/raid1/www/Hosts/bankrupt/TCRLA_Public/020807.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
Wednesday, August 7, 2002, Vol. 3, Issue 155
Headlines
A R G E N T I N A
BANCO SUQUIA: Agricole Angling for Minority Shareholders' Stake
REPSOL YPF: Continuing Argentine Investments Despite Crisis
TELECOM ARGENTINA: Creditors Likely To Take Over Control
B E R M U D A
TYCO INTERNATIONAL: CFO's Resignation Came Just As Expected
B R A Z I L
ALCOA ALUMINIO: Rating Watch Follows Sovereign Lower
AMBEV: Foreign Currency Ratings Now on Rating Watch Negative
ARACRUZ CELULOSE: Fitch Places Rating On Rating Watch Negative
BANCO BRADESCO: 1H02 Results Show Lower Net Income
CEMIG: Moody's Downgrades Ratings Over Currency Concerns
COMPANHIA PETROLIFERA: Fitch Moves To Watch Negative On Currency
COPEL: Moody's Cuts Ratings On Concern About High Foreign Debt
COPENE: Shareholders To Meet Aug 16 To Approve Asset Purchase
CSN: Fitch Puts Foreign Currency Rating on Watch Negative
CSN ISLAND: Notes Rating on Watch Negative Over Currency
CST: Unfavorable Market, Currency Prompts Rating Watch Negative
ELETROPAULO METROPOLITANA: Local, Foreign Rating Cut To Caa1
INDUSTRIAS KLABIN: Merrill Lynch Drops Recommendation To Neutral
MRS LOGISTICA: Liquidity, Refinancing Risk Prompt Watch Negative
OPP QUIMICA/OPP FINANCE: Currency, Notes Placed On Watch Neg.
PETROBRAS: Foreign Currency Rating on Rating Watch Negative
RIPASA S.A.: Fitch Places Ratings on Rating Watch Negative
SADIA S.A.: Ratings Now Watch Negative Over Currency Troubles
SAMARCO: Fitch Lowers Rating to Watch Negative, Monitoring
TELEMAR: Brazil's Currency Drags Down Ratings Watch
TELEMAR: Devaluation Betrays 2Q02 Modest Growth Numbers
TRIKEM SA: Foreign Currency Ratings Now on Rating Watch Negative
VARIG: Employees Seek Ouster of Top Execs
M E X I C O
BANCO ANAHUAC: Regulators Close Doors After Revoking License
BANCO INDUSTRIAL: Shareholders Weigh Bank's Future Options
DESC: Relevant Issues Discussed During 2Q02 Conference Call
EMPRESAS ICA: Shares Continue To Plummet On Losses, Rating Cuts
GRUPO ALFA: Investors Weigh In After Costa Rican Firm Purchase
GRUPO BITAL: To Issue $250M Notes In September
GRUPO IUSACELL: Analysts Predict Difficult Debt Restructuring
PEGASO: Inks 3-Year Licensing Deal With Spanish Soccer Team
SATMEX: Q202 Results Reflect Innova's Painful Departure
T R I N I D A D & T O B A G O
BWIA: More Delays, Flight Cancellations
BWIA: Delays, Flight Cancellations Fuel Rift
- - - - - - - - - -
=================
A R G E N T I N A
=================
BANCO SUQUIA: Agricole Angling for Minority Shareholders' Stake
---------------------------------------------------------------
French bank Credit Agricole is seeking to buy the stake of one of
its three former Argentine units. Control of Banco Suquia was
assumed by state-owned Banco de la Nacion Argentina after
Agricole decided to exit the country in May.
According to an AFX report, Agricole offered to buy 30% of Banco
Suquia held by minority shareholders at a price of 0.76 pesos per
share. The French bank said it would invest some US$6 million in
the operation.
However, Banco Suquia's shareholders were angered by Agricole's
offer, saying that the offer was way too low.
Credit Agricole pulled out of Argentina in May citing
uncertainties in the country's economic situation. The bank's
subsidiaries, Banco Bisel, Suquia and Banco de Entre Rios
(Bersa), which had about 6,000 employees and 355 branches, were
responsible for financing the bulk of Argentina's grain and
oilseeds industry, which accounted for US$9 billion of exports
last year, 40% of the country's total.
Credit Agricole is among the foreign banks that stopped funding
Argentine units after a run on deposits late last year that was
followed by a US$95-billion government debt default and currency
devaluation.
CONTACT: BANCO SUQUIA S.A
25 de Mayo 160 Cordoba
5000 Cordoba
Argentina
Phone: 0351-422-2048
Fax: 0351-420-0279
E-mail: relacioninversores@bancosuquia.com.ar
Home Page: http://www.bancosuquia.com.ar/
Contact:
Bernard Pierre Jean Brousse, Vice-President
Nestor Jose Belgrano, Director
BANCO DE ENTRE RIOS S.A. (BERSA)
Monte Caseros 128
Parana
3100 Entre Rios
Argentina
Phone: 0343-4201200
Fax: 0343-4213869
Contact: Alberto Roque Ferrero, Vice-President
BANCO BISEL S.A.
Mitre 602 Rosario
2000 Santa Fe
Argentina
Phone: 0341-4200300
Home Page: http://www.bancobisel.com.ar/
Contact:
Guillermo Harteneck, President
Jean Luc Perron, Vice President
Bernard Brousse, Vice President
REPSOL YPF: Continuing Argentine Investments Despite Crisis
------------------------------------------------------------
The deepening financial crisis in Argentina won't stop the
Spanish oil group Repsol YPF from investing in the country,
reports InfoBAE newspaper. Repsol YPF has allotted US$800 million
this year for exploration projects in Argentina.
"Investment levels in upstream operations are very similar to
last year's levels," Repsol YPF Vice President Ramon Blanco told
the newspaper.
Blanco said Repsol YPF has worked hard to deal with the effects
of the crisis, adding that the Company was concerned about export
duties and restrictions.
"We would like for the government to establish a time horizon to
deregulate all types of products before we commit to any more
long-term investments," Blanco said.
With regards to Petrobras' recent US$1.11-billion acquisition of
Argentine oil firm Pecom Energia, Blanco said, "We are concerned
about competing with a company in which the government has a 34%
stake, but we still enjoy a very good relationship with
Petrobras."
Repsol YPF is Argentina's largest energy company, employing close
to 8,500 workers and exporting US$1.83 billion worth of oil and
natural gas per year.
To see financial statements: http://bankrupt.com/misc/Repsol.pdf
CONTACTS: REPSOL YPF
Alfonso Cortina De Alcocer, Chairman & CEO
Ramon Blanco Balin, Vice Chairman
Carmelo De Las Morenas Lopez, CFO
Their Address:
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
TELECOM ARGENTINA: Creditors Likely To Take Over Control
--------------------------------------------------------
Creditors of Telecom Argentina Stet- France Telecom SA could take
control of the Company as part of Telecom Argentina's US$3.2
billion debt restructuring, according to InfoBAE newspaper. As a
result, Telecom Italia SpA and France Telecom SA, which controls
Telecom Argentina, will reduce their holdings.
The newspaper indicated that a debt-for-equity exchange was due
to be announced very soon. Morgan Stanley & Co. has been hired to
help Telecom Argentina restructure its debt.
The Company, which is the second-biggest telephone company in
Argentina, lost ARS2.3 billion (US$650 million) in the first
quarter, the second-biggest loss since it began operating in
Argentina in 1990, after the government devalued the currency and
barred companies from raising rates in an effort to curtail
inflation.
The drop in revenue made it impossible for Telecom Argentina to
pay back its debt.
In March, France Telecom said it wrote down the entire value of
its stake in Telecom Argentina, or ARS360 million ($356 million)
and was giving up control.
CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA (TELECOM)
Alicia Moreau de Justo 50, 10th Floor
Capital Federal (1107) Repoblica Argentina
Phone: +54 11 4968 4000
Home Page: http://www.telecom.com.ar
Contacts:
Alberto J. Ricciardi, Chief Financial Officer
Elvira Lazzati, Finance Director
Pedro Insussarry, Investor Relations Manager
Phone: (5411) 4968-3626/3627
Fax: (5411) 4313-5842/3109
Email: inversores@intersrv.telecom.com
MORGAN STANLEY, DEAN WITTER & COMPANY
1585 Broadway
New York, New York 10036
United States
Phone: +1 212 761-4000
Fax: (212) 761-0086
Home Page http://www.msdw.com
Contacts:
Philip J. Purcell, Chairman/Chief Executive
Robert G. Scott, President & Chief Operating Officer
Investor Relations
E-mail: indivfeedback@morganstanley.com.
Phone: (212) 762-8131
=============
B E R M U D A
=============
TYCO INTERNATIONAL: CFO's Resignation Came Just As Expected
-----------------------------------------------------------
Chief Financial Officer Mark Swartz of the former Tyco regime
resigned Thursday, a week following Edward Breen's installation
into office as the Company's new chief executive officer. The
circumstance was predicted to happen by observers.
Swartz led the acquisitions of Tyco into a 1,000-company, a $64
billion string of deals that included ADT Ltd. of Boca Raton in
1997 and last year's $2 billion deal for Sensormatic Electronics,
also of Boca Raton.
As the Company attempts to remake itself under Breen's new
leadership, analysts anticipate the disappearance of characters
related to former CEO Dennis Kozlowski's past administration to
continue. Kozlowski stepped down two months ago, a day before
being indicted on sales-tax evasion charges in New York.
Analysts are seeing the need for the new CEO to completely erase
any lingering questions about the past management, even if Swartz
is cleared of any accounting irregularities in the revived probe
by the Securities and Exchange Commission (SEC).
Swartz was actively involved in the SEC investigation regarding
Tyco's practices two year's ago. Although no significant issues
were uncovered, the SEC is renewing the probe of the Company's
accounting.
Swartz had been a due-diligence consultant at Deloitte & Touche
when he joined Tyco after Kozlowski became CEO in 1991. Swartz
and Kozlowski's alleged strategy of requiring companies they
bought to immediately add earnings was the scheme, that has
recently created doubts about the legitimacy of the Company's
numbers.
Breen has not yet named Swartz successor, but some analysts
believe the new CEO will choose someone with global and big-
company experience; someone who will concentrate on the books
rather than on a mergers-and-acquisitions, according to Knight-
Ridder Business News.
So far, Breen has hired Michael Useen, a Wharton Business School
professor, to help set new policy on running the Company.
Standard & Poor's downgraded Tyco's credit rating to its lowest
investment-grade level, with other ratings on junk status. Tyco's
debt stands at $19 billion, of which $12.7 billion comes due at
the end of 2003.
CONTACT: TYCO INTERNATIONAL LTD.
Media: Gary Holmes
Tel: +1-212-424-1314 or +1-212-424-1307
Investor Relations: Kathy Manning
Tel: +1-603-778-9700
===========
B R A Z I L
===========
ALCOA ALUMINIO: Rating Watch Follows Sovereign Lower
----------------------------------------------------
Fitch Ratings has placed the `B+' foreign currency ratings of
Alcoa Aluminio S.A. on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
AMBEV: Foreign Currency Ratings Now on Rating Watch Negative
------------------------------------------------------------
Companhia de Bebidas das Americas S.A. (Ambev) had its `B+'
foreign currency ratings placed on Rating Watch Negative by
Fitch.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
ARACRUZ CELULOSE: Fitch Places Rating On Rating Watch Negative
--------------------------------------------------------------
Fitch Ratings has placed the `B+' foreign currency ratings of
Aracruz Celulose S.A. on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
BANCO BRADESCO: 1H02 Results Show Lower Net Income
--------------------------------------------------
Banco Bradesco (NYSE: BBD) (BOVESPA: BBDC4) (Latibex: XBBDC),
Brazil's largest private bank, announced Monday its results for
the first half of 2002 (1H02). The following financial and
operating information is presented on a consolidated basis and in
reais, in accordance with Brazilian corporate legislation.
-- Net Income was R$ 904 million for 1H02, a 13.2% decrease as
compared to net income for 1H01.
- Financial Activity results attained R$ 576 million, 14.6% lower
than results for 1H01.
- The Insurance Group contributed with results of R$ 306 million,
an increment of 4.2% compared to 1H01.
- Results of other activities totaled R$ 22 million, a 70.1%
decrease in comparison to 1H01.
-- Operating Income was R$ 1,219 million, a 7.8% decrease
compared to 1H01.
-- The financial margin attained R$ 5,470 million, a growth rate
of 21.2% as compared to 1H01. In relation to average total
assets, the annualized financial margin increased to 9.5% over
9.4% in 1H01.
-- Income from financial intermediation totaled R$ 4,126 million,
a 14.5% increase as compared to 1H01.
-- The efficiency ratio was 55.3%, and even after the recent
acquisitions, increased in relation to 1H01 ratio which was
55.6%.
-- Consolidated Assets amounted to R$ 124.5 billion, a 22.2%
increase as compared to 1H01.
-- The Basle capital adequacy ratio was 14.7% on a consolidated
financial basis and 13.0% on a total consolidated basis, a growth
rate of 1.3 and 0.8 percentage points, respectively, compared
with 1H01.
-- The fixed assets to stockholders' equity ratio was 56.1% on a
consolidated financial basis and 46.6% on a total consolidated
basis, compared to 54.8% and 48.9%, respectively for 1H01.
-- The expanded combined insurance ratio dropped to 92.8%, an
improvement compared with 94.3% ratio in 1H01.
CONTACT: BANCO BRADESCO S.A.
Jean Philippe Leroy
Technical Director of Investor Relations
Tel: (11) 3684-9229
E-mail: 4260.jean@bradesco.com.br
Bernardo Garcia
Executive Manager of Investor Relations
Tel: (11) 3684-9302
E-mail: 4260.bernardo@bradesco.com.br
CEMIG: Moody's Downgrades Ratings Over Currency Concerns
--------------------------------------------------------
Companhia Energetica de Minas Gerais (CEMIG), a leading
vertically integrated electric utility in Brazil, had its ratings
downgraded by Moody's Investors Service. Ratings downgraded are
CEMIG's Brazil National Scale rating to Aa2.br from Aa1.br, and
its issuer and senior unsecured debt ratings to Ba1 from Baa3
(Global Local Currency Scale).
The rating action reflects the rating of its controlling
shareholder, the state of Minas Gerais (B3, Global Local Currency
Scale), and Moody's concerns about the Company's foreign currency
debt in light of the uncertain economic environment prevailing in
Brazil.
CEMIG has US$103 million in debt maturing this year. As of March
31, 2002, the Company's total debt is BRL2.3 billion, which
equivalent to 24% of its total capitalization. Of this total, 50%
is denominated in US dollars, which causes CEMIG to be affected
by the devaluation of the real.
Moody's thinks it's very unlikely the CEMIG's foreign ownership
(AES and Mirant) will provide significant near term support, as
the market environment in Brazil makes prospects difficult for
additional investment at present. The Company's cash on hand
(BRL1.5 Billion at March 31, 2002) provides some comfort to
investors.
In its review, Moody's will focus on CEMIG's liquidity position,
any potential need to access external financing during this
turbulent period and the possible impact of conditions at the
state and federal government levels.
The review will also assess CEMIG's ability to execute its
strategic program in light of the difficult financial markets in
Brazil and the potential for increased pressure for dividends
from its controlling shareholder, the state of Minas Gerais,
which could result in lower credit quality at CEMIG.
Cemig has 5,633MW in generating capacity, most of which is
hydroelectric, and distributes natural gas. It has "limited"
telecom investments, according to Moody's.
COMPANHIA PETROLIFERA: Fitch Moves To Watch Negative On Currency
----------------------------------------------------------------
Companhia Petrolifera Marlim had its `B+' foreign currency
ratings placed on Rating Watch Negative by Fitch.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
COPEL: Moody's Cuts Ratings On Concern About High Foreign Debt
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Companhia
Paranaense de Energia (COPEL). The ratings affected are COPEL's
Brazil National Scale rating which was downgraded to Aa2.br from
Aa1.br, and its senior unsecured debt and issuer ratings to Ba1
from Baa3 (Global Local Currency Scale).
The ratings remain under review for possible downgrade.
The cut on the ratings reflect on Moody's concerns about the
Company's significant foreign currency debt in light of the
uncertain economic environment prevailing in Brazil.
COPEL's has BRL112 million in debt maturing this year. The debt
consists of BRL 74 million and USD 11 million. COPEL's total debt
stands at BRL1.95 billion, which is equivalent to 52% of the
Company's total capitalization. Of this total, 46% is denominated
in US dollars, which causes COPEL to be affected by the
devaluation of the real. The Company's cash on hand as of March
31, 2002 was BRL216.5 million.
In its review, Moody's will focus on the Company's liquidity
position, potential needs to access external financing over time,
and the possible impact of conditions at the state and federal
government levels.
The review will also assess COPEL's ability to execute its
strategic program in light of the difficult financial markets in
Brazil and the potential for increased pressure for dividends
from its controlling shareholder, the state of Parana, which
could result in lower credit quality at COPEL.
Copel owns 4,548MW in generating capacity and has planned several
additional generation investments through its wholly owned
subsidiary, Copel Participacoes. The Company also holds smaller
telecom and gas distribution investments.
To see financial statements: http://bankrupt.com/misc/Copel.pdf
COPENE: Shareholders To Meet Aug 16 To Approve Asset Purchase
-------------------------------------------------------------
Shareholders of Brazil's petrochemicals firms Copene are due to
meet August 16 to approve the acquisition of the chemicals and
petrochemicals assets belonging to the Odebrecht and Mariani
groups.
Citing a Copene statement, Business News Americas reports that
the Company will pay BRL643.9 million (approximately US$197.2mn)
in shares to acquire the assets, which include OPP Produtos
Petroquimicos and 52114 Participacoes.
Banco Credit Lyonnais Securities, which was chosen to evaluate
the assets of the companies concerned, revealed its calculations
May 31, 2002. Accordingly, Copene was worth BRL1.69 billion, OPP
Produtos Petroquimicos BRL1.44 billion and 52114 BRL117 million.
The values of the net book assets to be transferred to Copene are
estimated to be BRL583 million for OPP PP and BRL60.9 million for
52114 Participacoes.
Copene will increase its capital from the current BRL1.2 billion
to BRL1.85 billion, through the issue of some 579 million new
common shares and 1 billion preferred class A shares.
OPP PP shareholders will receive a total of some 535.7 million
common shares and 949.2 preferred shares; while 52114
Participacoes shareholders will receive 43.6 million common
shares and 77.3 million preferred class A shares.
Also on August 16, shareholders are to approve the creation of
petrochemicals giant Braskem. Copene and consulting firm McKinsey
calculate that operational, fiscal, administrative, commercial
and financial synergies for Braskem can potentially save up to
BRL330 million a year. Braskem aims to list on the Sao Paulo
stock market's Level 1 of corporate governance, and aims to reach
Level 2 within two years. One of the principal measures extends
tagalong rights to all shareholders.
Odebrecht and Mariani have also extended a call option for the
purchase of shares in Copene currently held by the groups in
order to enable Petroquisa to maintain a shareholding stake equal
to that of Odebrecht and Mariani. The option is exercisable until
April 30, 2005.
Brazil's National Development Bank (BNDES) has agreed to
restructure debts associated with the group's companies: debts of
OPP Quimica and Trikem will be transferred to ODBPAR
Investimentos, a subsidiary of Odebrecht, which will become
Braskem's creditor for subordinated convertible debentures
maturing in 2007.
To see financial statements: http://bankrupt.com/misc/Copene.txt
CONTACT: COPENE PETROQUIMICA DO NORDESTE S.A.
Carlos Augusto de Oliveira Freitas
Tel: +55-71-632-5847
Fax: +55-71-632-5047
E-mail: caof@copene.com.br
or
Breakstone & Ruth International
Luca Biondolillo
Tel: 646-536-7012
Fax: 646-536-7100
E-mail: Lbiondolillo@breakstoneruth.com
CSN: Fitch Puts Foreign Currency Rating on Watch Negative
---------------------------------------------------------
Companhia Siderurgica Nacional S.A. (CSN) saw Fitch Ratings place
its `B+' foreign currency rating on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
CSN ISLAND: Notes Rating on Watch Negative Over Currency
--------------------------------------------------------
Fitch puts CSN Island Corp.'s `B+' guaranteed notes rating on
Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
CST: Unfavorable Market, Currency Prompts Rating Watch Negative
---------------------------------------------------------------
Fitch puts Companhia Siderurgica de Turbarao S.A.'s (CST) `B+'
foreign currency rating on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
ELETROPAULO METROPOLITANA: Local, Foreign Rating Cut To Caa1
------------------------------------------------------------
Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A. had its
local and foreign currency issuer rating downgraded to Caa1 from
B1 by Moody's Investors Service. The rating outlook is negative.
Moody's cut the ratings in light of the Company's continuing lack
of success in assuring adequate liquidity to meet its near term
debt maturities.
Eletropaulo has more than US$400 million in maturing debt in
August and is dependent on funding from BNDES, the Brazilian
Development Bank, and on a successful renegotiation of the
upcoming bank debt maturity, Moody's noted.
The BNDES proceeds were originally expected in March 2002, but
the receipt of the second and third installments have been
delayed. It appears that the Company has negotiated all necessary
documentation and proceeds are expected by the second week of
August; however, there remains uncertainty with regard to the
timing of the BNDES advances.
In order to avoid a payment default, Eletropaulo needs to
successfully renegotiate its maturing bank loans in addition to
achieving timely receipt of the BNDES loans. While negotiations
are ongoing, the current financing environment is extremely
difficult. Eletropaulo has not utilized its bank overdraft lines
and Moody's lacks confidence that these would be available if the
maturing debt is not refinanced. If the company successfully
refinances its August maturities, it has additional debt
maturities in the fall of this year that will also need to be
addressed. While the Company has recently started a process to
renegotiate the debt due in the second half of this year, the
outcome of these efforts are difficult to ascertain at the
current time, Moody's said.
Eletropaulo is the largest electricity distributor in Latin
America in terms of revenues, with a sales volume of 32,563 GWh
in 2001. Since privatization on April 15, 1998, Eletropaulo has
been owned by LightGas, now known as AES ELPA. AES ELPA is 88.21%
owned and controlled by AES. AES ELPA owns 77.81% of
Eletropaulo's voting shares and 30.97% of total capital.
CONTACT: ELETROPAULO METROPOLITANA
Avenida Alfredo Egidio de Souza Aranha 100-B,
13 andar 04726-270 San Paulo
Brazil
Phone: +55-11-548-9461, +55 11 5696 3595
Fax: +55-11-546-1933
URL: http://www.eletropaulo.com.br
Contacts:
Luiz D. Travesso, Chairman and President
Orestes Gonzalves Jr., VP Finance/Investor Relations
INDUSTRIAS KLABIN: Merrill Lynch Drops Recommendation To Neutral
----------------------------------------------------------------
Merrill Lynch reduced its equity rating recommendation on
Industrias Klabin SA, one of Brazil's largest pulp and paper
producers, to neutral from strong buy, citing refinancing risk,
reports Dow Jones Newswires.
Merrill Lynch indicates that the Company may have a hard time
obtaining new financing as it operates in a crisis-torn country.
Investors are now wary about making investments in Brazil because
of its high debt burden as well as the upcoming presidential
election.
Klabin has nearly US$540 million of debt to repay in the next 12-
months, most of which is trade finance related.
"We believe the Company may face a difficult period ahead to
rollover its debt maturities," Merrill said in a research note.
"Although rollover is expected, we believe this will result in
higher interest cost and therefore deterioration in equity
value."
To see Klabin's latest financial statements:
http://bankrupt.com/misc/Klabin.pdf
CONTACT: INDUSTRIAS KLABIN
Ronald Seckelmann, Financial and IR Director
Luiz Marciano Candalaft, IR Manager
Tel: (55 11) 3225-4045
Email: marciano@klabin.com.br
MRS LOGISTICA: Liquidity, Refinancing Risk Prompt Watch Negative
----------------------------------------------------------------
MRS Logistica S.A. (MRS) had its 'B+' foreign currency rating
placed by Fitch on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
OPP QUIMICA/OPP FINANCE: Currency, Notes Placed On Watch Neg.
-------------------------------------------------------------
Fitch placed the `B+' foreign currency ratings of OPP Quimica
S.A. and OPP Finance Ltd. on Rating Watch Negative. At the same
time, Fitch also placed the `B+' global notes rating of OPP
Finance Ltd. on Rating Watch Negative.
The rating actions follow the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the ratings on Rating Watch Negative on concern
about the increased country risk and unfavorable market
conditions for the companies as they face tighter liquidity and
greater refinancing risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the companies.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
PETROBRAS: Foreign Currency Rating on Rating Watch Negative
-----------------------------------------------------------
Fitch placed the `B+' foreign currency ratings of Petroleo
Brasileiro S.A. (Petrobras) on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
RIPASA S.A.: Fitch Places Ratings on Rating Watch Negative
----------------------------------------------------------
Fitch Ratings has placed the `B+' foreign currency ratings of
Ripasa S.A. Celulose e Papel on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
SADIA S.A.: Ratings Now Watch Negative Over Currency Troubles
-------------------------------------------------------------
Sadia S.A. had its `B+' foreign currency ratings placed on Rating
Watch Negative by Fitch.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
SAMARCO: Fitch Lowers Rating to Watch Negative, Monitoring
----------------------------------------------------------
Fitch has put Samarco Mineracao S.A.'s (Samarco) 'B+' foreign
currency rating on Rating Watch Negative.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
TELEMAR: Brazil's Currency Drags Down Ratings Watch
----------------------------------------------------
The `B+' foreign currency rating of Tele Norte Leste
Participacoes S.A. was placed on Rating Watch Negative by Fitch.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
TELEMAR: Devaluation Betrays 2Q02 Modest Growth Numbers
-------------------------------------------------------
OPERATING PERFORMANCE
Lines in service (LIS) totaled 14.9 million at the end of 2Q02, a
1.4 million line increase over 2Q01. During 2Q02, the Company
activated 669,000 lines and disconnected 527,000 lines, resulting
in net additions of 142,000 lines. Total lines in service (LIS)
also includes Public Telephones, which grew by 18% year over
year, to reach a current plant of 721,000 public phones.
The small increase in lines in service (LIS) over the quarter
reflects the Company's strategy to improve the quality of its
portfolio through customer loyalty and retention programs and
monitoring of low income clients, in order to avoid payment
delays. The volume of disconnections in the quarter (3.5% of
average platform in service over the period) also affected net
line growth.
The installed platform reached 17.7 million lines at the end of
2Q02, a 12.2% increase over 2Q01 and a 0.4% decrease over 1Q02.
Telemar keeps optimizing its installed platform, through:
- Reduction of analog lines, saving space and infrastructure
costs;
- Equipment realocation, in both external network and switches,
reducing installation and operating costs.
The utilization rate of lines installed (UTI) reached 84.6% by
the end of 2Q02, showing a continuous recovery since 4Q01. The
digitalization rate reached 97.6% in 2Q02, representing an
increase of 2.4 p.p. over 2Q01.
Lines Blocked - At the end of 2Q02 there were 912,000 lines
blocked, representing a 20.8% decrease over 2Q01 figures. From
total lines blocked (912,000) at the end of 2Q02, 60.2% were
partially blocked (for outgoing calls) while 39.8% were totally
blocked (both outgoing and incoming calls). When compared to
2Q01, there was a reduction in the ratio of lines fully blocked
(49.6%), due to initiatives to encourage customers to pay their
bills before getting disconnected.
FINANCIAL PERFORMANCE
REVENUE - Gross Revenue totalled R$ 3,774 million in 2Q02, a
14.9% increase over 2Q01. Comparing the first half of 2002 and
2001, the increase was 17.6%. Net Revenue in 2Q02 reached R$
2,780 million, a 14% increase over 2Q01, mainly driven by "local
service" and "long distance" revenues, compensating the lower
performance in "fixed to- mobile" and "network usage" revenues
Local Service (installation, monthly subscription and traffic)
revenue was R$ 1,716 million in 2Q02, a 22% increase over 2Q01.
In 1H02 this revenue increased 23.1% over 1H01, mainly due to the
rate increase put in place at the end of June, 2001, especially
in monthly subscription rates (+18%).
Installation Fees reached R$ 44 million in the quarter, a 55.4%
decrease over 2Q01, basically due to the lower number of lines
activated in the period (669,000 in 2Q02 against 1,465,000 in
2Q01). It is worth mentioning that during May, 2002, Telemar had
a Mother's Day promotion, offering lines with free installation.
Also in June, 2002, except in Rio de Janeiro, a 31% discount on
installation fees was offered to clients signing up for new lines
(first lines), generating 130,000 new lines sold, while
additional lines (second, third lines) were sold with no
installation fees (30,000 new lines activated). In 1H02,
installation fees reached R$ 87 million, 47.4% lower than in
1H01, also because of the lower number of lines activated in the
period.
Monthly subscription revenue reached R$ 1,078 million in 2Q02, a
36.4% growth over 2Q01. This revenue reached R$ 2,153 million in
1H02, a 38.1% increase over 1H01, driven by the 16.9% raise in
the average number of lines in service in the period and the
17.8% rate increase implemented at the end of June 2001.
Pulse-based revenues (local calls) reached R$ 564 million in
2Q02, a 14.5% increase over 2Q01, due to a 12.7% growth in local
traffic over 2Q01. This revenue arrived at R$ 1,092 million in
1H02, a 11.8% increase over 1H01, mainly caused by a 9.4% growth
in local traffic during this period.
Long Distance Services revenue was R$ 382 million in 2Q02, a
31.0% increase over 2Q01, due to a 19.4% traffic growth and an
average rate hike of 8% in effect as of the end of June, 2001. In
1H02, this revenue reached R$ 751 million, a 31.4% growth over
1H01, also thanks to a traffic expansion of 23% in the period,
resulting from overall market growth and an increase in our
market share.
Public Telephone Services revenue was R$ 159 million in 2Q02, a
10.9% increase over 2Q01, because of higher sales of phone card
units. This revenue was flat at R$ 307 million in 1H02 compared
to 1H01, partially impacted by an increase in the transfer of
revenues to other operators, mainly long distance carriers. It is
worth mentioning that, in 2002, public phone revenues are showing
a consistent growth quarter over quarter.
Public phone revenues include all revenues from calls made
through public phones ("local", "long-distance" or "fixed-to-
mobile").
Fixed-to-Mobile Service revenue was R$ 816 million in 2Q02, a
2.1% increase over 2Q01. In 1H02, this revenue totaled R$ 1,651
million, a 7.4% growth over 1H01. This revenue increase is due to
a 9.9% average rate increase in effect since February, 2002,
offset by a 1.8% traffic decrease in the period as a direct
consequence of the Company's campaign offering fixed-to-mobile
call blockage as an optional service to clients.
Network Usage revenue was R$ 395 million in 2Q02, a 5% increase
over 2Q01. This revenue totaled R$ 820 million in 1H02, a 13.2%
growth over 1H01. This revenue increase was caused by an
enhancement in billing and traffic measurement systems and a
slight traffic increase in Telemar's network.
Data Transmission Services revenue was R$ 223 million in 2Q02, a
10.9% increase over 2Q01. This revenue accumulated to R$ 452
million in 1H02, showing a 20.4% increase over 1H01. The growth
in this period was driven by leased lines to wireless operators
(+R$ 14 million) and IP services - IP Connect - with faster
connections and longer contractual terms (+R$ 16 million).
Besides, there was an increase of R$ 14 million in dedicated line
revenues, as a consequence of customers' migration to higher
bandwith lines.
COSTS AND OPERATING EXPENSES (ex- depreciation) amounted to
R$1,448 million in 2Q02, a R$ 51 million increase over 2Q01. The
increase in costs is a direct consequence of the plant growth in
the period. Average platform in service grew 13.3%, while
operating costs grew only 3.7% in the same period, reflecting an
improvement in cost control which resulted from the merger of the
fixed line subsidiaries into TMAR. Comparing the first half of
2001 and 2002, costs went up 7.5%, significantly less than the
average growth of LIS (16.9%). Total costs increased by R$ 51
million (3.7%), but personnel expenses decreased (lower
headcount) as well as marketing (lower advertising expenses). The
launch of our wireless (Oi) and national long distance services
at the end of the quarter did not have a significant impact on
marketing expenses in the period. Costs and expenses per average
LIS decreased 10.9% year over year.
Cost of Services increased R$ 29 million (7.5%) in 2Q02 over
2Q01, mainly due to higher costs with plant maintenance ("third
party services") and with the lease of circuits, posts and rights
of way ("other"), as a consequence of the average LIS growth of
13.3%, over the same period. This increase in network costs was
partially offset by a reduction in personnel expenses. In 1H02,
cost of services increased 15.8% over 1H01 - still below average
LIS growth (16.9%).
Interconnection: Total costs were 4.4% (R$ 25 million) higher in
2Q02 when compared to 2Q01, mainly because of the average
increase of 10.7% in mobile interconnection rates (TUM), set by
Anatel in February, 2002, but also due to lower fixed-to-mobile
traffic in the same period (see our comment on "fixed-to-mobile"
revenue). Interconnection costs rose 8.5% in 1H02 when compared
to 1H01, totaling R$ 1,187 million.
Selling Expenses (ex-bad debt provisions) dropped in 2Q02 R$ 17
million or 12.7% compared with 2Q01, due to lower marketing and
personnel expenses. In 1H02 the decrease was R$ 94 million or
31.2% in comparison with 1H01.
Bad Debt Provisions totaled R$ 158 million in 2Q02, versus R$152
million in 2Q01, representing 4.2% of the quarter's gross
revenue. This ratio shows a significant reduction from 1Q02
(5.6%) as a direct consequence of a better management of accounts
receivable and the offering of a blockage service for fixed-to-
mobile calls. In 1H02, bad debt ratio reached 4.9%, against 3.7%
in 1H01 (before the inclusion in bad debt provisions of
government and corporate customers).
General and Administrative Expenses posted, in 2Q02, a 10.8% (R$
19 million) increase in relation to 2Q01, mainly due to higher
expenses for public services (energy, post office, water). In
1H02 the increase was 14.6% (R$ 47 million) over 1H01. This also
reflects the LIS growth, partially compensated by cost reduction
initiatives implemented by the management.
Other Operational Expenses (Revenues) in 2Q02, registered a
revenue of R$ 39 million, against a revenue of R$ 29 million in
2Q01. In 1H02, this revenue came to R$ 155 million (R$ 63 million
in 1H01), mainly due to the recovery of operating expenses
related to the contributions made by the Company to its
employees' pension fund (SISTEL), to the amount of R$ 143
million, in 1Q02, as previously released to the market.
Personnel expenses totaled R$ 179 million in 2Q02, a 23.2%
reduction (R$ 54 million) over 2Q01. The drop in these expenses
in the quarter, compared to 1Q02, reflects the headcount
reduction of 968 employees in our fixed telephony businesses,
which ended 1H02 with 10,921 employees - a 48% reduction over the
2001 average headcount (21,039). Contax and Oi increased their
number of employees by 2,036 and 512 respectively over 2Q01. This
expansion in Contax was caused by the demand for new attendant
positions, as a direct impact of new contracts signed (see note
about Contax), and in Oi due to the preparation for the
commercial launch, which was authorized at the end of 2Q02.
EBITDA - totaled R$ 1,332 million in 2Q02, a 28% increase over
2Q01 (R$ 1,041 million). The EBITDA margin reached 47.9% in 2Q02,
versus 42.7% in 2Q01.
The EBITDA growth in 2Q02 reflects revenue growth and a strong
cost control, which resulted from the consolidation of the
wireline companies and the attainment of the network expansion
targets set for 2003. In 1H02, EBITDA reached R$ 2,745 million, a
29.4% expansion when compared to 1H01. The margin in the same
period reached 49.3%, which was 4.6 p.p. higher than in 1H01.
Besides operating on higher absolute revenue and EBITDA levels,
this year, as a direct consequence of the network growth, the
Company is also returning to higher levels of EBITDA margin.
The recurring 1Q02 EBITDA margin was 45.8%, excluding a non-
recurring operating revenue of R$ 143 million, related to SISTEL
pension fund (as detailed in 1Q02 Press Release).
DEPRECIATION AND AMORTIZATION - totaled R$ 954 million in 2Q02, a
R$ 225 million or 30.9% growth over 2Q01, driven by the increase
in permanent assets, as a consequence of the Capex made in 2001.
In 1H02, accumulated total expenses with depreciation and
amortization shows a R$ 474 million growth over 1H01.
NET FINANCIAL RESULT in 2Q02 was a financial expense of R$ 500
million (R$ 125 million and R$ 193 million in 2Q01 and 1Q02
respectively) as a consequence of:
Financial Revenues (interest and monetary variation) on cash and
equivalents and on loans receivable, in a total amount of R$ 136
million;
Financial Expenses of R$ 636 million, composed of interest and
other fees on loans (R$ 186 million) and on provisions for
contingencies (R$ 45 million), besides additional expenses like
CPMF, monetary adjustment of interest on capital / dividends,
options premium and others (R$ 72 million) and, mainly, expenses
related to monetary and exchange variations on loans and
financing which totaled R$ 913 million, partially offset by the
results of currency swaps, in the amount of R$ 580 million in
2Q02. The net result of monetary and exchange variation - an
expense of R$ 333 million in 2Q02 - is explained by:
- Financial costs - interest expenses (CDI based) on currency
swaps of R$ 142 million (which is accounted for as a reduction of
the currency swap results);
- Expenses related to loans hedged with currency options, given
that the corresponding gain with these options - R$ 97 million -
are not accounted for in accordance with the accrual method, but
only at maturity (1Q03);
In 2Q02, the devaluation of the Real reached 22.6%, strongly
impacting the quarter's results. Foreign currency denominated
loans, which totaled R$ 6,250 million at the end of 2Q02 - net of
a swap result of R$ 454 million - are fully hedged - 79.6%
through currency swap contracts (accounted for by the accrual
method), and the remaining amount through currency option and
forward contracts (losses recognized on the accrual basis, while
gains are recognized only upon contract maturity).
NET INCOME (LOSS) - the Company recorded a net loss of R$ 76
million in 2Q02 - (R$0.20) per thousand shares, compared with a
net income of R$ 117 million in 2Q01 - R$ 0.32 per thousand
shares. In 1H02, net income reached R$ 67 million - R$ 0.18 per
thousand shares - compared to a net income of R$ 292 million - R$
0.79 per thousand shares - in 1H01.
The Company's net results in 2Q02, therefore, were severely
affected by the increase in financial expenses, and were also
affected by the non-recognition of tax credits in the amount of
R$ 39 million, which reduced the Company's Income Tax and Social
Contribution credits, in the quarter, to R$ 45.1 million. Such
procedure was adopted in compliance with a new regulation of
"Comissao de Valores Mobili rios" (Ins. CVM 371 of June 27,
2002), based on the fact that the subsidiaries which generated
the tax losses (Contax, TNext, HiCorp, TNL.Net and Telemar
Acesso) do not show, at present, historical background and/or
expectation of a taxable income generation. Several initiatives
are being implemented by management towards the operational
restructuring of such subsidiaries, including a revision of their
operations in order to allow the generation of taxable income and
the recognition of such tax credits (amounting to R$ 62 million),
in accordance with CVM regulations.
If these tax credits were to be accounted by the subsidiaries,
the consolidated net loss in the quarter would be reduced by R$
39 million (and 1H02 net income would be increased by R$ 50
million). In addition, net result does not consider the R$ 63
million gain with options (R$ 97 million before taxes) with
maturity in 1Q03.
ACCOUNTS RECEIVABLE, net of a R$ 337 million provision for
doubtful accounts was R$2,401 million at the end of 2Q02,
compared to R$ 2,537 million at the end of 2Q01, a 5.4% decrease
year over year, in spite of revenue growth in the period.
From total accounts receivable, 79% correspond to wireline
clients and 21% to other clients, mainly telecom service
providers (using Telemar's network).
CAPEX reached R$ 386 million in 2Q02, a significantly lower
amount than in 2Q01 (R$2,081 million), reflecting the achievement
of the network expansion targets set for 2003 and the Company's
strategy to optimize the use of existing assets.
Of the 2Q02 CapEx, 65% was allocated to Oi, 20% to quality
enhancement and maintenance of the wireline network and the
remainder to improvements in network management and data
transmission systems and call center services.
In 1H02, total Capex reached R$ 825 million, versus R$ 3,893
million in 1H01, reflecting a 79% reduction in the period and 15%
ratio in relation to net revenues (82% in 1H01). Considering only
the wireline business (TMAR), Capex reached R$ 353 million in
1H02, representing 6.3% of the period's net revenue (68% in
1H01).
DEBT - Net debt at the end of 2Q02 was R$ 9,128 million, while
total debt reached R$ 9,700 million, being 64.4% in foreign
currency. Of the total debt, 12.6% is short term and the
remaining matures in over 12 months.
Of the R$ 1,220 million short term debt, some R$ 796 million will
be amortized still in 2002, using the Company's cash generation.
Local currency denominated debt totals R$ 3,450 million, of which
11.5% matures in the next 12 months, with an average cost of
17.4% p.a.. Foreign currency denominated debt (R$ 6,250 million,
net of a R$ 454 million currency swap result), with an average
cost of Libor plus 5.19% p.a. for dollar contracts, 1.65% p.a.
for yen contracts and 12.27% for a currency basket contract - is
hedged. From total hedge, 79.6% refers to currency swaps and the
remaining to currency options and foward contracts. From total
currency swaps, some 89% are contracted until the corresponding
debt maturities. For accounting purposes, the R$ 97 million gain
with currency options were not accounted for in 2Q02, in spite of
recognition of negative impact of the devaluation on the
respective loan agreements (registered as financial expenses).
In relation to 2001 year end, this increase in net debt was R$
1,426 million, which was compensated by a reduction of R$ 1,562
in the balances of supplier and other accounts payable.
In June, 2002, TNE contracted a US$98 million loan with KFW Bank
(Germany) to finance equipment acquisition (by TMAR) from
Siemens. This loan has an 8-year term and an average cost of
Libor + 4.7% p.a.. This loan was fully disbursed in July.
In May 02, an amount of R$ 127 million was disbursed at the
credit facility contracted in August 01 to finance Oi's Capex.
This facility involves the main PCS suppliers (Nokia, Siemens and
Alcatel) and a pool of banks headed by ABN AMRO Bank.
At the end of 2Q02, an amount of R$ 397 million was paid as
dividends and interest on capital. In the same period,
"Suppliers" and "Other Accounts Payable" (Current Liabilities)
totaled R$ 1,415 million, registering a R$ 1,562 million or 52.5%
reduction over 4Q01. These accounts include R$ 254 million to be
paid with long term financings, as defined in the agreements with
our suppliers.
QUARTERLY HIGHLIGHTS
OI KICKS OFF
At the end of 2Q02, Oi was authorized by Anatel to launch its
operations in 200 cities, covering 10 states of the Southeastern,
Northeastern and Northern regions in Brazil (Region 1), including
Rio de Janeiro, Minas Gerais, Bahia and Pernambuco. The promotion
that offered 31 years of free in-network local calls on weekends
registered more than 4.4 million pre subscriptions.
Oi operates in a region with ten other wireless operators, two in
each of the five areas that Region 1 was divided into for
purposes of cellular services. To increase its competitiveness,
Oi has adjusted its strategies (handsets prices, rates and plans
offered) to each area.
Oi has created different innovative pricing plans for wireless
users. Its post-paid plans are unique in the market enabling
clients to transfer unused minutes, as credits for the following
2 months. It offers 4 different post-paid monthly plans, allowing
40 to 300 minutes of use, with the respective monthly fees going
from R$29.90 to R$114.00. The per minute rate ranges from R$ 0.38
to R$ 0.75, according to the plan selected by the subscriber.
On June 24, 2002, Anatel established the maximum interconnection
rate (TU-M) to be charged by Oi, to fixed and mobile companies in
its region, at R$ 0.2921 per minute.
Clients choosing a pre-paid plan (Oi Card) plan will be able to
select a four-hour period of the day to pay reduced rates:
Morning (8 a.m. to noon); Afternoon (12 p.m. to 4 p.m.); Night (4
p.m. to 8 p.m.) or Super Night (8 p.m. to 00 a.m.). Another
option is the flat rate plan at R$ 0.99 per minute.
The client can find Oi's products and services available in more
than 1,600 points of sales including specialized dealers and
retail stores. The company has handsets supplying agreements with
Nokia, Siemens, Motorola, Sony and Ericsson, that enable Oi to
offer different handset models to its clients. It is worth
mentioning that the high speed data transmission service (GPRS)
is available in five metropolitan areas: Rio de Janeiro, Belo
Horizonte, Salvador, Recife and Fortaleza. The GPRS technology
will be extended to other cities in the next months.
- DISCOUNT ON CALLS
Oi is also offering a plan called "Oi Dez+" ("Oi Ten plus"),
which gives clients a discount up to 50% for calls to 10 numbers
they select (either another Oi number or a Telemar fixed-line
number). The discount applies when the client exceeds the amount
of minutes originally contracted.
- CAPEX REDUCTION
Oi's management has undertaken a thorough revision of the capex
budget of its original business plan, aiming at reducing
expenditures on infrastructure, redefining the size of its
platform and negotiating co-siting agreements with other wireless
operators. It already has 2,000 sites in service, of which 700
are being shared with other wireless operators in Region 1 (TIM,
Maxitel, BCP, Telemig Celular, etc.).
- CAPITALIZATION OF PRE-OPERATING EXPENSES
In 2Q02 Oi capitalized R$ 125 million as pre-operating expenses
and R$ 194 million as financial expenses, accounted for as
deferred assets for future amortization. Therefore, a total of R$
497 million was capitalized in the first half of 2002, R$ 205
million as operating expenses and R$ 292 million as financial
expenses. At the end of 2002, the number of sites built should
already represent more than 75% of the amount forecasted in the
revised business plan. Oi's management decided not to capitalize
the expenses after the launching. Therefore, they will be fully
recognized in its income statement as of the beginning of 2H02.
- INTERNATIONAL ROAMING
Oi has already concluded interconnection agreements with some ten
countries, including Portugal, Spain, Italy, Denmark and
Switzerland, and expects to extend it to 50 countries until the
end of this year. It is worth mentioning that due to the GSM
technology, its clients don't need to change handsets, contact a
call center or change their regular cell number when traveling
abroad. In July, Oi started roaming tests with Voicestream (USA).
During 3Q02, Oi expects to extend its international roaming
agreements to the following countries: Germany, Belgium, Chile,
Canada, France, Philippines, Netherlands and Venezuela.
- TELEMAR LAUNCHES DOMESTIC AND INTERNATIONAL LONG DISTANCE
SERVICES TMAR - Inter-regional - On July 20, 2002, Telemar Norte
Leste launched its domestic interregional long distance service
through the "31" pick code, for calls from its concession area
(Region 1) to anywhere in Brazil.
Oi - International - On July 06, 2002, Anatel officially
authorized Oi to launch its international long distance services
through the "31" pick code, to all telephony clients in the 16
states of Region 1.
- CONTAX
Contax, our call and contact center company, ended 1H02 with
important achievements. It launched, in Sao Paulo, a large and
modern Call Center with an initial capacity of 860 attendant
positions, which guarantees the Company's presence in the most
important market of this segment in Brazil. In 2002, the Company
expects to invest R$ 50 million in training and state-of-the- art
technology, of which R$ 25 million will go to Sao Paulo.
Entering the Sao Paulo market consolidates Contax's strategy of
exploiting the financial sector, which represents 57% of the
Call/Contact Center domestic market. The Brasilia market with the
weight of Central Government is also a priority for Contax, which
is complemented by other sectors like logistics and retail. In
Sao Paulo, Contax starts with clients like iG (ISP), CSPE
(energy), Valor Econ“mico (media) and Conectel (pager).
In 2Q02, Contax recorded R$ 43 million in gross revenue, a 9%
increase year-over-year. EBITDA reached R$ 600,000 in the
quarter. In 1H02, gross revenue reached R$ 86 million, with a 53%
increase over the gross revenue recorded in 1H01. The Company's
key drivers are to achieve scale gains, enhance quality of
services, offer customized solutions and leverage synergies with
Telemar.
- TNEXT (INTERNET DATA CENTERS)
One year after its start-up, Tnext has a portfolio of 74 clients,
hosting approximately 600 servers in its Internet Data Centers of
Rio de Janeiro and Sao Paulo. In 2002, Tnext re-positioned itself
in the market, offering infrastructure outsourcing solutions,
desktop management and contingencies systems, in addition to the
more conventional hosting solutions.
- VALUATION OF PEGASUS TELECOM
On July 11, 2002, Telemar hired the investment banks UBS Warburg
and Goldman, Sachs & Co., to conduct an economic and financial
valuation analysis of Pegasus Telecom S/A (Pegasus) concerning
the possible acquisition of control or an increase in the current
ownership interest held in the capital stock of Pegasus by TNE
and TMAR. The possible acquisition or increase in ownership
interest of Pegasus as well as the form of such transaction have
not yet been defined. Should it be decided that, within 90 days
after July 11, part of the capital or the stock control of
Pegasus will be acquired, the transaction will be submitted for
the approval of Anatel. Pegasus is an end-to-end data
transmission solution provider focused on large and medium size
businesses and other telecom operators.
Formed in 1994 by Construtora Andrade Gutierrez, Pegasus was
granted a license from Anatel, in May, 1998, to offer specialized
circuit and network services. Following are Pegasus' current
shareholders:
In June, 2002, Pegasus had a workforce of 160 full-time employees
and 91 outsourced, a reduction of 56% when compared to December
of 2001. Pegasus has the second largest data transmission network
in the city of Sao Paulo. In April, 2002, its network included
873 Km of metro rings with 770 points of presence (POPs) and
5,723 Km of long hauls with 39 POPs, connecting the main urban
areas of the South, Southeast and Midwest Brazil. By the end of
2004, the company plans to conclude the implementation of metro
rings in Belo Horizonte and Rio de Janeiro. The company has
partnerships with several other companies
and telecom operators AIX, Novadutra, Geodex, Eletronet, Intelig,
Global Crossing, Engeredes and NET, besides the operational
agreements with Telemar. Following is Pegasus' backbone and metro
rings distribution: States covered: Rio Grande do Sul, Santa
Catarina, Paran , Sao Paulo, Rio de Janeiro, Minas Gerais, Goi s
and Distrito
Federal; Metro Rings: Sao Paulo, Brasˇlia, Campinas, Curitiba,
Porto Alegre, Santos, Barueri, Guarulhos, Osasco and Sao Jos‚ dos
Campos.
- CAPITAL INCREASE AT TNE
The General Shareholder Meeting held on April 26, 2002, approved
a capital increase for TNE in the amount of R$ 167.6 million
(referring to the tax benefit of amortization of the goodwill
incorporated in December, 1999). The Company's capital increased
to R$ 4,476.8 million represented by 127,948,562,088 common
shares and 255,897,123,175 preferred shares. After the
subscription, which ended in May, 2002, the Company's capital
structure became as follows:
* Telemar Participa‡oes - 52.96% of voting shares and 18.70% of
total shares
* Treasury - 3.25% of voting shares and 2.29% of total shares
* Free Float - 43.79% of voting shares and 79.01% of total
shares
- DIVIDENDS AND INTEREST ON CAPITAL
As approved in the General Shareholder's Meeting of April 25,
2002, TNE paid, in June, 2002, a total amount of R$ 287 million
as dividends related to 2001 and TMAR paid a total of R$ 588
million as dividends / interest on capital related to 2001, of
which R$ 478 million were paid to TNE
- NEW PRODUCTS
-- PREPAID FIXED LINE
Telemar launched in June/02 the testing phase of the "Prepaid
Fixed Line" service in the cities of Bel‚m (PA), Recife (PE) and
Fortaleza (CE) in the Northern and Northeastern regions.
The "Prepaid" plan is similar to the plans offered by Oi, in
which the client does not pay monthly fees or receive bills. To
make calls the client should buy one of the 3 types of "Pre Paid"
cards available at any post office.
With a prepaid card, clients with overdue bills have the option
to continue to make or receive calls, and also better manage
their expenses. The prepaid plan allows the client to make local,
domestic, international long distance and collect calls.
-- VIRTUAL PRIVATE NETWORK (VPN) SERVICES
Telemar began offering of Safe VPN services, based on Internet
protocol, with two products of the "SafeConnect" family: TC VPN
Remote Connect: enables remote access to a company's intranet
through an Internet dial up connection; TC VPN Site Connect:
connects two or more corporate networks, facilitating intranet
and extranet buildup. It enables the connection between a
company's network and its subsidiaries, employees (through home
offices) and supplier's networks.
To keep the security of these new products, Telemar developed a
Security Management Center (CGS), within its Network Management
Center (CGR).
- VIDEOCONFERENCE SERVICES
On July, 2002, Telemar launched multi-point video conference
services for corporate clients called TC Multivideo. It covers
the entire country and has the capacity to connect up to 30
different points, with at least one point connected to a
Telemar's line. According to the Yankee Group, 42% of Brazilian
large companies will adopt corporate video conferencing solutions
in the next two years.
- LINES IN SERVICE - As a consequence of the Brazilian economic
slowdown, and the Company's strict policy of blocking and
disconnecting delinquent lines, we estimate total net additions
to LIS of up to 400,000 lines for the full year 2002;
- REVENUE - In addition to the positive impact of average local
rate (8.3%) and long distance rate increases (5%) at the end of
1H02, Telemar started, in mid July/02, to offer inter-regional
and international long distance services (outgoing calls from
Region 1), which should bring additional revenues in 2H02;
- CAPEX plan is being kept under very strict control, and we do
not expect any surprises in 2H02. We estimate a total Capex of
approximately R$ 2.0 billion in 2002, evenly allocated between Oi
and TMAR;
- BAD DEBT -The initiatives taken by the Company in the previous
quarters to prevent delinquency began to show some results during
the second quarter. We maintain the guidance of an average bad
debt ratio lower than 5% of gross revenue in 2002;
- INDEBTEDNESS - Our revised projection of Net Debt at the end of
2002 is a 15% increase over the 2001 year-end level (to be lower
than R$ 9.0 billion);
- OI - The initial outstanding results, in terms of subscriber
acquisition and network coverage, confirm management's enthusiasm
with the project rollout. Based on this, the Company is
estimating that the 12-month target of 500,000 subscribers will
be achieved still in 2002;
- PEGASUS - On July 11, 2002, the Company hired two first-tier
investment banks to conduct an economic and financial valuation
analysis of Pegasus Telecom, considering a possible acquisition.
The company commits to fully disclose any new developments
regarding this transaction.
CONTACT:
TNE- INVESTOR RELATIONS
invest@telemar.com.br
Phone: 55 (21) 3131 1314/1315/1316/1110
THOMSON FINANCIAL IR
Isabel Vieira (isabel.vieira@tfn.com)
Richard Huber (richard.huber@tfn.com)
Phone: 1 (212) 807 5026 / 014 / 110
Fax: 1 (212) 509 5824
TRIKEM SA: Foreign Currency Ratings Now on Rating Watch Negative
----------------------------------------------------------------
The `B+' foreign currency rating of Trikem S.A. was placed on
Rating Watch Negative by Fitch.
The rating action follows the placement of Brazil's sovereign
foreign and local currency ratings on Rating Watch Negative on
August 1, 2002. Fitch Ratings has placed Brazil's sovereign
ratings on Rating Watch Negative status in light of continued
unfavorable market conditions facing the country and the
consequent impact on credit fundamentals. The ratings remain at
'B+' for both foreign and local currency (Brazilian real)
denominated obligations.
Fitch placed the rating on Rating Watch Negative on concern about
the increased country risk and unfavorable market conditions for
the Company as it faces tighter liquidity and greater refinancing
risk under the current volatile environment.
Fitch will continue to closely monitor the developments in Brazil
as well as other factors that may affect the operating
environment and credit risk of the Company.
Contact: Daniel R. Kastholm, CFA 1-312-368-2070, Chicago
Rafael Guedes, +55-11-287-3177, Sao Paulo
VARIG: Employees Seek Ouster of Top Execs
-----------------------------------------
Varig's top executives find themselves in a tight spot after
employees of the largest airline in Latin America warned they
will go to court to remove their bosses amid allegations of
mismanagement, the Financial Times reports.
"We will go to court to stop the disastrous management that has
led to the financial ruin of the Company," said Flavio Souza,
head of the pilots union (Apvar), which claims to represent 1,400
- or more than 90% - of Varig pilots, the FT reports.
The employees issued their warning just days after a local judge
froze the personal assets of Varig's top executives and
controlling shareholders. The judge, on Friday, froze their
assets, citing "an astronomical deficit, proven negligence of
administrative duties and abuse of power in the squandering of
the shareholder equity." She added that there was an "imminent
danger of irreparable damage to creditors."
The airline's management, the government and potential investors
have been in repeated negotiations over a possible bailout plan
for the embattled company. However, none of these negotiations
found a solution to the airline's financial troubles.
Varig is limping under heavy debts, which have been inflated due
to the sharp depreciation of Brazil's currency. It made an annual
net loss of BRL480 million (US$1=BRL3.15999) at the end of last
year, up from losses of BRL178 million in 2000 and BRL94 million
in 1999. Its net equity fell from BRL29 million in 1999 to a
negative BRL523 million last year. Adding more to the Company's
woes is the rising competition in the sector.
Bruno Rocha, a financial consultant hired by Apvar, suggested
that behind the union's move is a reform proposal to restructure
debt, including labor and pension liabilities, which exceeds BRL6
billion.
Rocha is expected to propose a rescue plan that foresees a
capitalization of more than BRL6 billion, largely through bond
and share offerings.
"Creditors (mostly domestic banks and Petrobras, the state petrol
company) will want to renegotiate," said Rocha. "They stand to
lose more from bankruptcy because labor and pension liabilities
take precedent."
The proposal would require the Ruben Berta Foundation (RBF),
which provides services to employees, to relinquish its majority
control over the company.
Analysts see Varig's unwieldy ownership structure as the heart of
its problem. As a non-profit organization, they say, the RBF
provides no incentive for Varig to make profits.
The company has streamlined operations, reduced costs and
partially opened management to outside professionals, yet reforms
have not gone far enough, critics say. "Management is out of
touch with the market, the Company needs new leadership," said an
analyst with a local bank.
Offers of aid from the BNDES, the state development bank, are
said to hinge on such reforms.
Souza said: "If the current management doesn't go, Varig will
fail."
===========
M E X I C O
===========
BANCO ANAHUAC: Regulators Close Doors After Revoking License
------------------------------------------------------------
Mexico's federal deposit insurance agency (IPAB) has decided to
shutter local bank Anahuac after the Finance Ministry revoked its
banking license, Dow Jones Newswires reported.
The decision to liquidate the bank was reached after a technical
study conducted by the consulting firm Deloitte & Touche (D&T)
under the order of the Bank Savings Protection. D&T's probe had
indicated that the banks don't have any future as viable
businesses.
Bank Anahuac, which was taken over by financial regulators in
late 1996, has a capital deficit of totaling US$69 million.
According to IPAB, should the agency inject funds to the sick
bank, the amount could be higher as it still needs to review
Anuhauc's books. At the close of 2000, Banco Anahuac lost MXN878
million (US$93 million).
The cleanup funds will come from IPAB's deposit insurance fees
charged to other banks operating in the country.
CONTACT: IPAB
Varsovia 19 Col. Ju rez
Delegaci˘n Cuauhtemoc C.P. 06600
Phone: 52.09.55.00
E-Mail: investor-relations@ipab.org.mx
Home Page: http://www.ipab.org.mx
Investors Contact:
Adri n Hong
Phone: 5209-5636
E-mail: eahong@ipab.org.mx
Juan Pablo Trevizo
Phone: 5209-5631
E-mail: jptrevizo@ipab.org.mx
Natalia Ize
Phone: 5209-5636
E-mail: nize@ipab.org.mx
Erika Avil‚s
Phone: 5209-5500
E-mail: eaviles@ipab.org.mx
BANCO INDUSTRIAL: Shareholders Weigh Bank's Future Options
----------------------------------------------------------
Shareholders of Banco Industrial were scheduled to meet August 5
to decide whether to make a capital contribution to bail out the
institution or to leave its control in the hands of the National
Banking and Securities Commission (CNBV), which will close the
bank.
Banco Industrial was intervened in 1998 after financial problems
were detected in its assets and credit portfolio, as well as
insufficient preventive provisions for high-risk credits
estimated at MXN555 million (US$56.73 million).
Banco Industrial shareholders are expected to reject the capital
contribution, a decision, which will probably result in the CNBV
asking the Treasury Secretariat to close the bank.
Banco Industrial has less than 14,000 clients.
DESC: Relevant Issues Discussed During 2Q02 Conference Call
-----------------------------------------------------------
Desc, S.A. de C.V. (NYSE: DES; BMV: DESC) hosted its Second
Quarter 2002 Conference Call on July 26, 2002. The main issues
discussed by Luis T‚llez, Executive Vice President, and Arturo
D'Acosta, Chief Financial Officer, were the following:
- Discussion regarding the Company's Second Quarter 2002
financial results as per the press release distributed on July
25, 2002.
- The Branded Products business showed an increase of 4.7% and
8.9% in volumes and sales, respectively, during 2Q02.
- Pork Business' sales decreased 10.5%, despite the 12.8% volume
increase, due to the 14.6% decline in the pork meat sale prices.
- The Company's administrative restructure is expected to be
completed by the third quarter of 2002. Cost reductions could
reach annual savings of approximately US$ 15 million, which will
be reflected in the Company's 2003 results.
- As per the Company's strategy to divest non-productive assets,
in July Desc sold one floor at the corporate offices located in
the Arcos Bosques Tower for approximately US$ 2 million.
To see financial statements: http://bankrupt.com/misc/Desc.pdf
CONTACTS:
Arturo D'Acosta
Alejandro de la Barreda
Tel: 5255-5261-8037
abarredag@mail.desc.com.mx
Blanca Hirani
Melanie Carpenter
Tel: 212-406-3693
bhirani@i-advize.com
EMPRESAS ICA: Shares Continue To Plummet On Losses, Rating Cuts
---------------------------------------------------------------
Shares of Empresas ICA Sociedad Controladora SA, Mexico's largest
construction company, fell another 11 centavos, or 6.1%, to
MXN1.69, the eighth consecutive decline, after falling to a 52-
week low of MXN1.6 earlier, says Bloomberg.
Empresas ICA has been reporting operating losses in the last
three consecutive years. Standard & Poor's recently downgraded
the Company's credit rating to `CCC' from `B,' the third
downgrade this year, after the Company fell behind on payments to
suppliers.
Investors are now apprehensive that the Company might not be able
to meet upcoming payments on its US$531 million of debt.
To see financial statements:
http://bankrupt.com/misc/Empresas_ICA.pdf
CONTACTS: EMPRESAS ICA SOCIEDAD CONTROLADORA S.A. DE C.V.
Bernardo Quintana Isaac, Chairman/Pres/CEO
Jos, L. Guerrero Alvarez, EVP Finance and CFO
THEIR ADDRESS:
Mineria No. 145, Colonia Escand>n
11800 Mexico, D.F., Mexico
Phone: +52-55-5272-9991
Fax: +52-55-5227-5012
URL: http://www.ica.com.mx
GRUPO ALFA: Investors Weigh In After Costa Rican Firm Purchase
--------------------------------------------------------------
Shares of Alfa SA, a producer of steel, chemicals and auto parts,
fell 24 centavos, or 1.5%, to MXN15.59, after the Company,
through its food group Sigma Alimentos, acquired 100% of
Embutidos Zar, Costa Rica's biggest maker of processed meats, for
an undisclosed price, analysts said.
"We believe this acquisition sends a negative signal, although it
is not enough to change our `outperform' recommendation on the
stock," wrote Pablo Burbridge, an analyst at Salomon Smith Barney
Inc. in a research report.
Zar is one of the most important producers of processed meats in
Central America. Its "Zar" brand is the market leader in Costa
Rica, with a 30% market share. Zar produces and commercializes a
broad range of products, highly recognized and accepted by the
Costa Rican costumer. It operates one plant in San Jose, plus has
an extensive distribution network across the country. It is
expected that sales in 2002 will reach approximately US$20
million.
CONTACT: ALFA, S.A. de C.V.
Ave. Gomez Morin 1111 Sur, Col. Carrizalejo
Garza Garcia, N. L. Mexico C.P. 66254
Tel: 52 8748-1111
Fax: 52 8748-2552
GRUPO BITAL: To Issue $250M Notes In September
----------------------------------------------
Mexican financial group Grupo Financiero Bital (GF Bital) has
confirmed plans of issuing US$250 million notes on international
markets in September, Business News Americas reports. The notes
will mature in 10 years and will have a discount rate of 10%.
The issuance was part of the Company's effort to keep Bital, its
banking subsidiary, within the government's required
capitalization index for the next year. Bital is required to
raise US$600 million in new funds to meet the minimum 8%
Capitalization index. GF Bital chairman Luis Berrondo expects the
bank to have an index of at least 10% by year-end.
The financial group has hired investment bank Credit Suisse First
Boston as the issuing agent.
Last week, Bital was able to secure an agreement to sell a 19.3%
stake to Dutch bank ING for US$200 million. Earlier this year,
other shareholders also provided the company with additional
funds amounting US$136 million.
The parent company also plans inject US$280 million into Bital in
the form of dividends and profits from its other holdings.
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
CREDIT SUISSE FIRST BOSTON
New York-Headquarters
11 Madison Ave.
New York, NY 10010
Phone: 212-325-2000
Fax: 212-325-8249
Home Page: http://www.csfb.com
Contacts:
Joe L. Roby, Senior Advisor
John J. Mack, Vice Chairman and CEO
Richard E. Thornburgh, Vice Chairman, Executive Board,
CFO and Head of Support
GRUPO IUSACELL: Analysts Predict Difficult Debt Restructuring
-------------------------------------------------------------
Mexican wireless cellular and PCS service provider Iusacell saw
its shares plunge 6 centavos, or 7.4%, to 72 centavos on
analysts' talk that the Company will have trouble restructuring
its debt, relates Bloomberg.
"Iusacell requires strong capitalization from its partners," said
Rodrigo Quevedo, an analyst at Invex Casa de Bolsa SA in Mexico
City. The Company's 2006 bonds need restructuring because they
are paying high interest rates given current market conditions."
Standard and Poor's recently lowered the Company's foreign and
local currency credit ratings to `B+' from `BB' due to "further
erosion of Iusacell's market share and revenues."
"The downgrade also incorporates our growing concerns about the
company's debt service and refinancing ability," S&P added.
S&P warned that the rating could be reduced even further if the
cellular telephone company does not implement operational and
financial measures to revert the negative trend in its financial
statements.
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV: CEL) is a
wireless cellular and PCS service provider in seven of Mexico's
nine regions, including Mexico City, Guadalajara, Monterrey,
Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service
regions encompass a total of approximately 91 million POPs,
representing approximately 90% of the country's total population.
Iusacell is under the management and operating control of
subsidiaries of Verizon Communications Inc. (NYSE: VZ).
To see financial statements:
http://bankrupt.com/misc/Grupo_Iusacell.htm
CONTACT: Investor Contacts:
Russell A. Olson
Chief Financial Officer
Phone: 011-5255-5109-5751
E-mail: russell.olson@iusacell.com.mx
Carlos J. Moctezuma
Manager, Investor Relations
Phone: 011-5255-5109-5780
E-mail: carlos.moctezuma@iusacell.com.mx
PEGASO: Inks 3-Year Licensing Deal With Spanish Soccer Team
-----------------------------------------------------------
Mexican wireless company Grupo Pegaso and Real Madrid Football
Club signed a three-year agreement, the value of which was not
disclosed. According to the soccer team, the deal gives Pegaso,
which is controlled by Telefonica Moviles, the rights to sell
Real Madrid's brand and products in Mexico.
Real and Pegaso will open stores selling team products, bring the
team's television channel to Mexico, run a Real Madrid Web site,
and create a soccer school in Mexico City, among other projects
that were not specified, said Florentino Perez, chairman of Real
Madrid.
Telefonica Moviles, the wireless unit of the biggest phone
company in Spain and Latin America, agreed in March to pay US$884
million in cash and debt for Pegaso.
CONTACT: PEGASO PCS, SA OF CV
Stroll of the Tamarinds 400A,
Floor 4, Forests of Hills
Mexico, DF 05120
Phone: (55) 5806,8700
Fax: (55) 5806.9080
E-mail: atencionclientes@pegasopcs.com.mx
Home Page: http://www.pegasopcs.com.mx/
Contact:
Roberta Lopez Negrete
Manager of Strategic Communication
Phone: 261 66 38 Fax: 261 66 98
Email: rlopez@pegasopcs.com.mx
Eduardo Jimenez Urias
Phone: 261 66 34
Fax: 261 66 91
E-mail: ejimenez@pegasopcs.com.mx
SATMEX: Q202 Results Reflect Innova's Painful Departure
-------------------------------------------------------
Satelites Mexicanos, S.A. de C.V. ("Satmex") announced its
financial results for the quarter ended June 30, 2002, posting
revenue of $20.4 million, and EBITDA (earnings before interest,
taxes, depreciation and amortization) of $11.1 million, a 55%
EBITDA margin.
Second Quarter Highlights
-- Second quarter bookings of $ 22.9 million
-- Backlog of $359.7 million at June 30, 2002
-- Weighted average contract life of 4.8 years
-- Several long term contracts renewed with key Mexican clients
-- Satmex 6 construction program on plan, scheduled for launch in
Q1-03
Financial Results for the Period Ended June 30, 2002
Revenue
Revenue for the second quarter of 2002 was $20.4 million, as
compared to $32.8 million for the same quarter in 2001. The year
over year decrease is due mainly to lower capacity utilization of
Solidaridad 2 caused by contract cancellations and non-renewals.
The transponder lease for Satmex's largest customer, Innova,
ended on March 31, 2002. Innova represented approximately 19% of
service revenue for the quarter ended June 30, 2001 and accounts
for approximately half of the decline in revenue.
Operating Expenses and Profitability
Cash operating expenses (total operating expenses excluding
depreciation and amortization) decreased 16% to $9.3 million in
the second quarter of 2002, compared to $11.1 million during the
second quarter a year ago.
-- Satellite operating costs, which consist primarily of
satellite insurance and personnel costs related to the operation
of the satellites, were $4.7 million for the second quarter of
2002, a 5% decrease compared to $5.0 million in the same quarter
of last year.
-- Selling and administrative expenses in the second quarter of
2002 decreased 18% to $4.3 million, from $5.2 million in the same
quarter last year. The decrease was primarily due to planned
expense and personnel reductions.
EBITDA was $11.1 million in the second quarter of 2002, as
compared to $21.8 million during the second quarter last year.
Depreciation and amortization expense was $11.8 million in each
quarter.
Liquidity and Capital Resources
At June 30, 2002, Satmex had cash and cash equivalents of $27.3
million, as well as $66.7 million of restricted and segregated
cash of which $20.9 million is available for debt service on the
senior secured notes and revolving credit facility and $45.8
million is available to fund the construction and launch of
Satmex 6.
Capital expenditures for the first six months of 2002 were $70.5
million, which included $69.5 million for the construction of
Satmex 6 and $1.0 million for capital expenditures not related to
Satmex 6. In the first six months of 2002, $68.8 million of the
cost of Satmex 6 was funded through the use of the restricted and
segregated cash account. Capital expenditures are expected to be
in the $110-120 million range for all of 2002, primarily to fund
the construction and launch of Satmex 6.
At June 30, 2002, Satmex had total debt of $542.9 million. At
June 30, 2002, Satmex was in compliance with all covenants
governing its debt agreements.
About Satmex
Satmex, the leading Mexican satellite operator in the Americas,
owns and operates a satellite system through which it offers
broadcast, telephone and telecommunications services to 39
countries in the region. The Satmex fleet also helps develop
rural areas by offering distance learning and rural telephony
services. And, through its business partners in the NAFTA region
and Latin America, Satmex provides high-speed connectivity to
ISPs and Digital Broadcast Services (DBS), thus contributing to
the integration of Latin America with the rest of the Continent.
Satmex is ISO 9001 certified. Satmex is a member of the Loral
Global Alliance and offers its customers the advantages of a
worldwide network of satellite capacity, providing global
satellite solutions to the needs and requirements of the
Americas. For more information, please visit the Satmex web site
at http://www.satmex.com.
About Principia
Principia is a leading Mexican telecommunications company that is
majority owned by certain members of the Autrey family and Mr.
Lauro Gonzalez. In 1997, Principia and Loral Space &
Communications were selected to acquire 75 percent of Satmex in
connection with the privatization of Mexico's fixed satellite
services.
About Loral Loral Space & Communications is a high technology
company that concentrates primarily on satellite-based services
and satellite manufacturing, including broadcast transponder
leasing and value added services, domestic and international
corporate data networks, broadband data transmission and Internet
services. For more information, visit Loral's web site at
http://www.loral.com.
To see financial statements: http://bankrupt.com/misc/Satmex.htm
CONTACT: SATELITES MEXICANOS, S.A. DE C.V.
Cynthia Pelini
Phone: +52-55-5201-0808
LORAL
Tony Doumlele
Phone: +1-212-338-5214
Home Page: http://www.satmex.com
=================================
T R I N I D A D & T O B A G O
=================================
BWIA: More Delays, Flight Cancellations
---------------------------------------
Trinidad national airline BWIA has recently experienced an
increase in the numbers of delays and flight cancellations that
led to loses in income and require other expenditures.
A pilot shortage on Sunday has cancelled one of the airline's
most profitable flights: the 414 flight bound for Kingston,
Jamaica, which was due to leave Piarco Airport at around 7 a.m.
On Saturday, flight 483 bound for Trinidad was delayed, leaving
Miami at 9 am Sunday instead of 8 pm Saturday.
According to the Trinidad Express, mechanical problems delayed
the flight of plane 484 from Piarco to Miami, where the plane is
to turn around and return to Piarco with another plane-load of
passengers. As the flight arrived several hours later than
scheduled, the crew had to stay overnight in Miami to meet the
required amount of rest before taking another trip. Pilots are
required by international law to get 12 hours of rest in between
flights.
Aside from the loss of income, the delays and cancellations had
also led the airline to lose money as the Company has to shoulder
expenses in ushering customers to other airlines in order for
them to catch connecting flights. The airline also had to
compensate stranded customers with room and board expenses.
In the Company's apologies to clients, the airline cited the
crew's frequent calling in sick as the reasons for the delays.
In separate reports, the pilots are said to be negotiating an
average minimum salary of up to US$77,500 a year.
The management of BWIA has for some time been in negotiations
with the Trinidad and Tobago Airline Pilots' Association (TTALPA)
for better wages and conditions for its members.
CONTACTS: BWIA West Indies Airways
Phone: + 868 627 2942
E-mail: mailto:mail@bwee.com
Home Page: http://www.bwee.com/
Contacts:
Conrad Aleong, President and CEO (Trinidad)
Beatrix Carrington, VP Marketing and Sales (Barbados)
Paul Schutz, Chief Financial Officer (Trinidad)
BWIA: Delays, Flight Cancellations Fuel Rift
--------------------------------------------
A week of flight delays and cancellations has heated up the rift
between Trinidad's state-owned BWIA and its employees. The
Company blamed the delays on striking crew who frequently called
in sick, a charge the employees denied.
According to the Trinidad Guardian, the airline staff was irked
by the statement of the airline communications manager, Clint
Williams, attributing the delays to the "unavailability of the
crew." Williams denied any official notice of a go slow or work-
to-rule issued by the airline to cause the delays.
He also claimed that the July/August schedule is always a heavy
schedule, but that, in fact, this year's schedule is slightly
less than last year.
Speaking for the employees' side on the other hand, the Aviation
Communication and Allied Workers Union claimed that there are
areas in the airline left with not enough crew as a result of the
reduction of employees over the past few years. Adding to the
burdensome workload is the addition of new flights.
***********
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
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Information contained herein is obtained from sources believed to
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contact Christopher Beard at 240/629-3300.
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