/raid1/www/Hosts/bankrupt/TCRLA_Public/030124.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
Friday, January 24, 2003, Vol. 4, Issue 17
Headlines
A R G E N T I N A
ARGENTINE UTILITIES: President Side Steps Courts on Price Hike
BGN: Judge Awards Creditors First Round In Deposit Battle
JUAN MINETTI: Fitch Maintains Category 4 Share Rating
SALTA HYDROCARBON: S&P Lowers, Removes Rating From CreditWatch
SIDERAR: Fitch Rates $250M Bonds C(arg), Devaluation Problematic
* Argentina Pays $760M To World Bank, Anticipates Bridge Loan
* Argentina Chooses Three Finalists Restructuring Adviser
B E R M U D A
MUTUAL RISK: Fitch Lowers Long-Term, Subordinated Debt Ratings
TYCO INTERNATIONAL: Posts Mixed 1Q Results, Expects Improvement
B R A Z I L
AES TRANSGAS: Seeks Extension On $300M Preferred Dividend
BEP: Piaui State Government Mounts Efforts To Block Sale
BSE: Restructures Maturing $6.54M Interest Payment
CEMIG: Stock Prices Drop On Bad Debt Concerns
EMBRATEL: Signs Agreement With Minas Gerais To Improve Presence
VARIG: Pins New Partner Hopes On VEM
VESPER: BCI Announces Debt Reduction
VESPER: QUALCOMM Announces Record 1Q Fiscal 2003 Results
C O L O M B I A
SEVEN SEAS: Trustee Seeks Approval for Counsel, Special Counsel
* Fitch Rates Sovereign Bond 'BB', Local Currency `BBB-`
C U B A
SHERRITT POWER: Parent Proposes Debt Restructuring
SHERRITT POWER: Officially Contemplating Debt Proposal
M E X I C O
ALESTRA: Obtains Federal License To Expand Services
CORPORACION DURANGO: Moody's Downgrades Ratings To Ca
P A N A M A
BLADEX: 4Q, Full Year 2002 Results Show Big Argentina Losses
T R I N I D A D & T O B A G O
CARONI LTD: Management, Unions Reach Agreement on VSEP
V E N E Z U E L A
BANCO MERCANTIL: Moody's Cuts BFSR To E+, Outlook Developing
BBVA BANCO PROVINCIAL: Venezuelan Crisis Takes Toll On Ratings
BANCO DE VENEZUELA: Moody's Cuts BFSR On Slumping Economy
- - - - - - - - - -
=================
A R G E N T I N A
=================
ARGENTINE UTILITIES: President Side Steps Courts on Price Hike
--------------------------------------------------------------
Luis Verdi, a spokesman for Argentine President Eduardo Duhalde,
said that the president signed an order allowing the government
to skirt a court ruling and raise utility rates, relates
Bloomberg.
The mandate comes a month after Judge Susana Cordoba suspended a
presidential decree authorizing a 9% power price hike and a 7.2%
increase in natural gas rates. The country is under pressure from
the International Monetary Fund and utility companies to increase
rates.
Mr. Verdi said that the order amends a law requiring congress to
first sign off any public rate increase proposed by the
government. The president pointed out that utility companies may
not have enough left to provide service, if a price hike is not
allowed.
The move may be seen as part of the country's efforts to meet the
IMF's requirements for permission to defer on loans. One of the
IMF's conditions on an aid agreement to Argentina is a 30%
increase in power rates.
Utility companies with dollar-denominated debts in the country
were hard hit by the currency devaluation. Last year, the local
currency lost about 70% of its value against the US dollar. Last
year, the government also ordered to freeze utility prices,
adding to the companies' losses. Foreign owned utilities like
Electricite de France, Telecom Italia SpA, the UK's BG Group Plc
and Spain's Endesa SA suffered losses due to the devaluation.
The report also mentions that U.S. power company AES Corp. saying
it may abandon its US$1 billion investment in Argentina because
the government would not let it raise electricity rates to
compensate for declines in the local currency. Foreign companies
invested more than US$25 billion in Argentina's public services
in the 1990s.
BGN: Judge Awards Creditors First Round In Deposit Battle
---------------------------------------------------------
Depositors of the failed Buenos Aires-based Banco General de
Negocios SA and its affiliates experienced their first victory in
their bid to get their money back. Bloomberg reports that
Uruguayan Judge Graciela Barcelona froze a US$100-million payment
to J.P. Morgan Chase & Co., Credit Suisse First Boston and
Dresdner Bank AG.
J.P. Morgan, Credit Suisse and Dresdner, which are partial owners
of BGN, injected US$100 million into Uruguay's Banco Comercial
SA, which is also majority owned by the three international
banks, as part of a bailout last February as neighboring
Argentina's financial woes spread across the region.
Under the terms of the bailout negotiated with Uruguayan
regulators, the three international banks would get their US$100
million back if the government took over or liquidated the bank.
Uruguay has taken over Banco Comercial and now wants to combine
the bank with two other troubled lenders.
However, Judge Barcelona's ruling banned the three international
banks from getting their US$100 million back. Judge Barcelona
backed her ruling by saying that depositors in several affiliated
Latin American banks may have first claim on the money. As much
as US$360 million disappeared from the affiliated banks last
year.
The Judge's order is the latest twist in a legal battle triggered
by the collapse of BGN. Bloomberg recalls that more than 600
depositors in BGN and its affiliates have spent months preparing
evidence in Uruguay and Argentina that they say will prove that
the three international shareholders are responsible for paying
them back.
"This is first the victory we've had after a year of work," said
Juan Grasset, who leads the group of Banco General clients.
CONTACT: BANCO GENERAL DE NEGOCIOS
Esmeralda 120 - (C1035ABD)
Capital Federal
Argentina
Phone: (54-11) 4394-3003
Home Page: http://www.bancobgn.com
CREDIT SUISSE GROUP
P.O. Box 1
CH-8070 Zurich
Tel. +41 (1) 212 16 16
Fax. +41 (1) 333 25 87
Contact: Lukas Muehlemann, chairman & CEO
J.P. MORGAN CHASE & CO.
270 Park Avenue
New York, NY 10017
Phone: (212) 270-6000
Fax: (212) 270-1648
Home Page: http://www.jpmorganchase.com/
Contact:
William Harrison, Jr., Chairman and CEO
Dina Dublon, Chief Financial Officer
Geoffrey Boisi, Co-CEO of the Investment Bank
Investor Relations
Phone: (1-212) 270-6000
DRESDNER BANK AG
Jrgen-Ponto-Platz 1
D-60301 Frankfurt/Main,
Germany
Phone: +49-(0) 69/2 63-0
Fax: General enquiries
+49-(0) 69/2 63-48 31
+49-(0) 69/2 63-40 04
Home Page: http://www.dresdner-bank.de/
Contact:
Dr. Jur. Henning Schulte-Noelle
Chairman of the Supervisory Board of Dresdner Bank AG
Uwe Plucinski
Deputy Chairman of the Supervisory Boa
JUAN MINETTI: Fitch Maintains Category 4 Share Rating
-----------------------------------------------------
Credit rating agency Fitch said it is leaving unchanged its
Category 4 rating on the shares of Juan Minetti, Argentina's
second-largest cement producer with a 34% market share behind
Loma, relates Business News Americas. Category 4 is for low
quality, medium liquidity shares with a low capacity to generate
funds.
The rating action comes as Minetti struggles to generate funds,
which are peso-denominated, while battling with high debts, 90%
of which are dollar-denominated. Fitch also attributed the action
to the effect of the peso's devaluation (73%) on Minetti's
dollar-denominated costs.
Fitch also noted a slumping demand of cement products that has
resulted to a reduction of income since 1999, prompting the
Company to implement an asset-restructuring plan that should be
completed in March.
For the first nine months of 2002, Minetti widened its net loss
to ARS497 million (some US$162mn at today's rate), compared to a
net loss of ARS81.4 million the same period in the previous year.
The Company is controlled by Swiss cement giant Holcim.
SALTA HYDROCARBON: S&P Lowers, Removes Rating From CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered Wednesday its rating
on Salta Hydrocarbon Royalty Trust's (Salta Trust) $234 million
11.5% targeted amortization notes due 2015 to 'CCC-' from 'CCC+',
and removed the rating from CreditWatch, where it was placed July
13, 2001.
The rating action was triggered by inadequate cash flow that the
issuer needed for the last interest payment on Dec. 28, 2002.
Although the issuer made this payment in full, it paid investors
with funds in its reserve account. If collections do not improve,
there is a concern that by Sept. 28, 2003, the reserve fund will
be depleted and the issuer will be unable to fully meet its debt
payments on that date. Specifically, the
December payment was made with funds derived from collections
($6.26 million) and from funds in the reserve account ($0.50
million from a total of $13.55 million). This is the second time
that funds from the reserve account were needed to pay debt. In
December 2001, $2.27 million of the reserve account was used to
pay debt. The next due payment for the Salta Trust bonds is March
28, 2003, for $6.75 million. As of Jan. 21, 2003, collections for
the first quarter of 2003 amounted to $2.2 million. Therefore,
the ability of the transaction to make the next scheduled payment
will depend, among other factors, on the sustainability of high
crude oil prices in the international market, and on the
performance of both natural gas production and prices. Although
it is expected that the transaction will continue receiving
collections from the underlying assets, total cash flows might be
severely affected by the local economic environment.
Standard & Poor's opinion of the industry risk has not changed
significantly since the last rating action on the transaction.
However, the impact of the deterioration, including the effects
of the pesification of natural gas prices and investment
incentives, has strongly affected the issuer's ability to meet
debt payments. In addition, the province of Salta's ability to
increase royalty collections depends on the potential for
recovery of average natural gas prices. This recovery continues
to be uncertain since a potential utility tariff adjustment and
the renegotiation of existing contracts with industrial clients
also remain uncertain.
Salta Trust involves the securitization of 80% of all royalty
payments due to the Argentine province of Salta from a group of
18 private companies operating oil and gas concessions in the
province. The transaction has an insurance policy protecting the
issuer from the risk that it cannot transfer or convert currency
needed for debt service. The policy protects the issuer against
these risks for 31 months and a liquidity reserve fund protects
it for an additional six months. On Feb. 22, 2002, Standard &
Poor's lowered this transaction's rating to 'CCC+' from 'B-', in
light of the reassessment of the province of Salta's oil and gas
industry risk, on which the transaction's cash flow is dependent.
To speak with an analyst directly regarding Salta Hydrocarbon
Royalty Trust, please contact Juan Pablo De Mollein, Structured
Finance Ratings Latin America, Buenos Aires (54) 114-891-2113;
and regarding the province of Salta's oil and gas industry,
please contact Pablo Lutereau, Industrial Ratings, Buenos Aires
(54) 114-891-2125.
ANALYSTS: Juan Pablo De Mollein, Buenos Aires (54) 114-891-2113
Felicitas Del Cioppo, Buenos Aires (54) 114-891-2120
Diane Audino, New York (1) 212-438-2388
Pablo Lutereau, Buenos Aires (54) 114-891-2125
SIDERAR: Fitch Rates $250M Bonds C(arg), Devaluation Problematic
----------------------------------------------------------------
Fitch assigned Argentine steelmaker Siderar with a C(arg) rating,
reports Business News Americas. The rating covers US$250 million
worth of bonds issued by Siderar. In a statement, Fitch said that
the rating reflects a series of postponements in repayments,
agreed to by bondholders while the Company undergoes a financial
restructuring. Interest payments, on the other hand, have been
kept up to date.
Siderar, controlled by the Techint group, has had a hard time
meeting its debt obligations following the devaluation of the
local currency. The Company is Argentina's largest integrated
steelmaker with crude output of 2.2Mt/y and an 80% share of the
local market for the products it makes.
CONTACT: Leonardo Stazi
Siderar S.A.I.C.
Phone: 54 (11) 4018-2308/2249
Home Page: www.siderar.com
* Argentina Pays $760M To World Bank, Anticipates Bridge Loan
-------------------------------------------------------------
Using central bank reserves, Argentina managed to make a US$760-
million payment to the World Bank,. Without mentioning its source
of information, Clarin reported that the government gave the
payment order on Tuesday, adding that the amount will be
deposited in the lender's bank on the following day.
The move is part of the country's efforts to meet the
requirements of the International Monetary Fund in order to be
allowed to defer payments on approximately US$11 billion in debt
through August.
On Tuesday, Clarin reported that the country of Spain may grant
Argentina a bridge loan to allow it pay US$845 million due to the
Inter-American Development Bank.
Argentina is badly in need of fresh funds to help it recover from
a deep recession, in which it has been wallowing in for four
years. The country has lost its credit lines to multilateral
lenders, except for the IMF, after defaulting on a record US$95
million in debt in December 2001.
* Argentina Chooses Three Finalists Restructuring Adviser
---------------------------------------------------------
The government of Argentina has narrowed its short list for
adviser in the negotiations of its US$95 billion in defaulted
debt down to three: Morgan Stanley, UBS Warburg LLC and Lazard
LLC. A report by Bloomberg cited a statement from the economy
ministry indicating the government turned down bids from Credit
Lyonnais SA, Dresdner Bank AG, Bank of America Corp., and Panama-
based Acciones Grupo Wall Street Securities SA.
Analysts say that the chosen adviser may receive as much as
US$100 million in fees. Earlier, the government disqualified
banks, which helped sell Argentine bonds prior to the country's
default from bidding to advise the country on renegotiations of
its debts.
But some analysts believe that the selection of adviser may have
been a token gesture to the IMF. According to them, there is very
little the banks can do before a new administration takes over on
May 25.
Economy Minister Ernesto Lavagna earlier said that the
restructuring is likely to take at least two years.
Fausto Spotorno, an economist at Delphos Investment in Buenos
Aires, commented on the banks which were allowed to bid, saying,
"The problem with the banks that were allowed to bid is that they
have little experience in restructuring anything the size of this
default. What might take a year with an experienced bank will now
take two years or more."
The country is expected to make a final decision on which bank
would become its adviser in the debt talks next week. Signs of
the country's willingness to negotiate with bondholders of the
defaulted debt has helped the country earn permission to defer
payments on about US$11 billion it owes to multilateral lenders.
Richard Segal, director of research at Exotix Ltd., the London-
based brokerage of ICAP Plc said, "This is an important and
necessary component to the recovery process and if the government
is beginning to restructure its external debt, then it's easier
to take them and their policies seriously."
=============
B E R M U D A
=============
MUTUAL RISK: Fitch Lowers Long-Term, Subordinated Debt Ratings
--------------------------------------------------------------
Fitch Ratings has downgraded Mutual Risk Management Ltd.'s (MRM)
long-term issuer rating, which provides an indication of MRM's
credit quality at a senior unsecured level, to 'C' from 'CCC-'.
Fitch also downgraded the rating of MRM's convertible
exchangeable subordinated debt to 'C' from 'CC'. The ratings were
removed from Rating Watch Evolving.
The rating actions follow a review of MRM's plan to restructure
its senior debt. Fitch Ratings considers the restructuring to be
a distressed debt exchange since the alternative to the
restructuring would be liquidation. Upon completion of the
exchange, the ratings will be moved into the 'D' category under
Fitch's existing distressed debt guidelines. After thirty days,
Fitch expects to withdraw the ratings and no longer follow the
company.
The following ratings are affected:
Entity/Issue/Type Action Rating/Watch
Mutual Risk Management Ltd.
--Long-term issuer Downgrade/remove rating watch 'C';
--Conv. Exch. Sub. Debt Downgrade/remove rating watch 'C'.
CONTACT: Donald F. Thorpe CPA, CFA, 1-312-606-2353
James B. Auden CFA, 1-312-368-3146, Chicago
Media Relations: James Jockle 1-212-908-0547, New York
TYCO INTERNATIONAL: Posts Mixed 1Q Results, Expects Improvement
---------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) reported
on Wednesday that earnings per share for its first quarter were
32 cents, as compared to 47 cents from continuing operations for
the same period last year. Revenues were $8.9 billion, up 4% from
$8.6 billion in the first quarter last year. Income from
continuing operations was $635 million for the quarter as
compared with $935 million for the same period last year. Free
cash flow was $482 million in the quarter.
"Results for the first quarter reflect a base of operations on
which we can build during fiscal 2003," said Ed Breen, Tyco's
Chairman and Chief Executive Officer. "Given the challenging
economic environment in which we are operating and the issues we
worked to resolve during the quarter, these results demonstrate
the strength of our market positions and the appeal of our
products and services."
Quarterly Operating Results
The segment profits and margins below are presented in accordance
with generally accepted accounting principles (GAAP). During the
quarter, David Robinson was appointed President of Tyco Plastics
and Adhesives, reporting directly to the CEO. Accordingly,
Plastics and Adhesives is presented as a separate reportable
segment for all periods. In fiscal 2002, its results were
included in the Healthcare and Specialty Products segment.
Restated segment results by quarter for fiscal 2002 are available
at www.tyco.com. All dollar amounts are stated in millions.
Electronics
December 31, December 31,
2002 2001
Segment revenues $2,528.3 $2,817.3
Segment profit $292.6 $525.7
Segment margins 11.6% 18.7%
Revenues decreased 10% due to a significant decline within the
telecommunications sector, primarily associated with a decline of
$379 million at TyCom, where there were no new third party
construction or capacity sales in FY03. These declines were
partially offset by acquisitions made in FY02 and favorable
fluctuations in foreign currency rates. Additionally, year over
year declines in the telecommunication end market of our
electronic components business were partially offset by growth in
product sales to the automotive industry. Segment profits were
negatively impacted by lower operating profits in the
telecommunications sector, including operating losses of $65
million at TyCom, compared to profit of $67 million in the year
ago period, as well as lower manufacturing volumes in the
electronic components business and higher pension expense.
Fire and Security Services
December 31, December 31,
2002 2001
Segment revenues $2,759.4 $2,480.3
Segment profit $270.8 $402.1
Segment margins 9.8% 16.2%
Fire and Security Services revenues increased 11% year over year
as a result of acquisitions and the benefit of favorable
fluctuations in foreign currency rates. Segment profits were down
33% due to weaker commercial construction impacting both fire and
security in the U.S., lower gross margins in the fire service and
contracting businesses, and higher bad debt expense in security.
Healthcare
December 31, December 31,
2002 2001
Segment revenues $2,005.4 $1,770.4
Segment profit $447.4 $469.2
Segment margins 22.3% 26.5%
Healthcare revenues increased 13% due to acquisitions made in
FY02, favorable fluctuations in foreign currency rates and
organic growth of about 6%. Surgical and Medical revenues
increased as a result of sales under new contracts, as well as
new product introductions. Imaging, Respiratory, and
Pharmaceutical all benefited from higher volumes. These increases
were partially offset by declines in the International and Retail
base businesses. Segment profits were down roughly 5% as a result
of increased selling costs associated with new contracts and
product lines, higher costs associated with International
operations, higher R&D spending and increased pension expense.
Engineered Products and Services
December 31, December 31,
2002 2001
Segment revenues $ 1,195.7 $1,071.7
Segment profit $137.3 $143.8
Segment margins 11.5% 13.4%
Revenues increased 12% and profits decreased 5% in Engineered
Products and Services. Revenues grew through a combination of
acquisitions, favorable fluctuations in foreign currency rates,
and almost 6% organically. Fire and Building Products and
Electrical and Metal Products revenues increased slightly. Flow
Control saw revenue increases due to demand for water and
irrigation products, especially in the Pacific region, and higher
revenues in Thermal Controls as major contracts neared
completion. This more than offset lower volumes and prices in
North American and European valves and controls markets, customer
delays in infrastructure projects and reduced U.S. state and
municipal governmental spending levels. Segment profit and margin
declines were primarily the result of selling price pressure in
North American and European non-residential construction markets,
partially offset by profit contributions from acquisitions.
Plastics and Adhesives
December 31, December 31,
2002 2001
Segment revenues $450.6 $ 439.0
Segment profit $44.2 $93.6
Segment margins 9.8% 21.3%
The impact of revenue from acquisitions made in FY02 more than
offset a 3% decrease in organic sales. Economic conditions
depressed volumes and prices in Custom and Retail, while
Corrosion Protection declined as oil and gas pipeline
construction slowed. Segment profits declined in part as a result
of reduced volumes, increased raw material costs and adverse
pricing trends.
Other Items
The Company's income tax rate was 28.0% for the quarter, up from
17.1% in the year ago period. Interest expense, net was $263
million, up 39% from $189 million a year ago. The Company
incurred approximately $40 million of expenses associated with
the Phase 2 accounting review and related matters. This was
partially offset by the return to the Company of an unauthorized
payment of $20 million to a former director related to the
acquisition of CIT.
CASH AND LIQUIDITY
Free cash flow was $482 million for the first quarter. Cash flow
from operating activities was $828 million in the quarter. Free
cash flow was favorably impacted by approximately $200 million of
employee bonuses which are typically paid during the first
quarter of our fiscal year, but which were not paid until January
of 2003. Operating cash flow in the first quarter of FY03
included $159 million in cash spending on restructuring items.
See the accompanying table to this press release for the
definition and components of free cash flow.
Additionally, the Company used $247 million in cash for
acquisitions in the quarter, including $237 million for the
acquisition of dealer accounts. The Company also used $69 million
related to purchase accounting liabilities and $43 million
related to contingent deferred purchase price arising from prior
acquisitions. Free cash flow is calculated before these uses.
Tyco's debt-to-capitalization ratio was 48.3% at December 31,
2002 compared with 49.4% at September 30, 2002. The net debt-to-
capitalization ratios were 36.9% and 36.8%, respectively, for the
same periods.
FISCAL 2003 GUIDANCE
Earnings per share are expected to be near the lower end of the
Company's previously announced range of $1.50 to $1.75,
reflecting the incremental dilution associated with its
refinancing of debt and higher pension expense. Free cash flow is
expected to remain in a range of $2.5 billion to $3.0 billion for
the full fiscal year.
ABOUT TYCO INTERNATIONAL
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.
To see financial statements:
http://bankrupt.com/misc/TYCO_INTERNATIONAL.htm
CONTACT: Tyco International Ltd.
Media, Gary Holmes, +1-212-424-1314
Investor Relations, Kathy Manning, +1-603-778-9700
URL: http://www.tyco.com
===========
B R A Z I L
===========
AES TRANSGAS: Seeks Extension On $300M Preferred Dividend
---------------------------------------------------------
AES Transgas, a Brazilian power holding company, owned by US
power company AES Corp., has until January 25 to make a payment
of about US$300 million due on preferred shares of Sao Paulo
distributor Eletropaulo, which it acquired in 2000, reports
Business News Americas.
However, due to "temporary shortage of funds," the holding
company is seeking to delay the payment until April 15, promising
to pay interest equivalent to 9% a year for the 80-day delay to
those creditors that accept the postponement.
The payment is the last of four installments owed to Brazil's
national development bank BNDES and individual investors that
sold their preferred shares in January and May 2000,
respectively.
AES Transgas is used by AES Corp. to buy preferred shares in
Eletropaulo. It owns 64.1% of Eletropaulo's preferred shares,
equivalent to 38.6% of total capital.
According to an AES Transgas spokesperson, the holding company
was using dividends from Eletropaulo to pay for the shares, but
the recent decision by the distributor to suspend dividend
payments forced AES Transgas to reschedule its own debt payment.
BEP: Piaui State Government Mounts Efforts To Block Sale
--------------------------------------------------------
Another injunction has been filed to block the sale of Brazil's
Piaui state bank BEP, reports Business News Americas. According
to the federal supreme court, the state government of Piaui has
filed a petition for a new valuation study of BEP.
"BEP cannot be sold for a mere BRL38 million (US$10.7mn)," Piaui
state attorney Joao Emilio Falcao said in his case against the
minimum bid set by the central bank for a 74% stake in BEP.
BEP was due to be privatized in December, but the Brazilian
central bank suspended the process privatization because of two
injunctions filed by the state government and the bank's union.
The injunctions argued that the sale could not take place during
a change of government.
The latest injunction argues that the assessment of the bank's
value failed to take several assets and revenue sources into
account, such as tax credits and a contract to manage the state
government's accounts.
BEP has a contract with the state government giving it exclusive
rights to handle public accounts until December 2010. The
contract with the state government alone has already generated
revenues of BRL100 million, Falcao argued.
BSE: Restructures Maturing $6.54M Interest Payment
--------------------------------------------------
Brazilian mobile operator BSE, which is currently in negotiations
to be acquired by an unnamed buyer, is scheduled to pay 40% of a
maturing BRL23-million (US$6.54 million) interest payment on
Wednesday as part of an agreement reached with creditors.
According to Business News Americas, the Company, also known as
BCP Nordeste, will make another 30% payment over the next 30
days, and the remaining 30% over the next 60 days.
On Monday, the Company revealed it is in talks to be acquired by
an unnamed buyer. According to BSE investor relations director
Luiz Felipe Schiriak, BSE is working with two acquisition
proposals.
Among the companies believed to be interested in acquiring BSE
are Brazilian mobile holdings Brasilcel - the joint venture
between Spain's Telefonica and Portugal Telecom - and Telecom
Americas - the property of Mexico's America Movil. BSE expects to
conclude the talks "in weeks or days," according to Schiriak.
BSE, which is controlled by Bellsouth and Verbier Communications,
a unit of local Banco Safra, is having trouble making payments on
US$76 million, after a 37% decline in the real this year drove up
financing costs for Brazilian companies.
CEMIG: Stock Prices Drop On Bad Debt Concerns
---------------------------------------------
Shares of Brazilian power company Cia. Energetica de Minas Gerais
(Cemig) went down 3.9% to BRL5.94, after the actual amount of
provision the Company set aside to cover receivables owed by the
state of Minas Gerais exceeded expectations, Bloomberg reports,
citing Rafael Quintanilha, an analyst at Esprito Santo Securities
in Rio de Janeiro. According to the Company, 51% owner Minas
Gerais has not been able to honor some debts owed since 1995.
The Company restated earnings to take into account provisions
worth BRL1.05 billion (US$295 million) to cover unpaid debts.
Some parties, despite knowledge of the state's debt, were
surprised by the amount. Prior to the change, the Company posted
a loss of BRL267.9 million for the first three quarters of last
year.
CONTACT: Cia Energetica de Minas Gerais (Cemig)
Registered Office
Edificio Julio Soares
Avenida Barbacena, 1200
Sto Agostinho
30123-970 Belo Horizonte - MG
Brazil
Tel +55 31 3349-2111
Fax +55 31 3299-4691
URL: http://www.cemig.com.br
Contact:
Djalma Bastos de Morais, Chairman
EMBRATEL: Signs Agreement With Minas Gerais To Improve Presence
---------------------------------------------------------------
Brazil's largest long-distance phone company signed an agreement
with Minas Gerais state municipal association AMM, according to
local paper Valor Economico. The move is intended to expand the
Company's presence in the business of providing satellite
Internet connectivity to city governments.
"Our focus is small city governments that have difficulty in
transmitting official data to the state government," said
Embratel governmental sales manager Guilherme Paixao Franciscani.
The agreement would allow the Company to provide Internet
connection via Embratel's satellite unit called Star One, to the
state's 853 municipalities at a discounted rate.
Business News Americas reported that Embratel expects more than
one-half of the state's municipalities with a population of at
least 20,000 to sign up for connectivity, without mentioning a
target date. So far, some 50 cities have subscribed since the
agreement was announced three days ago.
Facing growing competition from local incumbents such as Telemar
and Telesp, Embratel intends to use this agreement as a model for
expansion to other states. Meanwhile, Mr. Franciscani refused to
divulge the amount of investments involved in this project.
CONTACT: Embratel Participacoes SA
Registered Office
Rua Regente Feijo, 166 sala 1687-B
Centro 20060-060 Rio de Janeiro
Brazil
Tel +55 21 2519-9622
Fax +55 21 2519-6608
Web http://www.embratel.com.br/
Contact: Daniel Eldon Crawford, Chairman
VARIG: Pins New Partner Hopes On VEM
------------------------------------
VEM (Varig Engenharia e Manutencao), a subsidiary of Brazilian
airline company Varig, registered profits of BRL20 million in
2002 fiscal year, reports Gazeta Mercantil. The positive result
makes VEM the main asset that will help its ailing parent draw a
new partner, as it struggles to pay down debt amounting to US$720
million, nearly half of which comes due this year.
VEM renders aircraft maintenance services and is currently the
main partner of Lufthansa Technik, one of the largest companies
for maintenance services worldwide. The Varig unit turned over
BRL417 million in 2002.
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
VESPER: BCI Announces Debt Reduction
------------------------------------
Bell Canada International Inc. ("BCI") (NASDAQ:BCICF) (TSX:BI)
announced Wednesday that Vesper S.A. and Vesper Sao Paulo S.A.
(the "Vespers") have entered into transactions which will result
in a reduction of approximately US$13 million of the principal
amount of debt owed by the Vespers to certain Brazilian banks
(the "Vesper Debt"), a portion of which debt is guaranteed by
BCI.
As part of the November 2001 financial restructuring of the
Vespers, BCI entered into agreements to guarantee up to 31.4% of
the Vesper Debt, subject to a cap of US$32.3 million (the "Vesper
Guarantees"). As a result of this reduction of the Vesper Debt
and based on a Brazilian real to US dollar exchange rate of 3.36,
BCI's obligations under the Vesper Guarantees will be
approximately US$21 million. This guarantee exposure will however
fluctuate if there are further reductions in the Vesper Debt and
with changes to the Brazilian real to US dollar exchange rate,
subject to the maximum cap of US$32.3 million.
BCI is operating under a court supervised Plan of Arrangement,
pursuant to which BCI intends to monetize its assets in an
orderly fashion and resolve outstanding claims against it in an
expeditious manner with the ultimate objective of distributing
the net proceeds to its stakeholders and dissolving the company.
BCI is listed on the Toronto Stock Exchange under the symbol BI
and on the NASDAQ National Market under the symbol BCICF.
CONTACT: Bell Canada International Inc.
Howard Hendrick
Tel: 514/392-2260
Email: howard.hendrick@bci.ca
Web site: www.bci.ca
VESPER: QUALCOMM Announces Record 1Q Fiscal 2003 Results
--------------------------------------------------------
QUALCOMM Incorporated (Nasdaq: QCOM) announced Wednesday its
first quarter fiscal 2003 results ended December 29, 2002. GAAP
reported revenues were $1.1 billion in the first fiscal quarter,
up 26 percent sequentially and 57 percent year-over-year.
Revenues increased primarily due to record demand for CDMA
products across global markets. GAAP reported net income was $241
million or $0.30 per share in the first fiscal quarter, up 30
percent sequentially and 76 percent year-over-year.
Revenues excluding the QUALCOMM Strategic Initiatives (QSI)
segment were $1.1 billion in the first fiscal quarter, up 27
percent sequentially and 54 percent year-over-year. Net income
excluding the QSI segment was $345 million or $0.42 per share in
the first fiscal quarter, up 35 percent sequentially and 83
percent year-over-year.
"QUALCOMM's exceptionally strong performance in the first fiscal
quarter was fueled by the successful commercial deployment of
third generation CDMA networks, which now total 35 operators in
17 countries around the world," said Dr. Irwin Mark Jacobs,
chairman and CEO of QUALCOMM. "We achieved record revenues and
earnings in both our QTL technology licensing business and our
QCT semiconductor business, with shipments of approximately 29
million MSM phone chips during the first fiscal quarter. We are
continuing to see very strong demand in the Americas and
throughout Asia for our industry-leading chipsets and system
software. Our end-to-end BREW platform is supporting an ever
increasing variety of applications, enhancing data revenues and
encouraging an early migration to 3G CDMA. We anticipate
significant growth in China and India this year as China Unicom,
Reliance InfoComm, Tata Teleservices and other wireless operators
introduce commercial CDMA2000 1X service."
Gross margins excluding the QSI segment were 67 percent in the
first fiscal quarter, down from 69 percent sequentially and up
from 66 percent year-over-year. The sequential decrease in gross
margins was primarily due to a lower percentage of total revenues
coming from QUALCOMM Technology Licensing (QTL), and the year-
over-year increase was primarily due to the shift in product mix
toward higher-end 3G CDMA2000 1X products and increased
efficiency resulting from economies of scale.
Research and development (R&D) expenses excluding the QSI segment
were $110 million in the first fiscal quarter, up 3 percent
sequentially and 6 percent year-over-year. The increase in R&D
investment was primarily due to product development efforts to
support high-speed wireless Internet access and multimode,
multiband, multinetwork chips supporting cdmaOne(TM), CDMA2000
1X/1xEV-DO, radioOne(TM), GSM/GPRS and WCDMA technologies.
Selling, general and administrative (SG&A) expenses excluding the
QSI segment were $107 million in the first fiscal quarter, up 4
percent sequentially and 18 percent year- over-year.
Investment income excluding the QSI segment was $26 million in
the first fiscal quarter, up 66 percent sequentially and 5
percent year-over-year. Investment income excluding the QSI
segment is primarily comprised of interest income on corporate
cash and marketable debt securities and other-than- temporary
losses on debt securities. The sequential increase in investment
income resulted from lower other-than-temporary losses on debt
securities.
QUALCOMM's annual effective income tax rate on earnings excluding
the QSI segment for fiscal 2003 is estimated to be 34 percent,
compared to 35 percent in the year ago period. Our annual
effective income tax rate on GAAP reported earnings for fiscal
2003 is estimated to be 38 percent, compared to 22 percent in the
year ago period.
QUALCOMM Strategic Initiatives
The QUALCOMM Strategic Initiatives (QSI) segment includes our
strategic investments and related income and expenses, including
the Vesper Companies in Brazil. QSI revenues, which are primarily
related to the consolidation of the Vesper Companies, were $29
million in the first fiscal quarter, down 15 percent sequentially
largely due to changes in foreign exchange rates of the Brazilian
real. QSI losses before taxes were $133 million in the first
fiscal quarter, up 36 percent sequentially primarily due to a $28
million increase in other-than-temporary losses on investments.
Included in the QSI losses was $30 million of losses from Vesper,
a 29 percent decrease in losses sequentially.
Business Outlook
The following statements are forward-looking and actual results
may differ materially. Please see a description of certain risk
factors in this release and QUALCOMM's quarterly reports on file
with the Securities and Exchange Commission (SEC) for a more
complete description of risks.
Second Quarter Fiscal 2003
-- Based on the current business outlook, we anticipate that
revenues excluding the QSI segment in the second fiscal quarter
will increase by approximately 50 percent year-over-year and
decrease sequentially by approximately 7 percent. We anticipate
that earnings per share excluding the QSI segment will be
approximately $0.34-$0.35 in the second fiscal quarter, a 75
percent increase year-over-year. This estimate assumes shipments
of approximately 27 million MSM phone chips during the quarter,
of which approximately 86 percent is expected to be 3G CDMA2000
MSM phone chips. This represents 93 percent growth in MSM chip
shipments year-over-year. We anticipate that operating expenses
will increase in the second fiscal quarter compared to the first
fiscal quarter due to seasonal factors such as higher employee
payroll taxes and public company expenses.
Fiscal 2003
-- Based on the current business outlook, we anticipate that
revenues excluding the QSI segment will grow by approximately 28-
33 percent year-over-year and earnings per share excluding the
QSI segment to be in the range of $1.34 - $1.39 for fiscal 2003,
up 37-42 percent year-over-year. This estimate is based on the
sale of 105-112 million CDMA phones in calendar 2003 with
approximately 10 percent decrease in average selling prices of
CDMA phones, upon which royalties are calculated.
Cash Flow
QUALCOMM's cash, cash equivalents and marketable securities,
excluding the QSI segment, totaled approximately $3.7 billion at
the end of the first quarter of fiscal 2003.
QUALCOMM Incorporated (www.qualcomm.com) is a leader in
developing and delivering innovative digital wireless
communications products and services based on the Company's CDMA
digital technology. Headquartered in San Diego, Calif., QUALCOMM
is included in the S&P 500 Index and traded on The Nasdaq Stock
Market(R) under the ticker symbol QCOM.
To see financial statements:
http://bankrupt.com/misc/QUALCOMM.htm
CONTACT: QUALCOMM Incorporated
Investor Relations:
Julie Cunningham, Sr. Vice President
Tel: +1-858-658-4224
Fax: +1-858-651-9303,
Email: juliec@qualcomm.com
===============
C O L O M B I A
===============
SEVEN SEAS: Trustee Seeks Approval for Counsel, Special Counsel
---------------------------------------------------------------
Ben B. Floyd, Chapter 11 Trustee of the Bankruptcy Estate of
Seven Seas Petroleum, Inc., is seeking a court order from U.S.
Bankruptcy Court for the Southern District of Texas allowing him
to retain Floyd, Isgur, Rios & Wahrlich, P.C., as general
bankruptcy counsel to assist him in performing his duties in this
case effective as of January 3, 2003.
The Trustee has also filed an application seeking to retain
Andrews & Kurth, LLP as his special counsel. Although the two
firma will work closely together in representing the Trustee,
they will not perform duplicative services in carrying out their
representation. Within their separate areas of responsibility,
the two firms will be required to coordinate their efforts to
ensure consistency and to implement common strategies and
objectives. Consistent with his duties as Chapter 11 trustee,
the Trustee intends to monitor and direct the services provided
by the two firm to insure they are in the best interest of the
Debtor's estate.
Floyd Isgur will be employed to:
a. analyze the records of the Debtor and assist the Trustee
in preparing the financial schedules and statement of
financial affairs;
b. analyze and assist the Trustee in proposing a plan of
reorganization;
c. assist the Trustee, where necessary, to negotiate and
consummate non-routine sales of assets of the Estate,
including sales free and clear of liens, claims and
encumbrances, and to institute any proceedings related
thereto;
d. assist the Trustee, where necessary to negotiate and/or
prosecute non-routine objections to claims;
e. prepare, where appropriate, necessary motions,
applications, answers, orders, reports, and papers in
connection with the foregoing enumerated services;
f. perform any and all other legal services for the Trustee
that the Trustee determines is necessary and appropriate
after advice and consultation.
Floyd Isgur's rates range from:
Shareholder/Partner $440 to $300 per hour
Counsel $295 per hour
Associate $230 to $175 per hour
paralegal $110 to $70 per hour
On December 20, 2002 a group of its creditors filed a petition to
involuntarily adjudicate Seven Seas as a chapter 7 debtor. Seven
Seas consequently consented to the Adjudication under Chapter 11
on January 14, 2003. Tony M. Davis, Esq., at Baker Botts LLP
represents the Debtor in its restructuring efforts. As of
September 30, 2002, the Company listed $180,389,000 in total
assets and $185,970,000 in total debts.
* Fitch Rates Sovereign Bond 'BB', Local Currency `BBB-`
--------------------------------------------------------
Fitch Ratings assigned a 'BB' rating to the Republic of
Colombia's US$500 million global bond maturing Jan. 28, 2033.
Fitch rates Colombia's long-term foreign currency obligations
'BB' and local currency (Colombian peso) obligations 'BBB-'.
On August 29, 2002, Fitch Ratings revised its Rating Outlook to
Negative from Stable on the Colombia's sovereign ratings, citing
a deterioration in external financing conditions and rising
government debt levels. Fitch is currently evaluating whether
legislation passed at year-end and, if affirmed, the pending
national referendum will result in substantive fiscal deficit
reduction and a return of investor confidence and economic
growth.
External financing conditions for Latin American sovereigns
remain unfavorable. In this environment, concerns about
Colombia's security problems, muted growth prospects, and
widening fiscal deficits have increased its borrowing costs and
led to a weakening of its currency, raising Colombia's external
financing burden.
Colombia has sizable external financing needs of US$7.6 billion
in 2003, or 42% of expected CXR (current external receipts, a
broad measure of exports), which compares unfavorably with most
other 'BB'-rated sovereigns. Likewise, net public external debt
to CXR at 71% is higher than most 'BB'-rated sovereigns. In
recent years, the Colombian government has increased its use of
external sources of financing, and at year-end 2002, 29% of
public debt constituted externally sourced market debt. Given its
sizable external financing needs, Colombia remains vulnerable to
a further deterioration in market conditions emanating, for
example, from Brazil. Furthermore, with more than 50% of exports
directed to the U.S. market, Colombia is exposed to the risk of
continued sluggish conditions there.
Persistent fiscal deficits and slow economic growth have
underpinned an increase in Colombia's gross general government
debt to about 50% of GDP at year-end from 24% in 1998, versus a
median level for 'BB' peers of 45%. Net of social security assets
and debt held by other public sector entities, government debt
measures 47% of GDP. In order to stabilize debt at current
levels, fiscal and growth targets must be met and the upcoming
referendum must approve further fiscal adjustment and pension
reform. Fiscal austerity will be especially challenging given the
need for additional spending on security and social programs in
order to support social stability and a more attractive
environment for investment.
Fitch's analysis of debt dynamics indicates that a primary
surplus (before interest expenses) of 1% of GDP at the general
government level would be necessary over the medium term to
stabilize the debt-to-GDP ratio at current levels. A surplus of
this magnitude could engender a virtuous cycle of lower borrowing
costs, improved private sector confidence, currency stability and
stronger economic growth. Conversely, if the adjustment falls
short, debt would continue its rise, further weakening sovereign
creditworthiness. This year's budget should achieve the needed 1%
of GDP primary surplus, barring contingencies or slower than
expected growth. Refinancing risks to this year's substantial
US$7 billion in gross public sector financing needs are reduced
somewhat by today's issue and by the US$2.6 billion commitment
from multilateral lenders.
Should the new administration's progress in fiscal adjustment and
its more aggressive approach to security issues engender greater
private sector confidence that supports both improved growth
prospects and balance of payments stability, then sovereign
creditworthiness could stabilize. Alternatively, if the budget
targets are missed or if the government is unable to deliver
improved security, the ratings could be downgraded.
CONTACT: Fitch Ratings, New York
Morgan Harting, 212/908-0820
Roger Scher, 212/908-0240
Matt Burkhard, 212/908-0540 (Media Relations)
=======
C U B A
=======
SHERRITT POWER: Parent Proposes Debt Restructuring
-------------------------------------------------------
Sherritt International Corporation announced Wednesday it has
made a non-binding proposal to Sherritt Power Corporation. The
subject of the proposal is to address Sherritt Power's concerns
regarding the ability to meet its obligations with respect to
interest and principal payments due March 31, 2003 on Sherritt
Power's 12.125% senior unsecured amortizing notes due March 31,
2007 (the "Sherritt Power notes") and its potential need for
additional funds for gas related infrastructure and additional
power capacity.
The transaction proposed by Sherritt International would provide
Sherritt Power noteholders (other than Sherritt International)
approximately 12.7% of the principal value of the notes in cash
and 87.3% of the principal value of the notes in the form of 9%
Sherritt International Corporation unsecured debentures due March
31, 2010. Sherritt International also intends to offer the common
shareholders of Sherritt Power, other than itself, 1.25
restricted voting shares of Sherritt International for each
common share of Sherritt Power they hold. Sherritt International
currently holds $60.2 million of the $180.5 principal amount
(33.3%) of the Sherritt Power notes outstanding as well as 49.7 %
of the 8 million outstanding common shares of Sherritt Power.
The proposal to Sherritt Power is designed to offer both its
shareholders and noteholders a premium to historical trading
prices of their securities as well as continuing participation in
the benefits of combining the complementary businesses of
Sherritt Power and Sherritt International. Sherritt Power
shareholders can also expect to benefit from the substantial
growth projected in the diversified businesses of Sherritt
International. Sherritt Power noteholders will benefit from
having the support for their investment coming by way of a much
larger, well capitalized and growing Canadian public company with
over $2 billion in assets.
Sherritt International has appointed an independent director of
Sherritt International, to carry out discussions with Sherritt
Power with respect to the proposal put forth.
Sherritt Power Corporation designs, constructs and operates
power- generating facilities. To date, through its one-third
owned subsidiary, Energas S.A., Sherritt Power has commissioned
151 megawatts of natural gas fired generating capacity in Cuba
and has an additional 75 megawatts of capacity scheduled to be
connected to the Cuban power grid in the first quarter of 2003.
Sherritt Power has provided financing to Energas for the full
cost of the facilities put in place. Delays and additional costs
of the Cuban power projects have created a mismatch between the
amortization schedule of Sherritt Power's notes and the cash
flows expected from generating capacity additions.
The additional cost of the facilities and the delay in their
completion has already required the amortization schedule of the
Sherritt Power notes to be modified once (March 2001) and as
indicated in Sherritt Power's third quarter 2002 financial
report, it has been evaluating various alternatives, which are
required to meet the scheduled $45.0 million repayment under the
Sherritt Power notes due March 2003.
Sherritt International Corporation is a widely held Canadian
public company with 97.8 million shares and $600 million of
convertible debentures, which trade on The Toronto Stock Exchange
under the symbols S and S.DB, respectively.
CONTACT: Sherritt International Corporation,
Ernie Lalonde, Vice-President
Investor Relations and Corporate Affairs
Tel: (416) 924-4551
Email: www.sherritt.com
SHERRITT POWER: Officially Contemplating Debt Proposal
------------------------------------------------------
Sherritt Power Corporation ("Sherritt Power" or the
"Corporation") announced Wednesday that it is evaluating a
proposal received from Sherritt International Corporation
("Sherritt International") in respect of Sherritt Power's common
shares and 12.125% senior unsecured amortizing notes due 2007
(the "Notes"). The Sherritt International proposal arises out of
an expectation by Sherritt Power that it will have insufficient
cash available to meet the $45 million principal repayment on the
Notes scheduled for March 31, 2003. A committee of independent
Sherritt Power directors (the "Independent Committee") is
evaluating the proposal and other alternatives to meet its
liquidity needs. The Independent Committee has retained Paradigm
Capital Inc. as financial advisor.
Sherritt Power had previously reported that as a result of delays
in the construction schedule of the combined cycle phase of its
Varadero plant, which had delayed the expected revenue stream
from this phase and increased capital costs, the Corporation was
evaluating various alternatives which were required to provide
for the necessary financial flexibility to meet the scheduled
repayment under its Notes in March 2003 and to provide the funds
to invest in gas-related infrastructure. Notwithstanding the
deferral in cash flows, the underlying business of Sherritt Power
is operating normally and the combined cycle phase of the
Varadero project is now undergoing final synchronization with the
Cuban power grid. Sherritt Power is expected to supply in excess
of 10% of Cuba's electricity requirements with the combined cycle
phase in operation.
The transaction proposed by Sherritt International would provide
owners of the Notes (other than Sherritt International), with
approximately 12.7% of the principal value of the Notes in cash
and 87.3% of the principal value of the Notes in the form of 9%
Sherritt International Corporation unsecured debentures due March
31, 2010. Sherritt International has also indicated that it
intends to offer the common shareholders of Sherritt Power, other
than itself, 1.25 restricted voting shares of Sherritt
International for each common share of Sherritt Power owned.
Sherritt International holds $60.2 million of the $180.5
principal amount (33.3%) of the Notes outstanding as well as
49.7% of the outstanding common shares of the Corporation.
The proposal from Sherritt International addresses Sherritt
Power's liquidity concerns as well as provides securities via
exchanges that Sherritt International has indicated represent
premiums to the historical trading prices for Sherritt Power's
common shares and Notes. Sherritt International has indicated
that this proposal will also provide for continuing participation
via an interest in Sherritt International, which has
complementary businesses to Sherritt Power as well as other more
diversified businesses.
Sherritt International has indicated that the proposals are
conditional on receiving the necessary approvals for each class
of securities, and that it would prefer to proceed by way of a
plan of arrangement. There can be no assurance that the proposals
will proceed. If the proposals or satisfactory alternatives are
not completed expeditiously, the Corporation could be materially
adversely affected, and the Corporation could default on the
Notes.
The Corporation has been engaged in the design, construction and
operation of natural gas-fired electricity generating facilities
in Cuba. The Corporation's original power project concept
included the construction of 206 megawatts of electricity
generating capacity, which was to be financed in part by the
issuance of the Notes and was to be completed by the end of 2000.
To date, 151 megawatts of generating capacity has been
commissioned in Cuba, including 20 megawatts not originally
contemplated, and an additional 75 megawatts is expected to be
connected to the Cuban power grid in the first quarter of 2003
bringing total net generating capacity to 226 megawatts.
The Independent Committee intends to evaluate the proposal
received from Sherritt International. Paradigm Capital, at the
Independent Committee's request, is also considering whether or
not there are other alternatives that would provide Sherritt
Power the necessary financial flexibility to meet its short-term
liquidity needs, as well as potentially to provide funds for
project infrastructure requirements.
Sherritt Power Corporation was formed to finance, construct and
operate power-generating businesses. Sherritt Power Corporation
trades on The Toronto Stock Exchange under the symbol U. The
Corporation's 12.125% notes due 2007 trade on the over-the-
counter market.
CONTACT: Sherritt Power Corporation
Tel: (416) 934-3179
1-877-676-6006 (toll-free in Canada)
===========
M E X I C O
===========
ALESTRA: Obtains Federal License To Expand Services
---------------------------------------------------
Mexican long distance communications company Alestra will now be
able to offer local telecommunications services with the AT&T
Corp. brand to other cities besides Mexico City, Guadalajara and
Monterrey, reports Dow Jones,
In a press release, Alestra revealed that it has been granted a
federal license to offer high-speed digital Internet services to
other cities. AT&T owns 49% of Alestra. The rest of the Company
is split between Mexican industrial conglomerate Alfa SA and
financial group BBVA-Bancomer SA.
The three shareholders recently expressed willingness to provide
an US$80-million capital injection into the ailing Mexican
international exchange operator. But first, Alestra must
successfully restructure US$570 million in debt meet stipulations
for the capital injection, said Alestra's treasurer Sergio Bravo.
Already, the Company has drawn up a proposal to restructure the
debt. But the debt proposal still needs authorization from the US
and Mexican securities regulators, Mr. Bravo said. He added that
Alestra expects to receive authorization in the next days. After
the authorization, the Company will then submit the proposal for
bondholders to approve or reject by the end of January.
CONTACT: ALESTRA S.A. DE R.L. DE C.V
Av. Paseo de las Palmas No. 405
Col. Lomas de Chapultepec
11000 Mexico, D.F.
Phone: 5201-5020
5201-5019
Fax: 5201-5031
5201-5027
Web site: http://www.alestra.com.mx/cgi-
Executives: Rolando Zubiran, Chief Executive Officer
Eduardo Lazos, V.P. Engineering & Ops
Investor Relations: Alberto Guajardo
Phone: (52-818) 625-2219
E-mail: aguajard@alestra.com.mx
FINANCIAL ADVISOR: MORGAN STANLEY
Worldwide Headquarters
1585 Broadway
New York, NY 10036
Phone: (212) 761-4000
Fax: (212) 761-0086
Home Page: http://www.morganstanley.com/
Contact:
Investor Relations
Phone: (212) 762-8131
In Mexico:
MORGAN STANLEY & CO. INCORPORATED
Oficina de Representaci>n en M,xico
Andres Bello 10
8o Piso
Colonia Polanco
11560 Mexico, D.F.
Phone: 011-525-282-6700
Fax: 011-525-282-9200
CORPORACION DURANGO: Moody's Downgrades Ratings To Ca
-----------------------------------------------------
Moody's Investors Service downgraded the ratings of Mexican
packaging company Corporacion Durango, S.A. de C.V. (Durango) to
Ca after missing a January 15, 2003 interest payment on its
US$175 million 13.75% senior notes due in 2009. The action
reflects Moody's opinion that bondholders are likely to
experience a loss in principle in excess of 25% of face value.
This concludes Moody's review, which was initiated on December
23, 2002.
Ratings Downgraded are: To From
- Senior Implied rating Ca Caa2
- Senior Unsecured Issuer rating Ca Caa3
- US$175 million senior notes, due 2009 Ca Caa3
- US$301.7 million senior notes, due 2006 Ca Caa3
- US$10.4 million senior notes, due 2008 Ca Caa3
- US$18.2 million senior notes,
due August 2003 Ca Caa3
The outlook on the ratings is Negative
Durango must make the interest payment within 30 days of the
contractual payment date. Failure to make the payment within the
allocated grace period would constitute an event of default under
the indenture governing these notes. Moody's believes Durango
will be challenged to make the missed payment within the
allocated grace period.
CONTACTS: CORPORACION DURANGO, S.A. DE C.V.
Mayela R. Velasco
+52 (1) 829 1008
mrinconv@corpdgo.com.mx
Arturo Diaz Medina
+52 (1) 829 1015
adiaz@corpdgo.com.mx
===========
P A N A M A
===========
BLADEX: 4Q, Full Year 2002 Results Show Big Argentina Losses
------------------------------------------------------------
Banco Latinoamericano de Exportaciones, S.A. (NYSE: BLX)
("BLADEX" or the "Bank"), a specialized multinational bank
established to finance trade in the Latin American and Caribbean
region, reported Wednesday results for the fourth quarter and
full year ended December 31, 2002. The Bank reported net income
for the fourth quarter of 2002 of $15.0 million, or $0.85 per
share, compared with a net loss of $76.7 million, or $4.43 per
share, reported in the fourth quarter of 2001.
Net loss for the year 2002 was $268.8 million, or $15.56 per
share, compared with net income of $2.5 million, or $0.06 per
share, reported for the year ended December 31, 2001.
Commenting on the latest quarterly results, Jose Castaneda, chief
executive officer of BLADEX, said, "Since July 31, 2002 when we
announced our $302 million provision against possible credit
losses and impairment losses on securities in our Argentine
portfolio, BLADEX has made significant progress toward returning
the Bank to profitability and long-term growth. The operating
momentum achieved in the third quarter this year continued in the
fourth quarter. Importantly, market conditions have begun showing
some signs of stabilizing, and meaningful progress was made on
our plan to re-capitalize the Bank. In addition, our capital
ratios improved. Throughout the period, we were able to fulfill
our mission of providing trade financing to our clients in
support of their objectives, while realizing attractive financial
returns.
"Our fourth quarter net income of $15.0 million ($0.85 per common
share) was achieved on average assets of $3.1 billion for the
quarter, just half of the Bank's average assets of $6.2 billion
in the fourth quarter of 2001. This performance reflects the
Bank's ability to adjust its size to a smaller capital base in a
high risk environment. The 18.7% return on average equity and
1.9% return on assets for the quarter reflect our improved
pricing power as a result of our commitment to the markets in
which the Bank operates, as well as our stable portfolio quality.
"Deposit balances, at $552 million at the end of the quarter,
remained relatively stable, and BLADEX's cash balances of $479
million represented 87% of total deposits at December 31, 2002.
"Contributing to the strength of our results in the quarter is
the success we continue to have in mitigating our risks in
Argentina and in achieving a solid risk/return balance in Brazil.
Our exposure in Argentina, where interest income is accounted for
on a cash basis, was $851 million at year- end, down $304 million
from the beginning of the year and down $78 million in the final
quarter, which included loan write offs of $20 million. For all
of 2002, we had only $5.9 million in past due interest on
Argentine loans and securities. While the resolution of the
economic situation in Argentina remains uncertain, we continue to
believe that our Argentine reserves are adequate under current
conditions in the country. We are particularly encouraged by the
improving tone of the dialogue between the Argentine government
and the IMF.
"Our portfolio in Brazil continues to be healthy and profitable.
During the year our exposure in that country was reduced nearly
55% to $1.3 billion at year-end in order to mitigate our
concentration risk given the smaller size of our balance sheet.
"Excluding Argentina, BLADEX ended 2002 with basically no non-
performing assets on its books. This reflects our rigorous credit
process which, in the Bank's 24 years of operations, and
excluding the current crisis in Argentina, has allowed us to
extend $117 billion in credits while experiencing only $78
million in credit losses, equivalent to a low 0.06% of
disbursements.
"Significant progress was made during the quarter on the Bank's
re- capitalization plan. At a special meeting on November 18,
shareholders overwhelmingly approved a proposed amendment to
BLADEX's Articles of Incorporation to increase the number of
authorized shares to 185 million, a critical step in our plan to
raise at least $100 million of Tier 1 equity capital through a
rights offering. On December 17, 2002, BLADEX filed a
Registration Statement with the Securities and Exchange
Commission regarding a proposed rights offering to the holders of
the Bank's Class A, Class B and Class E common stock. The Bank
currently has preliminary commitments or expressions of interest
from a group of existing Class A and Class B shareholders and a
small number of other institutions, including multilateral
organizations and development banks (the Core Support Group), to
purchase for investment approximately $100 million of shares to
the extent that shareholders do not subscribe for such shares in
the rights offering. Further details on the re-capitalization
plan are available in the Registration Statement, which is posted
on our web site at www.blx.com.
"During 2003, our financial goals are focused on four objectives:
to conclude the re-capitalization of the Bank, to diversify our
funding sources, to gradually re-leverage our balance sheet while
adhering to our traditionally high credit standards, and to
control expenses aggressively. Furthermore, we will continue to
manage our liquidity in a conservative manner," Mr. Castaneda
concluded.
SUMMARY ANALYSIS OF OPERATING RESULTS
The following table sets forth the condensed income statements of
the Bank for the fourth quarter and year ended December 31, 2001,
as well as for the third and fourth quarters of 2002 and for the
year ended December 31, 2002.
(In $ millions)
2001 2002 IVQ01 IIIQ02 IVQ02
Operating net
interest income 67.8 53.9 18.6 11.3 11.3
Effect of
interest rate gap 18.6 8.2 5.7 0.9 1.1
Interest income
on available
capital funds 34.0 15.4 5.4 3.9 3.6
Net interest
income (1) 120.4 77.6 29.7 16.1 16.0
Net commission
and other income 19.1 8.0 3.7 1.1 2.2
Net revenues before
gain on
extinguishment of
debt and
derivatives and
hedging activities 139.6 85.6 33.3 17.1 18.2
Gain on
extinguishment
of debt 0.0 1.4 0.0 1.4 0.0
Derivatives and
hedging
activities (2) 7.4 -0.3 5.5 4.6 -0.4
Net revenues 146.9 86.7 38.9 23.2 17.8
Operating
expenses (3) -24.0 -19.3 -6.7 -5.1 -3.8
Income before loss
From operations and
disposal of segment,
reversal/charge-off
of unpaid interest
on non-accruing
loans and
adjustments,
provision for
credit losses and
impairment losses
on securities,
income tax and
cumulative effect
of accounting
change 123.0 67.4 32.1 18.1 14.0
Loss from
operations and
disposal of
segment (4) -2.4 -2.3 -1.2 0.0 -0.1
Reversal/charge-off
of unpaid
interest accrued
on non-accruing
loans and
adjustments (5) -1.7 -10.9 -1.7 0.0 -0.1
Provision for
possible credit
losses, and
impairment loss
on securities -117.5 -323.0 -106.0 -2.3 1.2
Income tax 0.0 0.0 0.0 0.0 0.1
Cumulative effect
of accounting
change 1.1 0.0 0.0 0.0 0.0
Net income (loss) 2.5 -268.8 -76.7 15.8 15.0
(1) Excludes reversals of interest accrued on Argentine loans and
investments placed on non-accrual status of $1.7 million and $9.3
million in IVQ01 and in the first six months of 2002,
respectively.
(2) Represents the impact of the fair value adjustment of credit
put options, which were exercised in IIIQ02, and the fair value
of interest rate swaps (SFAS 133).
(3) Includes $0.7 million of severance costs at BLADEX's
headquarters during 2002 and the same amount for 2001. During the
fourth quarter of 2002, outlays related to the re-capitalization
process of approximately $1.4 million were reversed from the
professional services line item and deferred to be deducted from
the proceeds of the capital raising expected in 2003.
(4) Represents $1.5 million and $32 thousand in severance costs
related to the closing of the structured finance unit in New York
in IIQ02 and IVQ02, respectively, and operating expenses for the
year 2002 totaling $821 thousand, of which $724 thousand were
incurred during the first half of 2002.
(5) Includes reversals of interest accrued on Argentine loans and
investments placed on non-accrual status of $1.7 million and $9.3
million in IVQ01 and in the first six months of 2002,
respectively.
BLADEX, with $2.9 billion in assets, is a specialized
multinational bank established to finance trade in the Latin
American and Caribbean region. Its shareholders include central
banks from 23 countries in the region and 147 commercial banks
(from the region, as well as international banks) and private
investors. Its mission is to channel funds for the development of
Latin America and the Caribbean, and to provide integrated
solutions for the promotion of the region's exports. BLADEX is
listed on the New York Stock Exchange.
CONTACTS:
BLADEX, Head Office
Calle 50 y Aquilino de la Guardia
Panama City, Panama
Attention: Carlos Yap,
Senior Vice President, Finance & Performance Mgt.
Tel. No. (507) 210-8581
Email: cyap@blx.com
URL: http://www.blx.com
-or-
The Galvin Partnership
76 Valley Road, Cos Cob, CT 06807
Attention: William W. Galvin
Tel. No. (203) 618-9800
Email: wwg@galvinpartners.com
=================================
T R I N I D A D & T O B A G O
=================================
CARONI LTD: Management, Unions Reach Agreement on VSEP
------------------------------------------------------
The management of Caroni (1975) Ltd. and unions representing its
staff workers signed a memorandum of understanding that may
precipitate the resumption of the Company's operations. Earlier,
operations has been hampered by mechanical problems in Caroni's
Usine Ste Madeliene factory, while members of its staff
association gathered outside the Company's main office in protest
of the government's handling of the reorganization.
The memorandum was signed at the Company's Brechin Castle office
late Tuesday after a series of marathon meetings between
management and representatives of the Association of Technical
Administrative and Supervisory Staff (ATASS), The Sugar Industry
Staff Association (SISA), the Sugar Boilers Association and The
Estate Police Association, according to the Jamaica Express.
Under the memorandum, which specifically states that there should
be no victimization of any employee, talks on a new collective
agreement would resume on Wednesday next week.
Issues on the government's controversial Voluntary Separation of
Employment Plan offer to employees are also taken into
consideration.
The memorandum stipulates that the enhanced VSEP would be offered
on February 15, concurrently with the EVESP offered to daily paid
workers.
For the workers who accept the EVSEP, the severance package would
be computed based on salary increases agreed upon in the new
collective agreement. In addition, workers who have accepted the
EVSEP before the conclusion of the new collective agreements and
reclassification exercise shall receive the benefits that may be
agreed upon in the future.
CONTACT: Caroni Limited
Old Southern Main Road, Caroni,
Trinidad & Tobago
Phone: (868) 663-1781 or 662-0879
Fax: (868) 663-1404
All Trinidad Sugar and General Workers' Trade Union
Rienzi Complex
Exchange Village
Southern Main Road, Couva.
President: Mr. Boysie Moore-Jones
General Secretary: Mr. Rudranath Indarsingh
Tel. 868-636-2354
Fax. 868-636-3372
E-mail: atsgwtu@opus.co.tt
=================
V E N E Z U E L A
=================
BANCO MERCANTIL: Moody's Cuts BFSR To E+, Outlook Developing
------------------------------------------------------------
Moody's Investors Service said it lowered the bank financial
strength ratings (BFSR) of Banco Mercantil S.A. to E+ from D-. In
addition, Moody's also changed the outlook for foreign currency
deposit rating and BFSR on the bank to developing from stable.
The change in the outlook is a direct result of the change in
outlook of Venezuela's ceiling for foreign currency bank deposits
to developing from stable. Moody's downgrade on Banco Mercantil's
BFSR reflects the continued erosion of the operating environment.
Banco Mercantil is one of the three strongest banks in the
Venezuelan system. The other two are BBVA Banco Provincial S.A.
and Banco de Venezuela Grupo Santander S.A. The downgrade,
according to Moody's senior credit officer for Latin American
banks, Philip Guarco, doesn't imply that the bank is facing
financial woes since the bank is well run and profitable. Rather,
the downgrade reflects the uncertain outlook going forward as a
result of Venezuela's crisis, Guarco said.
Gaurco said the crisis is more political than economic and the
best scenario for the rated bank would be some kind of political
agreement in the short-term that permits the banks to return to
something resembling normal business.
BBVA BANCO PROVINCIAL: Venezuelan Crisis Takes Toll On Ratings
--------------------------------------------------------------
Moody's Investors Service said it lowered the bank financial
strength ratings (BFSR) of BBVA Banco Provincial S.A. to E+ from
D-. In addition, Moody's also changed the outlook for foreign
currency deposit rating and BFSR on the bank to developing from
stable.
The change in the outlook is a direct result of the change in
outlook of Venezuela's ceiling for foreign currency bank deposits
to developing from stable. Moody's downgrade on Banco
Provincial's BFSR reflects the continued erosion of the operating
environment.
Banco Provincial is one of the three strongest banks in the
Venezuelan system. The other two are Banco Mercantil S.A. and
Banco de Venezuela Grupo Santander S.A. The downgrade, according
to Moody's senior credit officer for Latin American banks, Philip
Guarco, doesn't imply that the bank is facing financial woes
since the bank is well run and profitable. Rather, the downgrade
reflects the uncertain outlook going forward as a result of
Venezuela's crisis, Guarco said.
Gaurco said the crisis is more political than economic and the
best scenario for the rated bank would be some kind of political
agreement in the short-term that permits the banks to return to
something resembling normal business.
BANCO DE VENEZUELA: Moody's Cuts BFSR On Slumping Economy
---------------------------------------------------------
Moody's Investors Service said it lowered the bank financial
strength ratings (BFSR) of Banco de Venezuela Grupo Santander
S.A. to E+ from D-. In addition, Moody's also changed the outlook
for foreign currency deposit rating and BFSR on the bank to
developing from stable.
The change in the outlook is a direct result of the change in
outlook of Venezuela's ceiling for foreign currency bank deposits
to developing from stable. Moody's downgrade on Banco de
Venezuela's BFSR reflects the continued erosion of the operating
environment.
Banco de Venezuela is one of the three strongest banks in the
Venezuelan system. The other two are Banco Mercantil S.A. and
BBVA Banco Provincial S.A. The downgrade, according to Moody's
senior credit officer for Latin American banks, Philip Guarco,
doesn't imply that the bank is facing financial woes since the
bank is well run and profitable. Rather, the downgrade reflects
the uncertain outlook going forward as a result of Venezuela's
crisis, Guarco said.
Gaurco said the crisis is more political than economic and the
best scenario for the rated bank would be some kind of political
agreement in the short-term that permits the banks to return to
something resembling normal business.
***********
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 * * *