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/raid1/www/Hosts/bankrupt/TCRLA_Public/020919.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, September 19, 2002, Vol. 3, Issue 186 Headlines A R G E N T I N A BANCO SUQUIA: Banex Joins List of Potential Purchasers EDENOR: S&P Downgrades Currency Ratings to `D' IMAGEN SATELITAL: Claxson Extends Exchange Offer Eight Days TELECOM ARGENTINA: Initiates Debt Talks With Creditors B E R M U D A GLOBAL CROSSING: Selling former HQ TYCO INTERNATIONAL: 8-K Filing Claims Restatement Unnecessary TYCO INTERNATIONAL: May Sell Emergia Stake To Telefonica TYCO INTERNATIONAL: S&P Keeps Ratings On CreditWatch, Negative TYCO INTERNATIONAL: Ex-Exec's Have Trouble Posting Bail B R A Z I L BANCO FIAT: Searches for Partner as Part of Reorganization ELETROPAULO METROPOLITANA: Bear Stearns Cuts Recommendation EMBRATEL: Hires MS&CR2 To Aid In Debt Restructuring EMBRATEL: Signs Three-Year Outsourcing Contract With BB TUPY: President Ousted As Part of Reorganization Process C H I L E COEUR D'ALENE MINES: Provides Update on Debt Reduction Efforts DISPUTADA: Exxon Holds `No Comment' Line On Agreement Reports EDELNOR: Files For Chapter 11 Bankruptcy Protection In the U.S. EDELNOR: Case Summary & 20 Largest Unsecured Creditors C O L O M B I A SEVEN SEAS: Announces Operational, Financial Update E C U A D O R EMELEC: May Sue Big Debtors To Recover $15M In Debt M E X I C O UNEFON: Files $900M Lawsuit Against Nortel, Delays Unefon Deal P E R U MINERA VOLCAN: Finalizes Debt Agreement With Banks U R U G U A Y BANCO COMERCIAL: International Banks To Aid In Capitalization V E N E Z U E L A SIDOR: Union, Labor Ministry Meeting Resolves Conflict - - - - - - - - - - ================= A R G E N T I N A ================= BANCO SUQUIA: Banex Joins List of Potential Purchasers ------------------------------------------------------ Another bank has expressed interest in buying intervened bank Banco Suquia, whose operations were handed over to Banco Nacion. The intervention came after its parent, the French banking group Credit Agricole, decided to leave Argentina. According to an El Cronista report, Argentine bank Banco Banex expressed its interest in buying Suquia just days after local business group Petersen Inversiones (PISA) submitted to both Banco Nacion and the central bank an offer to buy Suquia. "We're really interested in getting the Cordoba entity," a Banex director told El Cronista. Suquia is one of three banks that were taken over by federally- owned Banco Nacion earlier this year when the French Agricole decided to pull out of Argentina. The two other local banks are Banco Bisel and Entre Rios. The government opted to hand the banks over to Banco Nacion, rather than suspending operations, considering the important role they play in their respective provinces' local economies. The federal bank is now in the process of selling the three banks but its still not clear if Nacion will handle the sale of the three former Credit Agricole banks, a task the central bank has claimed as its own. Credit Agricole was 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 EDENOR: S&P Downgrades Currency Ratings to `D' ---------------------------------------------- Argentine electric distributor Empresa Distribuidora y Comercializadora Norte's (Edenor) had its local and foreign currency ratings downgraded to `D' from `CC-' and `SD', respectively. The downgrade, according to Reuters, was prompted by the utility's failure to meet a US$37.5-million payment due on September 16th. The scheduled payment was an installment of the US$250 million floating rate notes with final maturity in June 2003. Edenor has requested Central Bank's authorization to make interest payments on the notes and is negotiating with its bondholders to extend the principal maturity to 2003. This negotiation is part of a general rescheduling of the Company's approximately US$510 million debt. Edenor has retained JP Morgan as advisor for the process. The company has also been pursuing a power tariff increase to stave off an impending bankruptcy. Its managing director, Henri Ducre, has admitted Edenor could go bankrupt unless it is allowed to hike power tariffs to offset the effects of inflation and the depreciation of the peso. Edenor is Argentina's largest electricity distribution company serving approximately 2.3 million customers in the northwestern half of greater Buenos Aires and the northern portion of the city of Buenos Aires. CONTACT: EDENOR S.A. Azopardo Building Azopardo 1025 (1107) Capital Federal Phone: (54-11) 4346-5000 Fax: (54-11) 4346-5300 E-mai: to ofitel@edenor.com.ar Home Page: http://www.edenor.com.ar J.P. MORGAN CHASE & CO. 270 Park Avenue New York, NY 10017 Phone: (212) 270-6000 Fax: (212) 270-1648 Home Page: http://www.jpmorganchase.com/ Contact: William Harrison, Jr., Chairman and CEO Dina Dublon, Chief Financial Officer Geoffrey Boisi, Co-CEO of the Investment Bank Investor Relations Phone: (1-212) 270-6000 IMAGEN SATELITAL: Claxson Extends Exchange Offer Eight Days ----------------------------------------------------------- Claxson Interactive Group Inc. ("Claxson") announces an extension of its pending exchange offer and consent solicitation (the "Exchange Offer") for all U.S.$80 million outstanding principal amount of the 11% Senior Notes due 2005 (144A Global CUSIP No. 44545HHA0 and Reg S Global ISIN No. USP52800AA04) (the "Old Notes") of its subsidiary, Imagen Satelital S.A. ("Imagen"). The expiration date for the Exchange Offer has been extended from 5:00 p.m. New York City time on September 16, 2002, to 5:00 p.m. New York City time on September 24, 2002, unless further extended. As of 5:00 p.m. September 16, 2002, Claxson had received tenders from holders of approximately U.S.$12.7 million principal amount of the outstanding Old Notes. Informational documents relating to the Exchange Offer will only be distributed to eligible investors who complete and return an Eligibility Letter that has already been sent to investors. If you would like to receive this Eligibility Letter, please contact Tom Long at D.F. King & Co., the Information Agent for the Exchange Offer, at +(1) 212-493-6920, or Eduardo Rodriguez Sapey at Banco Rio de la Plata, the Trustee and Rep. Exchange Agent in Buenos Aires, Argentina at +(54) 11-4341-1013. The new notes will not be registered under the U.S. Securities Act of 1933, as amended, and will only be offered in the United States to qualified institutional buyers and accredited investors in private transactions and to persons outside the United States in off-shore transactions. The new notes will be listed on the Buenos Aires Stock Exchange. The company's press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the new notes in any state of the United States in which such offer, solicitation or sale would be unlawful. Claxson (Nasdaq: XSON) is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed in a merger transaction, which combined El Sitio, Inc. and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc. and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero-American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. CONTACT: CLAXSON INTERACTIVE GROUP INC. Press - Alfredo Richard, SVP, Communications +1-305-894-3588 Investors - Ezequiel Paz, AVP, Corporate Finance +1-305-894-3574 Web site: http://www.claxson.com/ TELECOM ARGENTINA: Initiates Debt Talks With Creditors ------------------------------------------------------ After missing a payment on part of its US$3.2-billion debt, Telecom Argentina, the country's No. 1 telephone company, began debt restructuring talks with creditors Tuesday, Sept. 17, reports Reuters. "In the process of renegotiating our financial debt, we had an informative meeting with our creditors today," Telecom Argentina spokesman Pablo Talamoni said. Telecom, the most indebted company in Argentina, did not mention a specific haircut for existing debt, Talamoni said, adding that discussions would last "as long as is necessary." Telecom Argentina is 54.7% owned by Nortel Inversora, a holding company held in equal parts by France Telecom and Telecom Italia. To see financial statements and accompanying notes: http://bankrupt.com/misc/Telecom_Argentina.doc 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 ============= B E R M U D A ============= GLOBAL CROSSING: Selling former HQ ---------------------------------- The headquarters of the bankrupt telecommunications firm Global Crossing is up for sale, according to a Associated Press report. The firm's founder and president, Gary Winnick is currently looking for a buyer for the property. Pacific Capital Group, one of Winnick's investment firms, acquired the complex for US$41.5 million in 1998. Global Crossing then leased it for US$400,000 a month through one of its subsidiaries, North Crescent Realty. Global Crossing broke it lease last April, but Pacific Capital continues to use some of the offices. The complex was designed by Architect Paul Williams. Modeled after an Italian villa, it symbolized Global Crossing's flamboyant ways, with its elaborate gates, statues, fountains and reflecting pools. Winnick reportedly worked in a replica of the Oval Office he had built as part of the project. At least US$7.5 million was spent on the property's renovations. According to regulatory filings, Global Crossing footed at least US$3.2 million of the bill. The plaza also houses two other buildings, one built in 1938 for MCA, and the other built in 1963 for Litton Industries. Office space in these two structures totals 124,000 square feet. The real estate firm Cushman & Wakefield was hired to sell the property. The firm received several proposals on the property, reports Martin Morgenstern, one of Cushman & Wakefield Senior directors. Ideas include turning the complex into a boutique hotel or a medical office. However, he declined to elaborate whether the property would fetch more or less than what Pacific Capital paid. The listing came a day after Global Crossing submitted its reorganization plan with a New York bankruptcy court. Last week, Winnick received a subpoena from the House Energy and Commerce Committee, requiring him to answer questions on Global Crossing's accounting practices. He is scheduled to appear before the panel on Sept. 24. 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 TYCO INTERNATIONAL: 8-K Filing Claims Restatement Unnecessary ------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) filed Tuesday a Form 8-K report with the Securities and Exchange Commission on its investigation, review and analysis of transactions between and among the Company and its subsidiaries and the Company's officers and directors, including the improper conduct of its former Chief Executive Officer, former Chief Financial Officer and former Chief Corporate Counsel. The Company said the improper conduct and the related misuse of Company funds by its former management does not require material adjustments to Tyco's prior financial statements because the expenditure of these funds, while unauthorized, has already been expensed in its financial statements. The Company also said the improper conduct of its former management has damaged Tyco. The amount of money improperly diverted by Tyco's former senior executives from the Company to themselves is very small in comparison with Tyco's total revenues and profits, but it is very large by any other relevant comparison; and the extent of the former executives' misconduct has harmed Tyco's reputation and credibility with investors, lenders and others. In the interest of restoring confidence in the Company, the Company's disclosures in the 8-K filing go beyond what the law requires, or what would ordinarily be disclosed in such a filing. The Company said that this pattern of improper and illegal activity occurred for at least five years prior to June 3, 2002, when former CEO L. Dennis Kozlowski resigned, and that this activity was concealed from the Board and its relevant committees. The nature of such conduct, to the extent it is now known by Tyco, is described in the filing. The areas covered in this filing include: -- Relocation Programs, under which certain executive officers, including Mr. Kozlowski, former CFO Mark Swartz and former Chief Corporate Counsel Mark Belnick used the Company's relocation program to take non-qualifying interest-free loans and unauthorized benefits that were not generally available to all salaried employees affected by relocations. Under the program, Mr. Kozlowski improperly borrowed approximately $61,690,628 in non-qualifying relocation loans to purchase real estate and other properties, Mr. Swartz borrowed approximately $33,097,925 and Mr. Belnick borrowed approximately $14,635,597. -- The "TyCom Bonus" Misappropriation, in which Mr. Kozlowski caused Tyco to pay a special, unapproved bonus to 51 employees who had relocation loans with the Company. The bonus was calculated to forgive the relocation loans of 51 executives and employees, totaling $56,415,037, and to pay compensation sufficient to discharge all of the tax liability due as a result of the forgiveness of those loans. This action was purportedly related to the successful completion of the TyCom Initial Public Offering. The total gross wages paid by the Company in this mortgage forgiveness program were $95,962,000, of which amount Mr. Kozlowski received $32,976,000 and Mr. Swartz received $16,611,000. These benefits were not approved by, or disclosed to, the Compensation Committee or the Board of Directors. However, the employees who received these bonuses were led by Mr. Kozlowski to believe that they were part of a Board-approved program. -- The "ADT Automotive Bonus" Misappropriations, in which Mr. Kozlowski authorized Tyco to pay cash, award restricted shares of Tyco common stock and purportedly forgive additional loans and make related tax payments to approximately 17 Tyco officers and employees -- even though the relocation loans of each of these 17 persons had already been paid in full. Mr. Kozlowski and Mr. Swartz received cash bonuses, restricted shares and "relocation" benefits valued at approximately $25,566,610 and $12,844,632 respectively. These benefits were not approved by or disclosed to the Compensation Committee or the Board of Directors. As with the TyCom unauthorized bonus, other senior executives were misled by Mr. Kozlowski to believe that the ADT Automotive award of restricted shares was a Board-approved program. -- The Key Employee Loan (KEL) Program, in which certain executive officers borrowed money for purposes other than the payment of taxes due upon the vesting of restricted shares, or borrowed in excess of the maximum amount they were permitted under the program. Mr. Kozlowski was, by a large margin, the greatest abuser of this program. By the end of 2001, Mr. Kozlowski had taken over 200 KEL loans -- some for millions of dollars and some as small as $100 -- and his total borrowings over that time exceeded $250 million. Approximately 90% of Mr. Kozlowski's KEL loans were non-program loans, which he used to fund his personal lifestyle, including speculating in real estate, acquisition of antiques and furnishings for his properties (including properties purchased with unauthorized "relocation loans") and the purchase and maintenance of his yacht. Mr. Swartz also borrowed millions in non-program loans. Like Mr. Kozlowski, Mr. Swartz used those unauthorized loans to purchase, develop and speculate in real estate; to fund investments in various business ventures and partnerships; and for miscellaneous personal uses having nothing to do with the ownership of Tyco stock. Tyco is currently evaluating the KEL program in light of recent enactment of a prohibition upon loans by public companies to directors and executive officers. -- Attempted Unauthorized Credits to Key Employee Loan Accounts, in which Mr. Kozlowki and Mr. Swartz attempted to erase an outstanding $25 million KEL indebtedness to Mr. Kozlowski and $12.5 million in KEL indebtedness to Mr. Swartz without the knowledge or approval of the Compensation Committee. Mr. Kozlowski, through his attorneys, has acknowledged to Tyco that he sought no approvals for these credits and that, if they were entered as a credit to his KEL account, it was done so improperly, and that he is therefore obligated to repay these amounts to Tyco. Mr. Swartz has also agreed to repay his forgiven indebtedness with interest and has repaid most of the amounts. Tyco has reversed these entries and a related unauthorized entry, thereby increasing the outstanding balances for the key employee loan accounts of each individual involved. -- Executive Compensation, including authorized and unauthorized compensation to Mr. Belnick, which totaled $34,331,679 for the years 1999-2001. Belnick's compensation resulted from a secret agreement that tied Mr. Belnick's compensation to Mr. Kozlowski's compensation, thereby giving Mr. Belnick an undisclosed incentive to aid and facilitate Mr. Kozlowski's improper diversion of Company funds to Mr. Kozlowski's personal benefit. The undisclosed terms of Messrs. Kozlowski's and Belnick's agreement were incorporated in a letter dated August 19, 1998 and signed by Mr. Kozlowski. Mr. Kozlowski and Mr. Belnick agreed that the letter would not be disclosed to the Tyco Board, the Board's Compensation Committee or the Tyco Human Resources department. Mr. Belnick did, however, keep a copy of the undisclosed agreement in his personal office. -- Perquisites in excess of $50,000 per year for Mr. Kozlowski and Mr. Swartz. These perquisites were required to be reported in a proxy to the extent they exceeded $50,000. However, these amounts were not reported in the proxy because Mr. Kozlowski and Mr. Swartz represented that they would reimburse the Company for amounts in excess of $50,000. However, in most cases Messrs. Kozlowski and Swartz failed to reimburse the Company for all perquisites in excess of $50,000. Mr. Kozlowski also caused Tyco to make available to him various properties that the Company owned for his purported business use. Tyco has now discovered that Mr. Kozlowski periodically made personal use of properties in North Hampton, NH, Boca Raton, FL, New York City and New Castle, NH. -- Self-Dealing Transactions and Other Misuses of Corporate Trust, including Tyco properties purchased by or from Mr. Kozlowski without disclosure to or authorization by the Compensation Committee. For example, Mr. Kozlowski and others caused a Tyco subsidiary to purchase property in Rye, New Hampshire from Mr. Kozlowski on July 6, 2000 for $4,500,000. After an appraisal in March 2002 valued the property at $1,500,000, Tyco wrote down the carrying value of the property to the appraised value and charged Mr. Kozlowski's $3,049,576 overpayment to expense. Mr. Kozlowski also used millions of dollars of Company funds to pay for his other personal interests and activities, including a $700,000 investment in the film "Endurance"; more than $1 million for an extravagant birthday party celebration for his wife in Sardinia; over $1 million in undocumented business expenses, including a private venture; jewelry, clothing, flowers, club membership dues and wine; and an undocumented $110,000 charge for the purported corporate use of Mr. Kozlowski's personal yacht, "Endeavour." Mr. Kozlowski also tampered with evidence under subpoena, purchased a New York City apartment at its depreciated rather than its market value, and took personal credit for at least $43 million in donations from Tyco to charitable organizations. -- Information Concerning Other Transactions Between Tyco and its Directors, which includes detail about transactions between the Company and certain directors. Actions Taken by the Company The 8-K filed Tuesday also includes previous announcements of actions taken by Tyco to address the issues the Company has been facing. These include: -- A lawsuit against Mr. Kozlowski for breach of fiduciary duties, fraud and other wrongful conduct. This suit seeks to recover actual and consequential damages, including misappropriated or otherwise unauthorized payments fraudulently made at Mr. Kozlowski's direction to himself, a former director and other senior executives and key managers; repayment of outstanding loans made to Mr. Kozlowski by a Company subsidiary; disgorgement of all compensation paid to Mr. Kozlowski from 1997 through 2002; forfeiture of all benefits awarded to Mr. Kozlowski from 1997 through 2002; and compensatory, consequential, special and punitive damages suffered by Tyco as a result of Mr. Kozlowski's wrongful conduct, including his breaches of fiduciary duties and misappropriations of Tyco funds and assets. -- A lawsuit against Mr. Belnick for a broad pattern of misconduct, including using Company funds for personal gain. -- A lawsuit against former director Frank Walsh for breaching his fiduciary responsibilities by taking a $20 million "finders fee" in connection with the CIT acquisition, without the knowledge or approval of the Board. -- The appointment of John A. Krol, former Chairman and CEO of E.I DuPont, to the Board of Directors. -- The appointment of Eric Pillmore as Senior Vice President for Corporate Governance, a newly-created position. -- The appointment of David FitzPatrick, the former Chief Financial Officer of United Technologies, as Tyco's new CFO. -- The appointment of William Lytton, the former General Counsel of International Paper, as Tyco's new General Counsel. -- The nomination of five leading figures in the business community to fill expected vacancies on the Board before the Company's next annual meeting. -- The Board's vote not to nominate or support for re-election at the Company's 2003 annual meeting any of the nine current members of the Board who were members of the Board prior to July 2002. As disclosed in its 10-Q report filed on August 14, 2002, Tyco's new Chief Executive Officer Ed Breen believes that one of his immediate priorities is to restore the credibility of Tyco with investors and regulators. For that reason, Mr. Breen has directed Boies, Schiller & Flexner LLP and the forensic accounting firm of Urbach Kahn & Werlin Advisors, in conjunction with the Company's auditor, PricewaterhouseCoopers LLP, to perform an in-depth review of Tyco's accounting beginning with fiscal year 1999 and extending into the fourth quarter of the current fiscal year. This review will include, but is not limited to, reviewing Tyco's revenues, profits, cash flow and internal auditing procedures as well as past and present accounting for acquisitions and reserves. Management notes that Tyco currently has no reason to believe that there are any material adjustments necessary to the Company's financial results. However, Mr. Breen believes that, in view of recent events at the Company, this in-depth review of accounting practices is important if the Company is to provide further assurance to shareholders and regulators that accounting decisions made at Tyco have been appropriate and consistent with Generally Accepted Accounting Principles. If this internal review were to reveal any material adjustments necessary to the Company's financial results, the Company of course would promptly disclose such adjustments. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. 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 fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS The company's news release may contain certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. CONTACT: Gary Holmes (Media) 212-424-1314 Kathy Manning (Investors) 603-778-9700 TYCO INTERNATIONAL: May Sell Emergia Stake To Telefonica -------------------------------------------------------- A filing with the Comisi�n Nacional del Mercado de Valores (CNMV), the agency in charge of supervising and inspecting the Spanish Stock Markets, revealed that Tyco International has the option to sell its 6.3% stake in Emergia, the holding company it shares with Telefonica SA, for EUR48.4 million, reports Expansion. Tyco, according to the filing, can exercise its option to sell the stake in the holding to Telefonica "if Emergia hasn't begun an initial public offering before Dec 31, 2002." Nevertheless, the Emergia share sale is not expected to take place in the short term due to current stock market conditions, says Expansion. TYCO INTERNATIONAL: S&P Keeps Ratings On CreditWatch, Negative -------------------------------------------------------------- The 'BBB-' long-term corporate credit rating and 'A-3' short-term rating of Tyco International Ltd. will remain on CreditWatch with negative implications, said Standard & Poor's. The statement comes after the Company issued a report to the US Securities and Exchange Commission detailing improper conduct and misuse of company funds by former senior management. "The wrongdoing seems confined to a small number of senior executives," said S&P. The amounts disclosed to date are not material to Tyco's credit quality and are not expected to require material restatements of the troubled conglomerate's financial statements because the related outlays have already been expensed. The findings so far do not include any indication of broader misconduct or improper accounting affecting areas beyond executive compensation. However, S&P said it will await the outcome of the various investigations including the internal probe and the SEC investigation, before considering removing the ratings from CreditWatch. S&P's said the series of management changes recently have been positive developments as well as the vote by the management board not to nominate or support for re-election at the Company's 2003 annual meeting any of the nine current members of the board who were members prior to July 2002. But liquidity remains a concern, S&P said. Removing the ratings from CreditWatch will depend on management's addressing the gap between cash balances plus free cash flow and obligations coming due in the next 15 months. The ratings agency said it will continue to monitor the performance of Tyco's still well-diversified business portfolio and its efforts to stem any damage that recent events may have had on customer, supplier, or employee relationships. Ratings could be lowered if debt is not reduced meaningfully in the near term -- the Company does not address in a timely manner obligations coming due late in the calendar year 2003 or there are further negative developments in connection with internal, regulatory or law enforcement investigations. Tyco should have sufficient liquidity to repay amounts outstanding under accounts receivable securitizations -- about US$540 million -- that might come due as a result of recent rating downgrades. Depending on the Company's future capital structure, the ratings on debt obligations that S&P's currently rates in the investment- grade category could be lowered even if the corporate credit rating remains unchanged. TYCO INTERNATIONAL: Ex-Exec's Have Trouble Posting Bail ------------------------------------------------------- Two former executives of Tyco International Ltd., charged with looting the company of hundreds of millions of dollars, are having a hard time posting bail, according to a report by the Associated Press Monday. Their legal counsel complained in court, saying their clients' personal assets have been frozen, funds offered by relatives and others are rejected as possible proceeds of the crimes with which they are charged. State Supreme Court Judge Michael Obus gave L. Dennis Kozlowski, 55, Tyco's former chief executive officer, and Mark Swartz, 42, the corporation's former chief financial officer until Thursday to post at least 10 percent of their bonds. The said bonds are set for US$100 million for Kozlowski, and US$50 million for Swartz. Kozlowski's ex-wife, Angie, offered to put up her US$10 million house in Greenwich, Conn., or US$10 million in municipal bonds as bond security. However, these are rejected as both are "possibly attributable to the course of conduct" charged in the indictment, according to Assistant District Attorney John Moscow. "We have made every reasonable effort to satisfy the bond that your honor set," Stephen Kaufman, Kozlowski's legal counsel told the judge. Moscow replied, "It doesn't seem appropriate that the proceeds of the crime should be used as bail. All we want to know is if the bail is the proceeds of the crime." Kaufman explained that the restraining order Judge Obus issued last week keeps Kozlowski from using his assets anywhere in the country for his bond. He commented outside court that it is legally questionable whether a New York judge has that authority. "He's got more assets than Custer had Indians, but he can't get to them. He can't even go to an ATM," Kaufman said, explaining that his clients problem is not lack of money. Swartz's lawyer, James Mitchell found himself in the same situation as Kaufman. Mitchell said his client's wife had offered property she and the defendant owned jointly. However, Moscow objected, saying, "It is quite obvious that that the source of the funds is the defendant," citing the employment history of Swartz's wife. Judge Obus clarified that some of the bond collateral the defendants are offering might not be subject to his restraining order. He ordered the defense to return Thursday and post the security. If Moscow objects, the court will hold a hearing on whether it is acceptable. Kozlowski and Swartz were charged last week with enterprise corruption and grand larceny for allegedly pilfering some $600 million from Tyco. They face up to 25 years in prison on each of those charges if convicted. At the same time, Tyco's former general counsel Mark Belnick, 55, was charged with falsification of documents, which covers up to US$14 million in improper loans. He faces up to 4 years in prison. These charges were filed soon after the Securities and Exchange Commission accused them of hiding huge loans and other money they allegedly took out of the company's funds. The SEC stated that Kozlowski used US$242 million from an employee loan program, originally designed to help workers buy Tyco stock, in order to pay for yachts, fine art, jewelry, luxury apartments, and vacations, among other things. Kozlowski resigned from Tyco a day after he was indicted in June on tax evasion. He pleaded innocent on evading New York sales tax allegedly due on US$13 million in art, including works by Renoir and Monet. Tyco is based in Bermuda, but is headquartered in New Hampshire. The company makes everything from coat hangers to security systems and medical equipment. =========== B R A Z I L =========== BANCO FIAT: Searches for Partner as Part of Reorganization ---------------------------------------------------------- An executive from Banco Fiat SA revealed that the Brazilian financing arm of the Italian automaker Fiat is now in talks with companies, whose names are not revealed, as part of an effort to find a partner. "We can confirm that the negotiations are going ahead in a very positive way, both in the domestic market and in the international market," said Celso Fernandes, Banco Fiat's commercial and marketing director in a statement. Fernandes made no predictions as to when the bank might announce an agreement. The Banco Fiat financing arm would be attractive to any of the big Brazilian banks such as Banco Bradesco SA, Banco Itau SA or Uniao de Bancos Brasileiros SA, said Erivelto Rodrigues, director of Austin Asis, a banking consultancy in Sao Paulo. The partner search comes amid attempts by the Italian parent to sell assets worldwide to cut debt. Fiat is seeking to sell its car finance unit Fidis as part of its pledge to sell more than EUR2 billion in assets this year to raise cash, reduce debt and cover losses at its car unit. In Brazil, where Fiat is the biggest maker of passenger cars, its financing arm is the largest auto finance company and 26th biggest bank with assets of BRL4.5 billion (US$1.4 billion), according to central bank figures. ELETROPAULO METROPOLITANA: Bear Stearns Cuts Recommendation ----------------------------------------------------------- Despite Eletropaulo Metropolitana's recent success in reaching agreements with creditors to reschedule some of its debts and meet payments of commercial papers, Bear Stearns proceeded to cut its equity rating recommendation on the Brazilian utility to peer perform from outperform. "Notwithstanding this success, we remain concerned regarding the Company's ability to still rollover US$671 million in short-term debt maturing by June 2003," Bear Stearns said in a research note. Just recently, Eletropaulo reached an agreement with creditors to reschedule around BRL175 million worth of debentures originally due October 1, met a payment on US$150 million in commercial paper, and is negotiating with bankers to reschedule an unpaid portion of a US$225 million syndicated loan that came due in late August. 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 EMBRATEL: Hires MS&CR2 To Aid In Debt Restructuring --------------------------------------------------- Embratel, which has debts of BRL800 million coming due in the first quarter next year, is to outline a financial restructuring plan to cut expenses. The Brazilian telephone operator has hired the consulting company MS&CR2 to assist it in its debt restructuring efforts. The Company attributed its financial difficulties mainly to interconnection fees (46% of the net income) and the 2,000 accounts in default (6.5% of gross earnings). Embratel reported a second-quarter loss of BRL152.2 million, a whopping 292% rise over the year-earlier period. A 17.5%- depreciation in Brazil's currency, the Real, was the main villain as it magnified its overseas debt costs in local terms. But revenue also dipped and provisions for nonpayment of accounts remained high. CONTACT: EMBRATEL PARTICIPACOES S.A. Investor Relations Silvia Pereira Tel. (55 21) 2519-9662 Fax: (55 21) 2519-6388 Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br or Press Relations: Helena Duncan/Mariana Palmeira Tel: (55 21) 2519-3653/3654 Fax: (55 21) 2519-8010 Email: hduncan@embratel.com.br mpalm@embratel.com.br EMBRATEL: Signs Three-Year Outsourcing Contract With BB ------------------------------------------------------- Banco do Brasil (BB), Brazil's largest bank in terms of assets, has signed a three-year outsourcing contract with long distance incumbent operator Embratel. Under the contract, the federally- controlled bank will outsource its remote and international telecoms needs to Embratel. Embratel will connect 30 of BB's existing points of presence (POPs), 25 of which lie outside Brazil. The bank's network is present in 25 cities and 18 countries in the Americas, Europe and Asia. The distribution centers for voice and data traffic are located in Brasilia, London, New York and Tokyo. The bank has been working since April this year on a network design, over which Embratel will provide Diginet, Global Dedicated Line (GDL), International Frame Relay (IFR) and Iternational Private Line (IPL) services. "Our only supplier, from now on, will be Embratel," BB tech & infrastructure VP Gustavo do Vale said. The bank expects its data transmission speed to increase 60% and its monthlyoperational costs to decrease 40% as a result of the contract. Terms of the deal were not disclosed. TUPY: President Ousted As Part of Reorganization Process -------------------------------------------------------- Despite positive operating results, Florianopolis-based foundry Tupy is embarking on an administrative and financial reorganization. The process is supposed to address its problems with its cash flow resulting from high levels of indebtedness. As part of the reorganization, Business News Americas reports that the Company, Latin America's largest foundry, fired its president Mario Egerland. Tupy posted a net loss of BRL34 million (currently US$11 million) and net revenue of BRL375 million (US$121 million) for the first half of this year. The Company didn't reveal the details of its financial restructuring, but in its latest report, Tupy said that its major shareholders - pension fund Previ (30.5%), Telos (22.6%), Aerus (18.5%) and the equity arm of state development bank BNDESPar (17.6%) - promised to inject capital, lengthen the firm's debt profile and substitute debt denominated in foreign currency with local currency obligations. Last June, the board of directors approved the issue of BRL150 million (US$50 million) in promissory notes. CONTACT: TUPY S.A. (Head Office) Rua Albano Schmidt, 3400 Joinville - Sc - Brasil CEP: 89206-900 TEL: + 55 (47) 441-8181 FAX: + 55 (47) 441-8141 EMAIL: marilda@tupy.com.br ========= C H I L E ========= COEUR D'ALENE MINES: Provides Update on Debt Reduction Efforts -------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE:CDE) announced its shareholders elected directors and approved four proposals at the Company's Annual Meeting of Shareholders held Tuesday. Coeur's shareholders elected a slate of ten directors, approved an increase in the number of authorized shares of common stock from 125 million to 250 million, and approved increases in the numbers of shares of common stock authorized for issuance under the Company's Executive Compensation Program and Non-Employee Directors' Stock Option Plan. Highlights from the Company's presentation to its shareholders included: Positive Exploration Results Coeur continues to generate positive exploration results at Cerro Bayo in Chile and Martha in Argentina. At Cerro Bayo, four drill rigs are presently active. Two are focused on delineating additional reserves in the immediate area of mining operations. The other two are being used for "step-out" drilling up to 1.0 mile to the north and 0.6 miles to the south of the existing mine infrastructure in order to expand total resources. The drilling program is part of an expanded $1.2 million exploration program taking place during the second half of 2002. The program's objectives are to increase reserves/resources and improve our geologic understanding of the highly prospective 3 mile wide by 6 mile long Cerro Bayo mineralized zone. The Company has intersected new vein structures at Cerro Bayo. During recent drilling on the Celia vein -- one of the main sources of new reserves -- Coeur intersected two new veins. Select values from these intercepts on the new Marta vein located 80 feet west of the Celia vein included 6.6 feet of 36.3 oz/ton silver and 0.17 oz/ton gold and 4.0 feet of 42.9 oz/ton silver and 0.39 oz/ton gold. At Martha, Coeur has now completed twelve reverse circulation holes totaling 2,600 feet and is planning to drill an additional sixteen holes. These holes were drilled to assess the potential in the immediate area of the mining operations where additional reserves could be defined. Early results included 13.0 feet of 162 oz/ton silver and 0.14 oz/ton gold located outside the eastern limits of the existing reserves. This result suggests that there is a good probability that the mineralized zone could be extended eastwards of the lower level of the mine and could significantly increase the grades of the reserve block defined in that area. Continued Debt Reductions Coeur's outstanding indebtedness has decreased to $105 million, down from $146 million at the beginning of the year. A significant portion of the remaining debt continues to voluntarily convert into shares of Coeur's common stock. Since June 30, approximately $21.9 million of debt has converted into shares of common stock. Since embarking on its debt reduction program in 1998, the Company has reduced its annual cash interest expense from $20.4 million to approximately $5.3 million. Together with the Company's significant growth in its low-cost silver production, Coeur should generate positive cash flow during the remainder of 2002. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. This document contains numerous forward-looking statements relating to the Company's silver and gold mining business and future transactions effecting its liquidity and capital resources. The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Operating, exploration and financial data, and other statements in this document are based on information the company believes reasonable, but involve significant uncertainties as to future gold and silver prices, costs, ore grades, estimation of gold and silver reserves, mining and processing conditions, changes that could result from the Company's future acquisition of new mining properties or businesses, the risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions), regulatory and permitting matters, and risks inherent in the ownership and operation of, or investment in, mining properties or businesses in foreign countries. Actual results and timetables could vary significantly from the estimates presented. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise. CONTACT: COEUR D'ALENE MINES CORPORATION Mitchell J. Krebs, 208/769-8155 DISPUTADA: Exxon Holds `No Comment' Line On Agreement Reports ------------------------------------------------------------- US oil giant ExxonMobil is sticking strictly to the no comment line with regard to recent reports that it has reached an agreement with the Chilean government. The deal in question would allow the sale of its Disputada de Las Condes copper mining subsidiary to proceed, reports Business News Americas. However, Ed Glab, a spokesperson from Exxon's EMMI mining unit, said that contact was continuing between the company and the Chilean government. Recent press reports have it that a preliminary agreement had been reached under which Exxon has agreed to pay Chile US$40-45 million in capital gains taxes for the planned US$1.3-billion sale of Disputada to South African mining group Anglo American. However, according to Santiago business paper El Diario, a final agreement has not been reached on the details of the Enami option terms. The state company, which filed legal action after Exxon refused to recognize the option, had wanted the value of the mechanism to be determined by market forces. But, according to the report, Enami has now accepted that under the terms of the 1978 contract under which it sold 85% of Disputada to Exxon for US$94 million, the 49% option is now worth US$1.6 billion, valuing Disputada at more than twice the Anglo sale price. Anglo American has made it clear that it does not object in principle to including the Enami option in the contract, depending on how it is valued. Enami's board, chaired by mining minister Alfonso Dulanto, is due to meet September 25 to vote on the Exxon agreement, according to the paper. Their court battle to resolve this spat has held up the Exxon- Anglo sale. Anglo said this week it expects to close the deal within weeks. The principal assets of Disputada include Los Bronces copper mine, El Soldado copper mine and the Chagres smelter, all located in Chile's central region. Disputada's two copper mines produced 252,000 tonnes of copper in 2001. Chile is the world's No.1 copper producer. CONTACT: EXXONMOBIL (U.S.) Cynthia Langlands Phone: 972/444-1107 DISPUTADA (CHILE) Guillermo Garcia Phone: 562/230-6488 EDELNOR: Files For Chapter 11 Bankruptcy Protection In the U.S. --------------------------------------------------------------- Empresa Electrica del Norte Grande SA (Edelnor), a Chilean power generator, filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Manhattan to complete a prearranged reorganization of unsecured loans in the U.S. In the filing, Edelnor, a unit of Spanish utility company Endesa S.A., revealed it has nearly US$612.9 million in total assets and about US$385.5 million in total liabilities. Citing a company press release dated Aug. 19, Dow Jones reports that the Company said the planned Chapter 11 filing would affect holders of US$340 million in unsecured loans from Bank of America N.A. and the New York branch of Switzerland's Union Bank. Court documents revealed that Union Bank of Switzerland is owed about US$260 million and Bank of America is owed more than US$92.4 million. Under the proposed reorganization plan, affected holders would receive new 15-year certificates equal to just over 92% of the original principal, a cash payment equal to 38% of the principal, or a combination of the two. In the release, Edelnor said that two-thirds of the affected holders had to accept or reject the plan by Monday, but noted that 74% had already pledged their support. Edelnor said obligations to all other creditors will be met through "the ordinary course of business." Edelnor keeps principal executive offices in Santiago, Chile, and for the past two years has maintained accounts in New York with minimum total balances of about US$1 million to US$3 million, according to a declaration by Chief Financial Officer Cristian Bernstein. With the exception of those New York accounts, all of Edelnor's assets are in Chile. "A U.S. bankruptcy filing was preferable to a Chilean bankruptcy for a number of reasons," said Bernstein in court papers. Most of the Company's creditors are U.S. residents who are more familiar with U.S. law, and certain creditors wouldn't be able to take part in a Chilean bankruptcy, Bernstein said. Moreover, the filing said, the proposed restructuring would affect only the debt under Edelnor's existing loan agreements, all of which are governed by New York law. Court documents revealed two secured claims against Edelnor, held by Tesoreria General de La Republica and Scotiabank Sud Americano, both of Santiago. The total collateral value of Tesoreria General's claim - related to power plants - is about US$132.8 million, and Scotiabank claims roughly US$2.1 million in collateral. EDELNOR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Empresa Electrica Del Norte Grande S.A. (Edelnor) Avenida Apoqindo 3721, Oficina 81 Las Condes Santiago, Chile Bankruptcy Case No.: 02-14530 Type of Business: The Debtor is a partially integrated electric utility engaged in the generation, transmission and sale of electric power in northern Chile. The Debtor owns and operates coal, gas, diesel, fuel oil and hydroelectric generating facilities. Chapter 11 Petition Date: September 17, 2002 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Lindsee Paige Granfield, Esq. Thomas J. Moloney, Esq. Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, NY 10006 (212) 225-2000 Fax : (212) 225-3499 Total Assets: $612,861,000 (as of July 31, 2002) Total Debts: $385,483,000 (as of July 31, 2002) Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Union Bank of Switzerland, Stamford Branch $259,956,597 Paul Morrison, Executive Director 677 Washington Boulevard, Stamford, Connecticut, 06912, United States Bank of America, N.A. $92,441,250 Mary-Claire Carter, Agency Management 1850 Gateway Boulevard, Concord, California 94520, United States 925-682-4644 Ansaldo Energia S.P.A. Via Nicola Lorenzini 8, $1,022,545 Malverino Porfido, Risk Director 16152 Genova, Italy 39-010-655 Puerto Mejillones S.A. $229,667 Babcock Montajes Chile S.A. $148,524 Ypf S.A. Avda. Pte. Roque Saenz $138,023 Electroandina S.A. $116,568 B. Bosch S.A. $91,931 Esso Chile Petrolera Ltda. $75,595 Shinwa (USA) Inc. $70,584 Mobil Argentina S.A. $62,248 Tecpetrol S.A. $62,248 Adan Rozas Catalan El Yodo Nro. 8137 $50,236 Western Bulk Carriers $43,125 Cdec-Sing Ltda. $43,125 ACE Seguros S.A. $39,946 Empresa Electrica Cavancha S.A. $39,640 Compa��a de Petroleos de Chile S.A. $26,262 Compa�ia General De Combustibles S.A. $13,562 Roberto Miranda M. Gonzalo Cerda Nro. 1224 $13,024 =============== C O L O M B I A =============== SEVEN SEAS: Announces Operational, Financial Update ------------------------------------------------------ Seven Seas Petroleum Inc. (Amex: SEV) announced Tuesday that its Escuela 2 exploration well is currently drilling at approximately 20,155 feet in the lower Cretaceous (Utica- Caballeros) formation and is expected to reach total depth within 24 hours. Electric logs have been run on the well to a depth of 19,933 feet and are currently being evaluated. After reaching total depth, additional logs and wire line tests will be undertaken and evaluated. Based upon the preliminary log and sample analysis and natural gas shows, including heavier hydrocarbons (C1 through C5), the Company believes the well should be production tested and is presently evaluating how best to test the well. Depending upon the method and length of testing, it is estimated the costs will be between $1.5 and $3.5 million. To date, cumulative well costs have reached approximately $21.1 million. Testing costs will bring the total cost for the Escuela 2 to between approximately $22.6 and $24.6 million. "We have the potential of a major discovery; however, it will require a production test to determine the real potential of the Escuela 2 well and possibly a second well to determine the full potential of the prospect," stated Robert A. Hefner, III, Chairman and Chief Executive Officer of Seven Seas Petroleum, Inc. Operational Update Production from the Guaduas Oil Field averaged approximately 6,100 barrels of oil per day (2,800 net to Seven Seas) during the month of August compared to 6,700 barrels of oil per day (3,100 net to Seven Seas) during the month of July. As previously reported, the Company is attempting to optimize production from existing wells through a workover program. To date, the Company has completed workover operations on three wells, the Tres Pasos 1-W, El Segundo 1-N and the Tres Pasos 6-N. These efforts have not yet increased production. The Company has also fracture treated the Tres Pasos 5-W. The results may not be known for several weeks and could potentially determine whether the company proceeds with additional workovers. Colombian "War Tax" In August 2002, the newly elected Presidential administration in Colombia imposed an emergency "war tax" of 1.2 percent on all in- country equity, as calculated by Colombian tax authorities, to finance efforts to combat ongoing guerilla activity. Seven Seas current "war tax" liability is estimated to be approximately $800,000, payable in four installments beginning at the end of September 2002 and ending in June 2003. Rosablanca Association Contract Given continuing regional political uncertainty in the area covered by the Rosablanca Association Contract, the additional costs to drill deeper on the Escuela 2, and the unexpected "war tax", Seven Seas has decided to postpone the drilling of the Santa Fe #1 well to test the Aguachica Prospect. The Company will consider potential farmout agreements. Seven Seas Petroleum Inc. is an independent oil and gas exploration and production company operating in Colombia, South America. The Company's primary emphasis is on the development and production of the Guaduas Oil Field and exploration of the Subthrust Dindal Prospect, both of which are located in Colombia's prolific Magdalena Basin. Statements regarding anticipated oil and gas production and other oil and gas operating activities, including the costs and timing of those activities, are "forward looking statements" within the meaning of the Securities Litigation Reform Act. The statements involve risks that could significantly impact Seven Seas Petroleum Inc. These risks include, but are not limited to, adverse general economic conditions, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geologic data, competition, reduced availability of drilling and other well services, fluctuations in oil and gas prices and prices for drilling and other well services and government regulation and foreign political risks, as well as other risks discussed in detail in the Seven Seas Petroleum Inc.'s filings with the U.S. Securities and Exchange Commission. CONTACT: SEVEN SEAS PETROLEUM INC. Daniel Drum, Investor Relations +1-713-622-8218/ Web site: http://www.sevenseaspetro.com ============= E C U A D O R ============= EMELEC: May Sue Big Debtors To Recover $15M In Debt --------------------------------------------------- Ecuadorian distributor Emelec, which has failed to reach an agreement with debtors following six months of negotiations, is considering starting legal proceedings to recover US$15 million as part of a plan to collect outstanding debt, Business News Americas report, citing Emelec financial advisor Cristobal Accini. "We have an overdue portfolio worth US$30 million of which we intend to collect US$15 million, considering the financial reality of the country," Accini explained, adding, "We are only taking legal action against the big debtors." The debtors consist of non-traded businesses, banks, and sports venues, which have held the debts for more than eight months. Emelec has cut power to its debtors, and currently disconnects some 80,000 users a month, Accini said. "The law allows us to cut power for overdue payments. This has allowed us to balance our situation," he said. Emelec will keep negotiating payment plans, and expects to recover the outstanding US$15 million in 2003, Accini added. Meanwhile, the Ecuadorian government is considering alternatives for the future of Emelec, including selling its shares in the stock market, or enabling it to issue debt titles in the financial market. However, the government must first tackle the US$400 million in debts piled up by Emelec since 1982 before making a decision. In March 2001, Ecuadorian electricity council Conelec canceled Emelec's concession to distribute electricity in Guayaquil after the Company broke its contract with the state, having accumulated US$97 million in debts and failing to maintain service standards. Emelec owner, Fernando Aspiazu was arrested, and the then- government decided to sell the Company to reimburse clients of Banco del Progreso, also owned by Aspiazu, and which was declared bankrupt. CONTACT: Electrica del Ecuador (EMELEC) Tel,fonos: (593-4) 248000 - 248003 Fax: (593-4) 248051 E-mail: asalcedo@teconet.net =========== M E X I C O =========== UNEFON: Files $900M Lawsuit Against Nortel, Delays Unefon Deal -------------------------------------------------------------- TV Azteca, S.A. de C.V. (NYSE: TZA)(BMV: TVAZTCA), one of the two largest producers of Spanish language television programming in the world, announced today that Unefon, S.A. de C.V. (BMV: UNEFON), a Mexican mobile telephony operator 46.5% owned by the company, filed a lawsuit against Nortel Networks Limited, Unefon's major equipment supplier and lender, for US$900 million. As a consequence of the dispute, TV Azteca will postpone the spin off of the company's investment in Unefon to allow Unefon time to resolve its disagreements with Nortel. TV Azteca previously announced that its board of directors has approved the spin off of the company's investment in Unefon, as a distribution of Unefon shares to TV Azteca shareholders before year-end. Unefon has been seeking to restructure its debt and to negotiate a procurement agreement with Nortel since the first quarter of 2002. As part of this intention, last August, Unefon announced that it did not make a US$6 million interest payment to Nortel. Nortel responded with a notice of default to Unefon and warned that a spin off would be interpreted as a change in the firm's control, equivalent to an additional default. Further, Nortel decided to accelerate Unefon's indebtedness to Nortel, which could result in a foreclosure of the guarantees of the loan, comprised of Unefon's assets and concessions. On September 9, Unefon filed a lawsuit for US$900 million against Nortel alleging that Nortel has failed in its obligation to syndicate portions of Unefon's indebtedness, which would have triggered availability to Unefon of additional financing under its agreement with Nortel. The suit alleges that Nortel's failure to "apply its best efforts" to syndicate the indebtedness "in a diligent and timely manner" has resulted in lost profits, a diminution in equity value, and has caused Unefon to default as a consequence of Nortel's initial alleged default. "Had Unefon been able to make use of the entire US$618 million credit facility as originally agreed with Nortel, Unefon would certainly be in a different business position," said Pedro Padilla, TV Azteca's Chief Executive Officer. "We believe Unefon's current financial situation is a direct consequence of the lack of financing, and that its claims against Nortel have merit." "Therefore, we are pushing back our original schedule to give Unefon the opportunity to resolve its negotiations or legal case with Nortel. We would prefer not to negatively impact Unefon by granting a distribution of shares in a manner that could result in a broader legal dispute with its main supplier and lender," added Mr. Padilla. TV Azteca noted that it intends to submit the spin off for approval by its shareholders in the future in the same manner approved by its board of directors. The company stated that, effective immediately, TV Azteca ceases its US$80 million financing support granted on behalf of Unefon in July 2001. As of August 30, Unefon had used US$48 million of the guarantee. TV Azteca will not allow Unefon to access the remaining US$32 million of the facility until satisfactory resolution of the dispute. TV Azteca will continue to be subject to its commitment regarding a US$35 million support to cover possible funding gaps through December 2002, as agreed in year 2000 by TV Azteca and Moises Saba. TV Azteca has not received any demand for payment from Unefon under this commitment. TV Azteca noted it does not have any direct obligations with Nortel. Even though TV Azteca believes the lawsuit of Unefon has merit, it cannot give assurances that Unefon will win it, and in the event of winning it, it cannot give assurances that the courts will grant a judgment in the amount requested. Company Profile TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. Except for historical information, the matters discussed in this press release are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Risks that may affect TV Azteca are identified in its Form 20-F and other filings with the US Securities and Exchange Commission. CONTACT: TV AZTECA Investor Relations: Bruno Rangel 5255 3099 9167 jrangelk@tvazteca.com.mx Rolando Villarreal 5255 3099 0041 rvillarreal@tvazteca.com.mx Media Relations: Tristan Canales 5255?3099?5786 tcanales@tvazteca.com.mx ======= P E R U ======= MINERA VOLCAN: Finalizes Debt Agreement With Banks -------------------------------------------------- Peruvian zinc miner Minera Volcan informed the Lima bourse that it has finalized a financial restructuring agreement with a syndicate of banks, reports Business News Americas. The banks involved are: Banque Cantonale Vaudoise, Societe Generale, Banco Wiese Sudameris, BNP Paribas, Fortis Bank and Westdeutsche Landesbank Girozentrale. Under the agreement, Volcan will reschedule a US$110-million loan package over five years with an 18-month grace period. Amortization, including interest, will be US$100,000 a month from October, compared with previous installments of US$2.17 million. The deal also involves a new credit of US$6.5 million, as part of the US$110 million. Furthermore, the agreement required Volcan to put up its mining properties as collateral. Meanwhile, Volcan revealed plans to place 51% of its A series voting shares in a trust as part of a plan to seek a strategic partner within 30 months, and is renegotiating terms with suppliers and sub-contractors to free up funds of US$13 million. Volcan owns the Paragsha underground mine in the Cerro de Pasco district in central Peru's Junin department and three other mines in the nearby Yauli district. It extracts copper and lead, as well as zinc. ============= U R U G U A Y ============= BANCO COMERCIAL: International Banks To Aid In Capitalization ------------------------------------------------------------- Several international banks and institutions have expressed interest in taking part in the capitalization of intervened and suspended Uruguayan bank Banco Comercial. According to a local daily El Pais report, Comercial's executive director Paul Elberse has traveled to New York and Washington to hold talks with the international banks that are shareholders in Comercial, and also with the International Finance Corporation and the Inter-American Development Bank. Comercial's international shareholders, which include Germany- based Dresdner Bank, US-based JP Morgan and Switzerland-based Credit Suisse, have submitted official requests to the central bank to participate in Comercial's upcoming capitalization. Elberse will also meet with two international investors that have expressed interest in Comercial. Comercial, one of Uruguay's largest banks, was intervened together with several other local banks in July and August due to a massive bank run caused by the Uruguayan financial system's vulnerability to Argentina's financial crisis. Comercial's problems were also aggravated by a very public scandal in which some of its owners were accused of illegal capital flight and money laundering. ================= V E N E Z U E L A ================= SIDOR: Union, Labor Ministry Meeting Resolves Conflict ------------------------------------------------------ A looming strike at the Venezuelan steel maker Siderurgica del Orinico (Sidor) was averted after its unions reached a deal with labor minister Maria Cristina Iglesias at a meeting called Monday to resolve an ongoing dispute over Sidor management methodology in calculating wages, reports Business News Americas. "The agreement will be put to workers on Wednesday and we hope we'll sign the final document on Thursday to end the conflict at Sidor," said a spokesperson for the Sutiss trade union, which represents some 5,400 Sidor employees and another 6,000 subcontracted workers. The labor ministry, which acted as mediator, called in the union leaders for a meeting in Caracas to discuss their demands and finally reached a deal early Tuesday morning on the four points at issue. The protracted labor dispute came at the back of the Company's efforts to negotiate the refinancing of much of its US$1.45 billion debt with a group of banks and the Venezuelan state. Sidor, which has been battered by the sharp slide in steel prices and the shrinking domestic economy, had failed to meet the terms of an earlier 2000 debt restructuring deal. Sidor, a former state operation, was privatized in 1997 when the Consorcio Amazonia acquired a majority stake. Shareholders are Mexican companies Hylsamex and Tamsa, Brazil's Usiminas, Argentina's Siderar and Venezuela's Sivensa. CONTACT: SIDERURGICA DEL ORINOCO, C.A. (SIDOR) Edificio General, Piso 9 Avda. La Estancia Chuao, Caracas 1060 Venezuela Tel: (582) 902 3800/3917/3955 Fax: (582) 993 2930 Home Page: www.sidor.com.ve/ *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Ma. Cristina Canson, Editors. Copyright 2002. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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