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/raid1/www/Hosts/bankrupt/TCRLA_Public/020507.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 Tuesday, May 7, 2002, Vol. 3, Issue 89 Headlines A R G E N T I N A AIR PLUS ARGENTINA: Sector Crisis Prompts Temporary Suspension BANCO GALICIA: Central Bank Authorizes ARS700M Turnaround Plan GRUPO GALICIA: To Make Good On Bond Interest Payment IMAGEN SATELITAL: Defaults on $80M, Fitch Drops to 'DD' B E R M U D A MUTUAL RISK: Announces Preliminary Agreement On Restructuring TYCO INTERNATIONAL: DBRS Drops to BBB (high), Trend Negative B R A Z I L ENRON: Presents Restructuring Plan To Creditors ENRON: Elektro Decides Against Issuing Dividends GLOBO CABO: Shares Up On Recapitalization Plan Approval C H I L E AES Corp.: Chilean Unit Halts New Loans, Itabo to Sell Soon MADECO: Global Economic Slump Takes Its Toll on Earnings VTR GLOBALCOM: Faces Bankruptcy If Banks Refuse Loan Refinance M E X I C O ALESTRA: S&P Lowers to 'B-'; CreditWatch Negative Continues ALESTRA: Revenues Up, Net Loss Declines in 1Q02 Results SAVIA: Year End 2001 Results Show Soft Marktes, Resturcturing N I C A R A G U A ENRON: Loses Bid On Enel Over Technicality, Court Appeal Follows U R U G U A Y BANCO COMERCIAL: Moody's Cuts Foreign Currency Ratings - - - - - - - - - - ================= A R G E N T I N A ================= AIR PLUS ARGENTINA: Sector Crisis Prompts Temporary Suspension -------------------------------------------------------------- The ongoing crisis in the airline industry led Air Plus Argentina, a subsidiary of the Marsans group, to temporarily halt flights during May. The operations affected are its 3 weekly flights to Porto Seguro city, Brazil, Cancun and Punta Cana, in Mexico and Tenerife, Spain. Demand for international air tickets during the first quarter of this year has experienced a 56-percent slump to a turnover of US$108 million. The destinations covered by Air Plus suffered an average drop of 80 percent. Air Plus Argentina turned over US$70 million last year and employs 140 people in Argentina. BANCO GALICIA: Central Bank Authorizes ARS700M Turnaround Plan -------------------------------------------------------------- After pursuing every possibilty for securing fresh capital to rebuild its reserves since February, Banco de Galicia y Buenos Aires SA has finally found a solution to its problem. Dow Jones relates that the bank's parent, Grupo Financiero Galicia SA, Argentina's largest private commercial banking company said that the central bank has approved a ARS700-million refinancing plan for its debt-laden division. The approval of Galicia's refinancing program by the Central bank follows several weeks of postponement due to unspecified "legal issues" and "other details," according to central bank and company officials. In a statement, the company revealed that Galicia will get ARS400 million from a group of local banks, credit that is backed by the company's loan portfolio. An additional ARS300 million will come from Argentina's Deposit Insurance Fund and the industry's Banking Liquidity Fiduciary Fund. According to Daniel Llambias, a bank director and official spokesman, Galicia previously received ARS100 million in assistance from the central bank. Meanwhile, the company also revealed plans to arrange about US$300 million in fresh financing from foreign banks through the swap of outstanding Galicia debt to those banks for the Argentine company's Class B common shares, the company's preferred shares, convertible subordinated debt and/or subordinated debt. However, it is still not clear when the final stage of the refinancing plan will be complete. "We are convinced that this plan places Banco Galicia under solid and normal operating conditions, even under a critical situation as the current one," Llambias said in a statement. CONTACT: BANCO DE GALICIA Y BUENOS AIRES S.A., HEAD OFFICE Tte. Gral Juan D. Peron 407 1038 Buenos Aires, Argentina Phone: +54-11-6329-0000 Fax: +54-11-6329-6100 Home Page: http://www.bancogalicia.com.ar Contacts: Eduardo J. Escasany, Chairman and Chief Executive Officer Sergio Grinenco, Chief Financial Officer Corporate Communications Phone: (54 11) 6329 6439 Fax:(54 11) 6329 6000 ext.: 2041 Representative Office: Buenos Aires Reconquista 144, piso 17 (1003) Buenos Aires, Argentina Phone: (54-11) 4343-5200/5303/5162 Fax: (54-11) 4343-6576 New York Branch 300 Park Avenue, 20th Floor New York, NY 10022 Phone: (1-212) 906-3700 Fax: (1-212) 906-3777 GRUPO FINANCIERO GALICIA S.A. Teniente General Juan D. Per›n 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Home Page: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires GRUPO GALICIA: To Make Good On Bond Interest Payment ---------------------------------------------------- In the midst of a difficult financial crunch, Grupo Financiero Galicia SA expressed confidence that it will meet its next interest payment on a bond due in 2003. Galicia investor relations vice president Jorge Scarinci stated that authorization from the central bank to send international bondholders the cash Galicia owes them should come "in the next few days." Galicia last week reported that the company lost ARS1.1 (US$1=ARS3.10) per American Depositary Receipt in 2001, down from net income of ARS1.65 per ADR in 2000. IMAGEN SATELITAL: Defaults on $80M, Fitch Drops to 'DD' ------------------------------------------------------- Fitch Ratings has downgraded the foreign currency rating of Imagen Satelital S.A. (Imagen) to 'DD' from 'C'. The 'DD' rating indicates the company is in default and that the recovery rate is expected to be in the range of 50% - 90%. The downgrade affects approximately US$85.1 million in debt obligations, primarily consisting of US$80 million of senior unsecured notes, due in 2005. The rating action reflects the company's missed payment of US$4.4 million due May 1, 2002 on its US$80 million senior unsecured notes. Its next interest payment is on Nov. 1, 2002. Imagen has retained Bank of America LLC to assist in the evaluation of debt restructuring alternatives. Imagen's default reflects the heightened risks associated with the Argentine economic environment which include the prolonged recession, the government default, revocation of convertibility and the associated currency devaluation and the implementation of currency controls. Approximately 75% of sales are in Argentina. Imagen's largest customers are the leading Argentine multiple system operators (MSOs), Cablevision and Multicanal. Sales to Cablevision and Multicanal represented 39% of total sales at 12/31/02. Imagen is one of the leading programmers and distributors of pay- TV channels in Argentina and the rest of the Southern Cone. The company owns seven channels and has distribution rights for another five. The 12 channels are provided to more than 1,000 cable system operators and delivered to more than 15 million TV households in Latin America. Imagen is a wholly owned subsidiary of the newly formed Claxson. Claxson was formed as a result of the merger of certain media assets held by Grupo Cisneros, Hicks Muse Tate and First, and El Sitio in exchange for a 45%, 35% and 20% stake, respectively, in Claxson. In recent years, Imagen's non-Argentine sales have increased from 13% to 25% of total sales and are expected to moderately increase over the intermediate term and further reduce revenue concentration risk. However, the diversification of sales is not anticipated, in the near-term, to reach a point sufficient to offset the currency mismatch and heightened sovereign risks. CONTACT: Fitch Ratings Randy Alvarado, 312/368 3117 Carolina Iturralde, +011 541 14 327 2444 James Jockle, 212/908-0547 (Media Relations) ============= B E R M U D A ============= MUTUAL RISK: Announces Preliminary Agreement On Restructuring ------------------------------------------------------------- Mutual Risk Management Ltd. announced Friday that it has reached an agreement in principle to restructure its senior debt. The principal amount of the debt is $235 million, comprised of approximately $131 million owing under the Company's credit facility and $104 million owing to holders of the Company's 9 3/8% debentures. Under the proposed restructuring, the senior debt holders would exchange their existing debt for preferred stock and warrants to purchase 15% of the common stock of the Company on a fully diluted basis as well as debt, preferred stock and 80% of the common stock of the Company's subsidiary, MRM Services Ltd. (MRM Services). MRM Services holds the Company's fee-based businesses. After the proposed restructuring, the Company's remaining principal assets would be 20% of the common shares of MRM Services and all of the common stock of its U.S. insurance companies. These common shares will be subordinate to the debt and preferred stock of MRM Services and the Company. The value of the Company's investment in its U.S. insurance companies is dependent on the outcome of the previously announced rehabilitation proceedings. The restructuring is proposed to be effected through a Scheme of Arrangement under Bermuda Law. MRM Services comprises the following main subsidiaries: -- MRM Specialty Brokers Ltd.; -- MRM Global Captive Group Ltd. (including International Advisory Services Ltd. and Shoreline Mutual Management); -- The IPC Companies; -- CRS Services, Inc.; -- Captive Resources, Inc.; and -- Mutual Trust Management Ltd.; The Company is in the process of negotiating the sales of Captive Resources, Inc. and Mutual Trust Management Ltd. These companies are not expected to form part of ongoing operations. The various options available in relation to CRS Services and the IPC Companies continue to be evaluated. The new management team of MRM Services will be headed by David Ezekiel as Chief Executive Officer. Mr. Ezekiel will continue to serve as President of both MRM Global Captive Group Ltd. and International Advisory Services Ltd. Paul Scope, CEO of MRM Specialty Brokers Ltd., and Richard Turner, President of CRS Services, Inc., will also hold senior positions on the new management team. Commenting on the proposed plan, Mr. Ezekiel said "The proposed restructuring will provide an opportunity for MRM Specialty Brokers and MRM Global Captive Group to continue their strong growth and profitability. Both entities will continue to operate as autonomous and strong units independent of Mutual Risk's U.S. insurance companies in rehabilitation." The agreement in principle is not binding on the senior creditors or Mutual Risk and remains subject to final negotiation, regulatory approval and the approval of other creditors. CONTACT: MUTUAL RISK MANAGEMENT LTD.: Robert A. Mulderig, (800) 772-0849 or (441) 295-5688 MRM Services Ltd.: David Ezekiel, Angus H. Ayliffe, Fran Tucker, (800) 772-0849 or (441) 295-5688 TYCO INTERNATIONAL: DBRS Drops to BBB (high), Trend Negative ------------------------------------------------------------ Toronto-based, full-service credit rating agency Dominion Bond Rating Service, Ltd. (DBRS) is downgrading Tyco International Ltd. from A (low) to BBB (high) with a Negative trend. With this action, the Company is removed from "Under Review with Negative Implications" where it was placed on February 5, 2002. The rating action reflects the deterioration in the Company's profitability, which is not expected to reverse in the medium term, the increase in financial risks and the uncertainty of achieving the targeted value for the CIT Group in the spin-off. CONTACT: Kam Hon Phone: 416-593-5577 ext.2243 Linda Scott Phone: ext.2245 E-mail: khon@dbrs.com =========== B R A Z I L =========== ENRON: Presents Restructuring Plan To Creditors ----------------------------------------------- Enron Corp. presented Friday a process to its Unsecured Creditors' Committee to maximize recoveries through the exploration of a variety of alternatives for moving the company's core energy assets out from under its Chapter 11 case. Under the proposal, which will be facilitated through Section 363 of the Bankruptcy Code, the new company would be an energy infrastructure business focused on the transportation, distribution, generation and production of natural gas and electricity primarily in North, Central and South America. "We believe this process will lead to the maximization of value of Enron's core energy assets and the mitigation of risk by removing viable operations out from under Chapter 11," said Stephen F. Cooper, Enron interim CEO and chief restructuring officer. "This enables Enron's creditors to realize value from the company's power and pipeline roots through an expedited process. However, this is just one of the options that we will openly explore with our creditors." Headquartered in Houston, the new company, temporarily called "OpCo Energy Company," could have 15,000 miles of pipeline assets, 75,000 miles of distribution assets, 6,700 megawatts of generation, and 12,000 employees. It is estimated that OpCo could have $10.8 billion in assets and a projected earnings before interest, income taxes, depreciation and amortization (EBITDA) in excess of $1.3 billion in calendar year 2003. The company hopes to have the Section 363 auction and sale process completed by the end of 2002. CONTACTS: ENRON CORP., +1-713-853-4738 Mark Palmer, Investor Relations Dept. P.O. Box 1188, Suite 4926B Houston, TX 77251-1188 (713) 853-3956 Email: investor-relations@enron.com Enron Corp. Public Relations Dept. P.O. Box 1188, Suite 4712 Houston, TX 77251-1188 (713) 853-5670 ENRON: Elektro Decides Against Issuing Dividends ------------------------------------------------ Brazilian utility Elektro will not be giving off dividends to its shareholders from the BRL25.4-million profit made in 2001. The action is perceived as a conservative move intended to improve its financial figures, given the bankruptcy of its parent Enron. Instead, the company will use the money to reduce its accumulated debt of BRL335.3 million. Elektro is looking to avoid future difficulties in raising capital due to its relationship with the failed US company. CONTACT: ELEKTRO ELETRICIDADE E SERVICOS SA Rua Ary Antenor de Souza, 321 Jd Nova America 13053-024 Campinas - SP Brazil Phone: +55 19 3726 1098 Home Page: http://www.elektro.com.br Contact: Orlando Rufo Gonzalez, Chairman Britaldo Pedrosa Soares, Finance Director GLOBO CABO: Shares Up On Recapitalization Plan Approval ------------------------------------------------------- Globo Cabo's preferred shares were up 3.3 percent Friday at BRL0.31 ($1=BRR2.39) after falling about 12 percent the previous day on first quarter operational results that showed the Company's user base fell 6.7 percent from a year earlier, according to a report by Dow Jones. Shares surged forward after the Company's board, at a meeting held Thursday, approved a pending BRL1.0-billion (US$1=BRR2.39) equity offering and a 1-for-10 reverse stock split. Also at the meeting, the board granted authorization to issue an additional 10 billion shares if it so chooses. As part of the recapitalization plan for the money-losing cable television provider, the Company plans to adhere to a set of more rigorous corporate governance standards as defined by the Sao Paulo Stock Exchange's Level 2 listing requirements. CONTACT: GLOBO CABO Investor Relations: Luis Henrique Martinez, +5511-5186-2684, lmartinez@globocabo.com.br Marcio Minoru, +5511-5186-2811, minoru@globocabo.com.br ========= C H I L E ========= AES Corp.: Chilean Unit Halts New Loans, Itabo to Sell Soon ----------------------------------------------------------- AES Gener, after passing on US$320 million in July 2001 and US$61.6 million in August to its troubled parent, AES Corp., decided to stop granting further loans to the U.S.-based company. Minority shareholders believe that successive transfers of cash from the Chilean unit to AES Corp. caused a drop in its asset totals to CLP144 million, and an increased in its liabilities to CLP770 million. AES Gener has put the sale of the Argentinean subsidiaries Interandes and Termoandes on hold due to the devaluation of the Argentinean Peso. However, Gener expects to complete the selling off of the thermal plant Itabo in the Dominican Republic soon. Despite criticism from environmental related groups and the lack of positive signals on power prices, AES Gener plans to begin until end 2002 the works to erect the combined cycle power plant Totihue. The project is to be erected in two stages, one to be ready in 2005 has 370 Mw, and another to be ready in 2008 totaling 740 Mw to cost investments of US$345 million. AES Corp. controls 98.7 percent of the Chilean subsidiary through Inversiones Cachagua. CONTACT: AES GENER S.A. Mariano Sanchez Fontecilla 310 Piso 3 Santiago de Chile Phone: (56-2) 6868900 Fax: (56-2) 6868991 Home Page: www.gener.com Contact: Robert Morgan, Chief Executive Laurence Golborne Riveros, Chief Financial Officer MADECO: Global Economic Slump Takes Its Toll on Earnings -------------------------------------------------------- The slump in international and regional economies in the first quarter, most especially the ongoing Argentine economic crisis, continues to hurt the earnings of Chilean conglomerate Madeco SA. The Company's first quarter 2002 earnings statements showed a widening consolidated net loss of US$15.6 million against a net loss of US$1.3 million posted in the first quarter of the previous year. This reflected the temporary closure of its Decker Indelqui wire and cable subsidiary in Argentina, which took effect in January. The company also exited the curtain wall business, Madeco said. The changes partly explain the 36 percent year on year decline in revenues, to US$96.6 million, Madeco said. Madeco reported a first quarter operating gain of US$3.3 million, versus the year-earlier quarter's US$9.9 million gain, as lower operating income in its Wire and Cable and Brass Mills businesses offset stronger results in its Flexible Packaging and Aluminum Profiles divisions. The Company's non-operating loss widened 157 percent to US$19.8 million due in large part to Argentina. Madeco registered an US$8.3-million loss resulting from the translation of its Argentina operations using the devalued Argentine peso. Madeco also recorded a loss equal to US$2.3 million in severance payments from the Decker Indelqui closing, as well as booking a provision equal to US$1.8 million related to the situation across the Andes. The Company has not shown a profit in over three years and the deepening crisis in Argentina only served to worsen its problematic situation. At the start of January, Madeco initiated a financial restructuring in an effort to reduce its debt and hired Salomon Smith Barney to advise it during the process. The investment bank is currently in talks with creditors to renegotiate debt and determine the amount of additional required capital. Once that process is complete, Madeco plans to carry out a capital increase, which according to analysts' estimate, will be for US$70 million to US$80 million. CONTACT: MADECO Marisol Fernandez, Investor Relations Voice : (56 2) 520-1380 Fax : (56 2) 520-1545 E-mail : mfl@madeco.cl Web Site: www.madeco.cl OR Oscar Ruiz-tagle Humeres, Chairman Albert Cussen Mackenna, CEO Santiago Edwards Morice, CFO Enrique S. Arangua, General Counsel Their Address: Ureta Cox 930 Santiago Chile Phone +56 2 520 1000 VTR GLOBALCOM: Faces Bankruptcy If Banks Refuse Loan Refinance -------------------------------------------------------------- Bankruptcy looms ahead at VTR GlobalCom, Chile's largest cable television company and a subsidiary of Denver-based UnitedGlobalCom Inc., unless banks refinance a US$176-million loan. According to a report by Bloomberg, the Company, which is nearly out of cash to meet payments, had until April 29 to pay the loan and secure a 30-day extension from J.P. Morgan Chase & Co. and five other banks. An imminent collapse of VTR poses a great threat at UnitedGlobalCom as it would deprive it of its only business with positive earnings before interest, tax, depreciation and other expenses. The Chilean unit last year accounted for 10.7 percent of UnitedGlobalCom's US$1.5 billion in revenue and had US$26.9 million in EBITDA, while other units lost money. "This is really surprising because we hadn't seen the deterioration in the business at VTR that we saw elsewhere," said Guzman & Co. analyst David Joyce, who currently recommends buying UnitedGlobalCom shares. Joyce said he expects VTR to avert bankruptcy by renegotiating its debt. Meanwhile, in a SEC filing dated April 15, UnitedGlobalCom said that although VTR can finance its cable, telephone and Internet access operations, it won't have the cash to make loan payments due this year. As a likely result, VTR may have to sell assets, restructure its operations or find other financing to repay its banks, the company said. There is "substantial doubt about its ability to continue as a going concern," the company said. Officials at VTR declined comment. UnitedGlobalCom spokesman Jim Carlson said the company "is firmly committed to VTR," but declined to comment on talks to refinance VTR's loan. UnitedGlobalCom, which is controlled by Liberty Media, the media company run by billionaire John Malone, bought VTR in 1999 and has since added telephone and Internet access to its cable service. CONTACT: UnitedGlobalCom, Inc. 4643 South Ulster Street Suite 1300 Denver, CO 80237 USA Phone: 303-770-4001 Fax: 303-770-4207 Home Page www.unitedglobal.com Contact: Investor Relations Rick Westerman, Chief Financial Officer Phone: 303-770-4001 =========== M E X I C O =========== ALESTRA: S&P Lowers to 'B-'; CreditWatch Negative Continues ----------------------------------------------------------- On May 2, 2002, Standard & Poor's lowered its foreign and local currency corporate credit ratings on Alestra S. de R.L. de C.V. to 'B-' from 'BB-' due to the Mexican telecom provider's deteriorated liquidity, solvency concerns, and incipient volume growth combined with very high debt. The downgrade also reflects unclear financial support from shareholders. Ratings remain on CreditWatch with negative implications because of uncertainties regarding the refinancing of near-term financial obligations. Near-term debt service and repayment are challenged by the company's negative free cash flow and decreased ability to access new financings. Alestra's May 2002 coupon payment will be made through escrow account reserved cash. Subsequently, Alestra is negotiating refinancing alternatives for its fully drawn US$25 million revolving credit facility which expires in July 2002, and a US$32 million interest coupon in November 2002, whose timely payment is uncertain. The rating will likely be lowered again within the next few weeks, unless there's additional shareholder support in the form of an equity injection and/or credit guarantees, and a realistic strategic and financing plan is implemented. This would allow Alestra to carry its debt burden until improvements materialize from a recovering local economy and revenue growth from higher margin services. Following declining international settlement rates, Mexican long-distance rates have fallen sharply (60%-70% in real terms) since Alestra entered the market in 1997. Consequently, Alestra has become increasingly dependent on growth in higher margin services such as local calls, data, and Internet services. Alestra's shareholders, include 49%-owner AT&T Corp. (BBB+/Watch Neg/A-2) and Onexa S.A. de C.V. (unrated; 50.2% owned by Grupo Alfa S.A. de C.V. and 49.8% by Grupo Financiero BBVA Bancomer S.A. de C.V.). However, future support from these parties is unclear. Additionally, one of the financing alternatives being considered involves pledging Alestra's long-distance receivables, which would result in the structural subordination of Alestra's unsecured debt, and lead to a two 'notch' downgrade for Alestra's senior notes relative to the corporate credit rating. Ratings List Corporate Credit Rating Local currency B-/Watch Neg Foreign currency B-/Watch Neg Senior unsecured debt US$270 million senior notes due May 15, 2006 B-/Watch Neg US$300 million senior notes due May 15, 2009 B-/Watch Neg ANALYST: Manuel Guerena, Mexico City (52) 55-5279-2011 ALESTRA: Revenues Up, Net Loss Declines in 1Q02 Results ------------------------------------------------------- Mexican long-distance operator Alestra is seeing a quarter-over- quarter improvement in revenues due to a non-recurring adjustment made in the 4Q01, an improved market share in data transmission services, and higher prices. According to a report released by Business News Americas, Alestra posted a net loss of MXN128 million (US$13.6 million) for 1Q02, a 13.5 percent improvement over the MXN148 million net loss the previous quarter, but still almost 200 percent worse than its net loss of MXN43 million a year ago. Revenues for the quarter totaled US$101 million, up 42 percent from the US$71 million billed in 4Q01, and in line with revenues for 1Q01, Alestra disclosed. The Company also revealed that Ebitda reached US$16 million, which, while an improvement over recent quarters, was still 9 percent below its Ebitda in the same period last year. Alestra said its strategy since 2000 has been to expand its voice and data business at a greater rate than its long distance business. The company said its non-long distance revenues for 1Q02 were US$21 million, up 15 percent from the US$18 million registered in 4Q01, and up 49 percent from the US$14 million registered one year ago. Alestra also reported 718 million minutes of traffic on its network during the quarter, down 4 percent and 7 percent from the volumes reported in the fourth and first quarters of 2001, respectively. CONTACT: ALESTRA Edificio ALESTRA Av. Lazaro Cardenas 2321, p.9 Col. Residencial San Agustn CP. 66260 San Pedro, Garza Garcia Nuevo Le>n Phone: 8625-2100 Megacentro Av. Munich 175 Col. Cuauhtemoc CP. 66450 San Nicolas de los Garza Nuevo Leon Phone: 8748-6100 ALESTRA Guadalajara Av. Libertad 1955 Col. Americana 44160 Guadalajara, Jalisco Mexico Phone: 3540-8300 ALESTRA Mexico Optima I Paseo de las Palmas 405, piso 21 Lomas de Chapultepec 11000 M,xico, D.F. Optima II Paseo de las Palmas 275, piso 8 Lomas de Chapultepec 11000 Mexico, D.F. Phone: 8503-5000 Home Page: http://www.att-alestra.com.mx. Contact: Jorge Escribano Alestra - Mexico Phone: +52 8 503 5011 E-mail: :jescriba@alestra.com.mx SAVIA:Year End 2001 Results Show Soft Marktes, Resturcturing ------------------------------------------------------------ Savia, S.A. de C.V. announced Friday results for fiscal 2001. The results for Seguros Comercial America and for Empaques Ponderosa are reported as discontinued operations in the attached tables. Net Consolidated Sales Net consolidated sales reached 702 million Dollars, a reduction of 14% compared with the same period last year. The reduction is a result of lower sales in the Agro business division and the sale of non-strategic assets in Savia. Foreign currency denominated sales for the period accounted for 93% of total sales. Consolidated Operating Income Consolidated operating income for fiscal 2001 reached 2 million Dollars, without considering extraordinary expenses by Seminis. When considering these extraordinary expenses, consolidated operating income for fiscal 2001 reflected a loss of 59 million Dollars, 37 million Dollars (39%) lower than the loss reported in fiscal 2000. This improvement is the result of a reduction in operating expenses by 18% and in the cost of sales by 15%. The operating cash flow recovered 33 million Dollars (50%) and reported a negative cash flow of 33 million Dollars for fiscal 2001. Net Consolidated Income Net consolidated loss for this period reported 391 million Dollars, 82 million Dollars (17%) lower than the reported loss for fiscal 2000. This result shows a relevant step in the recovery of profitability in the business. The majority loss reported 293 million Dollars, a reduction of 47 million Dollars (14%) as compared to fiscal 2000. RESULTS FOR THE FISCAL YEAR 2001 FOR THE PRINCIPAL SUBSIDIARIES Seminis The total sales for fiscal 2001 reached 448 million Dollars, a figure similar to that reported for fiscal 2000, when excluding the effect of discontinued operations and exchange rate. When considering extraordinary expenses, sales showed a decrease of 8%. The operating expenses were reduced by 15% and reported 228 million Dollars for fiscal 2001. The operating loss reached 9 million Dollars, amount that reflects an improvement of 64% when compared to fiscal year 2000. Cash flow from operations for fiscal 2001 was 8 million Dollars, an improvement by 245% in comparison to fiscal 2000. The initiatives implemented after September 2000 kept improving business results. Bionova The Bionova sales were 205 million Dollars, which represented a decrease of 11% in comparison to sales reported during fiscal 2000. The operating loss was 9 million Dollars in comparison with a loss of 24 million Dollars during the same period last year, a reduction of 15 million Dollars (64%). During fiscal 2001 the company sold non-strategic assets that included Tanimura Distributing and Interfruver de Mexico. RELEVANT EVENT In the accumulated results reported by Savia for its fiscal year 2001, a 48 million Dollar reserve, regarding deferred taxes for Seminis subsidiary was included. Of the 48 million Dollar reserve, 42 million Dollars were charged retractably in June 2001 and the other 6 million Dollars were charged in September 2001. This amount was not reported by Seminis in its previous results. These reserves are provisions made at the value that reflects fiscal losses carried forward in countries where Seminis operates, mainly in the United States of America and Netherlands. These reserves were accounted by a methodology of deferred taxes that takes into account the fiscal results achieved in the prior three years in each country where the company operates. This reserve does not imply cash out flow and it does not diminish the true value of fiscal losses carried forward and the opportunity of realizing these losses in the future. Savia participates in industries that offer high growth potential in Mexico and internationally. Among its main subsidiaries are: Seminis a global leader in the development, production and commercialization of fruit and vegetable seeds, Bionova, a company focused on plant science for the development and improvement of fruit and vegetable seeds; and Omega, a real estate development company. Savia's financial statements are prepared in compliance with generally accepted accounting principles in Mexico. For the consolidation of domestic subsidiaries, Savia follows the guidelines set forth in bulletin B-10 and for foreign companies follows the guidelines set forth in bulletin B-15. Seminis and Bionova report following the generally accepted accounting principles of Mexico. These results are adjusted to reflect the above-mentioned guidelines. In addition, Seminis reports its fiscal year the first quarter of October through the last of September. Savia reports its fiscal year on a calendar basis, including in its consolidated results the operations of Seminis according to calendar year. To see financial statements: http://bankrupt.com/misc/Savia.txt CONTACT: Savia S.A. de C.V. Investor Relations: Francisco Garza Phone: 011-52818-173-5500 Fax: 011-52818-173-5508 E-mail: fjgarza@savia.com.mx or Investor Relations: Francisco del Cueto Phone: 011-52555-6623198 Fax: 011-52555-6628544 E-mail: delcueto@mail.internet.com.mx Home Page: http://www.savia.com.mx ================= N I C A R A G U A ================= ENRON: Loses Bid On Enel Over Technicality, Court Appeal Follows ---------------------------------------------------------------- Enron Nicaragua said Saturday it will contest Nicaragua's decision to sell two state-owned hydroelectric plants to the U.S. firm Coastal Power International, says EFE. On Wednesday, officials announced Enron Nicaragua had won a bid for 95 percent control of the two Nicaraguan plants with an offer of US$41.4 million. However, Mario Montenegro, president of state-run Nicaraguan Electricity Company (Enel), announced Saturday that Enron Nicaragua failed to provide the required US$2 million guarantee for its bid. As a result, the two plants, each with a capacity of 50 megawatts, were awarded to U.S. firm Coastal Power, runner-up in the original bidding process with an offer of US$41.2 million. "We will use all the recourses permitted by law, including a legal challenge," Enron's attorney in Nicaragua, Raul Palacios, said, adding that the Company will file a complaint with the Comptroller General "because state-contracting laws were violated, and if necessary, we will go to the Supreme Court." Enel spokesman Luis Adolfo Diaz, confirmed to EFE that the tender committee discarded the Enron bid and sold the plants to Coastal Power. According to Diaz, committee members, led by Abdel Karim, said the presentation of Enron Nicaragua's surety bond had irregularities. Palacios said the alleged lack of a guarantee is "an interpretation by Karim and the committee members, because there was a guarantee by an international firm." Privatization of Enel's generators is part of an agreement with the International Monetary Fund to sell off state enterprises. Enel has two other generators on the block but has not received any offers. ============= U R U G U A Y ============= BANCO COMERCIAL: Moody's Cuts Foreign Currency Ratings ------------------------------------------------------ Moody's downgraded the long-term term foreign currency deposit ratings of Banco Comercial S.A. to Ba3 from Ba2, and confirmed the bank's foreign currency senior and subordinated debt ratings at Ba3 and B1, respectively. The ratings were placed on negative outlook. The ratings affected are: -- Long-term foreign currency deposits downgraded to Ba3 from Ba2, with negative outlook. -- Long-term foreign currency senior debt confirmed at Ba3, with stable outlook. -- Long-term foreign currency subordinated debt confirmed at B1, with stable outlook. The rating actions followed Moody's downgrade of the Republic of Uruguay's foreign currency country ceilings for bonds, notes, and bank deposits, with a negative outlook. Banco Comercial is Uruguay's largest domestically owned private bank. As of December 31, 2000, Comercial had US$1.9 billion in assets, US$1.6 billion in deposits, and US$151 million in equity. CONTACTS: New York Jeanne Del Casino Vice President - Senior Analyst Financial Institutions Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York Gregory W. Bauer Managing Director Financial Institutions Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 *********** 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 * * *