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/raid1/www/Hosts/bankrupt/TCRLA_Public/020613.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 13, 2002, Vol. 3, Issue 116 Headlines A R G E N T I N A EDESUR: Adjusting Plans to Meet Short-Term Debt Schedule IMPSAT FIBER: Majority of Creditors Support Expected Ch. 11 IMPSAT FIBER: Case Summary & 20 Largest Unsecured Creditors METRORED TELECOM: Close to Final Agreement With Creditors REPSOL YPF: Cortina Stays On; Defends Gas Natural Sale SKY ARGENTINA: Exits Argentina Due To Economic Recession VIA NET.WORKS: Turnaround Plan to Sell Argentina, Brazil Ops B E R M U D A GLOBAL CROSSING: Founder Backs Rescue Plan With Own Funds GLOBAL CROSSING: Wolf Haldenstein Commences Class Action Suit B R A Z I L CEMIG: Board Authorizes Hedges To Protect Dollar-linked Debt COPEL: Deutsche Bank Raises Recommendation, Target Price TRANSBRASIL: To Continue Flying Despite Financial Woes VARIG: In Talks With GE Capital To Return Planes E C U A D O R EMELEC: Ecuador's Head To Define New Sale Model This Week FILANBANCO: Plan Deadline Set For Return Of $350M To Depositors M E X I C O COPAMEX: S&P Rates To US$200 Million Unsecured Notes BB- GRUPO BITAL: SCH Seeks Due Diligence Authority GRUPO MEXICO: Analysts Express Mixed Expectations Despite S&P RAINTREE RESORTS: Moody's Cuts Ratings Following Default - - - - - - - - - - ================= A R G E N T I N A ================= EDESUR: Adjusting Plans to Meet Short-Term Debt Schedule -------------------------------------------------------- Argentine distributor Edesur SA unveiled a short-term financial policy aiming to meet payment obligations and avoiding default, reports Business News Americas. The Company, controlled by Chilean holding company Enersis, will be working on this goal pending new regulations for the electricity sector. Companies are currently negotiating with the Argentine government in a process that is expected to conclude by the end of June. Edesur has already asked Argentine authorities for an urgent and immediate rate increase to make the its operations viable. Edesur considers the rate hike very critical because the emergency measures adopted by the authorities to face the crisis have destroyed the Company's economic-financial balance, creating serious risks for its provision of services and survival, with no guarantee of reasonable rates of profitability, making normal functioning difficult. If the situation is not normalized in the medium term there will be a shortage of materials, a generation deficit, bankruptcy of contractors, increases in power prices and it will be impossible to pass on rates, Edesur said. Edesur, which distributes electricity to southern Buenos Aires and the industrial belt around the capital, posted a first- quarter loss of ARS370 million (US$115.6 million), or close to 86 percent of all profits earned by the firm since it was privatized in 1992. The Company has close to US$206.4 million in debt. 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 IMPSAT FIBER: Majority of Creditors Support Expected Ch. 11 ----------------------------------------------------------- In a recent offical announcement, Impsat Fiber outlined the following major points to its present restructuring effort: -- Creditors Representing over 59% of Debt Have Agreed to the Terms of the Restructuring Plan Announced in March -- The Plan, Which Contemplates a Reduction of Impsat's Indebtedness by Approximately $680 Million, will Significantly Strengthen the Company's Capital Structure -- The Company Intends to File with the Court a Pre-Negotiated Plan and Disclosure Statement Supported by Majority of its Creditors in the Coming Weeks -- Impsat's Subsidiaries will Continue Operating Normally Throughout the Process -- The Company Expects to Emerge from Chapter 11 in the Fourth Quarter Impsat Fiber Networks, Inc., announced Tuesday that it has filed for Chapter 11 in New York, following the signing of binding lock-up agreements with creditors representing over 59 % of its debt. The agreed upon restructuring plan, which was announced in March, contemplates the reduction in Impsat's indebtedness by approximately $680 million and its future annual interest expense by about $90 million. The Company expects to file a pre-negotiated Plan and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York in the coming four weeks and emerge from Chapter 11 in the fourth quarter of 2002. The plan involves a restructuring of Impsat Fiber Networks, Inc.'s indebtedness under its vendor financing agreements, and its Guaranteed Senior Notes due 2003, Senior Notes due 2005 and Senior Notes 2008. The Company is also conducting discussions with other creditors at the subsidiaries' level to agree on a debt-restructuring plan incorporating similar conditions. Impsat Fiber Networks, Inc. is a holding company and its subsidiaries, which are independent legal entities, will continue to operate without interruption and serve their customers normally. After the restructuring is completed, Impsat's strengthened capital structure will reinforce the Company's leadership in the Latin American telecommunications market. Ricardo Verdaguer, Impsat's chief executive officer, stated: "The filing of Chapter 11 to effectuate the negotiated transaction is the final step in the Company's financial restructuring. Impsat's substantially de-levered capital structure will enable us to strengthen our operations and consolidate our market position in Latin America. We are deeply grateful for the support we have received from our customers, creditors, vendors, employees and directors throughout this process. We are confident that this level of support will enable us to consummate this plan through the U.S. Court in the fourth quarter, while continuing with our normal operations in the region." As announced on March 11, 2002, the pre negotiated Plan will provide, among other things, that: -- Holders of debt under the Company's Broadband Network Vendor Financing Agreements will receive a combination of senior secured indebtedness totaling in the aggregate $141 million, $23 million in the aggregate of new Senior Guaranteed Notes initially convertible in the aggregate into 5% of the Company's new common stock and warrants to acquire 15% in the aggregate of the Company's new common stock. -- Holders of the Company's Senior Guaranteed Notes due 2003 will receive new Senior Guaranteed Notes in an aggregate amount of $67 million, initially convertible in the aggregate into 23% of the Company's new common stock. -- Holders of the Company's Senior Notes due 2005 and 2008 will exchange those Notes for initially 98% in the aggregate of the Company's new common stock. -- The pre-negotiated Plan contemplates no distribution to existing stockholders of the Company. Completion of the restructuring plan remains subject to certain conditions, including its acceptance by affected classes of public debt and equity holders, whose approval will be solicited as part of the Court process. Impsat Fiber Networks, Inc. provids fully integrated broadband data, Internet and voice telecommunications services in Latin America. Impsat has recently launched an extensive pan-Latin American high capacity broadband network in Brazil, Argentina, Chile and Colombia using advanced technologies, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. The Company has also deployed fourteen facilities to provide hosting services. Impsat currently provides services to 3,000 national and multinational companies, government entities and wholesale services to carriers, ISPs and other service providers throughout the region. The Company has local operations in Argentina, Colombia, VeneImportant assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q on file with the Securities and Exchange Commission. CONTACT: IMPSAT Fiber Networks, Inc. Home Page: http://www.impsat.com Hector Alonso Gonzalo Alende Serra Phone: 54.11.5170.3700 or Houlihan Lokey Howard & Zukin Capital John McKenna Lily Chu Phone: 212/497-4100 or Citigate Dewe Rogerson Inc. John McInerney Robin Weinberg Phone: 212/688-6840 IMPSAT FIBER: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: IMPSAT Fiber Networks, Inc. Arnold & Porter 399 Park Avenue New York, New York 10022 212-715-1000 Bankruptcy Case No.: 02-12882 Type of Business: The Debtor is a provider of broadband Internet, data, and voice services in Latin America. Chapter 11 Petition Date: June 11, 2002 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtors' Counsel: Anthony D. Boccanfuso, Esq. Michael J. Canning, Esq. Arnold & Porter 399 Park Avenue New York, New York 10022 (212) 715-1315 Fax : (212) 715-1399 Total Assets: $667,189,368 Total Debts: $1,334,732,793 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of New York as Notes $300,000,000 Trustee for holders of plus accrued 13-3/4% Senior Notes due interest 2005 101 Barclay Floor 21 West New York, NY 10286 Attn: Corporate Trust Administration Phone: 212-815-4888 Bank of New York as Notes $225,000,000 Trustee for holders of plus accrued 12-3/8% Senior Notes due interest 2008 101 Barclay Floor 21 West New York, NY 10286 Attn: Corporate Trust Administration Phone: 212-815-4888 Nortel Networks Limited, Guarantee of non- $125,129,546 as administrative agent debtor subsidiary plus accrued for Lenders under that debt - Brazil interest certain Financing Agreement dated as of October 25, 1999, as amended c/o Nortel (CALA) Inc. Jorge Suarez 1500 Concord Terrace Sunrise, Florida 33323-2815 Phone: 954-851-8930 Bank of New York as Notes $125,000,000 Trustee for holders plus accrued Of 12-1/8% Senior Guaranteed interest Notes due 2003 101 Barclay Floor 21 West New York, NY 10286 Attn: Corporate Trust Administration Phone: 212-815-4888 Nortel Networks Limited, Guarantee of non- $120,777,954 as administrative agent debtor subsidiary plus accrued for Lenders under that debt - Argentina interest certain Financing Agreement dated as of October 25, 1999, as amended c/o Nortel (CALA) Inc. Jorge Suarez 1500 Concord Terrace Sunrise, Florida 33323-2815 Phone: 954-851-8930 Citibank NA Guarantee of Non- $8,356,976 Horacia Almada debtor subsidiary plus accrued 399 Park Avenue debt - Argentina interest New York, NY 10043 Phone: 54-11-4329-1686 Sirti Argentina S.A. Guarantee of non- $8,303,860 Av. Pte. Hipolito Yrigoyen debtor subsidiary plus accrued 4848 debt - Argentina interest Javier Defferrari Anibal Civale B1604 CMV, Florida Buenos Aires, Argentina Phone: 54-11-4730-8879 Compania Ericsson Guarantee of non- $4,874,993 S.A.C.I. debtor subsidiary plus accrued Juan Prgich debt - Argentina interest Av. Madero 1020 piso 15 Buenos Aires, 1106 Argentina Phone: 54-11-4319-5522 Amtrade International Guarantee of non- $4,874,993 Bank of Georgia debtor subsidiary plus accrued Jack Foster debt - Colombia interest One Midtown Plaza, Suite 1105 1360 Peachtree Street, N.E. Atlanta, Georgia 30127 Hughes Network Systems Guarantee of non- $3,424,867 Chris Biondi debtor subsidiary plus accrued 1717 Exploration Lane debt - Argentina interest Germantown, MD 20816 Phone: 301-428-2773 El Camino Resources de Guarantee of non- $2,544,230 America Latina, Inc. debtor subsidiary plus accrued Jose Virginio de Rezende debt - Brazil interest Otavio Olveira 45-18 Court Square, Suite 501 Long Island City, NY Phone: 55-21-3824-8910 Harris Corporation Guarantee of non- $2,277,427 Paul Hare debtor subsidiary plus accrued 3 Hotel de Ville debt - Argentina interest Dollard-des-Ormeaux Quebec, H9B 3G4, Canada Tellabs, Inc. Guarantee of non- $2,190,962 Gerald Rixie debtor subsidiary plus accrued One Tellabs Center debt - Argentina interest 1415 West Diehl Road Naperville, IL 60653 Phone: 630-758-3512 DMC Startex Networks, Inc. Guarantee of non- $1,496,888 Gonzalo Ferrer debtor subsidiary plus accrued 170 Rose Orchard Way debt - Argentina interest San Jose, CA 95134 Phone: 408-944-3562 408-943-0777 Nortel Dassa SatCom - Guarantee of non- $1,015,579 Gessellschaft fur debtor subsidiary plus accrued Satellitenkommunikation debt - USA interest ssysteme mbH An der Bundesstrasse 31 88039 Firedrichshafen, Germany Phone: 49-7545-939-8080 Bank of America as Guarantee of non- $829,267 Successor to Barnett Bank debtor subsidiary plus accrued N.A. debt - USA interest Shawn Guicheteaui One East Broward Boulevard Ft. Lauderdale, FL 33301 Phone: 704-386-2433 Harris Corporation Guarantee of non- $621,530 Paul Hare debtor subsidiary plus accrued 3 Hotel de Ville debt - Venezuela interest Dollard-des-Ormeaux Quebec, H9B 3G4, Canada Cisco Systems Capital Guarantee of non- $620,365 Oscar Bode debtor subsidiary plus accrued 8200 NW 41st Street, debt - Brazil interest Suite 400 Miami, FL 33166 USA Phone: 305-513-5281 Compaq Financing Services Guarantee of non- $232,440 debtor subsidiary debt - Argentina METRORED TELECOM: Close to Final Agreement With Creditors --------------------------------------------------------- MetroRed Telecom Ltd., a high-speed telecommunications provider majority-owned by Fidelity Investments, is close to reaching an agreement with creditors that would allow the Company to continue operating, according to a report by Argentine financial daily El Cronista. "We will reach an agreement this week or we will stop the process," Carlos de la Garza, a MetroRed spokesman in Mexico City, said in a brief telephone interview. The agreement would let the Company's main creditors - US bank Bankboston and Spanish bank SCH - take control of MetroRed Argentina. MetroRed, which filed for bankruptcy in May, blamed the government default on some US$95 billon of debt in December for its financial problems. This, according to the Company, led it to cut all its financing sources. The currency devaluation in January also left it saddled with debts in U.S. dollars and revenue in pesos. Fidelity Investments, a U.S. mutual fund company, bankrolled the startup in the 1990s, betting on surging demand for high-speed lines. Since 1996, the company has poured a total of US$170 million in Argentina, where it claims to have 400 corporate clients. CONTACT: METRORED TELECOMUNICACIONES Paseo Col�n 746 Piso 4 (C1063ACU) Buenos Aires Argentina Phone: (5411) 4876-7700 Fax: (5411) 4876-7767 Home Page: metrored@metrored.com.ar BANKBOSTON Headquarters Fleetboston P.O. Box 2016 100 Federal St. MA BOS 01-08-04 Boston, MA 02106-2016 S.W.I.F.T : FNBB US 33 Telex: 4996527 Boston KBBSN Home Page: http://www.bankboston.com.ar/ BANKBOSTON-ARGENTINA Florida 99 1005 Buenos Aires Argentina Phone: 54-(11)-4820-2000 Fax: 54-(11)-4820-3200 Home Page: http://www.bankboston.com.ar/ SANTANDER CENTRAL HISPANO S.A. Plaza de Canalejas,1 28014 Madrid, Spain Phone: +34-91-558-10-31 Fax: +34-91-552-66-70 Home Page: http://www.bsch.es Contacts: Ana P. Bot�n, Chairman, Banesto Emilio Bot�n-Sanz, Chairman Francisco G. Rold n, Financial Division General Manager Investor Relations: Phone: + 34.91.558.13.69 + 34.91.558.10.05 Fax: + 34.91. 558.14.53 + 34.91.522.66.70 REPSOL YPF: Cortina Stays On; Defends Gas Natural Sale ------------------------------------------------------ Repsol YPF SA Chairman Alfonso Cortina denied speculation that he is stepping down from his post and defended a move to sell half of Repsol's stake in Gas Natural SDG SA, according to La Gaceta de los Negocios newspaper. In a meeting held Thursday, Cortina told 200 executives of Europe's fifth-biggest oil company that he has no plans to step down. Although 2002 has been "especially tough," he vowed to stay committed to the Company. He also admitted that the decision to sell half of Repsol's stake in Gas Natural SDG SA was "painful," but it allowed Repsol to move up its debt reduction plan by three years. Citing information from El Mundo newspaper, TCR-LA previously reported that Cortina is running out of time to appoint a chief executive after his choice of one of his closest colleagues, Ramon Blanco, was rejected by Banco Bilbao Vizcaya Argentaria SA (BBVA) and Caja de Ahorros y Pensiones de Barcelona SA (LaCaixa), Repsol YPF SA's largest shareholders. The shareholders, according to El Mundo, want a CEO from outside the Company and are urging Cortina to name one by July. BBVA and La Caixa executives are wary that Repsol may be a target of a hostile takeover due to its sinking earnings and stock price. The Company's US$15-billion purchase of Argentine driller YPF in 1999 turned sour after the country's four-year economic slump and currency devaluation wiped EUR2.7 billion (US$2.5 billion) off Repsol's earnings. 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 SKY ARGENTINA: Exits Argentina Due To Economic Recession -------------------------------------------------------- Sky Argentina, the country's second-largest satellite television provider behind DirecTV, will halt its operations in the recession-plagued country by July, EFE reports, citing a company press release. The Company attributed its decision to "the economic crisis, its effect on our cost structure and the difficulties we face in planning future investments in a climate of economic uncertainty." Sky's investment since November 2000 has totaled US$120 million. The firm had 80,000 subscribers at one point, but its customer base shrank to 45,000 because of the recession. Sky Argentina, a joint venture among Australia's News Corp., Brazil's O Globo and Mexico's Televisa, holds the broadcast rights to the 2002 World Cup. VIA NET.WORKS: Turnaround Plan to Sell Argentina, Brazil Ops ------------------------------------------------------------ VIA NET.WORKS, Inc. announced Monday the sale of its operations in Argentina, Brazil and Austria. All three dispositions were completed through stock deals; other terms were not disclosed. In Austria, VIA sold its operation to the existing management team led by Martin Zandonella. VIA's Brazilian subsidiary was also sold to its management team led by Antonio Tavares. The Argentine operation was sold to DATCO S.A., a technology infrastructure provider with operations in Argentina and Chile. VIA's acting chief executive officer, Karl Maier stated: "These divestitures represent further progress in our turnaround plan that is focused on significantly reducing our cash burn and driving the company towards profitability. They also allow us to focus more intently on our core country operations. We are pleased with our turnaround progress to date and will continue to take actions that allow us to achieve our operational and financial objectives." About VIA NET.WORKS, Inc. VIA NET.WORKS, Inc. is a single-source provider of managed Internet services for business. Serving businesses in Europe and North America, VIA is committed to improving each customer's business productivity and competitiveness. VIA local operations offer a comprehensive portfolio of flexible and reliable managed Internet services encompassing areas such as connectivity, hosting, security, messaging, and professional services. VIA is a facilities-based Internet services company, managing its own backbone network. The Company claims this unique combination -- the agility of a local, customer-focused company and the reliability of an international high-speed network -- allows VIA to be highly responsive to specific customer needs and to deliver quality solutions. VIA is headquartered at 12100 Sunset Hills Road, Reston, Virginia, USA, 20190. More information about VIA can be obtained by visiting their website at http://www.vianetworks.com. CONTACT: VIA NET.WORKS, Inc. Matt S. Nydell Tel. +1-703-464-0300 Fax. +1-703-464-0608 Email: ir@vianetworks.com Web site: http://www.vianetworks.com ============= B E R M U D A ============= GLOBAL CROSSING: Founder Backs Rescue Plan With Own Funds -------------------------------------------------------- Speculation abounds that Gary Winnick, Global Crossing's founder and chairman, may possibly use some of his own money to back a management-led reorganization plan. The pending proposal, which could be worth well over US$1 billion, would be designed to pull the telecommunications company out of its present state of demise. Citing people familiar with the matter, the Wall Street Journal reports that Winnick has approached some private-equity firms and other potential investors to back the plan and told them that he would be willing to contribute as much as US$100 million of his own money under the right circumstances. However, Winnick may find it hard to win the confidence of these potential investors, as some of them still hold him responsible for Global Crossing's swift decline into bankruptcy proceedings, the fourth-largest such filing in U.S. history. They remain peeved at him for, among other things, selling UDS$735 million of Global Crossing shares from his personal holdings. Based in Hamilton, Bermuda, and run from offices in Madison, New Jersey, Global Crossing filed for Chapter 11 in January, listing US$12.4 billion in debts. 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 GLOBAL CROSSING: Wolf Haldenstein Commences Class Action Suit ------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP has commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of purchasers of Global Crossing Ltd. ("Global Crossing" or the "Company") (NYSE: GX) common stock between June 15, 1999 and November 10, 2001 (the "Class Period"), inclusive, against Salomon Smith Barney, Inc. ("Salomon") and its star telecommunication analyst Jack Grubman ("Grubman") for violations of Sections 10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder. The case name is Ovetsky-Weiss v. Salomon Smith Barney, Inc. 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 sections 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, by the issuance of analyst reports regarding Global Crossing which recommended the purchase of Global Crossing common stock and which set price targets for Global Crossing common stock without any reasonable factual basis. Furthermore, when issuing their Global Crossing reports, defendants failed to disclose significant, material conflicts of interest, which they had, in light of their use of Grubman's reputation and his Global Crossing analyst reports, to obtain investment banking business for Salomon. Furthermore, in issuing their Global Crossing reports, in which they were recommending the purchase of Global Crossing stock, defendants failed to disclose material, non-public, adverse information which they possessed about Global Crossing as well as their true opinion about Global Crossing. Defendants also failed to disclose that Grubman, while issuing reports on Global Crossing recommending that investors purchase Global Crossing common stock, had been intimately involved in the management of Global Crossing. Plaintiffs seek to recover damages on behalf of all those who purchased shares of Global Crossing common stock during the Class Period (the "Class"). Members of the Class may wish to join in the action to serve as lead plaintiff by requesting that the Court appoint them as lead plaintiff. Such requests must be made by July 23, 2002. CONTACT: WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP 270 Madison Avenue New York, New York 10016 Contacts: Fred T. Isquith, Esq. Robert Abrams, Esq. Michael Miske George Peters Derek Behnke Tel. +1-800-575-0735 Email: classmember@whafh.com Web site: http://www.whafh.com =========== B R A Z I L =========== CEMIG: Board Authorizes Hedges To Protect Dollar-linked Debt ------------------------------------------------------------ Companhia Energetica de Minas Gerais (Cemig) gained approval from its board of directors to use hedging operations to protect up to 100% of the Brazilian electric utility's dollar-linked debt against foreign exchange variations, Dow Jones Newswires reports, citing a company official. Cemig, in its first quarter financial statement, revealed that its dollar-linked debt stood at about US$600 million. Company officials said the board made an "umbrella decision" which will allow Cemig to protect all of its dollar-linked debt if necessary. The board's approval comes amid increasing doubts about the outcome of the country's presidential elections in October and about Brazil's ability to honor debt commitments in the medium term. Brazil's real has been losing ground in the past few months, hit by pre-election jitters. Since May 31, the real has weakened nearly 5%, says Dow Jones. Cemig, Brazil's biggest combined power distributor and generator, posted a first-quarter profit of BRL220 million (US$89 million), reversing a loss of BRL12.5 million in the same period in 2001. The state of Minas Gerais controls 51 percent of the Company's voting shares. CONTACT: CEMIG Avenida Barbacena, 1200 Sto Agostinho 30123-970 Belo Horizonte - MG Brazil Phone +55 31 299 4900 Home Page http://www.cemig.com.br Contacts: Djalma Bastos De Morais, Chairman Geraldo De Oliveira Faria, Vice Chairman Cristiano Correa De Barros, Finance Director COPEL: Deutsche Bank Raises Recommendation, Target Price -------------------------------------------------------- Deutsche Bank upped its recommendation on Companhia Paranaense de Energia (Copel), to `buy' from `market perform,' and adjusted the Brazilian electric utility's target price to BRL22.40 ($1=BRR2.636) from BRL20.30, according to a Dow Jones Newswires report. "We believe that most of the bad news regarding excess Copel energy in 2002-2003 is priced into the stock," Deutsche bank said in a research note. Deutsche reduced Copel's 2002 through 2004 earnings estimates to BRL280 million, BRL388 million and BRL646 million respectively from previous estimates of BRL393 million, BRL482 million and BRL725 million. Just recently, Spanish brokerage house BBVA Securities also raised its recommendation on Copel to `buy' from `outperform,' and upped its target price by 4%, to US$8.88 per American Depositary Receipt. According to the Spanish brokerage house, the main catalyst for Copel's short-term prospects is the conversion of BRL700 million (US$1=BRR2.637) of illiquid credits into cash. Copel, controlled by the Brazilian state of Parana, has BRL1.4 billion in debt, 62 percent of which is denominated in U.S. dollars. The utility serves about three million customers in Parana, with an installed capacity of 4,580 megawatts, making it one of Brazil's largest utilities. CONTACTS: Ingo Henrique Hobert, Chief Executive Officer Deni Lineu Schwartz, Chief Government Relatins Officer Ferdinando schauenburg, CFO TRANSBRASIL: To Continue Flying Despite Financial Woes ------------------------------------------------------ Brazil's DAC (Departamento de Aviacao Civil) is not going to revoke Brazilian airline Transbrasil's license to operate, despite the fact that it has not flown for six consecutive months due to insolvency. Transbrasil is currently battling with a number of problems, including losing access to its offices, the absence of a lawyer, and the BRL80-million debt it owes to its employees, and the BRL1 billion to suppliers and the government. Adding up to that is the lawsuit filed by Mr. Dilson Prado de Fonseca, who reportedly bought the Company for BRL1.00 in January. The struggling airline intends to call a shareholder meeting soon in order to present a new investor who will rescue the airline from its insolvency. CONTACT: Antonio Celso Cipriani, CFO Rua Geral Pantaleao Telles, No. 4, Jardim Aeroporto 04355-040 Sao Paulo, Brazil Phone: +55-11-533-7111 Fax: +55-11-543-9083 VARIG: In Talks With GE Capital To Return Planes ------------------------------------------------ As part of an effort to cut costs, Viacao Aerea Rio-Grandense SA (Varig) is negotiating to return seven Boeing 737 planes to GE Capital Aviation Services, General Electric Co.'s aircraft- leasing arm, Bloomberg reports, citing Ozires Silva, the carrier's president. Silva said that the aircraft will be returned as soon as Varig completes negotiations with GE Capital on financial terms to break the leases. Still unknown is how much Varig might have to pay to break the lease or how much the airline will save in operating costs from reducing its fleet to 86 aircraft from the current 93. The return of the seven aircraft is part of a plan to attract investors, domestic or foreign, to help reduce the Company's debt, which totals about US$900 million, Silva said. Varig's losses more than doubled in 2001 to BRL480.9 million (US$178 million) from BRL178.54 million a year earlier. The airline's accountant said in April in a footnote to the financial statements for 2001 that Varig needs to raise cash soon to keep flying. "The projections for its cash flow indicate the need to obtain funds in the short term to make possible the maintenance of its operations," wrote Samuel de Paula Matos, a partner at the Brazilian business of Arthur Andersen LLP, who signed off on Varig's accounts. CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.) Rua 18 de Novembro No. 800, Sao Joao 90240-040 Porto Alegre, Rio Grande do Sul, Brazil Phone: (51) 358-7039/7040 (51) 358-7010/7042 Fax: +55-51-358-7001 Home Page: www.varig.com.br/english/ Contacts: Dorival Ramos Schultz, EVP Finance and CFO E-mail: dorival.schultz@varig.com.br Investor Relations: Av. Almirante Silvio de Noronha, n 365-Bloco "B" - s/458 / Centro Rio de Janeiro, Brazil GE CAPITAL AVIATION SERVICES Headquarters 201 High Ridge Road Stamford, CT 06927 Fax: (203) 357-3776 GE Corporate Headquarters Fairfield, CT 06431 Telephone: (203) 373-2211 Home Page: http://www.ge.com/ Contact: Pauline Berardi, Investor Relations GE Corporate Investor Communications 3135 Easton Turnpike Fairfield, CT 06431 ============= E C U A D O R ============= EMELEC: Ecuador's Head To Define New Sale Model This Week --------------------------------------------------------- The Ecuadorian president Gustavo Noboa is expected to detail this week a new model for selling off the electric utility Emelec, reports South American Business Information. The move follows a recent failed tender which, according to market sources, was due to the very high base price of US$130 million. Alternatives for the future of Emelec include selling its shares in the stock market, or enabling it to issue debt titles in the financial market. However, the government must first tackle the US$400 million in debts piled up by Emelec since 1982 before making a decision. Another matter soon to be addressed is the adoption of a realistic tariffs policy and modernization investments of US$50 million over the next 4 years. In March 2001, Ecuadorian electricity council Conelec canceled Emelec's concession to distribute electricity in Guayaquil after the Company broke its contract with the state, having accumulated US$97 million in 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 FILANBANCO: Plan Deadline Set For Return Of $350M To Depositors --------------------------------------------------------------- Filanbanco, formerly Ecuador's biggest bank, has until the end of June to devise a plan to return US$350 million owed to depositors since it closed last July in a liquidity crisis, reports Reuters. Banking authorities and depositors are working on a plan to set up trusts to manage resources from selling the bank's fixed- assets as well as recovering non-performing loans. Due to changes in Filanbanco's management and delays setting up the trust, Ecuador's Banking Board extended a deadline to liquidate the bank from June 10 to June 30, hoping the trusts can be created before then. The board refused to push the deadline back to July arguing that liquidating Filanbanco is a requirement for the country to tap a US$240-million credit program it's seeking with the International Monetary Fund. "This was expected, because granting an extension until July 31 - - as depositors requested -- was impossible, because of the IMF requirement," said a spokesman from the Banking Superintendency. Filanbanco was taken over by the government in December 1998 amid a financial crisis that pushed 15 institutions into state hands due to mismanagement and liquidity problems. CONTACT: FILANBANCO Av. 9 of 203 October and Pichincha Guayaquil, Ecuador Phone: 322780 ext. 2885 Fax: 329451 E-mail: mailto:administrador@filanbanco.com Home Page: http://www.filanbanco.com/ Contacts: International Business Division Germania Narv ez Brandon E-mail: mailto:mgnarvaez@filanbanco.com Legal Divison (Guayaquil) Marks Arteaga Valenzuela, Departmental Manager E-mail: mailto:mmarteaga@filanbanco.com =========== M E X I C O =========== COPAMEX: S&P Rates To US$200 Million Unsecured Notes BB- -------------------------------------------------------- Standard & Poor's said Tuesday it assigned a double-'B'-minus rating to Copamex S.A. de C.V.'s US$200 million senior unsecured notes due 2009. Copamex is one of the leading producers of value- added paper-based consumer products and industrial paper products in Mexico. Standard & Poor's also affirmed the double-'B'-minus corporate credit rating. The outlook is stable. The notes will be used to refinance existing short- and long-term debt, which totals US$525 million as of March 2002. "Improving economic market conditions during the second half of 2002 coupled with a higher value-added product mix, should allow Copamex to increase its cash flow generation in order to reduce debt and improve its financial profile," said Standard & Poor's credit analyst Beatriz Coll. Standard & Poor's expects that the company will be able to successfully refinance its existing short-term debt. The company's debt is high, with total debt to EBITDA and EBITDA interest coverage ratios of 3.8 times (x) and 2.4x respectively for the 12 months ended March 2002. Nevertheless, in the past six months, Copamex reduced an important portion of its short-term debt, diminishing Standard & Poor's concerns about the company's refinancing risk. Currently, Copamex's short-term debt represents approximately 25% of the company's total debt and with the refinancing Copamex's short-term debt is expected to represent around 15% of the total. Standard & Poor's said that the expected refinancing would provide additional financial flexibility and liberate additional cash flow, which could be used to reduce debt. During the next two years, EBITDA interest coverage and total debt to EBITDA should strengthen to about 2.6x and 3.4x, respectively. The company's operating margins have remained at around 16% in the past two years because of the lower margins at the printing and writing, and packaging divisions, due to increased price competition from imports, lower prices in the international markets, and higher expenses in the consumer products division. In the next couple of years, operating margins are expected to gradually increase to about 17% as the company increases its sales in the consumer products division. As of December 2001, Copamex's sales yielded US$832 million. The company participates in three major segments: consumer products, packaging, and printing and writing paper, which represent 48%, 24%, and 28% respectively of the company's total sales. Copamex has a well-diversified product mix, and, despite competition with the Mexican affiliates of strong multinationals, the company commands a significant share of the Mexican market for tissue, kraft, bond, and specialty papers products. Analyst: Beatriz Coll, Mexico City (52) 55-5279-2016 GRUPO BITAL: SCH Seeks Due Diligence Authority ---------------------------------------------- After increasing its stake in Grupo Financiero Bital SA to 30% of voting rights, Spain's Banco Santander Central Hispano SA now seeks authority to analyze the loan portfolio of Mexico's fourth- largest financial services company, relates Dow Jones Newswires. In a regulatory filing, Bital said that BSCH "requested a financial analysis of the institution, which is basically limited to the evaluation of its loan portfolio." Bital has already submitted BSCH's request to the National Banking and Securities Commission and is now awaiting authorization from the commission. Bital said the proposed due diligence is a "positive development, as it will establish an objective framework for BSCH to decide what kind of role it seeks to have in the institution." Bital is one of the few banks under control of Mexican shareholders. But its current US$400 million capitalization process will dramatically alter the balance of power on the board, Dow Jones Newswires suggests. In addition to SCH's minority stake, Dutch giant ING Groep NV (ING) has signed a memorandum of understanding to purchase a 17.5% interest in Bital for US$200 million. According to reports by the local media, BSCH is seeking a due diligence similar to the one ING conducted before signing its letter of intention. As minority shareholder, BSCH is entitled to make a tender offer for 100% of Bital. CONTACT: GRUPO FINANCIERO BITAL Paseo De La Reforma No. 243, Cuauhtemoc, 06500, Mexico ,D.F. Phone: 57.21.52.86 Fax: 57.21.57.83 Home Page: www.bital.com.mx Contact: Investor Relations Act. Ricardo Garza Galindo Salazar Phone: 57.21.26.40 Fax:57.21.26.26 E-mail: ricaggs@bital.com.mx SANTANDER CENTRAL HISPANO S.A. (BSCH) Plaza de Canalejas,1 28014 Madrid, Spain Phone: +34-91-558-10-31 Fax: +34-91-552-66-70 Email: investor@grupo.bsch.es Home Page: http://www.bsch.es Contacts: Ana P. Botin, Chairman, Banesto Emilio Botin-Sanz, Chairman Francisco G. Rold n, Financial Division General Manager Investor Relations: Phone: + 34.91.558.13.69 + 34.91.558.10.05 Fax: + 34.91. 558.14.53 + 34.91.522.66.70 GRUPO MEXICO: Analysts Express Mixed Expectations Despite S&P ------------------------------------------------------------- Despite the fact Grupo Mexico is in negotiations with creditors, the company is on the brink of declaring bankruptcy due to the loan conditions and the low price of copper, according to a report by rating agency Standard & Poor's. S&P analysts say this is the reason they have tagged Grupo Mexico and its subsidiary Grupo Minero M�xico with "MxCC" and "MxB" ratings, both with negative outlooks. However, analysts at BBVA-Bancomer expect differently and see a bright future for the Company. They believe that by refinancing its US$153-million debt (part of US$650 million that will expire in the short term), Grupo Mexico will begin to reduce its structural risk, although it has not yet restructured the more important US$450 million owed in November, which dates from the purchase of Asarco. Grupo Mexico is the world's third largest copper producer with operations in Mexico, Peru and the United States. 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 RAINTREE RESORTS: Moody's Cuts Ratings Following Default -------------------------------------------------------- Moody's Investors Service downgraded the ratings on Raintree Resorts International Inc.'s US$94.5 million senior notes due 2004 to Ca from Caa2 and its senior implied rating and senior unsecured long-term issuer rating to Ca from Caa2. The rating action follows the Company's failure to pay a US$6.1 million coupon due June 1, 2002. The ratings outlook is now negative and reflects the uncertainty regarding Raintree's ability to make future interest payments. Raintree is currently negotiating with Leisure Industries Corp. the sale of the Whisky Jack Resorts Ltd. and Teton Club Jackson Hole resorts, and an interest on the Cimarron Golf Resort, to obtain the funds to make the interest payments. However, Moody's believes that the amount and timing of any asset sales is uncertain at this time. Raintree is a developer, marketer, and operator of luxury vacation ownership resorts in North America with resorts in Mexico, the U.S., and Canada. To see Financial Statement: http://bankrupt.com/misc/RAINTREE.htm CONTACT: MOODY'S INVESTORS SERVICE, New York Robert N. McCreary Senior Vice President Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 MOODY'S INVESTORS SERVICE, New York Keith Foley Vice President - Senior Analyst Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 RAINTREE RESORTS INTERNATIONAL INC 10000 Memorial Drive, Suite 480 Houston, Texas 77024 Telephone: (713) 613-2800 Home Page: http://www.raintreeresorts.com/ George E. Aldrich, Senior VP - Finance/Accounting *********** 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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