/raid1/www/Hosts/bankrupt/TCRLA_Public/020606.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
Thursday, June 6, 2002, Vol. 3, Issue 111
Headlines
A R G E N T I N A
VINTAGE PETROLEUM: Sticks To Plan; Rejects BP Restructuring
B E R M U D A
DOV PHARMACEUTICAL: Schiffrin & Barroway Files Securities Suit
TYCO INTERNATIONAL: Experts Favor External Choice for New CEO
TYCO INTERNATIONAL: CIT Price Tag Looks In Jeapordy
TYCO INTERNATIONAL: Housecleaning May Follow Ex-CEO Indictment
B R A Z I L
ANDERSEN: Deloitte JV Projects BRL300M In Annual Turnover
AT&T LATIN AMERICA: Cutting 10% of Total Brazilian Workforce
PREVI: Attorney General Second Guessing Intervention Motives
C O L O M B I A
VALORES BAVARIA: To Exclude Avianca From Financial Reports
H O N D U R A S
BANCO SOGERIN/CAPITAL: Regulator To Inject More Funding
M E X I C O
AEROMEXICO/MEXICANA: Unions Skeptical About Upcoming Sale
GRUPO ICONSA: Files For Bankruptcy Protection From Creditors
GRUPO MEXICO: Plant Remains Open Despite Difficult Market
GRUPO MEXICO: Metal Prices, Economic Slump Prompt SPCC Review
GRUPO TFM: To Issue US$170M Of 10-Year Bonds for Share Buy-Back
GRUPO TFM: Fitch Rating Assigns 'BB-' Ratings To TFM
- - - - - - - - - -
=================
A R G E N T I N A
=================
VINTAGE PETROLEUM: Sticks To Plan; Rejects BP Restructuring
-----------------------------------------------------------
In an official company announcement, Vintage Petroleum, Inc.
reiterated Tuesday that it continues to be committed to its
existing long-term strategic plan to maximize shareholder value
as a growth-oriented, opportunistic, diversified exploration and
production company.
The Company believes that its current depressed stock price is
attributable primarily to Vintage's position in Argentina, which
has experienced a series of economic and political shocks, and
Vintage's relatively high leverage, which Vintage is committed to
reducing. Vintage recently announced several initiatives to
reduce leverage, including the intention to reduce the Company's
aggregate indebtedness by $200 million by year-end 2002 through a
combination of the sale of non-core assets and cash flow in
excess of planned capital expenditures. The Company is proceeding
with the implementation of these initiatives as well as its long-
term strategic plan.
Vintage also noted that its Board of Directors and management
team continues to be fully committed to acting in the long-term
best interests of all of the Vintage stockholders. The Vintage
management team and Board of Directors beneficially own
approximately 23% of the outstanding common stock of Vintage,
with the Chairman of the Board, a co-founder of the Company,
owning 17% of the outstanding shares. The four senior members of
the Vintage management team have a combined 63 years of
experience at Vintage. During that time, Vintage has a strong
track record of shareholder value creation, despite the recent
challenges facing the Company. With their significant ownership
interests, the Vintage management and Board strongly believe that
their interests are closely aligned with the interests of all of
Vintage's public shareholders.
Response to BP Capital Restructuring Plan
Vintage also announced that it has reviewed the proposed
restructuring plan submitted by BP Capital Energy on May 15,
2002, and concluded that it is not an appropriate plan for the
Company to pursue. BP Capital currently beneficially owns
approximately 8.9% of the outstanding Vintage common stock. The
return to shareholders from the BP Capital restructuring proposal
is speculative, at best, and would entail significant execution
risk:
-- The BP Capital restructuring proposal calls for the
liquidation of the Company's North American assets, creating a
pure-play Latin American exploration and production company.
-- The BP restructuring proposal is inefficient from a tax
perspective.
-- The BP Capital restructuring proposal relies upon favorable
assumptions about the market's receptivity to the trading value
of a pure-play Latin American exploration and production company,
especially considering its significant interest in Argentina.
-- If implemented, the BP Capital restructuring proposal would
realize little or no value for Vintage as a going-concern, or for
Vintage's proven ability and developed infrastructure to explore,
develop and exploit North American oil and gas properties
successfully.
As a result of its analysis, Vintage does not believe that
implementation of the BP Capital restructuring proposal would
maximize shareholder value. Therefore, the Board of Directors of
Vintage is unwilling to pursue the BP Capital plan. The Board of
Directors of Vintage strongly believes that pursuit of
management's long term strategic plan -- which includes
continuing to be a growth oriented, opportunistic, diversified
exploration and production company -- will lead to greater value
for the Vintage shareholders.
Vintage has retained Credit Suisse First Boston as its financial
advisor.
Vintage Petroleum, Inc. is an independent energy company engaged
in the acquisition, exploitation, exploration and development of
oil and gas properties and the marketing of natural gas and crude
oil. Company headquarters are in Tulsa, Oklahoma, and its common
shares are traded on the New York Stock Exchange under the symbol
VPI.
CONTACT: VINTAGE PETROLEUM, INC.,
Robert E. Phaneuf
Vice President - Corporate Development
Phone: +1-918-592-0101
=============
B E R M U D A
=============
DOV PHARMACEUTICAL: Schiffrin & Barroway Files Securities Suit
--------------------------------------------------------------
A pending class action charges DOV Pharmaceutical, Inc. ("DOV" or
the "Company") (Nasdaq:DOVP) with misleading investors about its
business and financial condition according to the law firm of
Schiffrin & Barroway, LLP.
The complaint was filed in the U.S. District Court for the
Southern District of New York (02-CV-3538). Plaintiff seeks
damages for violations of the federal securities laws on behalf
of all investors who purchased DOV Pharmaceutical, Inc.
securities between pursuant and/or traceable to its initial
public offering (the "Offering") on April 25, 2002 (the "Class
Period").
The complaint alleges that the New Jersey-based DOV
Pharmaceutical, Inc., just before the Offering priced, made a
last-minute change to its Offering documents to reflect a
revision of its 1999 financial results for a joint venture in
Bermuda with Elan Corp. The accounting change widened the
Company's net loss at the venture, known as DOV Bermuda Ltd., to
$11.9 million in 1999, from a previously-reported loss of $10.2
million. The complaint alleges that this change was deeply buried
in the revised documents where it was very difficult, if not
impossible, for investors to see and evaluate prior to the
commencement of the trading. As a result, the complaint alleges,
investors were deprived of the opportunity to rely on the
Company's new financial information, causing a steep decline in
the price of the Company's shares once they began to be publicly
traded and the Company's true financial information became known.
When DOV shares finally opened for trading for the first time,
the price of DOV shares began trading at $11.25 per share (after
having been priced at $13 per share) and reached an intra-day
high of $12 per share. By the end of the day, the stock had
closed at $8.70 per share, or 33% below the offering price,
making it one of the worst-performing IPOs of the past two years.
CONTACT: Schiffrin & Barroway, LLP
Marc A. Topaz, Esq. or Stuart L. Berman, Esq.
Phone: 1-888-299-7706 (toll free)/(610) 822-2221
E-mail: info@sbclasslaw.com
TYCO INTERNATIONAL: Experts Favor External Choice for New CEO
-------------------------------------------------------------
Business experts are urging Tyco International Ltd. to reduce its
debt quickly and bring in someone from outside the Company to
lead it in its turnaround attempts, following the recent
departure of chief executive Dennis Kozlowski.
Kozlowski, who resigned from his post amid criticism of the
Company's shifting strategy and a report of a criminal probe into
suspected personal tax evasion, was replaced by John Fort, a
former Tyco chairman and CEO and current board member. Fort will
assume primary executive responsibilities on an interim basis.
"Right now Tyco is in a high state of instability," said
turnaround specialist William Brandt. "Is it going to go under?
The near-term lever that will determine that ... is how fast they
can restore financial health."
Rob Plaza, an analyst with Morningstar Inc. in Chicago, suggested
Tyco needs to bring in an outsider to lead the Company. Plaza
believes Fort won't be able to restore investor confidence.
"The fear is some of Kozlowski's behavior spilled over into his
professional life," Plaza said. "The best way to look at it is
guilt by association. You really need to bring in an outside
leader with some credibility who wouldn't be afraid to clean
house."
Tyco, based in Bermuda but run from Exeter, said in January it
planned to split into four parts, but its stock kept falling and
it abruptly scrapped the plan in April -- a reversal that raised
new questions about leadership.
Tyco is a diversified company with total debt of about US$27
billion.
To see Tyco's latest 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
Home Page: http://www.tyco.com
TYCO INTERNATIONAL: CIT Price Tag Looks In Jeapordy
---------------------------------------------------
Shareholders and analysts suggested that the resignation of Chief
Executive Officer Dennis Kozlowski adds to concern about Tyco
International Ltd.'s stability.
Tyco is hoping to sell its CIT Group finance arm for as much as
US$6.5 billion. However, the Company may get less than US$5
billion from the sale following Kozlowski's departure,
shareholders and analysts said.
"This is an absolute lack of management credibility," said Tom
Giles, who owns Tyco shares among US$1 billion in assets he helps
manage at Dean Investment Associates. "People are afraid there's
something else out there."
Kozlowski's departure enhances the impression of a fire sale,
analysts said. Tyco needs to sell the unit to help repay as much
as US$14.2 billion in debt by the end of 2003. The Company has
said it has enough cash to get through February.
Lehman Brothers Holdings Inc. previously offered US$5 billion for
CIT. However, it withdrew the bid last month. Now, the unit may
fetch even less than Lehman had offered, perhaps $4 billion, said
Glenn Reynolds, chief executive of Creditsights Inc., an
independent research firm.
Kozlowski's departure "has really undermined the credibility in
anything that Tyco was planning to do," said Scott Keller, the
head of Dealanalytics.com, a New York research firm. "If I was
advising the Tyco board, I would tell them not to sell it. A
forced, distressed sale should be avoided."
Tyco may have no choice, analysts said.
As a finance company, CIT needs to borrow money at low interest
rates to keep making money on what it lends to customers. Its
credit rating is now tied to Tyco's, which is hovering just above
"junk" status. Standard & Poor's Corp. rates Tyco's debt "BBB,"
two levels above non-investment grade. Moody's Investors
Service's rating is "Baa3" -- its lowest investment grade.
CONTACT: CTI Group (Holdings), Incorporated
333 North Alabama Street
Suite 240
Indianapolis, IN. 46204-1767
Tel:317-262-4666
Fax:317-262-4605
Home Page: http://www.ctigroup.com/index.asp
Contact: Brad Houlberg, Chief Executive Officer
Email: dsauceda@ctigroup.com
TYCO INTERNATIONAL: Housecleaning May Follow Ex-CEO Indictment
--------------------------------------------------------------
Dennis Kozlowski, former chairman of Tyco International Ltd. was
indicted Tuesday on charges he conspired to avoid paying more
than $1 million in sales taxes on paintings by such masters as
Monet and Renoir.
The criminal indictment, according to Reuters, could trigger a
housecleaning of other top executives at the troubled
conglomerate on concerns they are too closely tied to him.
"They're going to have to clean house because so much of the
valuation story of Tyco comes from trusting Tyco management,"
said Rob Plaza, an analyst at Morningstar Inc.
For example, Chief Financial Officer Mark Swartz invested with
Kozlowski and lost money with him in a failed Massachusetts
Internet start-up. Other executives became involved in the same
charitable causes as Kozlowski, a generous benefactor to several
groups.
However, Brad McGee, a Tyco executive vice president hired by
Kozlowski 11 years ago, claimed that the indictment of his former
boss will not carry over into Tyco's operations.
"The fundamental strength of a company is not derived from a
corporate headquarters," McGee said. "The fundamental strength of
(Tyco's) businesses is found out in the field."
He said Kozlowski's indictment does not affect the premier market
position of Tyco products such as ADT security alarms.
===========
B R A Z I L
===========
ANDERSEN: Deloitte JV Projects BRL300M In Annual Turnover
---------------------------------------------------------
The recent association of the operations of Deloite and Andersen
in Brazil creates a new company that is expected to generate
annual revenues of BRL300 million.
The venture will compare closely with its primary competitor,
PricewaterhouseCoopers' annual turnover of BRL330 million. The
association also increased the number of employees from 1,500 to
2,650.
The merger, which does not include assets or liabilities swap,
allowed Andersen to reach 24.8 percent share of Brazil's
publicly-held companies market. Now, PricewaterhouseCoopers
trails behind it with 21.5 percent.
Ernst & Young comes in third with 9 percent and KPMG on the
fourth with 6.6 percent.
CONTACT: DELOITTE CONSULTING IN BRAZIL
Av. Nacoes Unidas, 12901
Torre Norte 10th. Floor - CENU
04578-000 Sao Paulo, SP - BRAZIL
Phone: +55(11) 5509-4500
Fax: +55(11) 5509-4502
ANDERSEN IN BRAZIL:
Email: brazil@andersen.com
Belo Horizonte
Av. Alvares Cabral, 1741 - 9§ to walk
Belo Horizonte - MG Brazil
CEP: 30170-001
Phone: 55 31 3330 1300
Fax: 55 31 3330 1400
Campinas
Av. Dr. Carlos Grimaldi, 1701 - 2§ to walk 2B
Campinas - SP Brazil
CEP: 13091-000
Phone: 55 19 3207 3166
Fax: 55 19 3207 3338
Curitiba
R. Deodoro marshal, 717 - 7§ to walk
Curitiba - PR Brazil
CEP: 80020-912
Phone: 55 41 223 9511
Fax: 55 41 232 6714
Porto Alegre
Av. Carlos Gomes, 403 - 10§, 11§ and 12§ floors
Porto Alegre - RS Brazil
CEP: 90480-003
Phone: 55 51 3327 8800
Fax: 55 51 3328 3031
Rio De Janeiro
Beach of Botafogo, 300 - 7§ to walk
Rio De Janeiro - RIO DE JANEIRO Brazil
CEP: 22250-040
Phone: 55 21 2559 4141
Fax: 55 21 2552 3253
Salvador
Av. Tancredo Snows, 450 - 25§ to walk - CJ.2501
Salvador - BA Brazil
CEP: 41820-020
Phone: 55 71 341 1455
Fax: 55 71 341 1091
Sao Paulo
R. Alexander Of ones, 1981 - Chacar de Santo Antonio
Sao Paulo - SP Brazil
CEP: 04717-906
Phone: 55 11 5185 2444
Fax: 55 11 5181 2911
AT&T LATIN AMERICA: Cutting 10% of Total Brazilian Workforce
------------------------------------------------------------
About 50 workers, or 10 percent of the 507 full time workforce of
AT&T Latin America Corp. in Brazil are likely to lose their jobs
as the Company plans to reduce its workforce in an effort to cut
costs and ease losses.
The Company is "implementing new procedures in order to increase
its operational efficiency," AT&T Latin America, which is
controlled by AT&T Corp., said.
The Coral Gables, Florida-based company, which has never posted a
profit, is slashing spending and offering new services to
increase use of its fiber optic network.
Chief Executive Officer Patricio Northland said in May the
company expects to focus on business consumers to increase
revenue by 40 percent in 2002, from the previous year.
AT&T Latin America posted a first-quarter loss of US$77.5
million, a 6.3-percent increase from the previous year's loss of
US$73 million. The Company's losses mounted as a rise in costs to
maintain its network offset a 92 percent decline in investments
in the period. Investments fell to US$7.3 million, from US$92.5
million in the first-quarter of 2001.
CONTACT: AT&T LATIN AMERICA
Matriz Brasil
Av. Pres. Juscelino Kubitschek, 1830
Torre 3 - 9§ Andar
04543-900
Sao Paulo, SP
Phone: (11) 3365-1500
Fax: (11) 3365-1503
Home Page: http://www.attla.com/
Contact:
Tania Magalhaes, Public Relations Director
Av. Alfredo Eg¡dio de Souza Aranha, 100
7o. andar - Bloco D - Ch. santo Ant“nio
Sao Paulo, SP- Brasil - 04726-905
Phone: 55 11 3365 1533
Fax: 55 11 3365 1502
E-mail: tania.magalhaes@attla.com
PREVI: Attorney General Second Guessing Intervention Motives
------------------------------------------------------------
Luiz Franciso Fernandes de Souza, Brazil's attorney general,
claimed that the government took over the country's biggest
pension fund Caixa de Previdˆncia dos Funcion rios do Banco do
Brasil (Previ) in order to avoid a scandal in the run-up to the
presidential elections, relates the Financial Times.
"Only four months before the elections, the government intervenes
so it can secretly manage the fund. It is very suspect," the
attorney general alleged.
"There are serious indications that fraudulent financial
transactions in Previ benefited companies that financed
government election campaigns, including that of President
Fernando Henrique Cardoso."
Early this week, the government intervened into the 98-year-old
fund, threw out executives and had their accounts frozen, because
the fund had reportedly broken rules on board-membership.
According to pension-fund regulations, owners and contributors
must have equal representation on the board, but in Previ's case
the owners, Banco do Brasil, had three seats, while
representatives of the contributors (Banco do Brasil employees)
had four seats.
The attorney general said he might challenge the intervention in
court.
Previ is the pension fund for employees of Brazil's largest state
bank, Banco do Brasil. It holds assets of BRL36.8 billion
(US$14.6 billion) and has 310 seats on the boards of 94 Brazilian
companies.
CONTACT: PREVI-CAIXA DE PREVIDENCIA DOS FUNCIONARIOS DO BANCO
DO BRASIL
Praia de Botafogo 501 - 3 E 4 and
Rio de Janeiro
22250-040
RJ
Phone: (21) 3870-1030
E-mail: presi@previ.com.br
Home Page: http://www.previ.com.br/
BANCO DO BRASIL
SBS Edificio Sede III, 24th Fl.
70089-900 Braslia, D.F., Brazil
Phone: +55-61-310-3406
Fax: +55-61-310-2563
Home Page: http://www.bb.com.br
Contact: Marco Geovanne Tobias da Silva, IR Manager
Phone: 61-310-5920
===============
C O L O M B I A
===============
VALORES BAVARIA: To Exclude Avianca From Financial Reports
----------------------------------------------------------
Valores Bavaria SA, Colombia's biggest diversified holding
company, informed Colombia's stock exchange regulator that it
won't include in its earnings report the losses or profits of
Aerovias Nacionales de Colombia SA, or Avianca, as it no longer
has direct control over it, reports Bloomberg.
Avianca, the world's second oldest airline, recently combined
operations with Colombia's second biggest airline, Aerolineas
Centrales de Colombia SA, or ACES to cut costs.
Valores Bavaria now expects to reduce second-quarter losses by
classifying its stake in Avianca as an investment and excluding
its results from earnings.
"The losses for Valores Bavaria will decline, but the value of
our investments will also fall," said Frank Pearl, a vice-
president of Valores Bavaria. He added that the Company had not
yet estimated by how much losses would be reduced and didn't
specify by how much the value of Valores Bavaria's holdings in
the airline might decline.
Valores Bavaria's first-quarter loss widened to COP40.4 billion
(US$17.7 million), or COP45.8 a share, from COP12.9 billion, or
COP37.1 a share a year earlier. Avianca accounted for COP32.9
billion (US$14.2 million) of the first-quarter loss.
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
===============
H O N D U R A S
===============
BANCO SOGERIN/CAPITAL: Regulator To Inject More Funding
-------------------------------------------------------
Honduras' banking regulator said it would capitalize Banco
Capital and Banco Sogerin with HNL565 million (US$34.5 million),
as part of an effort to streamline both the intervened private
banks, reports Business News Americas, citing a spokesperson from
the regulator's office. Capital and Sogerin were intervened in
May after they both fell below the minimum capitalization level
of HNL100 million.
Capitalization funding will be provided by Honduras' deposit
insurance agency, an industry funded entity run by banks and the
government. The decision to capitalize the ailing banks was
considered less costly than forcing them into liquidation.
Meanwhile, the banking regulator also said it would appoint new
administrators to run Capital and Sogerin. The new administrators
will modernize the banks in a process that includes the sale of
branches to other banks, downsizing, and investments in e-banking
services.
CONTACTS: BANCO SOGERIN, S.A.
Barrio El Centro, frente al Parque La Merced,
Tegucigalpa
P.O. BOX. 320
Phones: 237-4551 / 237-4227
Fax: 237-2934
E-mail: sogopera@hondutel.hn
Contact: Jos‚ Abraham Velez, General Manager
BANCO CAPITAL
Apartado Postal No. 3815
Tegucigalpa
Phone: (504) 238-6090
Fax: (504) 238-6094
E-mail: webmaster@capital.hn
Home Page: http://www.capital.hn/#
Contacts:
Marcial Flores Sosa, President
Luis Raudales, Vice President
===========
M E X I C O
===========
AEROMEXICO/MEXICANA: Unions Skeptical About Upcoming Sale
---------------------------------------------------------
The planned sale of Aeromexico and Mexicana de Aviaci¢n is
creating discomfort among unions. The Aeromexico Flight
Attendants Union (ASSA), which recently managed to negotiate a
6.62-percent salary hike with Aeromexico and the Labor
Secretariat (STPS), considers the imminent transaction as "very
worrying"
ASSA general secretary Arturo Aragon Sosa said, "as a union we
will continue fighting so that union members continue working
under the same labor and salary scheme."
Controlled by a holding company Cintra SA, Aeromexico and
Mexicana, which account for 75 percent of domestic air travel in
Mexico, are to be sold off this year separately. Merrill Lynch &
Co., the third-largest global mergers and acquisitions adviser,
recently won a mandate to manage the sale.
Among the companies expressing interest in acquiring them are
Delta Air Lines Inc., AMR Corp.'s American Airlines Inc. and
Continental Airlines Inc.
Cintra, whose share last traded May 10 at MXN3.9, has a market
value of MXN3.8 billion (US$399 million). It was created in 1996
to own the airlines after they defaulted on loans and creditors
exchanged the bad debt for an equity stake. IPAB, the government-
backed bank bailout agency that was 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
GRUPO ICONSA: Files For Bankruptcy Protection From Creditors
------------------------------------------------------------
Mexican construction company Grupo Iconsa, a subsidiary of
embattled Bufete Industrial, announced Tuesday it has filed for
bankruptcy. Dow Jones reports that Iconsa, in a filing with the
Mexican Stock Exchange, promised to keep the market up-to-date as
the process moves forward.
Previously, the firm said that it would meet with creditors and
suppliers to restructure liabilities once it obtained protection
under Mexico's new bankruptcy law.
Iconsa's Board of Directors decided to begin bankruptcy
proceedings under Mexico's version of the U.S. Chapter 11 due to
the Company's difficult financial condition.
The group accumulated losses of MXN255 million (US$28 million)
over the past two years as infrastructure sales in Mexico
decreased severely. In 2001, Iconsa recorded a MXN159.6 million
net loss on sales of MXN748.9 million. The Company's total
liabilities stood at MXN675.9 million.
Bufete Industrial, Iconsa's parent, initiated pre-bankruptcy
proceedings in late January this year, listing debts of more than
US$500 million, almost half of which is owed to foreign
companies.
CONTACT: GRUPO ICONSA SA
Calle Tres No. 53
Naucalpan de Ju rez
Edo. de M,xico. C.P. 5356
Phone: 52 5576-67-55
Fax: 52 53-58-74-75
Email: grupo_iconsa@iconsa.com.mx
Home Page: www.iconsa.com.mx
Contact:
Andres Conesa Ruiz, Investor Relations
Phone: 21-22-80-00
Fax: 53-58-74-75
BUFETE INDUSTRIAL
Moras 850, Colonia del Valle
03100 Mexico City, Mexico
Phone: (525) 723-4728
Fax: (525) 420-8903
Email: imendoza@bufete.com
Contacts:
Jose Fernandez, President
Luis Escalante, Exec. VP - Business Development
Ernesto Montero, Exec. VP - Operations
Ramon Lignan, Sr. VP and Comptroller
Arturo Anel, Sr. VP of Projects
GRUPO MEXICO: Plant Remains Open Despite Difficult Market
---------------------------------------------------------
Battling problematic industrial relations and sagging copper
prices, Mexican minerals-transport giant Grupo Mexico (G-Mex) is
not planning to mothball operations at its Cananea copper
operation in northwest Sonora state, Business News Americas
reports, citing the Company's managing director Hector Garcia de
Quevedo.
Garcia's announcement refutes a Dow Jones report suggesting that
the Company is closing the plant's operations after miners went
on strike to press higher wage demands.
A strike over wage negotiations has paralyzed operations at
150,000t/y Cananea since Monday. Workers are demanding a 16.3-
percent wage hike, while the Company is offering a 5.25-percent
increase, in line with the amount awarded to its other mining
divisions earlier this year. These include Mexicana de Cobre, San
Martin and its coal mining and coke producing operations, Garcia
said.
A 16.3-percent increase would make Cananea economically unviable,
G-Mex admitted. However, Garcia said the Company is not
considering shutting down operations, but is working to resolve
the conflict.
Simultaneously, Grupo Mexico announced that its debt negotiations
have progressed in recent days. The Company said it is seeking to
reschedule debt over seven years with two years grace, and has
offered to capitalize Grupo Minero Mexico, its Mexican unit, with
US$105 million in fresh capital.
Grupo Mexico, the world's third largest copper producer with
operations in Mexico, Peru and the United States, is currently
renegotiating more than US$1 billion in debt at Grupo Minero
Mexico and U.S.-based Asarco.
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
ASARCO, INC.
2575 E. Camelback Rd., Ste. 500
Phoenix, AZ 85016
Phone: 602-977-6500
Fax: 602-977-6701
Home Page: http://www.asarco.com
Contacts:
German Larea Mota-Velasco, Chairman & CEO
Genaro Larrea Mota-Velasco, President
Daniel Tellechea Salido, VP & CFO
GRUPO MEXICO: Metal Prices, Economic Slump Prompt SPCC Review
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The downtrend in metal prices and uncertainties in the Peruvian
economy is leading Grupo Mexico to review some plans for Southern
Peru Copper Corp (SPCC).
Grupo Mexico took control of SPCC, Peru's largest copper
producer, in 1999 through their purchase of U.S.-based Asarco
Inc. The Mexican group believes that if the business environment
improves, SPCC is to issue bonds worth US$500 million, either in
Peru or abroad.
Grupo Mexico said it will also review the US$200-million planned
investments for 2002.
So far, SPCC has invested US$65 million, 70 percent of which to
expand the Toquepala plant that is 80 percent completed and
should be operational by August.
Over the weekend, SPCC revealed it would cut its earnings
forecast on US$11 million for this year as the average price of
copper fell below its estimates.
GRUPO TFM: To Issue US$170M Of 10-Year Bonds for Share Buy-Back
---------------------------------------------------------------
Grupo Transportacion Ferroviaria SA de CV expects to price US$170
million of ten-year bonds on Wednesday or Thursday.
The deal, according to Dow Jones, finally realizes plans scrapped
after September 11, when nervous investors had shown little
interest in buying a company rated B2 by Moody's Investors
Service. No Latin American corporate bond rated so low has priced
in the international markets since early 2001.
TFM is running out of time to raise new funds, which will go
toward a share buy-back that must take place by late July.
Yields on TFM's infrequently-traded debt are hovering around 13
percent to 13.5 percent, comparable to levels witnessed when the
company was marketing its bonds before September 11. Word in the
streat says the new debt might price between 12.5 percent and 13
percent.
GRUPO TFM: Fitch Rating Assigns 'BB-' Ratings To TFM
----------------------------------------------------
Fitch Ratings has assigned 'BB-' senior unsecured foreign and
local currency ratings to TFM, S.A. de C.V. (TFM). These ratings
are based on the company's solid business position as the largest
railroad in Mexico, long-term growth opportunities in the North
American market, and financial position. The ratings incorporate
the addition of $170 million in new debt to be used to acquire
the Mexican government's 24.6% equity stake in Grupo TFM, S.A. de
C.V. (Grupo TFM).
TFM is one of three main railroad networks in Mexico and provides
the most direct link between Mexico City and the US border
crossing at Laredo, Texas. TFM owns more than 2,600 miles of rail
track and transports more than 40% of Mexican rail volume and 65%
of international rail volume. TFM's most significant customers in
terms of revenues include the agro-industrial, automotive,
chemical, manufacturing, and mining industries. Five years after
privatization, TFM has improved the operating efficiency of its
rail network and achieved relatively high profitability margins.
TFM has greatly benefited from increasing trade between Mexico
and the United States since the North American Free Trade
Agreement (NAFTA) was implemented in 1992. Over 80% of TFM's
revenues are attributable to international freight, primarily to
the United States. After several years of continuous growth,
international trade between the two countries declined during
2001 as the United States economy entered into a recession.
Despite the challenging operating environment, TFM was able to
continue increasing revenues by taking advantage of additional
growth opportunities from the conversion from truck to rail
transportation. The vast majority of Mexican cargo is still
transported by truck rather than by rail, providing additional
future growth opportunities.
TFM was formed in late 1996 after the Mexican government began
the privatization of the three major railway networks in Mexico
(each focused geographically on the Northeast, Northwest, and
South). TFM acquired a 50-year concession to operate the
Northeastern rail network. The Mexican government retains two
significant equity stakes in TFM, although it has no voting
rights. TFM, an operating company, is 80% owned by Grupo TFM and
20% owned by the Mexican government. Grupo TFM, a holding
company, is 38.5% owned by Grupo TMM, S.A. de C.V. (TMM), 36.9%
owned by Kansas City Southern Industries (KCSI), and 24.6% owned
by the Mexican government.
TFM's debt levels are expected to increase by $170 million as the
company will likely exercise its option to acquire the Mexican
government's 24.6% stake in Grupo TFM. The option, which was
granted at the time of the privatization in 1997, expires in July
2002. If the option is exercised, both TMM and KCSI would
increase their respective ownership stakes in Grupo TFM to an
estimated 51% and 49%, respectively. The Mexican government will
maintain its 20% stake in TFM.
TFM has cash balances of $76.7 million and debt of $880.1 million
at March 31, 2002. Refinancing needs over the next 12 months
include $295 million in commercial paper maturing in September
2002, which are expected to be rolled over. Long-term debt
includes $150 million senior notes due 2007 and $443.5 million
senior Ddscount debentures due 2009.
TFM generated $667.9 million in revenues and $240 million of
EBITDA in 2001. The company's gross interest coverage, as
measured by EBITDA/interest, was an estimated 2.7 times (x) in
2001 but is expected to decline below 2.5x after the company
increases debt levels by $170 million. The company's financial
leverage, as measured by debt/EBITDA was 3.6x in 2001 but is
expected to increase to approximately 4.0x.
On May 16 2002, the Mexican antitrust authorities rejected the
merger between Ferromex and Ferrosur. Ferromex and Ferrosur, the
two other major railway networks in Mexico, announced their
intention to merge in early 2002. Ferromex's rail network links
Mexico City with Northwestern Mexico, while Ferrosur's rail
network links Mexico City with Southern Mexico. If the Mexican
antitrust authorities had approved the merger, they could have
posed a greater competitive threat to TFM. Regardless of the
final outcome of the proposed merger, TFM was expected to
continue to maintain a geographical competitive advantage in its
main routes in Northeastern Mexico, providing the shortest route
between Mexico City, the industrial city of Monterrey and the
border crossing at Laredo, Texas.
During March 2002, TFM acquired Mexrail, which was 51% owned by
TMM and 49% owned by KCSI, for $64 million. Mexrail is the
holding company for the TexMex railway, which operates 157 miles
of rail track between Laredo and the port town of Corpus Christi,
Texas; as well as the northern half of the International Bridge
at Laredo. 60% of all rail traffic between the United States and
Mexico crosses the border at Laredo.
In conjunction with the acquisition of Mexrail, TFM's
shareholders, TMM and KCSI announced the resolution of their
legal dispute over the first dividends made by TFM in late 2001
by canceling the dividends. TFM had declared dividends of $33
million in December 2001, a decision which was supported by TMM
but opposed by KCSI. After making large investments to modernize
its rail network in recent years, TFM has gradually improved its
profitability and generates free cash flow. Since the company's
capital expenditure needs going forward are expected to be funded
internally, TFM should continue to generate free cash flow and
may resume dividend payments in the future.
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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.
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