/raid1/www/Hosts/bankrupt/TCRLA_Public/021024.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, October 24, 2002, Vol. 3, Issue 211
Headlines
A R G E N T I N A
ARGENTINE CORPORATIONS: Analyst Says More Defaults Expected
BANCO FRANCES: Releases 1Q02 Financial Results
BELLSOUTH CORP.: Latin American Woes Continue To Slow Earnings
CAMUZZI ARGENTINA: 'CCC-' Rating Withdrawn at Company's Request
GRUPO GALICIA: Reports 1Q02 Financial Results
REPSOL YPF: Shares Decline on News of Possible Forced Deposit
SODIGAS PAMPEANA: 'CCC-' Ratings Withdrawn at Company's Request
SODIGAS SUR: Ratings Withdrawn at the Company's Request
TRANSENER: News of $525M Non-Convertible Debentures Merely Rumor
* Fitch Downgrades Argentina and Colombia World Bank Deals
B E R M U D A
GLOBAL CROSSING: Releases Operating Results for August 2002
B R A Z I L
ACESITA: Plans BRL800M Sale of Local Debentures in December
EMBRATEL Reports 3Q02 EBITDA of BRL371M
NATSTEEL BRASIL: Board Announces Divestment Completion
VARIG: Denies Reports It Has Reached Deal With Creditors
* Adviser Says State and Municipal Debt Restructure Eminent
C H I L E
EDELNOR: Obtains Debt Plan Confirmation Order
GASATACAMA: Intends To Sign Gas Purchase Deals By Year-end
MADECO: Creditor Banks Okay New Equity Issue
SAESA: Negotiating Loan Terms and Conditions Through November 8
TELEFONICA CTC CHILE: Unions Say Company Will Cut Jobs
M E X I C O
AHMSA: Issues New Invitation To Shareholders' Meeting
AHMSA: Unions Take Action To Help Company Escape Bankruptcy
ALESTRA: Reports Widening Losses In The 3Q02
CINTRA: Merrill Completes Due Diligence
ISPAT INTERNATIONAL: Reports 3Q02 Results
NII HOLDINGS: Judge Refuses To Confirm Reorganization Plan
V E N E Z U E L A
SIDOR: Signs Agreement with Imsa Acero
- - - - - - - -
=================
A R G E N T I N A
=================
ARGENTINE CORPORATIONS: Analyst Says More Defaults Expected
-----------------------------------------------------------
Economic analyst Fundacion Capital (FC) warns that more corporate
defaults can be expected for through the remainder of this year.
According to FC, about US$1.52 billion of corporate debt would be
due by the end of the year, of which US$514 million is
attributable to the banking sector.
The Institutional Investor quoted FC's reports saying that the
delay in the restructuring of corporate debts is caused by the
slow progress made in the restructuring of public debt and in the
agreement to increase utility rates.
Based on a study of a sample of 100 companies in Argentina, FC
released this statement:
"Of the expirations [capital and interest]) occurring during the
first three months of 2002 (US$6.75 billion), some US$1.54
billion was defaulted, 23% of the expirations in the period,"
said FC. Most of the cases were registered in the banking sector
and mainly in domestic banking (Banco de la Pampa, San Juan,
Credicoop, Municipal de la Plata and Velox, among others) or
foreign capital banks without a regional presence in Latin
America."
BANCO FRANCES: Releases 1Q02 Financial Results
----------------------------------------------
BBVA Banco Frances SA, one of Argentina's leading banks, released
Tuesday financial results for the first quarter ended March 31.
According to Dow Jones Newswires, Banco Frances posted a loss of
ARS25.7 million ($1=ARS3.605) for the first quarter of this year.
Net financial income during the period totaled ARS420.7 million.
The figure was positively impacted by a reduction in the average
cost of peso funds related to a large portion of checking and
savings account deposits. The bank also cited improved income
related to forward foreign-exchange purchases and sales.
Banks like Banco Frances have seen their losses mount after the
government defaulted on the sovereign bonds they owned in
December and Duhalde ordered dollar-denominated loans converted
into pesos at below market rates.
However, events in recent weeks indicate that Argentina is slowly
recovering, with the return of savings to Argentine banks, even
if the high interest offered on deposits seems to be the main
reason.
Nonetheless, BBVA Banco Frances' parent, Spanish financial group
BBVA, still does not expect the Argentine subsidiary to turn a
profit for the next two years because Argentina's recent recovery
could still be negatively affected by the upcoming presidential
elections in March 2003.
CONTACT: BANCO FRANCES
Maria Elena Siburu de Lopez Oliva
Investor Relations Manager, in Argentina
Tel. 5411-4341-5035
E-mail: mesiburu@bancofrances.com.ar
Maria Adriana Arbelbide
Investor Relations
Tel. 5411-4341-5036
E-mail: marbelbide@bancofrances.com.ar
BELLSOUTH CORP.: Latin American Woes Continue To Slow Earnings
--------------------------------------------------------------
BellSouth Corporation (NYSE: BLS) reported earnings per share
(EPS) of 39 cents in the third quarter of 2002, compared to
breakeven EPS (0 cents) in the same quarter of 2001. Normalized
for special items, EPS in the third quarter of 2002 was 52 cents,
compared to normalized EPS of 59 cents in the same quarter a year
ago.
Capital expenditures for the first nine months totaled $2.9
billion, a reduction of 39.4 percent compared to $4.7 billion
during the same period a year earlier. Operating free cash flow
(defined as cash flow from operations less capital expenditures)
was $1.5 billion in the third quarter of 2002, and totaled $3.7
billion year-to-date. Total debt has been reduced $2.5 billion,
or 12.2 percent, since the beginning of 2002.
Consolidated revenues, which do not include BellSouth's 40
percent share of Cingular Wireless, were $5.54 billion, compared
to $6.01 billion in the third quarter of 2001. Normalized total
operating revenues, which include Cingular, were $7.02 billion, a
decline of 5.7 percent versus the third quarter of 2001.
Reported net income was $733 million, compared to reported net
income of $7 million in the third quarter a year ago. Normalized
net income was $970 million, compared to $1.12 billion in the
third quarter of 2001.
BellSouth's operating results continued to reflect weak demand
for communications services, both in the United States and Latin
America. The impact of retail access line market share loss in
the U.S., as well as currency devaluations in Argentina and
Venezuela, also affected results. Business failures, including
those in the telecommunications industry, also continued to
negatively affect demand and financial results.
The company said it is eliminating certain service offerings,
resulting in a charge in the third quarter. See Special Items
below.
Communications Group
Total Communications Group revenues were $4.62 billion, a decline
of 3.7 percent compared to the third quarter of 2001. Cash
operating expenses decreased 3.7 percent, primarily as a function
of reduced labor expense. BellSouth added 121,000 new DSL high-
speed Internet service customers in the third quarter, compared
to 74,000 in the previous three months. DSL customers nearly
doubled on an annual basis, increasing 99.6 percent to 924,000 at
September 30. Data revenues were $1.07 billion, a decline of 1.3
percent compared to the third quarter of 2001.
At the end of the quarter, BellSouth was serving approximately
416,000 consumer and business long distance customers. These
included approximately 11 percent of its residence and
approximately 21 percent of its mass market small business
accounts in Georgia and Louisiana, where the company has been
marketing long distance since late May. On September 27, it
launched BellSouth(R) Long Distance service in five additional
states. Long Distance applications for BellSouth's two remaining
states, Florida and Tennessee, are currently being considered by
the Federal Communications Commission.
The company launched the BellSouth(R) Answers package in all its
states in late July. Wit h BellSouth Answers, residential
customers combine on a single bill the wireline and wireless
communications services they want. The introduction of long
distance service and BellSouth Answers helped increase the number
of customers purchasing packages that combine local service with
additional data, voice, wireless and Internet services to
approximately 1 million.
Domestic Wireless / Cingular
BellSouth's share of Cingular's domestic wireless revenues in the
third quarter of 2002 was $1.51 billion, a gain of 3.1 percent
compared to the same quarter a year ago. BellSouth's share of
Cingular operating income was $247 million in the quarter,
compared to $291 million in the same three months of 2001.
Cingular experienced a net reduction of 107,000 customers during
the third quarter, ending the quarter with 22.1 million cellular
and PCS customers nationwide.
Latin America Group
Consolidated Latin America revenues were $495 million in the
third quarter of 2002, a decline of 30.9 percent compared to the
same period of the prior year. Revenues reflected the impacts of
currency devaluations, principally in Argentina and Venezuela, as
well as weak economic conditions in those countries. EBITDA
(earnings before interest, taxes, and depreciation and
amortization) margin increased to 34.1 percent from 31.3 percent
in the third quarter of 2001.
On a consolidated basis, Latin America Group wireless voice
customers declined by 152,000 during the third quarter, compared
to a net reduction of 68,000 customers in the second quarter of
2002. Year-over-year, customers declined by 179,000, or 2.2
percent. BellSouth and its partners serve a total of 11.3 million
customers in 11 Central and South American countries, including
225,000 fixed wireless customers.
Latin America segment and BellSouth's consolidated results
include a favorable tax adjustment of $33 million related to one
of the Latin American investments.
Advertising & Publishing
Domestic Advertising & Publishing revenues were $464 million in
the third quarter of 2002, a decline of 6.5 percent compared to
the same period of the prior year. EBITDA margin decreased to
43.5 percent due to increased uncollectible expense as a result
of continued economic weakness. Special Items
In the third quarter of 2002, the difference between reported EPS
of 39 cents and normalized EPS of 52 cents is the result of four
special charges:
Workforce reduction 6 cents
Service curtailments/Asset impairments 5 cents
Foreign currency transaction losses 1 cent
Early extinguishment of debt 1 cent
Total of special charges 13 cents
Workforce reduction -- As announced May 17, BellSouth is in the
process of reducing its workforce by approximately 5,000
positions to reduce operating costs in response to a slow
economy, increased competition and regulatory pricing pressures.
The charge represents the third quarter true-up for severance
costs associated with the workforce reduction. Also included are
pension settlement losses. An initial charge of 12 cents per
share was recognized in the second quarter.
Service curtailments/Asset impairments -- BellSouth recognized
charges related to its decision to eliminate sales of certain
services related to wholesale long distance, e-business centers
and, as previously announced, public communications (pay phones).
In order to meet the needs of existing and new customers,
BellSouth will collaborate with other providers of these
services. BellSouth also will discontinue operations at its
multi-media Internet exchange in Miami. Charges relate primarily
to asset impairments, early termination penalties on contracts
and leases, and severance for affected employees.
Foreign currency transaction losses -- Primarily associated with
the remeasurement of U.S. dollar-denominated liabilities in Latin
America.
Early extinguishment of debt -- BellSouth incurred one-time
expenses associated with the early extinguishment of $620 million
of long-term debt.
2002 Guidance
Company guidance for full year 2002 remains as follows:
Total operating revenue growth
(including Cingular) -2% to -3%
Normalized earnings per share* $2.06 to $2.13
Capital expenditures (excluding Cingular) $3.7 to $3.9 bln
Data revenue growth Mid-single
digits
DSL high-speed Internet customers at 12/31 1.0 million
*Includes effect of cessation of amortization of goodwill and
indefinite- lived assets under FAS 142. Excludes foreign currency
transaction gains or losses.
About BellSouth Corporation
BellSouth Corporation is a Fortune 100 communications services
company headquartered in Atlanta, Georgia, serving more than 44
million customers in the United States and 14 other countries.
Consistently recognized for customer satisfaction, BellSouth
provides a full array of broadband data solutions to large,
medium and small businesses. In the residential market, BellSouth
offers DSL high-speed Internet access, advanced voice features
and other services. BellSouth offers long distance service for
both business and consumer customers in Alabama, Georgia,
Kentucky, Louisiana, Mississippi, North Carolina and South
Carolina. The company's BellSouth(R) Answers package combines
local and long distance service with an array of calling
features; wireless data, voice and e-mail services; and high-
speed DSL or dial-up Internet service. BellSouth also provides
online and directory advertising services through BellSouth(R)
Real PagesSM.com and The Real Yellow Pages(R).
BellSouth owns 40 percent of Cingular Wireless, the nation's
second largest wireless company, which provides innovative data
and voice services.
To see financial statements:
http://bankrupt.com/misc/BellSouth_Corp.txt
CONTACT: Jeff Battcher of BellSouth Corporation, +1-404-249-2793
CAMUZZI ARGENTINA: 'CCC-' Rating Withdrawn at Company's Request
---------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it withdrew
its triple-'C'-minus ratings on Argentine holding company Camuzzi
Argentina S.A. at the company's request.
Camuzzi Argentina S.A. is a holding company devoted to public
services, with investments in 7 operating companies, which are
focused on natural gas distribution, electric power
transportation and distribution, and supply of drinking water and
sewage services.
Camuzzi Argentina S.A. is the parent company of Camuzzi Gas
Pampeana S.A. and Camuzzi Gas del Sur S.A., both devoted to
natural gas distribution.
S&P ANALYSTS: Sergio Fuentes, Buenos Aires (54) 114-891-2131
Marta Castelli, Buenos Aires (54) 114-891-2128
CONTACT: CAMUZZI ARGENTINA S.A.
Av. Alicia Moreau de Justo 270 Piso 4o
(C1107AAF) Buenos Aires - Argentina
Phone: (54-11) 4891-2270
Mobile: (54-11) 15-5329-4876
Fax: (54-11) 4891-2237
E-Mail: hugo.krajnc@camuzzi.com.ar
Home Page: http://www.camuzzi.com.ar/
Contact:
Hugo Krajnc, Institutional Relations Director
Fabrizio Garilli, Chairman:
Martn Juan Blaquier, Vice-Chairman & C.E.O.
GRUPO GALICIA: Reports 1Q02 Financial Results
---------------------------------------------
Argentine financial services holding company Grupo Financiero
Galicia SA reported Tuesday its financial results for the first
quarter of FY2002, ended March 31, 2002.
Dow Jones Newswires reports that Grupo Financiero posted a net
loss of ARS1.22 billion ($1=ARS3.605) during the period.
Accordingly, the negative result was driven by losses at
Argentina's largest privately owned commercial bank, Banco de
Galicia y Buenos Aires, of which Grupo Galicia owns 92.8%. The
local unit registered a ARS1.28-billion loss in the first quarter
of 2002.
These results come in the context of a disastrous year for
Argentine banks after the government imposed a partial banking
freeze last Dec. 1, declared a default on US$141 billion three
weeks later and ended 11 years when the peso was pegged 1:1 with
the dollar on Jan 6. Since then, the peso has sunk 71% against
the dollar.
In its press statement, Grupo Financiero Galicia explained that
while the official accounting loss was ARS1.22 billion, the real
fall in income was ARS400.45 million in the first quarter.
Grupo Galicia explained that that difference comes from a Central
Bank directive ordering banks to declare the revaluation of
dollar stocks and bonds as a result of the devaluation as part of
its assets - as a "specific shareholders' equity account without
being registered in the income statement" the press statement
said.
Separately, in a press conference given by Banco Galicia y Buenos
Aires Tuesday, officials said the "real loss" was largely due to
the government's failure to fully compensate the financial
institutions for the effects of its decision to convert dollar
loans at a rate of 1:1, while converting dollar deposits at
ARS1.4 to 1.
It also said the company's income had been hit by spiraling
inflation. The accumulated rate of inflation this year reached
39.7% in September, eroding bank assets.
Banco Galicia y Buenos Aires said that in this context, the
group's position remains strong and leaves the bank well
positioned for the future. The unit said that as of March 31, it
had deposits of ARS5.46 million and capital of ARS1.46 billion.
Its capital at the close of December 2001 was ARS1.86 billion.
"This reflects that despite the accounting loss of the period,
the strength of the bank, before the crisis, allowed it to
maintain its solvency level ... This bank has the capacity to
start loaning again on a large scale in the future," said Banco
Galicia y Buenos Aires director Manuel Llambias.
CONTACT: GRUPO FINANCIERO GALICIA S.A.
Teniente General Juan D. Per>n 456, Piso 3
1038 Buenos Aires, Argentina
Phone: (54 11) 4343 7528 / 9475
Home Page: http://www.gfgsa.com
Contacts:
Eduardo J. Escasany, Chairman and CEO
Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires
BANCO DE GALICIA Y BUENOS AIRES S.A., HEAD OFFICE
Tte. Gral Juan D. Peron 407
1038 Buenos Aires, Argentina
Phone: +54-11-6329-0000
Fax: +54-11-6329-6100
Home Page: http://www.bancogalicia.com.ar
REPSOL YPF: Shares Decline on News of Possible Forced Deposit
-------------------------------------------------------------
Concerns that Argentina may force Repsol YPF SA to deposit half
of their oil export revenues in the country's central bank caused
the Company's shares to decline by 4.6 percent.
According to Bloomberg reports, Repsol's shares dropped to 11.25
euros in trading in Madrid as of Monday.
Argentine local newspaper Clarin said that President Duhalde's
administration plans to require oil drillers to deposit up to 50
percent of their export income in the country's central bank.
The deposits are to be made in the local currency, which has lost
75 percent of its value against the euro this year.
Repsol is Europe's fifth- largest oil company and Argentina's
biggest source of oil.
Stocks suffered further damage when oil prices fell to a six-week
low after the U.S. government showed signs that it may negotiate
with Iraq and avoid war.
Another local daily, Pagina reported that Argentina's central
bank may also recommend that the oil companies pay 50 percent
rate for past export income transfers.
Repsol's chairman Alfonso Cortina said that the company could
continue investing in Argentina if only 30 percent of exports
revenue in the country would be deposited.
CONTACT: Repsol YPF SA
Head Office
Paseo de la Castellana 278
28046 Madrid
Spain
Tel +34 91 348 81 00
Fax +34 91 348 28 21
Telex 48162 RESOLE
Web: http://www.repsol.com/
Contact:
Alfonso Cortina de Alcocer, Chairman
Jose Vilarasu Salat, Vice Chairman
Antonio Hernandez, Vice Chairman
SODIGAS PAMPEANA: 'CCC-' Ratings Withdrawn at Company's Request
---------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it withdrew
its triple-'C'-minus local and foreign currency corporate credit
ratings on the Argentine holding company Sodigas Pampeana S.A. at
the company's request.
S&P ANALYSTS: Pablo Lutereau, Buenos Aires (54) 114-891-2125
Marta Castelli, Buenos Aires (54) 114-891-2128
SODIGAS SUR: Ratings Withdrawn at the Company's Request
-------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it withdrew
its ratings on the Argentine holding company Sodigas Sur S.A. at
the company's request. Ratings include the selecive default 'SD'
local and foreign currency corporate credit ratings.
S&P ANALYSTS: Pablo Lutereau, Buenos Aires (54) 114-891-2125
Marta Castelli, Buenos Aires (54) 114-891-2128
TRANSENER: News of $525M Non-Convertible Debentures Merely Rumor
----------------------------------------------------------------
There's no truth to press reports that Argentine transmission
company Transener is planning to issue US$525 million in non-
convertible debentures, Transener spokesperson Marcelo Fell told
Business News Americas.
"Our financial situation is too complicated for us to offer bonds
to our creditors at this time," he added.
Transener defaulted on debt payments in 2002 and holds some
US$460 million in dollar-denominated debt.
"Our situation is very complicated because our debt and expenses
are in dollars but our income is in pesos," Fell continued.
"There is great uncertainty right now about what will happen with
the energy rates and the evolution of the dollar," he said,
adding that Transener is in discussions with its financial
advisor Morgan Stanley and creditors to restructure its debt.
Transener owns the concession to operate the extra high voltage
electricity transmission network in the Argentine Republic.
During these years, since its constitution in 1993, the Company
has been positioned as a leader in that activity.
CONTACT: COMPANIA DE TRANSPORTE DE ENERGIA ELECTRICA EN ALTA
TENSION (Transener S.A.)
Av. Paseo Colon 728, 6"Piso - (1063)
Buenos Aires, Argentina
Tel. (5411) 4342-6925
Business Development:
Carlos A. Jeifetz (jeifecar@transx.com.ar)
Gerardo Baseotto (baseoger@transx.com.ar)
Tel.: (54-11) 4334-0182 / 4342-6925
Fax: (54-11) 4342-4861
MORGAN STANLEY, DEAN WITTER & COMPANY
1585 Broadway
New York, New York 10036
United States
Phone: +1 212 761-4000
Home Page http://www.msdw.com
* Fitch Downgrades Argentina and Colombia World Bank Deals
----------------------------------------------------------
Fitch Ratings has downgraded the ratings on two transactions
related to the World Bank's rolling guarantee program. Fitch
downgraded Argentina's Series E and Series F $250 million zero
coupon notes to 'CC' Rating Watch Evolving from 'B-' Rating Watch
Negative. Fitch also downgraded Colombia's $750 million World
Bank rolling guarantee-backed obligation to 'BB+' from 'BBB'. The
sovereign long-term foreign currency rating for Argentina remains
at 'DDD' and the long-term foreign currency rating for Colombia
remains at 'BB'.
The downgrades resulted from the World Bank's October 15, 2002
announcement regarding the terms for reimbursement on the $250
million guarantee payment, which had backed the Argentine Series
D zero coupon notes. In order for the guarantee to roll to the
Series E payment, Argentina would have to reimburse the World
Bank within 60 days. The World Bank decision to extend the
repayment period from 60 days to five years makes it unlikely
that the guarantee will roll and effectively leaves the
subsequent Argentine Series E and Series F naked to sovereign
default risk. The Rating Watch Evolving status reflects that
Argentina may reimburse the World Bank within the 60-day grace
period. If this is the case, the Series E notes will be upgraded
to 'AAA' and Fitch will further review the implications to the
Series F notes at that time.
Technically the rescheduling announcement does not force
Argentina into arrears with the World Bank because the bank has
always reserved the right not to seek immediate reimbursement
when it deems that it would not be in either the borrower's or
bank's interests. Further, Argentina's delayed repayment does not
create a cross default to other World Bank loans or jeopardize
future lending disbursements. As such, there are no negative
consequences to Argentina in relation to the announcement.
However, Fitch does view the World Bank's action as damaging to
the value added by rolling guarantee programs. Fitch's rating
action on the Colombian Notes reflects a concern that if a
sovereign is in default, circumstances would often be
sufficiently dire to warrant the World Bank providing similar
leniency on the repayment of guarantees, furthermore this
leniency creates an unfavorable precedent which dilutes the
preferred creditor argument in relation to partial guarantees.
Fitch believes the Colombian transaction merits 1 notch above the
Colombian Long-term foreign currency rating as the structure
covers two semi-annual debt service payments, which will act as
liquidity enhancement during times of distress.
While the recent actions were specific to Argentina and the World
Bank, Fitch is concerned with the overall value of preferred
creditor transactions in all countries. Specifically, Fitch will
look closely at transactions involving preferred creditors such
as IFC or IDB B-loan structures, where the preferred creditor
halo has traditionally been expected to allow uninterrupted
access to foreign exchange. While the preferred creditor argument
held up reasonably well in Argentina as companies were able to
receive preferential access to foreign exchange, the recent World
Bank precedent could change the way sovereigns view the lender-
of-last-resort threat and jeopardize future treatment during a
severe sovereign crisis.
While the rolling-guarantee and the preferred creditor umbrella
has been tarnished, Fitch will continue to give credit to other
types of partial guarantees offered by the multi-nationals. Fitch
believes these partial guarantees being offered will replace the
rolling guarantee product and will offer investors a better means
of protection as they will reduce either the probability or the
severity of loss on an investment.
CONTACT: FITCH RATINGS
Greg Kabance, 312/368-2052 (Chicago)
Samuel Fox, 312/606-2307 (Chicago)
James Jockle, 212/908-0547 (Media, New York)
=============
B E R M U D A
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GLOBAL CROSSING: Releases Operating Results for August 2002
-----------------------------------------------------------
Global Crossing reported Wednesday that it continues to meet key
goals outlined in its operating plan, including year-to-date
targets for Service Revenue, cash in bank accounts, operating
expenses, third-party maintenance and Service EBITDA (earnings
before interest, taxes, depreciation, and amortization). The
performance targets were established for Global Crossing
(excluding Asia Global Crossing) in the operating plan presented
to its creditors in March.
Consolidated results for the month of August that include Asia
Global Crossing and that are reported in the Monthly Operating
Report (MOR) filed with the U.S. Bankruptcy Court in the Southern
District of New York are summarized later in this press release.
OPERATING RESULTS (excluding Asia Global Crossing)
In August 2002, Global Crossing reported $236 million in Service
Revenue, $13 million above the Service Revenue target set forth
in the operating plan. In addition, August 2002 Service Revenue
showed an increase of $5 million from the prior month's reported
Service Revenue. Service EBITDA continued to improve month-over-
month and was reported at a loss of $5 million, in line with
August 2002 operating plan targets. Year-to-date Service EBITDA
continues to exceed the target in the operating plan.
"It is clear from our August and year-to-date financials that our
business is stable and we continue to make progress on our
financial recovery," said John Legere, CEO of Global Crossing.
"In particular, our Service Revenue has exceeded year-to-date
targets by $47 million -- an impressive achievement for any
company in today's market. In addition, we've made marked
improvements in Service EBITDA, which was reported at a loss of
$65 million in February 2002 and now stands at a loss of $5
million. We have worked hard to achieve the goals outlined in the
operating plan and are upbeat about our future."
Total cash in bank accounts exceeded targets set forth in the
operating plan, with $744 million as of August 31, 2002, compared
to a plan of $631 million. Operating expenses held steady from
the previous month and were reported at $63 million in August
2002, $3 million higher than the target in the operating plan.
Third-party maintenance costs were also unchanged from the
previous month at $12 million, beating the operating plan target
by $3 million.
MOR RESULTS FOR AUGUST 2002
Global Crossing on Wednesday filed a Monthly Operating Report
(MOR) for the month of August with the U.S. Bankruptcy Court for
the Southern District of New York, as required by its Chapter 11
reorganization process. The consolidated results in the MOR
include Asia Global Crossing and revenue from sales of capacity
in the form of IRUs (indefeasible rights of use) that occurred in
prior periods, recognized ratably over the life of the relevant
contracts.
Results reported in the August MOR include:
For continuing operations in August 2002, Global Crossing
reported consolidated revenue of approximately $255 million.
Consolidated operating expenses were $73 million, while access
and maintenance costs were reported at $196 million in August
2002.
In addition, Global Crossing reported a consolidated GAAP
(Generally Accepted Accounting Principles) cash balance of
approximately $1,008 million as of August 31, 2002, including
$292 million of cash held by Asia Global Crossing. Global
Crossing's $716 million GAAP cash balance (excluding Asia) is
comprised of $339 million unrestricted cash, $333 million in
restricted cash and $44 million of cash held by Global Marine.
Global Crossing reported a consolidated net loss of $138 million
for August 2002. Consolidated EBITDA was reported at a loss of
$14 million.
Global Crossing yesterday announced that, based upon advice from
the staff of the Securities and Exchange Commission (SEC), it
will restate certain financial statements contained in filings
previously made with the SEC. Global Crossing's restatements will
record exchanges between carriers of leases of telecommunications
capacity at historical carryover basis, resulting in no
recognition of revenue for such exchanges. Global Crossing
previously reported these capacity exchanges at fair value,
recognizing revenue in its GAAP financial statements over the
lives of the relevant lease contracts. Global Crossing also
announced that, for exchanges that involve service contracts, it
will continue to record revenue over the lives of the relevant
contracts at fair values, but that its balance sheet will not
reflect the entire value of the contracts received or given in
the exchanges. Accordingly, the revenue contributed by previous
exchanges involving service contracts will not be restated, but
the fair values of these exchanges involving services will be
removed from the balance sheets previously filed. Global Crossing
expects to utilize the accounting treatment described above for
exchanges of telecommunications capacity and service contracts as
it reports results in the future.
Although the detailed application of this accounting treatment is
not complete, the Company estimates that the impact of recording
all such transactions at carrying value rather than fair value
would be to reduce revenue by $7 million, and depreciation
expense by $2 million, from the numbers reported in the MOR for
the month of August. In addition, the change from fair value to
carrying value for these transactions would reduce Total Assets
as well as Total Liabilities and Shareholders' Equity by
approximately $1,200 million as of August 31, 2002, from the
numbers reported on the balance sheet contained in the August
MOR. The restatement will have no impact on cash flow for the
month of August.
MOR RESULTS
MONTHLY RESULTS JUNE 2002 - AUGUST 2002
MONTH CONSOLIDATED CONSOLIDATED CONSOLIDATED NET LOSS
REVENUE OPERATING EBITDA
EXPENSES
August 2002 $255 mln $73 mln $(14) mln $138 mln
July 2002 $249 mln $75 mln $(19) mln $145 mln
June 2002 $250 mln $74 mln $(17) mln $173 mln
Definitions and Notes
"Service Revenue" refers to revenue less (i) any revenue
recognized immediately for circuit activations that qualified as
sales-type leases and (ii) revenue recognized due to the
amortization of IRUs sold in prior periods and not recognized as
sales-type leases.
"Service EBITDA" refers to EBITDA (earnings before interest,
taxes, depreciation, and amortization) but excludes the
contribution of (i) any revenue recognized immediately for
circuit activations that qualified as sales-type leases and (ii)
revenue recognized due to the amortization of IRUs sold in prior
periods and not recognized as sales-type leases.
The results for Global Crossing (excluding Asia Global Crossing)
discussed in the "Operating Results (excluding Asia Global
Crossing)" section of this release have been prepared on a basis
consistent with targets presented to the creditors of Global
Crossing in March 2002, and include the results previously
reported in Monthly Operating Reports (MORs) prepared for the
months of February through August. No such MOR was prepared for
the month of January. These operating results exclude Global
Marine (which is a discontinued operation), exclude any revenue
contribution of sales of capacity in the form of IRUs
(indefeasible rights of use), and reflect certain eliminations
and adjustments not detailed in the MORs for the months of
February through August. Cash balances reported in this section
are bank balances, not reflecting the estimated impact of
outstanding checks and other adjustments as required by GAAP.
The information contained in this press release is qualified in
its entirety by reference to the MORs for the months of February
through August, including the footnotes to the financial
statements contained therein, copies of which are available
through the U.S. Bankruptcy Court for the Southern District of
New York and on Global Crossing's Web site. The August MOR is
available at http://www.globalcrossing.com/pdf/investors/inv--
mor--aug.pdf. These MORs have been prepared pursuant to the
requirements of the Bankruptcy Code and the unaudited
consolidated financial statements contained in these MORs do not
include all footnotes and certain financial presentations
normally required under GAAP. In addition, any revenues,
expenses, realized gains and losses, and provisions resulting
from the reorganization and restructuring of Global Crossing are
reported separately as reorganization items in these MORs.
As discussed more fully in these MORs, Global Crossing has not
yet filed its Annual Report on Form 10-K for the year ended
December 31, 2001. Global Crossing has agreed with the Creditors'
Committee in its Bankruptcy proceeding and with the United States
Trustee to the appointment of an examiner in the Chapter 11
cases, whose role is expected to be limited to addressing the
financial statements of Global Crossing and companies within its
control, including (i) issuing an audit opinion on Global
Crossing's financial statements for the year ended December 31,
2001, (ii) issuing an audit opinion on restated financial
statements for earlier periods if restatement is necessary and
(iii) issuing a report regarding its findings. Global Crossing is
currently reviewing the anticipated role of the examiner with the
SEC and expects the order appointing the examiner to be approved
shortly. Global Crossing's Board of Directors is currently
seeking to retain a new independent public accounting firm to act
as its new auditor, and it is expected that a member of the new
accounting firm would also act as the examiner in the Bankruptcy
proceeding.
In addition, certain matters relating to Global Crossing's
accounting for, and disclosure of, concurrent transactions for
the purchase and sale of telecommunications capacity between
Global Crossing and its carrier customers are being investigated
by the SEC, the U.S. Attorney's Office for the Central District
of California, the House of Representatives Financial Services
Committee and the House of Representatives Energy & Commerce
Committee. In connection with their investigation, a subcommittee
of the House Energy & Commerce Committee held hearings on
September 24, 2002 and October 1, 2002 regarding Global Crossing.
The House Financial Services Committee has also requested
documents from the company on matters related to corporate
governance and the proposed investment in the company by
Hutchison Telecommunications and Singapore Technologies
Telemedia. Global Crossing is also cooperating with a similar
inquiry being conducted by the Denver office of the SEC regarding
another telecommunications company, and has provided and is
providing documents in response to three subpoenas it has
received from the New York Attorney General's office relating to
an investigation of Salomon Smith Barney. The U.S. Department of
Labor is conducting an investigation into the administration of
Global Crossing's benefit plans. These investigations are
described more fully in the August MOR.
Any changes to the financial statements resulting from any of
these investigations and the completion of the 2001 financial
statement audit could materially affect the unaudited
consolidated financial statements contained in these MORs and the
information presented in this press release.
As previously announced, Global Crossing's net loss for the three
months ended December 31, 2001 is expected to reflect the write-
off of the remaining goodwill and other intangible assets, which
total approximately $8 billion. Furthermore, in light of the
terms contained in the previously announced agreement with
Hutchison Telecommunications and Singapore Technologies
Telemedia, Global Crossing has determined that it will write down
its tangible assets by at least $10 billion. The financial
information included within this press release and the MORs
reflect the write-off of all of the goodwill and other
identifiable intangible assets of $8 billion, but does not
reflect any write-down of tangible asset value. Global Crossing
is currently in the process of evaluating its financial forecasts
to determine the impairment of its long-lived assets. In
addition, Global Crossing will write down Asia Global Crossing's
interest in Hutchison Global Crossing by $450 million,
representing the difference between the proceeds received and the
carrying value of Asia Global Crossing's interest in Hutchison
Global Crossing, which was sold on April 30, 2002.
The write-off of the intangible assets, and the write-downs of
tangible assets are described more fully in the August MOR.
About Global Crossing
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, Global Crossing and certain of its
affiliates (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York (Bankruptcy Court) and
coordinated proceedings in the Supreme Court of Bermuda (Bermuda
Court). On the same date, the Bermuda Court granted an order
appointing joint provisional liquidators with the power to
oversee the continuation and reorganization of the Bermuda-
incorporated companies' businesses under the control of their
boards of directors and under the supervision of the Bankruptcy
Court and the Bermuda Court.
On April 23, 2002, Global Crossing commenced a Chapter 11 case in
the Bankruptcy Court for its affiliate, GT UK, Ltd. On August 4,
2002, Global Crossing commenced a Chapter 11 case in the United
States Bankruptcy Court for the Southern District of New York for
its affiliate, SAC Peru Ltd. On August 30, 2002, Global Crossing
commenced Chapter 11 cases in the Bankruptcy Court for an
additional 23 of its affiliates (as specified in the July [July
or August?] Monthly Operating Report filed with the Bankruptcy
Court) in order to coordinate the restructuring of those
companies with its restructuring. Global Crossing has also filed
coordinated insolvency proceedings in the Bermuda Court for those
affiliates that are incorporated in Bermuda. The administration
of all the cases filed subsequent to Global Crossing's initial
filing on January 28, 2002 has been consolidated with that of the
cases commenced in Bankruptcy Court on January 28, 2002.
Global Crossing's Plan of Reorganization, which it filed with the
Bankruptcy Court on September 16, 2002, does not include a
capital structure in which existing common or preferred equity
would retain any value.
Please visit http://www.globalcrossing.com/or
http://www.asiaglobalcrossing.com/for more information on Global
Crossing and Asia Global Crossing.
CONTACT: GLOBAL CROSSING
Press Contacts
Tisha Kresler+1 973-410-8666
Tisha.Kresler@globalcrossing.com
Kendra Langlie
Latin America
+1 305-808-5912
kendra.langlie@globalcrossing.com
Mish Desmidt
Europe
+44 (0) 1256-732866
Mish.Desmidt@globalcrossing.com
Analysts/Investors Contact
Ken Simril+1 310-385-3838
investors@globalcrossing.com
===========
B R A Z I L
===========
ACESITA: Plans BRL800M Sale of Local Debentures in December
-----------------------------------------------------------
Brazil's stainless steel maker Acesita SA issued a statement
Tuesday revealing its plans to launch on Dec. 1 BRL800 million
($1=BRL3.915) in local debentures with a December 2006 maturity,
according to a report released by Dow Jones Newswires.
Acesita has total debts of BRL1.8 billion, according to figures
released at the end of March this year. That amount includes
BRL76 million of debt held by Acesita's subsidiary Acesita
International and guaranteed by Acesita. About 54% of the total
debt, or BRL966 million, was short-term, the Company said.
Acesita is Latin America's sole integrated producer of flat-
rolled stainless and silicon steels with an annual production
capacity of 850,000 tons of liquid steel. The Company has 800,000
tons of stainless steel capacity, and ranks among the top 10 flat
stainless steel producers, representing approximately 4.7% of
world flat stainless steel production.
In 2001, Acesita sold 704,000 tons of steel, of which 17% was
exported, primarily to Asia, Europe, and the Americas.
Acesita is controlled by Luxembourg-based steel group Arcelor,
the world's largest steel maker. It was created through the
merger of France's Usinor SA with Luxembourg's Arbed SA and
Spain's Aceralia Corporacion Siderurgica SA of Spain on Feb. 28,
2002.
CONTACT: ACESITA
Avenida Joao Pinheiro, 580
30130-180 Belo Horizonte, Minas Gerais, Brazil
Phone: +55-31-3235-4200
Fax: +55-31-3235-4294
URL: http://www.acesita.com.br
Contacts:
Luiz A. de Lima Fernandes, President
Bernardo C. Marie Del Litto, Industrial Director
Guilherme Amado, Financial Superintendent
EMBRATEL Reports 3Q02 EBITDA of BRL371M
---------------------------------------
Embratel Participacoes' (the "Company") (NYSE: EMT; BOVESPA:
EBTP3, EBTP4) net revenues remained stable at R$1.8 billion in
the quarter compared to the previous 2002 quarter;
Interconnection costs improved by another percentage point to
45.3 percent from 46.4 percent of net revenues quarter-over-
quarter;
EBITDA was R$371 million representing an EBITDA margin of 20.8
percent. This was the second consecutive quarter EBITDA margin
rose by a percentage point. Compared to the 2001 average, EBITDA
margin increased by 7.2 percentage points;
Outstanding debt dropped by US$208 million as a result of an
improved cash generation and hedging. Embratel ended the quarter
with a cash position of R$757 million, 23 percent higher than in
the previous quarter; Collections improved, receivables fell and
provision for doubtful accounts dropped for the third consecutive
quarter; Net loss for the quarter was R$550 million arising from
the impact of the 36.9 percent devaluation of the Real in the
quarter on the company's debt;
Capex for the nine months period of the year was R$696 million,
mostly financed out of operating cash; On a year-to-date basis,
net revenues and net losses were, respectively, R$5.4 billion and
R$738 million. Data Communications Services Revenues maintained
despite economic slowdown.
Embratel's data communications revenues were R$455 million, flat
relative to the second quarter of 2002 and the year ago 2001
quarter. The company was able to maintain data revenues in the
third quarter of 2002 despite the fact that customers were
postponing investment plans due to economic uncertainty and some
prices continued to decline. Switched data and satellite revenues
grew while Internet revenues were impacted by price reductions as
contracts were renewed.
Client base continues to grow as does the number of installed
circuits.
In the nine month period ending September 30, 2002, data revenues
were R$1.4 billion representing a 0.6 percent increase relative
to the 2001 nine month period. Compared to September 2001 the
number of installed circuits rose by approximately 40 percent
evidencing that underlying demand for bandwidth has existed, but
slowed down in the past quarter due to economic uncertainty.
Voice Services
Domestic Long Distance
Domestic long distance revenues were R$1.1 billion in the third
quarter of 2002. This represented a 7.0 percent decline relative
to the third quarter 2001 and a 3.7 percent decline quarter-over-
quarter. While the year-over-year reduction is primarily
attributable to call management activity, the quarter-over-
quarter reduction resulted not only from the growth in blocked
lines but also from new competition in the inter-regional market
which began in July 2002.
Revenues from advanced voice services such as VIPphone continue
to grow at rates above 45 percent on a year-over-year basis.
ViPphone is a service that requires a direct link from the
companies' premises to Embratel's network to make long distance
calls. In addition to cost advantages, the service ensures higher
quality (faster call completion) at call origination because
calls do not go through the public network.
As expected new competition led to traffic declines mainly in the
residential market. Embratel's average revenue per minute
continued to rise in the third quarter. Also, network
remuneration revenues from traffic resulting from the completion
of long distance calls originated by Tele's 0800 services was
redirected to their respective networks. This revenue item
represented a minor portion of Embratel's domestic long distance
revenues.
Year-to-date, domestic long distance revenues were R$3.3 billion,
representing a 2 percent decrease from the comparable 2001 nine-
month period. This revenue performance reflects primarily the
company's efforts to manage non-performing calls as well as the
opening of the inter-region market to two additional competitors.
We expect domestic long distance revenues to decline due to
competition in certain market segments.
International Long Distance
International long distance revenues rose by 1.6 percent to R$165
million quarter-over-quarter. Year-over-year, international long
distance revenues fell 24.6 percent due to both price and traffic
declines.
On a year-to-date basis, international long distance revenues
were R$499 million compared to R$674 million in the first nine
months of 2001. International revenues represented 9.3 percent of
the company's total revenues compared to 12.0 percent in the
first nine months of 2001.
EBITDA
EBITDA was R$371 million in the third quarter of 2002. EBITDA
margin rose by another percentage point to 20.8 percent for the
second consecutive quarter. Comparing to the average 2001 EBITDA
margin of 13.6 percent, there was a 7.2 percentage point increase
in EBITDA margin. This was the result of lower interconnection
costs and declining provisions for doubtful accounts.
Embratel continued to install points-of-presence for
interconnection (PPI) in the third quarter of 2002 totaling 112
new PPIs since the beginning of the year. Embratel's 2002 PPIs
program is well advanced but additional opportunities still
exist. The growth in the number of PPIs has contributed to the
reduction in TU-RIU costs and was largely responsible for the
reduction in overall interconnection costs. Total line costs
dropped to 45.3 percent of net revenues in the third quarter of
2002 compared to 46.4 percent in the second quarter of this year.
Active call management continued to contribute to the improved
operating performance and productivity. Embratel increased
blocked lines due to delinquency by approximately 300,000. Total
delinquent lines blocked at the end of the quarter was 2.9
million. The provision for doubtful receivables was R$153 million
in the quarter, or 8.6 percent of net revenues (6.5 percent of
gross revenues) representing the third consecutive quarter of
improvement. Provision for doubtful receivables was 9.0 percent
in the second quarter of 2002, 9.7 percent in the first quarter
of 2002 and 15.5 percent in FY2001.
Depreciation & Amortization
Depreciation and amortization expense increased to R$289 million
in the third quarter from R$281 million in the second quarter and
R$269 million in the year-earlier quarter. This increase is a
result of new assets becoming operational during the past year.
In addition to increased installations of PPIs in the quarter,
continued upgrades to collection and fraud systems were
completed. These investments have been resulting in improved
operating performance throughout the year. In addition, a new
system was implemented to provide greater efficiency in
installing new customers and to improve management of data access
equipment. It is expected that depreciation will continue to
trend upwards during the fourth quarter as a result of
investments made in prior periods that are now entering an
operational phase.
EBIT
Operating income (EBIT) was R$82 million in the third quarter of
2002 a slight quarter-over-quarter increase resulting from the
reduction in interconnection costs and in provisions for doubtful
accounts.
Year-to-date, EBIT was R$224 million compared to R$436 million in
the first nine months of 2001.
Income Taxes
Embratel recorded a net tax benefit of R$309 million on its net
operating loss during the third quarter. The high FX volatility
in the current year and the related financial expenses have
increased Embratel's net losses before taxes and consequently,
the income and social contribution benefit related to these net
losses. This creates an asset for Embratel, or a type of
receivable that will be realized in future periods as the company
generates income. In the current year, the total amount of such
deferred tax assets for Embratel has increased by R$598 million
from R$785 million at the end of 2001 to R$1,383 million.
Embratel has performed an analysis of projected future profits
based on the requirements of CVM 371 and has demonstrated the
recoverability of this deferred tax asset. Embratel will continue
to analyze this asset based on changing economic conditions.
Net Income
The net loss for the third quarter of 2002 was R$550 million. The
loss was the result of the effect of the devaluation of the Real
vis-a-vis the US dollar (36.9 percent in the quarter) which
exceeded the hedged portion of the Company's foreign currency
debt (see Financial Position below).
The net loss reached R$738 million in the first nine months of
2002 compared to a net loss of R$267 million in the first nine
months of 2001.
Financial Position
During the third quarter of 2002 Embratel reduced total
outstanding debt by US$208 million to US$1.3 billion from US$1.5
billion at the end of the second quarter of 2002. Approximately
US$71 million of debt was retired in the quarter. This debt
reduction resulted from an improvement in operating cash and
hedging activity. Cash position at the end of the third quarter
was R$757 million, an increase of 22.6 percent from the second
quarter 2002 cash position. Net debt outstanding as of September
30, 2002 was R$4.4 billion (total debt of R$5.2 billion). Short-
term debt was R$2.4 billion. Since short-term debt includes all
principal maturing in the next 12 months, in addition to short-
term debt per se and accrued interest, the increase is explained
by the principal maturing in the third quarter of 2003 becoming
current. The devaluation of the Real increased Embratel's overall
debt position by R$994 million, net of hedging income. Had
hedging not been done, total debt would have increased by almost
R$1.6 billion.
The Company's short-term hedged position is 66 percent. The
company's hedged debt and respective average debt cost are in
table 15 below.
In the past several weeks Embratel has been discussing
refinancing alternatives for certain upcoming 2003 and other debt
maturities. Embratel received several ideas to proactively
address funding requirements under current market uncertainties,
reduce refinancing risks to both the company and its lenders
through the first half of 2004, convert some foreign currency
debt to Reais and implement a debt structure that improves credit
quality. To implement this program, Embratel is being supported
by Banc of America Securities as financial advisors and MS & CR2
as general advisors. We are currently in the process of analyzing
different financing alternatives as well as different economic
scenarios.
Principal maturing in 2003 is approximately US$790 million (see
table 16 for maturity)
Accounts Receivables
The company's net receivable position on September 30, 2002 was
R$1.8 billion a reduction of more than R$140 million relative to
the previous 2002 quarter. This decline was the result of an
improvement in collections overall which offset the impact of the
devaluation of the Real on receivables from foreign
administrators. Basic telephony voice receivables DSO fell to 72
days in the third quarter of 2002 from 75 days in the previous
2002 quarter and from 82 days at the end of 2001. Receivables
from foreign administration in US dollar terms actually fell to
US$100 million in the third quarter of 2002 from US$119 million
in the second quarter of 2002 (payables were adjusted
accordingly).
See Tables 17 and 18.
Capex
During the third quarter, capital expenditures were R$152 million
(almost half of the R$296 million spent in the previous 2002
quarter). The company is analyzing ways to optimize the use of
Capex and the amount spent in the third quarter of 2003 is
consistent with Embratel's ongoing investment needs with the
exception of Star One's investment in satellite-C1 which will
require higher payments at certain intervals. The breakout of the
third quarter 2002 expenditure is the following: local
infrastructure and access - 23.7 percent (including PPIs); data
and Internet services - 26.1 percent; network infrastructure -
6.3 percent and others - 43.9 percent (Approximately 1/3 of other
expenditure refers to the new satellite and the remaining portion
refers to various items such as IT and other satellite
investments). Cumulative capital expenditure was R$696 million in
2002.
Tax Contingencies
Outbound withholding tax - With respect to the R$411 million
assessment against Embratel on withholding income taxes on
outbound payments, the Administrative Court has issued a decision
in September 2002 reducing the amount of the liability to R$12.9
million. This decision reflects, among other things, the effect
of payments made to countries which have tax treaties with
Brazil. Embratel has made a judicial deposit for the reduced
amount of R$35 million (including interest) in the third quarter
pending a review of the matter at the second judicial level.
Notwithhstanding this favorable decision, it is still possible
that this matter could be decided against Embratel and could
result in the aforementioned possible loss.
Judicial Deposit - COFINS - In 1999 Embratel challenged the
change introduced by Law no. 9,718/98 that: (a) increased the
revenue base on which PIS and COFINS are paid to include
financial revenues and exchange variations, and (b) increased the
rate of COFINS from 2% to 3%. Despite the challenge, Embratel
continued accruing the full amount of the tax liability and paid
this as a judicial deposit from August of 1999 to April of 2001.
From May 2001 and forward, based on jurisprudence, the company
decided to discontinue the legal challenge prospectively. On
August 29, 2002, provisional measure 66 was published allowing
the liquidation of such legal deposits without any incidence of
penalties. Embratel decided to use the provisional measure and
pay this liability. The net effect was to reduce accrued taxes
and contributions by R$173 million with a corresponding decrease
in judicial deposits. Since the expense was already recorded,
there was no impact on current period results. Since funds were
already deposited, there was no impact on cash flows. Embratel
simply liquidated this liability against the judicial deposit
asset.
Local Services
Local interconnection negotiations are progressing and Embratel
expects to launch local services in two cities- Recife and
Fortaleza in November as scheduled. Network tests are being
conducted with Telemar. Embratel has initiated sales and already
signed contracts with clients. Service start in another 27 cities
is planned for late December and January 2003. In addition,
Embratel began booking local interconnection revenues relative to
the local portion of its own 0800 services. This amount was
previously passed to Teles and partially offsets the loss of long
distance Teles 0800 service long distance interconnection
revenues to them.
One major client who will certainly use Embratel's services, is
Embratel itself. The company will began to use its own local
service as it is deployed in various cities. In addition to
testing services, Embratel expects to save on telephony costs.
Star One
In September Star One was awarded an orbital slot by Anatel which
will allow the company to increase its resources including Ku and
Ka frequency band which will permit more flexibility, better
coverage and optimization of its future satellite fleet. In
addition, Star One launched Easyband Corporate, a new family of
products designed specifically for the corporate segment, which
leverages the Easyband platform for residential users.
Regulatory Developments and Interconnection Costs/Interconnection
Agreement Clarification
It has now been six months since Embratel submitted, together
with Intelig, a petition to Anatel indicating local Teles were
engaged in anti-competitive practices. It is Embratel's
understanding that all necessary investigations have been
completed. The company expects Anatel to announce its conclusion
very soon. Embratel trusts Anatel will exercise its power and
responsibility to enforce existing competitive legislation and
preserve one of the pillars over which the Brazilian
telecommunications model was built--competition.
Interconnection Costs/Interconnection Agreement Clarification
Recently Embratel was sued by one of the local operators for the
non-payment of interconnection costs. In order to settle such
disputes call detail records (CDR) which include the time of the
call, the origination and termination location, the duration of
the call, among others, need to be reconciled. The local operator
involved has not yet agreed to reconcile records.
Why do discrepancies arise? Here are some examples:
-- charges may have been made for types of calls for which no
interconnection costs are associated, e.g. data;
-- discrepancies in call duration might cause access fees to
have been charged for calls with less than the minimum regulatory
duration liable for charging either the customer or the
corresponding interconnection;
-- charges may have been made for calls arising from
disconnected lines;
-- charges from calls arising from non activated numbers
(possibly created by fraud)
-- charges may be inflated by system duplication
Interconnection agreements provide for the invoiced party to pay
the undisputed amount and follow the contractual procedures to
solve the disputed amounts.
In order to settle disputes, records need to be reconciled: all
call records need to be categorized, pricing procedures and rules
need to be strictly the same, etc.. This will be a requirement
whether settlement is voluntary between parties, whether Anatel
acts as intermediary, or when justice requires proof. Given the
amount of records - typically in a single month Embratel will
record approximately 600 million calls, and the fact that
switches of the different companies involved are not necessarily
synchronized - registering different start and ending times for
each call, it is obvious that the matching process is not trivial
and will necessarily take experts to determine the final
settlement amounts.
Embratel is the premier communications provider in Brazil
offering a wide array of advanced communications services over
its own state of the art network. It is the leading provider of
data and Internet services in the country. Service offerings:
include advanced voice, high-speed data communication services,
Internet, satellite data communications and corporate networks.
Embratel is uniquely positioned to be the all-distance
telecommunications network of South America. The Company's
network has countrywide coverage with 28,868 km of fiber cables
comprising 1,068,657 km of optic fibers.
The Company holds 98.8 percent of Empresa Brasileira de
Telecomunicacoes S.A. ("Embratel").
Third Quarter 2002 Results*
*All financial figures are in Reais and based on consolidated
financial statements in "Legislacao Societaria".
Embratel Participagues S.A.
Sep 30, 2002
------------------
Amounts in Average Average
R$ thousands % Cost of Debt Maturity
-----------------------------------------------------------------
Hedged short
term debt
(notional
amount) 1,552,615 65.8% 99,30% CDI up to 12 mos.
Unhedged short
term debt 807,568 34.2% US + 8,28%pa. up to 12 mos.
Total short
term debt 2,360,183 100.0%
-----------------------------------------------------------------
Hedged long
term debt
(notional
amount) 241,691 8.6% 86,53% CDI up to 1,90yrs
Unhedged long
term debt 2,581,576 91.4% US + 8,16%pa. up to 8,04yrs
Total long
term debt 2,823,267 100.0%
-----------------------------------------------------------------
Total hedged
debt 1,794,306 34.6%
Total unhedged
debt 3,389,144 65.4%
Total debt
(net of hedge
gains) 5,183,450 100.0%
-----------------------------------------------------------------
Table 16
Hedged Portion Debt principal
Debt Principal 2003 maturing per quarter
-----------------------------------------------------------------
First quarter 88.5% 38.8%
Second quarter 75.3% 14.5%
Third quarter 58.3% 34.1%
Fourth quarter 7.5% 12.6%
Total 66.1% 100.0%
-----------------------------------------------------------------
Table 17 Gross
Embratel Participacoes SA Receivables
R$ thousands Sep 30,2002 Jun 30,2002
-----------------------------------------------------------------
Accounts Receivables
Voice Services 2,685,158 2,650,175
Data, Telco and Other Services 625,486 699,382
Foreign Administrations 387,543 339,678
Gross Receivables 3,698,187 3,689,234
Allowance for Doubtful Accounts (1,866,486) (1,714,240)
Net Receivables 1,831,701 1,974,994
-----------------------------------------------------------------
Table 18 Net Account
Embratel Participacoes SA Receivables
R$ thousands Sep 30,2002 Jun 30,2002
-----------------------------------------------------------------
Voice Service 918,593 1,027,576
Current 61.4% 64.2%
1-60 days 29.3% 26.9%
61-120 days 9.4% 8.9%
Greater than 120 days 0 0
-----------------------------------------------------------------
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
NATSTEEL BRASIL: Board Announces Divestment Completion
-------------------------------------------------------
The Board of Directors of NatSteel Ltd ("Company") refers to the
divestment of the Company's entire interest of 66.8 percent in
NatSteel Brasil Ltda ("NatSteel Brasil") to Gerdau Participacoes
Ltda and Gerdau GTL Spain S.L., details of the transaction of
which were announced on 30 January 2002, 1 March 2002 and 9
September 2002.
The Company wishes to announce that it had, on 18 October 2002
(Brazil time), received gross proceeds of S$253,633,687.90 from
the sale (the "Sale") of its entire interest in NatSteel Brasil.
Such receipt marks the completion of the Sale and satisfies one
of the two conditions precedent for the proposed sale of, inter
alia, the Company's assets and businesses to Crown Central Assets
Limited as well as condition 2 (as announced by or on behalf of
98 Holdings Pte. Ltd. ("98 Holdings") on 3 October 2002) of the
voluntary conditional cash offer by or on behalf 98 Holdings to
acquire all the issued ordinary shares of NatSteel Ltd.
By Order of the Board
Lim Su-Ling
Company Secretary
21 October 2002
VARIG: Denies Reports It Has Reached Deal With Creditors
--------------------------------------------------------
Brazilian airline Viacao Aerea Rio Grandense SA (Varig) refused
to confirm reports that it has struck a debt-restructuring
agreement with creditors, says Dow Jones.
Gazeta Mercantil released a report saying that Varig made an
agreement with its main creditors, GE Capital, Banco do Brasil,
Infraero, BR Distribuidora and Unibanco, to roll over its debts.
Accordingly, the Company might have a maximum six-month period to
pay more than US$900 million in debts.
The report indicated that the agreement is likely to see the
Brazilian development bank BNDES (Banco Nacional de
Desenvolvimento Economico e Social) resuming the management of
Varig's restructuring process, which will have to count on a
strategic partner.
Varig has hired Bain & Co., KPMG and the Brazilian law firm of
Machado Meyer and Tavares Paes to assist it in a restructuring
effort slated to conclude in December.
Though the company denied a deal has been reached, it has said it
is in talks with suppliers, leasing companies and creditors about
ways to pay down its US$900-million debt load and return to
profitability.
In the first half of this year, Varig posted a BRL1.04-billion
loss amid rising dollar-denominated operating costs and greater
competitive pressure from upstarts like discount carrier Gol
Transportes Aereos.
Critics say management at Varig has been hampered by the
nonprofit Rubem Berta foundation, which controls 87% of Varig's
stock.
CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.)
Rua 18 de Novembro No. 800, Sao Joao
90240-040 Porto Alegre,
Rio Grande do Sul, Brazil
Phone: (51) 358-7039/7040
(51) 358-7010/7042
Fax: +55-51-358-7001
Home Page: www.varig.com.br/english/
Contacts:
Dorival Ramos Schultz, EVP Finance and CFO
E-mail: dorival.schultz@varig.com.br
Investor Relations:
Av. Almirante Silvio de Noronha,
n 365-Bloco "B" - s/458 / Centro
Rio de Janeiro, Brazil
KPMG Brazil
Belo Horizonte
Rua Paraba, 1122
13th Floor
30130-918 Belo Horizonte MG
Telephone 55 (31) 3261 5444
Telefax 55 (31) 3261 5151
or
Brasilia
SBS Quadra 2 BL A N 1
Edificio Casa de Sao Paulo SL 502
70078-900 Braslia - DF
Telephone 55 (61) 223 2024
Telefax 55 (61) 224 0473
BAIN & CO
Primary Contact: Wendy Miller
Two Copley Place, Boston, MA 02116
USA
Phone: +1-617-572-2000
Fax: +1-617-572-2461
Email: miles.cook@bain.com
URL: http://www.bain.com
* Adviser Says State and Municipal Debt Restructure Eminent
-----------------------------------------------------------
Antonio Palocci, economic program director for Workers Party in
Brazil said that the country may seek to renegotiate the part of
state and municipal government debt should the party's
presidential candidate win.
According to Palocci, Workers Party's Luiz Inacio Lula da Silva,
who leads polls surveys going to the run-off on Oct. 27, want to
help the local government to reduce their portion of the BRL240
billion of debt owed to the federal government.
Out of this amount, BRL144 billion is from Sao Paulo, Rio and
Minas Gerais, the three wealthiest states in the country,
combined.
State and municipal debts cover about 23 percent of the federal
government's BRL1.05 trillion of debt, based on the figures in
August this year.
Bloomberg quoted Palocci saying that the intention is to let the
states and municipalities have more room to spend from the second
year of government.
The restructuring is to be done during the government's second
year so that the central government would have posted a bigger
primary budget surplus of 3.75 percent, excluding debt payments,
according to Palocci.
Palocci explained that the government would have to assume more
of the primary surplus.
Analysts said that Lula's promise control government spending and
meeting the country's debt obligations contradict with his party
adviser's statements, resulting to lower investor confidence.
A number of economists expressed doubts that Lula will keep
spending and inflation controls employed by the current
administration. Lula had been known to advocate a debt default by
Brazil some time back.
Brazil's economy had been embattles since the currency had lost
about 33 percent of its value. The Brazilian currency now trades
at 3.9 to the dollar.
The local currency devaluation was started when Itamar Franco,
governor of Minas Gerais announced that they will not be paying
debts for at least 90 days. The state of Rio Grande do Sul
followed suit soon after.
=========
C H I L E
=========
EDELNOR: Obtains Debt Plan Confirmation Order
----------------------------------------------
Chilean thermo generator Edelnor informed the country's
securities regulator SVS that it has already obtained a
confirmation order from a New York bankruptcy court allowing it
to implement a US$340-million debt restructuring plan under the
terms of Chapter 11 bankruptcy protection, relates Business News
Americas.
If there are no appeals or objections presented until November 5,
the documents and contracts associated with the plan will be
signed by then.
Edelnor, a unit of Spanish utility company Endesa S.A., filed for
Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court
in Manhattan in September this year to complete a prearranged
reorganization of unsecured loans in the U.S. Edelnor has a ten-
year, US$250-million loan with Swiss Bank UBS, due March 2006;
and a seven-year, US$90-million loan with the Bank of America,
due June 2005.
Chilean businessman Fernando del Sol's holding company FS
Inversiones currently holds 82% of Edelnor, and as part of the
plan will sell this stake to the Inversiones Mejillones joint
venture of Belgian power company Tractebel and Chile's state
copper corporation Codelco.
Inversiones Mejillones is still awaiting the US justice's
decision to approve the deal. Reports suggested however that the
deal is conditional upon the successful restructuring of
Edelnor's debt.
Edelnor listed nearly US$612.9 million in total assets and about
US$385.5 million in total liabilities in the bankruptcy filing.
CONTACT: EMPRESA ELECTRICA DEL NORTE GRANDE S.A. (EDELNOR)
Avenida Apoqindo 3721, Oficina 81
Las Condes
Santiago, Chile
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
GASATACAMA: Intends To Sign Gas Purchase Deals By Year-end
----------------------------------------------------------
Rudolf Araneda, CEO of GasAtacama, revealed that the Chilean gas
transporter and power generator expects to sign gas purchase
agreements for an "important" quantity of natural gas by year-end
for delivery to a petrochemical project, relates Business News
Americas.
Araneda, however, didn't reveal the names of the companies that
would buy the gas and develop the project due to confidentiality
agreements.
He also didn't specify the location of the project in order to
avoid land speculation. He said however that the project is
within GasAtacama's Region II area of influence.
GasAtacama had planned to refinance US$200 million - US$300
million this year. However, due to the recession in Argentina, it
has decided to put off the plan until next year, as it still
needs to define the exact amount to be refinanced because of the
recession in Argentina.
Citigroup's Salomon Smith Barney, which has been contracted to
advise on the process, will help GasAtacama decide on the best
instrument for the refinancing, as well as the amount and the
timing, Araneda said.
CONTACT: Gasoducto Atacama Y Cia. Ltda.
Isodora Goyenechea 3365 Piso 8
Santiago, Chile
Phone: 3663800
Fax: 3663802
Contact:
Rudolf Araneda, Chief Executive Officer
MADECO: Creditor Banks Okay New Equity Issue
--------------------------------------------
Chilean copper wire and cable manufacturer Madeco's new proposal
to raise US$137 million in equity obtained approval from the its
creditor banks, Business News Americas reports, citing local
business daily El Diario.
According to the daily, the latest plan was presented to creditor
banks on Friday by Francisco Perez Mackenna, general manager of
Quinenco, which controls 56% of Madeco, and is leading
negotiations with creditors.
The banks are reportedly prepared to accept US$50 million - US$60
million to pay off some of Madeco's US$120-million short-term
bank debt with the rest being restructured over seven years, with
three years grace, less than what they would have received under
the original capital increase.
This week, Quinenco is expected to seek approval from Chile's
pension fund managers (AFPs), which hold almost 12% of Madeco,
for the new restructuring process.
Madeco drew the new proposal following a recent failed US$90
million capital increase. One of the reasons why the operation
collapsed is because institutional investors such as the AFPs did
not take up their share of the offer.
This time round, Madeco will earmark some US$10 million for
bondholders to make the equity issue more attractive, El Diario
said.
Madeco is expected to call an emergency shareholders' meeting
this week to approve the capital increase and financial
restructuring. Among other things, shareholders will have to
decide the price of the equity issue, which is expected to be
less than the CLP35 Chilean per share set last time round and
considered too high by many shareholders.
Madeco has debts totaling US$325 million, of which about US$120
million is in short-term bank loans, US$100 million in long-term
bonds and US$100 million related to its subsidiaries.
In addition to cables, Madeco makes finished and semi-finished
nonferrous products based on copper, aluminum, related alloys and
optical fiber as well as flexible packaging products for use in
the mass consumer market for food, snacks and cosmetics products.
To see latest financial statements:
http://bankrupt.com/misc/Madeco.doc
CONTACT: MADECO S.A.
Ureta Cox, 930
San Miguel, Santiago, Chile
Phone: 56-2 5201461
Fax: 56-2 5516413
E-mail: mfl@madeco.cl
Home Page: http://www.madeco.cl
Contacts:
Oscar Ruiz-Tagle Humeres, Chairman
Albert Cussen Mackenna, Chief Executive Officer
Investor Relations
Phone: 56-2 5201380
Fax: 56-2 5201545
E-mail: ir@madeco.cl
RESTRUCTURING ADVISER:
SALOMON SMITH BARNEY HOLDINGS INC.
388 Greenwich St.
New York, NY 10013
Phone: 212-816-6000
Fax: 212-793-9086
Home Page: http://www.smithbarney.com
Contact:
Michael A. Carpenter, Chairman and CEO
Michael J. Day, EVP and Controller
SAESA: Negotiating Loan Terms and Conditions Through November 8
---------------------------------------------------------------
Saesa, a Chilean distributor, informed the country's securities
regulator SVS that it has agreed to negotiate through November 8
the terms and conditions of a US$150-million loan that came due
October 18, relates Business News Americas.
Saesa had wanted to pay the loan using the proceeds of a US$175-
million bond issuance supposedly scheduled for October 11.
However, due to "investor uncertainty" following a drop in the
valuation of utility shares on Wall Street, the Company decided
to delay the planned issue.
United States power company PSEG owns Saesa.
CONTACT: SAESA
Gerencia y Administracion Zonal de Osorno
Bulnes 441, Osorno
Telefono: (64) 206400
Fax: (64) 206209 - Casilla: 21 -0
TELEFONICA CTC CHILE: Unions Say Company Will Cut Jobs
------------------------------------------------------
A union official said that Chile's Telefonica CTC (Telefonica)
has plans to fire 800 people, a report from Bloomberg's Thursday
edition revealed.
Speaking for 12 of the 16 unions concerning Telefonica, Davis
Droguett said that the company has announced the cuts as part of
a cost-reduction scheme.
The number of people to be fired is equivalent to 17 percent of
the company's workforce. Telefonica, whose main business is local
telephone service, had 4,639 employees as of June his year.
Suffering from a CLP902 million-loss from this year's second
quarter, Telefonica intends to cut losses due to declining
revenues. The company reported a profit of CLP4.1 billion last
year.
Telefonica CTC's shares fell to a low of CLP1,450, the lowest
since March 1995 in trading in Santiago yesterday.
This year, the shares have dropped 33 percent of their value.
CONTACT: Telefonica CTC Chile
Avenida Providencia 111, Piso 2
Santiago, Chile
Phone: +56-2-691-2020
Fax: +56-2-691-2392
Homepage: http://www.ctc.cl/
Contacts:
Mr. Bruno Philippi, President
Mr. Jacinto DĦaz, Vice President
Gisela Escobar, Head of Investor Relations
===========
M E X I C O
===========
AHMSA: Issues New Invitation To Shareholders' Meeting
-----------------------------------------------------
Mexican steel company Altos Hornos de Mexico (Ahmsa) revealed to
the Mexico City stock exchange (BVM) that there are "serious
irregularities" in an advertisement published in several
newspapers inviting shareholders to a meeting scheduled for
November 7.
The document was signed by the Company's external auditor, Manuel
Constantino Gutierrez Garcia, and invited shareholders to attend
a meeting on November 7 at 1 pm in Monclova, Caohuila state,
where Ahmsa is based.
According to the company, the notice contained several
irregularities, particularly referring to Article 185 of the
general corporate law, and omitted certain formal requisites of
that same law, the country's securities legislation and the
Company's statutes.
Because of these irregularities, Ahmsa sent a correction to the
BVM replacing the one signed by the auditor. The new invitation
says that the meeting will be held at 8 am on November 7 at the
Company's head offices in Monclova.
The meeting, which will be the first in three years, is expected
to see company owners bidding to kick out Gutierrez Garcia and
keep disgruntled creditors at bay.
Ahmsa, whose shares have been suspended from trading since 1999,
is seeking for the "removal or resignation" of Gutierrez who last
month launched his own bid to convoke a shareholders' meeting and
shake up the board and its powers.
According to a previous Ahmsa statement, Gutierrez, whose
supervisory job includes assuring company statutes are followed,
was acting in the interests and under pressure from creditor
banks when he called his own shareholders' meeting.
At the meeting, creditor banks are also expected to try to oust
the Company's chairman Xavier Autrey Maza and managing director
Alonso Ancira Elizondo.
Frustrated by a protection from payments order handed down by a
Mexico City judge more than three years ago, the banks are still
waiting for around US$1.85 billion in debt repayments from Ahmsa.
The banks have accused current directors of being unwilling to
carry out modifications needed to lift the order, a type of
Chapter 11 bankruptcy protection, and broke off negotiations with
the board in April this year.
The banks hope a new board may adopt a debt-restructuring plan
put forward by creditors two years ago and agreed to in principle
by the current board, but never implemented.
The plan involves a stock-for-debt swap with the banks, an asset
sell-off program and a repayment schedule over eight years, which
would finally clear up Ahmsa's debt problem.
Ahmsa, Mexico's largest steel maker, ran into trouble following a
drop in world steel prices resulting from the 1998 Asian crisis
CONTACT: AHMSA
Prolongacion B. Juarez s/n,
Monclova , Coahuila 25770
Mexico
http://www.ahmsa.com
Phone: +52 86 33 81 72
Fax: +52 86 33 65 66
Contacts:
Alonso Ancira Elizondo, CEO, Vice Chairman, Pres./CEO
Jorge Ancira Elizondo, Chief Financial Officer
Manuel Ancira Elizondo, Chief Operating Officer
AHMSA: Unions Take Action To Help Company Escape Bankruptcy
-----------------------------------------------------------
Union leader Napoleon Gomez Urrutia is confident that the
bankruptcy request from the creditor banks of Ahmsa will never
prosper because the situation at the Company will be resolved by
agreement and via Ahmsa's restructuring.
Unions, which are trying to protect jobs in the steel industry,
have proposed solutions such as productivity programs, banking on
the Company's economic feasibility, said Gomez Urrutia.
"What Altos Hornos de Mexico (Ahmsa) has told us is that it has
all its production from here to the first quarter of 2003 sold,
it has better cash flow and has paid its suppliers, and that
gives us certain hopes that management will be able to
restructure and not fall into bankruptcy," said Gomez Urrutia.
Ahmsa has in its favor the protectionist measures adopted by the
Mexican government in March, which have slowed imports from
countries with which Mexico has not signed free trade agreements.
It has also been exempted from the Section 201 steel import
restrictions imposed by the US in March, thanks to the Nafta
agreement signed by both countries.
ALESTRA: Reports Widening Losses In The 3Q02
--------------------------------------------
The Mexican peso's depreciation during the third quarter of this
year prompted Alestra to report widening losses for the period.
According to Business News Americas, the Mexican competitive
local exchange carrier reported a loss of US$32 million for the
third quarter of this year, a 146% increase from the US$13
million loss reported in the same period last year.
Revenues fell 11% to US$125 million, due in part to a 14% decline
in long distance call volume. EBITDA improved 45% at US$19.7
million, compared with US$13.6 million for 3Q01. EBITDA growth
was helped by a 12% reduction in operating expenses to US$44
million.
Cost reductions were achieved through staff downsizing,
postponing annual inflation-related wage increases, and cutting
marketing and training expenses, Alestra said in a statement.
Alestra, however, is likely to have a hard time meeting its
upcoming bond payments due to the negative results during the
quarter. The carrier had only US$8 million in cash on hand
following a US$25-million payment to BNP Paribas on October 15.
In August, international credit ratings agency Moody's lowered
Alestra's ratings to Ca from Caa1, and placed them on negative
outlook, citing concerns on the Company's ability to meet
forthcoming payments on its US$570-million bond debt. Moody's
said at the time it believed Alestra would have insufficient cash
to make coupon payments in November totaling US$35 million.
AT&T owns 49% of Alestra, with the rest equally divided between
Mexican industrial conglomerate Alfa and Spanish-Mexican
financial group BBVA Bancomer.
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 Mexico, D.F.
Phone: 011-525-282-6700
Fax: 011-525-282-9200
CINTRA: Merrill Completes Due Diligence
---------------------------------------
Merrill Lynch, which has been hired to oversee the sale process
of Cintra, completed its due diligence in the government-
controlled holding company.
This marks a step towards the sale of the Company's assets, which
is expected to take place next year. The final decision regarding
the sale will take place in the last week of October.
Merrill Lynch will continue working on the next steps of the
sales strategy, which include the prospectus and the road show,
as well as identifying prospective buyers, which will make a
decision after analyzing the details of the sale.
Cintra's assets include Aeromexico and Mexicana, Mexico's two
largest airlines, Aerocaribe, Aerolitoral and Aerocozumel.
To see financial statements: http://bankrupt.com/misc/Cintra.doc
CONTACT: CINTRA
Xola 535, Piso 16, Col. del Valle
03100 M,xico, D.F., Mexico
Phone: +52-5-448-8050
Fax: +52-5-448-8055
Contacts:
Jaime Corredor Esnaola, Chairman
Juan Dez-Canedo Ruiz, CEO
Rodrigo Ocejo Rojo, CFO
OR
C.P. Francisco Cuevas Feliu, Investor Relations
Xola 535, Piso 16
Col. del Valle
03100 M,xico, D.F.
Tel. (52) 5 448 80 50
Fax (52) 5 448 80 55
infocintra@cintra.com.mx
MERRILL LYNCH & CO., INC.
World Financial Center,
North Tower, 250 Vesey St.
New York, NY 10281
Phone: 212-449-1000
Toll Free: 800-637-7455
Home Page: http://www.merrilllynch.com
Contact:
David H. Komansky, Chairman and CEO
E. Stanley O'Neal, President, COO, and Director
Thomas H. Patrick, EVP and CFO
MERRILL LYNCH MEXICO
Paseo de las Palmas No. 405
Piso 8
Col. Lomas de Chapultepec
11000 Mexico City, Mexico
Phone: 5255-5201-3200
Fax: 5255-5201-3222
ISPAT INTERNATIONAL: Reports 3Q02 Results
-----------------------------------------
Ispat International N.V., (NYSE: IST US; AEX: IST NA), reported
Wednesday a net income of $26 million or 21 cents per share for
the third quarter of 2002 as compared to a loss of $98 million or
negative 81 cents per share for the third quarter of 2001.
Consolidated sales and EBITDA for the third quarter were $1.26
billion and $143 million, respectively, as compared to $1.06
billion and negative $3 million, respectively, for the third
quarter of 2001. The Company achieved a 12% increase in steel
shipments to 3.9 million tons, as compared to 3.5 million tons
shipped in the same period last year.
Net debt at the end of third quarter was $2.24 billion. Capital
expenditure for third quarter of 2002 totaled $37 million. At
September 30, 2002 the Company's consolidated cash, cash
equivalents and short-term liquid investments totaled $111
million. The Company also has approximately $312 million
available to it under various undrawn lines of credit and bank
credit arrangements.
Ispat International N.V. is one of the world's largest and most
global steel producers, with major steelmaking operations in the
United States, Canada, Mexico, Trinidad, Germany and France. The
Company produces a broad range of flat and long products with
over 90% of sales in North American Free Trade Agreement (NAFTA)
participating countries and the European Union (EU) countries.
Ispat International is a member of The LNM Group.
This news release contains forward-looking statements that
involve a number of risks and uncertainties. These statements are
based on current expectations whereas actual results may differ.
Among the factors that could cause actual results to differ are
the risk factors listed in the Company's most recent SEC filings
To see financial statements:
http://bankrupt.com/misc/Ispat_International.htm
CONTACT: ISPAT INTERNATIONAL N.V.
T.N. Ramaswamy, Director, Finance
+44-20-7543-1174
Annanya Sarin, Head of Communications
+44-20-7543-1162, or +31-10-282-9471
Citigate Dewe Rogerson
John McInerney, Investor Relations
+1-212-419-4219
NII HOLDINGS: Judge Refuses To Confirm Reorganization Plan
----------------------------------------------------------
A U.S. bankruptcy court judge denied NII Holdings Inc.
confirmation of its proposed Chapter 11 reorganization plan after
it found out that the document had flaws in it.
According to Dow Jones Newswires, Judge Mary F. Walrath of the
U.S. Bankruptcy Court in Wilmington found NII Holdings' plan
violated certain provisions of the Bankruptcy Code.
First, the plan can't be confirmed with a provision that allows
only some of its Class 6 creditors to designate the reorganized
company's directors. Under the proposed plan, NII Holdings's
parent Nextel Communications Corp., which is also a Class 6
creditor, is able to designate the directors. Another Class 6
creditor, Cordillera Communications Corp., cannot.
Secondly, Judge Walrath found that certain releases granted to
interested parties that protect them from litigation aren't
acceptable. NII Holdings had proposed to release all of its
current and former officers and directors from any and all
claims. Judge Walrath said the releases should only pertain to
officers and directors who were with the company during some
portion of its time in Chapter 11.
Finally, Judge Walrath said she couldn't confirm the plan until
NII Holdings produces evidence it received enough creditor votes
in support of confirmation to satisfy requirements under the
Bankruptcy Code. Judge Walrath ruled earlier Tuesday that several
votes in favor of confirmation couldn't be counted because the
debtor violated the Bankruptcy Code's solicitation guidelines.
NII Holdings said it does, indeed, have the requisite votes and
will submit evidence demonstrating that fact.
Walrath urged NII Holdings to resolve these issues before it can
hope to win confirmation of the plan which calls for the Company
to emerge as a streamlined going concern. NII Holdings will
submit resolutions to the issues by Friday. A hearing to consider
confirmation will reconvene on Oct. 28, if necessary.
NII, a unit of Nextel, has operations in Mexico, Brazil, Peru,
Argentina, Chile and the Philippines. It offers a fully
integrated wireless communications tool with digital cellular,
text/numeric paging, wireless Internet access and Nextel Direct
Connectr, a digital
two-way radio feature.
In May 24, the Company filed for Chapter 11 bankruptcy
protection, listing assets of US$1.24 billion and liabilities of
US$3.26 billion as of Dec. 31, 2001.
To see financial statement:
http://bankrupt.com/misc/NIIHOLDINGS.htm
CONTACT: NII Holdings Inc.
Claudia Restrepo
Phone: +1-305-779-3086
E-mail: claudia.restrepo@nextel.com
LEGAL REPRESENTATIVE:
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
P. O. Box 551
Wilmington, Delaware 19899
Phone: (302) 651-7700
Fax: (302) 651-7701
Home Page: http://www.rlf.com/welcome2.htm
Contact:
Daniel J DeFranceschi
Phone: (302) 651-7816
Fax: (302) 784-7090
E-mail: defranceschi@rlf.com
NEXTEL COMMUNICATIONS
2001 Edmund Halley Dr.
Reston, Virginia 20191
Corporate Communications
Phone: 703-433-4700
Contact: William E. Conway, Jr., Chairman of the Board
Timothy M. Donahue, President/Chief Executive
=================
V E N E Z U E L A
=================
SIDOR: Signs Agreement with Imsa Acero
--------------------------------------
Imsa Acero chief executive, Santiago Clariond, said that an
agreement to buy 350,000-500,000 t/y from Siderurgica del Orinoco
(Sidor), Venezuela's biggest steelmaker, has been signed.
"This is thanks to the free trade agreement signed between
Mexico, Colombia and Venezuela, which is now yielding results,"
Clariond said, as quoted by Mexican daily El Norte.
The slabs will be used in its operations in the US and Guatemala,
and to supply Imsa Acero's rolling mill in Monterrey. Last year
Imsa Acero, which is a subsidiary of conglomerate Grupo IMSA,
bought 220,000 tons of steel from Sidor.
The agreement would provide Sidor revenues of US$120 million per
year.
Earlier, Sidor had failed to restructure US$1.4 billion in debt
with banks by the Sept. 30 deadline.
Sidor president Francisco Rangel did not explain state any reason
for the failure but said that the company, which has been
battered by the sharp slide in steel prices and the shrinking
domestic economy, is now in advanced talks with its creditor
banks.
Sidor, which defaulted on a US$31.3-million interest payment on
its bank loans last December, signed a preliminary agreement with
its bank creditors on July 30, which provided 60 days to work out
terms of the restructuring. Under terms of the preliminary
agreement, up to half of the Company's debt will be written off.
Sidor is 70%-owned by Argentina's Siderar, Mexico's Hylsamex,
Tubos de Acero de Mexico SA, Brazil's Usinas Siderurgica de Minas
Gerais and Venezuela's Siderurgica Venezolana Sivensa SA. The
remaining 30% is owned by the Venezuelan government.
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/
Grupo IMSA SA de CV
Head Office
Apdo Postal 267 Sucursal "B"
26th Floor Fracc Valle Oriente
Av Batallon de San Patricio No 111
San Pedro Garza Garcia
Nuevo Leon
Mexico 66269
Tel +52 81 8153 8300
Fax +52 81 8153 8400
Web http://www.grupoimsa.com
Contacts:
Eugenio Clariond Garza, Chairman
Marcelo Canales Clariond, Chief Financial Officer
Eugenio Clariond Reyes, Chief Executive
***********
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
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Copyright 2002. All rights reserved. ISSN 1529-2746.
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