/raid1/www/Hosts/bankrupt/TCRLA_Public/020917.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, September 17, 2002, Vol. 3, Issue 184
Headlines
A R G E N T I N A
ARGENTINE BANKS: Duhalde Sees Chaos If SC Upholds Ruling
CTG: To Meet With Bondholders In New York
ENERSIS: To Appeal ICC Decision Regarding Distrilec Board
REPSOL YPF: Blames 1H02 Losses On Peso Devaluation
TELECOM ARGENTINA: Results Improve Despite Difficult Conditions
B E R M U D A
GLOBAL CROSSING: Bermudian Creditors Must File Claims Soon
GLOBAL CROSSING: To File Reorganization Plan
TYCO INTERNATIONAL: Declares Regular Quarterly Dividend
TYCO INTERNATIONAL: Financial Statements Remain Unchanged
TYCO INTERNATIONAL: Investors Blame Board for Execs Spree
B R A Z I L
BANCO BRADESCO: Issues US$100M In 92-day Bonds
BCP TELECOMMUNICACOES: Violates Contract With Creditors
CSN: BNDES Position in Corus Deal Could Delay Transaction
ELETROPAULO METROPOLITANA: Restructures $113.9M Of Bonds
VARIG: Net Loss Doubles On Currency Troubles, Debt Costs
C H I L E
TELEX-CHILE: Looks To Expand Via Mobile Telephony Services
TRANSELEC: IFC Board Delays Decision On $60M Investment
C O L O M B I A
TELECOM: Teeters On The Verge of Total Financial Collapse
M E X I C O
GRUPO MEXICO: Fitch takes Multiple Rating Actions
T R I N I D A D & T O B A G O
BWIA: 40 Pilots Could Lose Jobs If Company Gets Rid Of Dash 8's
BWIA: Forms Strategic Partnership With LIAT
U R U G U A Y
BANCO DE CREDITO: St George, Govt., CB To Negotiate Reopening
UTE: Won't Make September Debt Payments
- - - - - - - - - -
=================
A R G E N T I N A
=================
ARGENTINE BANKS: Duhalde Sees Chaos If SC Upholds Ruling
--------------------------------------------------------
Argentine President Eduardo Duhalde warned that the country is
heading for chaos if the Supreme Court upholds a lower court
ruling handed down Friday declaring withdrawal limits
unconstitutional. The ruling also affects the conversion of
frozen dollar savings into pesos and a decree blocking lawsuits
against the savings freeze.
Reuters reports that the Argentine government plans to appeal
Friday's ruling in a case brought by the ombudsman that applies
to all depositors which could, if upheld, scuttle banks teetering
on collapse amid the worst recession in the nation's history.
"If the country enters what I imagine it could enter, if we go
backwards on these policies which are bringing us gradually back
to normal, we could enter chaos and no one will recover
absolutely anything," Duhalde told a local radio station.
Bankers have said they do not have enough US dollars on hand to
pay depositors in the event the Supreme Court upholds the rulings
and there likely are not enough pesos available to reimburse
those savings at current exchange rates.
"Depositors will not be able to recover their savings and we will
not be able to make the economy grow," Duhalde said.
The government is under pressure to control spending and rescue
the banks as a condition for aid from the IMF but said it will
comply with a Supreme Court ruling against a 13% government wage
cut to pensioners and state employees.
CTG: To Meet With Bondholders In New York
-----------------------------------------
Argentine thermo generator Guemes (CTG) invited bondholders to a
meeting, which will be held on September 17-19 in the offices of
Morgan, Lewis and Bockius in New York. The company, in a
statement to the Buenos Aires stock exchange, disclosed that the
meeting will focus on how Argentina's financial, political,
regulatory and business situation affects its capacity to meet a
looming interest payment.
Guemes is facing an interest payment in September on US$54
million bonds that expire in 2010. The Company is seeking to
renegotiate the terms to "make possible the payment of capital
and interest on the bonds, in the face of this country's new
financial situation," CTG said in the statement.
To see latest financial statements:
http://bankrupt.com/misc/CTG.doc
CONTACT: Central Termica Guemes S.A.
Avenida Leandro N Alam 822
Piso 12
Ciudad Autonoma de Buenos Aires C1001AAQ
ARGENTINA
Tel. +54 4311-6064/6065/6066
MORGAN, LEWIS AND BOCKIUS (New York, New York)
101 Park Avenue
New York, NY 10178-0060
Tel: 212-309-6000
Fax: 212-309-6273
ENERSIS: To Appeal ICC Decision Regarding Distrilec Board
---------------------------------------------------------
Chilean holding company Enersis is considering appealing a
decision by the Paris-based International Chamber of Commerce
(ICC) that the board of Argentine investment group Distrilec,
controller of Buenos Aires distributor Edesur, should be
comprised of five directors from Enersis and five from Argentine
energy company Pecom. An Argentine court ruled in favor of Pecom
in May 2000, which had argued for equal representation. Pecom
owns 49% of Distrilec while Enersis and subsidiaries own 51%.
On Friday, Enersis lost 2.88% to CLP75.75 after Moody's Investor
Service downgraded the Company's as well as its generator Endesa
Chile's credit rating the previous day to Baa3 from Baa1. The
revision reflected a greater reliance on cash flows from more
unpredictable non-Chilean operations, including Argentina and
Brazil.
To see financial statements:
http://bankrupt.com/misc/Enersis.pdf
CONTACT: ENERSIS
Investor Relations:
Ricardo Alvial
Chief Investments & Risks Officer of Enersis
Email: ram@e.enersis.cl
Phone: (562) 353-4682
Susana Rey, srm@e.enersis.cl
Ximena Rivas, mxra@e.enersis.cl
Pablo Lanyi-Grunfeldt, pll@e.enersis.cl
REPSOL YPF: Blames 1H02 Losses On Peso Devaluation
--------------------------------------------------
Due to the devaluation of the Argentine peso, Spanish-Argentine
oil company YPF registered losses in the first half of 2002.
In a statement to the local market regulator, the company
reported a loss of ARS796 million (Us$217 million) in the first
half of this year.
The company says the loss was also brought about by the
pesification of YPF's assets during the period. According to YPF,
exposure to the exchange rate cost YPF ARS2.25 billion.
However, the company's financial situation is improving, with
profits of ARS1.04 billion in the second quarter, after losses of
ARS1.84 billion in the previous quarter.
YPF ended the first half with ARS15.8 billion in liquidity.
CONTACT: 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: Results Improve Despite Difficult Conditions
---------------------------------------------------------------
In its official financial results announcement, Telecom Argentina
highlighted numerous points which are later detailed below:
* End of investments in MobilCom
* A business model, which generates considerable unleveraged free
cash flow
* Sustained growth in revenues (+10%), EBITDA (+ 13.2%) and
operating income (+17.3%)
* Higher profit margins as a result of intensified management
controls
* Net results impacted by non-recurring provisions
* Consolidated revenues: 22.5 billion euros (+10% over 1H 2001),
of which 40% from outside France
* EBITDA: 6.9 billion euros (+13.2%)
* Operating income: 3.2 billion euros (+17.3%)
* Recurring income before tax: 1.0 billion euros
* Non-recurring provisions and other exceptional items: (11.1)
billion euros
* Net loss (after minority interests): (12.2) billion euros
* Net debt: 69.7 billion euros
* Net Group unleveraged free cash flow from operations: 3.6
billion euros (+67%)
Sustained growth and steadily rising operating margins: +13.2%
for EBITDA and +17.3% for operating income France Telecom's
results from operations were up significantly in all of the
Group's fixed-line, wireless and Internet businesses, reflecting
a strong increase in the operating profitability of its core
activities. Between the first half of 2001 and the first half of
2002, consolidated revenues increased by 10%, EBITDA by 13.2% and
operating income by 17.3%. On a pro forma basis(1), growth for
the first-half of 2002 was just over 2% for revenues, 10% for
EBITDA and 15% for operating income.
These results reflect the excellent operating performance of new
businesses, including wireless and Internet activities, as well
as operations outside France. For the first six months of 2002
these high-growth segments accounted for nearly 69% of total
Group revenues, up from 64% in 2000 and 66% in 2001. These
activities have fully benefited from sustained expansion in new
services such as broadband Internet and wireless data services
(SMS, WAP or GPRS). Operating results for first-half 2002 also
reflect the competitiveness of fixed-line services in France.
New business areas currently account for 48% of Group EBITDA, up
from 34% a year earlier. As a result of sustained growth in new
businesses, ongoing management controls and lower capital
expenditures, France Telecom's gross operating margins
(EBITDA/revenues) advanced from 28.4% for first-half 2001 to
30.6% for first-half 2002 on a pro forma basis.
The growth strategy pursued by the Group over the past five years
has continued to yield positive results. Growth remains sustained
and France Telecom's operating profitability and its ability to
generate unleveraged free cash flow have increased significantly.
* Orange, the market leader in France and the UK, outstripped
expectations in the first half of 2002. Revenue growth was 13.8%,
the customer base expanded 16.6% in one year, and the trend in
average annual revenue per user was encouraging, both in France
and in the UK. The 41% jump in EBITDA reflects the increasing
profitability of this segment. In addition, the ratio of EBITDA
to network revenues was 31.3% in the first half of 2002, up from
26.1% in the first half of
2001.
* Wanadoo, Europe's No. 2 ISP, is ahead of schedule in achieving
its development objectives. For the first time since its IPO,
Wanadoo reported positive EBITDA of 29 million euros,
underscoring the significant improvement in its profitability.
Wanadoo's Internet access services also showed strong growth,
both in France and other countries, as revenues surged 88.8% for
the first six months of 2002.
* Equant reached breakeven for operations despite a difficult
business environment. EBITDA was 78 million euros at June 30,
2002, up from an EBITDA loss of 11 million euros at June 30,
2001. This performance is the result of more efficient cost
control and the initial effects of synergies achieved following
the merger with Global One.
* For the first half of 2002, TP Group (Polish carrier T.P.S.A.
and its subsidiaries, including wireless operator PTK Centertel)
consolidated in France Telecom's accounts since April 1, 2002,
recorded an increase of over 10% in EBITDA versus first-half 2001
on a pro forma basis. The EBITDA margin reached 42.1% at June 30,
2002, up from 36.6% at June 30, 2001. With its portfolio of
fixed-line, wireless and Internet businesses, TP Group is a
profitable company, with considerable growth potential in all its
markets.
* As anticipated, the fixed-line segment has demonstrated its
competitiveness: the one-time decrease observed in local call
market share in the first quarter of 2002 was not repeated in the
second quarter. France Telecom's share of the local and long-
distance markets is stabilizing. In addition, the fixed-line
segment benefits from fresh growth impetus from new services such
as ADSL, which had 730,000 customers at the end of June 2002.
Companies in which France Telecom has a controlling interest had
a total of 107.3 million customers at the end of June 2002,
making it one of Europe's leading telecommunications operators.
The Group has achieved critical mass in all its core businesses,
and is now consolidating its positions. Orange, the market leader
in France and the UK, has established itself as a major pan-
European brand; Wanadoo has further strengthened its presence in
Spain with Eresmas; and Equant is increasing its profitability
following the successful merger with Global One.
A business model that generates significant unleveraged free cash
flow: 3.6 billion euros (+67%) France Telecom's business model,
based on the generation of free cash flow, is efficient. Strong
growth in EBITDA from all segments and increases in unleveraged
free cash flow have been made possible by stable cash flows from
mature businesses, coupled with a strong increase in the
profitability of new activities. For the six months ending June
30, 2002, the increase in unleveraged free cash flow accelerated
significantly to more than 3.6 billion euros, up 67% over the
first half of 2001.
Unleveraged cash flow from fixed-line telephony in France was up
more than 8% during the period thanks to a marked reduction in
capital expenditure.
During the same period, the Group's growth businesses also
generated more than 1 billion euros of free cash flow. This
compares with negative free cash flow of 570 million euros for
the year-earlier period. This strong increase is due mainly to
improved margins for wireless activities. For the first six
months of 2002, Orange had unleveraged free cash flow of 871
million euros, compared with 201 million euros for the first half
of 2001.
Non-recurring provisions, due mainly to MobilCom, totaling 10.8
billion euros
MobilCom
In 2001, a disagreement arose between Gerhard Schmid, MobilCom,
France Telecom and Orange as to the conditions of application of
the cooperation framework agreement, in particular with respect
to MobilCom's business plan for development of its UMTS activity
and the ability of France Telecom to approve this plan.
On June 11, 2002, France Telecom and Orange informed MobilCom and
Gerhard Schmid that they were terminating the cooperation
framework agreement, following a series of serious breaches of
the agreement by Gerhard Schmid and MobilCom.
On June 21, 2002, Mr. Schmid was dismissed from his position as
Chief Executive Officer by decision of MobilCom's Supervisory
Board.
Once the violation of the cooperation framework agreement by Mr
Schmid and MobilCom was established, France Telecom started
discussions with the various parties involved in order to
determine whether a solution acceptable to all could be found to
ensure the future of MobilCom. In this spirit, on July 30, 2002,
France Telecom signed a Memorandum of Understanding with the bank
syndicate that had granted MobilCom a credit facility of 4.7
billion euros. This agreement provides that the banks would sell
the MobilCom loans to France Telecom in exchange for Subordinated
Perpetual Convertible Securities convertible into shares of
France Telecom. Similar agreements have been signed with respect
to vendor financing loans.
After the dismissal of Mr. Schmid from MobilCom's Management
Board, an in-depth operational, strategic and legal analysis of
MobilCom was undertaken with internal and external experts on
behalf of France Telecom and Orange.
The conclusions of these in-depth analyses obtained in August and
September 2002 showed the structural difficulties of MobilCom,
the significant decline in its results and the weakness of its
customer base. These results have led France Telecom to conclude
that MobilCom's UMTS activity is not viable on a standalone
basis.
Furthermore, the lack of any change in the German regulatory
framework necessary for market consolidation and the European
Commission's decision to apply the subsidiarity principle to
national legislation on this issue have also contributed to the
loss of the reasonable expectation of consolidation among UMTS
players in Germany, as France Telecom had anticipated when it
closed its 2001 accounts.
From a strategic standpoint, the evolution of the German market,
which is characterized by an excessive number of UMTS
licenseholders, the lack of flexibility of the German regulatory
framework necessary for market consolidation, combined with the
troubling situation of MobilCom revealed by the in-depth analyses
undertaken and the significant deterioration of relationships
between shareholders, led the Board of Directors of France
Telecom to decide, at its meeting on September 12, 2002, not to
seek to take control of MobilCom and to no longer respond to its
requests for financial support.
However, France Telecom has expressed its hope to seek to
implement the agreements reached with the banks and equipment
suppliers of MobilCom, with a view to purchasing their loans in
exchange for Subordinated Perpetual Convertible Securities
convertible into shares of France Telecom.
As a result, France Telecom took a provision for risks of 7
billion euros in its accounts for the six months ended June 30,
2002 related to the purchase of liabilities from banks and
suppliers, and a total depreciation of the 290 million euros in
shareholder loans granted by France Telecom to MobilCom in the
first half of 2002.
Deferred income taxes
The 7.3 billion euro provision for MobilCom and the drop in the
France Telecom share price have led to a deferment of the date at
which further taxes will be paid and a recalculation of the basis
used for determination of deferred tax assets.
Under these conditions, the application of prudent accounting
principles, which under accounting norms take precedence over the
recognition of deferred tax assets, resulted in a provision for
net deferred tax liabilities of 1.8 billion euros.
69.7 billion euros in net debt at June 30, 2002
Net debt totaled 69.7 billion euros at June 30, 2002. This
compares with 63.4 billion euros at December 31, 2001.
The net debt/EBITDA ratio was 5, calculated on a pro forma basis
over a rolling 12-month period, and the average cost of net debt
for the first half of 2002 was 5.25%.
France Telecom's net debt is expected to decline slightly during
the second half of 2002 due to assets disposed since June 30,
2002 (TDF for 1.6 billion euros, Stellat for 200 million euros
and Casema for 700 million euros) and anticipated cash inflows in
excess of 1.5 billion euros, from the disposal of Noos, the sale
of receivables, and unleveraged free cash flow.
Moreover, the amount of credit lines currently available - 7.15
billion euros at June 30, 2002 - is expected to be maintained
through the end of this year.
As noted above, France Telecom expects at least 4 billion euros
in additional financial resources by the end of this year from
unleveraged free cash flow, disposals of non-core assets and from
the sale of receivables, both already executed or planned over
the coming months.
Cash outlays, either already completed in or planned for the
second half of 2002, total 4.2 billion euros, covering financial
investments, the portion of dividends paid in cash and debt
repayment. Credit lines available at December 31, 2002 are
therefore expected to total approximately 7 billion euros.
Long-term debt repayments should reach 7.5 billion euros in the
first-half of 2003. This amount is expected to be covered by
available credit lines and cash generated by operations.
France Telecom's full-year results will confirm the strong
increase in its operating profitability. For the third
consecutive year, annual pro forma EBITDA growth should exceed
10%.
Consolidated results for the first half of 2002
The following table sets forth France Telecom's revenues, EBITDA
and operating income for the six months ended June 30, 2001 and
2002 and the percentage changes between these periods on a
historical and a pro forma basis:
Six months ended June 30
2002 2001 2001 02/01 02/01
pro forma historical pro forma historical
(euros in millions) (% change)
Revenues 22,472 21,992 20,424 2.2% 10.0%
EBITDA(1) 6,870 6,256 6,066 9.8% 13.2%
Operating
income 3,182 2,767 2,714 15.0% 17.3%
(1) EBITDA: operating income before special items, net and
depreciation and amortization On a historical basis, France
Telecom's revenues increased 10% due to growth in the internet,
wireless and data services operations. Revenues from
international operations, which increased by a multiple of three
since June 30, 2000, reached 40% for the first half of 2002,
compared to 33.6% for the first half of 2001.
Between the first half of 2001 and the first half of 2002, EBITDA
increased by more than 13% and operating income increased by more
than 17%.
In order to permit a more meaningful comparison with the first-
half of 2002, pro forma information is presented for the first-
half of 2001, which restates the first-half 2001 results using
the same scope of consolidation as first-half 2002. In
particular, these figures are calculated to give effect, as of
the first half of 2001, to the consolidation of the TP Group (TP
SA and its subsidiaries), Equant, Freeserve and Indice
Multimedia, the consolidation using the equity method of Telecom
Argentina, and the effects real estate sales.
On a pro forma basis, revenues in the first half of 2002
increased by slightly over 2%, EBITDA increased by nearly 10% and
operating income increased by 15%, emphasizing the growth in
France Telecom's operational profitability.
Due to the improved profitability in high-growth businesses and
continuing progress in internal controls, France Telecom's EBITDA
margin (EBITDA divided by revenues) increased from 28.4% for the
first half of 2001 on a pro forma basis to 30.6% for the first
half of 2002.
Operating income to net recurring income
(euros in millions)
Six months ended Six months ended
June 30, 2002 June 30, 2001
Operating income 3,182 2,714
Interest expenses, net (1,754) (1,967)
Discounting of early
retirement liability (126) (114)
Foreign exchange loss, net (87) (399)
Employee profit sharing (51) (71)
Equity in net income of
affiliates (163) (292)
Net recurring income
before taxes 1,001 (129)
Despite the high level of France Telecom's indebtedness, interest
expenses, net decreased 11% during the first half of 2002
compared to the first half 2001. The decrease was mainly due to
the issuance of exchangeable bonds, which have lower interest
rates than traditional bonds.
Excluding exceptional items, recurring income before taxes
increased by 1.1 billion euros, showing France Telecom's
increased profitability (excluding exceptional items).
Net recurring income to net loss
In millions of euros Six months ended Six months ended
June 30, 2002 June 30, 2001
Net recurring income
before taxes 1,001 (129)
Other non-operating
income (expense), net (11,139) 1,778
Income taxes (496) 1,439
Income (loss) before
goodwill amortization (10,634) 3,088
Goodwill amortization (1,466) (1,353)
Minority interests (76) 216
Net income (loss) (12,176) 1,951
Other non-operating income (expense), net includes in particular
the provisions taken with respect to MobilCom (7.3 billion euros)
and the shares and other securities of NTL (1.7 billion euros).
MobilCom
See the section "Non-Recurring Provisions, due mainly to
MobilCom, totaling 10.8 billion euros."
NTL
At June 30, 2002, France Telecom, based on an estimated market
value of the "New NTL" warrants 143 million euros, took:
-- A provision of 1,263 million euros for additional
depreciation for the securities remaining on its balance sheet,
-- A provision of 400 million euros for the option to purchase
preferred shares held by financial institutions, which were
indeed purchased by France Telecom on July 12, 2002 for $1.1
billion. A provision of 811 million euros had already been taken
with respect to this commitment in 2001 for a total of 1,663
million euros in order to bring the book value of France
Telecom's investment to 143 million euros, which has already been
covered by provisions.
Following these provisions, France Telecom has no remaining
exposure to NTL.
France Telecom's net loss for the first half of 2002 was 12.2
billion euros.
Results by business segment
Orange Segment
The "Orange" segment encompasses wireless activities in France,
the United Kingdom and the rest of the world other than wireless
businesses not integrated into the Orange segment (i.e. Voxtel in
Moldavia, FTML in Lebanon and Mobinil/ECMS in Egypt, which was
transferred to Orange in July 2002).
Six months ended June 30,
2002 2001 2001 2002/2001 2002/2001
pro forma historical pro forma historical
(euros in millions) (% change)
Network
revenues 7,371 6,271 6,271 17.5% 17.5%
Total
revenues 8,059 7,082 7,082 13.8% 13.8%
EBITDA(1) 2,304 1,634 1,634 41.0% 41.0%
EBITDA/network
revenues 31.3% 26.1% 26.1%
Operating
income(2) 1,245 819 819 52.1% 52.1%
Investments in
UMTS/GSM
licenses 61 186 186 (67.2)% (67.2)%
Investments
in tangible
and intangible assets
(other than UMTS/GSM
licenses) 1,433 1,433 1,433 0.0% 0.0%
(1) EBITDA = operating income before special items, net and
depreciation and amortization
(2) Operating income before special items, net Revenues for the
Orange segment increased 13.8% in the first half of 2002. At June
30, 2002, Orange had a customer base of 41.4 million, an increase
of 16.6% in one year.
In France, Orange reported an increase of 14.4% in revenues, due
to a 17% increase in the number of customers (18.6 million at
June 30, 2002). Orange France has continued to benefit from the
slowdown in the rate of decline in average annual revenue per
user and the general shift of its customer base towards higher
value-added contract customers.
Revenues for Orange UK increased 11.8% in the first half of 2002,
due to a 7.9% increase in the number of customers at the end of
the period (12.8 million at June 30, 2002, compared with 11.9
million at June 30, 2001), and to the nearly 15.6% increase in
the average number of subscribers. This increase was also due to
the slowdown in the rate of decline in average annual revenue per
user compared with June 30, 2001. As in France, the proportion of
contract customers to the total customer base showed a marked
rise.
Other businesses in this segment, almost all of which are in
Europe, have grown significantly, especially in Belgium, Slovakia
and Switzerland. In total, revenues for "Orange outside of France
and the UK" (Rest of World) increased by 18.5% in the first half
of 2002.
EBITDA for the Orange segment increased 41% between June 30, 2001
and June 30, 2002. This strong growth resulted from improved
profitability for the segment as a whole, with the margin of
EBITDA to network revenues increasing from 26.1% in the first
half of 2001 to 31.3% in the first half of 2002.
In France, EBITDA for Orange increased 17.4% between June 30,
2001 and June 30, 2002, with the margin of EBITDA to network
revenues increasing from 38.0% to 38.9% over the same period.
In the United Kingdom, EBITDA for Orange increased 56.3% between
the first half of 2001 and the first half of 2002, with the
margin of EBITDA to network revenues increasing from 25.7% at
June 30, 2001 to 33.0% at June 30, 2002.
Outside of France and the UK, EBITDA rose significantly from 70
million euros to 334 million euros. As a result, the margin of
EBITDA to network revenues went from 5.7% at June 30, 2001 to
23.0% at June 30, 2002.
Investments in tangible and intangible assets, other than UMTS
and GSM licenses, for Orange remained stable at 1,433 million
euros at June 30, 2002, unchanged from June 30, 2001. Capital
expenditures for tangible assets showed a slight decline in the
first half of 2002 to reach 1,401 million euros, compared with
1,436 million euros at June 30, 2001.
In France, Orange's capital expenditures for tangible assets
decreased 18% between June 30, 2001 and June 30, 2002. This
decrease was due to declining expenditures for 2G technology and
the as yet modest level of expenditure for 3G (UMTS) technology.
In the United Kingdom, capital expenditures for tangible assets
were relatively stable in comparison with the figures at June 30,
2001, reflecting both declining expenditures for 2G technology
and lower than anticipated outlays to acquire and prepare sites
for 3G telecommunications networks.
The increase in capital expenditures for tangible assets outside
of France and the UK was mainly due to the deployment of a new
network in Sweden.
In the first half of 2002, Orange's capital expenditures included
the acquisition of a GSM license in Africa. No UMTS licenses were
acquired in the first half of 2002.
Wanadoo segment
The "Wanadoo" segment includes internet access services, portals,
e-merchant sites, directories and business services (chiefly
creating websites).
The pro forma figures for the first half of 2001 presented in the
table below include the consolidation of Freeserve and Indice
Multimedia from January 1, 2001, instead of from the historical
dates of March 1 and April 1, 2001, respectively.
Six months ended June 30,
2002 2001 2001 2002/2001 2002/2001
pro forma historical pro forma historical
(euros in millions) (% change)
Revenues 918 705 689 30.2% 33.2%
EBITDA(1) 29 (61) (54) 146.4% 153.7%
Operating
income(2) (4) (100) (92) 96.1% 95.7%
Investments
in tangible
and intangible
assets 42 41 40 2.4% 5.0%
(1) EBITDA = operating income before special items, net and
depreciation and amortization
(2) Operating income before special items, net In the first
half of 2002, on a historical basis, revenues for the Wanadoo
segment increased 33.2% over the year-earlier period, due in
minor part to changes in scope of consolidation. This increase
was due in greater part to the growth of the Access, Portals and
e-merchant sub-segment, which showed an increase in revenues of
69.2%. The Directories and Business Services sub- segment
achieved modest growth of 4.6%, generated by the Yellow Pages and
reflecting the consolidation of Indice Multimedia in the
consolidated accounts for the entire period.
On a pro forma basis, revenues increased 30.2% between the first
half of 2001 and the first half of 2002, with the Access, Portals
and e-merchant sub-segment up 59.3% and the Directories and
Business Services sub-segment up 5.6%.
Ahead of schedule with respect to its development plan, Wanadoo
reported 29 million euros in EBITDA for the first half of 2002,
compared with a negative EBITDA of 54 million euros for the year-
earlier period on a historical basis and a negative EBITDA of 61
million euros on a pro forma basis. This performance reflects the
sharply improved operating profitability achieved by the Wanadoo
segment.
On a pro forma basis, investments in tangible and intangible
assets for the Wanadoo segment increased slightly by 2.4% between
June 30, 2001 and June 30, 2002. This increase was due in large
part to the increase in investments related to the expanding
customer base and portal audience of the Access, Portals and e-
merchant sub-segment. Investments related to the Directories and
Business Services sub-segment remained stable with respect to the
first half of 2002.
Fixed-line, voice and data services - France
The "Fixed-line, voice and data services - France" segment
combines several of France Telecom's historical activities in
France, including fixed-line telephony, business networks,
broadcasting and cable television services, as well as equipment
sales and rentals. The pro forma figures for the first half of
2001 set forth in the table below reflect the impact of property
sales on Fixed-line, voice and data services - France.
Six months ended June 30,
2002 2001 2001 2002/2001 2002/2001
pro forma historical pro forma historical
(euros in millions) (% change)
Revenues 11,127 11,423 11,542 (2.6)% (3.6)%
EBITDA(1) 3,643 3,927 3,993 (7.2)% (8.8)%
Operating
income(2) 2,068 2,356 2,332 (12.2)% (11.3)%
Investments
in tangible
and intangible
assets 1,024 1,226 1,238 (16.5)% (17.3)%
(1) EBITDA: operating income before special items, net and
depreciation and amortization
(2) Operating income before special items, net On a pro forma
basis, revenues for the Fixed-line, voice and data services --
France segment decreased 2.6% for the first half of 2002.
Revenues were negatively impacted by the opening of the local-
call market to competition as of January 1, 2002.
In addition, revenues generated from services provided to
competing domestic operators, which until the first half of 2002
had been increasing steadily, began to decrease, due both to the
faster deployment of those operators' networks and the price cuts
in interconnection services effective as of January 1, 2002.
These factors were partially offset by:
-- Increased revenue growth in internet services, especially from
high-speed ADSL access. The ADSL customer base reached 730,000
customers at June 30, 2002, quadrupling since the same date in
2001.
-- Steadily increasing revenues from network services (not
including revenues from third-party operators for leased lines).
At the same time, France Telecom's share of the long-distance
call market remained constant compared to the same period in
2001.
On a pro forma basis, EBITDA for the Fixed-line, voice and data
services -- France segment decreased 7.2%, between June 30, 2001
and June 30, 2002. Expenses for the segment generally remained
stable.
Investments in tangible and intangible assets for the Fixed-line,
voice and data services -- France segment decreased 16.5% between
June 30, 2001 and June 30, 2002 on a pro forma basis.
On a pro forma basis, network investments, which account for more
than 59% of the segment's total capital expenditures, decreased
17% overall. The principal investment items all decreased, except
for ADSL, due to network rationalization and optimization.
The other items (data processing, real estate, terminals,
payphones and intangibles), accounting for 41% of all investments
in tangible and intangible assets for the Fixed-line, voice and
data services -- France segment, decreased 16% overall, resulting
from savings made globally in these activities.
Fixed-line, voice and data services - Outside France
The "Fixed-line, voice and data services - Outside France"
segment includes France Telecom's activities outside France as a
network operator for fixed-line telephony and data transmission
services, and as a provider of broadcasting and cable television
services, as well as wireless activities that have not been
contributed to Orange (Voxtel in Moldavia, FTML in Lebanon and
Mobinil/ECMS in Egypt ; the latter has been included in the
Orange segment since July 1, 2002.)
The pro forma figures for the first half of 2001, set forth in
the table below, take into account the consolidation of the TP
Group as of April 1, 2001, the consolidation of Equant as of
January 1, 2001, and Telecom Argentina, accounted for by the
equity method as of January 1, 2001.
Six months ended June 30,
2002 2001 2001 2002/2001 2002/2001
pro forma historical pro forma historical
(euros in millions) (% change)
Revenues 4,602 4,668 3,078 (1.4)% 49.5%
EBITDA(1) 936 745 480 25.8 % 95.0%
Operating
income(2) 65 (151) (199) 142.8 % 132.7%
Investments
in tangible
and intangible
assets 776 1,376 1,013 (43.6)% (23.4)%
(1) EBITDA: operating income before special items, net and
depreciation and amortization
(2) Operating income before special items, net On a
historical basis, revenues for Fixed-line, voice and data
services - Outside France increased 49.5%, under the combined
effect of several acquisitions and divestitures, including:
-- the impact of Equant's reorganization as of January 1, 2002;
and the full consolidation of TP Group as of April 1, 2002.
-- This increase was partially offset by accounting for Telecom
Argentina under the equity method.
On a pro forma basis, revenues for the Fixed-line, voice and data
services - Outside France segment decreased 1.4% compared to the
same period in 2001. Revenues for Equant and the TP Group
declined for the first half of 2002. At the same time, revenues
for Uni2's fixed-line services in Spain continued to increase.
On a historical basis, EBITDA for the Fixed-line, voice and data
services - Outside France segment increased significantly at June
30, 2002, nearly doubling compared to the same date in 2001. This
increase was due largely to the above-mentioned acquisitions and
divestitures.
Other subsidiaries in the segment contributed positively to the
segment's EBITDA, among them Uni2, Mobinil/ECMS, or Casema.
On a pro forma basis , EBITDA increased nearly 26%.
Investments in tangible and intangible assets for the Fixed-line,
voice and data services -- Outside France segment decreased more
than 23.4% on a historical basis between June 30, 2001 and June
30, 2002. This decrease was mainly due to accounting for Telecom
Argentina under the equity method and the savings derived from
synergies in the reorganized Equant. However, this decrease in
capital expenditures was offset by the full consolidation of the
TP Group, which accounted for more than a third of all
investments in tangible and intangible assets for Fixed-line,
voice and data services - Outside France during the first half of
2002.
Equant
Following its merger with Global One, the new Equant was formed
on July 1, 2001. Six-month pro forma figures have been
established for Equant for 2001 and 2002 using the scope of
consolidation in effect as of January 1, 2001, for the purpose of
comparing the half-year figures for 2001 and 2002.
On a pro forma basis, Equant's revenues decreased in a slow
economy by 5.2% at June 30, 2002 compared to the first half of
2001. Revenues from network services increased 2.9%, accounting
for more than 52% of total revenues at June 30, 2002.
Nonetheless, Equant's total revenues declined, due to a decrease
in sales in the integration services market and, to a lesser
extent, declining revenues from SITA .
In contrast, Equant's EBITDA for the first half year increased to
78 million euros on a pro forma basis at June 30, 2002, up from
negative 11 million euros at June 30, 2001. This significant
increase was due to effective cost control and initial savings
derived from the synergies generated by the Global One merger,
which led to a better network cost structure and a more
streamlined sales force.
Capital expenditures decreased significantly due to the impact of
the merger-generated synergies and the current slowdown in the
market. Capital expenditures are primarily affected to network
retrofitting, development of computer systems and market
management and back-office systems.
By controlling capital expenditures and improving EBITDA, Equant
reinforced its liquidity level at June 30, 2002 compared to June
30, 2001.
TP Group
TP Group (TP SA and its subsidiaries) has been fully consolidated
as of April 1, 2002. Six-month pro forma figures have been
established for TP Group for 2001 and 2002 using the scope of
consolidation in effect as of April 1, 2001, for the purpose of
comparing the half-year figures for 2001 and 2002.
On a pro forma basis, consolidated revenues for the TP Group at
June 30, 2002 decreased 4%. The significant increase in wireless
services achieved by the subsidiary PTK Centertel was more than
offset by the decrease in fixed-line revenues. (However, taking
into account the sharp depreciation of the zloty against the
euro, pro forma revenues for the TP Group at constant exchange
rates grew by 2.4% over the same period.)
The decrease in EBITDA, however, was more than offset by savings
resulting from the operating cost-cutting program and, more
significantly, the restructuring plan implemented by the TP
Group. TP Group's total workforce decreased significantly,
resulting in lower overall labor costs. Consequently, on a pro
forma basis, EBITDA increased by more than 10% between the first
half of 2001 and the first half of 2002. TP Group significantly
increased operating income, with the ratio of EBITDA to revenues
increasing from 36.6% at June 30, 2001 to 42.1% at June 30, 2002.
Capital expenditures for tangible and intangible assets decreased
by nearly 32% with respect to pro forma figures at June 30, 2001,
reflecting the ongoing optimization program initiated in 2001.
France Telecom is one of the world's leading telecommunications
carriers, with over 107,3 million customers on the five
continents (220 countries and territories) and consolidated
operating revenues of 43 billion euros for 2001. Through its
major international brands, including Orange, Wanadoo, Equant and
GlobeCast, France Telecom provides businesses, consumers and
other carriers with a complete portfolio of solutions that spans
local, long-distance and international telephony, wireless,
Internet, multimedia, data, broadcast and cable TV services.
France Telecom is the second-largest wireless operator and the
number two Internet access provider in Europe, and a world leader
in telecommunications solutions for multinational corporations.
France Telecom (NYSE: FTE) is listed on the Paris and New York
stock exchanges.
This document contains forward-looking statements, including
without limitation the statements in the discussion under the
heading "66.7 billion euros in net debt at June 30th", within the
meaning of Section 27A of the U.S. Securities Act of 1933, as
amended. Although France Telecom believes its expectations are
based on reasonable assumptions, these forward-looking statements
are subject to numerous risks and uncertainties. Important
factors that could cause actual results to differ materially from
the results anticipated in the forward-looking statements
include, among other things: the effects of competition;
telecommunications usage levels; the availability, terms and
deployment of capital for France Telecom; general economic and
market conditions, particularly with respect to the
telecommunications sector or affecting sales of assets; the
effect of UMTS roll out and performance; and the factors listed
in Item 3 of its Annual Report on Form 20-F, filed with the U.S.
Securities and Exchange Commission on June 28, 2002. The forward-
looking statements contained in this document speak only as of
the date of this document and France Telecom does not undertake
to update any forward-looking statement to reflect events or
circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
(1) In order to permit a more meaningful comparison with the
first-half of 2002, pro forma information is presented which
restates the first-half 2001 results, using the same scope of
consolidation as in the first half of 2002. In particular, these
figures are calculated to give effect, as of the first half of
2001, to the consolidation of the TP Group (TP SA and its
subsidiaries), Equant, Freeserve and Indice Multimedia, the
consolidation using the equity method of Telecom Argentina and
the effects of real estate sales.
CONTACT: FRANCE TELECOM
Press, Nilou du Castel, Head of the Press Office
Email: nilou.ducastel@francetelecom.com
Emilie Richer
Email: emilie.richer@francetelecom.com
Tel. +33-1-44-44-93-93
=============
B E R M U D A
=============
GLOBAL CROSSING: Bermudian Creditors Must File Claims Soon
----------------------------------------------------------
Attride, Stirling & Woloniecki and KPMG, the joint provisional
liquidators of bankrupt telecommunications company Global
Crossing, revealed that a package for the Company's creditors in
Bermuda is currently in the works. However, it needs to know the
details of the various creditors before it can satisfy the
claims. Accordingly, the liquidators have asked Bermudian
creditors to submit by the end of the month their claims against
the bankrupt company.
The filing refers to creditors of Global Crossing Ltd., Global
Crossing Holdings Ltd., Atlantic Crossing Ltd., Atlantic Crossing
Holdings Ltd., Mid Atlantic Crossing Holding Ltd., Global
Crossing International Ltd., Global Crossing Network Center Ltd.,
Mid Atlantic Crossing Ltd., Pan American Crossing Ltd., South
American Crossing Ltd., Pan American Crossing Ltd. and Atlantic
Crossing II Ltd..
Global Crossing, a Bermuda-based company, filed for bankruptcy in
January. In July, it was sold to Hong Kong's Hutchison Whampoa
Ltd. and Singapore Technologies Telemedia Pte. Ltd. for US$250
million.
CONTACT: GLOBAL CROSSING
Press:
Becky Yeamans, +1-974-410-5857,
Email: Rebecca.Yeamans@globalcrossing.com
Tisha Kresler, +1-973-410-8666
Email: Tisha.Kresler@globalcrossing.com
Analysts/Investors:
Ken Simril, +1-310-385-5200
Email: investors@globalcrossing.com
ATTORNEYS FOR PROVISIONAL LIQUIDATORS:
ATTRIDE-STIRLING & WOLONIECKI OF BERMUDA
Crawford House
50 Cedar Avenue
PO Box HM 2879,
Hamilton, HM LX
Bermuda
Telephone: (441) 295 6500
Facsimile: (441) 295 6566
GLOBAL CROSSING: To File Reorganization Plan
--------------------------------------------
Aiming to emerge from Chapter 11 protection early in the first
quarter of 2003, Global Crossing Ltd. planned to file Monday a
bankruptcy reorganization plan with the U.S. Bankruptcy Court in
Manhattan, the AP reports, citing papers filed with the court
Friday.
The Bermuda-based telecommunications company negotiated the plan
with its unsecured creditors' committee, its pre-petition lenders
and its two Asian investors after talks the court papers describe
as "intense."
The Company said a hearing on its disclosure statement is set for
October 21 before U.S. Bankruptcy Judge Robert E. Gerber. Global
Crossing said it was confident that the plan would be adopted by
the requisite number of creditors and approved by the court.
TYCO INTERNATIONAL: Declares Regular Quarterly Dividend
-------------------------------------------------------
The Board of Directors of Tyco International Ltd. (NYSE: TYC,
LSE: TYI, BSX: TYC), has declared a regular quarterly cash
dividend of US$0.0125 (one and one quarter cents) per common
share. The dividend is payable on November 1, 2002 to
shareholders of record on October 1, 2002.
About Tyco International, Ltd.
Tyco International Ltd. (NYSE: TYC; LSE: TYI; BSX: TYC) is a
diversified manufacturing and service company. Tyco is the
world's largest manufacturer and servicer of electrical and
electronic components; the world's largest designer,
manufacturer, installer and servicer of undersea
telecommunications systems; the world's largest manufacturer,
installer and provider of fire protection systems and electronic
security services and the world's largest manufacturer of
specialty valves. Tyco also holds strong leadership positions in
medical device products, and plastics and adhesives. Tyco
operates in more than 100 countries and had reported fiscal 2001
revenues from continuing operations of approximately $34 billion.
CONTACT: Tyco International Ltd.
Gary Holmes, +1-212-424-1314
Web site: http://www.tyco.com
TYCO INTERNATIONAL: Financial Statements Remain Unchanged
---------------------------------------------------------
Tyco International said it doesn't expect to make any "material"
adjustment to its financial statements during the time that
former Chairman and Chief Executive Dennis Kozlowski and former
Chief Financial Officer Mark Swartz allegedly looted the Company
of millions through unauthorized bonuses and misuse of corporate
money from its relocation and key-employee loan programs, Knight-
Ridder Business News reveals. Many of the loans were later
forgiven.
The company's announcement came after the Manhattan District
Attorney's Office indicted Kozlowski, Swartz and former General
Counsel Mark Belnick for allegedly stealing US$170 million from
the Company and conducting a fraud scheme that netted US$430
million more. The Securities and Exchange Commission sued the
three, while Tyco filed suit against Kozlowski seeking about
US$730 million in damages.
"(The) news was generally reassuring," said analyst Harriet
Baldwin of Deutsche Bank. "The apparent reason Tyco expects no
material restatements is that ill-gotten compensation was, in
fact, expensed."
Meanwhile, Tyco still must deal with US$20.7 billion in long-term
debt, which has haunted the Company for months. Standard & Poor's
rates the debt just above junk status.
"We're waiting for a number of things, such as the Company
improving its financial flexibility," said Standard & Poor's
analyst, Cynthia Werneth.
TYCO INTERNATIONAL: Investors Blame Board for Execs Spree
---------------------------------------------------------
Institutional investors expressed disbelief about how the Tyco
Board of Directors could not have noticed the alleged spending
spree of former Chief Executive L. Dennis Kozlowski. Whether they
were simply unaware, or "asleep at the switch", they are partly
to blame, investors commented, according to Knight-Ridder
Business News.
"It baffles me that they weren't able to detect the culture at
Tyco," said Ralph Whitworth of Relational Investors of San Diego,
which holds Tyco shares. "They should have seen the smoke, if not
the fire."
Kozlowski, 55, along with the former chief financial officer,
Mark Swartz were charged Thursday in New York with enterprise
corruption and grand larceny in the theft of US$170 million from
the company and the fraudulent sale of US$430 million in
securities. Kozlowski faces up to 25 years in prison, if
convicted.
Mark Belnick, Tyco's former general counsel, was also charged
with falsifying business records to conceal US$14 million loans
to himself.
Under pressure from Relational Investors and other shareholders,
Tyco's Board disclosed five new members were nominated to Tyco's
eleven-member board. The new members are: Jerome York, chairman
of Micro Warehouse Inc.; Mackey McDonald, chairman of VF Corp.;
George Buckley, chairman of Brunswick Corp.; Bruce Gordon,
president of retail markets at Verizon Communications Inc.; and
Sandra Wijnberg, senior vice president and chief financial
officer at Marsh & McLennan Cos.
The board also said that it refuses to nominate any of the
members who served under Kozlowski - except Edward Breen and his
appointee. Breen is now Tyco's new CEO.
An analyst who follows Tyco for PNC Advisors in Philadelphia,
James Ayscue, sees the introduction of independent board members
as a positive step for the company.
Lee Cooperman, fund manager of Omega Advisors in New York, which
has 5.2 million shares of Tyco, lauded Breen for his efforts
saying he's the right choice to lead the company, which sells
electronics, security systems and other products.
Bermuda-based Tyco, with offices in Boca Raton, said in an e-
mailed statement that some board vacancies are likely to occur
before the next annual shareholders meeting in early 2003.
===========
B R A Z I L
===========
BANCO BRADESCO: Issues US$100M In 92-day Bonds
----------------------------------------------
Brazilian bank Banco Bradesco SA sold US$100 million in 92-day
bonds, with a 5.75% coupon, in Europe and the U.S., Bloomberg
reports, citing Jose Guilherme Lembi de Faria, Bradesco's
international treasury director. Bradesco, the third-biggest bank
in Brazil, is selling bonds in the hopes of raising money to lend
to companies that need working capital.
Banks and investors have limited credit to companies and the
government this year on concern Brazil's next president may boost
spending and the chance of a default on BRL1.1 trillion of debt.
Banks have cut lending to Brazil by about US$5 billion in 12
months to roughly US$18 billion, the central bank recently said.
Initially, Bradesco tried to sell US$50 million but found there
was enough demand for a US$100 million sale, Faria said. The bank
arranged the sale itself to private investors and fixed-income
funds, he said.
The short term of the bond reflects investor concern about buying
Brazilian securities less than a month away from presidential
elections. Still, visits to the U.S. and Europe by Finance
Minister Pedro Malan and central bank President Arminio Fraga
during the last three weeks helped boost demand for the bonds.
Banks, though, such as Bradesco were able to renew only about 60%
of external credit lines in July and August, Faria said.
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
BCP TELECOMMUNICACOES: Violates Contract With Creditors
-------------------------------------------------------
BCP Telecommunicacoes SA breached a contract signed with a pool
of banks led by ABN Amro at the end of July this year. Under the
agreement, BCP should inform ABN Amro all its expenses. However,
the Company violated the stipulation when it failed to inform ABN
that it paid off debts with other banks. Now, the group is
considering going to the Justice to demand that the telecom
operator pay BRL5 million concerning expenses since it is in
default.
Besides seeking legal recourse, creditors are demanding that the
Company meet its shareholders (BellSouth and Verbier, of Safra
brothers) to promote a capital increase aimed at raising
resources to pay off debts and continue operating.
The main problem is the dispute among BCP's creditors over who
will be the first to receive the payment of debts. The Safra
brothers, as well as BellSouth, besides being shareholders, are
also BCP creditors and do not agree that the bank group be paid
before them.
In March this year, the two primary shareholders allowed BCP to
default on debts of US$375 million. The default caused
international credit rating agency Standard & Poor's to lower
BCP's credit rating from 'BrCC' to 'brD.' That default was
followed by another default -- US$1.6 million debt that fell due
in April. The latest default forced creditors to take over the
company's cash management.
Things would have been settled in June if not for the withdrawal
by Bellsouth of an offer to repay debts, provided local banks
allow a US$110 million discount.
CONTACT: BCP TELECOMUNICACOES
Address: Rua Fl>rida, 1970 4o andar
Sao Paulo - SP
Tel: 55 11 5509-6428
Fax: 55 11 5509-6257
Home Page: http://www.bcp.com.br
CSN: BNDES Position in Corus Deal Could Delay Transaction
---------------------------------------------------------
The position of Brazil's state-owned development bank BNDES in
the planned merger between Rio de Janeiro-based flat steel maker
CSN and Anglo-Dutch Corus group could delay the conclusion of the
transaction. BNDES holds a powerful position to rule whether or
not the merger will go forward because it is CSN's top creditor
and has also lent money to the controller of the Company, the
Vicunha group, which has used its stake in CSN as collateral.
BNDES wants Corus to commit to keeping the mill in Volta Redonda,
according to Wallim Vasconcellos, director of BNDES in the area
of industry, commerce and services.
As a likely result, the proposed merger between CSN and Corus
will not happen until next year, despite a letter of intent
signed by the two companies stating that they hope to merge their
operations this year.
Vasconcellos said the bank still has not received any documents
explaining the merger. The director also denied reports that the
period of evaluation will last approximately 120 days, finishing
at the end of November.
"For us, the period has not begun. There is no schedule," he
said.
The BNDES official said that Corus will have to present an
investment plan for Brazil in order to receive approval of the
deal. But Armando Franco, a steel analyst for consulting firm
Tendencias, believes the merger is already moving forward.
"Corus just wants the Casa de Pedra [iron ore mine], and CSN has
already begun to lay off workers and plans to transfer command
abroad," he said.
The analyst believes that it could be difficult to attract
investments to Brazil with company administration located in a
foreign country.
To see financial statements: http://bankrupt.com/misc/CSN.pdf
CONTACT: Jose Marcos Treiger
CSN - Investor Relations General Manager
Tel. +55 21 2586 1442
Email: jmtreiger@csn.com.br
URL: www.csn.com.br
Isabel Viera
Thomson Financial
Tel. +1 (212) 701-1823
Email: isabel.vieira@tfn.com
URL: www.thomsonfinancial.com
BNDES Main Office
Av. Republica do Chile,
100 Rio de Janeiro - RJ
Phone: (021) 2277-7447/6978
Home Page: http://www.bndes.gov.br/english/welcome.htm
Contacts: Enterprise Information Center
Main Office
Av. Repoblica do Chile,
100 - 13 andar - Sala 1301
Tel.: (21)2277-8888
Fax: (21) 2220-2615
Email: contact@bndes.gov.br
ELETROPAULO METROPOLITANA: Restructures $113.9M Of Bonds
--------------------------------------------------------
Eletropaulo Metropolitana SA, the embattled Brazilian power
distributor, struck a debt restructuring agreement with
bondholders of BRL360 million (US$113.9 million) of debt.
The restructuring, which was arranged by Banco Brascan, granted
Eletropaulo a two-year extension on the payment of the debt.
Under the agreement, the unit of AES Corp. will pay off BRL30
million of debt on October 1 and another BRL150 million in 23
installments beginning in November. The payments will be adjusted
for inflation and pay an annual interest rate of 14.5%, the
report says.
Eletropaulo is due to meet with bondholders on November 12 to
settle on terms for paying off the other half of the debt,
maturing in April, in monthly installments, revealed Luiz
Ildefonso Lopes, a vice president of Banco Brascan.
The ailing Brazilian utility, whose corporate debt rating was
lowered to selective default from 'CC' by Standard & Poor's last
month, is negotiating to extend payments on about US$470 million
in debt.
A previous Bloomberg report suggested that Eletropaulo is
considering ceasing dividend payments in the coming years. The
decision however, depends on the outcome of the ongoing talks
with creditors.
Eletropaulo, which had net income of BRL567.4 million in 2001,
didn't pay dividends last year because it didn't have enough
cash, the utility said in filings with Brazilian regulators.
Eletropaulo, the biggest power distributor in Latin America, has
seen its debt costs soar because of the 27% decline in the value
of the Brazilian currency.
Eletropaulo distributes electricity to about 14 million people in
Sao Paulo, Brazil's most populous city and financial center, and
23 surrounding municipalities.
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
VARIG: Net Loss Doubles On Currency Troubles, Debt Costs
--------------------------------------------------------
Varig, Brazil's ailing flagship airline, posted in the first half
of this year a loss that is twice as much as that of the previous
year as a result of the weakening currency that hiked its debt
and operating costs.
According to a Reuters report, the airline ended the first half
of 2002 with a BRL1.04-billion loss compared to a loss of
BRL509.2 million in the same period a year ago. Some BRL815
million of the first half's losses were related to the 17.9%
depreciation of the currency, the real, over the period, which
boosted costs of jet fuel and aircraft leasing, Varig SA Viacao
Aerea Riograndense said.
Despite disappointing financial results, the Company stays upbeat
as it believes that its efforts to get back on its feet are
yielding results.
Between January and June, the firm laid off 1,400 employees and
returned nine leased planes. The Company plans to return a
further seven leased planes by December as well as firing more
workers, although the number has yet to be defined.
Varig named a new director, Arnim Lore, who took over in August,
pledging to cut more jobs and routes. And the firm is currently
undergoing a radical restructuring to prepare for a share issue
that aims to raise about US$300 million.
"This (US$300 million) is sufficient to balance the Company's
finances in the first year and invest in operations," Manuel
Guedes, Varig's investor relations director, told Reuters.
Guedes said the layoffs and restructuring had helped Varig
reverse a loss from its flight operations. Flight operations
posted a profit of BRL1.5 million in the first half this year
versus a loss of BRL75 million a year earlier.
"The profit is small but it reflects the reduction in staff and
airplanes carried out in the first half," Guedes said.
Consolidated net revenue in the first half edged up to BRL2.94
billion from BRL2.85 billion a year ago.
Varig's debt rose to BRL2.7 billion in June from BRL2.4 billion
in December. In dollar terms, using an exchange rate of BRL2.844
per dollar, debt was reduced to US$870 million in June from
US$900 million in December, Varig said.
Varig said that its debt levels would improve if the real
strengthened.
CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.)
Rua 18 de Novembro No. 800, Sao Joao
90240-040 Porto Alegre,
Rio Grande do Sul, Brazil
Phone: (51) 358-7039/7040
(51) 358-7010/7042
Fax: +55-51-358-7001
Home Page: www.varig.com.br/english/
Contacts:
Dorival Ramos Schultz, EVP Finance and CFO
E-mail: dorival.schultz@varig.com.br
Investor Relations:
Av. Almirante Silvio de Noronha,
n 365-Bloco "B" - s/458 / Centro
Rio de Janeiro, Brazil
=========
C H I L E
=========
TELEX-CHILE: Looks To Expand Via Mobile Telephony Services
----------------------------------------------------------
Chilean telecommunications holding company Telex-Chile, which has
pursuing new growth opportunities since its acquisition by the
US-based investment firm Southern Cross early this year, is
considering providing mobile telephony services. The focus seems
a bit out of place as the company does not yet have a license for
mobile spectrum, hinted a company executive.
"We are interested in all [segments of] the telecommunications
sector. We have demonstrated interest in fixed line telephony,
but we can also take an interest in the mobile area," chairman
Norberto Morita said.
Independent consultant Jose Otero revealed to Business News
Americas that there are three ways that Telex could become a
mobile operator: First, to acquire spectrum via an auction -- an
option that no longer exists in Chile. Second, to purchase
spectrum from one of the existing mobile operators. Third, and
most likely option, would be for Telex to rent spectrum from one
of the existing operators, thereby becoming an MVNO (Mobile
Virtual Network Operator).
According to Otero, BellSouth and Smartcom, Chile's third and
fourth largest operators, respectively, would be the most likely
candidates to loan out their spectrum to an MVNO.
If Telex chooses the MVNO strategy, it would have to decide
whether to rent spectrum and leave network management to the
existing operator, or to take management and deployment issues
into its own hands. The hands-off option would probably make more
sense for Telex, since it has no experience in mobile
telecommunications, Otero said.
Southern Cross, through its majority owned subsidiary Redes
Opticas, increased its ownership of Telex-Chile from 46.9% to
approximately 95.9%, in a capital increase worth CLP68 billion
(US$104 million) in May.
As a result of the capitalization of its debt, Telex's
stockholders' equity at December 31, 2001, on a pro forma basis
for this capital increase, has gone from approximately US$42
million negative to approximately US$62.5 million positive.
CONTACT: REDES OPTICAS
Mackenzie Partners, Inc., New York
Charlie Koons, 212/929-5708
TELEX-CHILE SA
Rinconada El Salto 202,
Huechuraba
Santiago, Chile
Phone: +56-2-380-0171
Fax: +56-2-382-5142
Toll Free: 800-379-9110
E-mail: tlchile@chilesat.net
Home Page: http://www.telex.cl
Contacts:
Juan Eduardo Ibanez, Chairman
Fernando Poch, CEO
Daska Radic, Vice Chairman
Rafael Wilhelm, CFO
Investor Relations
Fax: 3825142
TRANSELEC: IFC Board Delays Decision On $60M Investment
-------------------------------------------------------
The International Finance Corporation (IFC), which signed a
letter of intent with Transelec in August to invest up to US$60
million in equity and/or quasi-equity, decided to delay voting on
the proposed investment, reports Business News Americas. The
original deadline was set for September 12. The board is yet to
announce the new date.
The investment would finance Transelec's 2002-2006 project to
upgrade Chile's central grid system (SIC). The project, currently
under review by the IFC, seeks to expand and improve the existing
network, and connect to other grids in Chile and neighboring
countries.
Transelec, a subsidiary of Canada's Hydro Quebec, would be in
charge of the project's implementation, which has a US$360-
million price tag.
CONTACT: TRANSELECTRIC
A. Quito - Ecuador
Phone: 593-2-2555570/2556461
Fax: 593-2-2529695
E-mail: lruales@transelectric.com.ec
===============
C O L O M B I A
===============
TELECOM: Teeters On The Verge of Total Financial Collapse
---------------------------------------------------------
Telecom, Colombia's most important telecom with 6,700 workers, is
close to folding with liabilities of more than US$2 billion.
However, according to Colombia's Communications Minister Martha
Pinto, the government is still hopeful it won't have to liquidate
the biggest telecommunications company in the country.
"Hopefully we won't get to that, but we have to be realistic. The
thing is, it may not come down to a decision by the government,
but it could be a court decision," Pinto said.
If the Company fails to meet a payment, a creditor could ask the
courts to start liquidating its assets, she said, adding she did
not know when the firm could run out of cash.
Telecom's situation is "extremely critical, almost one of no
return," said Pinto.
The Company has lost US$180 million a year since 1996 and is
facing pay-outs of US$800 million over the next few years to
disgruntled foreign partners who say that joint-venture contracts
did not yield promised results. The Colombian government has
already said it won't put more funds into Telecom.
CONTACT: EMPRESA NACIONAL DE TELECOMUNICACIONES (TELECOM)
Calle 23 No 13-49, Bogot
Colombia
Phone: 286-0077
282-8280
Home Page: http://www.telecom.com.co/
===========
M E X I C O
===========
GRUPO MEXICO: Fitch takes Multiple Rating Actions
-------------------------------------------------
Fitch Ratings has downgraded Grupo Minero Mexico, S.A. de C.V.'s
(GMM) senior unsecured local currency rating to 'B-' from 'B'. In
conjunction with this rating action, the Grupo Mexico Export
Master Trust No. 1 (SEN) Series C and Series D Notes have been
downgraded to 'B' from 'B+'. Fitch has also downgraded GMM's
Guaranteed Senior Notes due in 2008 (the Yankee bonds) and
Guaranteed Senior Notes due in 2028 (the Yankee bonds) to 'B-'
from 'B'. These ratings remain on Ratings Watch Negative.
Fitch has affirmed the 'B+' rating of GMM's Series B1 SEN notes
and the 'AAA' rating of the Series E SEN notes.
The downgrade of GMM's senior unsecured local currency rating and
the company's public debt reflects an expectation that the
company's indirect parent, Grupo Mexico, S.A. de C.V. (GM), will
add approximately $100 million of new capital to the company by
the end of 2002 and that $50 million will be released from a
collateral account, figures somewhat lower than previously
expected. Given low copper prices, the new capital will not
reduce the company's heavy debt burden and will be used primarily
for working capital. The new ratings also incorporate the
expectation that the company will be able to complete its debt
restructuring shortly with a debt structure that will extend debt
maturities and allow the company to service its debt obligations,
consistent with the new rating category.
Fitch has affirmed the Series B1 SEN notes, which mature on Nov.
28, 2002, because the cash necessary for all principal and
interest payments has been trapped in a collection account. The
Series E Export Master Trust No. 1 notes were affirmed at 'AAA'
due to a surety bond provided by MBIA that guarantees the timely
payment of interest and the ultimate payment of principal. The
claims paying ability of MBIA Insurance is rated 'AAA' by Fitch.
GMM has faced major liquidity problem since Fitch downgraded its
SEN notes on Oct 5, 2001, which, in turn, triggered an early
amortization event that has led to the trapping of export cash
flows by the trustee. As of the end of June 2002, the company had
$1.3 billion of debt and $80 million of cash and marketable
securities, most of which was restricted in the SEN's collateral
account. The public debt is comprised of $476 million of SEN
notes and $441 million of unsecured Guaranteed Senior Notes.
While GMM has kept current on the interest payments for its bank
loans during 2002, GMM did not pay principal on maturities dates
for loans with Bank of America (BofA) and the Export Development
Corporation (EDC) beginning in the first quarter of the year. The
company was unable to refinance or extend these loans with the
existing lenders at the maturities dates and are currently in
default; the banks have not accelerated on the loans. The loans
are not rated by Fitch. GMM has kept current on its principal and
interest payments with loans from the Export-Import Bank of the
United States of America during 2002.
GMM also has a $100 million loan from the Bank of Nova Scotia and
a $50 million loan with the Banco Nacional de Comercio Exterio,
S.N.C. These loans mature in August 2004 and February 2007,
respectively. Interest expense was paid in a timely manner on
these loans during 2002.
GMM continues to negotiate extensions of its credit agreements
with the holders of its SENs, as well as the Bank of Nova Scotia,
BofA and the EDC. As a result of the continued negotiations, all
of GMM's ratings remain on Rating Watch Negative. GMM's liquidity
problems will escalate on Jan. 28, 2003, if an agreement is not
reached because the Series E SEN notes ($220 million) and the
Series C SEN notes ($200 million) begin to amortize on that date.
This date is a result of a recent amendment between the holders
of the SENs and GMM, which pushed back the amortization date of
the Series E SEN notes from Sept. 28, 2002 and the Series C SEN
notes from Dec. 28, 2002.
Fitch's 'B' rating of the SENs reflects an expectation that the
principal of those notes will not be written down, as a result of
the negotiations. Should the terms and conditions of those notes
be weakened they would be considered a distressed debt exchange
and downgraded to 'DD'. The differing terms and conditions among
the different SEN series could result in different rating actions
of the SEN series depending on the outcome of the renegotiation.
During 2002, GMM has kept current on all principal and interest
payments for its public debt. On Oct. 1, 2002, the company will
need to make a $19 million interest payment on its Guaranteed
Senior Notes Series A and B. The funds from this payment are
expected to come from the capital increase that should be
slightly more than $100 million. Absent a failure to reach an
agreement with the SEN holders and the BofA and EDC, Fitch does
not expect GMM will default or restructure these Guaranteed
Senior Notes Series A and B given the tenor and coupon of these
securities.
Concurrent to the aforementioned rating actions, Fitch has
downgraded the credit ratings of GM to 'B-' from 'BB'. This
downgrade reflects weakened business fundamentals in the
company's main copper operating subsidiaries and the anticipated
debt profile of the group post-debt restructuring for all of the
entities. Fitch has also assigned a 'CCC-' rating to Asarco's 7
3/8% notes due in 2003, the 7 7/8% debentures due in 2013 and the
8 1/2% debentures due in 2025. These ratings have been placed on
Rating Watch Negative. They reflect Asarco's high debt leverage,
relatively high-cost position in the copper mining industry and
the restructuring of debt with creditor banks, which is currently
in default.
Finally, Fitch has withdrawn the 'BBB-' senior secured local
currency rating of Southern Peru Copper Corporation (SPCC) due to
the prepayment of its secured export notes during 2002. SPCC is
owned by Asarco. Fitch maintains its 'BB-' foreign currency
rating of SPCC. The Rating Outlook for this rating is Negative.
This rating is the same as that of the Republic of Peru.
CONTACT: FITCH RATINGS
Joe Bormann, 1-312-368-3349
Anita Saha, 1-312-368-3179
Daniel Kastholm, 1-312-368-2070
Sam Fox, 1-312-606-2307
James Jockle, 1-212-908-0547 (Media Relations)
=================================
T R I N I D A D & T O B A G O
=================================
BWIA: 40 Pilots Could Lose Jobs If Company Gets Rid Of Dash 8's
--------------------------------------------------------------
Cash strapped BWIA is planning to get rid of the Dash 8 and L1011
airplane fleets. The company considers the models not crucial to
the airline, BWIA CEO Conrad Aleong revealed Wednesday. The
comments came at a ceremony organized by the airline at the
atrium of the Piarco Airport to mark the anniversary of the
terrorist attacks in the US.
Should the company decide to carry out the plan, some 40 BWIA
pilots will lose their jobs. However, some of the pilots who are
now facing retrenchment, reportedly feel they may be able to
reach an agreement with the Company to keep the Dash 8s. They
will also be talking to their representative body, Talpa on the
issue later this week.
BWIA, which used to be one of the largest, if not the largest,
Caribbean aviation company, has been dogged with internal
problems leading to a negative impact on its attempts to assure
stability in the weakened market.
In July, an impasse between pilots and the Company led to
cancellations, delays and losses. The troubles have cost the
airline TT$8 million (US$1.3 million) from the middle of July
through early August. The latest figures follow the US$8.4
million loss posted for the first half of the year. The Company
attributes its recent week results to declining travel after the
September 11 terrorist attacks on the United States.
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: Forms Strategic Partnership With LIAT
-------------------------------------------
BWIA reached a Strategic Alliance agreement with LIAT in a deal
that would see the two Caribbean airlines sharing key services
allowing passengers seamless travel throughout the Caribbean,
from and to North America and the UK.
"I see this alliance as a development of great significance,
leading to improved service levels and route development. The
entire region will benefit from the efficiencies that are being
created today [Friday]," said, LIAT Chief Executive Officer Garry
Cullen.
Details of the Alliance and how it will impact on Caribbean
tourism and infrastructural development are to be released next
month at a news conference in Barbados.
CONTACT: LIAT
P.O Box 819
VC Bird Int. Airport
Antigua
Tel: 462 0700
Fax: 462 2682/4765
Home Page: www.liat.com
=============
U R U G U A Y
=============
BANCO DE CREDITO: St George, Govt., CB To Negotiate Reopening
-------------------------------------------------------------
St George investment group, which is looking to up its 49% stake
in Banco de Credito, is now ready to negotiate with the Uruguayan
government and the central bank the technical aspects of the
reopening of the suspended bank. The negotiations, which are
expected to last two weeks, following a recent presentation by St
George a business plan for the bank to the Economy and Finance
Ministry.
Central bank VP Elizeu Christiano Netto revealed that the
government and St George have agreed that the investment group
may capitalize Banco de Credito with a direct investment of
US$134 million, to be injected in a gradual process.
Banco de Credito was intervened and suspended together with
several other banks in July and August due to a massive run on
the banks' deposits.
A solid business plan was a crucial demand from the government
for reopening Banco de Credito. US-based Boston Consulting helped
St George design the plan.
UTE: Won't Make September Debt Payments
---------------------------------------
Uruguay's state power company UTE (Administracion Nacional de
Usinas y Trasmisiones Electricas) said it will delay payments
totaling US$68 million coming due by the end of the month,
relates Business News Americas.
"UTE can meet its payments but took this decision to collaborate
with the country," chairman Ricardo Scaglia said. Uruguay has
been feeling the fallout of Argentina's financial crisis.
UTE has a monopoly on all power generation, transmission and
distribution in Uruguay.
***********
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
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Information contained herein is obtained from sources believed to
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