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/raid1/www/Hosts/bankrupt/TCRLA_Public/021212.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, December 12, 2002, Vol. 3, Issue 246 Headlines A R G E N T I N A NII HOLDINGS: Signs $100M Sale-Lease Back Deal With ATC B E R M U D A ANNUITY & LIFE: S&P Lowers Ratings to 'BBB-' TYCO INTERNATIONAL: Appoints New Human Resources Senior VP B R A Z I L AOLA: Aims To Launch Broadband Services Next Year AOLA: Predicts Flat Revenues for Brazilian Unit ELETROPAULO METROPOLITANA: Hedging to Meet Debt Deadlines EMBRATEL: Sector Regulations Delay Takeover Bid STATE-RUN BANKS: Privatization Program In Jeopardy VARIG: Controllers May Conceed To Prevent Collapse C H I L E AES GENER: Delays Totihue EIS Presentation Again EDELNOR: NorAndino Sets January 4 Deadline for Guarantees C O L O M B I A EDT: Metrotel Expresses Willingness To Take Over Management MILLICOM INT'L: Intends To Sell Colombian Operations M E X I C O ASARCO: Seeks Union Agreement On Workers' Temporary Pay Cut SANLUIS CORPORACION: Restructures $255M Of Debt T R I N I D A D & T O B A G O BWIA: Executive Assures UAL Is Still Strong Partner V E N E Z U E L A PDVSA: Strike Prompts S&P CreditWatch Negative Warning PETROZUATA FINANCE: S&P Puts $1B Of Bonds on Watch Negative PDVSA FINANCE: Sr. Notes Go to S&P CreditWatch Negative SIDOR: Posting Record Production Levels Despite Debt Troubles - - - - - - - - - - ================= A R G E N T I N A ================= NII HOLDINGS: Signs $100M Sale-Lease Back Deal With ATC ------------------------------------------------------- NII Holdings, Inc. (OTCBB:NIHD) announced Tuesday the signing of a definitive agreement with American Tower Corporation (NYSE:AMT) for certain of NII's subsidiaries to sell at least 535 communication towers for an aggregate of $100 million to ATC and lease them back. The transaction is expected to close in stages, with the first closing of approximately $30 million scheduled to be finalized by the end of 2002, subject to customary closing conditions. American Tower has also agreed to provide up to 250 additional cell sites to NII Holding's incremental network build-out, of which at least 100 cell sites must be co-locations on American Tower's existing towers. The remaining 150 cell sites, if not co- located on the American Tower's existing towers, will be part of a build-to-suit program, which is expected to be completed over the next three years. "We are pleased to enter this transaction with American Tower," said Steve Shindler, CEO of NII Holdings. "It will provide NII with incremental cash liquidity and, as importantly, allows us to reduce our cash capital expenditures as we enter into the build to suit component of this transaction. We recently completed a successful debt restructuring, emerging as a financially healthy company with tremendous assets and a solid operational track record. With a fully funded business plan with annual revenues in excess of $700 million, less than $500 million in debt and 1.2 million wireless subscribers with the best ARPU and EBITDA per subscriber in Latin America, we are now on track to deliver strong operating cash flow growth and a clear company-wide focus on profitability and free cash flow generation." About NII Holdings, Inc. NII Holdings, Inc., a publicly held company based in Reston, Va., is a leading provider of mobile communications for corporate customers in Latin America. NII Holdings Inc. has operations in Argentina, Brazil, Chile, Mexico and Peru, offering a fully integrated wireless communications tool with digital cellular service, text/numeric paging, wireless Internet access and Nextel Direct Connect(R), a digital two-way radio feature. NII Holdings Inc. trades on the over-the -counter market under the symbol NIHD. CONTACT: NII Holdings, Inc. Byron R. Siliezar, 703/390-5170 (Investor Relations) Byron.siliezar@nextel.com or Claudia E. Restrepo, 305/779-3086 (Media Relations) Claudia.restrepo@nextel.com ============= B E R M U D A ============= ANNUITY & LIFE: S&P Lowers Ratings to 'BBB-' -------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it lowered its counterparty credit and financial strength ratings on Annuity & Life Reassurance Ltd. and its subsidiary, Annuity & Life Reassurance America Inc. (collectively referred to as Annuity & Life Re), to 'BBB-' from 'BBB+' following a review of the company's recent operating results as well as its plans to raise capital and secure collateral facilities to back statutory reserves ceded by U.S.-based life insurers. Standard & Poor's also said that it lowered its counterparty credit rating on Annuity & Life Re (Holdings) Ltd. to 'BB-' from 'BB+'. The ratings remain on CreditWatch with negative implications, where they were placed on November 20, 2002. "Although Annuity & Life Re has made progress on the capital and collateral issues, continued execution risk exists," said Standard & Poor's credit analyst Rodney A. Clark. "The company's capital remains adequate for the current rating, but failure to raise additional capital and to maintain existing collateral facilities would restrict the company's ability to issue additional profitable new business in 2003." In addition, there is concern that downgrade triggers associated with certain contracts could cause more profitable contracts to be recaptured by ceding companies or assumed by a third party. The recapture of certain contracts would help the company to manage its capital and collateral issues but would leave the company with reduced profitability and increased volatility on remaining business. Standard & Poor's will continue to monitor the Annuity & Life Re's efforts to raise capital as well as the adequacy of its collateral facilities. If the remaining issues are resolved satisfactorily by year-end and no significant downgrade triggers are exercised, the ratings are likely to be removed from CreditWatch and affirmed at the current level. If these issues are not resolved, or if downgrade triggers substantially reduce the company's profitable contracts, the ratings on Annuity & Life Re could be lowered into the 'BB' category. CONTACT: STANDARD & POOR'S Rodney A Clark, FSA, New York, 212/438-7245 Kevin Ahern, New York, 212/438-7160 Robert G Partridge, New York, 212/438-7231 TYCO INTERNATIONAL: Appoints New Human Resources Senior VP ---------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced Tuesday that Laurie Siegel has been appointed Senior Vice President, Human Resources. She will report to Chairman and Chief Executive Officer Ed Breen. Ms. Siegel was previously at Honeywell International, where she spent eight years in various roles, most recently as Vice President, Human Resources, Specialty Materials. Ms. Siegel also served at Honeywell as the Vice President, Human Resources, Aerospace Services; Vice President, Human Resources Services; and Director, Compensation. She has extensive experience in organization design, talent management, executive compensation, and use of Six-Sigma methodology applied to HR processes. Mr. Breen said: "Laurie Siegel is an outstanding human resources professional with extensive experience in diversified, global, manufacturing companies. At Tyco she will help us establish processes for identifying, developing and promoting talent throughout the organization. She will be integral to the management team we are continuing to build here at Tyco." Ms. Siegel said: "I could not be more enthusiastic about taking this position at Tyco. Ed Breen and his executive team are committed to a disciplined approach to human resources management at all levels of the Company. Tyco employs a remarkable number of talented men and women, and one of our great challenges will be to ensure that every one of them has the opportunity to reach his or her potential at the Company. With senior management's full support, I believe we can achieve that goal." Ms. Siegel's appointment is effective January 2, 2003. She succeeds Patricia Prue, who has resigned from the Company to allow Mr. Breen, as Tyco's new CEO, to build the Company's management team. Mr. Breen said: "I respect Patty's decision to leave the Company at this time, and I appreciate her help over the last few months in the transition we are implementing here at Tyco." Prior to joining Honeywell, Ms. Siegel was also Director, Global Compensation at Avon Products and a Principal at Strategic Compensation Associates. Ms. Siegel graduated from the University of Michigan with a Bachelor of General Studies and received a Masters of Business Administration and a Masters in City Planning from Harvard University. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. CONTACT: Gary Holmes (Media) Tel 212-424-1314 Kathy Manning (Investors) Tel 603-778-9700 =========== B R A Z I L =========== AOLA: Aims To Launch Broadband Services Next Year ------------------------------------------------- The Brazilian operation of US-based ISP and content provider America Online Latin America is currently in negotiations with two local fixed line incumbents Telemar and Telesp over plans to offer broadband services in 2003. In a Business News Americas report, AOLA Brazil operations director Cyro Ovalle said discussions have taken longer but are expected to conclude sometime next year. AOLA has already initiated a pilot program with 200 users through a partnership with local fixed line incumbent Brasil Telecom, Mr. Ovalle said. Broadband services are not expected to represent a significant source of revenues, but the Company is planning to offer a variety of value-added services to attract new clients. AOLA was the first service launched by AOL Latin America. It was launched in November 1999, and began as a joint venture of America Online, Inc., a wholly owned subsidiary of AOL Time Warner Inc. (NYSE:AOL), and the Cisneros Group of Companies. Banco Itau, a leading Brazilian bank, is also a minority stockholder of AOL Latin America. CONTACT: America Online Latin America, Inc., Fort Lauderdale Financial Community Monique Skruzny, 954/689-3256 aolairr@aol.com or News Media Fernando Figueredo, 954/689-3256 LatAmPressMail@aol.com AOLA: Predicts Flat Revenues for Brazilian Unit ------------------------------------------------ America Online Latin America expects online ad revenues of its Brazilian operation to remain stable next year, according to its Brazil marketing and e-commerce director Ricardo Daumas. A report from the Tuesday edition of Business News Americas revealed that the Company had taken 6-7% of all online advertising revenues in Brazil, which is estimated to be worth BRL260 million (US$68.2 million). However, Mr. Daumas said that online ad revenues make up only 10 percent of the Company's revenues. The rest come from the ISP's core business of Internet access. Of its total ad revenue, e- tailers contribute 30-40%, said Mr. Daumas, adding that AOLA Brazil has partnerships with over 40 local e-tailers. AOLA Brazil also plans to improve product marketing to niche customers in theme-specific areas, rather than expecting consumers to visit the online shopping section on their own, in order to boost revenues from e-commerce partners. CONTACT: AOL TIME WARNER INC. Head Office 75 Rockefeller Plaza New York NEW YORK United States 10019 Tel +1 212 484-8000 Web http://www.aoltimewarner.com Contacts: Stephen M. Chase, Chairman Richard D. Parsons, Chief Executive Officer ELETROPAULO METROPOLITANA: Hedging to Meet Debt Deadlines --------------------------------------------------------- Brazilian companies face a number of financial obligations coming due in the following weeks. The majority of the companies that have to make debt payments soon are banks, which, according to the report, have more capacity to meet their debts. The report had mentioned Banco Votorantim as an example. Despite several foreign debt payments coming due this month, it is seen as one of the financially stronger companies in the country. However, some companies may have to struggle to pay their debts. Klabin SA, for example, has to make a payment of US$60 million in late December. The company had negotiated with major banks, including the Brazilian Development Bank (BNDES) to help it with its financial needs until the second half of next year. Eletropaulo Metropolitana also had to make a US$100 million payment, which was due last Monday. The company had received an extension of a few more days to make a payment. Eletropaulo had managed to extend the deadlines on hundreds of million of debt that came due earlier this year. However, many companies in Brazil have purchased derivatives contracts offered by the central bank. Upon maturity, these contracts ensure that the buyers will have enough money in the local currency to settle their dollar debts, even if the real declined in the period. A report from Dow Jones Newswires reveals that swaps coming due between December 11 and January 7 total about US$10.2 billion, while companies face debt amortizations worth about US$2.2 billion come due this month, while another US$1.2 billion matures next month. Luis Fernando Lopes, economist at J.P. Morgan in Brazil, said that these companies may not need to use all the hard currecy they would be receiving from their swaps, saying they would probably strengthen the real if they sold their dollars in the form of their swap investments. Companies "may not be forced to replace all their (dollar-linked investments) coming due, but if the situation is nervous enough it's possible that they will," said Adam Weiner, an analyst at ING Barings in New York. Still, "the numbers themselves don't represent any kind of time bomb," Weiner said. Analysts fear that the real would decline further as an effect of the central bank's attempts to renew US$3.7 billion in dollar- linked investments that come due on December 12 and December 18. The report also said that the central bank should have the means to absorb the demand for dollars, even if the companies decide to renew their swaps. The future of Brazilian companies lies, in large part, on the ability of the upcoming administration, under Inacio Lula da Silva to keep the economy stable. CONTACT: Klabin SA Rua Formosa, 367 - 12o Andar Centro 01075-900 Sao Paulo - SP Brazil Tel +55 11 3225-4000 Fax +55 11 3225-4241 Web http://www.klabin.com.br Contact: Pedro Franco Piva, Chairman Eletropaulo Metropolitana Electricid Pca Professor Jose Lannes, 40 - 17 andar Brooklin Novo 04571-100 Sao Paulo - SP Brazil Tel +55 11 5501-7400 Fax +55 11 4469-4114 Web http://www.eletropaulo.com.br Contact: Luiz D. Travesso, Chairman EMBRATEL: Sector Regulations Delay Takeover Bid ----------------------------------------------- An executive of Brazilian telephone company Telemar admitted that it would be difficult for his company and rivals Telefonica and Brasil Telecom to seal a joint acquisition of leading long- distance operator Embratel by year-end, relates Reuters. "I think it will be hard to close the deal by the end of the year," Jose Fernandes Pauletti, the President of Tele Norte Leste Participacoes (Telemar), said. "There are difficulties ahead, and before those (are resolved), it is hard to talk of a date." The three companies are discussing setting up an investment fund abroad to skirt rules, which would prevent them from buying the Brazilian subsidiary of bankrupt telecommunications provider WorldCom Inc. This process alone could take long. Government rules on acquisitions in the telecommunications market before 2003, five years after the sector was privatized, bar the fixed-line firms from buying the operator. The National Telecommunications Agency, which regulates the sector, has said it is against the sale to the three fixed-line firms because it violates anti-trust laws. Embratel Participacoes, a unit of US-based Worldcom, Inc., has been battling with seven consecutive quarterly losses and apprehensions have been raised as to its ability to pay its hefty debts. Despite these woes, Embratel insisted it is not for sale and branded talk to the contrary as a bid by fixed-line firms to destabilize the market to their advantage. CONTACT: EMBRATEL PARTICIPACOES S.A. Investor Relations Silvia Pereira Tel. (55 21) 2519-9662 Fax: (55 21) 2519-6388 Email: Silvia.Pereira@embratel.com.br invest@embratel.com.br or Press Relations: Helena Duncan/Mariana Palmeira Tel: (55 21) 2519-3653/3654 Fax: (55 21) 2519-8010 Email: hduncan@embratel.com.br mpalm@embratel.com.br STATE-RUN BANKS: Privatization Program In Jeopardy -------------------------------------------------- Speculation is mounting that the Brazilian government is about to call off its privatization program for this year, Dow Jones suggests.Just a little more than a week after it effectively buried the auction of Maranhao's state bank, the central bank withdrew a plan to sell the state bank of Santa Catarina. Banco do Estado de Santa Catarina SA was scheduled to go on the auction block this month for a minimum price of BRL521 million. But injunctions filed by the Santa Catarina state government blocked the future operation, and the federal government has run out of time to overturn the said injunctions. Santa Catarina's state government is opposed to the sale claiming that it will be left with a debt of BRL1 billion after spending BRL1.5 billion cleaning up the institution's books. The government is now left with the tiny state banks of Ceara and Piaui on the market, but the sale of these two banks is also at risk because of litigation, bureaucracy, weak investor interest and political pressure. Furthermore, any delay beyond December means that the sales will likely be cancelled by President-elect Luiz Inacio Lula da Silva next year. According to political circles, Lula, who needs support for his reforms, has told regional governors he would be prepared to push for a delay of the sales if it were in their interest. VARIG: Controllers May Conceed To Prevent Collapse ------------------------------------------------------- The Ruben Berta Foundation, which owns 87% of Varig, said it was ready to reduce its stake in the ailing Brazilian airline in order to avert bankruptcy, reports EFE. "The Foundation has acquiesced on the question of control and has approved the possibility of becoming a minority shareholder," Varig CEO Manuel Guedes said after meeting with Development, Industry and Trade Minister Sergio Amaral on Monday. Varig is struggling with debts totaling US$764 million and a negative net equity of US$450 million. Its long-running financial crisis came to a head last month when the Foundation ditched an agreement between the airline's board of directors and creditors, prompting the resignation of Varig's top executive and directors. The rejection also ended any chance of receiving help from the government, which was ready to inject capital of US$300 million through the National Economic and Social Development Bank (BNDES). The government said it would only provide funds if Varig presented a solid restructuring plan. The Company's new interim president, Manuel Guedes, described the situation at the Company as delicate but he stressed that the US$764-million can be renegotiated. Varig, Brazil's flagship airline, has a fleet of 100 planes, employs 15,000 people and serves 110 domestic and 27 international destinations. 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 ========= AES GENER: Delays Totihue EIS Presentation Again ------------------------------------------------ Chilean generator AES Gener received a year-long extension in presenting the environmental impact study (EIS) for its 740 MW Totihue thermoelectric project located in Chile's Region VI, reports Business News Americas Tuesday, citing local press. The Company's third extension for making the presentation comes despite assertions that the project meets all environmental regulations. The project faced fierce opposition from the local wine industry, who interpret the delay as time for the Company to look for a new and less problematic location for the project. The report indicated that Region IV is an attractive location for generators because of the proximity to load center and capital city Santiago. The availability of gas through the recently approved extension of the GasAndes pipeline to the area, adds to the location's viability. However, the region is also a prime wine producing area, hence the wine makers' opposition. Other generators in the region had also suspended the presentation of their projects' EIS. Colbun, for instance, has suspended its Candelaria thermoelectric project's EIS presentation until May 2003. In September, Australia's Pacific Hydro and German engineering firm Lahmeyer International moved the presentation date for its EIS until December 25 this year, for its US$250mn, 240MW La Higuera run of the river hydro project. CONTACT: AES GENER S.A Head Office 3rd Floor Mariano Sanchez Fontecilla 310 Santiago Chile Tel +56 2 686 8900 Fax +56 2 686 8991 Web http://www.gener.cl Contact: Robert Morgan, Chief Executive COLBUN SA Head Office AV. 11 DE SEPTIEMBRE 2355 SANTIAGO Chile Tel +56 2 460 4000 Fax +56 2 460 4005 Contact: Engr Yves Jourdain, Chairman Engr Emilio Pellegrini Ripamonti, Vice Chairman LAHMEYER INTERNATIONAL GMBH Friedberger Str.173 61118 Bad Vilbel Phone: +49 6101 55-0 Fax: +49 6101 55-2222 E-Mail: info@lahmeyer.de EDELNOR: NorAndino Sets January 4 Deadline for Guarantees --------------------------------------------------------- Troubled Chilean energy distributor Empresa Electrica del Norte Grande S.A. (ELDENOR S.A.) gained additional time to provide guarantees for its natural gas supply contracts with natural gas transport company Gasoducto NorAndino, reports Business News Americas. According to a statement issued by Chile's securities & exchange commission, NorAndino has extended the deadline to January 4, next year. Edelnor, which is controlled by FS Inversiones, signed a gas transport agreement (GTA) with NorAndino in 1997 and this required Edelnor to maintain a credit rating of BB+ or higher with credit rating agency Standard & Poor's (S&P). However, in 1999, the credit rating fell below the stipulated level. This is the fifth time NorAndino has extended the deadline. The guarantee was originally provided by former Edelnor owner Mirant, which sold out to FS Inversiones. Belgian power company Tractebel controls Norandino and has an option to buy Edelnor from present owner FS Inversiones. Edelnor is a partially integrated utility engaged in the generation, transmission, and sale of electric power in northern Chile. It operates generating facilities with a capacity of approximately 687MW and about 1056 km of transmission lines. CONTACT: Empresa Electrica Del Norte Grande SA Avenida Grecia 750 Antofagasta, Chile Phone: +56 55 248500 +56 55 248094 Contact: Fernando del Sol, Chairman Tractebel Energia SA Registered Office Rua Antonio Dib Mussi, no 366 Centro 88015 - 110 Florianopolis - SC Brazil Tel +55 48 221-7016 Fax +55 48 221-7015 Web http://www.gerasul.com.br Contacts: Mauricio Stolle Bahr, Chairman Eric L.J. de Muynck, Vice Chairman =============== C O L O M B I A =============== EDT: Metrotel Expresses Willingness To Take Over Management ----------------------------------------------------------- EDT would be secure in the hands of Colombian local telephony provider if President Alvaro Uribe decides to hand management of Barranquilla's municipal telco to Metrotel instead of liquidating the intervened company, suggests Business News Americas. Metrotel CEO Raul Navarro was quoted by local daily El Heraldo as saying that his company is fully capable of operating EDT. One option under consideration is for Metrotel to replace public services regulator Superservicios as EDT's administrator until its assets are sold, Mr. Navarro revealed. The proceeds of the sale would be invested in a fund to cover EDT's COL230-billion (US$82mn) pension liability before anything else. Besides the pension liability, EDT has a COL54-billion debt with the central government and COL150 billion in other debts. Additionally, Metrotel's greater operating efficiency could help cut EDT's COL50,000 line activation costs to something closer to Metrotel's COL17,000 cost, instantly freeing up some COL30 billion, the CEO said. EDT has 140,000 lines in service, while Metrotel has 100,000. According to estimations by Barranquilla mayor Humberto Caiafa, EDT would need US$140 million in investments to restore financial balance. Mr. Navarro blamed Superservicios for the COL25-billion loss in the value of EDT since its intervention. MILLICOM INT'L: Intends To Sell Colombian Operations ---------------------------------------------------- In an official company press release, Millicom International Cellular S.A. ("Millicom") (Nasdaq: MICC), a global telecommunications investor, announced Tuesday that it has entered into separate discussions with third parties for the disposal of its cellular operations in The Philippines (Extelcom) and Colombia (Celcaribe). The company cautioned that there can be no assurance that either transaction will occur. Extelcom, Millicom's business in The Philippines, has continued to experience a number of difficult operational and trading issues, which have adversely impacted its financial performance. The board of Millicom has therefore concluded that the most appropriate course of action is to pursue a sale of Extelcom. Discussions with a potential buyer are ongoing and it is currently anticipated that the sale of Extelcom will be made for little consideration. It is expected that the sale of Extelcom will result in Millicom incurring a book write-off of approximately US$50 million. Separately, Millicom is in discussions with a third party regarding the potential sale of Celcaribe, Millicom's business in Colombia. In the context of this transaction, the third party potential purchaser is currently conducting due diligence of Celcaribe's operations. It is currently anticipated that the sale of Celcaribe will result in Millicom incurring a book write-off of approximately US$125 million. Millicom also announces that it has retained Lazard to assist it in reviewing strategic alternatives to address Millicom's ongoing liquidity needs, including other potential asset sales and divestitures, the availability of new debt and equity financing and potential debt restructuring alternatives. Millicom has, directly or through its affiliates, repurchased from time to time over the past year a portion of its outstanding debt securities at a discount from par and may continue to do so in the future depending upon market conditions and its other liquidity needs. Millicom is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has a total of 18 cellular operations and licenses in 17 countries. The Group's cellular operations have a combined population under license (excluding Tele2) of approximately 444 million people. Millicom also has a 7.0% interest in Tele2 AB, the leading alternative pan-European telecommunications company offering fixed and mobile telephony, data network and Internet services to over 16 million customers in 21 countries. Millicom's shares are traded on the Nasdaq Stock Market under the symbol MICC. CONTACTS: MILLICOM INTERNATIONAL CELLULAR S.A., Luxembourg Marc Beuls Telephone: +352 27 759 101 President and Chief Executive Officer Jim Millstein Telephone: +1 212 632 6000 Peter Warner Telephone: +44 20 7588 2721 LAZARD Andrew Best Telephone: +44 20 7321 5022 Investor Relations Shared Value Ltd., London =========== M E X I C O =========== ASARCO: Seeks Union Agreement On Workers' Temporary Pay Cut ----------------------------------------------------------- Grupo Mexico's troubled unit Asarco plans to ask its employees to take a 15 percent pay cut until the end of next year, according to a report from Reuters, citing Asarco spokesman Clay Allen. Mr. Allen conceded that the cash-strapped company has not had talks with the unions on the matter, adding that the Company hopes to have the pay cut in effect by the beginning of next year. Asarco is planning to present the idea to the United Steelworkers union soon, in order to fulfill its plan of starting the pay cuts next month. Meanwhile, Grupo Mexico said that it decide on the proposed closure of Asarco's mine in Mission, Arizona on December 21. CONTACT: 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 GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 M�xico, 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 P�rez, COO, Ferrocarril Mexicano Daniel Ch vez Carre�n, COO, Industrial Minera M�xico Daniel Tellechea Salido, VP and Administration and Finance President SANLUIS CORPORACION: Restructures $255M Of Debt ----------------------------------------------- SanLuis Corporacion, Mexico's largest manufacturer of car parts, restructured close to US$255 million in debt, or 88% of its total debt load, reports EFE. Of the total liabilities renegotiated, US$148 million accounted for cash while US$107 million was swapped for new bonds. The deadline to accede to the offer ended on December 3, SanLuis said in a press release. In August, Grupo SanLuis also struck a deal with creditors to restructure US$291 million in eurobonds and commercial paper. SanLuis Corporacion trades on the Mexican Stock Exchange under the board code MSE: SANLUIS. Its Auto-Part Division, SANLUIS Rassini, manufactures suspension and brake components and systems, and it is a leading company in suspensions in North America and mercosur. Over 85% of SanLuis Corporacion's consolidated sales are made abroad and denominate in dollars. CONTACT: SANLUIS Corporacion, S.A. de C.V. Hector Amador Tel. +11-5255-5229-5838 Fax. +11-5255-5202-6604 Email: hamador@sanluiscorp.com.mex Web site: www.sanluiscorp.com ================================= T R I N I D A D & T O B A G O ================================= BWIA: Executive Assures UAL Is Still Strong Partner --------------------------------------------------- BWIA still considers United Airline (UAL) as a very strong partner, despite the latter's filing for Chapter 11 bankruptcy protection last Monday, reports the Trinidad Guardian. The article said that BWIA's corporate communications director Clint Williams was more optimistic during his interview on Monday. Earlier, Williams had expressed concerns on UAL's bankruptcy. Mr. Williams noted that the Chapter 11 does not mean the end of UAL. He also said that he expects UAL to be on the way to recovery by the time Trinidad and Tobago regains Category One status from the US Federal Aviation Administration. According to the report, Chapter 11 protection, under US law, will allow United to continue its global operations while giving it access to special financing. However, UAL's application for a US$1.8 billion federal loan guarantee was turned down by the Air Transport Stabilization Board (ATSB), as UAL pilots voted "no" to a US$700 million pay- cut package. 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) UAL CORP. John Springer Manager-Investor Relation Email: cliff.hew@ual.com Tel (847) 700-7501 or Solange Cobbs Investor Relations Assistant Email: solange.cobbs@ual.com Tel (847) 700-7365 ================= V E N E Z U E L A ================= PDVSA: Strike Prompts S&P CreditWatch Negative Warning ------------------------------------------------------ Standard & Poor's Ratings Services on Tuesday changed its ratings on U.S. refining and marketing company PDV America Inc. and its affiliates (including its wholly owned subsidiary CITGO Petroleum Corp.) to CreditWatch with negative implications. The CreditWatch listing follows the severe disruption of the operations of Petroleos de Venezuela S.A. (PDVSA), PDV America's ultimate parent, as a result of the work force strike that has curtailed crude oil and refined product exports. Tulsa, Okla.-based PDV America has about $2 billion of outstanding debt. "PDVSA has declared force majeure on crude supply arrangements that contain margin stabilization provisions," noted Standard & Poor's credit analyst Bruce Schwartz, CFA. "This is diminishing the profitability and cash flow generation of CITGO's refineries by forcing CITGO to refine crude oil from other suppliers," he continued. Standard & Poor's is concerned for the company's future credit quality because the disarray in Venezuela and PDVSA could affect CITGO by limiting its access to external capital as CITGO enters a year of heavy capital expenditures to meet clean fuels standards and large refinancing requirements. CITGO's marketing margins also may be squeezed as it is forced to source product from alternative vendors. Standard & Poor's will resolve the CreditWatch listing when events warrant. If CITGO closes December 11th on a new bank credit facility as planned, the ratings agency could resolve the CreditWatch listing on the completion of a final review of the agreement's terms. If the new facility is not obtained, key events that could determine the direction of PDV America's credit quality could include changes to the ratings of its parent and/or a resolution to the labor and political unrest in Venezuela. ANALYST: Bruce Schwartz, CFA, New York (1) 212-438-7809 PETROZUATA FINANCE: S&P Puts $1B Of Bonds on Watch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services on Tuesday placed the ratings on Petrozuata Finance Inc.'s $1 billion bonds on CreditWatch with negative implications. The bonds are currently rated 'BB-'. The CreditWatch placement follows recent negative developments in Venezuela that have begun to and that could further disrupt Petrozuata's production, transport, and processing of heavy crude oils and its export of synfuel products. The developments include a strike by management and employees of Petroleos de Venezuela S.A. (PDVSA), which has led to a large reduction in domestic production and refining, a large drop in exports of crude oil and refined products, and growing civil unrest between the government and opposition groups. The bonds are guaranteed by Petrolera Zuata, Pertozuata C.A. Petrozuata is a heavy oil upgrading project that is located in Venezeula (B-/Negative/--) and owned by Conoco Orinoco (50.1%), a subsidiary of ConocoPhillips (A-/Stable/A-2), and PDVSA Petroleo Y Gas (49.9%), a subsidiary of PDVSA (B-/Negative/--). ConocoPhillps' management has reported that the strike has started to affect operations at Petrozuata as of late yesterday, Dec. 9th, due to insufficient hydrogen supply at the Jose upgrader, which is provided by PDVSA. The curtailment has resulted in a reduction in oil production to about 80,000 barrels per day (bpd) from 120,000 bpd. Petrozuata's work force has not joined in the strike actions. There are no operational problems with oil transport, and export operations are normal. The political situation in the country could lead to more widespread developments that could continue to negatively affect the company's wide range of operations. Petrozuata and other heavy oil projects with operations at the Jose complex have been negatively affected in the past by indirect strike actions, which were resolved through government intervention. Also, there is an increased risk of sovereign intervention in the oil and gas sector, especially if the strike action continues unabated, as the country's lack of exports would seriously deteriorate the government's financial position. Standard & Poor's expects to resolve the CreditWatch as developments warrant. The rating could fall if Petrozuata's operations are affected such that disruptions lead to material cash flow loss, or following an adverse government intervention into the sector or the project. ANALYSTS: Terry A. Pratt, New York (1) 212-438-2080 Bruce Schwartz, CFA, New York (1) 212-438-7809 PDVSA FINANCE: Sr. Notes Go to S&P CreditWatch Negative ------------------------------------------------------- Standard & Poor's Ratings Services on Tuesday placed its 'BB+' ratings on the senior unsecured notes issued by PDVSA Finance Ltd., a wholly owned subsidiary of Petr�leos de Venezuela S.A. (PDVSA), on CreditWatch with negative implications. The CreditWatch placement affects US$3.6 billion and ?200 million senior unsecured notes (see list). The CreditWatch placement is due to the interruption of export flows caused by labor disruptions in Venezuela and the potential for future strikes to plague future production volumes. If the near-paralysis of PDVSA's operations continues, Standard & Poor's is concerned that the need to generate revenue both for PDVSA and the Venezuelan government could reduce the willingness of the government to continue to allow a portion of PDVSA's export revenue to be trapped offshore to service the PDVSA Finance notes. PDVSA's production capacity has been greatly reduced as a result of the labor turmoil in Venezuela, with some former PDVSA officials estimating that it has been reduced as much as 70%. Exports have been further disrupted by striking administrative staff members and tanker captains. These actions affect PDVSA Finance as it purchases receivables generated from crude oil exports to designated customers in the U.S. and is required to deliver a sufficient amount of receivables to ensure that collections during the next debt service payment (debt service coverage ratio) exceed 4x. As of November 2002, the debt service coverage ratio was approximately 22.2x, requiring an 82% drop in collections for the next three months (December to February) to trigger an acceleration event, and a 95% drop in collections to cause a payment default. Given the importance of oil exports to the country, Standard & Poor's does not believe that a strike itself would last long enough to cause the PDVSA Finance notes to default. An offshore reserve currently funded in an amount equal to the next debt service payment (three months principal and interest) is available if the strike lasts until the payment date in February 2003. However, a lowering of PDVSA Finance's credit rating could occur if the political crisis continues. The transaction is structured to mitigate sovereign interference risk by requiring designated customers who purchase crude oil from PDVSA to deposit payments into an offshore collection account controlled by the trustee. Once crude oil exports resume, and if the political and economic problems continue, the government may have a greater incentive to try to reduce the amount of cash captured in the offshore account by redirecting cash flow (either directly or by redirecting the oil). The outlooks on the Republic of Venezuela and PDVSA remain negative. RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS PDVSA Finance Ltd. Class Rating To From A 6.45% notes due 2004 BB+/Watch Neg BB+ B 6.65% notes due 2006 BB+/Watch Neg BB+ C 6.80% notes due 2008 BB+/Watch Neg BB+ D 7.40% notes due 2016 BB+/Watch Neg BB+ E 7.50% notes due 2028 BB+/Watch Neg BB+ F 8.75% notes due 2004 BB+/Watch Neg BB+ G 6.25% notes due 2006 BB+/Watch Neg BB+ H 9.40% notes due 2007 BB+/Watch Neg BB+ I 9.75% notes due 2010 BB+/Watch Neg BB+ J 9.95% notes due 2020 BB+/Watch Neg BB+ K 8.50% notes due 2012 BB+/Watch Neg BB+ ANALYSTS: Nancy Gigante Chu, New York (1) 212-438-2429 Bruce Schwartz, CFA, New York (1) 212-438-7809 SIDOR: Posting Record Production Levels Despite Debt Troubles ------------------------------------------------------------- Siderurgica del Orinoco (Sidor), a Venezuelan flat steel maker, continues to reap the rewards from the efforts it has gone through to up its production capacity. According to Business News Americas, with staff training, technology investment and cost reductions, Sidor is likely to end the year with production of 2.8Mt. That far exceeds its design capacity by 400,000t. Sidor first set out a new output record in October when it registered 2.455Mt for molten steel, exceeding the previous record of 2.453Mt set in 2000, the year it reached design capacity. A company spokesperson also revealed that Sidor has reduced its accident rate by 30% from last year. "There is a project to eliminate unsafe working conditions, instill safe practices and, above all, get the workers to look after themselves," the spokesperson said. Sidor is the first large-scale plant in Venezuela, owned or partly owned by the state, to exceed its installed capacity. At the same time the Company has reduced emissions by 75%. The Company failed to restructure US$1.4 billion in debt with banks by the September 30 deadline and is now in talks with its creditor banks. Sidor was privatized in 1990 when the Amazonia consortium - made up of Mexico's Hylsamex, Argentina's Techint group (including its Mexican unit Tamsa), Venezuela's Sivensa and Brazil's Usiminas - acquired 70% of the company. State heavy industry holding company CVG held on to 30% but its stake is due to rise to 42% under a refinancing package announced in August that involves capitalizing part of Sidor's debt. CONTACT: SIDERURGICA DEL ORINOCO, C.A. (SIDOR) Edificio General, Piso 9 Avda. La Estancia Chuao, Caracas 1060 Venezuela Tel: (582) 902 3800/3917/3955 Fax: (582) 993 2930 Home Page: www.sidor.com.ve/ *********** 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. 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 * * *