a partner and sell its interests in Siderurgica del Orinoco SA (Sidor), Venezuela's largest steelmaker, according to Grupo Alfa president, Dionisio Garza. In a report released by Notimex, Mr. Garza explained that the group is considering such steps because of acute financial problems at its iron and steel divisions. Grupo Alfa's debt now totals US$2.6 billion, he explained. Mr. Garza also noted that Hylsamex still needs to finish restructuring its debt of US$1.1 billion, obtain a majority partner or sell assets to reduce its leverage. To see Hylsamex's financial statement: http://bankrupt.com/misc/Hylsamex.doc CONTACT: HYLSAMEX Investor Relations Margarita Gutierrez E-Mail: mgutierrez@hylsamex.com.mx Ricardo Sada E-Mail: rsada@hylsamex.com.mx Phone: (52) 81 8865 1224 (52) 81 8865 1201 Munich 101, San Nicolas de los Garza N.L., 66452 Mexico GRUPO MEXICO: EPA To Cover Cleanup Of the Ruston Smelter Site ------------------------------------------------------------- U.S. Rep. Norm Dicks revealed that a top Environmental Protection Agency official assured that the federal government will pay to complete the cleanup of the Ruston smelter site in the event that Asarco fails to do so, reports Knight-Ridder Business News. However, Mr. Dicks noted that Marianne Lamont Horinko, an assistant EPA administrator who oversees the Superfund program, also said that EPA and the Justice Department have become increasingly worried that Grupo Mexico, S.A. de C.V. might transfer the few remaining assets of its American subsidiary overseas. Grupo Mexico assumed control of Asarco in 1999 in a hostile takeover worth US$2.25 billion Such a move would force the company into bankruptcy, and could leave EPA on the hook for the estimated US$90 million to complete the Ruston smelter cleanup as well as some US$1 billion to clean up about 20 other Asarco sites around the nation. However, Doug McAllister, Asarco's Phoenix-based vice president and general counsel, strongly denied that Asarco's parent company intends to shift assets out of the United States. Asarco faces an April 20 deadline to report to the EPA on how it will comply with a March order to clean up submerged lands near the smelter. Asarco must produce a compliance plan and prove it can pay for the cleanup by posting a performance bond, securing a line of credit or showing how it can pay out of its own pocket. McAllister said he isn't sure how the company will respond. Meanwhile, Asarco and Grupo Mexico are facing financial liquidity problems. Asarco's 54.2 percent share of Southern Peru Copper Co. is pledged against Asarco's current debt. The company owes US$450 million to a consortium of international banks and is trying to renegotiate. The money is due in November. Grupo Mexico, on the other hand, is also carrying a debt load of US$2.5 billion, which is partly the result of its acquisition of Asarco. It has sought to control costs by suspending operations at Asarco smelters in Helena, Montana, and El Paso, Texas. CONTACTS: GRUPO MEXICO S.A. DE C.V Avenida Baja California 200, Colonia Roma Sur 06760 Mexico, D.F. Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 http://www.gmexico.com Contacts: German Larrea Mota-Velasco, Chairman & CEO Xavier Garcia de Quevedo Topete, President & COO SOUTHERN PERU COPPER CORPORATION Ave. Caminos del Inca 171 Urb. Chacarilla del Estanque Santiago de Surco Lima 33, Peru Tel: +51 1 372 1414 Fax: +51 1 372 0238 Home Page: http://www.southernperu.com Contacts: German Larrea Mota-Velasco, Chairman & CEO Oscar Gonzalez Rocha, President & Director General Daniel Tellechea Salido, VP - Finance ASARCO, INC. 2575 E. Camelback Rd., Ste. 500 Phoenix, AZ 85016 Phone: 602-977-6500 Fax: 602-977-6701 Home Page: http://www.asarco.com Contacts: German Larea Mota-Velasco, Chairman & CEO Genaro Larrea Mota-Velasco, President Daniel Tellechea Salido, VP & CFO ============= U R U G U A Y ============= PLUNA SA: Uruguay, Varig Announce Rescue Plan --------------------------------------------- Varig and Pluna Ente Autonomo announced a US$20-million capitalization plan that is expected to cancel Uruguayan airline Pluna SA's debts and avert the Company's technical bankruptcy. The Uruguayan state holds a 48.75 percent stake in PLUNA SA, while Varig holds 49 percent. According to the agreement, Varig will inject US14.5 million and Pluna Ente Autonomo will add US$5.6 million. The airline Pluna is faced with US$52 million debts, of which US$20 million is owed to Varig, as well as accumulated losses of US$10 million between July 2000 and June 2001. The Company's crisis stemmed from high management costs, says Fernando Alberti, President of the employees union. Varig expected an US$8-million surplus on its first year of management but a US$16-million deficit was turned in instead. The airline Pluna transports 75 percent of the tourists who fly to Uruguay from Argentina. ================= V E N E Z U E L A ================= PDVSA: Restores Operations, Workforce; Begins Transition --------------------------------------------------------- Pedro Carmona Estanga, President of the Transition Government, announced the reengagement of all PDVSA workers who were recently forcefully suspended, retired, dismissed, and transferred. These workers are once again performing their usual duties within the Corporation. In a special meeting held last week, PDVSA appointed Ignacio Layrisse as Executive Director of Exploration, Production, and Upgrading; Marco Rossi as Executive Director of Bitor; Alfredo Mart¡nez as Managing Director of Bariven; Erick Flores as Corporate Manager of Loss Prevention and Control; Francisco Bustillos as Finance Executive Director; and H‚ctor Asapche as Deputy General Auditor. The remaining administrative positions have been ratified as the respective analyses are being conducted. Petr¢leos de Venezuela has appointed a work team for the current transition period comprising certain representatives of the Workers' Assembly. This team will manage the Corporation until the Administration appoints the new Board of Directors. The team appointed to lead the transition process is comprised of Vice-presidents Karl Mazeika, Eduardo Praselj, and Vincenzo Paglione; Business Leaders Edgar Paredes (Refining, Supply, and Trading); Ignacio Layrisse (Exploration, Production, and Upgrading); Nelson Nava (PDVSA Gas); Jos‚ Rafael Paz (Pequiven); and, Francisco Bustillos (Finance Executive Director). Representing the Workers' Assembly are Lino Carrillo, Jos‚ Batista, Juan Santana, Guillermo Villamizar, Ciro Izarra, Horacio Medina, and Tom s Carrillo. Workers are reportedly working around the clock to restore operations and minimize the economic losses caused by the labor strike whose objective was to rescue Meritocracy and reject the politicization of PDVSA. CONTACT: Omar Guaregua Phone: (58212) 7084822 guareguao@pdvsa.com Yoly Bravo Phone: (58212) 7084484 bravoyz@pdvsa.com *********** 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. 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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