/raid1/www/Hosts/bankrupt/TCRLA_Public/020926.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 26, 2002, Vol. 3, Issue 191
Headlines
A R G E N T I N A
AT&T LATAM: Parent Contemplates Taking Unit Private
DVI: Fitch Drops Sr Unsecured Debt 'B+'; Outlook Still Negative
IMPSAT: Plans Regional Internet Backbone Unification By Year-End
PATAGON ARGENTINA: Court Confiscates ARS1.1M From SCH Unit
* Argentina Warns IMF of Debt Default
B E R M U D A
GLOBAL CROSSING: Probe Discovers Execs' Treachery
STIRLING COOKE: Reports Peter Christie's Resignation
B R A Z I L
AES BANDEIRANTE: Eletrobras Suspends Voting Rights In JV
BCP: Follows Telesp Celular's Move to Block TIM
CVC/Opportunity: Escapes Threatening Liquidation
ELETROPAULO METROPOLITANA: Market Upbeat On Making Debt Payments
C H I L E
ENERSIS: Parent Reassures Dividend Payment This Year
C O L O M B I A
TELECOM: May Take Part In Upcoming PCS Auction
M E X I C O
ALESTRA: Seeks Maturity Extension, Repurchase of $570M Bonds
BITAL: HSBC To Launch Tender Offer In November
UNEFON: Azteca, Elektra Woes Taking Toll on Divestiture
T R I N I D A D & T O B A G O
BWIA: Communications Director Defends Fellow Exec.
BWIA: TTALPA Expects Duprey's Response on Position
V E N E Z U E L A
CANTV/EDC: S&P Cuts Ratings After Venezuela Action
* S&P Cuts Venezuela as Economic and Political Crisis Deepens
- - - - - - - - - - -
=================
A R G E N T I N A
=================
AT&T LATAM: Parent Contemplates Taking Unit Private
---------------------------------------------------
AT&T is considering absorbing its two-year-old Latin American
subsidiary, AT&T Latin America Corp., according to The New York
Times. Citing sources close to the company, the report also
reveals that AT&T might retire the cash-hungry unit's publicly
traded shares. AT&T has remained silent regarding the report but
some analysts said the action would make sense.
"Maintaining an international presence is a real advantage for
AT&T over its competitors," said Drake Johnstone, a
telecommunications services analyst with Davenport & Co. "The
reason AT&T would not want it to go under is they do serve global
business clients and want to maintain a presence in Latin
America."
AT&T has full control of the operation, with 69% of the unit's
equity and 95% of its voting power. The subsidiary, which has a
total market capitalization of only US$81 million, owed its
parent company almost US$604 million at the end of the second
quarter. The company had almost US$843 million in debt at the end
of the quarter and it continues to lose money, even as sales
grow. AT&T Latin America lost US$103.3 million for the second
quarter on revenue of US$42 million.
AT&T Latin America serves the business telecommunications markets
in Argentina, Brazil, Chile, Colombia and Peru.
To see financial results: http://bankrupt.com/misc/AT&TLatAm.htm
CONTACT: AT&T LATIN AMERICA
Investor Relations
Nancy Anderson
Phone: +1-305-459-6424,
E-mail: nancy.anderson@attla.com
OR
Catherine Castro
Phone: +1-305-459-6336,
E-mail: catherine.castro@attla.com
DVI: Fitch Drops Sr Unsecured Debt 'B+'; Outlook Still Negative
---------------------------------------------------------------
Fitch Ratings lowers DVI's senior unsecured debt rating to 'B+'
from 'BB-'. The Rating Outlook remains Negative. This action
relates to $155 million of debt due in 2004.
The rating action reflects DVI's weak operating performance,
asset growth exceeding internal capital formation, rise in
encumbered assets as a percentage of total assets, and increased
financial leverage. The Rating Outlook remains Negative as DVI
faces significant challenges in reversing the trends in leverage
and capitalization. As such, if current trends continue, the
cushion available to unsecured debtholders may become further
compromised. Fitch also notes that gain-on-sale revenue as a
percentage of total revenue has rose sharply in fiscal year 2001
and first the first nine months of fiscal year 2002.
During the quarter ended March 31, 2002, DVI took two large one-
time charges in connection with the revaluation of certain
investments in its securities portfolio and its operations in
Argentina. The charges in the securities portfolio was to
recognized previously unrealized losses in current earnings for
Corvis Corp. and Claimsnet. This charge approximated $16.6
million. In Argentina, as a result of the peso devaluation, DVI
took a $13.7 million special loss provision. Although its
Argentinean operation is small, this amount did not cover all of
its outstanding credit.
While the charge for the investment securities had no impact on
book equity, as it was already recognized in comprehensive
income, it does provide additional insight into management's risk
appetite. The investment in Corvis came as a result of warrants
given to DVI in connection with a loan. DVI has taken equity in
other companies as a result of loan workouts. During the March
31, 2002 quarter, DVI transferred $16.5 million of loans
receivable from two customers to an investment account to reflect
equity securities taken in consideration for credit previously
outstanding.
Overlaid against Fitch's concerns is management's success in
navigating the company through one of the most challenging
periods in commercial finance. Additionally, in part due to
industry consolidation, DVI has emerged as the leading
independent healthcare finance company in the world.
The special charges taken in the March 31, 2002 quarter resulted
in DVI reporting a loss for that three month period and net
income of $3 million for the nine-month period. Excluding these
charges, net income would have been $6.5 million and $18.9
million, respectively. While still profitable, DVI's internal
capital formation continues to lag asset growth. This
increasingly puts capital under pressure, especially when the
scope of DVI's international operations are considered. DVI
during the first half of calendar 2002 issued $25 million of 7.5%
convertible subordinated debt. This security has a final maturity
of 2009 and is convertible into DVI common equity with a strike
price of $20/share.
Since fiscal year 1997, DVI's asset quality has weakened in part
due to the economy as well as a change in business mix, with the
addition of small ticket vendor finance. This trend has slowed in
fiscal 2002 as net chargeoffs as a percentage of managed
receivables have dipped slightly. However, because the company
uses the asset substitution provision allowable in its
securitizations, on-balance sheet assets could be adversely
selected against. While managed net chargeoffs appear moderate,
on a 12-month lag basis, there has been a noticeable increase on
an owned basis. It appears that credit costs will remain high
over the intermediate term as non-performing receivables as a
percentage of total managed receivables increased to 6.44% at
March 31, 2002 from 4.61% at June 30, 2001.
Additionally, losses arising from the recent problems in
Argentina have not been charged off. However reserves have been
increased and recoveries can be expected from assets previously
charged off.
CONTACT: FITCH RATINGS
Philip S. Walker, Jr., CFA, 212/908-0624
Matthew D. Gallino, 212/908-0218
James Jockle, 212/908-0547 (Media Relations)
IMPSAT: Plans Regional Internet Backbone Unification By Year-End
----------------------------------------------------------------
Argentina-based corporate communications provider Impsat Fiber
Networks is poised to become the first and only operator in Latin
America to unify its AS Internet backbone, which connects cities
in Brazil, Argentina, Colombia, Chile, Ecuador, Peru, Venezuela
and Mexico.
According to a report by Business News Americas, the Company is
looking to have its pan-regional Autonomous System (AS) Internet
backbone completely unified before year-end. Autonomous System
refers to a collection of routers that fall under one
administrative entity and cooperate using a common Interior
Gateway Protocol (IGP).
The backbone can operate at speeds exceeding 1Gbps and is
connected to 14 data centers in the major cities of the US and
Latin America, according to Impsat Internet VP Juan Carlos
Martinez.
Impsat Fiber, a provider of broadband Internet, data, and voice
services in Latin America, filed for chapter 11 protection on
June 11, 2002. Anthony D. Boccanfuso, Esq., and Michael J.
Canning, Esq. at Arnold & Porter represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $667,189,368 in total assets and
$1,334,732,793 in total debts.
To see Financial Statements:
http://bankrupt.com/misc/Impsat.htm
CONTACT: IMPSAT Fiber Networks, Inc.
Home Page: http://www.impsat.com
Hector Alonso
Gonzalo Alende Serra
Phone: 54.11.5170.3700
DEBTORS' COUNSEL: Anthony D. Boccanfuso, Esq.
Michael J. Canning, Esq.
Arnold & Porter
399 Park Avenue
New York, New York 10022
(212) 715-1315
Fax : (212) 715-1399
PATAGON ARGENTINA: Court Confiscates ARS1.1M From SCH Unit
----------------------------------------------------------
The case involving Patagon Argentina continues with the local
tribunal ordering payment of ARS1.1 million from SCH subsidiary
Banco Rio de la Plata on behalf of the defunct online bank's
former workers, says Business News Americas.
"The confiscation is a precaution in case there is no money left
at the bank by the time the case concludes," according to a court
source.
Accusations of irregularities at Patagon Argentina made headway
when SCH sold 100% of Patagon America to Patagon's original
founders Wenceslao Casares and Guillermo Kirchner for US$9.84
million in May this year. Under the agreement, the two
businessmen agreed to assume responsibility for any current or
future legal action involving Patagon America.
Patagon has been a thorn in SCH's side ever since Spanish
financial group paid EUR553 million for 75% of Patagon in March
2000, followed by a EUR273-million capital increase in September
2001. To date, the group has invested a total of EUR871 million
in Patagon.
Meanwhile, Patagon Argentina still has its funds embargoed as a
result of a labor lawsuit currently under litigation.
CONTACT: PATAGON (Argentina)
Peru 375, 6 Piso
Buenos Aires, Argentina
Belen Galleppi
Tel: 00-54-11-4343-7200
Home Page:
http://www.patagon.com.ar/Default.asp?rnd=0.211651
Contact: Javier Bolzico, Market manager
* Argentina Warns IMF of Debt Default
-------------------------------------
The Argentine government warned the International Monetary Fund
(IMF) of government's potential default on debt payments if the
lending agency doesn't come up with a new aid package. In a
report released by the Associated Press, Argentine Economy
Minister Roberto Lavagna stressed that, without a new deal,
Argentina would be pressured to tap into its US$9.5 billion in
reserves to pay its obligations to the World Bank and the IMF.
Mr. Lavagna also said that the government would not sacrifice its
social welfare programs and financing hard-pressed regional
governments in order to pay the IMF loan.
Shareholders and board members did not agree to an aid agreement
because of misconceptions that a number of IMF officials have on
the country's economy. He added that the economy had begun to
stabilize, as indicated by an increase industrial production,
declining interest rates and signals that the central bank has
begun buying dollars instead of selling them to hold the peso
steady.
Argentina is facing some US$329 million in loan repayments due to
the IMF and the World Bank in coming months. It has been
negotiating for short-term loans to keep the government solvent
and help it meet debt repayments.
Earlier this September, the IMF granted Argentina another year to
make a US$2.8 billion repayment on loans from the lending
organization.
Negotiations have been stalled for months as the IMF insists that
Duhalde's government failed to implement the needed structural
reforms required to insure new loans.
=============
B E R M U D A
=============
GLOBAL CROSSING: Probe Discovers Execs' Treachery
-------------------------------------------------
The investigative subcommittee of the House Energy and Commerce
Committee learned Tuesday that Global Crossing top executives
deceived analysts about the fiber-optic company's financial
condition, according to a former executive from the Company.
According to the Company's former Vice President for finance, Roy
Olofson, in early 2001 Global Crossing entered into more than a
dozen deals intended to "doll up" the Company's finances.
He also said that he heard then-CEO Thomas Casey tell financial
analysts that Global Crossing had not done any "swap"
transactions, in which companies swapped capacity on their
networks, which is not the truth. Mr. Olofson added that he
became deeply concerned, feeling the statement was inaccurate.
In August 2001, Olofson gave Global Crossing general counsel
James Gorton a detailed analysis of what he described as inflated
revenue and cash-flow data that may have deceived analysts and
investors. The said papers became public a day after Global
Crossing's bankruptcy filing.
Global Crossing, along with western telephone service provider
Qwest Communications, is under investigation by the Securities
and Exchange Commission, the Department of Justice, and Congress
on whether the companies engaged in "sham transactions designed
to boost revenues", giving investors and financial analysts
misleading information on the Company's financial health.
Former and current executives from both companies are expected
testify Tuesday.
Rep. Billie Tauzin, R-La., chairman of the House Energy and
Commerce said he would subpoena those who refuse to testify.
A tentative schedule for the next hearing had been set for early
nest month. Global Crossing Chairman Gary Winnick, whom committee
aides said has uncooperative with investigators, and Qwest's
former CEOJoseph Nacchio, who has given investigators several
hours of closed-door testimony, are expected to be present.
Global Crossing had aimed to dominate the high-speed
communications market with its 100,000-mile fiber optic network.
The Company's expansion was so fast, the network outpaced the
demands for its services, which added to the decline of the
company's finances.
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
STIRLING COOKE: Reports Peter Christie's Resignation
----------------------------------------------------
Stirling Cooke Brown Holdings Limited (Nasdaq: SCBHF) announced
that Peter S. Christie has resigned as a director of the Company,
effective Tuesday. Mr. Christie stated that he has resigned
because of his intention to accept a position that would be
incompatible with his continued service on the Stirling Cooke
Board of Directors.
Stephen A. Crane, Chairman, President & Chief Executive Officer
of Stirling Cooke, stated, "Peter Christie has been an excellent
director and strong supporter of the Company since his election
to the Board two years ago. We will miss his valuable
contributions but wish him well in his future endeavors." The
Company added that it has no current intention to replace Mr.
Christie on the Board, which now has seven members, four of which
are non- executive.
Stirling Cooke Brown Holdings Limited is a Bermuda holding
company, which, through its subsidiaries, provides insurance
services and products. The Company provides its range of
services and products to unaffiliated insurance and reinsurance
companies, insurance agents and insureds. The Company is active
primarily in the workers' compensation, occupational accident and
health and casualty insurance markets through its subsidiaries
located in London, Bermuda and the United States.
Stirling Cooke Brown Holdings Limited Ordinary Shares are quoted
on the NASDAQ market under the symbol "SCBHF."
To see financial statements:
http://bankrupt.com/misc/Stirling_Cooke.htm
CONTACT: Stirling Cooke Brown Holdings Limited
Stephen Crane, CEO
+1-212-422-0770
===========
B R A Z I L
===========
AES BANDEIRANTE: Eletrobras Suspends Voting Rights In JV
--------------------------------------------------------
Brazilian federal power company Eletrobras issued an official
statement to the Sao Paulo stock exchange informing the bourse
that it has suspended the voting rights of AES Bandeirante in
Eletronet. Business News Americas relates that both companies are
partners in the Eletronet joint venture. AES Bandeirante, a
subsidiary of US-based AES Corp., owns 51% of Eletronet, while
Eletrobras holds the remaining 49%.
The suspension came after AES failed to meet payments towards
capitalizing telecom Eletronet. In addition to the suspension of
AES Bandeirante's voting right, Eletrobras said it would also
appoint new directors to the board, in line with their
shareholders agreement.
Eletronet operates a national broadband network over Brazil's
existing electrical transmissions grid. It also owns 5,000km of
fiber optic cable attached to the transmission grid.
CONTACT: CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS
Avenida Presidente Vargas 409, 13 Andar
20071-003 Rio de Janeiro Brazil
Phone: (21) 2514-5151
Fax: +55-21-2242-2697
Home Page: http://www.eletrobras.gov.br
Contacts:
Cladio da Silva avila, President
Jose Alexandre Nogueira de Resende, Director of
Financial and Market Relations
Investor Relations Division
Phone: (0XX21) 2514-6207 / 2514-6333
Av. Presidente Vargas, 409 - 9 andar
20071-003 - Rio de Janeiro - RJ
Email: arlindo@eletrobras.gov.br
BCP: Follows Telesp Celular's Move to Block TIM
-----------------------------------------------
BCP, a Brazilian mobile operator, followed the lead of its Sao
Paulo-based rival Telesp Celular to block the PCS service
launching of Telecom Italia Mobile next month, according to
Business News Americas. Telesp Celular filed a protest last week,
which was rejected by a federal regional court last Friday.
However, there is still room for the company to make an appeal.
Telesp Celular contends that Telecom Italia's 47,000 reais
(US$12,500) sale of an 18.3 percent stake in Brasil Telecom was a
sham due to the low price of the sale.
BCP added the sale itself is insufficient to allow TIM to use its
PCS licenses since changes in the controlling shareholder before
July next year is prohibited by local legislation. Regulator
Anatel, which granted TIM the go signal, negates this claim.
TIM, which controls Brazilian cellular operators Tele Celular Sul
(NYSE: TSU), Tele Nordeste Celular (NYSE: TND) and Maxitel, has
been unable to use the three licenses it bought in March 2001 due
to regulations requiring fixed line incumbents of shareholders
holding at least 20 percent stake in those companies to meet
government mandated build-out goals in order to expand services
before July 2003.
In August, TIM controller Telecom Italia (NYSE: TI) reduced its
stake in Solpart Participacoes, a local telecoms holding, to 19
percent from 37.3 percent to allow TIM to offer PCS services.
Solpart is the indirect controller of Brazilian fixed line
incumbent operator Brasil Telecom (NYSE: BRP), which did not meet
build-out requirements ahead of schedule last year.
Meanwhile, TIM had started selling GSM handsets in Sao Paulo, Rio
de Janeiro and Brasilia three of Brazil's largest cities. For the
meantime, the company is selling only Siemens A40 phones.
CVC/Opportunity: Escapes Threatening Liquidation
------------------------------------------------
CVC/Opportunity Equity Partners Ltd, which is based in the Cayman
Islands, is likely to avoid possible liquidation as Citigroup
Inc.'s main investment manager in Brazil is close to resolving a
long-running legal dispute, The Wall Street Journal reports.
The Journal indicates that the financier, Daniel Dantas, is
moving to resolve shareholder feuds that have dogged Citigroup's
direct investments, including Brasil Telecom Participacoes
SA, Brazil's third-largest fixed-line telephone company.
Citigroup's Citicorp Venture Capital unit is the largest
shareholder of the CVC/Opportunity fund. The fund is managed by
Mr. Dantas' Opportunity group and, along with a parallel
Brazilian fund, gained control of several companies during
Brazil's privatization process over the past five years.
The legal dispute began in 1999 as a disagreement over the value
of a junior partner's stake in CVC/Opportunity. The dismissed
partner, Luis Roberto Demarco Almeida, filed a lawsuit to
liquidate the fund as part of the dispute.
CVC/Opportunity is a company organized with the specific purpose
of investing in private equity opportunities in Brazil.
CVC/Opportunity consists of an Offshore Investment Fund managed
by an Offshore Management Company and an Onshore Brazilian based
Investment Fund and managed by an Onshore Management Company.
CONTACT: TELEMIG CELULAR PARTICIPACOES
SCN Quadra 3, Bloco A, Sobreloja, Asa Norte
70713-000 Brasilia, D.F., Brazil
Phone: +55-61-429-5600
Fax: +55-61-429-5626
Contacts:
Gunnar Birger Vinof Vikberg, Chairman and CEO,
Rene Pantoine, COO
Joao Cox Neto, CFO and Head of Investor Relations
BRASIL TELECOM
Sia Sul, Asp, Lote D, Bloco B
71215-000 Braslia, D.F., Brazil
Phone: +55-61-415-1414
Fax: +55-61-415-1315
Contacts:
Luis Octavio Carvalho da Motta Veiga, Chairman
Henrique Sutton de Sousa Neves, CEO/Investor Relations
Officer
Paulo Pedrao Rio Branco, CFO
ELETROPAULO METROPOLITANA: Market Upbeat On Making Debt Payments
----------------------------------------------------------------
Despite the fact that Eletropaulo Metropolitana has twice
extended this month the payment deadline of an unpaid portion of
a US$225 million syndicated loan, market players are still
confident that the Brazilian utility will be able to meet
immediate debt obligations, says Dow Jones.
The Brazilian distributor, which is controlled by U.S.-based AES
Corp., has already paid US$34 million of the US$225-million debt
with banks due August. 26. Subsequently, the Company delayed
payment on the remaining balance of US$191 million to Sept. 9,
then to Sept. 23. However, Eletropaulo this week concluded
negotiations with banks over new terms for the debt and extended
the payment to October 7, 2002.
Most of the US$191 million debt, according to the Company, will
likely be converted into Brazilian reais and repaid over the next
24 months. Investors, meanwhile, continue believing this is
scenario is plausible.
"I think Eletropaulo will be able to continue restructuring its
debt," said Gustavo Gattass, an analyst at UBS Warburg in Brazil.
Eletropaulo already has hammered out an agreement with other
creditors to reschedule around BRL175 million worth of debentures
originally due Oct. 1. Bank debt is relatively easier to
restructure, since it involves fewer creditors and bankers often
have business relationships in mind when providing loans to
companies.
Once the bank loan negotiations wind up, Eletropaulo still has to
rollover another US$671 million in short-term debt maturing by
June 2003.
"Operationally the Company is fine," said Alexandra Strommer, an
analyst at JP Morgan in Brazil. "I don't think the level of debt
is impossible to pay."
Eletropaulo has earned more than US$500 million before interest,
taxes, debt and amortizations in each of the past three years.
The Company is dogged by factors taking place in its environment.
Electricity consumption in Brazil has dropped after a nine-month
rationing program that started in June last year. Meanwhile as
investors wonder how a new government to be elected in October
might manage the country's debt burden, the local currency has
declined more than 40% against the dollar this year. For a real
earner like Eletropaulo, this means dollar costs are getting
steep.
Meanwhile, Eletropaulo can expect little help from its parent
AES. The global power giant has said it doesn't plan to give any
cash to its troubled Latin units, as it has its own problems to
wrestle with.
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
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
=========
C H I L E
=========
ENERSIS: Parent Reassures Dividend Payment This Year
----------------------------------------------------
Spain's leading power utility Endesa tried to assuage investor
fears Tuesday, saying that it would maintain its 2002 annual
dividend unchanged at EUR0.264 per share. The dividend, according
to Reuters, will be paid next on January 2, 2003.
The announcement came amid wide market speculation that the
company might cut the payout on concern about its EUR23 billion
in group debt and its exposure to Latin America.
Endesa is Spain's largest power company with the greatest share
of its assets in Latin America, through its Chile-based Enersis
holding company. The Company 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 Spanish parent earlier revealed that Enersis reduced its
liabilities by EUR1.14 billion (US$1.12 billion) in the first
half of this year. Enersis and its subsidiaries closed August
with a US$460-million cash flow, Endesa said. In the short term,
the companies could sell assets worth US$588 million, which would
result in US$981 million being taken off their total debt.
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
===============
C O L O M B I A
===============
TELECOM: May Take Part In Upcoming PCS Auction
----------------------------------------------
Alfonso Gomez Palacio, the president of Colombia's incumbent long
distance operator Telecom, revealed that the telecommunications
firm may consider participating in the country's upcoming PCS
auction as a strategic partner or even a direct participant,
relates Business News Americas.
"We can be strategic actors for an operator," Gomez said. "There
is a remote possibility of direct participation and making an
offer in the auction," he said.
Meanwhile, Telecom is currently facing several lawsuits
concerning joint-venture contracts that did not yield promised
results. Recently, Japan's NEC Corp (6701) and Itochu Corp (8801)
lodged a suit against Telecom for a total US$154 million to
compensate for disappointing results from the joint-venture
contracts. NEC is seeking US$140 million and Itochu US$14 million
from Telecom.
In August, Telecom paid more than US$50 million to Canada's
Nortel Networks Corp (NT) after a Colombian tribunal ordered it
to make the payment. Moreover, Sweden's Ericsson (ERICb) is also
suing Telecom for about US$50 million.
Under the contracts, foreign firms installed 1.59 million
telephone lines. The installations did not yield the necessary
profits, and the foreign investors say that the contracts mean
that Telecom assumed the risk.
Telecom, which has lost US$180 million a year since 1996,
admitted that the lawsuits could cost it up to US$800 million
over the next few years and could ultimately drive it out of
business. Already, the Colombian government has said it won't put
more funds into Telecom.
CONTACT: EMPRESA NACIONAL DE TELECOMUNICACIONES (TELECOM)
Calle 23 No 13-49, Bogot
Colombia
Phone: 286-0077
282-8280
Home Page: http://www.telecom.com.co/
===========
M E X I C O
===========
ALESTRA: Seeks Maturity Extension, Repurchase of $570M Bonds
------------------------------------------------------------
Mexican long-distance carrier Alestra SA filed a registration
statement with the U.S. Securities and Exchange Commission
proposing to repurchase part of US$570 million in bonds at a
discount. The proposal would also extend due dates by two years
on the balance of its deb in order to complete the restructuring,
reports Bloomberg.
In the filing, the Company, whose equity sponsors include AT&T
Mexico and a joint venture between Grupo Alfa and Bancomer,
proposed to buy back its US$270 million of 12 1/8 bonds maturing
in May 2006 and US$300 million of 12 5/8 bonds due in May 2009,
exchanging them for new debt. The registration isn't effective
yet, the Company said.
Facing US$47.5 million of interest and principal payments due in
October and November, Alestra is likely to default on its debt as
it lacks the cash to meet the obligations. In July, the Company
hired Morgan Stanley to help it restructure the debt.
To see Financial Statement: http://bankrupt.com/misc/ALESTRA.pdf
CONTACT: ALESTRA S.A. DE R.L. DE C.V
Av. Paseo de las Palmas No. 405
Col. Lomas de Chapultepec
11000 Mexico, D.F.
Phone: 5201-5020
5201-5019
Fax: 5201-5031
5201-5027
Web site: http://www.alestra.com.mx/cgi-
Executives: Rolando Zubiran, Chief Executive Officer
Eduardo Lazos, V.P. Engineering & Ops
Investor Relations: Alberto Guajardo
Phone: (52-818) 625-2219
E-mail: aguajard@alestra.com.mx
FINANCIAL ADVISOR: MORGAN STANLEY
Worldwide Headquarters
1585 Broadway
New York, NY 10036
Phone: (212) 761-4000
Fax: (212) 761-0086
Home Page: http://www.morganstanley.com/
Contact:
Investor Relations
Phone: (212) 762-8131
In Mexico:
MORGAN STANLEY & CO. INCORPORATED
Oficina de Representaci›n en M,xico
Andres Bello 10
8o Piso
Colonia Polanco
11560 M,xico, D.F.
Phone: 011-525-282-6700
Fax: 011-525-282-9200
BITAL: HSBC To Launch Tender Offer In November
----------------------------------------------
HSBC Holdings PLC, which agreed in August to buy Grupo Financiero
Bital for US$1.1 billion in cash, will begin a tender offer for
Mexico's fifth largest financial group in November. The news,
according to Bloomberg, was revealed by the UK-based financial
group's chairman, Sir John Bond, at a press conference in
Singapore. The acquisition would give HSBC a 12.5% stake in one
of Latin America's largest and most attractive banking markets.
HSBC's bid in August, which GF Bital's board, as well the
controlling shareholders -- the local Berrondo and Esteve
families, accepted, came after the Mexican government indicated
it might take over Bital unless the bank increased its capital to
cover bad loans.
An earlier edition of TCR-LA reported that HSBC is expected to
inject US$450 million into Bital to help the local group with its
ongoing capitalization process. Spanish financial group SCH
(NYSE: STD), which owns 26% of Bital, said it would not obstruct
the deal after HSBC announced its bid.
HSBC Holdings is one of the largest banking and financial
services organizations in the world with about 7,000 offices in
81 countries and territories in Europe, the Asia-Pacific region,
the Americas, the Middle East and Africa.
CONTACT: GRUPO FINANCIERO BITAL
Paseo De La Reforma
No. 243, Cuauhtemoc,
06500, Mexico ,D.F.
Phone: 57.21.52.86
Fax: 57.21.57.83
Home Page: www.bital.com.mx
Contact:
Investor Relations
Act. Ricardo Garza Galindo Salazar
Phone: 57.21.26.40
Fax: 57.21.26.26
E-mail: ricaggs@bital.com.mx
HSBC HOLDING PLC
10 Lower Thames St.
London, EC3R 6Ae
Phone: 44-20-7260-0500
Home Page: http://www.hsbc.com
Contact:
Keith R.Whitson, CEO
UNEFON: Azteca, Elektra Woes Taking Toll on Divestiture
-------------------------------------------------------
TV Azteca SA and Grupo Elektra SA, both controlled by a group of
investors headed by Ricardo Salinas Pliego, have seen their
American Depositary Receipts plummet 23% and 24% respectively in
the past five sessions, reports Dow Jones Newswires.
The sharp plunge came after Azteca announced last week that it
has suspended plans to spin off its stake in money-losing
wireless start-up Unefon. However, the suspension announcement
also restored corporate governance concerns.
According to analysts, management's reversal on Unefon has
resurrected talk of the "Salinas discount," in which the market
penalizes Azteca and Elektra shares because of the danger that
the controlling group will transfer funds - and people - across
its shareholdings that aren't always in the best interest of the
publicly-traded companies.
"What it's done, I think, is to revive the fear in people's minds
about the Salinas corporate governance issue," said Geoffrey
Dennis, Latin American equity strategist at Salomon Smith Barney
in New York.
But Azteca management, in a conference call with investors last
week, said it still plans to spin off its 46.5% stake in Unefon.
However, it would only do so when the company can provide value
to shareholders and after a legal battle over a financing
contract with Canadian equipment maker Nortel Networks Corp. is
resolved. Management added that it is cutting off credit lines to
Unefon pending resolution of the lawsuit against Nortel.
Nonetheless, investors are worried that Azteca will sink more
money into the venture, which has total liabilities of around
US$600 million and just 1.15 million subscribers. Analysts also
warn that the dispute with Nortel, which involves US$900 million
in estimated damages, could turn into a protracted, messy affair.
=================================
T R I N I D A D & T O B A G O
=================================
BWIA: Communications Director Defends Fellow Exec.
--------------------------------------------------
BWIA corporate communications director Clint Williams tried to
defend chairman Lawrence Duprey saying that the chief never
threatened to pull his shares out of the airline, relates The
Trinidad Guardian.
"He never said `I will take out my shares.' His commitment is
properly noted and he wants to stay," said Williams.
Williams stepped in to defend Duprey who, according to a previous
report by the Trinidad Guardian, threatened to remove his shares
from BWIA as it seeks to reorganize its operations.
Duprey earlier wrote a letter speaking of the difficulties BWIA
has faced since September 11 and its efforts to reduce costs. In
that letter, Duprey said the airline "can no longer carry out its
outdated labour terms and conditions, poor productivity, absence
of cross utilisation of staff and full-in house capabilities."
He also responded to criticisms made by unions representing BWIA
employees on the way the airline is now being managed.
"If the employees or their representatives who pontificate feel
that BWIA must do otherwise, or who have convinced themselves
that they can better manage this crisis, then I am the first one
who will offer my shares," Duprey wrote.
Williams said that statement was misunderstood: "He (Duprey) said
more specifically, `If anybody wants to have my shares and run
the airline they could do so.' He was saying the owners of the
airline have the right to run the airline as they see fit."
Duprey said most of BWIA's directors run some of the most
successful businesses in the region and are yet to receive a
return on the US$182 million, which they invested. He said they
can no longer fund inefficiencies.
Williams said the staff and the management of BWIA need to be on
the same level in appreciating the airline's present situation
which he called "challenging."
BWIA, which used to be one of the largest, if not the largest,
Caribbean aviation company, has been dogged with internal
problems leading to a negative impact on its attempts to assure
stability in the weakened market.
In July, an impasse between pilots and the Company led to
cancellations, delays and losses. The troubles have cost the
airline TT$8 million (US$1.3 million) from the middle of July
through early August. The latest figures follow the US$8.4
million loss posted for the first half of the year. The Company
attributes its recent week results to declining travel after the
September 11 terrorist attacks on the United States.
CONTACTS: BWIA West Indies Airways
Phone: + 868 627 2942
E-mail: mailto:mail@bwee.com
Home Page: http://www.bwee.com/
Contacts:
Conrad Aleong, President and CEO (Trinidad)
Beatrix Carrington, VP Marketing and Sales (Barbados)
Paul Schutz, Chief Financial Officer (Trinidad)
BWIA: TTALPA Expects Duprey's Response on Position
--------------------------------------------------
The Trinidad and Tobago Pilots Association is still awaiting a
response from Lawrence Duprey, Chairman of BWIA, to a letter that
it has sent to the executive dated September 19, The Trinidad
Guardian reports.
In the letter, TTALPA revealed that they feel Duprey is
misinformed about the causes of the airline's problems, which he
listed in an earlier statement.
"With respect to the statements in your paragraphs 10 and 11
regarding the causes of the problem experienced during the 2002
summer season, we believe you have been misinformed on the issue.
An analysis carried out on the cancellations between July 7 and
August 23 shows the crew shortages accounted for only 22 per cent
of all cancellations," Captain Edward Goddard, Chairman of
TTALPA, stated in the letter to Duprey.
In the letter, TTALPA stated its position on the issue of
restructuring and requesting additional details on what the plan
entails. The letter also stated alleged actions by pilots would
have to be substantially less than 22% and, by comparison, 57% of
cancellations were attributable to maintenance issues.
The union said its members will support the plans to restructure
if it will benefit the airline and if they were able to operate
under similar conditions to Southwest Airlines, JetBlue, Ryanair
and Easyjet.
"Your article seems to indicate that you would be looking forward
to concessions to be made by BWIA staff. In this connection,
while we appreciate that concessions may have to be made, we will
not be able to agree to these without being apprised of the
details of the restructuring plan," said Goddard.
Goddard also said in the letter the pilots were in a position to
make valuable contributions to the plan, given the wealth of
experience and expertise available within the membership of
TTALPA.
=================
V E N E Z U E L A
=================
CANTV/EDC: S&P Cuts Ratings After Venezuela Action
--------------------------------------------------
Standard & Poor's Ratings Services said Tuesday it lowered its
foreign currency corporate credit ratings on two Venezuelan
utilities, Compania Anonima Nacional Telefonos de Venezuela
(CANTV) and C.A. La Electricidad De Caracas (EDC) to single-'B'-
minus from single-'B' following a similar action taken on the
ratings of the Bolivarian Republic of Venezuela.
The outlook on CANTV and EDC's ratings remains negative.
Even though the business plans and financial profiles of both
companies are strong for the rating category, being located in
Venezuela offsets these strengths.
EDC is a subsidiary of U.S.-based AES Corp. (double-'B'-
minus/Negative/--). CANTV is partially owned by Verizon
Communications Inc. (single-'A'-plus/Negative/--) and Telefonica
S.A. (single-'A'/Stable/A-1).
* S&P Cuts Venezuela as Economic and Political Crisis Deepens
-------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday it lowered the
Bolivarian Republic of Venezuela's long-term foreign currency
issuer credit rating to single-'B'-minus from single-'B' and the
short-term foreign currency rating to 'C' from 'B'. Standard &
Poor's does not rate the local currency debt of the Republic. The
outlook on the foreign currency ratings remains negative.
"The downgrade reflects the worsening of Venezuela's tense
political stalemate and deepening economic crisis. The profound
distrust that exists between the administration and supporters of
President Hugo Chavez and the opposition is impeding resolution
of the country's governance crisis and led the economy to
contract by 9.9% year-on-year in the second quarter of 2002,"
stated Standard & Poor's credit analyst Bruno Boccara. Despite
high oil prices, unemployment and inflation are increasing, a
reflection of the ineffectiveness of the economic policies of the
Chavez administration.
Although the almost 100% appreciation of the U.S. dollar against
the Bolivar in one year contributed significantly to closing the
fiscal gap, Standard & Poor's expects a central government budget
deficit of 1.1% of GDP for 2002. The government is nevertheless
facing acute difficulties in financing itself, as reflected by
the government's intention to modify the central bank of
Venezuela's profits redistribution rules. This would erode
further the independence of the central bank and would likely
lead to additional capital flight, which could induce the
government to tighten capital controls, to the detriment of
private external borrowers.
In Standard & Poor's view, debt service for the remainder of the
year can be covered by drawing down public sector liquid assets.
Honoring principal and interest payments coming due in 2003 will
be difficult, particularly as the average tenor of Bolivar-
denominated bonds has compressed. The external capital markets
remain effectively closed to Venezuelan debt, and domestic banks
have exhibited reluctance to rollover existing loans even at high
interest rates.
Venezuela's ratings are constrained by:
- Severe financing constraints. The FIEM resources, contrary to
what one would expect of an oil stabilization fund, have been
depleted even as oil prices are high. Managing the liquidity
crisis in 2003 will be particularly challenging.
- Political polarization. A sharp decrease in polarization will
be extremely difficult to engineer but has become a prerequisite
to resolve the liquidity crisis in a way that would not bring a
complete collapse of the economy. The political polarization
seriously threatens the country's social equilibrium as the
economy implodes.
- Weak institutions and a deterioration of the system of checks
and balances. The adoption of laws, in November 2001, reinforcing
government controls in resource allocation greatly damaged
confidence.
- A failure of the oil producing country's successive economic
teams to improve income distribution and deal effectively with
poverty and social issues. Economic policies have often been
inconsistent. Recent statements by the authorities in response to
the deepening economic crisis and the worsening liquidity crisis
are not conducive to investment and growth.
- Excessive dependence on oil revenues. The country's overall
growth prospects, public finances, and balance of payments are
heavily reliant on oil price swings.
The negative outlook reflects the ongoing political problems
besetting Venezuela. Future rating actions will likely track the
success or failure of the Venezuelan society to resolve the
current political impasse. In turn, this would allow the
authorities to adopt a sustainable and consistent fiscal and
monetary policy mix.
Credit Analyst: Bruno Boccara, New York (1) 212-438-7495; Richard
Francis, New York (1)-212-438-7348
***********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Ma. Cristina Canson, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
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Information contained herein is obtained from sources believed to
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The TCR Latin America subscription rate is $575 per half-year,
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