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/raid1/www/Hosts/bankrupt/TCRLA_Public/030107.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, January 7, 2003, Vol. 4, Issue 4 Headlines A R G E N T I N A CENTRAL COSTANERA: Extends $95M Loan Payment * Argentina May Get New Loan As IMF Sends Team For Talks B R A Z I L CESP: To Increase Power Sales, Renegotiate Part of Debt EMBRATEL: Shares Rise On Mixed Speculations C H I L E AES GENER: Unit Gets Extension To Provide More Info On Project AGF ALLIANZ: Chilean Insurer Mulls Bid ENAMI: Mining Ministry Says Protocol Signing Pending J A M A I C A CABLE AND WIRELESS: Anxious To Regain Market Lead M E X I C O GRUPO TFM: Commences Exchange Offer For 12.50% Sr Notes Due `12 U R U G U A Y URUGUAYAN BANKS: Government Reaches Solution To Crisis T R I N I D A D & T O B A G O BWIA: Lays Off 40 Pilots V E N E Z U E L A EL TABLAZO: Soldiers Take Control of Plant PDVSA: Chavez Fires 251 Workers UNITED AIRLINES: Closing Venezuelan Station * At Least 25T Venezuelan Companies Likely To Go Bankrupt - - - - - - - - ================= A R G E N T I N A ================= CENTRAL COSTANERA: Extends $95M Loan Payment -------------------------------------------- Argentine thermo generator Central Costanera reached an agreement with six creditor banks, BBVA, BankBoston, Bank of America, HSBC, Scotiabank and the Latin American Export Bank, to extend payment of a US$95-million loan issued July 12, 2000. Citing a statement to the Buenos Aires bourse, Business News Americas reports that the agreement extends the due date of the loan from June 30, 2003 to December 2004. But, according to the terms of the new agreement, the loan will be paid back in quarterly installments from June 2003 to December 2004 and interest will be charged at a 90-day rate of Libor plus 4.4%-4.9% a year. Central Costanera, which is majority-owned by Chilean generator Endesa Chile, has agreed not to make any dividend payments until the loan has been paid back. * Argentina May Get New Loan As IMF Sends Team For Talks -------------------------------------------------------- The executive board of the International Monetary Fund will review Argentina's economic reforms' implementation process Wednesday this week reports the Associated Press. In an announcement last Friday, the lender said it plans to send a team to Buenos Aires to discuss the country's request for a new short- term loan program. Argentina faces the possibility of being cut off from its only remaining source of foreign support, if it defaults on payments due to the World Bank and the Inter-American Development Bank. This short-term loan would enable the country to avoid going into default with the lender. The IMF rolled over loan payments due from Argentina for the greater part of last year. But the lender's rules forbid it from doing the same this year. The report revealed that the lender would not be able to roll over a US$1 billion loan coming due this January 17. Last year, Argentina negotiated with the IMF for a new loan package, without success. Government officials say the IMF's demands were too stringent, while the lender says Argentina needs to implement the correct economic program to jumpstart the country's economic recovery. The report also mentioned that the IMF may be consider granting Argentina a bigger financing package after the country's presidential elections in the spring. =========== B R A Z I L =========== CESP: To Increase Power Sales, Renegotiate Part of Debt ------------------------------------------------------- Cesp Parana, Brazil's Sao Paulo state owned generator, aims to boost power sales and renegotiate part of its debts as it faces maturing financial obligations amounting to BRL2.6 billion (US$750 million) this year, reports Business News Americas, citing Sao Paulo state energy minister Mauro Arce. According to Business News Americas, Cesp Parana tried to auction power on Brazil's BM&F futures exchange in December, but managed to sell just one of the 900 blocks of power it offered. As a result, the Company could now try to sell power through bilateral contracts, Arce said. Most of CESP 's debts are with the federal government, and around 90% of them are in US dollars, Arce reported earlier. Cesp, which has 7,345MW installed capacity in six hydro plants, is the last of three Cesp units to remain in state hands. And, the prospect of a future sale is getting dreary considering President Lula da Silva's declarations that federal power generators will not be sold during his term in office. CONTACT: Companhia Energetica De Sao Paulo (CESP) Rua da ConsolaO o, 1.875 CEP 01301 -100 S o Paulo, Brazil Phone: +55-11-234-6322 Fax: +55-11-287-0871 Home Page: http://www.cesp.com.br/ Contact: Mauro G. Jardim Arce, Chairman Ruy M. Altenfelder Silva, Vice Chairman Vicente Kazuhiro Okazaki, Finance Director EMBRATEL: Shares Rise On Mixed Speculations ------------------------------------------- Speculations that Embratel Participacoes, a unit of embattled U.S. company WorldCom Inc., is likely to see its debt- restructuring efforts yield positive results this year, boosted the Company's shares, some analysts say. According to a report by Bloomberg, the stock rose 19 centavos, or 4.4%, to BRL4.49, the highest level since May on rumors that the creditors of the largest long-distance carrier have accepted new terms. A company spokeswoman confirmed that Embratel is trying to renegotiate BRL2.4 billion (US$694 million) of debt coming due this year, but said that an agreement is yet to be reached. But looking at it at another angle, the rise in the stock could also be driven by a possibility of an acquisition. "There's still speculation the company may be an acquisition target and there might be changes in regulations that could benefit Embratel," Jacqueline Lison, an analyst with Fator Doria Atherino brokerage in Sao Paulo, said. Lison has a "buy" recommendation for Embratel shares. Anatel, the country's telecommunication regulator, proposed a variety of regulatory changes to take effect in 2006. One proposal would require companies to split local and long-distance businesses. Embratel claims companies that offer both local and long-distance services are competing unfairly by using profits from local operations to subsidize their long-distance business, Lison said. "If there's expectation of a more favorable regulation in the near future it increases the chances of the company being sold," Lison said. "If the company succeeds in renegotiating the debt it also gives breathing room to any new controlling shareholder." 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 ========= C H I L E ========= AES GENER: Unit Gets Extension To Provide More Info On Project -------------------------------------------------------------- Chilean generator Essa, a unit of AES Gener, now has until January 17 to submit its environmental impact study (EIS) for the conversion of its 100MW Renca diesel-fired plant to natural gas. Citing Essa's Ivan Jara, Business News Americas indicates that environmental authority (Corema) extended the deadline, originally set for Dec. 31, to allow Essa more time to provide complementary information regarding technical aspects of the project and compensation for various affected parties. Following final submission of the EIS, Corema will take 30-40 days to approve the project before Essa can call for bids to convert the plant to natural gas. Work on the plant is expected to start sometime in mid-2003, Jara said, adding that the conversion will boost Renca's capacity to 230MW and is scheduled for completion in 2005. AES Gener is handling project financing. A supply contract for the Argentine natural gas that will fire the plant will not be signed until the EIS is approved, Jara added. AGF ALLIANZ: Chilean Insurer Mulls Bid -------------------------------------- German insurance group AFG Allianz may be looking at Chilean insurer Vida Corp as a potential bidder for its Chilean unit, which it closed on Dec. 20, firing 70 of its employees. Citing a source close to Vida Corp, Business News Americas reports that Vida is considering a bid for the life insurance portfolio of AGF Allianz Chile. "I cannot say that we are prime candidates, but we are studying the situation," the source said. The German parent is looking to complete the sale during the first quarter of this year for an estimated price of US$30 million - US$50 million. ENAMI: Mining Ministry Says Protocol Signing Pending ---------------------------------------------------- Chile's mining ministry confirmed that a protocol to transfer Ventanas copper smelter-refinery operated by state minerals company Enami over to state copper corporation Codelco will be signed Monday, Jan. 6, 2003, reports Business News Americas. The document will be signed by mining minister Alfonso Dulanto, finance minister Nicolas Eyzaguirre, and the heads of the mining and energy and finance committees of the lower and upper chambers of congress. The signing, which comes after a two-year negotiation, paves a way for a solution to Enami's US$480-million debt crisis. The aim of the protocol is to insure parliamentary support for new legislation that would be needed to enact the transfer. "The protocol for the sale of the Ventanas smelter-refinery by Enami to Codelco forms the basis of a financial solution that assures the feasibility and stability of the National Mining Company [Enami]," the ministry said. The government has pledged it will draw up a new policy for Enami in its role as a promoter of the small and medium scale mining sectors. Ventanas, in central Chile's Region V, is the company's largest asset and in 2001 produced 323,000t of electrolytic copper. CONTACT: ENAMI (Empresa Nacional de Mineria) MacIver 459, Santiago, Chile Phone: 637 52 78 637 50 00 Fax: 637 54 52 Email: webmaster@enami.cl Home Page: www.enami.cl/ Contact: Jorge Rodriguez Grossi, President ============= J A M A I C A ============= CABLE AND WIRELESS: Anxious To Regain Market Lead ------------------------------------------------- Cable and Wireless Jamaica said it will do all it can this year regain its leadership in the local mobile telephone market, according to a report by the Trinidad Express. C&W President Gary Barrow summarized the Company's sentiments saying, "We intend to be number one again." Conceding that competitor Digicel has a slight lead, Barrow hinted that there could be more of the aggressive marketing and price battles it had been fighting with Digicel over the last few months. Digicel chairman Denis O'Brien confirmed claims that Digicel has a 65 percent market share in Jamaica made by the company's marketing head Harry Smith. O'Brien added that his company intends to further increase its client base in the country, and cut into C&W's market elsewhere in the region. But C&W head of mobile services in Jamaica refuted Digicel's claims. According to him, there are more than 1.2 million subscribers in Jamaica, and not a little over 900,000, based on Digicel's figures. Given that C&W has in excess of 550,000 subscribers, then, Digicel only has approximately 50 percent market share, and 46 percent is with C&W. the rest would be controlled by Centennial. The fierce competition between the two companies can be seen in the way they had reduced rates for international calls. But the report indicated that despite the 60 percent cut on the current price of international calls, the price could still go lower. C&W reduced international rates to US$18 per minute in November, as part of its re-balancing program. Digicel said its rate, at US$20 per minute was still cheaper because they charge per second, but to just to make sure, the company lowered its rate to US$17.75 per minute. In retaliation, C&W reduced its rate to US$16.95 per minute after the first minute for J$18, and shifted to per second charging format. Barrow also said that the company's re-balancing program may trigger more international call rate cuts, in order to bring rates for domestic services in line with real costs by ending the cross-subsidies. According to him, what important thing is making sure that the domestic rates reflect the underlying costs. If the domestic rate should rise, he said, the price would still be lower than expected because of the introduction of new technology and the company's planned network improvement. The two companies are also squabbling as to who has the better coverage. In fact, Barrow said that C&W would continue to invest in the network in Jamaica, ignoring the problems the company face there. "We are still holding to our original levels of investment- that is over J$6 billion a year," he said. On top of that, C&W West Indies had also invested US$100 million to install a GSM mobile network in the Caribbean, to be integrated with its TDMA system, and with quite a number of features to accommodate advanced telecoms service. Most of the said investment would focus on Jamaica, said the report. However, Barrow admits that C&W would have to face full competition before it has completed its re-balancing moves, when its monopoly on delivering calls ends in March. CONTACT: Cable & Wireless PLC Head Office 124 Theobalds Road London England WC1X 8RX Tel +44 (0)20 7315 4000 Fax +44 (0)20 7315 5000 Web http://www.cw.com Contacts: Sir Ralph Robins, Non Executive Chairman Sir Winfried W. Bischoff, Non Executive Deputy Chairman Graham M. Wallace, Chief Executive Robert E. Lerwill, Executive Director Finance =========== M E X I C O =========== GRUPO TFM: Commences Exchange Offer For 12.50% Sr Notes Due `12 --------------------------------------------------------------- Grupo TFM, S.A. de C.V. ("Grupo TFM"), announced Friday that its subsidiary, Transportacion Ferroviaria Mexicana, S.A. de C.V. ("TFM"), has commenced its exchange offer for all its outstanding unregistered 12.50 percent Senior Notes due 2012 ("Outstanding Notes"). TFM is offering to exchange its Outstanding Notes for an equal principal amount of new registered notes ("Exchange Notes"). The terms of the Exchange Notes are identical in all material respects to the terms of the Outstanding Notes, except for the transfer restrictions and registration rights relating to the Outstanding Notes. The exchange offer is being made upon the terms and subject to the conditions set forth in the prospectus, dated January 3, 2003, and the letter of transmittal related to the exchange offer. The exchange offer will expire at 5:00 p.m., New York City time, on January 31, 2003, unless extended ("Expiration Date"). Tenders may not be withdrawn after the Expiration Date, unless extended by TFM. The exchange offer is made solely by the prospectus dated January 3, 2003, the related letter of transmittal, and any amendments or supplements thereto. Copies of the prospectus and transmittal materials can be obtained from The Bank of New York, the exchange agent for the exchange offer, at the following address: The Bank of New York 101 Barclay Street Floor 7 East New York, NY 10286 Attn: Corporate Trust Operations, Reorganization Unit (212) 815-6331 This announcement is neither an offer to purchase nor a solicitation of an offer to sell TFM notes. The exchange offer is not being made to, nor will tenders be accepted from, or on behalf of, holders of Outstanding Notes in any jurisdiction in which the making of the exchange offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. Headquartered in Mexico City, TFM operates Mexico's Northeast railway and carries over forty percent (40%) of the country's rail cargo. Visit TFM's web site at www.tfm.com.mx. The site offers Spanish/English language options. Grupo TMM, S.A. (NYSE: TMM and BMV: TMM A) and Kansas City Southern (NYSE: KSU) are owners of the controlling interest in TFM. CONTACT: Grupo TFM Company Jacinto Marina Tel: 011-525-55-629-8790 Email: jacinto.marina@tmm.com.mx Leon Ortiz Tel: 011-525-55-447-5847 Email: lortiz@gtfm.com.mx or Dresner Corporate Services Kristine Walczak Tel: 312/726-3600 Email: kwalczak@dresnerco.com ============= U R U G U A Y ============= URUGUAYAN BANKS: Government Reaches Solution To Crisis ------------------------------------------------------ Struggling to find a solution to its embattled financial system, Uruguay's government reached a decision to liquidate three intervened banks and transfer their best assets to a new bank that is set to open this month, Business News Americas reports, citing a central bank spokesperson. The government intervened and suspended Banco Comercial, Banco Montevideo, Banco Caja Obrera and Banco de Credito in July and August last year due to liquidity and capital problems sparked by Uruguay's financial crisis. Liquidation of Comercial, Montevideo and Caja Obrera is expected to kick off January 13 and conclude by month's end. Once the liquidation is finished, the government will set up the new entity called Nuevo Banco Comercial. With regards to Banco de Credito, the bank's future is still being discussed. The central bank spokesperson said that the government is still in talks to hand control of the bank over to minority shareholder St George, an investment company owned by the South Korean Moon group. CONTACT: BANCO COMERCIAL Cerrito No. 400, 11100 Montevideo Phone: 960-394/97 Fax: 963-569 Home Page: www.bancocomercial.com.uy/ BANCO MONTEVIDEO Misiones 1399 - Montevideo Fax: 9162880 E-mail: info@bm.com.uy Home Page: http://www.bancomontevideo.com.uy Contact: Sr. Marcelo Pestarino, President ================================= T R I N I D A D & T O B A G O ================================= BWIA: Lays Off 40 Pilots ------------------------ Trinidad and Tobago's flag carrier, BWIA, released up to 40 pilots after deciding to remove at least three Dash-8 planes from its fleet. The seniority-based lay-offs will affect those Dash-8 pilots, who had the shortest length of service with the company. The report added that some of the pilots may remain until next month. The pilots, along with eight managers dismissed earlier last month, were offered compensation packages. In the meantime, some of the pilots were pre-qualifying to operate other aircraft, such as BWIA's Boeing 737 planes. BWIA will be selling two of its Dash-8's, said BWIA corporate communications director Clint Williams. The other one was leased to the Tobago Express to service the airbridge. The trouble carrier had to rationalize its fleet, and in the process release some of its employees, after the September 11 attacks in the United States had caused a worldwide slump in the airline industry. Competition from chartered flights and scheduling problems with pilots and in-flight crews added to the airline's woes. BWIA, which was on the verge of bankruptcy in October last year, plans to save US$1.4 million a month to qualify for a badly needed government loan. During the third period of last year, BWIA made only US$521,000 compared to US$5.8 million during the same period in 2001. 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) ================= V E N E Z U E L A ================= EL TABLAZO: Soldiers Take Control of Plant ------------------------------------------ Venezuelan soldiers claimed control of state-owned petrochemical El Tablazo following a shutdown due to a lack of natural gas that fuels the facility, reports Bloomberg. Production at the facility got stalled a day after state officials fired the plant's 21 managers and replaced all its workers with sympathizers of President Hugo Chavez. Closure of the plant comes as Chavez struggles to keep state companies operating after tens of thousands of government workers joined a nationwide strike that began Dec. 2 demanding his ouster. It's still not clear, however, whether the gas shortage was caused by the national strike, led by business leaders, union bosses and former oil officials, or by a leak. PDVSA: Chavez Fires 251 Workers ------------------------------- In a bid to break the national work stoppage, Venezuelan President Hugo Chavez 86'd 251 striking workers at the state- owned oil company Petroleos de Venezuela SA (PDVSA), reports El Nacional. Plant workers learned of their predicament after officials from the government oil monopoly, accompanied by the National Guard, came to their homes to inform them of the President's decision. According to Unapetrol's legal adviser, Edgar Quijano, the firings were illegal and the union will seek the workers' reinstatement. Unapetrol is a union consisting of 6,000 oil workers. UNITED AIRLINES: Closing Venezuelan Station ------------------------------------------- United Airlines (NYSE: UAL) announced Friday that by Jan. 19, 2003, the company will furlough nearly 1,500 management and salaried employees as part of its organizational redesign intended to optimize the performance of the airline while reducing United's cost structure. These furloughs will also help the airline meet the strict requirements of its Chapter 11 financing. All affected employees will be notified as soon as these decisions are finalized. "These changes are part of the process of creating a new business that is competitive, customer-focused and sustainable," said Sara Fields, United's senior vice president-People. "Our People Division has prepared transition services to assist these employees in every way possible during this very difficult time." United Airlines also announced that as part of the company's efforts to reduce its operating costs and return to financial stability, the airline will close its remaining 32 City Ticket Offices (CTOs) effective Jan. 28. The closures will result in the furlough of 188 employees. "Our research has shown that an increasing percentage of our customers are utilizing more cost-effective methods to buy their tickets. Rather than traveling to a CTO, more and more customers are buying tickets online or calling United Reservations," said Dan Walsh, vice president-Sales. "However, United sincerely regrets the necessity of making this decision because of the impact it will have on our CTO employees and their families. "It's important for our customers to know that they will still have around-the-clock access to United via United Reservations (800-UNITED1) and united.com," Walsh continued. A number of previously announced organizational changes and employee reductions will also be taking effect in the coming days. These include: Station Conversions/Closings Effective Jan. 7, 2003 United will convert mainline flying to United Express service at the following five stations: Eugene, Ore.; Medford, Ore.; Cedar Rapids, Iowa; White Plains, N.Y.; and Syracuse, N.Y. United Express carriers - SkyWest, Air Wisconsin and Atlantic Coast Airlines - can more efficiently serve these stations. This action will result in the furlough of approximately 150 employees. Also on Jan. 7, 2003, United will close stations in Caracas, Venezuela; Santiago, Chile; and Dusseldorf, Germany. The closings will affect 69 employees in Caracas, 110 in Santiago, and four in Dusseldorf. The last flights will depart Dusseldorf, Caracas and Santiago on January 6, 2003. Reservation Centers Because of a 25 percent year-over-year drop in call volume to United's reservations line, the company on Jan. 4, 2003, will close its reservation offices in San Francisco, Long Beach and Indianapolis. This will result in the furlough of 686 employees. United will continue to serve customers through its remaining nine reservations centers. The company said it will continue to look at every aspect of its operations and make changes that will ensure United continues to be a major player in the global airline industry. News releases and other information about United Airlines can be found at the company's website, www.united.com. * At Least 25T Venezuelan Companies Likely To Go Bankrupt --------------------------------------------------------- The Federation of Venezuelan Industries said that more than 25,000 companies may go bankrupt in the first half of this year, while 60,000 more will choose not open for business this month, reports local paper El Nacional, citing federation president Miguel Perez Abad. The national strike, which began last month, pushed Venezuela into recession and may trigger those bankruptcies. If this happens, over 200,000 people could lose their jobs. The companies that want to show their support for the strike will not open their doors in January. The strike, which seeks the resignation of President Hugo Chavez, or have him call early elections, has severely affected the country's oil industry. An earlier report from Bloomberg News shows that about 90 percent of Venezuela's oil exports have been cut off by the strike. Venezuela is one of the world's largest oil producers. State oil company Petroleos de Venezuela S.A, withdrew US$500 million from the country's "rainy day fund," to alleviate cash flow problems caused by the strike. The company may also dismiss more than 400 workers after firing 94 managers last month. *********** 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 2003. 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 * * *