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/raid1/www/Hosts/bankrupt/TCRLA_Public/020424.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, April 24, 2002, Vol. 3, Issue 80 Headlines A R G E N T I N A ARGENTINE BANKS: Government Proposes Merger To Redeem System ARGENTINE BANKS: Closures Remain Pending Legislation Approval HSBC: Continues to Evaluate Argentine Operations REPSOL YPF: S&P Affirms YPF SA Notes Rating; Off Watch REPSOL YPF: Shares Down On Nationalization Reports REPSOL YPF: Delays Dividend Payments Due To Argentina's Woes SCOTIABANK QUILMES: Experts Expect No Future Recapitalization SCOTIABANK QUILMES: S&P Cuts Ratings Operations' Suspension TRANSENER: Suspends Payments; Morgan Stanley Advising New Plans B R A Z I L CEMIG: Shareholders Vote On Capital Increase Plan By Month End EMBRATEL: Reports 1Q02 Revenues of BRL1.8 Bln; Business Stable C H I L E EDELNOR: Has Until June 15 To Honor Norandino Guarantees MANQUEHUE NET: Rating Agencies Doubt Work Out Plan Possible M E X I C O AEROVOX INC.: To Sell Mexican Unit Through Bankruptcy Process AEROVOX INC.: Company Profile CINTRA: IPAB, CFC and SCT To Hold Sale Discussions This Week GUILFORD MILLS: Mexican Plant Closure Part of Growth Strategy HYLSAMEX: Receives Majority of Notes; Tender Offer Extended MEXICANA: Continues to Update and Modernize Fleet P&M: To Close Mexican Mining By Third Quarter This Year P A R A G U A Y CORPOSANA: Only 6 Firms Submit Background Documents to Qualify - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Government Proposes Merger To Redeem System ------------------------------------------------------------- The Argentine government is stepping up efforts to salvage the country's staggering financial system. In an AP report, Eduardo Amadeo, spokesman for President Eduardo Duhalde, revealed that the Argentinean government would present a bill to legislators this week creating the Banco Federal Nacional, which would be a merger of Argentina's largest bank, Banco de La Nacion and investment bank, Banco de Inversion y Comercio Extranjero. Amadeo also revealed that the government said it was inviting all provincial and municipal banks to join the merger, including the government-run banks of Buenos Aires province and the city of Buenos Aires, two of Argentina's largest. The measure, according to Amadeo, is designed to strengthen the banking system. "We need an efficient public banking system," he said. "The intention is to have stronger, more solid banks, so that they can make loans." Argentina is in the midst of its worst economic downturn, with four years of recession reaching its crescendo in recent months. The government defaulted on its US$141-billion public debt in December and undertook a steep devaluation of the currency from January. ARGENTINE BANKS: Closures Remain Pending Legislation Approval ------------------------------------------------------------- Argentine President Eduardo Duhalde said officials are working to end the country's banking suspension, which began Friday, relates Dow Jones. "The banks won't be closed indefinitely... It's absurd in a capitalist system the banks don't work," Duhalde said. According to the president, the nation's banking crisis will take at least "a couple of months" to correct. Duhalde spoke as draft legislation aimed at slowing the loss of bank deposits was sent to the Congress. The legislation includes offering depositors with cash frozen in the country's banks new five- and 10-year government bonds. Plaintiffs who win lawsuits against Argentina's five-month limits on bank withdrawals will be forced to accept these bonds instead of cash. The bonds will be negotiable and holders "can be used to buy all sorts of goods" and services "so they will maintain their value," Duhalde said. Argentina's banks are to remain closed until that law passes both the Senate and the Chamber of Deputies. Economy Minister Jorge Remes Lenicov said he expects Congress to approve the new law on bonds by Tuesday evening or Wednesday. HSBC: Continues to Evaluate Argentine Operations ------------------------------------------------ HSBC Holdings Plc, Europe's largest bank by market value, is reviewing the future of its operations in Argentina, where it lost US$1.1 billion. The review, according to a report by AFX, comes after the Argentine Central Bank declared a "banking and foreign exchange holiday" on Friday on fears that a court ruling allowing account holders to recover their funds would cause a rush on the banks. HSBC is not currently proposing a withdrawal from the Argentine market saying, "we do invest in countries in the long term and we do hope to be in a position to participate in their financial system... But it is possible that we review this policy," according to an HSBC spokesman. HSBC had previously said it would exit Argentina if the economic crisis continues. However, according to the spokesman, the bank, which has already set aside US$1.2 billion to cover its exposure for non-performing loans and bad debts in Argentina, is waiting to find out more about the situation this week before taking any decisions. In view of the bank's "consistent and conservative provision policy," he said a further increase in provisions was unlikely for the time being. Some sector analysts have suggested that HSBC may have to raise its provisions by up to around US$300 million in view of the worsening economic crisis in Argentina. But the bank's spokesman dismissed this as mere speculation. CONTACT: HSBC HOLDINGS PLC 10 Lower Thames St. London EC3R 6AE, United Kingdom Phone: +44-020-7260-0500 Fax: +44-020-7260-0501 Home Page: http://www.hsbc.com Contacts: Sir John R. H. Bond, Group Chairman / Exec. Dir. Sir Brian Moffat, Deputy Chairman / Sr. Non-Exec. Dir. Keith R. Whitson, Group Chief Executive REPSOL YPF: S&P Affirms YPF SA Notes Rating; Off Watch ------------------------------------------------------ Standard & Poor's affirmed Monday its 'BB+' rating on Argentina- based YPF Sociedad Anonima's (YPF) structured export notes (SENs) and removed them from CreditWatch where they were placed on Janurary 23, 2002. The notes are secured by an assignment to the trustee of rights to receive payments under the oil purchase agreement entered into between YPF and Empresa Nacional del Petroleo (ENAP). The rating action follows the affirmation of the 'BB+' local currency and 'B+' foreign currency corporate credit ratings on Argentine oil and gas company YPF. The 'BB+' foreign currency rating on the SENs remains three notches above the foreign currency rating of YPF, reflecting Standard & Poor's opinion that the government will continue to grant the SENs exclusions from any repatriation requirements. The rating affirmation is based on the release of financial statements that confirm Standard & Poor's expectations of a significant debt reduction as of December 2001, thereby lowering immediate refinancing risks. Additionally, the foreign currency rating of YPF was removed from CreditWatch, where it was placed on Jan. 23, 2002. With sales of $8.1 billion for 2001, YPF is Argentina's largest company and Latin America's fourth-largest integrated power company. The existence of cross-default clauses and the strong performance of YPF's operations provide significant incentives for Repsol-YPF S.A. to support its Argentine operation. The cross-default clauses specify that Repsol would incur an event of default on its bonds if any principal subsidiary, including YPF, defaulted on more than US$20 million of debt obligations. Nevertheless, Standard & Poor's continues to maintain a significant differential between the ratings on Repsol and YPF, given Repsol's statements that it would not necessarily support YPF in the case of a direct intervention by the Argentine government. Besides fluctuation in oil prices, future financial performance will be conditioned by the effects of the currency devaluation and the new economic environment in Argentina. The most important factors affecting profitability are a 20% export duty on crude oil exports and a 5% export duty on refined product exports, and the pesification of natural gas tariffs. Additionally, the threat of potential retail price controls could lead to a deterioration of margins. YPF is a major integrated energy company, operating in an industry with highly volatile international prices. Its reserves are geographically concentrated in Argentina, which has a highly uncertain, challenging, and rapidly changing economic environment. Argentine regulations currently exclude the SENs from repatriation requirements. Standard & Poor's will review the impact that any changes to current regulations may have on the SENs. Any changes to the regulations that affect the future oil exports from YPF to ENAP under the oil contracts securing the repayment of the listed notes, or changes that affect the company's ability to maintain the offshore accounts, would negatively affect the rating on the SENs. RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH Transaction Rating To From YPF Sociedad Anonima $400 mil 8.95% structured export notes BB+ BB+/WatchNeg $400 mil 7.50% structured export notes BB+ BB+/WatchNeg $100 mil 7.00% medium-term notes BB+ BB+/WatchNeg CONTACT: STANDARD & POOR'S Jorge Solari, +54-114-891-2114 Juan Pablo De Mollein, +54-114-891-2113 Nancy Gigante Chu, +1-212-438-2429 Pablo Lutereau, +54-114-891-2125 REPSOL YPF: Shares Down On Nationalization Reports -------------------------------------------------- Shares in Repsol YPF SA were sharply lower in late Monday morning trading following a report in a La Vanguardia newspaper that Argentine legislator for the Polo Social Daniel Carbonetto will propose to President Eduardo Duhalde a plan to nationalize YPF. "Repsol YPF's getting hit on speculation that the Argentine government will decide to nationalize YPF as part of a plan aimed at boosting state revenues," said a dealer at a leading Spanish bank. At 11.38 am, the stock was down EUR0.2 or 1.39 percent at EUR14.18, near a low of EUR14.11, on volume of 1.46 million shares. CONTACTS: REPSOL YPF Alfonso Cortina De Alcocer, Chairman & CEO Ramon Blanco Balin, Vice Chairman Carmelo De Las Morenas Lopez, CFO Their Address: Paseo de la Castellana 278 28046 Madrid, Spain Phone +34 91 348 81 00 Home Page: http://www.repsol.com or Av. Roque S enz Pe a, 777. C.P 1364. Buenos Aires Argentina REPSOL YPF: Delays Dividend Payments Due To Argentina's Woes ------------------------------------------------------------ Repsol-YPF SA won't be paying a final dividend on its 2001 earnings due to the economic crisis in Argentina. The country is home to a significant part of its asset base, says Dow Jones. However, according to Repsol-YPF SA Chairman Alfonso Cortina, the Company plans to resume "the normal trend in dividend payouts," once the economic situation in Argentina stabilizes. "The objective for profit this year will depend, as is logical, on the evolution of Argentina...but until the situation there stabilizes, it's very hard to establish a profit objective," Cortina said. On the positive side, Cortina said that its outlook had improved recently thanks to higher oil prices and its chemical operations, where margins in many products improved in April for the first time in many months. Also, the Company was reaching agreements in Argentina that could allow it to pass higher oil costs on to end-users, Cortina said. SCOTIABANK QUILMES: Experts Expect No Future Recapitalization ------------------------------------------------------------- Bankers and analysts said that Argentine bank Scotiabank Quilmes, whose operations were halted for 30 days by the Central Bank, is likely to be torn apart and auctioned off instead of being recapitalized, says Reuters. Quilmes' parent, Canadian bank Bank of Nova Scotia, said on Friday it had already made full provisions for its local unit. "This is a liquidity problem and a question of whether head office wants to send money, which it does not, so for me the end result of this is it will be sold," one local banker said on condition of anonymity. The Canadian bank took a CAD540-million (US$320 million) charge on Scotiabank Quilmes in its first-quarter profits in early March, effectively writing down the entire value of the local unit and eliminating financial costs of walking away, analysts revealed. In that case, Argentina's bank act gives the Central Bank three options: ask the courts to declare Scotiabank Quilmes bankrupt; sell the bank as a whole; or auction off its different businesses separately. According to lawyers, current Argentine law does not force foreign banks to inject funds from abroad to shore up local units. "Whether a bank buys Scotiabank Quilmes depends on the future business outlook. If they think it will be impossible to operate in Argentina, no one will want to stay," one banking sector analyst said. 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 SCOTIABANK QUILMES: S&P Cuts Ratings Operations' Suspension ----------------------------------------------------------- The suspension of Scotiabank Quilmes' operations by the Argentine Central Bank prompted international rating agency Standard & Poor's to cut its rating on the Argentine bank to default (Dpi) from selective default (SDpi). "Like most Argentine banks, Scotiabank Quilmes has been suffering significant liquidity and asset quality pressures in a very complex operating environment, characterized by significant change in rules, including the devaluation of the Argentine peso and the overall loss of confidence in the Argentine financial system," credit analyst Cristian Krossler said. TRANSENER: Suspends Payments; Morgan Stanley Advising New Plans --------------------------------------------------------------- Argentine electric power company Transener SA said it had suspended all current and future loan payments, both on principal and interest, pending the renegotiation of its US$470 million in debts, reports Dow Jones. The company, majority-owned by Britain's National Grid Group PLC (NGG) and local energy giant Perez Companc SA (PC), has selected Morgan Stanley as financial advisor to help in developing a restructuring plan for all its debts. According to Carlos A. Gonzalez, Transener's finance and administration manager, about US$250 million of Transener's debt is corporate bonds. About US$100 million of the bonds mature in 2003 and US$150 million mature in 2008, Gonzalez said. The Company has US$180 million in bank debt due this year and US$40 million worth of bank debt due in 2003, Gonzalez added. On Friday international credit rating agency Standard & Poor's (S&P) lowered its local currency corporate credit rating on Transener to SD (selective default) from CC. The Company's foreign currency corporate credit rating remains at SD, S&P said. The downgrade came after the Company's failure to meet a US$20- million principal payment due April 5. The payment had a grace period of 10 business days after the maturity date. The Company also failed to meet a US$230,000 interest payment, S&P said. Transener's financial situation has been negatively affected this year by continued peso devaluation, the pesofication of tariffs, and a liquidity squeeze in the financial system, credit analyst Sergio Fuentes said. The prolonged period announced by the government to renegotiate concession contracts adds uncertainty over the Company's cash flow going forward, S&P added. Transener has 14,200km in transmission lines, including 5,500km of network belonging to subsidiary Transaba. CONTACT: COMPANIA DE TRANSPORTE DE ENERGIA ELECTRICA EN ALTA TENSION (Transener S.A.) Av. Paseo Colon 728, 6"Piso - (1063) Buenos Aires, Argentina Tel. (5411) 4342-6925 Business Development: Carlos A. Jeifetz (jeifecar@transx.com.ar) Gerardo Baseotto (baseoger@transx.com.ar) Tel.: (54-11) 4334-0182 / 4342-6925 Fax: (54-11) 4342-4861 MORGAN STANLEY, DEAN WITTER & COMPANY 1585 Broadway New York, New York 10036 United States Phone: +1 212 761-4000 Home Page http://www.msdw.com =========== B R A Z I L =========== CEMIG: Shareholders Vote On Capital Increase Plan By Month End -------------------------------------------------------------- Shareholders of Brazil's Minas Gerais state integrated power company Cemig are to vote on April 30 a plan to up its capital by BRL30 million (US$12.8mn), reports Business News Americas, citing IR director Luiz Fernando Rolla. The operation is scheduled to take place in May on a proposal that would give shareholders two shares for each hundred they currently own. The move is part of a payment by the government of Minas Gerais of the CRC account that existed up to 1993 to compensate companies for cost fluctuations. Minas Gerais state owes almost BRL1.5 billion from the CRC, and Cemig is negotiating this debt with the federal government with a view to receiving federal funds to cover losses due to electricity rationing. Cemig is 51-percent controlled by Minas Gerais, and 33-percent owned by US-based AES and Mirant and the Opportunity Fund. The utility provides services to 5.41 million clients in 778 municipalities in Minas Gerais. CONTACT: CEMIG Avenida Barbacena, 1200 Sto Agostinho 30123-970 Belo Horizonte - MG Brazil Phone +55 31 299 4900 Home Page http://www.cemig.com.br Contacts: Djalma Bastos De Morais, Chairman Geraldo De Oliveira Faria, Vice Chairman Cristiano Correa De Barros, Finance Director EMBRATEL: Reports 1Q02 Revenues of BRL1.8 Bln; Business Stable -------------------------------------------------------------- Embratel Participacoes S.A., the Company that holds 98.8 percent of Empresa Brasileira de Telecomunicacoes S.A. ("Embratel"), officially announced results Monday for the quarter ending March 31, 2002. All financial figures are in Reais and based on consolidated financial statements in "Legislacao Societaria". Long distance voice traffic volume reflected improvement in call management. The implementation of the collections system - CACs - and the second phase of the call management system - Infusion (Embratel Call Management System - "ECMS"), were completed during the quarter on schedule. Collections and call management efficiency are improving. First quarter net revenues of R$1.8 billion dropped slightly year-over-year due to emphasis on providing services to paying customers. Refinancing program completed in the quarter - net debt position maintained. Embratel refinanced debt maturing in 2002 in the first quarter of 2002. Refinancing program for 2002 is completed. Data business is sound and growing despite price reductions. Data revenues declined 2.1 percent to R$450 million year-over year. However, average megabit/equivalent volume growth exceeded 40 percent over the past year showing that our basic business is very sound and continuing to grow. Embratel generated a positive cash flow - first quarter 2002 EBITDA of R$333 million. Embratel's first quarter EBITDA met capex and net interest expense needs in the quarter. Data Communication Services Focusing on cash and profitable growth Data communications revenues declined 2.1 percent to R$450 million compared to the first quarter of 2001. Compared to the previous quarter, data revenues fell 2.5 percent. The reduction in data revenues was caused by a) contracts being renewed at current price levels; b) general reduction in Internet services prices (see February 5, 2002 Earnings Release) intended to drive further growth and insulate Embratel from competitors; and c) anticipated declines in wholesale revenues. Embratel has been focusing its growth on high return sales and on winning profitable contracts. This strategy is consistent with our primary objective of cash generation and returns. Despite the reduction in prices, volume growth is healthy. In 2 Mbits equivalent basis circuits volumes grew more than 40 percent year-over-year and 13 percent quarter over-quarter. In addition, Embratel's client base continues to increase. "This shows our data business is very sound and continuing to grow", said Jorge Rodriguez, Embratel's President and CEO. Also during the quarter, Embratel won significant contracts: Embratel was awarded the contract to provide telecommunications services to Banco Postal (5,000 locations throughout Brazil) and to provide Banco do Brasil's worldwide network. In addition, Embratel was appointed to be Shell Brazil's sole telecommunications provider including a complete range of data (frame relay, direct links, Global VPN, etc.) as well as voice services (VipPhone, 0800, Sempre 21, among others). In these transactions Embratel competed against local and foreign providers. Voice Services Active call management strengthens results During the quarter Embratel continued to improve the collectibility of revenues by filtering the non-performing traffic through ECMS. On average, approximately 2.5 million lines were prevented from completing calls using the Embratel code throughout the quarter. Voice traffic and revenues fell accordingly. Embratel views the reduction in traffic positively since it is an important step in the direction of reducing uncollectible accounts and the related interconnection costs. Domestic Long Distance Domestic long distance revenues were flat at R$1.1 billion in the first quarter of 2002 compared to the same 2001 quarter. Relative to the fourth quarter of 2001, domestic long distance revenues declined 1.9 percent. The main causes for this reduction were the interruption of non-paying traffic and the seasonal impact of the holiday period. Call management has a more significant impact on residential traffic. International Long Distance International long distance revenues were R$173 million in the first quarter of 2002 representing a decline of 21.5 percent when compared to the same quarter of the previous year. Compared to the fourth quarter of 2001, international long distance fell 5.5 percent. Price reductions and ECMS were responsible for the decline in international long distance revenues in the quarter. Both outbound and inbound rates decreased by 16 percent year- over-year. Also, lower traffic to and from Argentina contributed to a reduction in volumes year-over-year. These factors were responsible for the bulk of the revenue reduction in the period. Embratel expects a continued decline in revenues from this segment due to price reductions. EBITDA EBITDA was R$333 million in the first quarter of 2002. Compared to an effective quarterly EBITDA run rate of approximately R$250 million in 2001, this represents a significant increase. The reduction in the provision for doubtful receivables was the primary reason for improvement in the EBITDA. Embratel provisioned R$174 million for doubtful receivables in the first quarter of 2002. This amount corresponds to 9.7 percent of net revenues. When compared to the average level of provisions taken in 2001 - 15.5 percent, it represents a substantial reduction. This decrease is conforming with our policy of provisioning all voice receivables past due above 120 days. Thus, the amount provisioned in the quarter is largely related to bills from calls made in the months of August to October when current capabilities were not yet fully in place. While the tools Embratel implemented to manage billing and collections have greatly enhanced the company's ability to deal with uncollectibles we expect the level of provisioning to remain high in the short term due to the lag which exists between the provisioning deadline and the initiation of massive call selection. Financial Position and Interest Expenses Embratel Participacoes ended the quarter with a cash position of R$662 million. Total debt outstanding as of March 31, 2002 was R$3.7 billion (net debt of R$3.1 billion). R$1.2 billion corresponded to short term debt and current portion of long term debt. As previously announced, Embratel concluded in the quarter its 2002 refinancing program. The major part of this program consists of a syndicated loan of US$270 million. Another US$35 million of trade related finance structured in April completed core 2002 financing needs. Excluding the repayment of a bridge loan of US$ 161 million, the Company paid approximately US$308 million of interest, principal, related taxes and commissions during the quarter. "We are satisfied to have completed Embratel's refinancing needs for 2002 while maintaining favorable terms in a very challenging financing environment" said Jose Maria Zubiria, Embratel's CFO. While Embratel's debt profile continues to be primarily denominated in foreign currencies, portions of this debt have been swapped to the Real according to Exhibit 10 (see link below). The March 31, 2002 end of quarter hedge position does not include another US$100 million that were hedged on April 2, 2002. If this amount is included, short term hedged debt increases to 65.5 percent and total hedged debt increases to 44.8 percent. Compared to December 31, 2001 short term hedged debt also rose from 62.8 percent. Embratel continues to pursue hedging opportunities to fulfill it's policy of hedging all new debt under 3 years maturity and will continue to hedge as market conditions permit. Star One, Embratel's satellite subsidiary, has finalized the plans to launch a Ku-band satellite for broadband internet services, covering Latin America. The total investment over 3 years for this project is approximately US$250 million, including the satellite, launch services, insurance and taxes. In April, Star One entered into a contract with BNP Paribas to finance 85 percent of the satellite. This a 10 year loan with 3 years of grace period, reflecting the time to manufacture the satellite, with an all in cost of 9% per annum. Approximately US$40 million to US$50 million will be spent in 2002 and this amount is within Embratel's total projected Capex plan of R$1.1 billion. Net Income The net loss for the first quarter of 2002 was R$36 million. In addition to the factors mentioned above, the loss includes the impact of higher financial costs on hedged debt despite the fact that the devaluation of the real had little impact on the Company's foreign currency debt (see Financial Position above). In the first quarter of 2001 the company's net loss was R$34 million. Accounts Receivables The Company's net receivable position on March 31, 2002 was R$1.9 billion, representing a slight improvement in collections and an increase in the provision for doubtful accounts. On March 31, 2002, the balance of this provision was R$1.6 billion. Gross receivables were flat R$3.4 billion in the first quarter of 2002 (Exhibit 12 and 13 (see link)). Note there are zero unprovisioned voice receivables above 120 days. Co-billing has initiated with CTBC and Telemar. We expect to reach an agreement with Telefonica in the second quarter. We expect co-billing to eventually attenuate lack of payments because of incorrect or insufficient addressing information as well as offering clients an additional option for bill payment. Capital Expenditures In the first quarter capital expenditures were R$248 million. The breakout of this expenditure is: local infrastructure and access - 26.2 percent; data and Internet services - 36.9 percent; network infrastructure - 8.6 percent and others - 28.4 percent. Embratel expects to be cash flow positive (after capex and interest expenses) in 2002. Local Services Embratel has completed its Universalization obligations. Embratel is ready to initiate the providing local services as soon as Anatel grants the license. Anatel's regulatory deadline to issue Embratel's universalization target completion certificate expired on March 22, 2002. We expect Anatel to grant us our certification at any moment. Petition - Anti-competitive Practices (Representacao por Infracao da Ordem Economica) On April 15, 2002 Embratel and Intelig filed a petition to Cade (the Brazilian Anti-Trust Commission) via Anatel, which contains indications that Telemar, Brasil Telecom and Telefonica are engaging in illegal anti-competitive practices with respect to the interconnection rates charged to competitive long distance providers. Based on the analysis of publicly available financial information we show that either local/regional telcos charge their own long distance concessions a lower interconnection rate compared to those charged to the long distance carriers - a breach of the rule of equal treatment to all concessions; or their long distance concession is loss making at the operating level, in which case they are subsidizing their long distance concession through the interconnection revenues paid to their local concession. Also a violation of competitive rules. In this petition Embratel requests: 1) That Anatel immediately demands that local/regional operators present separate financial statements for each concession (local and long distance) in accordance to article 96 of the General Telecommunications Law, showing the TU-RL tariffs charged to other long distance concessions and to their own; 2) That the interconnection rate be determined according to a formula whereby the highest TU-RL rate charged in its concession region(A) be lower than the lowest tariff charged to an end customer in its concession region(B) minus the highest TU-RIU charged in its concession region (C) or A less than (B-C). 3) Should Anatel decide not to adopt the above formula (2) for interconnection pricing, that it demands the local/regional company charge other long distance concessions an interconnection rate that given the prices it practices to end customers, will make its long distance concession cash positive; 4) Lastly, given the risks of elimination of the competitive environment, Embratel requests that these companies not be granted licenses to operate in the inter-regional and inter-national long distance markets until such anti-competitive practices are stopped. Creation of Business Units Early this month, Embratel created two business units: a Residential & Small Company business unit and a Large & Medium Company business unit. "The purpose of this reorganization is to enhance focus and client orientation thereby raising the level of excellency in client services as well as increasing the agility and efficiency of our actions" said Jorge Rodriguez, Embratel's CEO. "The ultimate result we aim to achieve with this client focused organizational structure is to grow revenues and margins, generating cash and returns." The Large & Medium Company business unit, to be headed by Eduardo Levy, will provide voice, data and network services to government entities and companies, and to large and medium businesses. The Residential & Small Company business unit will provide voice and data services to the residential and small business market. It will be headed by Jose Maria Zubiria who will continue as Embratel's CFO until the appointment of a successor. Embratel is the premier communications provider in Brazil offering a wide array of advanced communications services over its own state of the art network. It is the leading provider of data and Internet services in the country. Service offerings include: advanced voice, high-speed data communication services, Internet, satellite data communications and corporate networks. Embratel is uniquely positioned to be the all-distance telecommunications network of South America. The Company's network is has countrywide coverage with 28,868 km of fiber cables comprising 1,068,657 km of optic fibers. To see exhibits and financial statements: http://bankrupt.com/misc/Embratel.txt CONTACT: EMBRATEL PARTICIPACOES S.A. Investor Relations Silvia Pereira Tel. (55 21) 2519-9662 Fax: (55 21) 2519-6388 Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br or Press Relations: Helena Duncan/Mariana Palmeira Tel: (55 21) 2519-3653/3654 Fax: (55 21) 2519-8010 Email: hduncan@embratel.com.br mpalm@embratel.com.br ========= C H I L E ========= EDELNOR: Has Until June 15 To Honor Norandino Guarantees -------------------------------------------------------- Chilean power generator Edelnor informed the Santiago bourse that it managed to persuade natural gas distributor Norandino to extend guarantees for the transport of gas, from April 22 to June 15, relates Business News Americas. Edelnor was allowed such an extension to have enough time to tell Norandino how it will continue to honor guarantees in a gas transportation agreement (GTA), provided the generator fulfils its payment obligations under the GTA, Edelnor said. "The GTA stipulates that if Edelnor does not achieve a rating of BB+ from Standard & Poor's, it must authorize a contract compliance guarantee, a personal guarantee authorized by former Edelnor controller Mirant Company," Edelnor said. Edelnor, which is 82.3-percent owned by Chilean company FS Inversiones, has two coal-fired generators - 166MW Mejillones I and 175MW Mejillones II - and the 250MW natural gas-fired plant Mejillones III. All three are situated in the city of Mejillones in northern Chile's Region II. CONTACT: Empresa Electrica Del Norte Grande SA (EDELNOR) Avenida Grecia 750 Antofagsta, Chile Phone: +56 55 248500 +56 55 248094 Contact: Fernando del Sol, Chairman MANQUEHUE NET: Rating Agencies Doubt Work Out Plan Possible ----------------------------------------------------------- Chilean competitive local exchange carrier Manquehue Net had its bonds downgraded by two rating agencies on uncertainty concerning the Company's ability to carry through on its business plan. Feller Rate cut the rating from A- to BB+ with outlook as yet undetermined, while Fitch Ratings agency altered its rating from BB+ to BB- with positive outlook. Feller Rate has concerns about Manquehue's sales goals for high traffic telephony and broadband lines, while Fitch sees a greater probability that bondholders will demand advance redemption of the bonds. In March, Manquehue said it had hired Dutch investment bank ABN Amro to help search for a strategic partner. Feller Rate noted that this move indicated that shareholders themselves were equally doubtful about those goals, and are not prepared to invest more in the Company themselves. The agency noted that from mid-2001 a general decline in demand for local telephony prevented the Company from fulfilling projected expansion, despite high investment in information systems. Manquehue ended 2001 with a net loss of CLP11.3 billion (US$17.3 million), which is equivalent to a 10-percent cut in the Company's average equity. To see financial statements: http://bankrupt.com/misc/Manquehue.doc =========== M E X I C O =========== AEROVOX INC.: To Sell Mexican Unit Through Bankruptcy Process ------------------------------------------------------------- Aerovox Incorporated ("Aerovox") reached agreements Friday with Parallax Power Components L.L.C. ("Parallax") to sell its U.S. based film capacitor and EMI filters business and Nueva Generacion Manufacturas, S.A. de C.V. ("NGM") to sell its Mexico City film and electrolytic capacitor business. Also on Friday, Evox Rifa Group OYJ ("Evox Rifa") was awarded the winning bid in Aerovox's sale of its United Kingdom subsidiary, BHC Aerovox Ltd. "From the perspective of our customers and vendors, these transactions eliminate the financial uncertainties that we have lived with since filing for bankruptcy protection last year," said Robert D. Elliott, president and CEO. "Our customers have been phenomenally supportive over the past eleven months and I'm pleased that they will be able to continue to purchase quality capacitors made by the same dedicated people who have serviced their needs for many years." Parallax owns a film capacitor manufacturing plant in Bridgeport, Connecticut, which was purchased from Magnetek Incorporated last year. The combined film capacitor business will be a strong competitor in the motor and lighting capacitor marketplace, and the engineering and operational synergies created in the acquisition will improve its position in a number of profitable niche markets. NGM is purchasing Aerovox's capacitor manufacturing assets in Mexico City, Mexico, which include both electrolytic and film capacitor lines. Both the Parallax and NGM deals are subject to U.S. Bankruptcy Court approval. Evox Rifa, based in Finland, becomes the leading European electrolytic capacitor manufacturer with its acquisition of BHC Aerovox, Ltd. The management of Evox Rifa believes that substantial synergy benefits will accrue to the company from the acquisition. Economies of scale, stronger R&D efforts, focused investment strategies and a broader customer base will strengthen Evox Rifa's presence in the global market. Aerovox, a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code, manufactures film, paper and aluminum electrolytic capacitors. The Company sells its products worldwide, principally to original equipment manufacturers as components in electrical and electronic equipment. CONTACT: AEROVOX INC. F. Randal Hunt Tel. (508) 910-3200 AEROVOX INC.: Company Profile ----------------------------- NAME: Aerovox Inc. 167 John Vertente Boulevard New Bedford, MA 02745-1221 PHONE: 508-994-9661 FAX: 508-995-3000 EMAIL: lbelliveau@aerovox.com WEB SITE: www.aerovox.com EXECUTIVE MANAGEMENT TEAM: Robert D. Elliott, President and Chief Executive Officer F. Randal Hunt, Senior Vice President, Finance and CFO Martin Hudis, Senior Vice President, Technology Development Enrique Sanchez Aldunate, Senior Vice President Graham Yates, Senior Vice President INVESTOR RELATIONS: Lauren Belliveau Phone: 508-994-9661 FAX: 508-910-3123 Email: lbelliveau@aerovox.com TYPE OF BUSINESS: Aerovox manufactures AC capacitors, DC film capacitors, aluminum electrolytic capacitors, power factor correction capacitors, and EMI filters. The company sells its products worldwide, primarily to original equipment manufacturers (OEMs) of electrical and electronic equipment. Markets for Aerovox products include motors, lighting fixtures, power electronics, medical and industrial equipment, experimental physics, traction drives, high voltage power supplies, and flash lamps. The company's manufacturing operations are located in New Bedford, Massachusetts; Huntsville, Alabama; Juarez and Mexico City, Mexico; and Weymouth, England. The shares of Aerovox Incorporated trade on Pink Sheets under the symbol ARVXQ. SIC: Electronics - Miscellaneous Electronics EMPLOYEES: 1591 (last reported count) TRIGGER EVENT: On June 6, 2001, Aerovox filed a voluntary petition for bankruptcy protection, on behalf of its U.S. operation, under Chapter 11 of the U.S. Bankruptcy Code. The Company is currently operating as a debtor-in-possession pursuant to the Bankruptcy Code. SALES: $109.7 million (Q ended Mar 2001) TOTAL ASSETS: US$ 85.5 million (Q ended Mar 2001) TOTAL LIABILITIES: US$ 69.8 million (Q ended Mar 2001) REVENUES: US$ 28.2 million (Q ended Mar 2001) PUBLIC SECURITIES: 6.15 million outstanding shares (Q ended Mar 2001) BANKRUPTCY JUDGE: Joan N. Feeney United States Bankruptcy Judge CINTRA: IPAB, CFC and SCT To Hold Sale Discussions This Week ------------------------------------------------------------ A meeting is scheduled for this week to review the sale of Cintra, the holding company that manages Mexico's leading airlines Aeromexico and Mexicana, reveals Mexico City daily el Economista. Among those attending the meeting are the heads of the Institute for Bank Savings Protection (IPAB) and the Federal Competition Commission (CFC), and officials from the Secretariat of Communications and Transport (SCT). Juan Manuel Duarte, president of the Transportation Commission of the Chamber of Deputies, confirmed that there was a proposal to sell the airlines together. However, he still believes that the decision to sell them separately was a good one. Duarte said Mexican investors should keep control of the airlines, since the Foreign Investment Law limits foreign participation to 25 percent. CONTACT: CINTRA Jaime Corredor Esnaola, Chairman Juan Dez-Canedo Ruiz, CEO Rodrigo Ocejo Rojo, CFO Xola 535, Piso 16, Col. del Valle 03100 M,xico, D.F., Mexico Phone: +52-5-448-8050 Fax: +52-5-448-8055 OR C.P. Francisco Cuevas Feliu, Investor Relations Xola 535, Piso 16 Col. del Valle 03100 M,xico, D.F. Tel. (52) 5 448 80 50 Fax (52) 5 448 80 55 infocintra@cintra.com.mx AEROMEXICO Mayte Sera Weitzman of AeroMexico, +1-713-744-8446, or mweitzman@aeromexico.com MEXICANA DE AVIACION Jenny Jenks, Marketing Director, International Division of Mexicana Airlines, +1-210-491-9764, or ennyjenks@mexicana.com GUILFORD MILLS: Mexican Plant Closure Part of Growth Strategy ------------------------------------------------------------- Guilford Mills, Inc. announced Monday two developments designed to strengthen the company's financial position: court approval of its revolving credit arrangement, and a management decision to exit a portion of its circular knit apparel fabric business in order to focus the company on its core operations. Those core businesses include worldwide automotive, technical textiles and American Textil. A U.S. Bankruptcy Court has given final approval for Guilford Mills' debtor-in-possession financing, giving the company additional liquidity for the duration of its bankruptcy period. The D-I-P credit facility, provided by Wachovia, is for up to $30 million. Guilford Mills filed its reorganization petition with the court on March 13 after it had already reached consensus with its major lenders on most key reorganization issues. Because these issues were worked out at such an early stage, Guilford expects to emerge from bankruptcy proceedings this summer. "This is a very important vote of confidence. Together with the incredible support we've received from our lenders, customers, vendors and associates, it gives us very positive momentum toward our reorganization goals," said John A. Emrich, Guilford Mills President and Chief Executive Officer. Emrich also announced that the company's plans to focus on more favorable growth businesses will result in the closure of its apparel plant in Altamira, Mexico, and its associated knitting plant in Lumberton, N.C. "While we saw that the Altamira operation had long-term growth potential, we needed to reassess our commitment there in light of the current economic environment," Emrich said. These conditions include the continued strength of the Mexican peso, which is causing products from Altamira to be more expensive than competing products; unfavorable trade legislation such as the Caribbean Basin Initiative, and the continued capital investment that would be required in Altamira for the near-term. "All of us are saddened by the impact this will have on 180 employees in Mexico and 100 in North Carolina. They've all done an outstanding job under very tough circumstances, and we had all hoped we could make their efforts pay off," Emrich said. The Altamira and Lumberton facilities will continue to operate for a short period of time to fill orders, and the company will work with its customers to identify alternative supply sources. The company expects Cushman & Wakefield to assist in the disposition of its state-of-the-art Altamira facility. "We're very encouraged with the progress we've made during the past month," Emrich said. "Through the dedication and hard work of the Guilford team, our core operations are showing the kind of strength we hoped to achieve during this reorganization." Guilford Mills is an integrated designer and producer of value- added fabrics using a broad range of technologies. The company is one of the largest warp knitters in the world and is a leader in technological advances in textiles, including microdenier warp knits and wide width circular knits of cotton blended with LYCRA(R). Guilford Mills serves a diversified customer base in the automotive, apparel and industrial markets. CONTACT: GUILFORD MILLS, INC. John A. Emrich, Chief Executive Officer Tel. +1-336-316-4000 HYLSAMEX: Receives Majority of Notes; Tender Offer Extended ----------------------------------------------------------- Hylsamex, S.A. de C.V. and its subsidiary Hylsa, S.A. de C.V. (the "Company" or "Hylsa") announced Monday that Hylsa has received tenders of approximately $153 million in principal amount of its 9 1/4% Notes due 2007 (the "2007 Notes") in exchange for new 10 1/2% Notes due 2010. Hylsa has now satisfied the condition that it receive tenders of at least 50% in principal amount of its outstanding 2007 Notes and the consent of a majority in principal amount of its outstanding 2007 Notes to the proposed amendments to the indenture governing the 2007 Notes and the waiver of past defaults under the indenture. Although these conditions are satisfied, to continue to encourage holders to tender 2007 Notes for exchange, Hylsa is extending the expiration date for the exchange offer until 11:59 p.m., New York time, on May 16, 2002 (the "Expiration Date") and is extending the period during which holders may receive the consent and exchange payment until 5:00 p.m., New York time, on April 30, 2002. Each holder that tenders 2007 Notes at or prior to 5:00 p.m., New York time, on April 30, 2002 will receive a $10 consent and exchange payment for each $1,000 principal amount of 2007 Notes tendered and not withdrawn. Holders that previously consented to the proposed amendments and waiver, but did not tender their 2007 Notes, may tender their 2007 Notes at or prior to 5:00 p.m., New York time, on April 30, 2002 and receive the full $10 consent and exchange payment for each $1,000 principal amount of 2007 Notes tendered and not withdrawn (rather than the $5 consent payment). All other terms and conditions to the exchange offer and consent solicitation remain unchanged. 2007 Notes tendered and consents delivered at or prior to 11:59 p.m., New York time, on April 19, 2002 may not be withdrawn or revoked. The exchange offer continues to be subject to the consummation by Hylsa of an overall restructuring of its outstanding debt, as well as other customary conditions. The new notes offered in the exchange offer will not be registered under the Securities Act of 1933, as amended, and will only be offered in the United States to qualified institutional buyers in a private transaction, and outside the United States in offshore transactions. For further information (including requests for offer documentation by eligible offerees), contact the information agent for the Company: CONTACT: MacKenzie Partners, Inc. Steven Balet E-mail: proxy@mackenziepartners.com Phone: 800-322-2885 212-929-5500 (collect) MEXICANA: Continues to Update and Modernize Fleet ------------------------------------------------- Mexicana Airlines, led by its CEO and chairman, Mr. Fernando Flores, announced Monday during a press conference held at the 27th edition of Tianguis in Acapulco, that it will continue with the plan of renewing its fleet through 2003. The initiative was approved by its Board, addressing a strategy focused on cost cutting, stimulating productivity and bottom line results. The plan will consist of replacing the remaining 11 Boeing 727-200 equipment in its fleet with younger and more modern Airbus A319 and Airbus A320 aircraft. The new aircraft will be flown directly from the Airbus manufacturing plant in Hamburg, Germany, and will be customized to meet the specifications as required by Mexicana to comply with its route network. Mexicana's modern fleet is currently comprised the following aircraft: 8 Boeing 757, 11 Boeing 727-200, 12 Fokker 100, 23 Airbus A320 and 4 Airbus A319, which amounts to 58 airplanes, averaging at 10 years of age, which is considered to be a very young fleet in its region. Once the renewal plan has been completed, the forecasted average age of the fleet will then be less than 8 years. CONTACT: MEXICANA AIRLINES Media contact in Mexico Adolfo Crespo, V.P. of Public Affairs, Tel. +5-55-448-3000, ext. 3296 Email: adolfo.crespo@mexicana.com.mx Media contact in the U.S.A. Jennifer L. Jenks, Marketing Manager Tel. +1-210-491-9764 Email: jennyjenks@mexicana.com P&M: To Close Mexican Mining By Third Quarter This Year ------------------------------------------------------- Due to increasing mining costs, geological conditions, and financial problems, Pittsburg & Midway Coal Mining (P&M) will shut its Ancho mine in Mexico in the third quarter of this year, reports Primedia Inc. According to P&M spokesperson Bob Johnson, the mine is fulfilling all customer contracts before the shutdown. Part of the York Canyon complex, Ancho produced 1.12 million tons of coal in 2001 and is the only operating mine there. =============== P A R A G U A Y =============== CORPOSANA: Only 6 Firms Submit Background Documents to Qualify -------------------------------------------------------------- Out of the 13 companies that purchased pre-qualification guidelines for the privatization of water utility Corposana, only 6 delivered background documents to Paraguay's state reform agency SNRE on Monday, says Business News Americas. The companies are UK's Anglian and International Water, Spain's Aguas del Bilbao, France's Proactiva Medio Ambiente (Vivendi- FCC), Italy's Acea and a consortium made up of Corposana workers. A list of qualified companies will be released April 25, instead of April 12 as earlier reported. The offers remained tentatively scheduled for opening June 27. Chicago-based firm, Baker & McKenzie, is the sale's legal adviser. Spanish banking group, Santander Central Hispano, is the financial consultant. Spanish investment bank, Nmas1, is managing the sale process. CONTACTS: CORPOSANA LEGAL ADVISER: Baker & McKenzie Latin America Regional Council c/o Eduardo de Cerqueira Leite - Chairman Av. Dr. Chucri Zaidan 920, 8th floor Market Place Tower I 04583-904 Sao Paulo, SP, Brazil Tel: (55-11) 3048-6800 Fax: (55-11) 5506-3455 Email: info-latinamerica@bakernet.com Marketing Manager: Ellen Van-Waveren Baker & McKenzie Headquarters: 1 Prudential Plaza, 130 E. Randolph Dr., Ste. 2500 Chicago, IL 60601 Phone: 312-861-8800 Fax: 312-861-2899 Bakerinfo.com FINANCIAL CONSULTANT: Banco Santander Central Hispano Plaza de Canalejas,1 28014 Madrid, Spain Phone: +34-91-558-10-31 Fax: +34-91-552-66-70 CORPOSANA: Emilio Botn-Sanz, Chairman Angel Corc>stegui Guraya, First Vice-Chairman and CEO Jose, Luis del Valle, EVP Finance *********** 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *