/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/020604.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, June 4, 2002, Vol. 3, Issue 109 Headlines A R G E N T I N A ARGENTINE BANKS: Economy Minister Defends Rescue Plan BANCO FRANCES: Spanish Parent To Boost Capital CAMPOFRIO ALIMENTACION: Still Seeking Buyers For LatAm Assets CTI HOLDINGS: S&P Drops Ratings On Suspended Payments EDESUR: Earnings Slump Prompts S&P To Cut Parent's Ratings HSBC ARGENTINA: Chairman Warns of "Critical" Position RURAL/METRO: Ratings Off Watch, S&P Affirms; Outlook Negative B E R M U D A ANDERSEN: Bermuda Workers Bid Goodbye; Transfer to PWC DOV BERMUDA: Wolf Haldenstein Files Class Action Suit DOV BERMUDA: DOV Pharmaceutical 1Q02 Results Show Bigger Loss FOSTER WHEELER: Financing Facilities Waiver Extended GLOBAL CROSSING: Analyst Grubman Influenced Corporate Decisions STIRLING COOKE: Replaces Andersen With KPMG C H I L E AUSDRILL LIMITED: To Close Chilean Operations C O L O M B I A AES GENER: Renegotiates $335.6 Million In Debt With 20 Banks VALORES BAVARIA: Plans To Offload Avianca In Restructuring D O M I N I C A N R E P U B L I C SMITH-ENRON: President Slams US$4M/mo. Bill from Defunct Plant H O N D U R A S GEOMAQUE EXPLORATIONS: Loss Shrinks, Production Up In 1Q02 M E X I C O AEROMEXICO: Workers Accept Salary Hike Offer, Cut Strike Short CINTRA: Merrill Lynch To Advise On Sale Of Two Airlines IMEXSA: S&P Drops Export Trust Rating to 'D' After Nonpayment P A R A G U A Y BANCO ALEMAN: Gets $15 Million From Owners - - - - - - - - - - ================= A R G E N T I N A ================= ARGENTINE BANKS: Economy Minister Defends Rescue Plan ----------------------------------------------------- Argentina's Economy Minister Roberto Lavagna spoke in defense of the government's plan designed to slowly phase out the much- maligned banking freeze. The plan, which was unveiled Saturday, offers savings-account holders a choice of bonds maturing in between three and 10 years. Depositors can convert their billions of dollars in savings trapped in banks since December into bonds under the plan, which would "rebuild a financial system" near collapse. Critics complained the plan makes the depositors wait for years to get their savings back. However, Lavagna said it is the only way to end the freeze without putting the tottering banking system at risk. "We are trying to spread the impact of the crisis in as fair a way as possible," Lavagna said. Argentina imposed a banking freeze on December 1 to prevent the banking system from collapsing after depositors, who were fearful for their savings in the growing financial crisis, began to drain money out of checking, fixed deposit and other accounts in November. Some US$19 billion poured out of the banking system in the month leading up to the freeze. Private analysts estimate some US$22.5 billion remains penned up by the current conditions, inspiring near daily protests by people demanding their savings back. BANCO FRANCES: Spanish Parent To Boost Capital ---------------------------------------------- Banco Frances, Argentina's fifth-largest bank by assets, got a much-needed financial lifeline after Spanish parent Banco Bilbao Vizcaya Argentaria (BBVA) announced over the weekend that it has come to help its ailing unit. BBVA, Spain's second biggest bank BBVA (BBVA), said it would increase Banco Frances' capital by converting US$209.3 million in debt for equity. "BBVA Banco Frances has reached an agreement with the Argentine authorities to carry out a capital increase," the Spanish bank said. "The operation does not imply any additional liquidity injection by BBVA, nor will it have any impact on the parent company, insofar as the debts are 100 percent provisioned." About US$130 million of Banco Frances' subordinated negotiable bonds held by BBVA would be swapped for shares in the Argentine bank as would $79.3 million of a $150 million loan BBVA previously made to the unit, according to a BBVA source. In return, BBVA will increase its stake in Banco Frances to around 75 percent from 67 percent, the source said. The deal, pending approval from the Bank of Spain, the country's central bank, will boost Banco Frances's capital adequacy and solvency ratios. Banco Frances recorded a loss of EUR4 million in the first quarter of the year, compared to a profit of EUR53 million in the previous year, BBVA said. A BBVA official said then that the bank had at least ARS450 million (US$142 million) of liquidity at present, "sufficient for us to look to the coming months calmly." Having written down the value of its entire investment in Argentina in December -- equivalent to about EUR1.3 billion -- the bank did not have to add more funds, the official said. "We have made no additional provisions. There shouldn't be any need for any more as long as we don't add capital or liquidity," he added. 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 CAMPOFRIO ALIMENTACION: Still Seeking Buyers For LatAm Assets ------------------------------------------------------------- Spanish food company Campofrio Alimentacion SA continues in its search for a buyer for its 40 percent stake in Argentine company Campo Austral and 49-percent stake in the Dominican Republic meat company Agrocarne SA. "These markets which, in their day, were very attractive and strategic, are no longer such for the Company," a Campofrio spokesman said in an email. "Both units (in Argentina and the Dominican Republic) lacked enough size to be profitable, on top of operating - in the case of Argentina - in a country where the economic conditions for local producers are, in many cases, unsustainable," said Banesto's Mata in a recent report. Campo Austral posted a loss of EUR14.9 million last year, three times its loss in 2000. The operation was also affected by strong competition from Brazilian producers, he said. "Given the tough times there, people weren't going to be paying the premium for quality products, instead they'd go for the home- brands," said Javier Quevedo, an analyst at Dresdner Kleinwort Wasserstein. Campofrio is still recovering after outbreaks of animal diseases in Europe in 2001 led to high prices that it couldn't pass on to consumers. The Company reported net profit of EUR25.7 million in 2001, with provisions of EUR40 million for Argentina and any losses arising from disposals in the Americas. CONTACT: CAMPOFRIO ALIMENTACION, S.A. Avda Europea 24, La Moraleja E-28108 Madrid, Spain Phone: +34-91 484 2700 Fax: +34-91 661 5345 Home Page: http://www.campofrio.es Contacts: Pedro Ballve Lantero, Co-Chairman Luis Serrano Martin, Co-Chairman Juan J. Guibelalde Inurritegu¡, CEO and VP CAMPO AUSTRAL Calle 12 Lote 2 fracc.1 Pque.Ind.de Pilar (1629) Pilar Prov. de Buenos Aires Tel. (54-2322) 49-6202 Home Page: http://www.frioraf.com.ar/castellanos/obrasimportantes/contenido1 0.htm CTI HOLDINGS: S&P Drops Ratings On Suspended Payments ----------------------------------------------------- Standard & Poor's lowered its local and foreign currency corporate credit ratings on Argentine wireless telecommunications provider CTI Holdings S.A. (CTI) to 'D' from double-'C' and 'SD', respectively. The downgrade follows the company's decision to suspend principal and interests payments on financial debt as a result of its financial situation and the economic and regulatory environment in Argentina. Despite that, the company expects to be able to continue funding its operations. CTI also announced that it hired Houlihan Lokey Howard & Zukin Capital as a financial advisor. As of March 2002, CTI's consolidated debt was $1,058 million, including $262.848 million 11.63% senior deferred coupon notes due in 2008 rated by Standard & Poor's. The notes are non-cash pay until October 2003 and, therefore, remain current. "CTI's funding ability has been impaired in light of the deep macroeconomic crisis in the country; the devaluation of the peso, which has created a dramatic mismatch between peso revenues and a dollar-denominated debt burden; and lower shareholder support from Verizon," Standard & Poor's credit analyst Marta Castelli said. CTI's ownership structure changed in March 2002, after Verizon International Holdings Ltd., a subsidiary of Verizon Communications Inc., which previously held a 65.3% stake in the company, transferred a 17.32% stake to a newly created trust for CTI employees. As a result, CTI is no longer controlled by Verizon nor is it consolidated into its financial statements. Until late 2001, the ratings on CTI incorporated expectations of financial support from its shareholder Verizon, which had been significant in the past. However, the uncertainties in Argentina, both economic and regulatory, and CTI's weakening financial performance made shareholder support more unlikely and led to a downgrade of CTI's ratings to double-'C' in December 2001. The deconsolidation confirms the change in Verizon commitment towards the Argentine operation. CTI is an Argentine nationwide provider of mobile telecommunication services. As of March 2002, the company had about 1.1 million subscribers that represented about 17% of the mobile customers in the country. Analyst: Marta Castelli, Buenos Aires (54) 114-891-2128; Ivana Recalde, Buenos Aires (54) 114-891-2127 CONTACT: C.T.I. NORTE COMPA¥IA DE TELEFONOS DEL INTERIOR S.A. Avda. Pte. Figueroa Alcorta 3259 Ciudad de Buenos Aires Capital Federal Argentina Phone: 4809-8888 Fax: 4809-8989 E mail : http://www.cti.com.ar EDESUR: Earnings Slump Prompts S&P To Cut Parent's Ratings ----------------------------------------------------------- Standard & Poor's lowered the ratings of Enersis SA and its distribution unit Chilectra SA to `BBB+' from `A-'. The outlooks for the companies remain negative. The downgrades reflect Enersis' lower earnings from Argentina, which could increase financing costs for South America's second- largest electricity company. Enersis' earnings and dividends from Argentina have dropped after the country's January currency devaluation and the government's decision to freeze energy prices reduced revenue at its Buenos Aires distribution unit, Edesur SA. Edesur, Enersis' biggest unit outside of Chile, saw its earnings fall after the government switched energy prices to pesos from dollars and froze them in an unsuccessful effort to curb inflation. This led to a cut in the company's revenue as the Argentine peso weakened 72 percent this year against the dollar. The decline makes it more expensive for Edesur to pay foreign debt, while a deepening recession also has reduced energy demand. Edesur's operating income, which represented 18 percent of 2001 operating income at Enersis, fell by 80 percent in the first quarter of 2002, the ratings agency said. Enersis is a unit of Endesa SA of Spain. CONTACT: EDESUR S.A. Gte. Gral.: Ing. Rafael Fernandez Morande San Jos, 140, 3o P Capital Federal 1076 Argentina Home Page: www.edesur.com.ar Tel.: 4370-3700/4370-3370 Fax:4381-0708 ENERSIS S.A. Santo Domingo 789 Santiago, Chile Phone: (562) 688-6840 www.enersis.cl Contacts: Alfredo Llorente, Chairman Enrique Garcia, CEO Rafael Miranda, Vice Chairman Mauricio Balbontin, CFO Domingo Valdes, Gen. Counsel HSBC ARGENTINA: Chairman Warns of "Critical" Position ----------------------------------------------------- Sir John Bond, chairman of HSBC Holdings Plc, Europe's biggest bank by market value, warned shareholders that the Company is in a "critical" position in Argentina and faces a "subdued" economy in Hong Kong, reports Bloomberg. At the Company's annual meeting in London, Bond told investors that in Argentina, "our business is living hand to mouth." HSBC was "conservative" when it set aside US$1.12 billion for Argentina in 2001, and whether it increases "depends on the government of Argentina, which is not a comfortable position." HSBC earnings dipped due to potential losses from Argentina's devaluation and US$95 billion debt default. The Company's 2001 profit fell 18 percent to US$5.41 billion, as it set aside US$2.04 billion for bad loans, up from US$932 million in 2000. Stagnating economic growth in Hong Kong, where the bank started in 1865, also hurt earnings. Net interest income was "resilient" in the first quarter of 2002 and bad debt charges, excluding Argentina, will be in line with 2001, Bond said. "The main source of solace (for investors) was that provisions were flattish on last year, excluding Argentina," said John-Paul Crutchley, an analyst at Merrill Lynch & Co., who recommends investors sell HSBC shares. Sales of wealth management products "showed good growth," and credit quality "remained stable," Bond said. HSBC's liquidity position and capital ratios "remain strong." 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 HSBC ARGENTINA Av. de Mayo 701, Piso 27, (1084) Buenos Aires, Argentina Tel: 54 11 4 344 3333 Fax: 54 11 4 334 6679 Contact: Michael Smith, Chairman and Chief Executive RURAL/METRO: Ratings Off Watch, S&P Affirms; Outlook Negative ------------------------------------------------------------- Standard & Poor's removed its ratings on emergency medical services company Rural/Metro Corp. from CreditWatch, where they were placed with negative implications on Jan. 27, 2000. The triple-'C' corporate credit, unsecured bank facility, and senior unsecured note ratings are affirmed. The ratings actions reflect Scottsdale, Ariz.-based Rural/Metro's improving but still weak financial performance and cash flow, and its ability to remain current on its required debt payments. The outlook is negative. About $350 million of rated debt and bank loans are affected. "Rural/Metro still remains without a source of liquidity until the situation with its bank agreement is resolved. The company's minimal free cash flow provides little ability for reinvestment in its existing business or in new growth opportunities," commented Standard & Poor's credit analyst David Peknay. The risks associated with the company's lack of liquidity, weak cash flow, and uncertainty regarding the eventual resolution of the bank agreement issues, are adequately reflected in the ratings and outlook. The negative outlook is in consideration of any adverse implications of a resolution of the covenant violation issues. Rural/Metro has experienced weak operating performance and limited financial flexibility. It has been affected by reimbursement pressures, poor receivable collections, and turmoil in Argentina. Extensive efforts to improve its portfolio of service contracts, operating efficiency, and cash collections have had a positive impact. The company has been able to generate sufficient cash flow to cover all its currentoperating and debt payment requirements. Rural/Metro is a leader in the very fragmented emergency medical services (EMS) industry, including ambulance and fire protection services. The company provides services to over 400 communities in 25 states, the District of Columbia, and Latin America. Analyst: David P Peknay, New York (1) 212-438-7852 CONTACT: RURAL METRO CORPORATION 8401 E. Indian School Road, Scottsdale, Arizona 85251 Phone: 1-800-398-6263 E-mail: feedback@ruralmetro.com Home Page: http://www.ruralmetro.com/ Contacts: Cor J. Clement, Chairman of the Board of Directors Jack E. Brucker, President and Chief Executive Officer Randall L. Harmsen, Vice President of Finance, Chief Accounting Officer and Corporate Controller ============= B E R M U D A ============= ANDERSEN: Bermuda Workers Bid Goodbye; Transfer to PWC ------------------------------------------------------ More than 20 workers of the embattled auditor Arthur Andersen's unit in Bermuda punched the Company's clock for their last time Friday. According to a report by the Bermuda Sun, the entire staff, including senior partners, have been hired by rival PricewaterhouseCoopers. Global units of Andersen have struck merger deals with rivals after the company was charged by the U.S. Justice Department with destroying records related to its audits of fallen energy trader Enron Corp. In April, the 89-year-old Andersen announced that it would cut 7,000 jobs, slightly more than a quarter of its U.S. staff. Still unknown is exactly how many staff in Bermuda the agreement affected, but it is believed to be several dozen and includes the company's partners. Also unclear is whether the company's partners, Hunter and Gus Hardart, are moving to the PricewaterhouseCoopers' offices in Dorchester House. "Our clients have been very loyal to us in this challenging time," Hunter said in April. "I am confident that as a result of this agreement, they can continue to be served in a seamless manner by world-class professionals within an unsurpassed global network." Hunter said the deal was not "a merger in the true sense". DOV BERMUDA: Wolf Haldenstein Files Class Action Suit ----------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of the common stock of DOV Pharmaceutical, Inc. ("DOV" or the "Company") (Nasdaq: DOVP) pursuant or traceable to the Company's April 25, 2002 initial public offering (the "IPO") against defendants DOV, certain of its officers and directors, and CIBC World Markets and Lehman Brothers, the Underwriters of the IPO. The case name and index number are Leffler v. DOV Pharmaceutical, et al, (02 CIV 4138). A copy of the complaint filed in this action is available from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman & Herz LLP website at http://www.whafh.com The complaint alleges that defendants violated the federal securities laws by issuing a materially false and misleading prospectus pursuant to their IPO that had the effect of artificially inflating the market price of the Company's securities. DOV sold 5 million shares in its IPO at a price of $13 per share on April 25, 2002. On that same day, the price of DOV shares fell 33%, from $13 to $8.70 per share on trading of 5.6 million shares (an amount in excess of the total of number of shares offered in the IPO). Unbeknownst to the majority of the investing public, after purchase commitments were obtained, the Company re- filed its offering documents with the SEC to reflect a revision of its 1999 financial results for a joint venture in Bermuda with Elan Corporation. (Itself the subject of recent accounting inquiries and related litigation.) The SEC suggested the Company change the way it accounted for the initial funding for the venture known as DOV Bermuda Ltd. The change caused a onetime adjustment that widened the loss of the venture in 1999 to $11.9 million (from $10.2 million). The Company issued a statement on April 26, 2002 that the accounting change was not "material" to its business. The investing public felt otherwise, however, as evidenced by the stock price decline immediately following the IPO. Even following DOV's April 26, 2002 "explanation" of the effect of the change, the price of DOV's stock did not materially recover and has continued to trail downward. CONTACT: WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP 270 Madison Avenue New York, New York 10016 Tel. (800) 575-0735 Email: classmember@whafh.com Web site: http://www.whafh.com/ Contacts: Fred Taylor Isquith, Esq. Gregory Nespole, Esq. Gustavo Bruckner, Esq. Michael Miske George Peters Derek Behnke DOV BERMUDA: DOV Pharmaceutical 1Q02 Results Show Bigger Loss ------------------------------------------------------------- DOV Pharmaceutical, Inc. announced its results for the first quarter ending March 31, 2002. First Quarter 2002 Performance For the first quarter of 2002, the Company reported a net loss of $3.9 million, or $0.79 per share, compared with a net loss of $1.8 million, or $0.37 per share, for the comparable period last year. At March 31, 2002, cash, cash equivalents and short-term investments totaled $11.4 million, which does not include estimated net proceeds of $59.2 million from the Company's initial public offering completed in April 2002. In addition, per share loss amounts do not include the 5,000,000 shares issued in the initial public offering. The increase in net loss of $2.1 million for the first quarter 2002 over the first quarter of 2001 was primarily the result of an increase in the Company's operating expenses of $1.3 million as the Company advanced its products through clinical and preclinical trials and the addition of new employees to support the Company's expanded operations, as well as an increase in non- cash interest expense of $668,000. Recent Highlights -- In April 2002, the Company initiated a Phase Ib multiple dose- ranging clinical trial for DOV 216,303, our lead product candidate for the treatment of depression. -- In April 2002, the Company competed an initial public offering of 5,000,000 shares of its common stock, at a price of $13 per share, with estimated net proceeds to the Company of $59.2 million. -- In May 2002, the Company completed enrollment of its 750- patient double-blind, placebo-controlled study comparing bicifadine, our lead product candidate for the treatment of pain, and codeine to placebo in a severe dental pain model. "2001, and 2002 to date, has been a time of significant growth and progress for DOV Pharmaceutical. We are pleased that our lead product candidates continue to show strong clinical progress," said Arnold Lippa, Chief Executive Officer. "Our initial public offering provides us with substantial resources for the further advancement of our product candidates in clinical trials. Going forward, the Company is focused on continuing to make advancements with our product pipeline. We expect to have results from our current clinical trial for bicifadine in the third quarter of 2002. During the remainder of 2002, we intend to initiate Phase III studies for bicifadine and DOV diltiazem, our proprietary formulation for the treatment of angina and hypertension. We also expect to complete the Phase II study currently underway for ocinaplon, our product candidate for the treatment of generalized anxiety disorder, as well as complete the Phase Ib study for DOV 216,303 by the end of 2002." DOV is a biopharmaceutical company focused on the discovery, acquisition, development and commercialization of novel drug candidates for central nervous system, cardiovascular and urological disorders. The Company has five product candidates in clinical trials addressing therapeutic indications with significant unmet needs. DOV PHARMACEUTICAL, INC. BALANCE SHEET DATA December 31, 2001 (1) March 31, 2002 (Unaudited) Cash and cash equivalents $13,573,707 $11,365,222 Total assets 18,080,029 17,589,511 Long-term debt 12,795,675 13,041,966 Redeemable preferred stock 14,838,159 14,838,159 Total stockholders' deficit 18,036,159) (20,919,102) (1) Derived from the December 31, 2001 audited financial statements. STATEMENTS OF OPERATIONS Three Months Ended March 31, 2001 2002 (Unaudited) Revenue $416,667 $708,297 Operating expenses: General and administrative expense 657,064 818,803 Research and development expense 1,065,189 2,251,730 Loss from operations (1,305,586) (2,362,236) Loss in investment in DOV Bermuda (379,340) (247,614) Interest income 110,952 61,228 Interest expense (242,379) (910,585) Other expense, net -- (422,702) Net loss $(1,816,353) $(3,881,909) Basic and diluted net loss per share $(0.37) $(0.79) Weighted average shares used in computing basic and diluted net loss per share 4,893,833 4,894,238 FOSTER WHEELER: Financing Facilities Waiver Extended ---------------------------------------------------- Foster Wheeler Ltd. announced that it has obtained further extensions through June 30, 2002 of both its waiver under its current revolving credit facility and the forbearance of remedies for its lease financing facility. The company said that it is continuing to negotiate with its bank lending group for a long- term credit facility. Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, plant operation and environmental services. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, N.J. CONTACT: FOSTER WHEELER LTD. Media Contact: Alastair Davie, 908/730-4444 Shareholder Contact: John Doyle, 908/730-4270 Other Inquiries: 908/730-4000 Web site at www.fwc.com. GLOBAL CROSSING: Analyst Grubman Influenced Corporate Decisions --------------------------------------------------------------- Jack Grubman, Salomon Smith Barney's embattled telecommunications analyst, was instrumental in the making of key management and business decisions at Global Crossing Ltd. for two years after the Bermuda-based firm went public in August 1998, the Wall Street Journal reports. According to sources familiar with the matter, the analyst personally recommended the appointment of a former Global chief executive, Robert Annunziata. He also helped Global hammer out merger agreements with telephone firms Frontier Corp. and U S West Inc. Furthermore, Mr. Grubman also counseled Gary Winnick, Global's chairman, on the executive's own stock sales. These activities by Mr. Grubman may lend support to New York State Attorney General Eliot Spitzer's investigation into conflicts of interest among research analysts. Mr. Spitzer has already asked for and received Mr. Grubman's self evaluations, written for his employer, Citigroup Inc.'s Salomon Smith Barney unit, to determine whether his bonuses were tied to his role as an adviser, rather than as an analyst, in mergers and other transactions. CONTACT: GLOBAL CROSSING Press Contacts Cynthia Artin +1 973-410-8820 Cynthia.Artin@globalcrossing.com Becky Yeamans + 1 973-410-5857 Rebecca.Yeamans@globalcrossing.com Tisha Kresler + 1 973-410-8666 Tisha.Kresler@globalcrossing.com Kevin Burgoyne Latin America + 1 305-808-5947 Kevin.Burgoyne@globalcrossing.com Mish Desmidt Europe +44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors: Ken Simril + 1 310-385-3838 investors@globalcrossing.com STIRLING COOKE: Replaces Andersen With KPMG ------------------------------------------- As recommended by its Audit Committee and Board of Directors, and as approved by its shareholders at the Annual General Meeting on May 23, 2002, Stirling Cooke Brown Holdings engaged KPMG LLP, to replace Arthur Andersen LLP, to serve as its independent auditors for the fiscal year ended December 31, 2002, effective as of May 23, 2002. Andersen's reports on Stirling Cooke's consolidated financial statements for each of the years ended December 31, 2001 and December 31, 2000 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During Stirling Cooke's two most recent fiscal years and through the date of this Form 8-K, there were no disagreements with Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Andersen's satisfaction, would have caused them to make reference to the subject matter in connection with their report on Stirling Cooke's consolidated financial statements for such years; and there were no reportable events. During its two most recent fiscal years and through the date of this Form 8-K, Stirling Cooke did not consult KPMG with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on its consolidated financial statements, or any other matters or reportable events. To see Stirling Cooke's latest financial statement: http://bankrupt.com/misc/Stirling_Cooke.txt CONTACTS: Stirling Cooke Brown Holdings Victoria Hall, Third Floor 11 Victoria Street Hamilton, HM 11, Bermuda Phone: (441) 295-7556 ========= C H I L E ========= AUSDRILL LIMITED: To Close Chilean Operations --------------------------------------------- Ausdrill advises that an orderly withdrawal and closure of its Chilean operations will commence immediately. The decision to withdraw from Chile, the last remaining operation in the South American region, has not been taken lightly but is considered necessary given the recent history of its trading losses and with no imminent signs of improvement of the Chilean market in the short to medium term. The Company claims a number of measures have been taken over the past few years to improve the trading performance of the Chilean operations. Although these measures have made an impact, the inconsistency of work in the region and the competitive tendering for new work does not allow the Chilean operations to produce ongoing results acceptable to the board and shareholders. A number of key items of equipment and related consumables and spare parts will be repatriated to Australia where they will be fully utilized by the Kalgoorlie operations while the balance will be sold in country. Initial forecasts predict that the proceeds from the sales of equipment and consumables together with the cash resources in Chile will be sufficient to fund the closure process and be both cash and profit neutral. Please contact the Managing Director, Mr. R Sayers for any further information. CONTACT: AUSDRILL LIMITED 170 Kewdale Road Kewdale WA 6105 Phone: 08 9353 3055 Fax: 08 9353 1953 Home Page: http://www.ausdrill.com.au/ AUSDRILL CHILE LTDA. Santa Beatriz 126 Providencia Santigo, Chile, Phone: 56-2-236-1446 Fax: 56-2-236-0652 Contact: Peter Wright, General Manager Ausdrill-South America =============== C O L O M B I A =============== AES GENER: Renegotiates $335.6 Million In Debt With 20 Banks ------------------------------------------------------------ AES Gener SA, Chile's third-biggest energy generator, was able to renegotiate with 20 banks, including Bank of America Corp., US$335.6 million of debt that its Colombian unit Chivor SA defaulted on in late December, reports Bloomberg. As a result, Chivor's debt owed to the banks will now be due at the end 2006. AES Gener, a unit of Arlington, Virginia-based AES Corp., said that Chivor will have to take steps to refinance the debt by selling bonds or other financing by 2004. AES Gener lost CLP5 billion (US$7.5 million) last year, in part as costs rose at Chivor. Writing down the value of businesses in South America also added to a US$313-million first-quarter loss at AES. Already, its investments in Latin America now total US$7 billion, including its purchase of AES Gener at end 2000. 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 CHIVOR S.A. E.S.P. Bogota, Distrito Capital Cl 98 22-64 Of 518 Tel: (57) (1) 6236660 - Fax: (57) (1) 6236837 Email: chivorbo@cable.net.co VALORES BAVARIA: Plans To Offload Avianca In Restructuring ---------------------------------------------------------- Embattled Colombian conglomerate Valores Bavaria announced plans to eventually divest Avianca, which it considers as non-strategic investment, as part of an ongoing radical restructuring, says Dow Jones. Javier Aguirre, Valores Bavaria's chief executive officer, revealed that the ailing airline was responsible for two-thirds of the publicly-traded Valores Bavaria's COP958-billion ($1=COP2325) net loss last year. Avianca represents around one- fifth of revenue at the conglomerate, which boasts nearly US$1.5 billion in annual sales and significant stakes in almost three dozen companies. Valores Bavaria merged the operations of Avianca and its subsidiary Sam earlier this month with fellow Colombian airline Aces. The merged airline, Summa, commands 67 percent market share in Colombia and hopes to halve its combined losses to around US$80 million this year. Aguirre, who took office at Valores Bavaria in January, said the planned divestment is more of a long-range project given the small number of potential suitors in the troubled industry right now. In the near term, Valores Bavaria will try to capitalize on around US$90 million in synergies from the airline merger while continuing to talk with other potential partners in a bid to make Summa profitable. CONTACT: VALORES BAVARIA SA No 7A-47 Calle 94 Santafe de Bogota DC Colombia Phone: +57 1 600 2100 Home Page: http://www.bavaria.com.co/ Contacts: Javier Aguirre Nogues, Chairman Leonor Montoya Alvarez, President Victor Alberto Machado Perez, Secretary AVIANCA P.O. Box 151310 Av. el Dorado no. 93-30 Bogota, Colombia Phone: (1) 413 9511 (1) 295 8977 ACES (AEROLINEAS CENTRALES DE COLOMBIA) Atahualpa Ave. 955 and Republica, Edificio Digicom, Office #204 Phone: 253123 253124 253294 Fax: 253131 Email: http://www.aces.com.co =================================== D O M I N I C A N R E P U B L I C =================================== SMITH-ENRON: President Slams US$4M/mo. Bill from Defunct Plant -------------------------------------------------------------- Dominican Republic's President Hipolito Mejia complained about a contract that obliges the government to pay US$4 million a month to Smith-Enron, despite the Company's power plant being closed, reports DR1 Daily News. The plant is shut down because it costs the state more to buy power from the plant than to keep it closed. But the contract, which was signed in 1994 during the Balaguer administration, obliges the state to pay a fee per installed capacity, regardless of whether purchasing power or not. Just recently, the U.S. Maritime Administration revealed in a letter that the U.S. government and Enron Corp. each own a stake in the cash-strapped Dominican Republic power plant. The federally guaranteed plant has debts of US$27 million and has "significant operational, profitability and debt service problems," Bruce J. Carlton, the acting deputy director of the administration, had written. According to Carlton's letter dated May 22, the project near Puerto Plata in the Dominican Republic suffered from power plant defects and from an unreliable payment history with its primary customer, a government-owned utility. =============== H O N D U R A S =============== GEOMAQUE EXPLORATIONS: Loss Shrinks, Production Up In 1Q02 ---------------------------------------------------------- Geomaque Explorations Ltd. announced consolidated financial and operating results for the three months ended March 31, 2002. The loss for the three months ended March 31, 2002 was $762,000, or $0.01 per share, versus a loss of $1,146,000 or $0.02 per share for three months ended March 31, 2001. Operations in the first quarter of 2002 reflect the transition period from Pad 1 to Pad 2 at the Vueltas Mine in Honduras, whereas operations in the first quarter of 2001 reflect preproduction at the Vueltas Mine and declining production at the San Francisco Mine in Mexico. Due to these factors, comparisons between the periods are not meaningful. Vueltas Mine Production at the Vueltas Mine totaled 5,277 ounces of gold for the first three months. The price realized on gold sales was $290 per ounce. All of the production came from Pad 1 despite the fact that loading of ore on this pad was stopped in November of 2001 due to problems with this pad. A new Pad 2 was completed, and mining commenced, in February of 2002. Initial recoveries from Pad 2, subsequent to the end of the quarter, are showing a marked improvement. With the expected increased production from Pad 2, combined with an improvement in the gold price, positive cash flows should be achieved.in the second quarter. Capital expenditures, principally for the construction of Pad 2 at the Vueltas Mine, totaled $284,000 during the quarter. A $70,000 drilling program is currently underway at the Vueltas Mine, with the objective of converting existing resources adjacent to the existing pit into additional ore reserves. San Francisco Mine The solution coming off the heap was processed to recover 174 ounces of gold. The last gold pour from this operation was made in May 2002. The solution is now meeting the Mexican environmental criteria for water discharge and final governmental approval for water discharge is expected soon. This is the final step in the decommissioning of the heap leach at this mine. Although there are no further reserves at the San Francisco Mine, there are still substantial resources, which could become reserves at higher gold prices. The current resource is 51,235,000 tonnes at 0.61 g/t gold or 998,000 ounces. Marathon Palladium Project The Company can earn a 50% interest in the Marathon Palladium Project near Marathon, Ontario by spending a total of $1.8 million on exploration and development of the property by November 2004. No further work was done on this project during the quarter. A total of $643,000 has been spent to March 31, 2002, which is in excess of the requirements to that date. Financial Condition The Company's cash position at March 31, 2002 amounted to $341,000 compared to $614,000 at December 31, 2001. The working capital deficit of $169,000 at March 31, 2002, compared to $63,000 at December 31, 2001. In February 2002, the second tranche, amounting to $997,792, of a private placement of common shares was received. By the end of the first quarter, gold production increased with gold pours now being completed every week. Gold prices have improved significantly. Management believes that cash resources are adequate to meet the Company's obligations until the Vueltas Mine is successfully generating positive cash flow. CONTACT: GEOMAQUE EXPLORATIONS, LTD. John W. W. Hick, President and CEO TEL: (416) 956-7470 Web site: www.geomaque.com =========== M E X I C O =========== AEROMEXICO: Workers Accept Salary Hike Offer, Cut Strike Short -------------------------------------------------------------- The Flight Attendants Union (ASSA) on Saturday agreed to accept Aeromexico's offer of a 6.6-percent pay hike and a 1.12-percent increase in benefits, thereby ending a strike, which began Friday midnight. Originally, Aeromexico had offered a 5.12 percent general salary increase. However, the workers demanded 5.5 percent plus an additional 2.5 percent in benefits. The union's secretary-general, Arturo Aragon, said the final proposal was submitted to the flight attendants and a new labor agreement was signed, effectively ending the strike Saturday morning. The agreement averted the cancellation of at least 250 daily flights and company losses calculated at US$4.5 million. CINTRA: Merrill Lynch To Advise On Sale Of Two Airlines ------------------------------------------------------- Merrill Lynch & Co., the third-largest global mergers and acquisitions adviser, won a mandate to manage the sale of state- owned airlines, AeroMexico and Mexicana, according to a report by Bloomberg. Controlled by a holding company Cintra SA, the state-owned airlines, which account for 75 percent of domestic air travel in Mexico, are to be sold separately. Among the companies expressing interest in acquiring them are Delta Air Lines Inc., AMR Corp.'s American Airlines Inc. and Continental Airlines Inc., said Francisco del Cueto, a spokesman for Cintra. The holding company, whose share last traded May 10 at MXN3.9, has a market value of MXN3.8 billion (US$399 million). Cintra was created in 1996 to own the airlines after they defaulted on loans and creditors exchanged the bad debt for an equity stake. The government-backed bank bailout agency, created in 1995, bought the bad debt from the creditors and became Cintra's majority shareholder. To see Cintra's financial statements: http://bankrupt.com/misc/Cintra.pdf 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 IMEXSA: S&P Drops Export Trust Rating to 'D' After Nonpayment ------------------------------------------------------------- Standard & Poor's lowered its rating on the structured export certificates of Imexsa Export Trust No. 96-1's (Imexsa), a subsidiary of Ispat International N.V., to 'D' from double-'C', following the nonpayment of almost all of the scheduled principal payments due on May 31, 2002. The payment default reflects the fact that Imexsa has concluded restructuring discussions with the holders of its structured export certificates. The restructuring entails a moratorium on all principal repayments until 2003. Although Imexsa will continue to make interest payments to investors, Standard & Poor's views the restructuring as a transaction default due to the coercive nature of the exchange--investors have little choice but to accept it--and because investors will not receive full and timely payment of the originally scheduled debt service. The structured export certificate transaction was based on a long-term supply contract between Imexsa and Mitsubishi Corp., in which the latter is required to purchase enough shipments of steel slabs from Imexsa at the then prevailing market price to cover 1.3 times the maximum debt service for each quarterly debt service period. Lately, Imexsa stopped shipping any steel slabs to Mitsubishi, which constituted a breach of a transaction covenant. Like most future flow transactions, Standard & Poor's considered the local currency rating of Imexsa as the best proxy for the likelihood that Imexsa will continue operating and thus exporting steel slabs for delivery to Mitsubishi Corp., and thus the rating on the certificates has always reflected Imexsa's local currency rating. The structured export certificates entered into early amortization after being downgraded to double-'B'-minus from double-'B' on Nov. 23, 2000. In the past year, Imexsa has faced difficult steel slab market conditions, high energy prices that have reduced its profit margins, and a strike that lasted from Dec. 20, 2001, until Jan. 17, 2002, which caused the stoppage of all production of the steel slabs that constitute the securitized assets. CONTACT: STANDARD & POOR's, Mexico City Juan J Flores, (52) 55-5279-2020 Federico Mora, (52) 55-5279-2036 or Standard & Poor's, London Olivier Beroud, (44) 20-7826-3508 =============== P A R A G U A Y =============== BANCO ALEMAN: Gets $15 Million From Owners ------------------------------------------ Paraguayan bank Banco Aleman, which has suffered deposit flight in the last two weeks amid widespread rumors suggesting financial distress, will get a financial shot in the arm from its parent, South American business group Velox. The group is prepared to put a total of US$15 million into its Paraguayan unit. Half of the amount to be issued on June 3 and teh balance a month later. The central bank said it had offered a US$14-million line of credit to Aleman and the bank had put up US$30 million worth of first-rate loans as a guarantee. Aleman has 60 days to decide whether to tap the credit line. The rumors surrounding the bank stem from problems at local financial group Grupo Inversiones Guarani, whose name is similar to that of Aleman subsidiary Cambio Guarani. However, rumors, according to a central bank spokesperson, have died down and on Thursday, "Paraguay's strongest bank" registered a positive balance (more money going in than going out). CONTACT: BANCO ALEMAN PARAGUAYO S.A. Estrella Esquina 14 de Mayo Asuncion, PARAGUAY Tel: (59521) 418 3000 Fax: (59521) 447 645 Home Page: http://www.bancoaleman.com.py/ Contact: Juan Peirano, Presidente Ricardo Castillo Fracchia, Vice President GRUPO VELOX Burgos 80, piso 5, Of. 501 Las Condes Santiago, chile Phone: 208-8380 Fax: 208-8332 Home Page: http://www.finambras.com.br/grupo_velox.html *********** 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 * * *