/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020521.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 21, 2002, Vol. 3, Issue 99 Headlines A R G E N T I N A ACEROS ZAPLA: Exec. Denies Reports On Imminent Financial Crisis ACINDAR: CNV Defers Financial Statements Filing Due Date AGUAS ARGENTINAS: Fitch Ratings Downgrades IDB 'B' Loan To `DD' BANCO FRANCES: Healthy Parent Stands By Amid Liquidity Woes BISEL/SUQUIA/BERSA: Banco Nacion To Operate Banks In Crisis REPSOL YPF: Fitch Drops Ratings; Outlook Negative in Argentina REPSOL YPF: May Strengthen Management With New CEO Post REPSOL YPF: Sells 23% Gas Natural Stake For EUR1.98 Bln SCOTIABANK QUILMES: Workers Uneasy Over Unpaid Salaries TELECOM ARGENTINA: Denies Telmex Sale; Market Supports Idea B E R M U D A DOV BERMUDA: Cohen, Milstein Files Securities Fraud Lawsuit TYCO INT'L: CIT Spinoff On Track; CFO Touts Financial Strength TYCO INT'L: Reiterates Core Businesses Focus; Fewer Acquisitions B R A Z I L EMBRAER: Canadian, Brazilian Negotiators Continue Subsidy Talks E C U A D O R EMELEC: Conelec's Indecision Spurs Skepticism Among Bidders SOCIAL SECURITY: Mismanaged, Corrupt, Underfunded System Falters M E X I C O DUBLINARES: Liquidity Woes Prompt Linares Closure EMPRESAS ICA: Moody's Cuts On Continued Liquidity Pressure GRUPO MEXICO: Blocked Railway Merger Knocks Share Prices GRUPO TMM: Grupo TFM Extends Sr. Note Consent Solicitation HYLSAMEX: HYLSA Extends Expiration Date For Exchange Offer INT'L THUNDERBIRD: FY01 Losses Due To Latin American Holdings P A R A G U A Y COPACO: Privatization To Proceed May 30 - - - - - - - - - - ================= A R G E N T I N A ================= ACEROS ZAPLA: Exec. Denies Reports On Imminent Financial Crisis --------------------------------------------------------------- Argentine steelmaker Aceros Zapla, which manufactures rolled- steel and stainless steel for the car and oil industries, is legally obligated to maintain the factory in operation until June 30, reports Business News Americas. But this does not suggest a bleak future for the Company, says Aceros Zapla human resources manager Enrique Mulacio, despite recent reports in the press. Mulacio contradicted the stories, saying Aceros Zapla is not facing a crisis nor is it on the verge of closure. "As this date is getting closer, of course they want to imagine the Company will close, but it's not like that at all. These are just the fears that unionists and politicians have, but they are far off the mark," Mulacio said. Fueling the rumors is the fact that the Company resorted to a crisis preventative procedure, a legal measure that it is obliged to take if it foresees a possible suspension of staff, but which in no way risks their job stability. "It's based on the issue of state regulations that make it hard to import primary materials that are extremely important for the manufacturer of steel products," Mulacio explained, adding the Company undertook the measure in case the import problem could not be solved. Mulacio insisted that the company's future is encouraging because the difference between the current exchange rate and when the Argentine peso was pegged to the US dollar has placed the Company in a much more competitive position. Aceros Zapla is preparing to increase production, which is presently well below capacity. The plant has a total installed capacity of 12,000t but it is only producing between 3,500t and 4,000t. ACINDAR: CNV Defers Financial Statements Filing Due Date -------------------------------------------------------- Argentine steel firm Acindar informs in its website the deferment of the filing of the quarterly Financial Statements as of March 31st 2002. On May 10th the Comision Nacional de Valores ("CNV") issued General Resolution Nbr. 405 extending the term for filing quarterly Financial Statements as of March 31st, 2002, for fifteen (15) consecutive days. As such, the Company's Financial Statements will be due May 27th, 2002. The Resolution is based in the necessity to properly include the changes to the accounting procedures arising in the modification of the monetary regime prevailing in Argentina. CONTACT: ACINDAR S.A. Estanislao Zeballos 2739 B1643AGY - Beccar Buenos Aires - Argentina Lic. Jos, I. Giraudo Investor Relations Manager Tel.: (54-11) 4 719-8674 Fax: (54-11) 4 719-8501 Int. 8674 Lic. Andrea Dala Investor Relations Officer Tel.: (54-11) 4 719-8672 Fax: (54-11) 4 719-8501 Int. 8672 Web site: http://www.acindar.com/index.htm AGUAS ARGENTINAS: Fitch Ratings Downgrades IDB 'B' Loan To `DD' --------------------------------------------------------------- Fitch Ratings has downgraded the IDB 'B' loan participation certificates of Aguas Argentinas S.A. (Aguas) to 'DD' from 'C' Rating Watch Negative. The rating action reflects the non-payment of interest in an amount of US$10.2 million due on May 15, 2002. Aguas is not prohibited from transferring dollars under the IDB loan due to its preferred creditor status but its ability to convert and transfer dollars abroad is limited by strained operating cash flow as cash balances and new bank lines of credit are nonexistent. Aguas' inability to fully serve its interest payment is a result of the combination of devaluation impact, the pesofication and withdrawal of the tariff indexation mechanism and an acute shortage of liquidity for Argentine corporates. The peso's adjustment increased Aguas' corporate debt burden and is pressuring its free cash flow generation ability. Thus, on April 5, 2002, Aguas announced the suspension of its debt service payments, being its priority to continue proving a good quality service. The company and other regulated participants are negotiating some type of compensation for the government's actions with the goal of recovering their already lost economic equilibrium. The result and timing of the negotiations is uncertain. Negotiations are being carried by a Commission, presided by the Ministry of Economy, which has until mid-June to present its recommendations to the government. Aguas Argentinas is the sole provider of potable water and sewerage services in the city of Buenos Aires and 17 surrounding districts. Aguas is 35%-owned and operated by Suez Lyonnaise des Eaux S.A. (Lyonnaise), a leading French water services and construction group. CONTACT: FITCH RATINGS Jason T. Todd, 312/368-3217 Greg Kabance, 312/368-2052 Ana Paula Ares/Cecilia Minguillon, +54 11 4327-2444 James Jockle, 212/908-0547 (Media Relations) BANCO FRANCES: Healthy Parent Stands By Amid Liquidity Woes ----------------------------------------------------------- Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) won't abandon Argentina even as its BBVA Banco Frances SA unit runs short of funds, Clarin reports on its Web site, citing Argentine President Eduardo Duhalde. "They said that despite Argentina's problems it would remain," Duhalde said bank officials told him. BBVA posted a first quarter profit of EUR587 million, up 6 percent. Discounting the effects of the crisis in Argentina, where BBVA lost EUR4 million through March, net attributed profit over the quarter would have grown by 18 percent. The devaluation of the peso in Argentina cut Banco Frances reserves by EUR116 million. But the Spanish parent said its Argentine subsidiary has cash reserves of some EUR450 million, easily enough, it said, to get through the next few months. Banco Frances and other Argentine banks are under pressure to conserve cash from increased withdrawals by depositors until the Argentine government safeguards against a run on banks. CONTACT: BANCO FRANCES Maria Elena Siburu de Lopez Oliva Investor Relations Manager, in Argentina Tel. 5411-4341-5035 E-mail: mesiburu@bancofrances.com.ar Maria Adriana Arbelbide Investor Relations Tel. 5411-4341-5036 E-mail: marbelbide@bancofrances.com.ar BISEL/SUQUIA/BERSA: Banco Nacion To Operate Banks In Crisis ----------------------------------------------------------- Argentina's state-run Banco Nacion will take over operations at three French-controlled banks facing liquidity problems, the Central Bank said late on Sunday. "Banco de la Nacion Argentina will take control of operations at the banks Bisel, Suquia and Banco de Entre Rios (BERSA)," the Central Bank said in a statement. Credit Agricole, France's biggest bank by number of customers, operates the three banks and employs 6,100 people in 345 branches. The French bank said it would stop backing its Argentine units after sustaining heavy losses following the government devaluation of its currency. The monetary change also turned U.S. dollar-denominated loans into pesos. On Friday, Banco Bisel SA asked the Central Bank to consider putting into practice an unspecified law it said was designed to restructure Banco Bisel to protect its loan portfolio and deposits. Banco Bisel also asked the Central Bank to apply the same law to Banco Suquia SA, which Banco Bisel controls. The Central Bank, which spent Sunday negotiating a solution to the banks' problems, said BERSA would open normally on Monday while Bisel and Suquia will reopen on Wednesday but did not provide further details. CONTACT: BANCO DE LA NACION ARGENTINA Bartolome Mitre, 326 1036 Buenos Aires, Argentina Phone: +54-11-4347-6000 Fax: +54-11-4347-8078 Home Page: http://www.bna.com.ar/ Contacts: Enrique Olivera, President Adolfo Martin Prudencio Canitrot, Deputy VP CREDIT AGRICOLE S.A. 91-93 Pasteur Boulevard 75710 - Paris Cedex 15 - France Phone: +33 01 43 23 52 02 Fax: +33 01 30 44 68 88 Home Page: http://ww.actionnaires.creditagricolesa.fr/ Contact: Marc Bue, Chairman Jean Laurent, Chief Executive Officer Patrice Vincent, Head of the service Synthesis & Financial Info. E-mail: patrice.vincent@credit-agricultural-sa.fr BANCO DE ENTRE RIOS S.A. (BERSA) Monte Caseros 128 Parana 3100 Entre Rios Argentina Phone: 0343-4201200 Fax: 0343-4213869 Contact: Alberto Roque Ferrero, Vice-President BANCO BISEL S.A. Mitre 602 Rosario 2000 Santa Fe Argentina Phone: 0341-4200300 Home Page: http://www.bancobisel.com.ar/ Contact: Guillermo Harteneck, President Jean Luc Perron, Vice President Bernard Brousse, Vice President BANCO SUQUIA S.A 25 de Mayo 160 Cordoba 5000 Cordoba Argentina Phone: 0351-422-2048 Fax: 0351-420-0279 E-mail: relacioninversores@bancosuquia.com.ar Home Page: http://www.bancosuquia.com.ar/ Contact: Bernard Pierre Jean Brousse, Vice-President Nestor Jose Belgrano, Director REPSOL YPF: Fitch Drops Ratings; Outlook Negative in Argentina -------------------------------------------------------------- Fitch Ratings, the international ratings agency, has downgraded Spain's Repsol YPF's Senior Unsecured rating to 'BBB' from 'BBB+' and the Short-term rating to 'F3' from 'F2'. The rating of the Preference Share issues made by Repsol International Capital BV has been lowered to 'BB+' from 'BBB-'. The Outlook remains Negative. The rating actions reflect Fitch's growing concern that the crisis in Argentina, to which the group has sizeable exposure, may have a more prolonged and severe impact on performance and liquidity than was anticipated when the group's ratings were last adjusted downward in January 2002. Profitability during 1Q02 (at EUR442 million, net income before non-recurring items was down 36.5% compared to the prior year) was negatively affected by the difficult macro-economic climate and a series of measures introduced by the Argentine government, including: -- The derogation of the currency conversion regime of one Argentine peso to one US dollar; -- The decreed change in price regulations, converting tariffs previously charged in US dollars directly into pesos, and prohibiting their adjustment based on the US Producer Price Index; -- The stipulation of a 20% tax on crude oil exports, and a 5% tax on refined oil product exports (export tax on gas-oil has in the meantime been increased to 20% as well). Fitch acknowledges management's efforts to soften the impact of the crisis, for example by foregoing the payment of final dividends and cutting the 2002 capital expenditure programme by some EUR900m. The proposed sale of a 23% stake in Gas Natural has some near-term liquidity benefits, though it has longer-term implications for the diversity of the group's income profile. There exists a significant degree of risk that factors remaining largely beyond management's control may have a negative impact on future performance, not least the possibility of additional measures taken by the Argentine government. Provisions of EUR1,288m made against the 2001 income statement (before tax and minority interests) and asset write-downs of EUR1,450m were not sufficient to fully capture the effect of the crisis: among other aspects, in view of the sharp devaluation of the Argentine peso against the US dollar in recent months (the current exchange rate exceeds 3 pesos to the US dollar). Consequently, during 1Q01 the group set aside an additional provision of EUR244m against financial expenses for part of the debt contracted in dollars by its Argentine affiliates and adjusted its shareholders equity by a further EUR1,011m. Fitch's view of the sovereign risks had until recently captured the fact that oil is traded in global US dollar-denominated commodity markets, limiting the impact of regional economic downturns on upstream results. Although this argument still partly holds, the agency considers that the introduction of the export tax and the fact that only 70% of export revenues can be kept outside of Argentina in US dollars represents a step change in terms of the group's exposure to Argentine sovereign risk. The rating action also considers Fitch's ongoing concern about the group's liquidity situation, partly as a consequence of controls that are in place on the external transfer of funds. YPF (currently rated 'B+'/Rating Watch Negative) accounted for close to half of EBITDA in 2001 (around 38% in 1Q02) while only some 14% of consolidated debt was located at the YPF level. Short-term debt obligations amount to some EUR7.5 billion, a level significantly above the organic cash flow levels forecast prior to the current crisis. Liquidity currently comprises cash and equivalents of close to EUR2.7bn, in addition to undrawn committed facilities amounting to EUR5.5bn. Although Fitch believes this level of liquidity to be sufficient for the group to service its debt, the inability to freely use cash flows generated by YPF clearly inhibits the group's financial flexibility. The abovementioned proposed sale of a 23% share in Gas Natural would reduce pressure on the liquidity situation and leverage, though this mitigation is tempered by the divestment of a stable income stream and by the further dilution of earnings outside Latin America. Despite the fact that debt at the YPF level is technically non-recourse to Repsol YPF, the ratings continue to assume a high level of support by the parent company, reflecting YPF's importance in the overall group strategy. Management's incentive to support YPF is further increased by the existence of cross default clauses in the bond documentation, which can be triggered if a Principal Subsidiary (such as YPF) defaulted on more than US$20m of obligations. Ratings at this level continue to acknowledge Repsol YPF's dominant market positions in Spain, where it refines close to 60% of all crude processed. The Company maintains a 45% share of the retail market, distributes nearly all the liquid petroleum gas consumed, and is by far the leader in natural gas distribution and acquisition. In addition, notwithstanding the current crisis, the group is expected to retain a strong presence in Latin America, where its 40% share of the Argentine retail market and a strong position in natural gas distribution and sales is expected to retain significant value following the current crisis. Repsol YPF's Negative Outlook reflects uncertainty with regards to the group's ability to efficiently implement its strategy in the unstable Argentine operating environment, and the maturity profile of current debt obligations. Liquidity remains the central area upon which Fitch will focus in its ongoing surveillance. The agency is aware that a large portion of credit lines contain Material Adverse Change clauses but understands that banks have so far remain committed to the group. The agency will also monitor the impact of government measures and the scope and uniformity of peso devaluation. CONTACTS: FITCH RATINGS (Barcelona) Erwin van Lumich Thomas Saul Tel: +34 93 323 8400 FITCH RATINGS (London) Richard Hunter Tel: +44 20 7417 4362 FITCH RATINGS (New York) Alejandro Bertuol Tel: +1 212 908 0393 FITCH RATINGS (Buenos Aires) Anabella Colombo Tel: +54 11 4327 2444 REPSOL YPF: May Strengthen Management With New CEO Post ------------------------------------------------------- The board of directors of the Spanish petroleum group Repsol YPF meets this week to analyze appointment of a CEO in a bid to strengthen the Company's team of directors, says a report released by Expansion. According to sector sources, the Company could create the post of CEO, as it has not had one since it was founded in 1985. One of the candidates being considered for the post is former Banco Santander Central Hispano SA deputy chairman and CEO Angel Corcostegui. The post could also go to one of Repsol YPF's existing top managers. The difficulties facing the oil and gas group in Argentina require greater efforts at management level, Expansion suggests, adding that the new CEO will work closely with Repsol YPF chairman Alfonso Cortina. Repsol YPF's core shareholders Banco Bilbao Vizcaya Argentaria SA and La Caja de Ahorros y Pensiones de Barcelona will have to agree on the appointment, Expansion notes. CONTACT: REPSOL YPF 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 Contacts: Alfonso Cortina De Alcocer, Chairman Ramon Blanco Balin, Vice Chairman Carmelo De Las Morenas Lopez, CFO REPSOL YPF: Sells 23% Gas Natural Stake For EUR1.98 Bln ------------------------------------------------------- As part of an effort to shed assets and reduce debt amid plummeting business at its Argentine unit, Repsol YPF SA, Repsol sold 23 percent of Spain's top natural-gas utility for EUR1.98 billion (US$1.8 billion). In a note to regulators, Europe's fifth-largest oil company said it offered the Gas Natural SDG SA stake to institutional investors at EUR19.5 a share. That was a discount to Thursday's closing price of EUR19.9, and to Gas Natural's average price of EUR20 this year. Goldman, Sachs & Co., Banco Bilbao Vizcaya Argentaria SA, and La Caixa unit Invercaixa managed the offering. The sale of 102.99 million Gas Natural shares cut Repsol's stake in the gas company to 24 percent. Repsol sold its stake in Gas Natural to reduce its EUR16.7- billion debt, which makes it one of the most indebted oil companies in Europe. Standard & Poor's last week confirmed Repsol's ``BBB'' debt rating, saying the sale ensures Repsol has enough liquidity until the end of 2004. Before the sale, cash levels were adequate until the summer of 2003, S&P said in a statement. Repsol has EUR2.5 billion in notes maturing next month. CONTACT: THE GOLDMAN SACHS GROUP, INC. New York Headquarters Goldman Sachs & Co. 85 Broad Street New York, NY 10004 United States of America Phone: 1-212-902-1000 Fax: 212-902-3000 Home Page: http://www.gs.com/ Contacts: Investor Relations The Goldman Sachs Group, Inc. 10 Hanover Square, 20th floor New York, NY 10005 U.S.A Tel: 1-212-902-0300 E-mail: investor-relations@gs.com THE GOLDMAN SACHS GROUP, INC. (Buenos Aires) Goldman Sachs Argentina L.L.C. Avda. del Libertador, 498 19th Floor 1001 Buenos Aires Argentina Phone: 54-11-4323-0500 BANCO BILBAO VIZCAYA ARGENTARIA, S.A. Gran Via, 1 48001 Bilbao, Vizcaya, Spain Phone: +34-94-487-55-55 Fax: +34-94-487-61-61 Home Page: http://www.bbv.es Contacts: Francisco Gonzalez Rodriguez, Chairman Jose Ignacio Goirigolzarri, CEO Angel Cano, CFO INVERCAIXA VALORES, S.V.B. Dna. Ana Buesa C/ Mar�a de Molina, 6 (28006) Madrid Phone: 34.91- 557 69 19 Fax: 34.91- 557 69 23 SCOTIABANK QUILMES: Workers Uneasy Over Unpaid Salaries ------------------------------------------------------- Lack of assurance from the management of cash-strapped Scotiabank Quilmes, a subsidiary of Canada-based Bank of Nova Scotia, for the payment of salaries led a number of its employees to consider a revolt. According to the group's spokesman, an analyst at the bank going solely by the name Pablo, employees are prepared to walk off the job, take to the streets and protest at the Canadian embassy if they don't get paid properly. The spokesman disclosed that the workers have organized and elected representatives to negotiate with management of the Buenos Aires bank. "We want you to know that Scotiabank is not assuring us the payment of our salaries while the bank is suspended, nor our severance payments if we are all fired," the spokesman said. However, Diane Flanagan, a spokeswoman for Scotiabank said that employees would continue to get paid as long as the central bank continued to negotiate with Quilmes about how to resume operations. But she would not give any such commitment on severance packages. Scotiabank Quilmes had its activities suspended and put under control of the central bank last month after the severe financial and liquidity crisis in Argentina prevented it from keeping its reserves at the required level. Banking insiders suggest the suspension of the Scotiabank unit is linked to the Toronto-based company's refusal to infuse more cash into its Argentine subsidiary. Scotiabank is in the midst of presenting options to the central bank, including selling the Argentine operation, Flanagan 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 TELECOM ARGENTINA: Denies Telmex Sale; Market Supports Idea ----------------------------------------------------------- Telecom Argentina Stet-France Telecom SA said it has received no official information on its possible sale to Telefonos de Mexico (Telmex). The announcement came in response to an Ambito Financiero report that its controlling shareholders, France Telecom and Telecom Italia SpA, had signed a letter of intention with Telmex to sell their stakes in the Company. According to Ambito, Telmex would acquire the Company in exchange for its accumulated debt, totaling some US$3.2 billion. The report, which a Telmex spokesman has also denied, saying it is not in talks to buy Telecom Argentina, has boosted the shares of the Argentine telecom company to as much as 18 percent to MXN1. "Telecom is rising as investors see a high possibility of an agreement being reached," said Eugenia Benitez, an analyst at Allaria Ledesma & Cia in Buenos Aires. At the beginning of April, Telecom Argentina announced that it had suspended payments on its outstanding debt Telecom Argentina is 57.74-percent owned by Nortel Inversora SA, of which the Italians and the French have 50 percent each. About 40.58 percent floats in the Buenos Aires, New York and Mexico Stock Exchanges and 4.68 percent is in the hands of the Company's staff. On the other hand, Telmex owns 60 percent of the local telecom Techtel, of which Techint owns the other 40 percent. Telmex's strategic intent would be to merge the 2 telecoms companies, according to Ambito. CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM) Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Repoblica Argentina Phone: +54 11 4968 4000 Home Page: http://www.telecom.com.ar Contacts: Alberto J. Ricciardi, Chief Financial Officer Elvira Lazzati, Finance Director Pedro Insussarry, Investor Relations Manager Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 Email: inversores@intersrv.telecom.com.ar TELEFONOS DE MEXICO, S.A. DE C.V. (Telmex) Parque Via 190, Colonia Cuauhtemoc 06599 Mexico, D.F., Mexico Phone: +52-55-5703-3990 Fax: +52-55-5545-5550 Home Page: http://www.telmex.com.mx Contacts: Carlos Slim Helu, Chairman Jaime Chico Pardo, CEO and Director Adolfo Cerezo Perez, Director Finance and Administration ============= B E R M U D A ============= DOV BERMUDA: Cohen, Milstein Files Securities Fraud Lawsuit ----------------------------------------------------------- Cohen, Milstein, Hausfeld & Toll, P.L.L.C. issued a notice on behalf of its client, who filed a lawsuit against Dov Pharmaceutical, Inc. in the United States District Court for the Southern District of New York. The suit is filed on behalf all persons who purchased common stock of Dov in or traceable to Dov's April 25, 2002 initial public offering. The action charges Dov and certain of its officers and directors, and the lead underwriters of Dov's IPO, CIBC World Markets and Lehman Brothers, with violations of Sections 11 and 12 of the Securities Act of 1933. Dov issued five million shares in its IPO on April 25, 2002 at $13 a share, but failed to timely inform the Class of a revision of its 1999 financial results to properly include a Joint Venture in Bermuda with Elan Corporation. The class of purchasers of the shares in the IPO or in the aftermarket were not promptly made aware of the restatement, and as a result, suffered losses on the first day of trading or thereafter, when the shares of Dov fell from $13 to $8.70 per share. Plaintiff seeks to recover damages on behalf of all those who purchased Dov common stock in the IPO or in the aftermarket. The plaintiff's counsel - Cohen, Milstein, Hausfeld & Toll, P.L.L.C. - prosecutes investor class actions and actions involving financial fraud. The firm has offices in Washington, D.C., Seattle, and New York and is active in major litigation pending in federal and state courts throughout the nation. CONTACT: Cohen, Milstein, Hausfeld & Toll, P.L.L.C. 1100 New York Avenue, NW Suite 500 - West Tower Washington, DC 20005 Contacts: Steven J. Toll, Esq., stoll@cmht.com Lisa Polk, lpolk@cmht.com Telephone: 888-240-0775 or 202-408-4600 TYCO INT'L: CIT Spinoff On Track; CFO Touts Financial Strength -------------------------------------------------------------- Shares of Tyco International Ltd. were up more than 13 percent Friday following an announcement that the Company is going to pay off about US$10 billion of its US$27 billion in debt, reports AP. A company executive disclosed Thursday that plans to spinoff CIT, its finance division, by the end of June are now on course. Tyco, based in Bermuda but with headquarters in Exeter, N.H., expects to get US$7.2 billion for the unit through an initial public offering or a sale. The US$10 billion in debt would be paid off by the end of this year with the proceeds of the spinoff and cash. According to chief financial officer Mark Swartz, a worst-case scenario would require Tyco to refinance US$3.25 billion in debt when Tyco's next payment comes due in February. "Our financial position as we sit right now is stronger than it was a year ago today," Swartz said. Tyco has struggled for months to overcome negative publicity over the company's accounting practices and a decision to abandon a breakup plan announced in January. The Company's shares have dropped 63 percent since Jan. 1. Tyco shares rose US$1.19 to US$21.75 Friday on the New York Stock Exchange. To see financial statements: http://bankrupt.com/misc/Tyco.txt CONTACT: TYCO INTERNATIONAL INC. Media Relations: J. Brad McGee or Peter Ferris +1-212-424-1300 Investor Relations: R. Jackson Blackstock +1-212-424-1344 TYCO INT'L: Reiterates Core Businesses Focus; Fewer Acquisitions ---------------------------------------------------------------- Tyco International Ltd.'s struggle to overcome weak demand and months of negative publicity over its accounting practices was underscored in a quarterly filing Tyco submitted late Wednesday with the Securities and Exchange Commission, the AP relates. The SEC filing provided revenue and expense numbers for the six months ending March 31. It also detailed thousands of layoffs at Tyco subsidiaries during that period. The filing said about 12,366 jobs were eliminated at Tyco during the six months ending March 31, including about 7,100 that had taken place but were not announced until Tyco revealed on April 25 that it was reversing course on a breakup plan. But Tyco's overall work force stood at 277,000 employees as of April 1 - leaving the Company with 30,000 more jobs than it reported in October. Spokeswoman Maryanne Kane said the increase was primarily due to acquisitions. Tyco said it must focus on its core businesses before it can return to a strategy of growth through acquisitions. "We anticipate reducing the number of acquisitions we complete prospectively, and, therefore, expect that our growth rate in revenues and earnings from acquisitions will also be reduced as compared to prior quarters," Tyco said in the filing. The 157-page filing also included the Company's plans to change the way it measures its performance. "Although management has historically considered earnings per share and free cash flow to be the most significant measures of Tyco's performance, we will begin to explicitly focus on return on capital as a management measure along with earnings per share and free cash flow," the filing said. Tyco says the focus on return on capital supports the conglomerate's decision not to sell its plastics unit. =========== B R A Z I L =========== EMBRAER: Canadian, Brazilian Negotiators Continue Subsidy Talks --------------------------------------------------------------- Negotiators from Canada and Brazil met again last week to discuss possible changes in subsidies to planemakers Bombardier Inc. and Empresa Brasileira de Aeronautica (Embraer) as part of an attempt to fend off future trade disputes, Bloomberg reports, citing Canadian Trade Department spokeswoman Mia Yen. The two countries have been locked up in a battle over plane subsidies at the World Trade Organization since 1996, when Canada first complained Brazil was helping Embraer steal market share from Bombardier. Both have been found guilty of offering airlines cut-rate loans to buy from their plane builders. One of Canada's goals in its discussions with Brazil is to define rules on subsidies to Bombardier and Embraer. "The meeting was constructive," said Sebastien Theberge, a spokesman for Trade Minister Pierre Pettigrew. He declined to give further details. A pending plane order from US Airways Group Inc., which Bombardier and Embraer are currently competing for was also discussed. The seventh-largest U.S. airline is considering a purchase of 70 50-seat jets. According to a research report by CIBC World Markets released just recently, Embraer has the edge because US Airways already flies some of its planes. The negotiators will meet again in June in Ottawa, Yen said. Both sides have said they'd rather find a settlement than stage a trade war. CONTACTS: EMBRAER Press office: Phone +55 12 3927 1311 Fax + 55 12 3927 2411 Press office mgr. Bob Sharp Email: bob.sharp@embraer.com.br OR Press officer Wagner Gonzalez Email: wagner.gonzalez@embraer.com.br ============= E C U A D O R ============= EMELEC: Conelec's Indecision Spurs Skepticism Among Bidders ----------------------------------------------------------- The prospective bidders for Ecuadorian electric company Emelec - AES, Pecom Energia and Union Fenosa - are now concerned about Ecuadorian electric council Conelec's lack of direction. To date, the council has not yet fixed a minimum asking price for the assets of Emelec, scheduled for privatization by the end of this month. Emelec's assets were estimated at US$118.5 million and the minimum asked price would be based on these values. Conelec's lack of decision is also creating a concern among former account holders and customers of the bankruptcy bank Banco del Progreso. Under the management of the banks agency AGD, its former customers would get US$90 million from the sum raised with the privatization to pay for deposits. AGD's manager Patricio Davila commented if Emelec raises below US$193 million, it will deny the privatization. In March 2001, Conelec canceled Emelec's concession to distribute electricity in Guayaquil after the Company broke its contract with the state, having accumulated massive debts and failing to maintain service standards. Emelec owner, Fernando Aspiazu was arrested, and the then-government decided to sell the Company to reimburse clients of Banco del Progreso, also owned by Aspiazu, and which was declared bankrupt. CONTACT: Electrica del Ecuador (EMELEC) Tel,fonos: (593-4) 248000 - 248003 Fax: (593-4) 248051 E-mail: asalcedo@teconet.net SOCIAL SECURITY: Mismanaged, Corrupt, Underfunded System Falters ---------------------------------------------------------------- Ecuador's social security agency is virtually bankrupt after years of corruption, mismanagement and insufficient contributions, according to an El Comercio report. Citing Ecuador's Finance Minister Carlos Julio Emanuel, the newspaper reports that the government owes the agency as much US$1.9 billion in unpaid contributions. The debt was accumulated over the last decade after the government failed to pay 40 percent of the total pension bill as required by law and made insufficient contributions for state employees. Under a law approved in November, Ecuador's state controller will decide the final amount the government owes the institute, says El Comercio. A proposed bill would allocate 70 percent of government income from a new oil pipeline to pay part of the amount owed to the social security institute and buy back external debt. The pipeline is expected to open in September next year and generate US$150 million during its first year of operation. CONTACT: Social Security Agency (Instituto Ecuatoriano de Seguridad Social) Social Communication 9 de Octubre y Jorge Washington Ed. Zarzuela, Planta Baja Quito, Ecuador Phone: 2 56 80 60 Fax: 2 50 26 12 E - mail: comunica@iess.org.ec Home Page: http://www.iess.org.ec/ =========== M E X I C O =========== DUBLINARES: Liquidity Woes Prompt Linares Closure ------------------------------------------------- Dublinares textile company is shutting down its Linares plant in Nuevo Leon in two to three weeks' time, according to Margarita Williams, director of Economic Development at Linares. The closure of the pants-producing plant, which will leave 300 workers without jobs, comes in the face of the Company's very tight financial condition. CONTACT: DUBLINARES SA Francisco I. Madero #1107 67710 Linares, Nuevo Leon Mexico Phone: (821) 2-60-41 (821) 2-60-42 EMPRESAS ICA: Moody's Cuts On Continued Liquidity Pressure ---------------------------------------------------------- Moody's Investors Service downgraded ratings on Mexican construction company Empresas ICA as follows: - US$170 million 5% convertible subordinated debentures due 3/15/04 to Caa2, from Caa1 - US$300 million global medium term note program ($0 outstanding) to B3, from B2 - Issuer rating to Caa1, from B3 - Senior implied rating to B3, from B2 The outlook remains negative. The downgrades, as well as the negative outlook, reflect longer- than-expected pressures on profitability from the protracted slow down in industrial and commercial construction in Mexico and the enduring liquidity pressures as the Company relies on asset sales to pay down maturing short-term debt, said Moody's. Although management has done a commendable job in managing the balance sheet in the face of an adverse operating environment, liquidity pressures continue unabated. Through asset sales and the draw down of cash balances, ICA has managed to reduce total debt outstanding by 78 percent, from MXN22.8 billion in 1994 to MXN5.1 billion (US$568 million) as of the end of the 2002 first quarter. Of the total debt, 30 percent (MXN1.6 billion pesos, or US$173 million) matures within the next year, a proportion reduced from the year-earlier 49 percent short-term debt exposure, as the Company has had some limited success in restructuring its current bank lines to five-year maturities. While the Company had cash balances of US$381 million at the end of the 2002 first quarter, much of it was derived from advance payments on construction projects and is restricted to paying suppliers. Thus asset sales must be maintained in order to generate the cash to make continuing debt payments. Moody's said it will continue to monitor closely the prospects for business in Mexico and other Latin American countries, the Company's strategy for restoring growth and for continuing to delever the balance sheet, and for restructuring its bank facilities and building liquidity. CONTACTS: EMPRESAS ICA SOCIEDAD CONTROLADORA S.A. DE C.V. Bernardo Quintana Isaac, Chairman/Pres/CEO Jos, L. Guerrero Alvarez, EVP Finance and CFO THEIR ADDRESS: Mineria No. 145, Colonia Escand>n 11800 Mexico, D.F., Mexico Phone: +52-55-5272-9991 Fax: +52-55-5227-5012 URL: http://www.ica.com.mx GRUPO MEXICO: Blocked Railway Merger Knocks Share Prices -------------------------------------------------------- Shares of Grupo Mexico SA, the world's third-largest copper producer, fell MXN1, or 5.9 percent, to MXN17.78, after Mexico's antitrust agency blocked the Company's purchase of Ferrocarril del Sureste (Ferrosur), a company owned by Carlos Slim's Grupo Carso SA. Mexico's Federal Competition Commission last week voted to block a proposed merger between Mexico's second and third largest railway operators, in a move that could intensify the competition between US railroad companies to provide transportation between the US and Mexico. The merger would have united Grupo Mexico's Ferrocaril Mexicano (Ferromex), one of the strongest railways in the north of the country, with Ferrosur, which controls the less lucrative routes from Mexico City to the country's rural southern region. The latest ruling dealt a bitter blow to Grupo Mexico, which has seen its earnings, as well as its ability to pay a US$2.7-billion debt, weakened due to falling copper prices. Analysts say Grupo Mexico wanted to use profits from a merged railroad business that would control 60 percent of the nation's rail system to service debt, as it waits for copper prices to rebound. 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 GRUPO TMM: Grupo TFM Extends Sr. Note Consent Solicitation ---------------------------------------------------------- Grupo TMM and Kansas City Southern, owners of the controlling interest in Grupo Transportacion Ferroviaria Mexicana, S. A. de C.V. (Grupo TFM), announced Friday that Grupo TFM's subsidiary, TFM is amending and extending its consent solicitation in respect of its 10.25 percent Senior Notes due 2007 and 11.75 percent Senior Discount Debentures due 2009 (together, the "Notes"). If the conditions to the consent solicitation are met, TFM will pay holders that grant consents a cash fee of $30.00 for each $1,000 principal amount of Notes. The consents will allow specified amendments to the respective indentures under which the Notes were issued. Holders that do not grant consents will not receive any fee, but will be bound by the amendments, if adopted. All those who held Notes as of the record date, April 11, 2002, are eligible to participate in the consent solicitation. The terms of the consent solicitation are described in an amended and restated consent solicitation statement dated May 9, 2002 and the amendments announced Friday are described in a supplement thereto dated May 17, 2002. These may be obtained upon request without charge by contacting: Mellon Investor Services LLC, 44 Wall Street, 7th Floor, New York, New York 10005, toll-free telephone: (800) 636-8927, telephone number for banks and brokers: (917) 320-6286. The consent solicitation is subject to conditions specified in the consent solicitation statement, as supplemented. The consent solicitation, which was scheduled to expire at 5:00 pm Eastern Standard Time on Monday, May 20, 2002, will now expire at 5:00 pm Eastern Standard Time on Tuesday, May 21, 2002 (unless extended further). CONTACT: GRUPO TFM Jacinto Marina, 011-525-55-629-8790 jacinto.marina@tmm.com.mx Leon Ortiz, 011-525-55-447-5800 lortiz@gtfm.com DRESNER CORPORATE SERVICES (general investors, analysts and media) Kristine Walczak, 312/726-3600 kwalczak@dresnerco.com HYLSAMEX: HYLSA Extends Expiration Date For Exchange Offer ---------------------------------------------------------- Hylsamex, S.A. de C.V. and its subsidiary Hylsa, S.A. de C.V. ("Hylsa") announced Friday that Hylsa is extending the expiration date for the exchange offer for its 9 1/4% Notes due 2007 (the "2007 Notes") until 5:00 p.m., New York time, on June 14, 2002. Hylsa is extending the expiration date to allow it to complete the proposed restructuring of its outstanding debt. Hylsa has reached an agreement in principle with the steering committee representing its bank lenders with respect to the restructuring, and is now working toward implementing the terms of the restructuring with the entire bank group. Hylsa has made significant progress toward satisfying the conditions precedent for the effectiveness of the Restructuring. Hylsa has received tenders of approximately $158 million in principal amount of its 2007 Notes in exchange for new 10 1/2% Notes due 2010. Hylsa has 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. 2007 Notes tendered and consents delivered may not be withdrawn or revoked. All other terms and conditions to the exchange offer and consent solicitation remain unchanged. The exchange offer continues to be subject to the consummation by Hylsa of the 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: 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 MACKENZIE PARTNERS, INC., New York Steven Balet Phone: 800/322-2885 / 212/929-5500 (collect) E-mail: proxy@mackenziepartners.com INT'L THUNDERBIRD: FY01 Losses Due To Latin American Holdings ------------------------------------------------------------- International Thunderbird Gaming Corporation Revenues for the year 2001 from continuing operations were $16.4 million, an increase of 1.4% over 2000 revenues from continuing operations of $16.2 million. Net loss for the year was $3.1 million compared with a loss of $1.3 million in 2000. The loss for the current year included a loss from equity in associated companies of $1.4 million; this loss is related to Mexico and Venezuela. The 2001 year-end loss also included a loss from discontinued operations related to product sales, including signage, of $1.2 million as compared to a loss of $662 thousand in 2000. General and Administrative expenses increased by 28.3% from $5.8 million in 2000 to $7.4 million in 2001. The growth in G&A expenses reflects expenses incurred in Nicaragua and additional locations in Mexico beyond our locations in the cities of Matamoros, Nuevo Laredo and Reynosa. Depreciation and Amortization expenses increased 13.2% from $1.1 million in 2000 to $1.3 million in 2001, which is due to a full year of expense from the Nicaragua operation and the addition of the office building through Inmobiliaria in Panama. In 2001, the Company incurred a total of $791 thousand in income taxes compared with $1.5 million in 2000. The loss per share before discontinued operations was $0.08 in 2001, $0.13 after discontinued operations, compared with earnings per share before discontinued operations of $0.03 in 2000, $0.06 after discontinued operations. In 2001, the Company achieved EBITDA before discontinued operations (Earnings Before Interest, Taxes, Depreciation and Amortization) of $1.3 million or $0.05 per share, compared to $3.2 million or $0.14 per share in 2000. The working capital deficiency of $2.1 million at the end of 2000 has increased to $3.1 million at the end of 2001. The increase in the deficiency is due, in part, by the Company funding its investment in the associated companies out of its operating cash flows, the write off of certain Amounts Receivable from the 2000 balance sheet and the reclassification of certain Amounts Receivable from current, in year 2000, to long term in year 2001 based on uncertainty as to when payments will be received. The notes to the financial statements for the year ended December 31, 2001 will state that the statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes the realization of assets and liabilities in the normal course of business, and that the application of the going concern concept is dependent on the Company's ability to generate future profitable operations. Management believes that the expected increase in profits from its investments in Venezuela and Nicaragua as well as the renewal of the Guatemala concession will mitigate the adverse conditions and events which raise doubt about the validity of the going concern assumption. International Thunderbird Gaming Corporation is an owner and manager of international gaming facilities. CONTACT: International Thunderbird Gaming Corporation Albert Atallah, 858/451-3637 858/451-1169 (Fax) Email: info@thunderbirdgaming.com Website: www.thunderbirdgaming.com =============== P A R A G U A Y =============== COPACO: Privatization To Proceed May 30 --------------------------------------- The privatization of the Paraguayan state telecom Copaco will proceed on the 30th of May. The schedule has been confirmed after Paraguayan President, Luis Gonzalez Macchi, said he will ignore a congressional request to delay the sale, saying that such postponement would be 'very negative' for the image of the country. The president's move came after the Paraguayan congress approved Tuesday a resolution requesting that the sale be postponed for 60 days citing lack of transparency in the process. The congress also claimed that there is no adequate regulatory structure to properly oversee a liberalized telecoms market. It recommended that a bi-cameral congressional commission be established to oversee the privatization process. But president Macchi expressed his confidence in the telecoms regulator, Victor Bogado. The government is hoping to raise US$400 million from the sale, half of which the winner would reinvest in the Company. However, speculation is mounting that no bidder might accept the government's price and conditions. Five companies are pre-qualified to bid for Copaco: Brasil Telecom; Paraguayan mobile operator and Millicom International subsidiary Telecel; Compania de Telecomunicaciones, a consortium between Paraguay's Citsa (Rieder Group) and Deustche Telekom's consultancy Detecon; Spain's Telefonica; and Telecom Argentina. CONTACT: COPACO S.A. (Ex. Antelco) - Paraguay Phone: 595-21-2192175 595-21-2192010 Fax: 595-21-2192175 E-mail: teleinfo@copaco.com.py *********** 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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