/raid1/www/Hosts/bankrupt/TCRLA_Public/020923.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
Monday, September 23, 2002, Vol. 3, Issue 188
Headlines
A R G E N T I N A
ACINDAR: Chilean Subsidiary Sale Process Finalized
EDENOR: Fitch Drops Local Currency To 'DD' After Default
PEREZ COMPANC: Pecom Divests Agropecuaria
PRIVATIZED COMPANIES: Public Service Concessions Remain Intact
TELEFONICA DE ARGENTINA: CNC Slaps Fine Over Service Failure
B E R M U D A
FOSTER WHEELER: Wins Major Power Plant Contract in Ireland
TYCO INTERNATIONAL: Ex-Executives Scramble to Post Steep Bail
TYCO INTERNATIONAL: SEC Tries New Tactic in Tyco Trial
B O L I V I A
HUANUNI: Alcazar & Morales To Make Vinto Debt Determination
B R A Z I L
EMBRATEL: Reiterates Worldcom Separation, Local Ops Unaffected
ENRON: Petrobras Overcomes First Hurdle In Acquiring CEG Stake
LIGHT: Furnas May File Suit Over Delayed Payment
STATE-RUN BANKS: Brazil To Auction BEC, BESC in November
C H I L E
EDELNOR: Seeks Court Approval for Cleary Gottlieb Retention
ENERSIS: Parent's Stock Falls On Possible Bailout Concerns
M E X I C O
CFE: Sells $264M, 30-Year Bonds To Back Investments
GRUPO MINSA: Debt Default Expected After Slumping Sales
UNEFON: Nortel Claims Lawsuit Without Merit in Rebuttal
P E R U
BACKUS: Five Execs In Hot Water For Alleged Administrative Fraud
V E N E Z U E L A
CMS ENERGY: Final Oil, Gas Exploration Affiliate Sold
- - - - - - - - - -
=================
A R G E N T I N A
=================
ACINDAR: Chilean Subsidiary Sale Process Finalized
--------------------------------------------------
Argentine steel maker Acindar informed the Buenos Aires stock
exchange that it has concluded the sale of its interest in its
wholly-owned subsidiary, Comercial Acindar Chile Ltda., to
Corporacion Aceros del Pacifico (CAP) and Gerdau AZA S.A., a unit
of Brazilian long products group Gerdau. The value of the
transaction wasn't disclosed, but at the time the sale was
announced late July, the transaction was worth US$4.8 million.
CAP had confirmed closure of the transaction earlier in the week.
It will have 50% of Comercial Acindar Chile and Gerdau Aza the
other half.
Comercial Acindar Chile Ltda. specializes in producing steel
products for the civil construction market in Chile. Acindar will
continue supplying the Chilean market trough direct exports from
Argentina.
CONTACTS: ACINDAR
Jose I. Giraudo
Investor Relations Manager
(54 11) 4719 8674
Andrea Dala
Investor Relations Officer
(54 11) 4719 8672
EDENOR: Fitch Drops Local Currency To 'DD' After Default
--------------------------------------------------------
Fitch Ratings has downgraded the local currency rating assigned
to Empresa Distribuidora y Comercializadora Norte S.A. (Edenor)
to 'DD' from 'C'. The rating for the Gain Trust Notes remains
unchanged at 'C' with a Rating Watch Negative status.
The rating action reflects the non-payment of principal in an
amount of $37.5 million on Sept. 15, 2002 under the US$250
million FRN Notes. The FRNs were originally issued under the
company's euro medium-term notes program. At present, the company
is negotiating with all its creditors for the extension of all of
its principal maturities until March 2003. The negotiations are
part of a general restructuring of the Company's debt
(approximately US$510 million).
Until mid-September, Edenor was current on its interest payments.
But the transfer abroad to the FRN's bondholders of a payment due
on Sept. 15, 2002, (approximately US$356 thd) is still subject to
Central Bank's authorization. The next interest payment date for
the gain trust notes is Dec. 15, 2002. Edenor estimates it will
be able to honor all of its scheduled interest payments, subject
primarily to the dynamic of the exchange rate and local
inflation.
Edenor's inability to face its principal payments is a result of
the devaluation impact, combined with the pesofication,
revocation of convertibility and prohibition of tariff
indexation. The policies implemented by the Duhalde
administration have eviscerated the market-oriented framework
instituted in the 1990s. The changes have wiped out significant
value and decision-making autonomy from private sector companies,
including Edenor.
The Government is negotiating a revenue-recovery mechanisms to
offset the effective expropriation of value with regulated market
participants, such as Edenor. The negotiations have been slow and
yielded little in the way of meaningful benefits. In fact, the
negotiation period expired in August 2002 but was extended for
another 120 days.
Although some sort of tariff increase is expected before year-
end, Fitch Ratings now believes that no material tariff relief
will come until after the March 2003 elections and even then only
after the new president has completed a review of the situation.
Thus, any workable plan with the government to restore value to
these companies is at least 12 months away. It was recently
reported that tariff rates may be positively adjusted by an
estimated 5%-10% by the fourth quarter of this year. As noted,
such a level is perceived as a token gesture, given the economic
dislocation generated to the estimated 70% currency devaluation
and 35% inflation observed since the beginning of the year.
Edenor is an electricity distribution company serving the
northwestern half of the greater Buenos Aires area and the
northern portion of the Federal Capital -- within the city of
Buenos Aires -- under the exclusive 95-year concession granted by
the Argentine government. EASA, Edenor's controlling shareholder
(51%), is a holding company controlled by EDF International
(100%).
Contact: Jason T. Todd 1-312-368-3217, Chicago, Alejandro Bertuol
1-212-908-0393, New York, Ana Paula Ares or Cecilia Minguillon
+54-11-4327-2444, Buenos Aires.
Media Relations: James Jockle 1-212-908-0547, New York.
PEREZ COMPANC: Pecom Divests Agropecuaria
-----------------------------------------
Perez Companc S.A. (Buenos Aires: PC NYSE: PC), disclosed that
Pecom Energia S.A. (Buenos Aires: PECO) announced the final of
its 100% equity interest in Pecom Agropecuaria S.A.'s capital
stock to Argentina Farmland Investors LLC. Pecom Agropecuaria
owns eight livestock and agricultural concerns with a total area
of 75,000 hectares and 51,000 head of cattle.
The transaction totaled US$ 53 million, accounting for revenues
of approximately Ps.27 million. Under the stock purchase
agreement, completion of certain administrative formalities is
still required.
Argentina Farmland Investors LLC is a Delaware company organized
under the laws of the United States and is an independent party
pursuant to the Regime concerning Transparency in Public Offering
currently in force.
This transaction enables the Company to move forward with the
strategy of strengthening the Company's positioning as an
integrated energy company, aligning the assets portfolio
structure with the axes of the Company's core business.
Pecom EnergĦa S.A., controlled by Perez Companc S.A., is a
leading company in an important Argentine and Latin American
industry sector, including oil and gas production and
transportation, refining and petrochemicals, power generation,
transmission and distribution.
CONTACT: PECOM ENERGIA S.A. DE PEREZ COMPANC S.A.
Maipo 1 - Piso 22 - C1084ABA
Buenos Aires, Argentina
Phone: (54-11) 4344-6000
Fax: (54-11) 4344-6315
URL: http://www.pecom.com.ar
PRIVATIZED COMPANIES: Public Service Concessions Remain Intact
--------------------------------------------------------------
The Argentine government issued a new decree allowing privatized
companies operating public services to retain their concessions
provided that they file for protection from creditors, reports
AFX.
The report adds that the government has also decided to delay by
another 120 days the talks it is holding with privatized
companies to renegotiate their contracts.
The delay, however, according to Economy Minister Roberto Lavagna
does not mean that the implementation of tariff hikes will also
be postponed. The government still intends to allow public
services to raise their tariffs this year, Lavagna reiterated.
TELEFONICA DE ARGENTINA: CNC Slaps Fine Over Service Failure
------------------------------------------------------------
The National Communications Commission (CNC), Argentina's
industry watchdog, on Tuesday levied on Telefonica de Argentina a
fine of ARS680,000 (US$187,070) for leaving thousands of clients
without service for weeks. Telefonica was also ordered to restore
service within three days and was warned that failure to do so
would mean further fines.
The CNC's move comes after tens of thousands of Argentines were
left without phone lines in recent months, because of the
stealing of cable lines across the country. Local reports say
that hundreds of tons of the copper cable lines have gone missing
each month.
CNC spokesman Jorge Cohen said their decision was made in
accordance with industry regulations. He said the organization
had repeatedly asked Telefonica to provide public telephones for
those without phone lines and to present documents explaining why
services were cut off and produce police reports verifying the
thefts.
"We are simply following the rules," he said, adding the Company
"did not carry out" its obligations.
However, Telefonica spokesman Eduardo Mirabelli slammed the CNC
decision and said accusations that the Company had not done its
utmost to explain the situation were "completely false".
"We've presented documents ... photos, security data. We've made
many presentations about the situation."
Mirabelli also revealed plans by the Company to appeal the
decision.
"We are going to fight this through legal means," Telefonica
Mirabelli announced, saying the Company was already discussing
with lawyers the best way to proceed.
Telefonica provides local exchange, long distance, residential
Internet access and directory publishing services. Until October
1999, the Company was the exclusive provider of telecoms services
in southern Argentina and controlled nearly two-third of the
Buenos Aires metropolitan area market. Telefonica is now allowed
to provide telecommunication services to northern Argentina,
where Telecom Argentina Stet France Telecom S.A. is the incumbent
operator.
CONTACT: TELEFONICA DE ARGENTINA
Tucuman 1, 18th Floor, 1049
Buenos Aires, Argentina
Phone: (212) 688-6840
Home Page: http://www.telefonica.com.ar
Contacts:
Carlos Fernandez-Prida Mendez Nunez, Chairman
Paul Burton Savoldelli, Vice Chairman
Fernando Raul Borio, Secretary
=============
B E R M U D A
=============
FOSTER WHEELER: Wins Major Power Plant Contract in Ireland
----------------------------------------------------------
Foster Wheeler Ltd. (NYSE: FWC) announced Thursday that its
Finland-based subsidiary, Foster Wheeler Energia Oy, has been
awarded a $342.2 million (EUR 350 million) power plant contract
by the Irish state-owned Electricity Supply Board (ESB).
The contract covers the engineering, procurement and construction
of two peat-fired power plants of 150 MWe and 100 MWe capacity,
respectively, in the Irish Midlands.
The new plants will use Foster Wheeler's advanced circulating
fluidized-bed (CFB) boiler technology, the leading technology of
its type in burning low-calorific-value fuel, such as peat, both
efficiently and in full compliance with the latest European Union
environmental emission norms. Foster Wheeler has extensive
experience with peat and has supplied peat-fuel boilers since
1977. A total of 51 boilers, with a combined capacity of close to
3,000 MWth, have been delivered by Foster Wheeler Energia Oy for
firing peat primarily, while another 22 boilers, totaling
approximately 2,000 MWth, have been supplied that use peat as a
secondary fuel.
The contract brings Foster Wheeler Energia Oy's unfilled orders
(backlog) to their highest level ever, and builds on the success
of its other recent power plant bookings in Poland, Estonia and
Germany.
"We believe that we have selected the best available technology
for our new power stations," says ESB's chief executive officer,
Padraig McManus. "The plants will enable us to make efficient use
of peat as a fuel, and means that we will continue to support
national policy, which is to maintain the strategic use of
indigenous fuel as part of fuel diversity."
Founded in 1927, ESB is Ireland's largest electricity generating
and distribution company, with more than 1.6 million customers
and a total installed generating capacity of about 4,700 MWe.
"This award further establishes Foster Wheeler's well-earned
reputation for innovation and customer responsiveness in CFB
technology," said Raymond J. Milchovich, chairman, president and
chief executive officer of Foster Wheeler Ltd. "This technology
also has significant applications in the U.S., enabling utilities
to burn opportunity fuels such as biomass, low-grade coals, and
petroleum cokes in an efficient and environmentally friendly
way."
The plants will be built at two ESB sites over the next three
years. When the new plants begin commercial generation at the end
of 2004, older plants at these sites will be decom- missioned,
and aging plants at two other ESB sites will be retired.
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research,
plant operation and environmental services. The corporation is
based in Hamilton, Bermuda, and its operational headquarters are
in Clinton, N.J. For more information about Foster Wheeler, visit
our World Wide Web site at www.fwc.com.
CONTACT: FOSTER WHEELER
Media:
Sherry Peske
908/730-4444
Other Inquiries:
908/730-4000
TYCO INTERNATIONAL: Ex-Executives Scramble to Post Steep Bail
-------------------------------------------------------------
The former chief executive officer of Tyco International Ltd., L.
Dennis Kozlowski, along with former chief financial executive
Mark Swartz are out on free on bail Thursday, according to a
report from the Associated press.
A hearing on whether the money is eligible for use as bail bond
was set on September 27. State Supreme Court Justice Michael Obus
will preside over the said hearing where the prosecutors allege
that the money was from the company, therefore, it should be used
for the former officers' bail.
Earlier, Assistant District Attorney had said, "It doesn't seem
appropriate that the proceeds of the crime should be used as
bail." rejecting offers from relatives and others for the men's
bail.
Kozlowski and Swartz were charged last week with enterprise
corruption and grand larceny for allegedly pilfering some US$600
million from Tyco. They face up to 25 years in prison on each of
those charges if convicted. Assets of both Kozlowski and Swartz
have been frozen.
Kozlowski's bond is set for US$100 million, while it is US$50
million for Swartz. They were supposed to post at least 10
percent of the said amount by Thursday.
Kozlowski's ex-wife, Angie had been very supportive of her ex-
husband, according to Stephen Kaufman, Kozlowski's lawyer. She is
expected to post the US$10 million in cash late on Thursday, and
would be available for next week's hearing.
On the other hand, Swartz would post US$5 million security with
shares of Tyco stock, either Thursday or Friday, according to his
lawyer, James Mitchell. The said stock is 4.02 million shares of
Tyco, worth US$6.7 million, based on Wednesday prices.
Tyco's former general counsel Mark Belnick was also charged with
falsifying documents to cover US$14 million in improper loans. If
convicted, he faces up to 4 years in prison. He already appeared
in a separate hearing Thursday regarding his US$1 million
personal recognizance bond.
Moscow stated that he has no plans of consolidating Belnick's
case with those of Kozlowski and Swartz. He expects to additional
charges with additional defendants, refusing requests to
elaborate further.
However, no trial had yet been set for either of the cases.
The men were charged after the Securities and Exchange Commission
accused them of hiding enormous loans and other money from Tyco's
coffers.
TYCO INTERNATIONAL: SEC Tries New Tactic in Tyco Trial
------------------------------------------------------
The U.S. Securities and Exchange Commission will ask the court to
order "disgorgement of all compensation... including salary." in
its case against former officers of Bermuda-based Tyco
International Ltd, according to Reuters report Friday.
The request is referred to as a new legal weapon the government
securities regulators employ for the first time. The said weapon
will be used to go after the executives' salaries, as well as the
"ill-gotten gains", lawyers said.
Salary was not cited as a disgorgement target, though it may have
been included in some cases, until recently. The SEC used to go
after the money defendants made through fraud.
SEC spokesman John Heine said, "In the past, there have been
general requests for disgorgement. In the Kozlowski case, we are
being explicit about disgorgement of non-incentive salary."
Lawyers say the SEC's attempt to go after salaries shows the
political pressure to look tough on white-collar crimes. They are
attempting to strip mega-wealthy defendants of virtually all
assets.
"This makes clear that the SEC is using every available legal
remedy to take everything away from people who are found to have
orchestrated or participated in serious corporate frauds."
according to former SEC general counsel David Becker.
The move by the SEC also reveals the gravity of the Tyco case.
The details even stun lawyers bored with corporate scandals like
in the cases of Enron and WorldCom.
Tyco's ex-CEO L. Dennis Kozlowski was charged of taking US$270
million from the company through an employee loan program. He
allegedly spent most of the money on yachts, vacations, jewelry
and fine art. He faces up to 25 years in prison and massive
fines, if convicted.
Mark Swartz, Tyco's former CFO, along with Kozlowski was accused
of pilfering some US$600 million from company funds. The
company's former general counsel was also charged of
falsification of documents to cover up US$14 million in illegal
loans. All three defendants pleaded not guilty.
Becker, who is now a partner of Cleary Gottlieb Steen & Hamilton
in Washington, said that if the salary disgorgement request
works, it would be a greater deterrent to corporate misconduct.
It would also pressure defendants in SEC enforcement actions to
settle because of the significantly greater risk involved.
Lawyer Frank Goldstein, a partner at Sidley Austin Brown & Wood
in Washington commented, "You can watch for the SEC to do more
and more of this ... They're coming after individuals."
=============
B O L I V I A
=============
HUANUNI: Alcazar & Morales To Make Vinto Debt Determination
-----------------------------------------------------------
Bolivian state mining authority Comibol hired auditors Alcazar &
Morales to determine whether tin miner Minera Huanuni is obliged
to pay a US$3-million debt owed to smelter Vinto, relates
Business News Americas. The debt was a result of what government
officials called the "accounting games" played by bankrupt
British company RBG Resources at the time that it ran the two
firms.
According to La Prensa newspaper, RBG fiddled the books to make
it look as if it was investing the US$10 million in Huanuni as
required by March this year under its contract with Comibol.
RBG claimed it invested US$11.2 million in the mine by the end of
2001, but the truth was that it only "invested" US$2.7 million,
and this was in the form of a US$3-million "loan" from Vinto.
Details of the case, currently in the courts, will not be
divulged until Comibol formally rescinds the joint venture
contract for Huanuni with RBG, the paper said.
The new owners of Vinto, which was sold for US$6 million by RBG's
liquidator to Bolivian mining company Comsur and the UK
government's Commonwealth Development Corporation (CDC) in June
this year, now want to recoup the money from Huanuni, according
to the report.
Huanuni had been the subject of a joint venture between Comibol
and RBG, formerly Allied Deals, but the UK Company collapsed
earlier this year amid allegations of a US$600-million fraud. The
company supplies the Vinto tin smelter, which was acquired by
Allied Deals (former name of RBG Resources) in March 2000 for
US$14.7 million and a pledge to invest US$14 million.
CONTACT: EMPRESA METALURGICA VINTO
(Vinto Foundry Company)
Superintendente de Adquisiciones
Casilla 612
Oruro
Phone: 5273091
Fax: 5278024
===========
B R A Z I L
===========
EMBRATEL: Reiterates Worldcom Separation, Local Ops Unaffected
--------------------------------------------------------------
Brazilian long-distance carrier Embratel Participacoes SA again
claims independence from WorldCom Inc. as the embattled US parent
is expected to soon unveil US$2 billion in accounting
adjustments, Dow Jones suggests. This latest revelation would
follow earlier disclosures of some US$7 billion in accounting
trouble.
"We reiterate that our financial operations are independent from
WorldCom," an Embratel official told Dow Jones Newswires.
A Wall Street Journal report released Friday revealed that one
transaction under investigation involved WorldCom's decision to
incorporate the results of Embratel into its financial results
after it bought MCI in 1998. MCI acquired a 51.8% voting interest
in Embratel, or about just 17% of total equity capital, shortly
before the merger and WorldCom consolidated the Embratel results
until 2001.
In mid-2001, WorldCom stopped consolidating its Embratel results,
suggesting the move was part of an attempt to remove volatile
emerging market cash flows from its core earnings.
Embratel reported a second-quarter loss of BRL152.2 million, a
whopping 292% increase 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 bills
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
ENRON: Petrobras Overcomes First Hurdle In Acquiring CEG Stake
--------------------------------------------------------------
Brazilian oil group Petroleo Brasileiro (Petrobras), which agreed
to buy Enron's stake in local gas distributor Companhia
Distribuidora de Gas do Rio de Janeiro (CEG) in February for
US$240 million, obtained approval from the antitrust department
of the Finance Ministry to proceed with the transaction. Although
the Finance Ministry's ruling recognized that verticalization
exists, it said the new arrangement wouldn't be enough to hinder
competition in the sector.
The approval, according to Dow Jones, is the first of three steps
to receive full approval on the way to acquiring bankrupt Enron's
gas assets in Brazil. The proposed deal still requires Justice
Ministry's antitrust department approval and, finally, an OK from
the Brazilian antitrust agency or CADE.
The stakes consist of a 25.38% stake the U.S. energy group owns
in CEG as well as the 33.75% stake Enron has in local unit CEG-
Rio.
CEG serves the metropolitan Rio de Janeiro area, and CEG-Rio
supplies industrial towns in the greater Rio de Janeiro region
and the interior of the state.
CONTACTS: Mark Palmer of Enron Corp., +1-713-853-4738
Enron Corp.
Investor Relations Dept.
P.O. Box 1188, Suite 4926B
Houston, TX 77251-1188
(713) 853-3956
Email: investor-relations@enron.com
Enron Corp.
Public Relations Dept.
P.O. Box 1188, Suite 4712
Houston, TX 77251-1188
(713) 853-5670
LIGHT: Furnas May File Suit Over Delayed Payment
------------------------------------------------
Brazilian state-owned generator Furnas Centrais Eletricas
threatened to lodge legal proceedings against power distributor
Light Servicos de Eletricidade for delaying the payment of BRL88
million ($1=BRL3.35) worth of electricity, reports Dow Jones.
Furnas, a unit of federal electricity holding Centrais Eletricas
Brasileiras, said Light should have made the payment on Aug. 30.
Local newspaper reports released Thursday cited Light's finance
director Paulo Roberto Ribeiro Pinto as saying that the
distributor was experiencing temporary cash-flow problems but
would make the payment in the next few days.
Light is a unit of France's Electricite de France (EDF).
CONTACT: LIGHT SERVICOS DE ELETRICIDADE S.A.
Avenida Marechal Floriano, 168
20080-002 Rio de Janeiro, Brazil
Phone: +55-21-2211-2794
Fax: +55-21-2211-2993
Home Page: http://www.lightrio.com.br
Contact:
Bo Gosta Kallstrand, Chairman
Michel Gaillard, President and CEO
Joel Nicolas, Executive Director, Operation
Paulo Roberto Ribeiro Pinto, Executive Director,
Investor Relations and CFO
ELECTRICITE DE FRANCE (EDF)
Rue Louis-Murat
75384 Paris Cedex 08,
France
Phone: +33-1-40-42-54-30
Fax: +33-1-40-42-79-40
Home Page: http://www.edf.fr
Contacts:
Francois Roussely, Chairman and CEO
Yannick d'Escatha, COO, Industry Branch
Jacques Chauvin, Chief Financial Officer
ELECTRICITE DE FRANCE (INTERNATIONAL)
30, Rue Jacques Ibert
75017 Paris
Phone: 33 (0) 1 40 42 22 22
Fax : 33 (0) 1 40 42 31 83
Home Page : http://www.edf.fr
Contact :
M. Fang Deyi
Phone: 33 (0) 1 40 42 18 68
Fax : 33 (0) 1 40 42 18 89
E-mail : deyi.fang@edf.fr
STATE-RUN BANKS: Brazil To Auction BEC, BESC in November
--------------------------------------------------------
The Brazilian central bank announced Thursday it would be putting
two of its remaining four state banks on the block in November,
reports Dow Jones. The banks are Banco do Estado Do Ceara SA
(BEC) and Banco do Estado de Santa Catarina SA (BESC), which will
be auctioned November 12 and November 20, respectively.
According to the monetary authority, BEC will now be sold at a
minimum price of BRL268 million ($1=BRL3.41), a 17% drop from the
BRL324.5 million set in late May. With regards to BESC, the
central bank is yet to set a value for the bank.
Meanwhile, the sale of Banco do Estado do Maranhao (BEM) and
Banco do Estado Do Piaui SA may not go through this year, defying
government's goals to meet its end of December deadline.
Brazil was supposed to have concluded the sale of all four banks
in June but a Federal Audit Court order demanded the central bank
re-evaluate the value of all the banks because previous
valuations were out of date. The court mandate held up the
transaction.
Furthermore, appetite for the state institutions is weak as
Brazil's biggest banks hold back on lending and building up
provisions at a time when external credit is hard to come by,
local borrowing costs are rising and investors fret about the
nation's debt burden and the outcome of the presidential
elections.
Whether the government will be able to sell off its banks by the
end of the year, an outcome that analysts have said is very
possible, still remains to be seen.
=========
C H I L E
=========
EDELNOR: Seeks Court Approval for Cleary Gottlieb Retention
-----------------------------------------------------------
Empresa Electrica del Norte Grande S.A. (Edelnor), seeks to
retain Cleary, Gottlieb, Steen & Hamilton as counsel for its
bankruptcy case and moves for authority from the U.S. Bankruptcy
Court for the Southern District of New York to do so.
The Debtor relates that it has selected Cleary, Gottlieb as
counsel because of the Firm's knowledge of the Debtor, as well as
the Firm's extensive experience and knowledge in the field of
business reorganizations and other debt restructuring
proceedings. The Debtor believes that the Firm is both well
qualified and uniquely able to represent it in an efficient and
timely manner. Cleary Gottlieb has already been intensely
involved in the Debtor's restructuring efforts.
In support of the motion, the Debtor claims, if it were forced to
retain counsel other than Cleary Gottlieb, it would be unduly
prejudiced by the time and expense necessarily required by such
new attorneys to familiarize themselves with the intricacies of
the Debtor's businesses, operations and capital structure.
Cleary Gottlieb will be required to:
1) provide legal advice with respect to the Debtor's powers
and duties as debtor in possession in the continued
operation of its business and management of its
property;
2) prepare on behalf of the Debtor, as debtor in
possession, necessary applications, motions, orders,
reports and other legal papers in connection with the
administration of its estate in this case;
3) represent the Debtor at all hearings on matters
pertaining to its affairs as debtor in possession;
4) prosecute and defend litigated matters that may arise
during this chapter 11 case;
5) counsel the Debtor with respect to various corporate and
litigation matters relating to this chapter 11 case
including, but not limited to, finance and tax matters;
6) perform all other legal services that are desirable and
necessary for the efficient and economic administration
of the Debtor's chapter 11 case; and
7) perform all assistance, necessary for the confirmation
and consummation of the Plan.
Cleary Gottlieb's hourly rates are:
Partners $525 - $695
Special Counsel $505 - $695
Associates $225 - $495
Managing Attorneys $440 - $455
Law Clerks/Summer Associates $155 - $220
Paralegals/ Clerks $155 - $220
Empresa Electrica del Norte Grande SA is a partially integrated
electric utility engaged in the generation, transmission and sale
of electric power in northern Chile. The Company filed for
chapter 11 protection on September 17, 2002. Lindsee Paige
Granfield, Esq., Thomas J. Moloney, Esq., at Cleary, Gottlieb,
Steen & Hamilton represent the Debtor in its restructuring
efforts. When the Debtor filed for protection from its
creditors, it listed $612,861,000 in total assets and
$385,483,000 in total debts.
ENERSIS: Parent's Stock Falls On Possible Bailout Concerns
----------------------------------------------------------
Shares Of Spain's Endesa SA fell as much as 3.5% to a six-year
low on concern it may have to bail out its unit in Chile,
Bloomberg reports, citing analysts. Shares fell as much as 36
cents to EUR10.03, the sixth straight decline, and were down 3.2%
as of 12:54 p.m. in Madrid. The shares have fallen 18% in six
sessions.
Endesa is Spain's largest power company with the greatest share
of its assets in Latin America, through its Chile-based Enersis
holding company. It doesn't have so-called "cross default"
clauses with Enersis, but may step in anyway to rescue the unit
if it can't pay its debt, analysts said.
"The shares are falling because Endesa has investments in places
in Latin America that investors are afraid of, and because of
regulatory uncertainty in Spain," said Maria Jesus Lago, an
analyst at Analistas Financieros Internacionales. "It's a company
that's quite indebted, and there are doubts about its ability to
reduce debt to the extent that it's set out to do."
Endesa has invested about EUR6 billion in Latin America, three-
quarters of it in Chile, a spokesman said.
Meanwhile, analyst Virginia Sanz de Madrid at Deutsche Bank
downgraded Endesa to "hold" from "buy," citing a "strong revenue
shortfall."
Endesa may cut its dividend for the first time since its 1988
stock listing, she said in a note to investors. Endesa paid a
semi-annual 34-cent net dividend in July. The stock pays a gross
dividend yield of 6.8%, based on the current share price.
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
===========
M E X I C O
===========
CFE: Sells $264M, 30-Year Bonds To Back Investments
---------------------------------------------------
Mexico's state electricity monopoly Comision Federal de
Electricidad (CFE) completed its first foreign debt sale in a
decade to finance investments, Bloomberg reveals. The state-owned
utility said it sold JPY32 billion (US$264 million) in 30-year
bonds but did not specify the terms of the bonds, nor how the
money would be spent.
CFE is reportedly in need of help to carry out its investment
program in 2011. An industry-wide upgrade is said to have been
required in order for the Company to meet the MXN560 million
(US$57.6 billion) it needs in the coming decade.
Last year, Mexican President Vicente Fox persuaded congress to
increase the amount of debt state-owned companies can sell this
year as the government lacks sufficient funds to pay for
investments in the energy industry.
CONTACT: COMISION FEDERAL DE ELECTRICIDAD
Rio Rodano 14, Col. Cuauhtemoc
06598 Mexico, D.F., Mexico
Phone: +52-55-5229-4400
Fax: +52-55-5310-4614
http://www.cfe.gob.mx
Contacts:
Alfredo Elias Ayub, General Director
Arturo Hernandez Alvarez, Director of Operations
Francisco J. Santoyo Vargas, Director of Finance
GRUPO MINSA: Debt Default Expected After Slumping Sales
-------------------------------------------------------
Mexican corn flour manufacturer Grupo Minsa, which recently
received notice of a lawsuit filed by the International Finance
Corp. for failing to pay US$50 million, is at risk of defaulting
on some of its debt payments. The expectation is increasing based
on declining sales and high leverage levels.
During 2001, Grupo Minsa registered a 1.5% drop in sales,
reaching MXN946 million (US$95.04 million). The Company reported
losses of more than MXN98 million (US$9.84 million) and operating
profits reached just MXN5 million (US$502,000).
IFC, the World Bank's financing arm, granted a loan in 1996 for
Grupo Minsa to pay off short-term debt and modernize its
facilities. Minsa, a former subsidiary of Conasupo, said it is
now in the process of renegotiating the loan, as well as debts
owed to other creditors.
The corn miller said it expects to conclude these talks shortly
and still meet its 2002 operational goals. Minsa had debt of
MXN948 million (US$95 million) at the end of June, three
quarters of which matures in a year or less.
UNEFON: Nortel Claims Lawsuit Without Merit in Rebuttal
-------------------------------------------------------
Canadian network equipment vendor Nortel Networks insisted that
the US$900-million lawsuit filed against it by Mexican mobile
operator Unefon has no merit, relates Business News Americas.
"Nortel Networks believes it is without merit and we will defend
ourselves vigorously and continue to aggressively pursue all of
the rights and remedies that are available to us under the
contractual arrangements with Unefon," a Nortel spokesman said,
adding that they have yet to be served with the lawsuit.
On September 9, Unefon filed a lawsuit against Nortel alleging
that Nortel failed in its obligation to syndicate portions of
Unefon's indebtedness. Adequate syndication 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."
The Nortel spokesperson said that contrary to Unefon's
allegations, "Nortel has acted in accordance with the provisions
of their finance agreement. Nortel accelerated the full amount of
its loan to Unefon on September 9, despite the fact that Unefon
failed to make a US$6-million interest payment to Nortel at the
end of August," he said.
The net economic impact of Nortel's exposure with respect to the
loan is not material, according to the spokesperson. Unefon is
46.5%-owned by TV Azteca, S.A. de C.V., one of the two largest
producers of Spanish language television programming in the
world.
=======
P E R U
=======
BACKUS: Five Execs In Hot Water For Alleged Administrative Fraud
----------------------------------------------------------------
A Peruvian judicial official, who requested anonymity, revealed
that at least five executives at the country's domestic brewer,
Backus y Johnston, are now under investigation for alleged
administrative fraud, relates Reuters.
"The 12th prosecutors' office is investigating the accusation
from (Venezuelan Brewer and Backus shareholder) Polar against
some five Backus executives, including General Manager Carlos
Bentin, for administrative fraud for hiding the truth," the
official said.
The criminal investigation is the latest chapter in a bitter
legal saga surrounding Backus that began in July, when Colombia's
biggest brewer Bavaria bought a 24.5% stake in Backus for some
US$420 million, and Venezuela's Cisneros Group snagged 16%
shortly afterward and launched an effort to acquire some 7% more.
Cisneros now holds around 21%.
Venezuelan brewer Empresas Polar, which controls about around
24.6% of Backus itself, cried foul and asked the Peruvian market
regulator Conasev to place an injunction to stop the Cisneros
Group from increasing its stake in Backus. Polar said Cisneros'
moves were aimed at taking control of Backus without making a
public offer.
Bavaria responded, charging that Polar should have launched a
public bid for its own stake.
CONTACT: UNION DE CERVECERIAS PERUANAS BACKUS & JOHNSTON S.A.
Jr. Chiclayo 594, Rimac
Lima 25.
Phone: +511-4810570
Fax: +511-3820008
Email: cobackus@backus.com.pe
Home Page: http://www.backus.com.pe/INDEX-I.HTM
Contact: Mr. Carlos Bentn, General Manager
=================
V E N E Z U E L A
=================
CMS ENERGY: Final Oil, Gas Exploration Affiliate Sold
-----------------------------------------------------
CMS Energy Corporation (NYSE: CMS) announced Thursday it has
closed a sale of the stock of CMS Oil and Gas (Venezuela) LDC to
an affiliate of Perenco SA. The transaction is part of a
previously announced sale of all of CMS Energy's exploration and
production business for approximately $232 million. With the
closing of the primary CMS Oil and Gas Company stock sales to
Perenco announced earlier this week, sales covering substantially
all of CMS Energy's oil and gas properties have been
completed. Closing of the sale of its Colombian oil and gas
properties, which is pending government approval, is expected by
early October.
CMS Energy Corporation is an integrated energy company, whose
primary business operations are an electric and natural gas
utility, natural gas pipeline systems, independent power
generation, and energy marketing, services and trading.
For more information on CMS Energy, is available at the company's
web site: www.cmsenergy.com.
CONTACT: CMS Energy Corporation
Media Contacts:
Jeffrey L. Holyfield, +1-517-788-2394
Kelly M. Farr, +1-313-436-9253
John P. Barnett, +1-713-989-7556
Investment Analyst Contact: +1-517-788-2590
***********
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. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each. For subscription information,
contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *