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/raid1/www/Hosts/bankrupt/TCRLA_Public/030113.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 Monday, January 13, 2003, Vol. 4, Issue 8 Headlines B E R M U D A TYCO INTERNATIONAL: To Use Cash To Buy Convertible Debentures TYCO INTERNATIONAL: To Move Out of N.H. Offices Soon B R A Z I L ELETROPAULO METROPOLITANA: Stronger Currency Moves Shares Up USIMINAS: Furnace Revamp Will Not Affect Customers C H I L E COEUR D'ALENE: Agrees with Asarco On Board Designees' Fate ENERSIS: Buyers Shortlist Expected By Month's End C O L O M B I A MILLICOM INT'L: Announces Subscriber Growth For The 4Q02 D O M I N I C A N R E P U B L I C UNION FENOSA: Turns To Government For Debt Aid M E X I C O EMPRESAS ICA: S&P Affirms, Off CreditWatch; Outlook Negative T R I N I D A D & T O B A G O BWIA: Chief Favors Cooperation Over Merger BWIA: Predicts Profitability Later This Year U R U G U A Y GALICIA URUGUAY: Plan To Reimburse Deposits Proceeds On Schedule V E N E Z U E L A PCV: WB Financing Arm Declines $225M Loan For Now PDVSA: Moody's Downgrades Ratings Amid Strike PDVSA FINANCE: Moody's Cuts Ratings * Venezuela's Rating Outlook Remains Negative - - - - - - - - - - ============= B E R M U D A ============= TYCO INTERNATIONAL: To Use Cash To Buy Convertible Debentures ------------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced Thursday its intent to purchase, through its wholly-owned subsidiary, Tyco International Group S.A., Tyco International Group's Zero Coupon Convertible Debentures due February 12, 2021 with cash. Under the terms of the debentures, Tyco has the option to pay for the debentures with cash, Tyco common shares, or a combination of cash and shares. Tyco has elected to pay for the debentures solely with cash. If all outstanding debentures are surrendered for purchase, the aggregate cash purchase price will be approximately $1,850,809,508. It is anticipated that debenture holders' opportunity to surrender debentures for purchase will commence on January 14, 2003, and will terminate on February 12, 2003. Under the terms of the debentures that may be surrendered for purchase, Tyco is required to pay for all debentures surrendered during such time period. This announcement is neither an offer to purchase nor a solicitation of an offer to sell the debentures. On the date debentures may first be surrendered for purchase, Tyco will file a Schedule TO with the SEC and will give notice to debenture holders specifying the terms of Tyco's obligation to purchase the debentures. Debenture holders are encouraged to read these documents carefully before making any decision with respect to the surrender of debentures, because these documents will contain important information regarding the details of Tyco's obligation to purchase the debentures. CONTACT: Tyco International Ltd. Gary Holmes (Media), +1-212-424-1314 Kathy Manning, (Investors), +1-603-778-9700 TYCO INTERNATIONAL: To Move Out of N.H. Offices Soon ---------------------------------------------------- Bermuda-based Tyco International, Inc. is preparing to leave its offices in Exeter, N.H., according to Knight Ridder Business News on Thursday. The Company has been on a cost cutting plan in an effort to regain investor confidence after top executives were indicted of embezzling company funds. Rent in the in 9W. 57th Street building went up to as much as US$130 per square foot, during the peak of the real estate market. Rent in the building started out at US$90per square foot. The Company rents 31,000 square feet on the 43rd floor. The report indicated that Tyco may have to find another company to sublet it and take a loss on the space as company spokesman Gary Holmes said that the offices are in a "long-term lease". However, the Company has not decided where it will be moving the offices and its 30 employees. Holmes said, "We're looking for a less expensive location, that in which more people -- more of the staff -- could work together." The report mentioned New Jersey, Connecticut, Pennsylvania and elsewhere in New York as possible locations to where the Company might move. The Trenton times specifically reported that the Company negotiating to rent offices in West Windsor, N.J., which is near to new CEO Edward Breen's home in New Hope, Pasadena. CONTACT: TYCO INTERNATIONAL LTD. Corporate Office The Zurich Centre, Second Floor 90 Pitts Bay Road Pembroke HM 08, Bermuda Phone: 441-292-8674 Home Page: http://www.tyco.com Contacts: Gary Holmes (Media) Tel +1-212-424-1314 or Kathy Manning (Investors) Tel +1-603-778-9700 =========== B R A Z I L =========== ELETROPAULO METROPOLITANA: Stronger Currency Moves Shares Up ------------------------------------------------------------ Shares of Brazilian power distributor Eletropaulo Metropolitana SA rose BRL2.4, or 7.7% to BRL33.5, a four-month on Thursday, adding to a 13% gain in the previous five trading days, Bloomberg says. Some analysts say that the increase was driven by a strengthening currency. "The rise in the currency has improved Eletropaulo's solvency situation," said Fabio Motta, who helps manage BRL5 billion in equities and bonds at Sul America Investimentos in Sao Paulo. "The stock continues to be very cheap despite its recent gains." The real gained 6.7% against the U.S. dollar this year. This may help Eletropaulo reduce debt by as much as BRL600 million, said Gustavo Gatass, a power utility analyst at UBS Warburg LLC in Rio de Janeiro. The Company's debt owed in dollars was BRL3.9 billion in the third quarter, or 62% of its total outstanding debt, Gatass said. Meanwhile, another analyst, Oswaldo Telles, a utility analyst at Banco Bilbao Vizcaya Argentaria SA in Sao Paulo, believes that the rise in the stock was prompted by speculations that its US- based parent AES may sell some assets to pay part of its debt to the government's development bank. Lower debt at the controlling shareholder would help Eletropaulo refinance obligations and increase investment. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations USIMINAS: Furnace Revamp Will Not Affect Customers -------------------------------------------------- Brazilian flat steel maker Usiminas said the renovation of its blast furnace No. 2 will not impact its customers, reports Business News Americas. The revamp, which cost BRL99 million, is a huge chunk of the Company's intended BRL323 million (US$97.9 million) in investments this year. The planned investment amount excludes its Sao Paolo subsidiary Cosipa. "The company has already taken measures to insure that its supply contracts are fulfilled," a spokesman for the Company was quoted in the report. The Company had already contracted several companies for the revamp, which is expected to last 85 days. The blast furnace will be installed by Usiminas' construction arm Usimec and Austrian firm Voest-Alpine. Usimec will receive BRL8 million, while Voest will get BRL23 million for the job. The two companies will also be responsible for the supply of mechanical materials. Usiminas has commissioned French electric and transport company Alstom to install new equipment for the project, for BRL22 million. Brazilian refractory company Ibar will be replacing the furnace's refractory bricks for BRL8.8 million. Meanwhile, other contracts are still under negotiation. The Company estimates output this year, to reach 4.6Mt, excluding production from Cosipa. Annually, Cosipa and Usiminas produce a total 9.7Mt of crude steel. Usiminas' total sales volume last year reached 4.13Mt. CONTACT: Usinas Siderurgicas de Minas Gerais Usiminas PN A Rua Prof. Jose Vieira de Mendonca, 3011 Engenheiro Nogueira 31310-260 Belo Horizonte - MG Brazil Tel +55 31 3499-8000 Fax +55 31 3499-8475 Web http://www.usiminas.com.br Contact: Jose Augusto Muller de Oliveira Gomes, Chairman ========= C H I L E ========= COEUR D'ALENE: Agrees with Asarco On Board Designees' Fate ---------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE:CDE) announced Thursday that Coeur and Asarco Inc. have reached an agreement that calls for the resignation of its two designees from Coeur's Board of Directors and contemplates the orderly sale by Asarco in the future of its 7,125,000 shares of Coeur common stock that it owns. As a result of this agreement, Xavier Garcia de Quevedo Topete and Daniel Tellechea Salido have resigned from Coeur's Board of Directors. These individuals, who are officers of Grupo Mexico, S.A. de C.V., which is the parent of Asarco, were first elected to Coeur's Board in 1999 when Coeur acquired certain silver assets from Asarco in exchange for shares of Coeur common stock. In addition, Asarco has agreed to limit its resale of these common shares it has owned since 1999 to 500,000 shares to any one investor. Finally, this agreement provides for the waiver by Asarco of certain approval authority it has had since the 1999 transaction over certain corporate actions by Coeur. Dennis E. Wheeler, Coeur's Chairman and Chief Executive Officer, remarked, "Coeur has enjoyed a strong relationship with Asarco and Grupo Mexico over the past several years. We are very appreciative of their contributions to Coeur's Board." Asarco plans to publicly sell its shares of Coeur common stock either (i) pursuant to Coeur's currently pending universal shelf registration statement that Coeur has on file with the SEC after it is declared effective, or (ii) after April 7, 2003, when an exemption from registration is expected to become available to cover Asarco's sales. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. Coeur has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. A registration statement, which is expected to be amended in the near future, relating to the securities referred to above has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. ENERSIS: Buyers Shortlist Expected By Month's End ------------------------------------------------- Financially trapped Chilean electricity holding company Enersis SA is currently seeking to raise US$0.9-1.0 billion from the sale of its assets. The company will narrow down the list of likely buyers by the end of this month, Dow Jones reports from an interview with Chairman Enrique Garcia by local business daily El Diario. Many companies are interested in buying the assets, "and we'll have the most select of these (suitors) by the end of the month," Garcia said, naming power plant Central Canutillar and distributor Rio Maipo as two of the interested companies. Enersis, a unit of Spain's Endesa, is selling assets to reduce its US$2.6 billion debt. It is also planning on a US$1.5-billion capital increase for the same reason. "We should have all scenarios perfectly developed by April 30," implying that "asset disposals and capital increase should be at an advanced stage or practically concluded" by then, Garcia 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 =============== C O L O M B I A =============== MILLICOM INT'L: Announces Subscriber Growth For The 4Q02 -------------------------------------------------------- - 28% annual growth in total subscribers to 4.3 million* - 25% annual growth in proportional subscribers to 3.0 million* - 52% annual growth in proportional pre-paid subscribers in Asia - 55% annual growth in proportional pre-paid subscribers in Central America Millicom International Cellular S.A. (MIC) (Nasdaq Stock Market: MICC), the global telecommunications investor, announced Thursday that in the fourth quarter of 2002 its worldwide operations in Asia, Latin America* and Africa added 316,395 net new cellular subscribers or 215,165 subscribers on a proportional basis. At December 31, 2002, MIC's worldwide cellular subscriber base* increased by 28% to 4,252,037 cellular subscribers from 3,322,869 as at December 31, 2001. Particularly significant annualized percentage increases were recorded in Cambodia, Pakistan, Sri Lanka, Sierra Leone, Ghana and Central America. At December 31, 2002, MIC had 3,021,873 proportional cellular subscribers*, an increase of 25% on the 2,415,474 proportional subscribers, reported at December 31, 2001. (See table: http://bankrupt.com/misc/Cellular_Operations.htm) Within the 3,021,873 proportional cellular subscribers* reported at the end of the fourth quarter, 2,667,400 were pre-paid customers, representing a 36% increase on the 1,967,571 proportional prepaid subscribers* recorded at the end of December 2001. Pre-paid subscribers currently represent 88% of gross reported proportional cellular subscribers. (* Excluding El Salvador) Millicom, whose credit rating was recently cut by Moody's Investors Service two levels to Caa2 from B3, has been selling assets to pay its debt, which it said was "unsustainable in the long term." Millicom 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 International Cellular S.A. is a global telecommunications investor with cellular operations in Asia, Latin America and Africa. It currently has a total of 17 cellular operations and licenses in 16 countries. The Group's cellular operations have a combined population under license (excluding Tele2) of approximately 369 million people. In addition, MIC provides high-speed wireless data services in seven countries. MIC also has a 6.8% 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. The Company's shares are traded on the Nasdaq Stock Market under the symbol MICC. CONTACTS: Marc Beuls Telephone: +352 27 759 101 President and Chief Executive Officer Millicom International Cellular S.A., Luxembourg Andrew Best Telephone: +44 (0) 20 7321 5022 Shared Value Ltd, London Visit MIC's homepage at http://www.millicom.com =================================== D O M I N I C A N R E P U B L I C =================================== UNION FENOSA: Turns To Government For Debt Aid ----------------------------------------------- Spanish company Union Fenosa said it piled up debts amounting to RD$14.5 billion in the Dominican Republic, where it controls two- thirds of power distribution, during its first four years of operation, reports DR1 Daily News. In order to deal with the debt crisis, the Company sent a letter to President Hipolito Mejia asking the DR government's assistance to provide it some US$200 million. The letter, dated 19 December 2002 and signed by executive vice president Antonio Pantoja de Andres, revealed that Edesur and Edenorte owe half of the total debt (RD$7 billion) to the mother company, Union Fenosa, and its affiliates. It also pointed out that the Dominican government has not kept up its half of the capitalization process, and urges it to do so as expediently as possible. =========== M E X I C O =========== EMPRESAS ICA: S&P Affirms, Off CreditWatch; Outlook Negative ------------------------------------------------------------ Standard & Poor's Ratings Services said Thursday it affirmed its 'CCC' corporate credit rating on Mexican construction company Empresas ICA Sociedad Controladora S.A. de C.V. (ICA). Standard & Poor's also affirmed the 'CC' subordinated debt rating on ICA's 5% subordinated convertible bond due in March 2004, of which $96.3 million remains outstanding. The outlook is negative. All ratings were removed from CreditWatch, where they were placed on Aug. 2, 2002. The rating action follows the company's announcement on Dec. 20, 2002, that with the proceeds from the 10-year loan signed with Banco Inbursa S.A. (BB+/Stable/B) for Mexican Peso (MxP) 1,180 million (about $120 million), it has refinanced outstanding loans amounting to MxP372 million (about $37 million). The affirmation also reflects ICA's announcement that it has repurchased approximately $71 million, face value, of its subordinated bond leaving the outstanding amount at $96.3 million. "The ratings reflect liquidity concerns and the company's weak operating performance. During the third quarter 2002, the recovery of provisions related to the delivery and acceptance of several industrial construction projects was offset by the cancellation of accounts receivable and the creation of provisions related to the light rail and San Juan Coliseum projects in Puerto Rico," stated Standard & Poor's credit analyst Jose Coballasi. The company's consolidated backlog as of the third quarter stood at five months of construction work. However, the agreement to complete the Chiapas bridge project, contracts recently signed by ICA Flour Daniel, and additional civil construction contracts should prevent a further decline in the company's backlog during the fourth quarter. ICA's financial performance remains weak as seen in its key financial ratios. During the first nine months of 2002, ICA posted an EBIDTA interest coverage, total debt to EBITDA, and FFO to total debt ratio of 1.3x, 10.4x, and -5.4%, respectively. Nevertheless, the company was able to reduce its total debt by around $80 million during 2002, through asset sales, and continues its efforts to improve its operating margin. ICA recently announced further headcount reductions that are expected to yield savings of about MxP121 million (around $12 million). It should also be noted that the company is in the midst of a debt restructuring effort, which has already led to improvements in the company's capital structure and maturity schedule. ANALYSTS: Jose Coballasi, Mexico City (52) 55-5279-2014 Manuel Guerena, Mexico City (52) 55-5279-2011 ================================= T R I N I D A D & T O B A G O ================================= BWIA: Chief Favors Cooperation Over Merger ------------------------------------------ BWIA Chief Conrad Aleong expressed his disapproval of the proposed merger of Caribbean airlines in a press conference with International Air Transportation Association Director General Giovanni Bisignani, according to an article released by the Trinidad Guardian. Mr. Aleong suggests that the solution for the troubled regional airlines would be functional cooperation, functional integration, rather than a merger. "Maybe all the carriers can put in one maintenance company and then do all the maintenance for all the carriers. We considered an accounting company for all the accounting for all the airlines," said Mr. Aleong. Mr. Bisignani echoes Mr. Aleong's opinions. He recommends a consolidation, where each airline would run a different part of the operations of its partners. Mr. Aleong also belied reports that Air Jamaica's chairman Butch Stewart did not want to cooperate with BWIA. According to Mr. Aleong, Mr. Stewart may simply be against the idea as the integration of the two carriers in a merger is very similar to a financial merger. Aleong noted that an arrangement very much like BWIA's partnership with LIAT may be more likely to happen than a merger. 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) BWIA: Predicts Profitability Later This Year -------------------------------------------- Trinidad and Tobago flagship carrier BWIA said that it has stopped the financial hemorrhaging it faced since the September 11 attacks, reports the Trinidad Guardian. The Company is expecting to operate in the black again this year. Last year, the airline posted an US$8.4 million loss during the first six months. The airline's chairman Conrad Aleong revealed that the Company has a plan to produce profit this year. Aleong, however, would not divulge the details of the said plan. Aleong boasted that, "You will hear us coming back to shareholder value. Our shareholders have waited too long to get a return and get dividends." The airline will have to implement the plan to save at least US$1.4 million in saving on operations per month before the deadline three weeks from now. The plan is part of the requirements imposed by the state when it granted a loan to help the airline's recovery. The report said that the state will stop disbursements on the loan once the airline fails to meet the savings target stipulated. BWIA has not implemented the plan yet, and not completed the negotiations for labor concessions with the unions. Meanwhile, the International Civil Aviation Organization predicts the global airline industry to start picking up. The organization expects airlines to generate profits in two years from now. The increase in the prices of fuel has added another challenge to the airlines. BWIA alone paid US$34 million in fuel costs last year. ============= U R U G U A Y ============= GALICIA URUGUAY: Plan To Reimburse Deposits Proceeds On Schedule ---------------------------------------------------------------- Banco Galicia Uruguay's schedule for returning frozen dollar- denominated deposits worth around US$947 million to the public on Thursday went ahead as planned, the Uruguayan central bank confirmed in a statement. The first 3% of the dollar deposits are to be repaid in cash this month, reports Business News Americas. By the end of 2003, 15% will have been returned. In 2004, a further 15% will be handed back. In the following seven years, 10% will be returned annually. Galicia Uruguay was intervened and had its deposits frozen due to a bank run by its numerous Argentine clients. In December, an intervening judge approved the plan to reimbursement deposits. The plan, according to Galicia Uruguay, was accepted by 82% of clients. Galicia Uruguay was the country's second-largest private financial institution in terms of deposits before it was intervened and suspended by the central bank in mid-February after losing US$500 million in deposits between December last year and January 2002. It is not yet known when the bank will be allowed to reopen. Galicia Uruguay is controlled by Argentina's largest commercial private bank, Banco Galicia. CONTACT: GRUPO FINANCIERO GALICIA S.A. Teniente General Juan D. Peron 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Home Page: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires BANCO GALICIA URUGUAY S.A. World Trade Center Luis A. Herrera 1248 Piso 22 Montevideo Uruguay Tel.:(+598-2) 628-1230 www.bancogalicia.com.uy ================= V E N E Z U E L A ================= PCV: WB Financing Arm Declines $225M Loan For Now ------------------------------------------------- Apparently Perez Companc - Venezuela (PCV), which is controlled by Argentina's Pecom Energia, will have to wait a while before receiving loans totaling US$225 million from the World's Banks private sector financing arm, Reuters indicates. The International Finance Corporation (IFC) on Thursday considered separate US$80 million and $45 million loans for PCV and is also planning to arrange a syndicated loan with the participation of private banks expected to total US$100 million. However, the IFC said it won't provide the money until the situation in Venezuela "normalizes" but promised to continue to work closely with PCV to enable the client to be in a position to move forward with the project PCV has requested IFC assistance in funding capital expenditure to increase production in each of the fields it operates, according to the IFC. The funds will be used for drilling a new producer and water injector wells, the construction of new field facilities and workovers on existing wells. PCV, which accounts for about 26% of Pecom's total oil production, operates four oil-producing fields in Venezuela under operating service agreements with Petroleos de Venezuela SA. PDVSA: Moody's Downgrades Ratings Amid Strike --------------------------------------------- Moody's Investors Service downgraded the debt ratings of Petroleos de Venezuela SA (PDVSA) as the state-owned oil company struggles to meet financial obligations amid a nationwide strike aimed at forcing President Hugo Chavez to resign or hold early elections. The ratings downgraded were: - PDVSA's local currency issuer rating to B3 from Ba1 - PDVSA's foreign currency obligations (medium term note programs) to B3 from Ba3 - PDV America Inc.'s senior note rating to B3 from Ba3 Moody's maintains a negative outlook on the ratings. "There is no evident resolution at hand to the political conflict or to PDVSA's strike conditions, which indicates continuing uncertainty and possibly worsening conditions surrounding the state oil company's ability to resume some level of normal operations," Moody's said in a statement. The strike, now on its sixth week, has reduced PDVSA's production from 3 million barrels of crude oil a day to about 600,000 barrels. The Company, which had more than US$7 billion in long-term debt at the end of 2001, has a US$150-million debt payment coming due Feb. 15. Analysts say the payment will be covered by the at least $300 million of export revenue accumulated in the Cayman Island- registered company's account. The Company's finance unit makes quarterly payments on about US$3.5 billion in debt securities. PDVSA FINANCE: Moody's Cuts Ratings ----------------------------------- Moody's Investors Service downgraded the ratings of PDVSA Finance Ltd. due to the ongoing national strike that has affected Venezuela's oil sector. The ratings downgraded are: - $400,000,000 6.45% Notes due 2004, to B3 from Ba1 - $300,000,000 6.65% Notes due 2006, to B3 from Ba1 - $300,000,000 6.80% Notes due 2008, to B3 from Ba1 - $400,000,000 7.40% Notes due 2016, to B3 from Ba1 - $400,000,000 7.50% Notes due 2028, to B3 from Ba1 - $400,000,000 8.750% Notes due 2004, to B3 from Ba1 - $250,000,000 9.375% Notes due 2007, to B3 from Ba1 - $250,000,000 9.750% Notes due 2010, to B3 from Ba1 - $100,000,000 9.950% Notes due 2020, to B3 from Ba1 - EURO 200,000,000 6.250% Notes due 2006, to B3 from Ba1 - $500,000,000 8.50% Notes due 2012 to B3 from Ba1 All the ratings have been placed on review for possible downgrade. Moody's actions came in relation to the downgrade on the ratings of the local currency issuer rating of PDVSA to B3 from Ba1, and the long term foreign currency rating of PDVSA to B3 from Ba3, both of which have negative outlooks. "The ratings of the PDVSA Finance notes are linked to the local currency and foreign currency ratings of PDVSA, which generates the receivables that back the repayment of the rated notes. As a result of this linkage, any change in those ratings may also result in a change in the PDVSA Finance notes' ratings," Moody's said in a statement. New York Linda Stesney Managing Director Structured Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York Maria Muller VP - Senior Credit Officer Structured Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 * Venezuela's Rating Outlook Remains Negative --------------------------------------------- Standard & Poor's Ratings Services affirmed Thursday its 'CCC+' long-term and 'C' short-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela. The outlook remains negative. (Standard & Poor's does not rate Venezuela's local currency debt.) "The heightened risk of default on Venezuela's foreign currency debt due to the ongoing strike at Petroleos de Venezuela (foreign currency rating CCC+/Negative/C) was taken into account by Standard & Poor's in its Dec. 13, 2002, downgrade of its long- term foreign currency sovereign credit rating on Venezuela to 'CCC+' from 'B-'," said sovereign credit analyst Richard Francis. "However, the continued, almost complete, cessation of oil revenue, which has provided over 50% of total government revenue, has engendered a severe cash crunch and accounts for the government's recent difficulty in rolling over its unrated Venezuelan bolivar-denominated debt," he added. Mr. Francis noted that Standard & Poor's expects the government to resort to increased central bank monetization of its debt, which will accelerate inflation and further depreciate the currency, and that the risk of the imposition of exchange controls has also increased. "International reserves have fallen by nearly US$1.4 billion since the strike began," said Mr. Francis. "Over the past week, there has been an accelerated loss of reserves, with total international reserves reported at US$14.4 billion as of January 8 down from nearly US$15.8 billion at the beginning of December 2002," he concluded. According to Standard & Poor's, the central government's external debt service will total only about US$250 million in January and February. However this amount rises to US$601 million in March. If reserves continue to fall, timely foreign currency debt service payments will become more onerous. ANALYSTS: Richard Francis, New York (1)-212-438-7348 Jane Eddy, New York (1) 212-438-7996 *********** 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. 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