/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/021029.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, October 29, 2002, Vol. 3, Issue 214 Headlines A R G E N T I N A ACINDAR: Shares Markedly Higher On Default Recovery Expectations IRSA: $100M Convertible Bonds Offered To End Debt Negotiations SIDERAR: Compensates Drop In Local Sales With Exports * Argentine Cabinet Chief Expects IMF Deal Soon B E R M U D A TYCO INTERNATIONAL: Ratings Still on Watch Negative B R A Z I L BRAZILIAN UTILITIES: Regulatory Risk Sets Negative Ratings Tone EMBRATEL: Court Ruling Averts Forced Payment FIAT: Brazilian Justice Declares Contract Breach With BF TELESP CELULAR: Reports Modestly Improved 3Q02 Results USIMINAS: New Orders Halted As Maximum Capacity Reached USIMINAS: Utilizing Online Transactions to Grow Business VARIG: Strikes Deal With Creditors To Renegotiate Debt C H I L E ENERSIS: Contacts U.S.-based Firm Regarding Sale Of Two Units C O L O M B I A BANCAFE: Sale May Involve Private Equity Deal CMS ENERGY: Sells Oil, Gas Assets in Colombia PROELECTRICA: Request For Bankruptcy Protection Approved C U B A * CUBA May Miss Japan, Mexico Debt Payments M E X I C O GRUPO MEXICO: Asarco Announces Possible Closing of Mission Unit T R I N I D A D & T O B A G O BWIA: Government Bail Out Unlikely U R U G U A Y BANCO COMERCIAL: Government Delays Closure V E N E Z U E L A AES CORP.: Recoups 40% of Venezuelan Unit Purchase Price UNITED AIRLINES: Closing Two LatAm Stations Early Next Year - - - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Shares Markedly Higher On Default Recovery Expectations ---------------------------------------------------------------- Shares of Acindar Industria Argentina de Aceros, Argentina's biggest producer of steel rods, rose 4 centavos, or 7.7%, to 58.5 centavos, the highest price since July 6, 2001, reports Bloomberg. Shares have jumped 61% this month. The stock is gaining on hopes growing exports will help the Company recover from its default last year. Rafael Ber, an analyst at Argentine Research, said investors expect the company to soon complete renegotiating its debt with Credit Suisse First Boston. To see Financial Statements: http://bankrupt.com/misc/Acindar.doc CONTACTS: ACINDAR SA Jose I. Giraudo, Investor Relations Manager Phone: (5411) 4719 8674 Andrea Dala, Investor Relations Officer Phone: (5411) 4719 8672 IRSA: $100M Convertible Bonds Offered To End Debt Negotiations -------------------------------------------------------------- IRSA Inversiones y Representaciones SA, Argentina's biggest real estate company, began offering up to US$100 million in convertible bonds Friday, says Bloomberg. The underwriter of the bonds that will mature in 2007 and have an 8% interest rate is Raymond James Financial Inc., whose Argentine unit is the biggest local brokerage. The conversion price will be US$0.56 and each bond will allow the holder to exchange it for 1.8 shares or IRSA. IRSA is selling bonds in an effort to raise cash to allow it to end its debt restructuring negotiation with banks. As part of the accord, banks will extend maturities on the rest of its $150 million debt, CEO Eduardo Elzstain said. "It makes sense for them to do this," said Rafael Ber, an analyst at Argentine Research. "They'll be getting a clean slate and will probably have some extra cash to buy new assets at ridiculously low prices." Cresud SA, which is IRSA's arm for investments in farmland and livestock, will issue another US$50 million in convertible bonds. To see latest financial statements: http://bankrupt.com/misc/Irsa.pdf CONTACT: Irsa Inversiones y Representaciones SA Head Office Piso1 Bolivar 108 Buenos Aires Argentina C1066AAD Tel +54 11 4323 7555 Fax +54 11 4323 7597 Web http://www.irsa.com.ar/ Contacts: Eduardo Sergio Elsztain, Executive Chairman M. Marcelo Mindlin, Executive Vice Chairman Atty Saul Zang, Vice Chairman SIDERAR: Compensates Drop In Local Sales With Exports ----------------------------------------------------- Siderar, Argentina's second largest steelmaker has seen sales in the domestic market drop dramatically. In 1997 and 1998, the Company sold 100,000 to 120,000 tons per month domestically; today that number has fallen to just 65,000 tons per monthly. "We are at the same sales level as in 1989-1990, when hyperinflation struck, selling about 50 kilograms of steel per capita," said Siderar President Fredy Cameo. However, according to the executive, "We have compensated for the drop in the local market with exports." In the past two years, Siderar has more than doubled its exports, sending abroad 70% of the 2.2 million tons it produces per year. The devaluation of the local currency allowed the Company to expand exports from 17 to 30 countries, and the Company has been competitive despite the fact that 70% of its costs are tied to the dollar, officials said. Meanwhile, Techint, which owns Siderar, has asked for more time in paying the Company's US$550-million debt. Siderar needs the extension to avoid being forced into bankruptcy as it tries to recuperate from four years of recession. The devaluation makes it harder for the Company to pay debts that are in dollars. CONTACT: Leonardo Stazi Siderar S.A.I.C. Phone: 54 (11) 4018-2308/2249 Home Page: www.siderar.com * Argentine Cabinet Chief Expects IMF Deal Soon ----------------------------------------------- Argentina's Cabinet Chief Alfredo Atanof said in a press conference that negotiations between the country and the International Monetary Fund are "definitely" approaching a conclusion. A report from Xinhua News Agency quoted Atanof's statement that the letter of intent between the two sides is about to be signed as both share the same opinions on the terms of the document. However, Atanof recognizes that this is one of the most difficult deals between the IMF and a country ever. He added that the fall of Argentina's gross domestic product would only by 12 percent, lower the predictions projected. Argentina lost its credit line to the IMF last December, forcing it to default on large amounts of foreign debt. ============= B E R M U D A ============= TYCO INTERNATIONAL: Ratings Still on Watch Negative --------------------------------------------------- Standard & Poor's Ratings Services said Friday that its triple- 'B'-minus long-term corporate credit and 'A-3' short-term ratings on Tyco International Ltd. and its subsidiaries remain on CreditWatch with negative implications following the company's announcement of fiscal fourth quarter earnings. Hamilton, Bermuda-based Tyco is a diversified company with total debt of about $24 billion. Earnings, which continue to be depressed by economic weakness, largely reflected in the electronics business, included impairment and restructuring charges, most of which had previously been announced, a minor restatement of the previous three quarters' earnings, and a $400 million noncash charge for increased pension liabilities. The company remains in compliance with bank loan covenants and is in discussions with lenders regarding new financing arrangements. "Liquidity remains Standard & Poor's key concern", said Standard & Poor's credit analyst Cynthia Werneth. "In February 2002, Tyco drew down its bank credit facilities in full and has not accessed debt markets since then". Standard & Poor's said that the resolution of the CreditWatch will depend on how management addresses the gap between cash balances plus free cash flow and obligations that come due in the next 15 months. The funding gap could be bridged through a combination of successful negotiation of new bank credit facilities, selling additional assets, and accessing the public capital markets. Standard & Poor's said that it will continue to monitor the performance of Tyco's well-diversified business portfolio and its efforts to stem any damage that recent events may have had on customer, supplier, or employee relationships. Standard & Poor's will also evaluate Tyco's new senior management team's business and financial strategies. Analyst: Cynthia Werneth, New York (1) 212-438-7819 =========== B R A Z I L =========== BRAZILIAN UTILITIES: Regulatory Risk Sets Negative Ratings Tone --------------------------------------------------------------- Background Since June 2002, Standard & Poor's Ratings Services has been taking several rating actions on Brazilian utilities as a result of an overall deterioration of credit quality following significant volatility in the domestic market. Primary concern relates to financial flexibility, since companies' access to both local and international capital markets, and worse of all, to bank lines, have been severely reduced. Standard & Poor's surveillance is focusing on how corporates are resolving their refinancing requirements for 2002 and on potential sources of cash. However, the effect of the currency depreciation and higher local interest rates is bound to hurt companies' financial statements and ratios. Many electric utilities in the country have suffered from such lack of liquidity, which precipitated the default of AES Eletropaulo Metropolitana (Eletropaulo) on a syndicated bank deal, the file for protection under the Brazilian equivalent of Chapter 11 of Cemar - Companhia EnergＵica do Maranhao, and the downgrade of AES Sul Distribuidora Gaucha de Energia S.A. to speculative-grade category. In Standard & Poor's opinion, the problems faced by these companies do not indicate a pressing systemic risk in the energy sector. Nevertheless, service utilities in general (water and energy) have their credit ratings very linked to the sovereign and country risk due to the regulated nature of their businesses, and the relatively new, untested regulatory framework. The history of private ownership for Brazilian utilities is fairly recent, and many regulatory issues are still evolving. In these regulated industries, additional concerns arise as the country prepares for the first political change in the Federal Government since the sector was privatized. The programs of the two candidates in the Presidential election regarding these regulated sectors are not totally clear, but both seem to have a more interventionist approach than the current administration, which reinforces the link between sovereign and regulated entities' risk. Particularly in the case of electric utilities, the new administration should have more incentives to interfere, as the privatization of the sector was never finalized, important developments in the regulation are still undefined, and the country's capacity to grow in the future clearly depends on pressing investments to increase generation. To avoid energy rationing in the future, the country would need to increase generation capacity by 3,000 MW per year at an estimated capital expenditures effort of some $3 billion. The federal government budget or state-owned energy assets do not have the capacity to fund these requirements themselves, reason why private investments are so necessary. Ironically, a clear regulatory environment is the fundamental piece to support such capital expenditures program. The loopholes in the regulation curb investments in new capacity or M&A activity, as investors do not feel comfortable that the project will achieve the expected rate of return. Most international investors that participated in the privatization of the energy sector have, to different degrees, limited their financial support to the Brazilian subsidiaries and are not expected to resume investments until rules are clearer. The energy rationing that affected the Northeast and Southeast regions of Brazil made it clear that further changes were necessary. While the Federal Government has made a significant effort since then to eliminate distortions in the regulation, further advances are now much more urgent as distribution companies face lower energy demand and weaker financial performance. Although the long-term scenario is that the country will be short in energy, distributors are currently facing a significant slowdown in demand. A permanent change in consumers' behavior following the rationing is imposing additional project risk. Companies are dealing with a revenue base that is 5% below that of year 2000. For 2002, total forecast consumption amounts to 38,748 MW average/year, compared to an initial estimative of 43,000 MW average/year, projected back in 2000 before the rationing problem. However, these companies executed an investment program to meet this higher demand with the quality requested by ANEEL (Brazilian regulatory agency for energy sector), and are now facing idle capacity. At the same time, their capital structure deteriorated with the need to meet higher working capital requirements in 2001 and 2002 until BNDES (Brazilian National Development Bank) disbursed the funds relative to the energy sector agreement, and the lower cash generation, which was consumed by interest expenses. As companies struggle with their tight cash position and overall lack of liquidity in the credit markets, firm action by the Government and the regulatory body is key to maintain the viability of the industry. Many Regulatory Concerns Since 2001, the regulation for the electric sector has faced many changes in order to meet demands brought about by the rationing. Ultimately, the government stepped in to resolve the Annex V (a clause contained in the purchased power agreements -"initial contracts"- that calculates a required reduction in hydro generation in the event of an energy shortage due to hydrological conditions) and rationing losses imposed on market players. (For further information on this topic, see "Financial Losses Due To Energy Rationing in Brazil Have Been Resolved", published Jan. 31, 2002. The commentary article is available on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com). While the agreement is seen as a positive development in the regulatory framework, many points are still undefined, such as: - The form distributors will be compensated for the change in definition of tariff-free low-income consumers. As the definition of low-income consumers was different for each distributor, the unification of the concept of this consumer category had a mixed impact on the distributors' revenue, and there is no definition on how companies will be reimbursed for this lost revenue. - Lack of a clear definition of the role of "normative value" (VN) as a price reference to the market. In the effort to protect captive customers from a significant increase in tariffs as the country diversifies its energy matrix, ANEEL has been trying to adjust the VN methodology. Needed investments in thermo and alternative sources of energy will not progress unless there is a definition on a reference price that remunerates such investments, or a reliable subsidy framework. - The challenge of shifting from the regulated environment to the free traded energy market. Beginning in 2003, the initial contracts of energy purchase will ramp down by 25% every year, and this "free" energy can be offered by generators either through bi-lateral agreements (only during 2002) or public auctions. The portion of energy offered but not contracted in the auctions can only be sold in the spot market - MAE, which still shows no indication that it can function properly. The idea is to force generators and distributors to sign long-term contracts and avoid an undesirable exposure to MAE. - The execution of the extraordinary tariff revision for nearly all distributors between 2003 and 2004. The definition of 'assets replacement value (market value)' -in spite of the 'assets book value'- as the reference for the tariff revision has frustrated distribution companies since the current market value of electric utilities' assets is said to be undervalued. In any case, previous tariff revisions have been arbitrated by ANEEL in a way to assure the economic equilibrium of the concessionaries. The revisions in the next two years will represent an important test on the regulatory framework and on ANEEL's autonomy to lead the industry. Since June 2002 the few auctions organized by generators - Tractebel, Cemig, Copel, Chesf, Furnas, and Eletronorte- offered only small volumes and there was demand only for the longer-term contracts (four to six years). The auction promoted by Eletrobras - Centrais Eletricas Brasileiras S.A., the most expected this year, showed timid levels of bids - only 1/3 of the energy offered was sold, and average prices were closed 30% below the VN. The result of the auctions precisely mirrors the current energy surplus, thanks to the tumble in consumption previously discussed. As a result of the weaker demand, distribution utilities do not need to replace ramping down contracts proportionally, and are imposing a discount on short-term supply contracts. However, as the longer-term scenario for the sector is that the country will be short in energy, this immediate approach can lead to significant vulnerabilities in the future. Marcelo Costa, Sao Paulo (55) 11-5501-8955; Juliana Gallo, Sao Paulo (55) 11-5501-8948; Milena Zaniboni, Sao Paulo (55) 11-5501- 8945 EMBRATEL: Court Ruling Averts Forced Payment -------------------------------------------- The Supreme Court of Brazil ruled that local distance operator Embratel will not be required to pay immediately its BRL47 million (US$12.5 million) debt due to Brasil Telecom. Business News Americas reported that Brasil Telecom filed a lawsuit demanding Embratel to pay its outstanding interconnection fees, on grounds that Embratel's financial health is obviously deteriorating. However, Judge Ruy Rosado de Aguiar rules that Brasil Telecom's basis for the lawsuit was not enough the force payment from Embratel. The debt is part of Brasil Telecom's total claims of BRL252 million in outstanding interconnection fees dating back t May 2000, according to the report. Embratel, which is under holding company Embratel Participacoes SA, has sour relationships with the country's three incumbent fixed line operators over the matter of interconnection payments. CONTACT: Embratel Participacoes SA Registered Office Rua Regente Feijo, 166 sala 1687-B Centro 20060-060 Rio de Janeiro Brazil Tel +55 21 2519-9622 Fax +55 21 2519-6608 Web http://www.embratel.com.br/ Contact: Daniel Eldon Crawford, Chairman BRASIL TELECOM SA Registered Office SIA / Sul- Asp - Lote D - Bl D - 2 Andar Sia 71215-000 Brasilia - DF Brazil Tel +55 61 415-1901 Fax +55 61 415-1237 Web http://www.brasiltelecom.com.br/ Contact: Eduardo Seabra Fagundes, Chairman FIAT: Brazilian Justice Declares Contract Breach With BF -------------------------------------------------------- The Brazilian Justice ruled that Fiat breached a contract it had with BF Transportes. As a result, the Justice ordered Fiat to pay an amount yet to be fixed. In 1991, the two companies signed a contract, with BF agreeing to transport 50% of Fiat's cars assembled in the Betim-based plant (Minas Gerais) and sold in Brazil, Argentina and Uruguay. However, in 1996, Fiat started reducing the activities of BF and in 1999 it terminated the contract. BF, which has invested US$25 million in the acquisition of 110 trucks and 60 heavy trucks to comply with Fiat's demand, claims losses of BRL90 million due to the non-fulfillment of the contract Fiat claims it has never entered a contract with BF. Meanwhile, Fiat is looking to sell its Brazilian arm, Fidis consumer car finance business, as part of its pledge to sell more than EUR2 billion in assets this year to raise cash, reduce debt and cover losses at its car unit. Fiat's main Italian bank creditors have agreed to buy a 51% stake in Fidis if no other buyer comes forward. Fiat is also looking for a partner for its Brazilian financing arm. Banco Fiat SA would be attractive to any of the big Brazilian banks such as Banco Bradesco SA, Banco Itau SA or Uniao de Bancos Brasileiros SA, said Erivelto Rodrigues, director of Austin Asis, a banking consultancy in Sao Paulo. In Brazil, where Fiat is the biggest maker of passenger cars, its financing arm is the largest auto finance company and 26th biggest bank with assets of BRL4.5 billion (US$1.4 billion), according to central bank figures. TELESP CELULAR: Reports Modestly Improved 3Q02 Results ------------------------------------------------------ Telesp Celular Participacoes S.A. ("TCP") (NYSE:TCP) (BOVESPA: TSPP3 (Common), TSPP4 (Preferred)) announced Friday its consolidated results for the third quarter 2002 and a relevant notice on Telesp Celular S.A. migration to PCS. TCP is the holding company that owns 100% of Telesp Celular S.A., the largest cellular operator in Brazil, and indirectly holds 83% of the capital of Global Telecom (49% of the voting capital), the B Band cellular operator in the states of Santa Catarina and Parana. The full earnings release can be downloaded from the IR page on the Company's website (http://www.telespcelular.com.br/). TELESP CELULAR S.A. HIGHLIGHTS -- Market share reached 67%. The client base grew to 5,755 thousand, a 4.2% increase compared to 2Q02, representing a net addition of 234,000 new clients. -- Subscriber Acquisition Cost totaled R$ 93, compared to R$ 99 in 2Q02 and to R$ 135 in 3Q01. -- Capital expenditures in this quarter were of R$ 87 million and totaled R$ 193 million in 9M02. -- Net revenues were of R$ 850.5 million, a decrease of 1.2% compared to 2Q02. -- Average Revenue per User (ARPU) was of R$ 44, compared to R$ 46 in the 2Q02, but higher than the R$ 43 recorded in the same quarter of 2001. -- EBITDA reached a record of R$ 380.2 million, a growth of 7.7% over 2Q02 and a 59.1% increase over 3Q01. -- EBITDA margin increased from 41.0% in 2Q02 and 32.1% in 3Q01 to 44.7% in this quarter, the highest margin since 2Q99. CONFERENCE CALL Date: October 29, 2002 (Tuesday) Time: 11:00 am (Eastern Time) Phone Number: +1 (706) 634-6093 Conference Call ID: 6234657 (or Telesp Celular) RELEVANT NOTICE Additionally, TCP informed in a relevant notice that both its Board of Directors and Telesp Celular's S.A. Extraordinary Shareholders' Meeting approved, on October 24th, the migration of the concession instruments of the Mobile Telecommunication Services (Brazilian SMC) of Telesp Celular S.A. to the regulatory regime of the Personal Communication Services (PCS), through the formalization of the Authorization and Migration Instrument with Anatel -- the Brazilian Communications regulator. CONTACT: Telesp Celular Participacoes, Sao Paulo Investor Relations: Edson Alves Menini, (55 11) 3059-7531 Email: mailto:emenini@telespcelular.com.br USIMINAS: New Orders Halted As Maximum Capacity Reached ------------------------------------------------------- Brazil's flat steel maker, Usiminas won't be accepting any more orders for this year despite operating at full capacity, Business News Americas reports, citing a company spokesperson. "Even working at full capacity, we have already sold everything since the start of October, including exports," said Rinaldo Campos Soares, president of the Belo Horizonte-based steel company. Usiminas hit a new monthly record in September, producing 393,000t of crude steel. The Company is on track to produce a record 4.7Mt this year, 100,000t more than in 2001. The competitive position and strong results stem from the hefty investments of US$3.1 billion injected into Usiminas and Sao Paulo-based flat steel maker Cosipa, which Usiminas controls, throughout the 1990s. The steel maker's capabilities are so advanced that it earns US$3.6 million in technological sales and registers an average of 18 yearly. Other factors contributing to the improvement of the Company's margins are restructuring of operations and consolidation of business units. Just in the past four years, savings from such synergies totaled BRL152 million. Usiminas is now betting on exports to compensate the drop in the domestic demand and to reduce the US dollar valuation impact on its debts, which currently total BRL3.93 billion, 62% of which is tied to the US dollar. Cosipa is also facing debts of up to BRL4.65 billion, 77% of which is tied to the US dollar. Cosipa will register a 335% increase on the exports volume, due to repair of its blast furnace. The subsidiary will export 1.48 million m tons over this year. Usiminas expects to register a 2.2% drop on sales in the domestic market over this year, while Cosipa should register a 5.3% decrease, according to predictions. Usiminas has seen its debt service costs increase due to Brazil's onerous liabilities, as well as the plunging value of the country's currency. Meanwhile, ongoing fears mount about the global economy and the outcome of Brazilian presidential elections later this month. The local currency, the Real, has declined against the dollar by about 40% so far this year. Market players can only guess what will happen to the currency in the coming months, but more depreciation remains a possibility. CONTACT: USIMINAS Rua Prof. Jos, Vieira de MendonOa 3011 Engenheiro Nogueira 31310-260 Belo Horizonte Minas Gerais, Brazil Phone: +55-31-3499-8000 Fax: +55-31-3499-8899 Web http://www.usiminas.com.br USIMINAS: Utilizing Online Transactions to Grow Business -------------------------------------------------------- Belo-Horizonted based flat steel maker Usiminas aims to do 95% of its purchasing online, according to local business newspaper Gazeta Mercantil. "We won't get to 100% of our purchasing by Internet because some items ... require person-to-person negotiation," said Usiminas' IT systems analyst Julio Jose Ferreira. Usiminas undertakes 90% of its procurement via the Internet, with annual online transactions now coming in at BRL1.7 billion (US$449 million). The Usiminas group now has 8,200 registered suppliers in countries such as Japan, German and the US. VARIG: Strikes Deal With Creditors To Renegotiate Debt ------------------------------------------------------ Brazilian airline Viacao Aerea Rio-Grandense SA, which has defaulted on some of its payments due to slumping currency and drop in air travel, agreed with creditors to renegotiate some debts. Varig, Latin America's largest carrier, has a US$900- million debt load. According to Bloomberg, the Company's creditors, including state- controlled oil company Petroleo Brasileiro SA, also agreed to provide financial assistance, helping free up US$118 million. The agreement will provide relief to Varig for a month as it pursues talks for a larger debt agreement, said Varig Chief Executive Arnim Lore at a press conference. Varig, which posted a BRL1.04-billion loss in the first half of this year, is the latest Brazilian company to say it is unable to meet obligations after the national currency weakened almost 40% and consumer demand fell. "Brazil is facing a credit crunch," said Fabio Motta, who manages BRL160 million (US$42.4 million) in Brazilian equities for Sul America Asset Management and doesn't own Varig shares. "In the case of Varig, the situation is worse because the industry is doing badly worldwide. Besides, the Company has dollar debts, revenue in reais and a low occupation of its seats." Among Varig's other creditors are state-controlled Banco do Brasil SA and General Electric Capital Corp. 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 ========= C H I L E ========= ENERSIS: Contacts U.S.-based Firm Regarding Sale Of Two Units ------------------------------------------------------------- Chilean power sector holding company Enersis S.A., which is trying to embark on a divestment plan, contacted U.S. peer PPL Corp. regarding the possible sale of distributor Rio Maipo and power plant Canutillar in Chile's Region X, according to a report in Dow Jones Newswires. Enersis SA is considering selling some of its assets to help ease debts of US$10.8 billion. That sum includes a US$1.4-billionn loan payment to Enersis' parent, Spain's largest power group, Endesa. To see financial statements: http://bankrupt.com/misc/Enersis.pdf CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl =============== C O L O M B I A =============== BANCAFE: Sale May Involve Private Equity Deal --------------------------------------------- Bancafe, one of Colombia's largest banks, is likely to be sold in a process that would involve the participation of private equity through a capitalization process, suggests local financial daily Portafolio. Exactly how much capital Bancafe would need is still unclear. But, according to estimates, the institution would require additional funds similar to that amount injected by Fogafin, Colombia's deposit insurance agency. Fogafin has injected COL250 billion (US$98 million) into Bancafe. Colombian authorities have been seeking to sell Bancafe for more than two years now because of the bank's drain on public finances. CONTACT: BANCAFE Street 28 Not 13 To 15 Bogota District of Colombia Phone: 5600999 EXT. 4338 E-mail: ma.pulido@bancafe.com.co Fax: 336 76 77 Home Page: www.bancafe.com Contact: Pedro Nel Ospina Santamaria, Legal Representative CMS ENERGY: Sells Oil, Gas Assets in Colombia --------------------------------------------- CMS Energy Corporation (NYSE: CMS) announced Friday it has closed the sale of its oil and gas assets in Colombia to Compania Espanola de Petroleos S.A. of Spain (CEPSA) for an undisclosed price. The transaction is part of a previously announced sale of all of CMS Energy's exploration and production business for approximately $232 million. The closing marks the completion of CMS Energy's exit from the oil and gas exploration and production business. Cash proceeds from the sale will be used to continue paying down a $295.8 million revolving credit facility for CMS Energy due March 31, 2003. In September, CMS Energy paid off a $150 million CMS Enterprises term loan due in December 2002. CMS Energy Corporation is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, independent power generation, and energy marketing, services and trading. CONTACT: CMS Energy Corporation Media Contacts: Jeffrey L. Holyfield, +1-517-788-2394 John P. Barnett, +1-713-989-7556 Daniel C. Bishop, +1-517-788-2395 Investment Analyst Contact: +1-517-788-2590 URL: http://www.cmsenergy.com PROELECTRICA: Request For Bankruptcy Protection Approved -------------------------------------------------------- AES Corp.'s Colombian generator Proelectrica request for bankruptcy protection has been accepted, said its general manager Antonio Flores. Proelectrica filed for Law 550 bankruptcy protection, the equivalent of Chapter 11 bankruptcy protection in the U.S., late in September. Colombian utilities regulator Superservicios approved the filing this month, reports Business News Americas. According to Flores, the company's executives have met with the assigned coordinator to work on the restructuring of the company's overdue payments. Despite having no capital loans on its books, proelectrica owes state oil company Ecopetrol some US$5 million for gas purchases, insurance premiums and tax payments. Flores added that it is unlikely that the debt will be paid as Resolution 34 provides that the government can oblige the company to generate even though its costs exceed the generated payment. He added that Resolution 34 has greatly compromised the company's income. In the case of Proelectrica, its production costs average 106 pesos/kWh, but the maximum it can receive under Resolution 34 is 95 pesos/kWh, according to the report. Resolution 34 limits the maximum price for generation, but guerilla attacks on the transmission system made generation priced below the maximum virtually impossible. The government is forced to call on more expensive generators to provide the needed power. Individual generators have filed for the annulment of the resolution, but they admit that the possibility of the resolution being revoked is very slim. The resolution is responsible for substantial losses on the part of the country's generators. According to generators' association Acolgen director Francisco Ochoa, the team who drafted the Resolution 34 would not allow it to be revoke even if they want to because it will allow for the filing of lawsuits against the government. According to Ochoa, the government must come up with a solution soon as there are rumors of putting pressure on Colombia, through trade pacts, which may cause greater damage to the country's economy. Scudder Latin America power investment fund owns 35 percent of Proelectrica, while the rest belongs to AES Corp. Another AES Corp. subsidiary, Termocandelaria, a 300MW thermo plant in Cartagena has run up to bank debts due to Resolution 34., despite winning the "Latin America Merchant Power Deal of the Year" award from Project Finance magazine in 2000. AES is now considering alternatives for Termocandelaria. According to the report, among the options are selling it or handing it over to the banks. CONTACT: AES CORP Investor Relations Kenneth R. Woodcock, 703/522-1315 http://www.investing@aes.com/ ======= C U B A ======= * CUBA May Miss Japan, Mexico Debt Payments ------------------------------------------- Cuba has ignored a US$400 million accord with Mexico and will reschedule a US$750 million debt agreement with private Japanese creditors. According to a report from Reuters, Cuba will have to delay the debt payments scheduled for next year, as it has suffered substantially from a decline in foreign exchange earnings and storm damage. Last year, the Cuban Central Bank reported US$11 billion hard currency debt. Twenty percent of this is owed to Japan's government and private sector. Cuba's tourism industry has been negatively impacted by the September 11 attacks. In August this year, tourist arrival had declined by 12 percent. Adding to the country's woes, Hurricane Michelle in November hit the country and caused up to US$1.8 billion of damage. Cuba has defaulted on billions of debts to other countries since 1997. However, the Japanese raised their hopes on the country after the signing of the agreement in 1998. Cuba is not a member of the International Monetary Fund or any other multilateral lending institution. The country is relying mainly on short-term and medium-term financing. "The majority of Cuban companies are not paying on time. They want to but simply can't. They are renegotiating with everyone," the Havana-based manager of a European bank said. According to the report, Havana is also in arrears with countries such as Spain and Canada that were providing short-term trade credit guarantees, increasing its already high risk status which rating agency Moody's pegs at Caa1, among its worst. =========== M E X I C O =========== GRUPO MEXICO: Asarco Announces Possible Closing of Mission Unit --------------------------------------------------------------- Asarco, Inc., a subsidiary of Grupo Mexico S.A. de C.V., announced today that it is exploring the possibility of closing operations at its Mission unit in southern Arizona by the end of the year. Analysis of the decision will take place during the next weeks. Asarco has notified the work force at the Mission unit of the possibility of such a closure. The measure is being considered due the unit's high costs of operations, the persistence of low copper prices, and as a responsible measure of its corporate discipline. As a result, Asarco expects to raise its earnings before income tax, depreciation and amortization (EBITDA) for the following year to better face its financial and environmental responsibilities. The shut down of the Mission unit would result in a production cut of approximately 50,000 metric tons of copper in concentrates, which is equivalent to approximately 5 percent of Grupo Mexico's overall production. This figure would be in addition to production cuts undertaken previously by other Grupo Mexico mining subsidiaries that will result in 150,000 metric tons of copper in concentrates at the end of this year. Asarco produces copper and other metals and operates as a subsidiary of Americas Mining Corporation (AMC), the mining division of Grupo Mexico, S.A. de C.V. AMC is among the world's largest integrated mining and refining companies and is the third-largest producer of copper. AMC includes Grupo Mexico's interests in Asarco, Inc. (100 percent), Minera Mexico (98.8 percent) and Southern Peru Copper Corp. (54.2 percent). CONTACT: GRUPO MEXICO SA Avenida Baja California 200, Colonia Roma Sur 06760 MＹico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Home Page: http://www.gmexico.com Contacts: Germ n Larrea Mota-Velasco, Chairman and CEO Xavier Garc｡a de Quevedo Topete, President and COO Alfredo Casar PＳez, COO, Ferrocarril Mexicano Daniel Ch vez Carre｢n, COO, Industrial Minera MＹico Daniel Tellechea Salido, VP and Administration and Finance President OR Asarco 2575 E. Camelback Rd., Ste. 500 Phoenix, AZ 85016 Phoenix City Phone: 602-977-6500 Fax: 602-977-6701 Home Page: http://www.asarco.com Contacts: Germ n Larea Mota-Velasco, Chairman and CEO Genaro Larrea Mota-Velasco, President Daniel Tellechea Salido, VP and CFO OR Clay Allen, 602/977-6515 ================================= T R I N I D A D & T O B A G O ================================= BWIA: Government Bail Out Unlikely ---------------------------------- Trinidad and Tobago Prime Minister Patrick Manning said that the government would not come to the financial rescue of BWIA if the airline's stakeholders will not agree to do some sacrifices for the struggling airline, reported The Trinidad Guardian. At a post-Cabinet meeting held Wednesday last week, Manning said that if BWIA's management and employees choose to sit down and allow the airline to go down, the government will have no choice but to let it be. However, Manning does not expect the airline to go down. BWIA will be implementing a restructuring and reorganization plan next Thurday to avoid the possibility of closure. BWIA, led by CEO Conrad Aleong, has already imposed some cost cutting measures like pay cuts to help the airline. It has also ask its employees to agree to some concessions to help the airline survive. The airline also plans to ask some US$13 million bailout fund from the government. However, the country's Minister of Trade Ken Valley believes that the country needs an airline, but not necessarily BWIA. Valley mentioned that Barbados, which does not have a national airline, has developed a healthy tourism industry. Like Manning, Valley said that the government may help BWIA if they see that BWIA's people are working to help save the embattled airline. On the question of BWIA's plea for government support, Valley said that he doubts the population would want to shoulder BWIA again, saying BWIA used to cost the Government $100 million per annum. CONTACT: British West Indies Airways Phone: + 868 627 2942 E-mail: mailto:mail@bwee.com Home Page: http://www.bwee.com/ Contacts: Conrad Aleong, President and CEO (Trinidad) Beatrix Carrington, VP Marketing and Sales (Barbados) Paul Schutz, CFO (Trinidad) ============= U R U G U A Y ============= BANCO COMERCIAL: Government Delays Closure ------------------------------------------ The government of Uruguay has postponed the closure of the country's biggest non-government lender, Banco Comercial SA to review proposals to save the bank. Three other banks share Banco Comercial's situation: Banco de Montevideo SA, Banco la Caja Obrera SA and Banco de Credito SA. These four banks, which are all insolvent, have been forbidden to do banking transactions since August after a weeklong shutdown of the entire financial system and run on deposits, reports Bloomberg. A report on the banks, prepared by ING Bank NV, which serves as consultant on the banks, will be reviewed to determine the possibility of saving them. The closure of these banks is part of the requirements under the terms of the US$3.8 billion credit line the country obtained from the International Monetary Fund, World Bank and Inter-American Development Bank in August. CONTACT: BANCO COMERCIAL Cerrito No. 400, 11100 Montevideo Phone: 960-394/97 Fax: 963-569 Home Page: www.bancocomercial.com.uy/ BANCO DE MONTEVIDEO Misiones 1399 - Montevideo Fax: 9162880 E-mail: info@bm.com.uy Home Page: http://www.bancomontevideo.com.uy Contact: Sr. Marcelo Pestarino, President ================= V E N E Z U E L A ================= AES CORP.: Recoups 40% of Venezuelan Unit Purchase Price -------------------------------------------------------- U.S. company AES Corp. has recovered at least 40 percent of the purchase price of its Venezuelan Unit since its takeover in 2000. Bloomberg quoted CA Electricidad de Caracas spokesman Juan Azpurua saying AES has received US$525 million in dividends since its acquisition of the company for US$1.6 billion. Azpurua added that AES also collected US$130.6 million from sales of Electricidad de Caracas, under its share repurchase program after the takeover. The dividend payments was seen to defray the extra cost of Electricidad de Caracas' purchase price as AES was forced to increase its initial offer after a struggle for control over the Venezuelan company. After AES's takeover, most of Electricidad de Caracas' overseas assets were sold, and operations were concentrated at a local level. CONTACT: AES CORP Investor Relations Kenneth R. Woodcock, 703/522-1315 www.investing@aes.com UNITED AIRLINES: Closing Two LatAm Stations Early Next Year ----------------------------------------------------------- Implementing its updated business plan, submitted to the Air Transportation Stabilization Board (ATSB) just recently, United Airlines announced last week's second round of cost-cutting measures that are expected to improve profitability by approximately $120 million annually. In response to current market conditions, the carrier will be closing four international stations and better matching capacity with demand by shifting to smaller aircraft in several markets. In combination, the U.S. domestic and international cost-cutting initiatives announced this week are expected to improve the carrier's profitability by approximately $220 million annually. Beginning Jan. 7, 2003, United will close stations in Caracas, Venezuela; Santiago, Chile; and Dusseldorf, Germany. On January 22, 2003, United will close its station in Milan, Italy. The closings will affect 69 employees in Caracas, 110 in Santiago, 46 in Milan and four in Dusseldorf. The last flights will depart Dusseldorf, Caracas and Santiago on January 6, 2003, and will depart Milan on January 21, 2003. Customers already booked for travel beyond the last date of service will be offered reaccommodation on other carriers. "Closing a station is always an extremely difficult decision to make, but given the unprecedented challenges the global airline industry faces, these closings are an essential and prudent course of action," said Glenn Tilton, United's chairman, president and chief executive officer. "These measures are unfortunately necessary given the continued deterioration of profitability in these four international markets. We regret the necessity of making these decisions because of the impact it will have on our customers, employees, their families and their countries," Tilton continued. "United will work closely with employees affected by these measures. Our goal is to be as helpful as we can be during this extremely difficult time for everyone," said Tilton. "These cuts come as a result of careful analysis of the stations' profitability for the last several years," said Graham Atkinson, United's senior vice president - International. "Results from all four cities fall well below United's profitability hurdles." While the company regrets last week's announcement, it remains strongly committed to its customers in the European and Latin America regions. United will continue to serve the needs of its customers to these affected locations in Europe and Latin America through its Star Alliance partners, Lufthansa and Varig. In addition, the company will also better match capacity to demand by down gauging the equipment it uses in several markets. The company will fly Boeing 767 aircraft instead of Boeing 777 aircraft in the Paris-Washington Dulles, Paris-San Francisco and Miami-Buenos Aires markets. United will also replace Boeing 747s with Boeing 777s on the flowing routes: Osaka-San Francisco, United's second Seoul-Tokyo flight and the carrier's second daily Tokyo-Chicago flight. These down gauges allow the company to more efficiently operate these flights by using equipment that adequately meets the demand. CONTACT: UNITED AIRLINES 1200 E. Algonquin Rd. Elk Grove Township, IL 60007 Phone: 847-700-4000 Fax: 847-700-4081 URL: http://www.united.com Contacts: Glenn F. Tilton, Chairman, President, and CEO Frederic F. (Jake) Brace, EVP and CFO *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Ma. Cristina Canson, Editors. Copyright 2002. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *