/raid1/www/Hosts/bankrupt/TCRLA_Public/021121.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, November 21, 2002, Vol. 3, Issue 231
Headlines
A R G E N T I N A
AHOLD: LatAm Units Pull Down 3Q02 Earnings
ARGENTINE UTILITIES: Presidential Decree May Increase Rates
BANCO FRANCES: Net Loss Balloons To ARS289.89 Million In 2Q02
TELECOM ARGENTINA: Lures New Chairman from Banco Rio
B E R M U D A
ALPHASTAR INSURANCE: 3Q02 Net Loss Triples Under Big Write Offs
MUTUAL RISK: U.S. Units May Fail To Pay North Carolina Workers
TYCO INTERNATIONAL: No Plans To Take Back Kozlowski Donation
B R A Z I L
AES CORP.: Waives Early Tender Date To Encourage Participation
BCP: 3Q02 Loss Quadruples 3Q01, Growth Flat
CEMIG: Resolves Debt Issues With Minas Gerais State
CSN/MRS/VICUNHA: Fitch Places Ratings On Watch Negative
KLABIN: S&P Raises Rating to 'CCC+'
TELEMAR: Brazilian Justice Rejects Bankruptcy Plea
C O L O M B I A
SEVEN SEAS: 3Q02 Loss Swells, Amex Listing In Question
* Colombia Outlines New Goals To Get IMF Loan
J A M A I C A
AIR JAMAICA: Statement From Transport And Works Minister
M E X I C O
BITAL: Seeking Shareholder Approval On $600M Capital Increase
GRUPO ELEKTRA: Seeks Additional Time to Address Elektra Queries
P A N A M A
BLADEX: Shareholders Approve Increase in Authorized Capital
P E R U
EDEGEL: Officially Anounces $150 Million Debenture Issue
- - - - - - - - - -
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A R G E N T I N A
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AHOLD: LatAm Units Pull Down 3Q02 Earnings
------------------------------------------
Ahold, the international food retailer and foodservice operator,
announced Tuesday third-quarter 2002(1) net earnings of Euro
257.6 million (2001: Euro 304.2 million). Earnings were below
last year's numbers primarily due to higher goodwill
amortization, higher financial expenses, higher income taxes and
unfavorable currency differences.
Due to continuing difficult trading conditions in most markets,
South America in particular, as well as higher financial expenses
and a substantially increased average tax rate, the outlook for
full-year 2002 earnings per share growth, excluding goodwill
amortization, exceptional items and currency impact, was
significantly lowered from plus 5-8% to negative 6-8%.
Ahold launched an aggressive company-wide initiative focused on
organic growth, cost reduction, capital efficiency and portfolio
review for the 2003-2005 plan period. The initiative is intended
to substantially improve Ahold's competitiveness and financial
performance. The objective is to generate free cash flow and
reduce debt.
REMARKS BY CEES VAN DER HOEVEN, AHOLD PRESIDENT & CEO
'Our core businesses delivered good operating results in tough
trading conditions,' said Ahold President & CEO Cees van der
Hoeven. 'The third-quarter results were, however, significantly
impacted by a number of non-operating items such as taxation and
financial expenses. In many ways, 2002 has not been our lucky
year. We have had several disappointments coming from different
directions, most particularly South America. Adding up the impact
of the extremely difficult trading conditions, the huge impact of
currency devaluations, the severe effect of the default of our
former Argentine partner, Velox, the impact on financial expenses
and the average tax rate, one can say that South America explains
most of it. Ahold's performance in almost all key markets is very
solid in the current environment. It is therefore extra painful
that we have had to announce a second revision to the 2002
outlook. We feel invigorated by the new strategic plan that will
focus the company on the growth of its core businesses and lead
to significant debt reduction.'
Sales and earnings for the third quarter were negatively impacted
by lower average exchange rates of mainly the following
currencies:
Average 3Q rates 2002 2001
U.S. Dollar (USD) 1.02 1.11
Brazilian Real (BRL) 0.32 0.43
Argentine Peso (ARS) 0.28 1.11
(1) 12 weeks from July 15 through October 6, 2002
Consolidated sales rose 5.8% to Euro 16.4 billion (+14.5%
excluding currency impact) mainly due to the inclusion of Alliant
and Bruno's Supermarkets. Organic sales growth amounted to 1.5%
(2001: 6.4%). Operating earnings were Euro 756.2 million,
representing an increase of 13.3% (+24.0% excluding currency
impact).
Net earnings amounted to Euro 257.6 million, a decrease of Euro
46.6 million compared to last year mainly due to the following:
-- Higher amortization of goodwill as a consequence of the
acquisition of Alliant and Bruno's Supermarkets in December
2001;
-- Higher net financial expense partly due to devaluation and
inflation adjustment losses in Argentina, related to
third-party U.S. Dollar and Argentine Peso debt, and
acquisition-related debt assumed;
-- Higher income taxes as a result of a change in the country
mix of earnings;
-- A currency impact of especially the lower U.S. Dollar.
Earnings to common shareholders excluding goodwill amortization
and exceptional items amounted to Euro 318.3 million or Euro 0.34
per average common share (-4.5% excluding currency impact).
In the United States, retail sales rose both organically and as a
result of the consolidation of Bruno's that took effect in
December 2001. Organic retail sales growth amounted to 3.4%
(2001: 7.0%). Comparable retail sales growth was 0.6% (2001:
3.8%) and identical retail sales declined 0.2% (2001: increase of
3.4%).
Operating earnings rose as a result of strong improvements at
most operating companies, supported by increased synergies,
effective margin management and cost control. In particular,
performance at Stop & Shop, Giant (Landover) and Giant (Carlisle)
was strong, offset to a limited degree by BI-LO. Internet grocer
Peapod reduced its operating loss to USD 7.4 million (2001: loss
of USD 11.1 million).
Results on tangible fixed assets mainly related to a sale and
leaseback transaction at Giant (Landover).
In the United States, foodservice sales grew mainly due to the
consolidation of Alliant with effect from December 2001. Organic
foodservice sales declined by 6.1% (2001: increase of 9.0%). The
company shed unprofitable business that was part of the Alliant
portfolio, closed unprofitable operations and rationalized
distribution. U.S. Foodservice expects to complete its planned
24-month operational integration of Alliant in 15 months.
Foodservice operating earnings in the United States were
significantly higher, primarily as a result of the consolidation
of Alliant, purchasing synergies and cost reductions. Results at
U.S. Foodservice, excluding Alliant, were strong due to effective
streamlining of the business. The combination of the voluntary
exit of the unprofitable business and the stepped-up transition
activities has resulted in almost a doubling of operating
earnings.
In Europe, organic sales growth, excluding currency impact,
amounted to 4.8% (2001: 6.3%). In particular Albert Heijn,
Schuitema, ICA Ahold and Central Europe contributed to the sales
rise.
Operating earnings at Albert Heijn, Schuitema and ICA Ahold
showed good improvements. Operating earnings in Spain were higher
than in the previous quarter but lower than last year, mostly as
a result of increased integration costs. In Central Europe,
operating earnings in the Czech Republic improved compared to
last year. Higher operating expenses were incurred due to the
entry into the Slovakian market. Operations in Poland are still
loss making.
In Latin America, sales in Euros were significantly lower as a
result of the devaluation of several currencies, mainly the
Argentine Peso and the Brazilian Real, as well as the
deconsolidation of La Fragua. Organic sales growth, excluding
currency impact, amounted to 6.0% (2001: minus 1.3%). Sales at
Disco in Argentina in local currency were higher, partly as a
result of strongly increased inflation. In Brazil, sales in local
currency were higher mainly due to the acquisition of G. Barbosa
in January of this year. In local currencies, Santa Isabel in
Chile, Peru and Paraguay generated sales at the same level as
last year.
Operating earnings in South America were heavily impacted by
currency devaluations and difficult trading circumstances.
Operating earnings in local currency in Brazil were slightly
higher than last year and include the acquisition of G. Barbosa.
Operating earnings in local currency at Disco in Argentina were
substantially below last year, whereas Santa Isabel in Chile
recorded an operating loss.
In Central America - Guatemala, Costa Rica, Honduras, Nicaragua
and El Salvador - the joint venture Paiz Ahold, owner of La
Fragua, formed a new regional joint venture with CSU named
CARHCO, effective January 1, 2002. Since that date, La Fragua has
been deconsolidated. CARHCO's results are reported as income from
unconsolidated subsidiaries and affiliates. Sales in the third
quarter amounted to Euro 371.9 million. Organic sales growth
amounted to 17.1%.
Operating earnings in the third quarter in Central America
increased to Euro 15.8 million (2001: Euro 8.5 million), mainly
attributable to the formation of the new joint venture. The net
income from CARHCO, reported as income from unconsolidated
subsidiaries and affiliates, amounted to Euro 0.9 million.
In Asia, sales rose 16.8% to Euro 109 million. In local
currencies, sales in Thailand and Indonesia were higher than last
year. Sales in Malaysia were below last year. Organic sales
growth, excluding currency impact, amounted to 21.7%, mainly as a
result of new store openings.
Operating losses in Asia amounted to Euro 4.9 million (2001: loss
of Euro 4.1 million). Corporate costs amounted to Euro 14.5
million (2001: Euro 11.7 million).
Net interest expense increased to Euro 223.5 million (2001: Euro
216.5 million) caused by the consolidation of new debt related to
acquisitions, the purchase of additional shares in Disco Ahold
International Holdings and an increase of cash dividends paid.
This was partly offset by a favorable currency impact, especially
of the U.S. Dollar.
Financing currency differences were unfavorable compared to last
year, partly due to the inclusion of devaluation losses in
Argentina on third-party U.S. Dollar debt (Euro 6.1 million) as
well as inflation adjustment losses on third-party Argentine Peso
debt (Euro 6.0 million).
The rolling interest coverage ratio improved to 3.4 (2001: 3.3).
The rolling ratio of net interest-bearing debt to EBITDA improved
to 2.5 (2001: 2.6).
Tax rate
The tax rate, expressed as a percentage of taxable earnings
adjusted for exceptional charges and goodwill amortization, was
33.4% (2001: 25.6%). A significant change in the composition of
taxable earnings caused the very considerable increase of the tax
rate. Higher earnings in the U.S. and higher losses before tax in
South America, for which no tax asset was taken into account,
were the main cause of this development.
Income from unconsolidated subsidiaries and affiliates
Income from unconsolidated subsidiaries amounted to a net profit
of Euro 7.1 million compared to a net profit of Euro 7.9 million
last year.
The results of unconsolidated subsidiaries at ICA are below last
year, mainly due to the inclusion of the losses at ICA Banken,
ICA Ahold's financial services operation, which was
deconsolidated effective December 2001.
Minority interests increased from Euro 28.0 million in 2001 to
Euro 35.2 million this year. This is mainly caused by the
following factors:
-- Earnings at ICA Ahold in Scandinavia and Jeronimo Martins in
Portugal increased, but were partly off-set by higher losses
at Santa Isabel in Chile;
-- The purchase of the remaining shares in Peapod in August 2001
brought the minority shareholders' portion of losses at
Peapod
to an end;
-- With effect from year-end 2001, no minority interest for the
net losses at Disco Ahold International Holdings has been
included.
Cash flow statement
Cash flow from operating activities amounted to Euro 300.0
million (2001: Euro 570.6 million). Cash flow from operating
activities was lower than last year primarily due to higher
investments in working capital (Euro 395.1 million compared to
Euro 180.6 million last year). Especially timing differences
related to the collection of vendor allowances contributed to
this development.
Investments in tangible and intangible fixed assets amounted to
Euro 526.9 million (2001: Euro 674.7 million). Divestments of
tangible and intangible fixed assets amounted to Euro 234.1
million (2001: Euro 54.9 million) mainly related to sale and
leaseback transactions in the U.S. and Europe. Depreciation and
amortization amounted to Euro 424.6 million (2001: Euro 393.9
million). The ratio of investments in tangible and intangible
fixed assets in relation to depreciation and amortization was 1.2
(2001: 1.7). The cash outflow related to acquisitions of Euro
618.8 million was mainly used to purchase the remaining shares in
Disco Ahold International Holdings as well as for smaller
acquisitions. Financing took place largely from cash balances.
Group equity
Group equity, expressed as a percentage of the balance sheet
total, amounted to 18.9% (at year-end 2001: 20.4%). Capital
accounts amounted to 22.4% of the balance sheet total.
Shareholders' equity was Euro 4.9 billion. In the third quarter
of 2002, net earnings after deduction of the dividend on
cumulative preferred financing shares were added to shareholders'
equity. The cash portion of interim dividend on common shares was
deducted from shareholders' equity. Goodwill adjustments related
to unused provisions for acquisitions prior to November 2000 were
added back to equity. Goodwill related to acquisitions through
November 2000 was charged to shareholders' equity. Goodwill
related to acquisitions after November 2000 was capitalized.
US GAAP reconciliation
Under US GAAP, third quarter net earnings amounted to Euro 302.1
million (2001: net earnings of Euro 199.2 million). In
particular, lower goodwill amortization related to the adoption
on December 31, 2001, of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets ("SFAS
142"), contributed to higher net earnings under US GAAP than
according to Dutch GAAP. This was partly offset by gains related
to sale and operating leaseback transactions, recognized as
income according to Dutch GAAP, but amortized over the remaining
period of the lease contract under US GAAP.
Goodwill impairment
On December 31, 2001, Ahold discontinued amortizing goodwill
under US GAAP. Ahold is required to test all goodwill for
impairment by the end of 2002 under US GAAP. In the second
quarter, an exceptional charge of Euro 430 million was booked
mainly related to the default of former Argentine partner, Velox.
By the end of 2002, the impairment test on the remaining goodwill
under US GAAP will be finalized and it is expected that this will
lead to further goodwill impairment charges in the range of Euro
800 to Euro 900 million.
Under Dutch GAAP, Ahold is also required to test capitalized
goodwill for impairment. Goodwill related to acquisitions through
November 2000 was charged to shareholders' equity. Goodwill
related to acquisitions after November 2000 was capitalized. The
goodwill that was capitalized is amortized over a period of
maximum 20 years and is subject to an annual impairment test. In
the second quarter, an exceptional charge of Euro 490 million was
booked consisting of Euro 410 million related to the default of
Velox, and Euro 80 million related to a goodwill impairment
charge in Argentina. By the end of 2002 the impairment test on
all capitalized goodwill will be finalized and it is expected
that this will lead to further goodwill impairment charges in the
range of Euro 50 to Euro 100 million.
Revised outlook for full-year 2002
Ahold is revising downwards its full-year projected earnings per
share target. The trading conditions, particularly in South
America, continue to be difficult. Also the impact on financial
expenses as a result of the default of Velox, the substantially
increased average tax rate and fixed asset impairments in
specific markets contribute to this revision. The company now
anticipates its earnings per share target for 2002, including
real estate gains of Euro 100-110 million, but excluding goodwill
amortization, exceptional items and currency impact, at negative
6-8%, down from the target announced in July of this year of plus
5 - 8%.
Accounting principles
Ahold's accounting principles are unchanged compared to the
accounting principles as stated in the Ahold 2001 Annual Report.
The data included in this press release are not audited.
At present Dutch GAAP has already adopted the principles of
various IAS/IFRS standards or allows the application of certain
US GAAP standards such as SFAS 87 relating to accounting for
pensions. Ahold will implement SFAS 87 for pension accounting
before year-end 2002.
In order to better address the demands of today's markets, Ahold
will implement IAS/IFRS standards fully with effect from fiscal
year 2004.
Ahold initiative to strengthen core business
Ahold is launching a three-year company-wide initiative with four
main priorities: organic sales growth, cost reduction, capital
efficiency and portfolio review. The objective is to focus on our
core food businesses with a balanced portfolio and a solid
financial position. The ambition is to grow faster than the
market, but at the same time to generate substantial free cash
flow in order to significantly reduce debt.
To achieve its mission, and in response to difficult trading
conditions worldwide and weak economic forecasts for the
foreseeable future, Ahold is setting aggressive new goals.
Internal targets are being established throughout the
organization with specific focus on improvements in free cash
flow, reductions in capital expenditure, working capital and
operating costs. These targets are an acceleration of the
company's 'Economic Value Added' (EVA) program initiated in 2001.
The company announced that it will also focus on its core
businesses and strengthen positions in leading markets. All non-
core businesses will be divested, either in whole or in part.
Consistently under-performing core businesses will be rigorously
scrutinized with a view to significantly improve performance or
consider divestment. Smaller acquisitions that will strengthen
Ahold's core businesses and improve returns are still possible,
but will be financed from internally generated funds.
The company announced a one-time performance share grant program
to ensure the retention and motivation of key contributors,
alignment with shareholders' interests and a long-term focus. The
objective is to outperform a peer group of world-class
competitors by up to 50% over a three-year period. Performance
will be measured in terms of total shareholder returns in line
with market best practice. A maximum number of 9 million shares
can be granted to approximately 1,500 associates by year-end
2005. The shares will be bought on the open market. No allocation
takes place in case of average or less than average performance.
Preliminary outlook 2003 reconfirmed
Ahold reconfirms the preliminary outlook for 2003 as announced
August 29, when the company issued its half-year 2002 earnings
statement. More details will follow on March 5, 2003, the date of
Ahold's full-year 2002 earnings statement.
To see financial statements: http://bankrupt.com/misc/Ahold.htm
CONTACT: Royal Ahold
Investor Relations:
Huibert Wurfbain, 011-31-75-659-5813
or
Media Relations:
Annemiek Louwers, 011-31-75-659-5720
or
Taylor Rafferty New York
Media Relations:
Ethan Sack, 212/889-4350
or
Taylor Rafferty London
Media Relations:
Matthew Nardella, + 44 20 7936 0400
ARGENTINE UTILITIES: Presidential Decree May Increase Rates
-----------------------------------------------------------
A government source told Reuters that the government has
decided to increase utilities rates after an Argentine court
issued a ban on public hearings on the increase of the said
rates.
Struggling utility companies welcome the news as rates have been
frozen at the January 2002 levels, while the local currency has
lost about 70 percent of its value. The sharp devaluation forced
a number of utility companies into critical default.
However, consumer rights groups say that they will contest any
presidential decree made to increase utility rates in court,
adding that such decrees would be "clearly unconstitutional".
Some presidential decrees are known to have been defeated in
court proceedings.
The country's Economy Minister Roberto Lavagna said the average
utility rate increase should be 10 percent, however, the
government may be planning to include some special exemptions for
poor families, making the actual percentage of increase hazier.
Despite the looming objection to the decree, investor confidence
went up as Reuters reported a 10 percent increase of Metrogas
shares, now up to ARS0.62, while Telecom Argentina shares went up
5 percent to ARS1.26 in the trading last Tuesday.
Utility firms in Argentina include Spain's Telefonica TEF.MC ,
Telecom Italia TIT.MI , France Telecom FTE.PA , Electricite de
France and Britain's BG Group Plc BG.L .
CONTACT: ELECTRICITE DE FRANCE (EDF)
Rue Louis-Murat
75384 Paris Cedex 08,
France
Phone: +33-1-40-42-54-30
Fax: +33-1-40-42-79-40
Home Page: http://www.edf.fr
Contact:
Francois Roussely, Chairman and CEO
Yannick d'Escatha, COO, Industry Branch
Jacques Chauvin, Chief Financial Officer
TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM)
Alicia Moreau de Justo 50, 10th Floor
Capital Federal (1107) Rep·blica Argentina
Phone: +54 11 4968 4000
Home Page: http://www.telecom.com.ar
Contacts:
Alberto J. Ricciardi, Chief Financial Officer
Elvira Lazzati, Finance Director
Pedro Insussarry, Investor Relations Manager
Phone: (5411) 4968-3626/3627
Fax: (5411) 4313-5842/3109
Email: inversores@intersrv.telecom.com.ar
TELECOM ITALIA
Registered Office:
Piazza degli Affari n. 2
20123 Milano
General Management and Secondary Office:
Corso d'Italia 41
00198 Roma
Phone: 0636881
Fax: 0636882965
Home Page: http://www.telecomitalia.it
Contacts:
Investor Relations:
Phone: +39 06 36882381
+39 06 36883378
+39 06 36882119
TELEFONICA DE ARGENTINA
Tucuman 1, 18th Floor, 1049
Buenos Aires, Argentina
Phone: (212) 688-6840
Home Page: http://www.telefonica.com.ar
Contacts:
Carlos Fernandez-Prida Mendez Nunez, Chairman
Paul Burton Savoldelli, Vice Chairman
Fernando Raul Borio, Secretary
BANCO FRANCES: Net Loss Balloons To ARS289.89 Million In 2Q02
-------------------------------------------------------------
In a late presentation of its second-quarter figures, Banco
Frances revealed a widening net loss. The bank issued the
official numbers in compliance with Argentine Central Bank
regulations aimed at helping the sector during a year of economic
crisis.
Banco Frances, one of Argentina's banks hard hit this year by the
worst economic and financial crisis seen in decades, posted a net
loss of ARS289.89 million for the second quarter of 2002 ended
June 30, says Dow Jones.
The bank, which is owned by Spain's BBVA, posted a net income
gain of ARS109.95 million in the second quarter of 2001. In the
first quarter of 2002, the bank posted a net income loss of
ARS37.56 million. Net loss per share was ARS1.38 in the second
quarter compared to net income per share of ARS0.52 a year
earlier.
Banco Frances, in its earnings statement, attributed the heavy
second-quarter loss mainly to three factors.
First: In the second quarter, the bank set aside an ARS222.2
million provision for loan losses due to the economic collapse.
In the second quarter of 2001, just ARS81.7 million was set aside
for such losses.
Second: The setting aside of ARS138.4 million to allow the bank
to pay clients who successfully appeal against the partial
banking freeze and win the right to have their dollar deposits
returned to them in pesos at the free exchange rate, which is
currently around ARS3.60 per dollar.
Third: All Argentine banks had to hike interest-rates they were
offering on savings accounts to attract back former clients'
deposits and stay liquid.
The bank said, however, its second quarter operating income was
ARS123.57, excluding the higher loan provisions.
Banco Frances also said it held total deposits of ARS7.2 billion
at the end of the second quarter, as against ARS8.08 billion at
the close of the first quarter.
The bank said it would cover the losses this year through equity
injections that will strengthen its capital base. BBVA has
already committed to capitalize US$130 million of the bank's debt
on top of a US$79.3 million it gave the bank in April, the
statement said.
It also said it would continue to cut expenses, continuing branch
closures that have seen 40 branches merged and 430 people laid
off since March.
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
TELECOM ARGENTINA: Lures New Chairman from Banco Rio
----------------------------------------------------
Amadeo Vazquez, the former vice chairman at local bank Banco Rio
and board member of BBVA Banco Frances, is now Telecom
Argentina's new chairman, reports Business News Americas. Mr.
Vazques, who replaces Juan Carlos Masjoan, faces a difficult task
of steering the second-biggest telco in Argentina back to
financial health amid tough economic environment.
Telecom halted interest and principal payments on its US$3.2-
billion debt earlier this year after the devaluation of the peso
in January. Debt restructuring talks are expected to begin as
soon as the Company obtains a new rates regime from the
government.
The Company, which is 54.7% owned by Telecom Italia Spa and
France Telecom SA through the holding company Nortel Inversora
SA, lost ARS4.15 billion in the first nine months of this year as
a result of the devaluation. That compares to a ARS142-million
gain in the same period last year.
CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA (TELECOM)
Alicia Moreau de Justo 50, 10th Floor
Capital Federal (1107) Repoblica Argentina
Phone: +54 11 4968 4000
Home Page: http://www.telecom.com.ar
Contacts:
Alberto J. Ricciardi, Chief Financial Officer
Elvira Lazzati, Finance Director
Pedro Insussarry, Investor Relations Manager
Phone: (5411) 4968-3626/3627
Fax: (5411) 4313-5842/3109
Email: inversores@intersrv.telecom.com
=============
B E R M U D A
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ALPHASTAR INSURANCE: 3Q02 Net Loss Triples Under Big Write Offs
---------------------------------------------------------------
AlphaStar Insurance Group Limited (Nasdaq: ASIG) reported results
for the third quarter ended September 30, 2002. The Company
reported a net loss from all operations of $15.2 million for the
third quarter, compared to a net loss from all operations of $5.9
million for the same period in 2001. Net loss from all operations
was $22.2 million for the first nine months of 2002, compared to
a net loss from all operations of $10.1 million for the same
period in 2001. On a per-share basis, the diluted net loss was
$1.60 for the third quarter ended September 30, 2002, compared
with diluted net loss per share of $0.61 for the corresponding
quarter of 2001. Diluted net loss per share from all operations
was $2.33 for the first nine months of 2002, compared with
diluted net loss per share from all operations of $1.06 for the
corresponding period of 2001.
The Company reported a net loss from continuing operations of
$14.6 million for the third quarter, compared to a net loss from
continuing operations of $2.5 million for the same period in
2001. Net loss from continuing operations was $25.1 million for
the first nine months of 2002, compared to a net loss from
continuing operations of $5.2 million for the same period in
2001. The Company reported a diluted net loss from continuing
operations of $1.53 per share for the third quarter and $2.63 for
the first nine months of 2002, compared with diluted net loss per
share from continuing operations of $0.26 and $0.55 for the
corresponding periods of 2001.
The results for the quarter reflected an underwriting loss in the
insurance segment of approximately $4.0 million, due to write-
offs of bad debts, higher loss and expense ratios caused by less
than expected written premiums, and increased losses attributable
in part to previously discontinued programs. The reduced written
premium was the result, in part, of the continuing effects of the
downgrading last spring of the Company's New York-domiciled
insurance subsidiary. The program business segment suffered
increased losses for the quarter, primarily due to a further
charge of $2.0 million for estimated costs that the Company
projects it may become liable for in connection with its
indemnification of its major issuing company for losses in excess
of a specific loss ratio on business produced by the program
business segment. The continuation of losses for the quarter and
for the nine months ended September 30, 2002 resulted in a re-
evaluation by the Company of the recoverability of its intangible
assets of goodwill and deferred taxes. Accordingly, during the
quarter, the Company wrote off its remaining goodwill of
approximately $1.0 million, as well as deferred taxes in the
amount of approximately $5.6 million. The Company also continued
to incur significant costs arising from reinsurance related
disputes in which the Company and others are involved, including
certain litigation in London, and the adverse effects of such
disputes on the Company's brokerage segment.
These disputes, as well as the Company's continuing operating
losses, have severely depleted the Company's cash resources.
These factors, as well as diminished prospects for future
profitability in the program and insurance segments, have led the
Company to conclude that it must implement alternative strategies
to ensure sufficient capital for the continuing financial
viability of the Company and to preserve shareholder value. As a
result, management is actively exploring various courses of
action, including the raising of additional capital, the
potential sale of one or more subsidiaries of the Company, the
restructuring or elimination of certain of its operations, the
reduction of ongoing expenses through normal attrition,
reductions in personnel and the potential reduction or
elimination of the considerable costs attendant to the Company's
continuing status as a publicly-traded company reporting to the
Securities and Exchange Commission.
For the quarter ended September 30, 2002, total revenues from
continuing operations were $10.0 million, a decrease of $2.7
million from $12.7 million in the third quarter of 2001. For the
nine months ended September 30, 2002, total revenues from
continuing operations were $32.2 million, a decrease of $3.8
million from $36.0 million in the same period of 2001. The
decline in revenues from continuing operations in 2002 reflected
capacity shortage and margin contraction in the brokerage and
program business segments. This decline was partially offset by
increased net premiums earned in the insurance segment as that
segment retained more business by reducing the amount of
reinsurance purchased for its programs.
Insurance revenues earned by the Company's U.S.-based insurance
carrier were $6.4 million in the third quarter of 2002 and $21.1
million in the first nine months of 2002, compared to $8.0
million for the third quarter last year and $20.1 million in the
first nine months of 2001.
The Company's program business revenues were $3.1 million in the
third quarter, compared to $3.4 million in the third quarter of
2001. Program business revenues were $9.2 million in the first
nine months of 2002, compared to $9.7 million in the same period
of 2001. This decrease was due to a reduction in program business
volume due to the imposition of more selective underwriting
guidelines on continuing programs.
Brokerage revenues were $0.3 million in the third quarter,
compared to $1.1 million in the third quarter of 2001. The
segment has been adversely affected by the disruption caused by
widespread reinsurance market disputes and legal proceedings,
including those involving the Company.
For the quarter ended September 30, 2002, total expenses from
continuing operations, including insurance costs, were $19.0
million, compared to $15.6 million in the same period of 2001.
For the nine months ended September 30, 2002, total expenses from
continuing operations, including insurance costs, were $52.1
million, compared to $42.2 million in the same period of 2001.
Insurance costs increased to $7.8 million in the third quarter of
2002, compared to $6.9 million in the third quarter of 2001.
Insurance costs increased to $21.6 million in the first nine
months of 2002, compared to $16.9 million in the first nine
months of 2001. The increase in insurance costs was primarily due
to increased underwriting losses in the Company's U.S.-based
insurance carrier.
For the quarter ended September 30, 2002, operating expenses
increased to $11.2 million from $8.7 million in 2001. For the
nine months ended September 30, 2002, operating expenses
increased to $30.4 million from $25.2 million in 2001. This
increase in expenses from continuing operations is partially due
a further charge of $2.0 million in the third quarter and $6.0
million in the nine months ended September 30, 2002 for estimated
costs that the Company projects it will pay in connection with
its indemnification of its major issuing company for losses in
excess of a specific loss ratio on business produced by the
program business segment during 2000 and 2001. In addition, the
increased expenses were partly due to write off of remaining
goodwill of approximately $1.0 million. These charges were
partially mitigated by the effects of the restructuring program
begun in 1999, together with a general reduction in
administrative costs as a result of reduced business volume. In
addition, expenses from continuing operations continued to be
impacted by costs and provisions pertaining to reinsurance-
related disputes in which the Company is involved, including
certain litigation.
The income from discontinued operations for the nine months ended
September 30, 2002 is primarily due to the sale of its wholly
owned reinsurance segment, which resulted in the elimination of
$4.8 million of accumulated deficit in the second quarter.
AlphaStar Insurance Group Limited is a Bermuda holding company
incorporated on December 12, 1995, which, through its
subsidiaries, provides insurance services and products. The
Company provides its range of services and products to insurance
and reinsurance companies, insurance agents, and insureds. The
Company is involved primarily in the workers' compensation,
occupational accident and health and property/casualty insurance
markets through its subsidiaries located in the United States,
Bermuda and London. Effective September 10, 2002, the Company
changed its name from Stirling Cooke Brown Holdings Limited to
AlphaStar Insurance Group Limited in order to enable the Company
and its subsidiaries to reflect the extensive re-engineering that
has been implemented throughout the organization.
AlphaStar Insurance Group Limited Ordinary Shares are quoted on
the NASDAQ market under the symbol "ASIG."
To see financial statements:
http://bankrupt.com/misc/Alphastar.htm
MUTUAL RISK: U.S. Units May Fail To Pay North Carolina Workers
--------------------------------------------------------------
Bermuda insurer Mutual Risk Management's US companies û Legion
and Villanova û may leave a number of North Carolina workers
short on compensation payments due to them. The Royal Gazette
reported that regulators in North Carolina had to face 1,500
workers' compensation claims, worth up to US$25 million. The
state's insurance companies were stuck picking up the workers'
comp tab - or the difference between claims and the $14 million
on deposit from the failed companies.
State regulators had taken over MRM's Legion and Villanova. The
two companies were put into state-regulated run-off. MRM
currently seeks t take the two out of rehabilitation, claiming
that they are solvent.
However, because the cases of the two companies had been brought
to Pennsylvania courts, some North Carolina residents could see
an interruption in their weekly workers' comp claims payments.
The payment gap could run from two to four weeks.
Meanwhile the regulators say that the failure of Legion and
Villanova were brought about by stiff competition in the workers'
camp market, leading t rate-cutting to the point that premiums
could not cover claims.
No formal insolvency declaration of the two companies has been
made. This prevents the state from using the US$14 million on
deposit to pay claims or obtain files on whom to pay.
The report indicates that officials from the Guaranty
Association, the Department of Insurance and the North Carolina
Industrial Commission asked the General Assembly to pass a
hastily-crafted bill allowing them to use the $14 million and to
begin cleaning up after the two firms, even though they haven't
been declared insolvent in Pennsylvania to get around these
difficulties. The General Assembly passed the bill within a
single day.
North Carolina Insurance Commissioner Jim Long declared the two
companies insolvent on November 1. The report added that the
Guaranty Association, which is still waiting for the case files
from the two companies, will asses its 700 insurance company
members for the amount of unpaid claims exceeding the $14 million
deposit.
CONTACT: MUTUAL RISK MANAGEMENT INC.
P.O. Box HM 2064
44 Church Street
Hamilton HM HX
Bermuda
Tel: (800) 772-0849 or (441) 295-5688
Contacts:
Angus H. Ayliffe, Chief Financial Officer
Fran Tucker, Investor Relations
Legion Insurance Company (In Rehabilitation)
Villanova Insurance Company (In Rehabilitation)
Legion Indemnity Company
One Logan Square
Suite 1400
Philadelphia, PA 19103
Tel: 215.979.7879
Fax: 215.963.1205
Contacts:
Joseph M. Boyle, Acting President
Paul Forbes, Senior Vice President - Underwriting
Andrew Walsh, General Counsel
Steve Zielinski, Senior Vice President - Claims
Gregg Frederick, Senior Vice President - Reinsurance
TYCO INTERNATIONAL: No Plans To Take Back Kozlowski Donation
------------------------------------------------------------
Tyco International Ltd said that the Company is not asking the
famous Cambridge University of England to return a US$4 million
donation given by then-chief executive Dennis Kozlowski.
Mr. Kozlowski is currently facing charges of grand larceny and
enterprise corruption for allegedly embezzling company funds.
Kozlowski had given the donation to endow a professorship in
corporate governance two years ago. The chair was named after
Robert Monks, a shareholder activist who sat on Tyco's board
during Kozlowski's first two years as CEO, according to a report
from Knight Ridder Business News.
Cambridge has been under pressure to return the donation after
news of the corporate scam allegedly orchestrated by Kozlowski
and his cohorts. However, company sources say Tyco will not be
taking any action, regardless of whatever action Cambridge deems
appropriate.
===========
B R A Z I L
===========
AES CORP.: Waives Early Tender Date To Encourage Participation
--------------------------------------------------------------
The AES Corporation (NYSE: AES) announced Tuesday that it had
waived the deadline by which holders of its outstanding
$300,000,000 8.75% Senior Notes due 2002 ("2002 Notes") and
$200,000,000 7.375% Remarketable and Redeemable Securities due
2013, which are puttable in 2003 ("ROARs"), must tender in order
to be eligible to receive the early tender bonus payment.
Holders that tender on or prior to 5:00 p.m., New York City time,
on December 3, 2002, the exchange offer expiration date, and do
not withdraw such securities will, if the exchange offer is
consummated, be entitled to such early tender bonus payment in
the amount of $15 for each $1,000 principal amount of 2002 Notes
tendered and $5 for each $1,000 principal amount of ROARs
tendered.
Consummation of the exchange offer is subject to a number of
significant conditions, including the condition that 80% in
aggregate principal amount of the ROARSs and 80% in aggregate
principal amount of the 2002 Notes are validly tendered and not
withdrawn. At this time, neither 80% of the ROARs nor 80% of the
2002 Notes have been tendered.
The offering of the new senior secured notes in the exchange
offer is being made only to "qualified institutional buyers" and
"persons other than a U.S. person" located outside the United
States, as such terms are defined in accordance with Rule 144A
and Regulation S of the Securities Act of 1933, as amended.
The new senior secured notes will not be registered under the
Securities Act of 1933, or any state securities laws. Therefore,
the new senior secured notes may not be offered or sold in the
United States absent an exemption from the registration
requirements of the Securities Act of 1933 and any applicable
state securities laws. This announcement is neither an offer to
sell nor a solicitation of an offer to buy the new notes.
CONTACT: The AES Corporation
Kenneth R. Woodcock, 703/522-1315
BCP: 3Q02 Loss Quadruples 3Q01, Growth Flat
-------------------------------------------
Brazilian mobile operator BCP reported losses of BRL1.66 billion
(US$470 million), more than four times the reported loss last
year. Growth in the number of subscribers for the third quarter
of this year is almost zero, while BCP rival registered a 4.5
percent subscriber increase. BCP's subscribers number 1.68
million. The depreciation of the real against the dollar was
cited as the major cause of loss.
However, analysts believe that the lack of communications between
BellSouth and Banco Safra, BCP's two main shareholders, caused
the poor results. These two companies defaulted on a US$375
million debt due last March.
According to a report from Business News Americas, regional
mobile operator Telecom Americas had been fingered as a likely
buyer for BCP. Recently, Telecom Americas won a PCS license
covering 64 municipalities in the state of Sao Paolo.
CONTACT: BCP S.A.
Rua Fl=rida, 1970 4o andar
Spo Paulo - SP
Tel: 55 11 5509-6428
Fax: 55 11 5509-6257
Home Page: http://www.bcp.com.br
BELLSOUTH CORPORATION
1155 Peachtree St. NE
Atlanta, GA 30309-3610
Phone: 404-249-2000
Fax: 404-249-5599
Home Page: http://www.bellsouth.com/
Contacts:
Investor Relations
Phone (US): 800.241.3419
Fax: 404.249.2060
E-mail: investor@bellsouth.com
BANCO SAFRA
Av. Paulista, 2100 - Spo Paulo
Brazil - 01310-930
Phone: (11) 3175-7575
Home Page: http://www.safra.com.br/ingles/index.asp
Contact: Carlos Alberto Vieira, President
CEMIG: Resolves Debt Issues With Minas Gerais State
---------------------------------------------------
In an agreement that would resolve pending issues with Brazilian
securities commission CVM, the board of directors of power
company Cemig approved the restructuring of the total debt owed
by the Minas Gerais state government, which controls the company.
Citing a Cemig statement, Business News Americas reports that the
state will be paying its debt in 149 monthly installments
starting January 2003 and ending May 2015. The debt is estimated
at BRL1.6 billion (US$453mn).
The payments will be guaranteed from future dividends to the
state and through the state's shares in Cemig, deducting
obligations towards construction of the Irape hydroelectric
plant, Cemig said.
The CVM earlier asked Cemig to restate its first half results
because of the uncertainty surrounding the state's debt. Cemig
has also postponed publishing third-quarter results, presumably
until it ties up the debt issue.
CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS
Luiz Fernando Rolla, Investor Relations
Phone: + 011-5531-299-3930
Fax: + 011-5531-299-3933
E-mail: lrolla@cemig.com.br
CSN/MRS/VICUNHA: Fitch Places Ratings On Watch Negative
-------------------------------------------------------
Fitch Ratings has changed the Rating Watch status of the ratings
for three Brazilian corporate entities, Companhia Siderurgica
Nacional S.A. (CSN), MRS Logistica S.A. (MRS) and Vicunha
Siderurgia S.A. (Vicunha) to Negative from Evolving. These rating
actions follow the announcement on November 12 by Corus of its
decision not to proceed with a merger with CSN.
This rating action follows similar rating actions taken on most
Brazilian corporates by Fitch on October 29. At that time,
however, the rating status of the aforementioned companies was
left at Evolving due to the ongoing merger discussions with
Corus. The Rating Watch Negative status of these companies
reflects the challenging credit environment in Brazil, as the
availability of short-term financing has declined in recent
months due to concern about the country's political and economic
conditions.
CSN is a low cost steel producer due to its ownership of the Casa
de Pedra mine, one of the world's largest, high quality iron ore
bodies. CSN's modern production facilities, vertical integration
and access to low cost labor further enhance its production cost
structure. With an annual production capacity of 5.4 million tons
of crude steel, CSN ranks as one the largest steel producers in
Latin America. Within Brazil, the company is the largest producer
of tin plate and galvanized steel.
At the end of September 2002, CSN had $2.2 billion of debt and
more than $700 million of cash and marketable securities. Of the
company's debt figure, approximately $600 million comes due
within the next year. During 2001, the company generated $611
million of EBITDA. Due to the sharp devaluation of the Brazilian
real to the U.S. dollar during the second half of 2002, the
company's EBITDA in dollars is expected to be lower in 2002 than
it was in 2001.
Vicunha is the largest shareholder of CSN, with a 46% stake in
the company. As a holding company, it has no operating assets.
Thus, Vicunha's credit quality is closely linked to that of CSN
given that Vicunha's debenture obligations are expected to be
serviced from the cash dividends received from CSN. Dividends
from CSN will need to be approximately one-third of CSN's EBITDA
in 2003 for Vicunha to meet the debt service on its debentures.
MRS is a railway that provides freight transportation of iron
ore, steel and other industrial products in Brazil. Three
principal rail lines of 1,700 kilometers serve as key
transportation links connecting Rio de Janeiro, Belo Horizonte,
Sao Paulo and the region's main ports. The credit quality of MRS
is directly linked to that of CSN. CSN is the largest shareholder
of MRS with a 32% equity stake and is one of MRS' largest
customers, accounting for approximately 12% of MRS' revenues.
More importantly, CSN's operations are entirely dependent upon
MRS for transporting CSN's iron ore from its mines to its steel
plant,
Contact: Anita Saha, CFA 1-312-368-3179 or Joe Bormann, CFA 1-
312-368-3349, Chicago; Rafael Guedes, +55-11-287-3177, Sao Paulo.
Media Relations: James Jockle 1-212-908-0547, New York.
KLABIN: S&P Raises Rating to 'CCC+'
-----------------------------------
Standard & Poor's Ratings Services said Tuesday that it raised
the local and foreign currency corporate credit ratings on
Brazilian paper company Klabin S.A. to 'CCC+' from 'SD'. The
ratings were placed on CreditWatch with developing implications.
The rating action follows confirmation that on Nov. 14, 2002,
Klabin repaid in full the $50 million principal payment on an
unrated Eurobond due since Nov. 4, 2002.
The bridge loan contracted by Klabin on Nov. 13 provided enough
funds to cover the repayment of the debentures in the local
market, and the $50 million Eurobond due on Nov. 4. The bridge
loan was subscribed by BNDES û Banco Nacional de Desenvolvimento
Econ(mico e Social and other private commercial banks, and is the
first step in a broader package that should resolve most of the
company's refinancing requirements until December 2003."The
conclusion of this financial package is crucial to fund the
payment of another Eurobond in December 2002 and to reduce
Klabin's exposure to refinancing risk," stated Standard & Poor's
credit analyst Milena Zaniboni.
Debt maturities are extremely concentrated until the end of next
year, as about $600 million out of the total debt of $825 million
comes due.
The company is in the process of structuring a Brazilian real
(BrR) 1.2 billion local debenture under a firm commitment from
its local banks, which should be completed until the end of the
year, and will fund the maturity of another Eurobond of $59
million due on Dec. 28. Considering the debentures and free cash
flow available to repay debt (between $100 million and $150
million in 2003), the company would still need to refinance some
$120 million through the end of December 2003.
Klabin should be able to manage such borrowing needs in 2003 as
there is no concentration of maturities after December 2002, and
the company could access trade related loans, even if these are
shorter in tenor.
This analysis does not incorporate the upside of asset sales
because the timetable of such strategy is uncertain, even though
the company is committed to sell assets in order to reduce its
total leverage.
The CreditWatch with developing implications will be resolved as
soon as the company discloses the terms and conditions of the
local debenture that is being arranged by the company and its
relationship banks.
ANALYST: Milena Zaniboni, Sao Paulo (55) 11-5501-8945
TELEMAR: Brazilian Justice Rejects Bankruptcy Plea
--------------------------------------------------
The Brazilian Justice rejected a request by call center company
Informador de Pernambuco Ltda. to have Telemar Norte Leste
bankrupted, reports O Globo. Informador went to the Justice
demanding the bankruptcy of Telemar Norte Leste, the fixed
telephone holding of Telemar group, claiming that Telemar owes it
BRL17 million.
Informador rendered information services for Telemar. However,
according to Telemar, the contract with Informador ended in the
beginning of the year and the BRL2.7 million trade note bills
issued were already paid.
CONTACTS: Tele Norte Leste Participacoes
Rua Lauro Miller 116/22 andar-Botafogo
22299-900 Rio de Janeiro, Brazil
Phone: +55-61-327-5544
Fax: +55-61-617-7090
Home Page: http://www.telemar.com.br
Contacts:
Sérgio Lins de Andrade, Chairman
José Fernandes Pauletti, VP Operations and Interim
President
Francisco Tosta Valim, VP Finance
===============
C O L O M B I A
===============
SEVEN SEAS: 3Q02 Loss Swells, Amex Listing In Question
------------------------------------------------------
Seven Seas Petroleum Inc. (Amex: SEV) announced Tuesday results
for the three-month and nine-month periods ended September 30,
2002. For the third quarter of 2002, the Company reported a net
loss of $5.5 million or $0.15 per share, compared to a net loss
of $1.4 million or $0.04 per share for the same three-month
period in 2001. For the first nine months of 2002, the Company
reported a net loss of $113.9 million, or $3.00 per common share,
compared to a net loss of $3.5 million or $0.09 per share for the
same nine-month period in 2001. The nine-month period ending
September 30, 2002, includes the June 30, 2002 non-cash
impairment of oil and gas properties equal to $128.2 million
before tax.
AMERICAN STOCK EXCHANGE DECISION TO CONTINUE LISTING
Seven Seas has been notified by the American Stock Exchange
("AMEX") that the Company currently fails to meet specific
listing standards, primarily that the Company has reported
shareholders' equity of less than $2,000,000 and has sustained
net losses in two of the last three most recent fiscal years.
In order to continue listing on the AMEX, the Company has
submitted a plan that details its efforts to remedy these
deficiencies within the next 18 months. The Company expects the
AMEX to accept or reject the plan within the next several weeks.
Seven Seas Petroleum Inc. is an independent oil and gas
exploration and production company operating in Colombia, South
America.
To see financial statements:
http://bankrupt.com/misc/Seven_Seas.htm
CONTACT: Daniel Drum, Investor Relations
Tel. +1-713-622-8218
* Colombia Outlines New Goals To Get IMF Loan
---------------------------------------------
The government of Colombia aims to maintain foreign currency
reserves of at least US$10.2 billion and keep inflation rate
between 5 and 6 percent next year in its efforts to secure
standby loans worth US$2 billion from the International Monetary
Fund. A report from Bloomberg disclosed that the government also
plans to narrow its expected budget deficit to equivalent to 2.4
percent of the gross domestic product.
The country presented this aims in its letter of intent to the
IMF in order to secure a new agreement to replace a three-year
Extended Fund Facility accord, which expires next month. A new
agreement will allow the country to draw on the funds in the
event of a balance of payments crisis.
Officials revealed that the new accord would also include the
passage of a tax bill and another one, which would increase
funding for the state-run pension system.
Under the existing accord, Colombia has access to as much as
US$2.7 billion. This had helped the government to trade the local
currency freely in 1999.
The country is on track to exceed a deficit target of 2.6 percent
of GDP and came close to achieving target of 6 percent inflation
for this year.
As of Nov. 8, the country's international reserves were $10.7
billion.
According to Finance Minister Roberto Junguito, the letter should
be signed in early December.
=============
J A M A I C A
=============
AIR JAMAICA: Statement From Transport And Works Minister
--------------------------------------------------------
Minister of Transport and Works, Robert Pickersgill, issued a
statement in relation to the bilateral 'Open Skies' Air Transport
Agreement recently signed by Jamaica and the United States
Governments.
Below is the statement presented by The Jamaica Gleaner in its
report:
Since the disclosure last week that Jamaica and the USA came to
an "Open Skies" arrangement that would permit their airlines to
freely access each others markets, there have been a number of
comments in the media on the agreement and related issues.
In one instance, in an article entitled "Joking around on single
airline" in the Sunday Observer of November 10, 2002, the well-
known columnist Ricky Singh, asserted that the Secretary-General
of CARICOM was both surprised and disturbed at the news of the
signing of the Agreement. The article further suggested that
other CARICOM officials, who ought to have known of such a
development, were also surprised. It is therefore imperative that
the air is cleared on this matter and we trust that the following
points will facilitate that objective.
CONSULTATIONS
In 1997, negotiations with CARICOM for an Open Skies Agreement
were proposed by the United States and, as a consequence, a
CARICOM negotiating team headed by Dr. Kenneth O. Rattray, Q.C.
was established. Based on consultations among CARICOM states, a
final draft CARICOM proposal was submitted in 1998 to the United
States in response to their proposal.
It was recognised that in the case of Jamaica the existing
liberalised regime concluded in 1979 between the Government of
Jamaica and the Government of the United States (via a Protocol
to the 1969 Air Transport Agreement) went beyond the CARICOM
proposal, many of the features of which were reflected in the
standard US draft Open Skies Agreement and that adjustments would
have to be made to the CARICOM draft so as to take the 1979
Provisions into account in the conclusion of any bilateral Open
Skies Agreement between Jamaica and the United States.
These proposals were based upon the recognition that
notwithstanding any Agreement that may have been arrived at
multilaterally, each CARICOM State would still be required to
sign bilaterally with the USA, because adjustments would have to
be made to any Agreement in order to take into consideration the
special circumstances of individual states.
PROBLEMS
No developments have taken place in the proposed CARICOM
negotiations in spite of many requests for securing a date for
such negotiations. It was clear that the United States had
formidable problems with some of the CARICOM proposals and was
therefore disinterested in pursuing talks on that basis.
Against this background, the Government of the Bahamas formally
notified CARICOM on 13th March 2001 that it would independently
pursue open skies negotiations with the United States. Belize is
also a party to an Open Skies Agreement with the USA. Jamaica was
therefore seeking to explore further liberalisation opportunities
for increased market access into and through the United States in
view of the limited access permitted under the 1979 Agree-ment.
In practical terms, the liberalised regime, which existed between
Jamaica and the United States under the 1979 Agreement, meant
that the move to an Open Skies regime would not require a quantum
leap. The basic framework of the existing 1979 regime was that of
a fair competition environment with the following provisions,
among others:
(a) No limits on the number of airlines that could be designated
by any party;
(b) Unrestricted capacity and frequencies on the specified routes
(with a limit of 10 points in the USA for Jamaican air carriers);
(c) Fifth freedom rights (traffic between Jamaica or the United
States and a third country but limited to specified routes)
including routes through Jamaica to the Caribbean;
(d) Liberal charter arrangements;
(e) Provisions for carriers to self-handle their passengers and
cargo or to select among competing agents for such services.
(f) Provisions designed to assure standards of safety and
security; and
(g) Provisions for dispute settlement.
In recognition of the need to expand its air transport relations
with the United States and to take advantage of the opportunities
available for the carriage and transhipment of cargo,
particularly in the context of the revolution in
telecommunications and Internet marketing, Jamaica negotiated an
Open Skies Air Cargo Agreement with the United States in October
2000, about which CARICOM had been made aware.
FURTHER LIBERATION
Air Jamaica, having reached the limits of its expansion with
respect to the 10 points to the United States, the future
development and planning of the aviation needs of the country
with particular reference to trade and tourism called for a
further liberalisation of the market opportunities in the air
transport relationship between Jamaica and the United States.
Separate and apart from that development, CARICOM was formally
notified by diplomatic note dated September 24, 2002 by Jamaica's
Ministry of Foreign Affairs and Foreign Trade, that Jamaica would
pursue bilateral discussions with the United States and that we
would be prepared to assist CARICOM countries in any further
negotiations with the United States, which they may wish to
pursue, and to bear in mind some of the concerns expressed by
CARICOM in the context of our own negotiations.
In submitting Jamaica's formal notification to CARICOM, we were
following the precedence established by Bahamas and Belize and
the understanding that even within the framework of the stalled
CARICOM proposal for negotiations, the special needs of
individual countries would be negotiated bilaterally.
There are no limits on the number of airlines that may be
designated by either country. This is similar to the existing
position in the 1979 Agreement. Jamaica maintained its CARICOM
perspective in our negotiations and accordingly proposed that in
addition to the right of each party to designate carriers that
are substantially owned and effectively controlled by homeland
nationals, Jamaica should have the right to designate carriers
that are substantially owned and effectively controlled by member
states or nationals of the Caribbean Community in order to
recognise the principle of community of interest adopted by ICAO
for the benefit of developing countries.
The United States delegation recognised the practical concern
raised by the Jamaican delegation. It noted that the US
Department of Transportation had generally been and would
continue to be amenable on a case-by-case basis to licensing
carriers with non-homeland ownership and control interest.
In this connection it is to be noted that under the principle of
Community of Interest the United States has recognised Air
Jamaica as the national carrier for Barbados and St. Lucia. It
was therefore reassuring to record that this recognition would
continue. The agreed principle of the Community of Interest
certainly belies any implication that by signing a bilateral open
skies agreement with the USA, Jamaica has intrinsically
undermined any possible future agreement by CARICOM States to
establish a regional airline.
CONTACT: AIR JAMAICA
4 St. Lucia Avenue
Kingston 5,
Jamaica
Tel No. 876/922-3460
Fax /929-5643
Email: webinfo@airjamaica.com
Contact:
Gordon Stewart, Chairman
Allen Chastanet, Vice President for Marketing and Sales
===========
M E X I C O
===========
BITAL: Seeking Shareholder Approval On $600M Capital Increase
-------------------------------------------------------------
At a shareholders meeting scheduled for Dec. 5, Mexico's Grupo
Financiero Bital will seek approval of at least US$600 million in
additional capital, according to a report by Dow Jones. Mexican
regulators had estimated that Bital would need an additional
US$550 million to US$600 million to boost its capital ratios.
Also at the Dec. 5 meeting, Bital will ask shareholders to
approve a request to delist its shares from the local stock
exchange and register the bank as an affiliate of a foreign
banking institution.
Bital is in the process of being acquired by HSBC Holdings Plc,
Europe's biggest bank by market value, in an operation valued at
US$1.14 billion.
HSBC is reportedly offering to buy shares from shareholders at
US$1.20 each. The tender offer expires November 22. Sandy
Flockhart, who has been designated as chief executive of Bital,
said at a press conference last Friday that HSBC expects shares
in excess of 90% to be tendered by the deadline.
CONTACT: GRUPO FINANCIERO BITAL
Paseo De La Reforma
No. 243, Cuauhtemoc,
06500, Mexico ,D.F.
Phone: 57.21.52.86
Fax: 57.21.57.83
Home Page: www.bital.com.mx
Contact:
Investor Relations
Act. Ricardo Garza Galindo Salazar
Phone: 57.21.26.40
Fax: 57.21.26.26
E-mail: ricaggs@bital.com.mx
GRUPO ELEKTRA: Seeks Additional Time to Address Elektra Queries
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Grupo Elektra SA, Mexico's biggest consumer electronics retailer,
is seeking for more time to answer investors' questions about how
its new banking subsidiary will affect profits, Dow Jones
indicates.
"We are fully aware that there are still unanswered questions
from our part with respect to how Grupo Elektra will look to the
future now that Banco Azteca has slowly started operations,"
Chief Executive Javier Sarro said on a conference call. "Let me
assure you that all of them should be properly addressed in a
short period of time."
Elektra organized the call to quell recent market concerns
regarding the Company's competitive position in Mexico, among
other things.
Investors want to know how quickly Banco Azteca will grow and how
much debt Elektra will pay down to prepare for having less income
from its credit business. Elektra sells about 70% of its products
on credit.
"The most important question is how the bank is going to relate
to Elektra and what the bank is going to look like in a couple of
years," said Fred Sykes, a portfolio manager with NWI management
in New York, which holds Elektra bonds. "They deferred that
question."
Some analysts are also concerned that Elektra is owed at least
US$3 million by Unefon and has US$14 million of the telephone
company's handsets in inventory.
The bank investment, the ties to Unefon and a weak consumer
economy prompted Moody's Investors Service to lower Elektra's
debt rating by one level to B2 last week. Merrill Lynch also cut
its recommendation on the stock to "sell" from "neutral" at the
end of October.
Sarro said Elektra's relationship with Unefon, which failed to
make a US$6 million payment in August on US$350 million it owes
Canada's Nortel Networks Corp, is little different from
commercial agreements to sell cellular telephones for other
companies, including America Movil SA and Telefonica SA.
TV Azteca owns 41% of Unefon. Elektra has an indirect stake of
18% in Azteca Holdings, a holding company that owns about 57% of
TV Azteca.
Elektra's Mexico City-traded shares fell MXN1.04 (10 U.S. cents),
or 4.3%, to MXN23.23 Tuesday after the Company refused to answer
investors' questions. The stock has plunged 40% percent in the
past month. It began a three-week decline, where it closed higher
only four times since Oct. 25, after reporting a US$22 million
third-quarter loss compared with a US$1 million profit the year
before, in part because of costs related to closing a chain of
clothing stores.
CONTACT: GRUPO ELEKTRA
Avenida Insurgentes Sur 3579, Colonia Tlalpßn La Joya
14000 Mexico, D.F., Mexico
Phone: +52-55-8582-7000
Fax: +52-55-5629-9234
http://www.elektra.com.mx
Contacts:
Ricardo B. Salinas Pliego, Chairman and President
Javier Sarro Cortina, CEO; CEO, Retail Division
Rodrigo Pliego, CFO; CFO, Retail Division
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P A N A M A
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BLADEX: Shareholders Approve Increase in Authorized Capital
-----------------------------------------------------------
Banco Latinoamericano de Exportaciones, S.A. (NYSE: BLX)
("BLADEX" or the "Bank"), a specialized multinational bank
established to finance trade in the Latin American and Caribbean
region, announced Tuesday the results of the Bank's special
meeting of shareholders held on November 18, 2002 at the Bank's
headquarters in Panama.
At the special meeting, shareholders approved the proposal to
amend Article 4 of the Articles of Incorporation of the Bank,
increasing the authorized capital of the Bank from 75,000,000 to
185,000,000 shares. Of the 89% of the holders of the Bank's
common shares represented at the special meeting, 92% voted in
favor of the proposal.
The increase in authorized capital approved at the special
meeting is an essential element in the Bank's efforts to raise
additional tier one equity capital.
For further information, please access our Web site on the
Internet at http://www.blx.com/or call:
Carlos Yap S.
Senior Vice President, Finance and Performance Management
BANCO LATINOAMERICANO DE EXPORTACIONES, S.A.
Head Office
Calle 50 y Aquilino de la Guardia
Apartado 6-1497 El Dorado
Panama City, Republic of Panama
Tel No. (507) 210-8581
Fax No. (507) 269 6333
E-mail Internet address: cyap@blx.com
Or
William W. Galvin
The Galvin Partnership
76 Valley Road
Cos Cob, CT 06807
U.S.A.
Tel No. (203) 618-9800
Fax No. (203) 618-1010
E-mail Internet address: wwg@galvinpartners.com
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P E R U
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EDEGEL: Officially Anounces $150 Million Debenture Issue
---------------------------------------------------------
Peruvian generator Edegel informed Lima's stock market that it
will issue up to US$150 million in debentures, which will be for
a period of three years from their transaction date and could be
issued in one or more series on local and international markets.
Citing a company statement, Business News Americas reports that
the first issue in the series already has the approval of the
Company's board and will be for PEN100 million (US$27.9mn).
The Peruvian company Continental Bolsa will manage the issues,
which will be structured through the BBVA bank, the statement
said.
Edegel will issue the debentures to fund a range of obligations
including an investment program, working capital expenditure and
the refinancing in part or in whole of outstanding debt.
Earlier, Edegel proposed to sell to the Colombian ISA
(Interconexion Electrica S.A) part of its share in its power
transmission lines in order to pay off part of its debt with its
Chilean parent, Endesa Chile, which is looking to prop up its
ailing finances.
Endesa Chile is controlled by Enersis S.A., which revealed plans
this year to sell some of its assets to help ease debts of
US$10.8 billion. That sum includes a US$1.4 billion loan payment
to Enersis' parent, Spain's largest power group, Endesa. Edegel's
total current debt stands at US$275 million, while Endesa's
stands at US$4.5 billion.
According to Edegel Managing Director Jose Griso, the Company was
doing well despite economic woes across Latin America, posting
PEN18.6 million (US$5.1 million) in net profits for the third
quarter of 2002.
"Edegel has a phenomenal (financial) position and very low debt.
But we are a unit of another company and ... that company (Endesa
Chile) has a high debt level," he said.
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
Contacts:
Susana Rey, srm@e.enersis.cl
Ximena Rivas, mxra@e.enersis.cl
Pablo Lanyi-Grunfeldt, pll@e.enersis.cl
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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 Oona G. Oyangoren, Editors.
Copyright 2002. All rights reserved. ISSN 1529-2746.
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