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/raid1/www/Hosts/bankrupt/TCRLA_Public/030127.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 27, 2003, Vol. 4, Issue 18 Headlines A R G E N T I N A AT&T: Posts $611M Loss on LatAm, Internet Asset Writedowns TCP: Restructures Debt With Spanish Parent and Swedish Vendor * Argentina Paid IDB Arrears, May Receive $1.5B IDB Loan B E R M U D A GLOBAL CROSSING: November 2002 Operating Targets Met TYCO INTERNATIONAL: Security Division Presents Trouble B R A Z I L BELLSOUTH CORP.: Latin American Investments Pull Down Earnings CEMIG: Announces CRC Loss Provision in Compliance With CVM EMBRATEL: SEAE Seeks To Block Plan With UOL USIMINAS: Bear Stearns Ups Recommendation On Strong Figures C H I L E SANTA ISABEL: Ahold, Jumbo In Talks To Buy Supermarkets C O L O M B I A SEVEN SEAS: Trustee Seeks Andrews & Kurth as Special Counsel J A M A I C A JUTC: Sending Home 300 Workers at Consultant's Recommendation JUTC: NTCS President Blames Troubles On `Too Much Politics' M E X I C O GRUPO TMM: Fitch's Views Proposed Debt Exchange as Distressed T R I N I D A D & T O B A G O BWIA: Former Pilots May Find Employment in Rival Airline CARONI LTD: Workers Want O'Neal's Reassignment Stopped V E N E Z U E L A BANCO DE VENEZUELA: Political Turmoil Pulls Down Ratings BANCO DEL CARIBE: Ratings Downgraded, Affirmed Amid Crisis BANCO EXTERIOR: LTFC Rating Downgraded To `CCC-' BANCO MERCANTIL: Fitch Takes Various Actions On Ratings BANCO OCCIDENTAL: Fitch Cuts LTFC To `CCC-` BANCO PROVINCIAL: Fitch Downgrades, Affirms Ratings BANCO VENEZOLANO: Fitch Downgrades, Affirms Ratings BANESCO BANCO: Fitch Cuts Foreign Currency Rating; Neg. Outlook CANTV: Moody's Downgrades LTFC Rating To Caa1 HAMACA: Moody's Lowers Ratings on $470M Senior Bank Loans PDVSA: Hourly Workers Return To Work PDVSA: Fitch Sees Shaky Short Term, Long Term Return to Normal - - - - - - - - - - ================= A R G E N T I N A ================= AT&T: Posts $611M Loss on LatAm, Internet Asset Writedowns ---------------------------------------------------------- AT&T (NYSE: T) announced Thursday its fourth-quarter and full- year 2002 results. The company's fourth-quarter earnings per diluted share, which reflect a gain in discontinued operations from the disposition of AT&T Broadband, partially offset by a loss from continuing operations resulting from restructuring and asset impairment charges announced earlier this month, was $0.66. The company reported a loss from continuing operations, primarily resulting from an asset impairment charge associated with the company's past investment in AT&T Latin America (ALA), and also reflecting the impact of a restructuring charge associated with planned employee separations and an asset impairment charge related to the value of the company's DSL assets. The loss per diluted share from continuing operations was $0.79. Revenue for the quarter was $9.3 billion, a decline of 8.6 percent from the year-ago quarter. The company attributes the revenue decline to continued declines in long distance voice services, partially offset by growth in local voice as well as data/Internet protocol (IP) and managed services. "We had solid operating results in the fourth quarter, reflecting our execution of the basics," said AT&T Chairman and CEO David W. Dorman. "We saw continued growth in our local voice and data businesses, despite an unsettled economic environment. We're entering 2003 with a strong focus on meeting customer needs, improving shareowner value and maintaining our financial discipline and flexibility." Full Year 2002 Results For the full year, the company reported a loss of $17.08 per diluted share, which reflects a loss related to discontinued operations, a loss related to the adoption of a new accounting standard and income from continuing operations. The loss related to discontinued operations includes a $18.95 loss from discontinued operations, partially offset by a gain of $1.73 per diluted share from the disposal of discontinued operations. The loss related to the adoption of the new accounting standard was $1.12 per diluted share. Income from continuing operations was $1.26 per diluted share. Full-year revenue was $37.8 billion, a decline of 10.4 percent from the previous year. UNIT HIGHLIGHTS Note: all comparisons are to same reporting period in prior year AT&T Business -- Fourth quarter revenue $6.6 billion, down 3.0 percent -- Full year revenue $26.6 billion, down 4.1 percent -- Fourth quarter EBIT, loss of $331 million, down 3.5 percent -- Fourth quarter EBIT, excluding other income, equity earnings and ALA charge, $451 million, up 26.7 percent -- Fourth quarter EBIT margin, excluding other income, equity earnings and ALA charge, 6.9 percent -- Full year EBIT, $1.6 billion, up 171.1 percent -- Full year EBIT, excluding other income, equity earnings and ALA charge, $3.1 billion, down 16.4 percent -- Full year EBIT margin, excluding other income, equity earnings and ALA charge, 11.6 percent -- LD voice revenue declined about 10 percent in the quarter due to price declines, volume increased nearly 7 percent, which reflects wholesale volume growth and declining retail volumes -- Local voice revenue grew more than 25 percent in the quarter -- Data/IP/Managed services revenue, including customer premises equipment sales, grew about 3 percent in the quarter AT&T Consumer -- Fourth quarter revenue $2.7 billion, down 20.0 percent -- Full year revenue $11.5 billion, down 22.3 percent -- Fourth quarter EBIT $395 million, down 62.7 percent -- Fourth quarter EBIT, excluding other income and equity earnings, $389 million, down 56.4 percent -- Fourth quarter EBIT margin, excluding other income and equity earnings, 14.2 percent -- Full year EBIT $2.6 billion, down 45.7 percent -- Full year EBIT, excluding other income and equity earnings, $2.6 billion, down 44.8 percent -- Full year EBIT margin, excluding other income and equity earnings, 22.5 percent -- Any Distance offer added more than 500,000 subscribers in the quarter and at year-end had more than 2.4 million subscribers; subscriber base doubled in 2002 OUTLOOK AT&T said that it does not yet see a significant turnaround in the overall business services industry, and, as a result, expects total telecom industry spending will be down again in 2003. However, AT&T believes it is well positioned to continue to take market share and therefore expects a slower rate of revenue decline in 2003 compared to 2002. Other expectations for the corporation include: -- Full-year operating income margin decline, excluding ALA charge, to be comparable to the 2002 decline -- Diluted EPS for the first quarter of 2003 in the range of $0.50 to $0.55 -- Capital expenditures for 2003 to be approximately $3.3 to $3.5 billion AT&T Business expects a slower rate of revenue decline in 2003 compared to 2002. AT&T Consumer expects the 2003 rate of revenue decline to be slightly better than the decline in 2002. DEFINITIONS and NOTES Note: Financial statements have been restated to reflect the one- for-five reverse stock split and to reflect AT&T Broadband as a discontinued operation in all periods presented. AT&T Broadband was spun off on November 18, 2002. AT&T Group does not include the results of Liberty Media Group, which was tracked as a separate class of stock through August 10, 2001, the split-off date. EBIT refers to earnings before interest, taxes, cumulative effect of accounting changes, dividend requirements on preferred stock, premium on exchange of AT&T Wireless tracking stock and discontinued operations. EBIT, excluding other income and equity earnings, refers to EBIT, excluding other income (expense), and pretax net equity earnings (losses) related to equity investments. EBIT, excluding other income, equity earnings and the ALA charge refers to EBIT, excluding other income (expense), pretax net earnings (losses) related to equity investments and the fourth- quarter charge related to AT&T's past investment in AT&T Latin America. EBIT margin, excluding other income and equity earnings refers to EBIT, excluding other income (expense) and pretax net earnings (losses) related to equity investments as a percentage of reported revenue. EBIT margin, excluding other income, equity earnings and ALA charge refers to EBIT, excluding other income (expense), pretax net earnings (losses) related to equity investments and the fourth-quarter charge related to AT&T's past investment in AT&T Latin America as a percentage of reported revenue. EPS is earnings per diluted share. To see financial statements: http://bankrupt.com/misc/AT&T.htm CONTACT: AT&T Eileen Connolly, +1-908-234-8510 Dan Lawler, +1-908-234-6846 TCP: Restructures Debt With Spanish Parent and Swedish Vendor ------------------------------------------------------------- Argentine mobile holding Telefonica Comunicaciones Personales (TCP) informed the Buenos Aires exchange in a statement that it has restructured debts totaling US$794 million, reports Business News Americas. The terms of the deal were not disclosed but the report reveals the debt involved US$664 million to its Spain-based parent company Telefonica Moviles and US$130 million with Swedish equipment vendor Ericsson. TCP is 97.93% owned by Telefonica Moviles and is the holding for the country's second-largest mobile operator Telefonica Moviles Argentina, which operates under the brand name Unifon. * Argentina Paid IDB Arrears, May Receive $1.5B IDB Loan -------------------------------------------------------- Argentina made a payment of US$770 million in arrears due to the Inter-American Development Bank (IDB), according to Dow Jones Newswires. Because of this, the lender will resume its disbursements from a US$694 million loan facility to the country. Earlier, Argentine Economy Minister Roberto Lavagna advised the lender the country would fall behind on its payments temporarily. In a statement last Thursday, the bank said that it may grant Argentina a US$1.5 billion loan for social spending. The lender also said that it welcomes the country's efforts to resolve the financial crisis it faces, adding that the bank will is willing to cooperate, particularly in supporting social programs in the country. The news comes after the World Bank said that it may grant the country a US$1 billion loan for family assistance and education aid after the International Monetary Fund approves a debt referral plan. Last year, the IDB disbursed a total of US$422.4 million to the country. ============= B E R M U D A ============= GLOBAL CROSSING: November 2002 Operating Targets Met ---------------------------------------------------- Global Crossing announced Thursday that it continued to meet key performance targets during November 2002. The performance targets were established for Global Crossing (excluding Asia Global Crossing) in the operating plan presented to its creditors in March 2002. The Operating Results that compare to that plan are described in the following section of this press release. Consolidated results for the month of November reported in the Monthly Operating Report (MOR) filed with the U.S. Bankruptcy Court in the Southern District of New York are summarized later in this press release. The MOR includes consolidated results for Asia Global Crossing Ltd. and its subsidiaries through November 17, 2002. As described in the accompanying notes to this press release, Global Crossing has deconsolidated the results of operations of Asia Global Crossing Ltd. and its subsidiaries effective November 18, 2002. OPERATING RESULTS (excluding Asia Global Crossing) "Global Crossing continues to fulfill the goals we set in our operating plan last March," said John Legere, CEO of Global Crossing. "We have posted solid results and look forward to closing the 2002 books with a positive trend -- one of financial and operational strength and viability." In November 2002, Global Crossing reported Service Revenue of $229 million, $25 million above the monthly Service Revenue target set forth in the operating plan. In November, Service EBITDA was reported at $(9) million, in line with the operating plan. "Our cash in bank accounts has increased and stands at $745 million -- the highest month-end balance since July 2002," said Dan Cohrs, Global Crossing's CFO. "In fact, throughout the past year we have maintained a secure cash position and stable revenues, while exercising tight control over our operating expenses." Total cash in bank accounts exceeded targets set forth in the operating plan, with $745 million as of November 30, 2002, compared to a plan of $551 million. Operating expenses were on target with the operating plan at $60 million in November, while third-party maintenance costs were reported at $7 million in November, beating the operating plan by $8 million. OPERATING RESULTS (excluding Asia Global Crossing) SEPTEMBER THROUGH NOVEMBER 2002 MONTH RECURRING OPERATING SERVICE CASH SERVICE REVENUE EXPENSES EBITDA IN BANK November 2002 $229mn $60mn $(9)mn $745mn October 2002 $242mn $64mn $(6)mn $683mn September 2002 $237mn $64mn $0mn $724mn MOR RESULTS FOR NOVEMBER 2002 Global Crossing filed Thursday a Monthly Operating Report (MOR) for the month of November with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. The consolidated results report revenue according to accounting principles generally accepted in the United States of America (US GAAP). US GAAP revenue includes revenue from sales of capacity in the form of indefeasible rights of use (IRUs) that occurred in prior periods, recognized ratably over the lives of the relevant contracts. Beginning on November 1, 2002, Global Crossing ceased recognizing revenue from exchanges of leases of capacity. The MOR includes consolidated results for Asia Global Crossing Ltd. and its subsidiaries through November 17, 2002. As described in the accompanying notes to this press release, Global Crossing has deconsolidated the results of operations of Asia Global Crossing and its subsidiaries effective November 18, 2002. Results reported in the November MOR include the following: For continuing operations in November 2002, Global Crossing reported consolidated revenue of approximately $239 million. Consolidated operating expenses were $65 million, while access and maintenance costs were reported at $184 million in November 2002. In addition, Global Crossing reported a consolidated US GAAP cash balance (excluding Asia Global Crossing) of approximately $714 million as of November 30, 2002. The consolidated US GAAP cash balance is comprised of $320 million in unrestricted cash, $333 million in restricted cash and $61 million of cash held by Global Marine. Global Crossing reported a consolidated net loss of $32 million for November 2002. Included in that net loss is non-operating income of $59 million resulting from the termination of certain pre-paid long-term lease agreements for services on the Global Crossing network. These agreements were terminated either through customer settlement agreements or through the bankruptcy proceedings of the customers that had purchased such services from Global Crossing. As a result of these terminations, Global Crossing is no longer obligated to provide the applicable services for which the customers had already paid, so deferred revenue of $59 million, representing Global Crossing's obligation to provide such services, was realized into income, but was not recognized as revenue. Consolidated EBITDA was reported at a loss of $10 million. MOR RESULTS MONTHLY RESULTS SEPTEMBER THROUGH NOVEMBER 2002 MONTH CONSOLIDATED CONSOLIDATED CONSOLIDATED NET REVENUE OPERATING EBITDA LOSS EXPENSES November 2002 $239mn $65mn $(10)mn $32mn October 2002 $256mn $79mn $(16)mn $150mn September 2002 $254mn $71mn $(6)mn $157mn Definitions and Notes "Service Revenue" refers to revenue less (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. "Service EBITDA" refers to EBITDA (earnings before interest, taxes, depreciation, and amortization) but excludes the contribution of (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. The results for Global Crossing (excluding Asia Global Crossing) discussed in the "Operating Results (excluding Asia Global Crossing)" section of this release have been prepared on a basis consistent with targets presented to the creditors of Global Crossing in March 2002. These operating results exclude Global Marine (which is a discontinued operation), exclude any revenue contribution of sales of capacity in the form of IRUs, and reflect certain eliminations and adjustments not detailed in the MORs. Cash balances reported in this section are bank balances, not reflecting the estimated impact of outstanding checks and other adjustments as required by US GAAP. On November 18, 2002, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Asia Global Crossing's bankruptcy proceedings are being administered separately from and are not being consolidated with Global Crossing's proceedings. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. As a result, effective November 18, 2002, Global Crossing deconsolidated the financial results of Asia Global Crossing and its subsidiaries and began reporting the net assets of Asia Global Crossing as an investment using the cost method. The results of operations reported in the November MOR include the results of Asia Global Crossing and its subsidiaries through November 17, 2002. Asia Global Crossing's operating results subsequent to November 17, 2002 and its financial position as of November 30, 2002 are not reflected in Global Crossing's consolidated and consolidating financial statements included in the November MOR. Please refer to the November MOR for further details of this accounting treatment. The information contained in this press release is qualified in its entirety by reference to the MORs for the months of February through November, including the footnotes to the financial statements contained therein, copies of which are available through the U.S. Bankruptcy Court for the Southern District of New York and on Global Crossing's Web site. The November MOR is available at http://www.globalcrossing.com/pdf/investors/inv-- mor--nov.pdf . These MORs have been prepared pursuant to the requirements of the Bankruptcy Code and the unaudited consolidated financial statements contained in these MORs do not include all footnotes and certain financial presentations normally required under GAAP. In addition, any revenues, expenses, realized gains and losses, and provisions resulting from the reorganization and restructuring of Global Crossing are reported separately as reorganization items in these MORs. As discussed more fully in the footnotes to the financial statements contained in the MORs, Global Crossing has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2001. By order dated October 20, 2002, the Bankruptcy Court directed the appointment of an examiner. On November 25, 2002, the United States Trustee appointed Martin E. Cooperman, a partner of Grant Thornton LLP, as the Examiner. Mr. Cooperman and the Audit Committee of the Board of Directors of Global Crossing Ltd. (in provisional liquidation) retained Grant Thornton LLP to assist the Examiner. In general, the Examiner's role is limited to reviewing the financial statements of the Debtors for the fiscal years ended December 31, 2001 and December 31, 2002 and earlier periods if any restatement of those periods is necessary. As part of his role, the Examiner, with the assistance of Grant Thornton LLP, will audit any revised financial statements and issue a report as to such financial statements. Separately, on November 27, 2002, the Examiner and the Audit Committee of the Board of Directors filed an application with the Bankruptcy Court to retain Grant Thornton as independent auditors of Global Crossing effective as of November 25, 2002. The Bankruptcy Court approved this application on December 11, 2002 and an engagement letter formalizing Grant Thornton's appointment was executed on January 8, 2003. In addition, certain matters relating to Global Crossing's accounting for, and disclosure of, concurrent transactions for the purchase and sale of telecommunications capacity between Global Crossing and its carrier customers are being investigated by the Securities and Exchange Commission (SEC), the U.S. Attorney's Office for the Central District of California, the House of Representatives Financial Services Committee and the House of Representatives Energy & Commerce Committee. Global Crossing is also cooperating with a similar inquiry being conducted by the Denver office of the SEC regarding Qwest Communications International, Inc., and has provided documents in response to subpoenas it received from the New York Attorney General's office relating to an investigation of Salomon Smith Barney. The U.S. Department of Labor is conducting an investigation into the administration of Global Crossing's benefit plans. All of these investigations are described more fully in footnote one to the financial statements contained in the November MOR. Any changes to the financial statements resulting from any of these investigations and the completion of the 2001 financial statement audit could materially affect the unaudited consolidated financial statements contained in the MORs and the information presented in this press release. On October 21, 2002, Global Crossing announced that it would restate certain financial statements contained in filings previously made with the SEC. These restatements, which are more fully described in footnote one to the financial statements contained in the November MOR, will record exchanges between carriers of leases of telecommunications capacity at historical carryover basis, resulting in no recognition of revenue for such exchanges. Reflecting this accounting treatment, the November MOR excludes from revenue amounts previously recognized as revenue over the lives of the lease contracts governing these capacity exchanges. However, since the detailed application of this accounting treatment for exchanges of capacity and services is not complete, the November MOR does not reflect the reduction to depreciation expense that will result when such transactions are recorded at carrying value rather than fair value. As discussed in greater detail in the November MOR, Global Crossing estimates that the reduction in depreciation expense for the month of November would be approximately $2mn. The restatements have no impact on cash flow. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001, which has not yet been reported, pending the completion of the audit of financial statements for 2001, is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, as previously disclosed, Global Crossing has determined that it will write down its tangible assets in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, and the bankruptcy filings of Asia Global Crossing and its subsidiary, Pacific Crossing Ltd. Global Crossing is in the process of evaluating its cash flow forecasts and other pertinent data to determine the amount of the impairment of its long-lived tangible assets. The impairment is anticipated to exceed $8 billion, an estimate that excludes any impairment attributable to the assets of Asia Global Crossing and its subsidiaries, which, as described above, Global Crossing deconsolidated effective November 18, 2002, but includes an estimated $1.2 billion related to the restatement of exchanges of capacity leases described above. The financial information included within this press release and the November MOR reflects the write-off of all of the goodwill and other identifiable intangible assets of $8 billion, but does not reflect any write- down of tangible asset value. Accordingly, the net loss of $32mn for the month of November 2002 (reported above under "MOR Results for November 2002") includes $89mn of depreciation and amortization expense recorded in November 2002. This November 2002 net loss would have been reduced substantially if the financial statements in the November MOR had reflected the tangible asset write down. The write-off of the intangible assets, and the write-downs of tangible assets are described more fully in the November MOR. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 26, 2002, does not include a capital structure in which existing common or preferred equity will retain any value. Global Crossing expects to emerge from bankruptcy in the first half of 2003. On November 18, 2002, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda, both of which are separate from the cases of Global Crossing. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. CONTACT GLOBAL CROSSING: Press Contacts Tisha Kresler + 1 973-410-8666 Tisha.Kresler@globalcrossing.com Kevin Burgoyne Latin America + 1 305-808-5947 Kevin.Burgoyne@globalcrossing.com Mish Desmidt Europe + 44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril + 1 310-385-3838 investors@globalcrossing.com URL: www.globalcrossing.com TYCO INTERNATIONAL: Security Division Presents Trouble ------------------------------------------------------ The New Chief Executive of Bermuda-based Tyco International, Ltd. said that the working capital available to operate the Company's Boca Raton-based ADT Security Services and the rest of its Fire & Security division unacceptable, reports Knight Ridder Business News. Chief Financial Officer David FitzPatrick said, "corrective actions are being implemented" in the concerned division. Mr. Fitzpatrick added that the Company is also dealing with bad debt expense in its security business both in the United States and in Europe. The security sector includes the alarm company ADT and the former Sensormatic Electronics, the Boca Raton security-tag company, which Tyco acquired in 2001. The Company's shares closed down 61 cents to US$16.50 in New York Stock Exchange composite trading on Wednesday. The Company's first fiscal quarter earnings dropped by almost 50 percent, despite a 4 percent increase in revenues. Net income fell to US$634.5 million in the quarter ended Dec. 31, or 32 cents a share, from US$1.19 billion, or 60 cents a share, a year earlier. Sales rose to US$8.94 billion from US$8.58 billion, according to a statement from the Company. Company executives warned that results for the quarter and the year would be below expectations, if not in the lower end. 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 =========== BELLSOUTH CORP.: Latin American Investments Pull Down Earnings -------------------------------------------------------------- BellSouth Corporation (NYSE: BLS) reported earnings per share (EPS) of 32 cents in the fourth quarter of 2002, compared to EPS of 42 cents in the same quarter of 2001. Normalized for special items, detailed below, EPS in the fourth quarter of 2002 was 50 cents, compared to normalized EPS of 63 cents in the same quarter a year ago. Capital expenditures for 2002 were $3.8 billion, a reduction of 36.9 percent compared to $6.0 billion in 2001. Operating free cash flow (defined as cash flow from operations less capital expenditures) was $791 million in the fourth quarter of 2002, and totaled $4.5 billion for the year as a whole. Including asset sales and note repayments to BellSouth during the year, the company generated free cash flow of $6.8 billion in 2002. The company reduced net debt to $14.9 billion in 2002 from $19.5 billion in 2001, or 23.6 percent, and increased its quarterly per share cash dividend 5.3 percent. Consolidated revenues, which do not include BellSouth's 40 percent share of Cingular Wireless, were $5.69 billion, compared to $6.21 billion in the fourth quarter of 2001. Normalized total operating revenues, which include Cingular, were $7.12 billion, a decline of 6.8 percent versus the fourth quarter of 2001. BellSouth reduced consolidated total operating expenses, which exclude Cingular, by 4.2 percent in the fourth quarter of 2002, compared to the same three months a year ago. Net income in the quarter was $597 million, compared to $792 million in the fourth quarter of the previous year. Normalized net income was $936 million, compared to $1.19 billion in the final quarter of 2001. For the year, EPS was 76 cents in 2002, compared to $1.36 in 2001. Normalized EPS was $2.09 in the latest year, compared to $2.34 in 2001. Foreign currency losses in 2002 totaled 32 cents per share, compared to 12 cents per share in the previous year. Including Cingular, revenues were $28.4 billion in 2002, a decline of 3.9 percent for the year. Net income was $1.42 billion in 2002, compared to $2.57 billion a year earlier. Normalized net income in 2002 was $3.92 billion, compared to $4.42 billion in 2001. BellSouth's operating results continued to reflect weak demand for communications services, both in the United States and Latin America. Bankruptcies continued to affect both retail and wholesale demand, as well as bad debt expense. Retail access line market share loss in the U.S., as well as currency devaluations in Argentina and Venezuela, also continued to impact results. Communications Group BellSouth added 97,000 DSL high-speed Internet service customers in the fourth quarter, surpassing 1 million and finishing the year with 1,021,000 broadband customers. On December 19, 2002, with endorsements in Florida and Tennessee, BellSouth became the first incumbent local telecommunications company to receive Federal Communications Commission approval to provide long distance service in all its markets. The company has been marketing long distance in Georgia and Louisiana since late May 2002, and in North Carolina, South Carolina, Kentucky, Alabama and Mississippi since late September. At the end of the year, BellSouth was serving more than 1 million consumer and business long distance customers, including approximately 10 percent of its residence and approximately 22 percent of its mass market small business accounts in the seven states that were approved earlier in 2002. The number of customers purchasing the BellSouth(R) Answers(SM) package increased to approximately 1.2 million at year end. Introduced during the third quarter of 2002, BellSouth Answers allows residential customers to combine on a single bill the data, voice and Internet communications services they want, including long distance and local, as well as wireline and wireless. Total Communications Group revenues were $4.52 billion in the fourth quarter, a decline of 6.3 percent compared to the same quarter of 2001. Cash operating expenses increased 0.8 percent. Data revenues were $1.07 billion, a decline of 3.2 percent compared to the fourth quarter a year earlier. Total access lines in service of 24.6 million at year end declined 3.2 percent compared to 2001, impacted by competition, a continued weak economy and technology substitution. Access lines served by BellSouth competitors under UNE-P (unbundled network elements- platform) increased by 190,000 in the fourth quarter. UNE-P lines increased 153 percent during 2002 as a whole. Domestic Wireless / Cingular BellSouth's share of Cingular's domestic wireless revenues in the fourth quarter of 2002 was $1.46 billion, a gain of 0.6 percent compared to the same quarter a year ago. BellSouth's share of Cingular operating income was $284 million in the quarter, compared to $221 million in the same three months of 2001. Cingular experienced a net reduction of 121,000 total cellular and PCS customers during the final three months of 2002, ending the year with 21.9 million customers, an annual increase of 1.5 percent. In December, Cingular increased the deployment of next- generation wireless technology to more than 50 percent of its potential customers nationwide, enabling high-speed wireless data services. Latin America Group Consolidated Latin America revenues were $486 million in the fourth quarter of 2002, a decline of 1.8 percent compared to the third quarter. Revenues continued to reflect the impacts of currency devaluations, principally in Argentina and Venezuela, as well as weak economic conditions in those countries. EBITDA (earnings before interest, taxes, and depreciation and amortization) margin was 38.1 percent, up from 34.1 percent in the third quarter of 2002. For the year as a whole, EBITDA margin improved to 32.8 percent in 2002 from 30.2 percent a year earlier. On a consolidated basis, Latin America Group wireless voice customers increased by 259,000 during the fourth quarter, compared to a net reduction of 152,000 customers in the third quarter of 2002. Year-over-year, consolidated customers increased by 505,000, or 6.6 percent. BellSouth and its partners serve a total of 11.5 million customers in 11 Central and South American countries, including 298,000 fixed wireless customers. Advertising & Publishing Domestic Advertising & Publishing revenues were $718 million in the fourth quarter of 2002, an increase of 0.4 percent compared to the same period of the prior year. Year over year, fourth quarter EBITDA margin decreased from 51.6 percent to 44.0 percent, due to increased uncollectible expense as a result of continued economic weakness. Special Items In the fourth quarter of 2002, the difference between reported EPS of 32 cents and normalized EPS of 50 cents is the result of four special charges: Asset impairments 11 cents Workforce reduction 3 cents Loss on sale 3 cents Foreign currency transaction losses 1 cent Total of special charges 18 cents Asset impairments -- Represents the impairment of MMDS spectrum previously held for sale, as well as impairments related to Cingular Wireless's TDMA network assets and Mobitex data business. Workforce reduction -- BellSouth has substantially completed the workforce reduction of approximately 5,000 positions it announced May 17, 2002. This charge represents severance costs recorded in the fourth quarter associated with the workforce reduction. Also included are pension settlement losses. Loss on sale -- Represents the fourth quarter charge related to the sale of BellSouth's remaining Brazilian yellow pages operation. Foreign currency transaction losses -- Primarily associated with the remeasurement of U.S. dollar-denominated liabilities in Latin America. Stock Option and Depreciation Accounting BellSouth also announced it will expense stock options granted to employees after January 1, 2003, using guidelines under Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." Using historical stock option grant levels and current valuation assumptions, the projected increase in expense will reduce 2003 net income by approximately $90 million (5 cents per share). In addition, on January 1, 2003 BellSouth adopted SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses accounting for the cost of legal obligations associated with the retirement of long-lived assets. Adopting SFAS No. 143 is expected to result in a one-time increase to net income of approximately $0.8 billion in the first quarter of 2003. The one- time item will be reported on the company's consolidated statements of income as a cumulative effect of a change in accounting principle. The ongoing impact of SFAS No. 143 will increase net income by approximately $60 million (3 cents per share) in 2003 as a whole. About BellSouth Corporation BellSouth Corporation is a Fortune 100 communications services company headquartered in Atlanta, Georgia, serving more than 44 million customers in the United States and 14 other countries. Consistently recognized for customer satisfaction, BellSouth provides a full array of broadband data solutions to large, medium and small businesses. In the residential market, BellSouth offers DSL high-speed Internet access, advanced voice features and other services. BellSouth also offers long distance service throughout its markets, serving both business and consumer customers. The company's BellSouth(R) Answers(SM) package combines local and long distance service with an array of calling features; wireless data, voice and e-mail services; and high- speed DSL or dial-up Internet service. BellSouth also provides online and directory advertising services through BellSouth(R) Real Pages(SM).com and The Real Yellow Pages(R). BellSouth owns 40 percent of Cingular Wireless, the nation's second largest wireless company, which provides innovative data and voice services. To see financial statements: http://bankrupt.com/misc/BellSouth_Corporation.htm CONTACT: BellSouth Corporation Jeff Battcher +1-404-249-2793 CEMIG: Announces CRC Loss Provision in Compliance With CVM ---------------------------------------------------------- Companhia Energetica de Minas Gerais - Cemig (NYSE: CIG; BOVESPA: CMIG3, CMIG4 and LATIBEX: XCMIG) one of Brazil's largest energy companies, announced Thursday that it will accrue a loss provision in its financial statements in the amount of R$1,045,325,000.00, which is approximately equivalent to US$450,000,000 according to March 31, 2002 rate of exchange. This provision is in compliance with Ordinance No. 358 dated January 1, 2002, of the Comissao de Valores Mobiliarios (the "CVM") (the Brazilian Securities and Exchange Commission), and will be implemented in a restatement of CEMIG's second- and third-quarter 2002 Brazilian GAAP financial statements. CEMIG's U.S. GAAP financial statements for the year ended December 31, 2001 will also reflect the provision. CEMIG is accruing this provision due to uncertainty involving the recoverability of certain receivables from the State of Minas Gerais, Brazil. The receivables represent installments becoming due on or after January 1, 2003 under the CRC Assignment Agreement between CEMIG and the State of Minas Gerais. The CRC Assignment Agreement, which was originally entered into in May 1995, provided for the transfer of certain payment obligations from the Brazilian Federal Government to the State of Minas Gerais. These payment obligations arose from rate shortfall credits that were granted to CEMIG. The CRC Assignment Agreement originally had a term of 17 years. The provision is being accrued in connection with an October 14, 2002 amendment to the CRC Assignment Agreement, which relates to installments due under the CRC Assignment Agreement from January 2003 through January 2015. This amendment was entered into in connection with the ongoing negotiations between CEMIG, the State of Minas Gerais and the Secretaria do Tesouro Nacional (the Brazilian National Treasury Secretariat) relating to the transfer of the obligation to pay the balance of the CRC Assignment Agreement back to the Brazilian Federal Government. CEMIG confirms that, notwithstanding the accrual of the loss provision, it is continuing to negotiate payment of all outstanding amounts under the CRC Assignment Agreement with the State of Minas Gerais and the Brazilian Federal Government. CONTACT: CEMIG Investor Relations: Luiz Fernando Rolla Tel: +55-31-3299-3930 Fax: +55-31-3299-3933 Email: lrolla@cemig.com.br Vicky Osorio of The Anne McBride Company Tel: +1-212-983-1702 Fax: 212-983-1736 Email: vicky@annemcbride.com EMBRATEL: SEAE Seeks To Block Plan With UOL ------------------------------------------- SEAE, the economics unit of Brazil's finance ministry, is attempting to block a plan by paid ISP and portal Universo Online (UOL) (www.uol.com.br) and Brazil's long distance incumbent Embratel to deepen their relationship by adopting a revenue share model. Business News Americas reveals that Embratel already provides connectivity to UOL's Internet access provider subsidiary AcessoNet. SEAE is urging the country's antitrust authority Cade to implement restrictions on the commercial relationship between UOL and Embratel. SEAE argues that if a revenue share model is implemented, UOL would naturally eschew connectivity agreements with UOL competitors. As such, SEAE concludes the agreement should be able to exist, but Embratel would still have to provide connectivity to other ISPs, giving no privileges to UOL. In response, Embratel said: "The final analysis will be made by Cade, which can or not adopt the recommendation contained in the statement made by SEAE." 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 USIMINAS: Bear Stearns Ups Recommendation On Strong Figures ----------------------------------------------------------- Bear Stearns upgraded its rating on Brazilian steelmaker Usinas Siderurgicas Minas Gerais (Usiminas) to `peer perform' from `underperform,' reports Business News Americas. The upgrade came "on the back of a strong fourth-quarter result, expectations for a continued solid demand/pricing outlook and increased balance sheet comfort," Bear Stearns explained in its research note. Bear Stearns noted Usiminas' revenue of US$627 million, which exceeded its forecast by 8% and was up 16% year on year. Steel revenue per ton was also better than expected, said Bear, with the quarter-on-quarter result roughly flat at US$275/t. The biggest surprise, according to Bear, was Usiminas' EBITDA, which came in at US$271 million, more than twice figures from a year earlier and 30% above the bank's forecast. 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 ========= SANTA ISABEL: Ahold, Jumbo In Talks To Buy Supermarkets ------------------------------------------------------- Jumbo, a Chilean supermarket chain owned by local entrepreneur Horst Paulmann, is planning to buy the 73 Santa Isabel SA supermarkets owned by Dutch rival Ahold NV, Dow Jones reports, citing local newspaper El Mercurio. The report reveals that at the end of last year, representatives from Jumbo and Ahold met to discuss Jumbo's interest in Santa Isabel. Ahold seemed to like the idea at that time, although its top priority was to restructure Santa Isabel. Ahold recently took 100% control of Santa Isabel by buying out former partner Velox and a public offer for outstanding shares. News that Ahold was facing financial difficulties as a result of its Latin American operations may have intensified talks, the paper adds. Analyst Pablo Bello from Santander Investment estimated Santa Isabel's operations, including those in Peru and Paraguay, to be worth US$166 million or less. Jumbo, the country's third-largest supermarket chain, is looking to buy Santa Isabel as part of its plans to expand its presence in the domestic market, El Mercurio suggests. CONTACT: Royal Ahold Investor Relations: Huibert Wurfbain, 011-31-75-659-5813 or Media Relations: Annemiek Louwers, 011-31-75-659-5720 or Taylor Rafferty New York Media Relations: Ethan Sack, 212/889-4350 or Taylor Rafferty London Media Relations: Matthew Nardella, + 44 20 7936 0400 =============== C O L O M B I A =============== SEVEN SEAS: Trustee Seeks Andrews & Kurth as Special Counsel ------------------------------------------------------------ Ben B. Floyd, the Chapter 11 Trustee for Seven Seas Petroleum, Inc., filed an application with the U.S. Bankruptcy Court for the Southern District of Texas to retain Andrews & Kurth LLP as Special Counsel. The Trustee relates that Andrews & Kurth also acted on behalf of the Petitioning Creditors to try to challenge the Company's decision to make the $4.7 million payment to Chesapeake Energy Corporation and the Secured Noteholders rather than to the holders of the Senior Notes. In conjunction with the filing of the involuntary petition and the Trustee Motion, Andrews & Kurth reviewed certain of the security agreements and indentures governing the rights of Chesapeake and the holders of the Secured Notes. Andrews & Kurth also undertook discovery to investigate the Debtor's financial affairs and establish the need for an appointment of an interim trustee. Consequently, the Chapter 11 Trustee seeks to retain Andrews & Kurth as his special counsel effective as of January 14, 2003. Andrews & Kurth, in its capacity will: (a) analyze, institute and prosecute causes of action that are property of the Estate, including, without limitation, actions under Chapter 5 of the Bankruptcy Code, claims under 506(c) and potential claims against the Debtor's officers and directors; (b) analyze, institute and prosecute actions regarding asset transfers, foreclosure sales, disclaimers, insider transactions and third-party dealings; (c) analyze business associations of the Debtor and determine the interest of the Estate and institute and prosecute actions to effect the recovery of such interests; (d) evaluate all claims or potential causes of action and take the necessary steps to preserve the Estate's rights; (e) analyze, institute and prosecute actions, including the recovery of property of the Estate and proceeds derived from property of the Estate; (f) 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; (g) assist the Trustee, where necessary, to negotiate and/or prosecute non-routine objections to claims; (h) defend any actions commenced against the Trustee or the Debtor; (i) prepare, where appropriate, necessary motions, applications, answers, orders, reports, and papers in connection with the foregoing enumerated services; (j) advise and perform tasks on behalf of the Trustee concerning SEC reporting and compliance matters, securities and tax matters, oil and gas matters and corporate governance; (k) advise the Trustee on matters relating to the Debtor's executory contracts, including all operating agreements and other oil and gas related agreements; and (l) perform any and all other legal services for the Trustee that the Trustee determines is necessary and appropriate after advice and consultation. Andrews & Kurth is a national full-service firm with substantial experience in insolvency and bankruptcy proceedings both nationally and locally and is intimately familiar with the issues that will likely be confronted by the Trustee. Andrews & Kurth's hourly billing rates range from: attorneys $135 to $575 paralegals $60 to $140 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. ============= J A M A I C A ============= JUTC: Sending Home 300 Workers at Consultant's Recommendation ------------------------------------------------------------- Troubled Jamaica Urban Transit Company was expected to dismiss about 300 workers, the Jamaica Gleaner recalls. Roughly 10% of JUTC's employees will lose their jobs. According to an earlier report, about 40% of the inspectors/dispatchers will be axed along with 10% of conductors and 3% of drivers. Other employees to be affected by the job cuts are a number of cleaners, janitors and middle managers. The workforce reduction is part of the recommendations of a team of Swedish consultants hired by the Company's president, Sterling Soares, to investigate on the weaknesses and recommend measures to help the struggling company from losing millions of dollars everyday. Last week, unions such as the University and Allied Workers Union (UAWU) and the Union of Clerical Administrative and Supervisory Employees (UCASE) representing JUTC workers voiced their objection of the proposal. The UAWU, representing about 80% of the Company's unionized workers, is currently having a series of meetings with the management to finalize the list of employees to be sent home, said the report citing UAWU president Professor Trevor Munroe. The report adds that a decision is expected today. The UAWU is also asking that the Company should make workers redundant immediately, if it has no intentions of re-hiring them. UCASE vice-president Danny Roberts agrees with UAWU. He said that the Company should make it clear who among the employees to be made redundant, or who would be laid off. Mr. Roberts said he would be seeking to a special redundancy package for those employees who will be sent home permanently. According to him, the union would seek three weeks' pay for each year the employee had served the Company, instead of the two weeks required by law. Under the law, workers can only be laid off for a maximum of 120 days, after which their employers are obliged to make redundancy payments, said the report. Mr Roberts added, "All the employees on the list to be made redundant should receive up front their special redundancy payments and should have the first right of refusal in the event the Company is seeking further employment." The Company has remained silent on the issue, reported the Gleaner. An earlier audit revealed that JUTC is losing $3.6 million daily. In February last year, the Company had a negative worth of $1.13 billion, aside from an accumulated deficit of $2.63 billion. JUTC: NTCS President Blames Troubles On `Too Much Politics' ----------------------------------------------------------- "The politicians are to be blamed squarely," said National Transport Co-operative Society (NTCS) president Ezroy Millwood on the problems concerning Jamaica Urban Transit's (JUTC). The Jamaica Gleaner quoted Mr. Millwood, a former franchise holder saying, "As long as the politician is the co-ordinator of policy and at the same time influence the management decisions (of the Company) through politics then the JUTC will never recover." Then State Minister for Transport Dean Peart admitted in August 2000, people were hired by JUTC because of their connections to the governing People's National Party (PNP). Peart is now the country's Minister of Land and Environment. Presently, the government buys the buses and builds the depots to rent to JUTC through Metropolitan Management Transport Holdings Ltd. Mr. Millwood proposed to change this system to allow private operators to operate the buses. He added that it is done in other countries and has proven to be more efficient than what is implemented in Jamaica. There are suggestions that JUTC may be operating on too many routes to be viable. Mr. Millwood refuted this saying that such is the case, as "you have to serve people wherever they are." He concluded, "The whole thing is politics and poor management." =========== M E X I C O =========== GRUPO TMM: Fitch's Views Proposed Debt Exchange as Distressed ------------------------------------------------------------- Fitch Ratings concludes that Grupo TMM, S.A.'s (TMM) proposed debt exchange offering as a distressed debt exchange, in part reflecting the lack of apparent alternative financing options available to the company. As a distressed debt exchange, TMM's $177 million 9.5% senior notes due 2003 and $200 million 10.25% senior notes due 2006 would be considered in default ('DD') under Fitch's rating methodology upon completion of the exchange, and the existing notes would be rated in the default category for 30 days. At that time, a new rating would be assigned to the newly- issued notes. Fitch does not rate these securities but does rate its operating subsidiary TFM, S.A. de C.V. (TFM). Fitch does not expect TMM's debt restructuring to have a material impact on the credit quality of its operating subsidiary TFM; TFM's senior unsecured debt obligations are currently rated 'BB- '. TFM's credit profile is significantly stronger than that of TMM. TFM generates relatively stable levels of cash flow from its operations and does not require financial support from its shareholders. In addition, TMM does not have sole control over TFM's business and financial strategy. TMM owns a 41% economic stake in TFM, while Kansas City Southern Industries and the Mexican government own a 39% and 20% economic stake, respectively. TFM's financial policies are governed by a shareholder agreement that somewhat insulates the company from TMM and allows it to be rated on a stand-alone basis. In addition, TFM's debt covenants limit its ability to pay dividends to its shareholders. Last year, a shareholder dispute was settled with TMM returning a cash dividend payment back to TFM. TFM's ratings are based on the company's solid business position as the largest railroad in Mexico, long-term growth opportunities in the North American market, and stable financial position. Five years after privatization, TFM has improved the operating efficiency of its rail network and achieved relatively high profitability margins. TFM's gross interest coverage, as measured by EBITDA/Interest, is estimated at slightly below 3.0X for 2002. The company's financial leverage, as measured by Debt/EBITDA is estimated at slightly above 4.0X for 2002. TFM generates enough cash flow to finance currently budgeted capital expenditures. On Dec. 26, 2002, TMM announced a debt exchange offering open to holders of the $177 million 9.5% senior notes due 2003 and $200 million 10.25% senior notes due 2006. Holders who participate in the debt exchange will receive 100% principal amount of newly- issued 10.75% senior notes due 2010. These notes are issued by TMM and guaranteed by its wholly owned subsidiary TMM Holdings, whose assets consist of TMM's shares in TFM. As a result, holders who do not participate in the debt exchange will be in a subordinated position to holders of the newly issued notes. The debt exchange offering, which expires on Feb. 11, 2003, requires the minimum participation of 85% of the holders of the senior notes due 2003 and 50% of the holders of the senior notes due 2006. Successful completion of the debt exchange would be positive for TMM as it would lengthen debt maturities, thus reducing refinancing risk. TMM launched the debt exchange offering in anticipation of its significant refinancing needs totaling more than $200 million over the next year, including the $177 million senior notes maturing in May 2003. In the absence of a debt exchange or asset sales, TMM is considered likely to default on these notes because it has low cash balances and does not generate significant free cash flow. TMM has not announced any alternative financing options to the debt exchange. Although the completion of a debt exchange would lengthen debt maturities, TMM's debt levels would remain high. At 9/30/02, TMM (excluding debt at TFM) had an estimated $436 million in debt, including $177 million senior notes due 2003, $200 million senior notes due 2006, $59 million short term debt including euro commercial paper, convertible notes, and other debt. In addition, TMM had an off-balance sheet receivables securitization program totaling $23 million at 9/30/02. Subsequently, TMM increased its securitization program by $30 million in October 2002 and an additional $35 million in December 2002, and a portion of the proceeds were used to pay down short-term debt. TMM (excluding TFM results) also faces weak credit protection measures. TMM's interest coverage weakened to an estimated 1.0X during the first nine months 2002 compared to 1.3X during the previous comparable period as the company faced a negative operating environment. In particular, the level of international trade between the United States and Mexico, which grew steadily through the late 1990s, slowed starting in 2001 due to the negative economic environment in the United States. TMM is expected to generate an estimated $60 million in EBITDA during 2002, compared with debt levels of $436 million. Therefore, credit protection measures are expected to remain weak over the near term, with estimated EBITDA/Interest around 1.0X and Debt/EBITDA above 7.0X TMM has a solid business position in the Mexican transportation and logistics sector. TMM is the largest integrated logistics and transportation company in Mexico. The company offers four major types of services, including 1) specialized maritime shipping, 2) logistics operations, including dedicated contract trucking and integrated logistics outsourcing services, 3) port and terminal operations, and 4) through its equity stake in TFM, rail transport between Mexico and the United States. TMM's network of ports, railroads, and land operations provides significant synergies and is considered difficult to replicate by competitors. In addition, TMM has long term growth opportunities in the NAFTA market. However, TMM's business is highly dependent on the level of international trade between the United States and Mexico. CONTACT: Guido A. Chamorro 1-312-368-5473 or Daniel R. Kastholm 1-312-368-2070, Chicago. Media Relations: James Jockle 1-212-908-0547, New York. ================================= T R I N I D A D & T O B A G O ================================= BWIA: Former Pilots May Find Employment in Rival Airline -------------------------------------------------------- Pilots who lost their jobs in the downsizing of BWIA's fleet may find employment in the airline's arch rival, Caribbean Star Airlines. A report by the Trinidad Guardian quoted Caribbean Star chief executive officer Paul Moreira saying the have interviewed about 15 pilots from BWIA.Mr. Moreira added that the Caribbean Star expects them to come aboard soon. Asked for his opinion on BWIA's pilots going to Caribbean Star, BWIA's corporate communications director Clint Williams only said, "That is excellent and we wish them the best of luck. We are happy to know they were able to find good employment." BWIA phased out three De Havilland Dash 8 aircraft, the same type used by Caribbean Star. The phase out was part of BWIA's fleet rationalization program in order to achieve the targeted savings to keep it alive. According to Williams, fares in the Caribbean became so low after Caribbean Star's entry in the market; it became impractical for BWIA to keep the Dash 8's and their pilots. Williams said that it became more profitable for BWIA to use its alliance with Liat to serve the lighter Caribbean routes. 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) CARONI LTD: Workers Want O'Neal's Reassignment Stopped ------------------------------------------------------- Sugar Industry Staff Association president Jai Ramkissoon said that a number of issues are yet to be discussed by the unions and the management of Caroni (1975) Ltd. A report from the Trinidad Express says that, although operations at the Company's factories have resumed, a new disagreement may disrupt operations again. Workers reportedly do not share the same sentiments on the reassignment of Usine Ste Madeleine factory manager Raphael O'Neal. Mr. O'Neal's reassignment was one of the actions agreed upon by the management and staff union representatives on Tuesday evening. However, some of the daily-paid workers at the factory signed a petition asking him to stay. The Company has resumed operations after the memorandum was signed. However, almost 7,000 tonnes of cane has been idle since the protest stalled operations. According to Caroni's acting chief executive, this would have produced about 500 tonnes of sugar, and could have been sold at about $2,500 per tonne, depending on the market. He believes that these canes might be used to make molasses instead. But, he added, if there would be no more setbacks, the Company should be able to meet its target harvest for this year. 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 DE VENEZUELA: Political Turmoil Pulls Down Ratings -------------------------------------------------------- Fitch Ratings took various actions on the ratings of Banco de Venezuela. The ratings affected are: --Long-term foreign currency downgraded to 'CCC-' from 'CCC' with a negative outlook; --Short-term foreign currency affirmed at 'C'; --Long-term local currency affirmed at 'CCC-'; --Short-term local currency affirmed at 'C'; --Individual downgraded to 'D/E' from 'D', Rating Watch Negative; --Support affirmed at '5T'; --Long-Term National rating downgraded to 'BBB+(ven)' from 'A(ven)'. (See Fitch notes below for explanations) BANCO DEL CARIBE: Ratings Downgraded, Affirmed Amid Crisis ---------------------------------------------------------- Fitch downgraded the long-term foreign currency rating of Banco del Caribe to 'CCC-' from 'CCC' and assigned a negative outlook on the rating. At the same time, the ratings agency affirmed the bank's short- term foreign currency at 'C'; long-term local currency at 'CCC-'; short-term local currency at 'C'; and support at '5T'. Fitch also affirmed the bank's individual rating at 'D/E' and placed the rating on watch negative. The bank's long-term national rating was also downgraded to 'BBB(ven)' from 'A-(ven)'. (See Fitch notes below for explanations) BANCO EXTERIOR: LTFC Rating Downgraded To `CCC-' ------------------------------------------------ Fitch downgraded Banco Exterior's long-term foreign currency rating to 'CCC-' from 'CCC' and assigned a negative outlook on the rating. Simultaneously, Fitch affirmed Banco Exterior's short-term foreign currency rating at 'C'; long-term local currency at 'CCC- '; short-term local currency at 'C'; and support at '5T'. The ratings agency downgraded the bank's individual rating to 'D/E' from 'D' and placed it on Rating Watch Negative. The bank's long-term national rating was also downgraded to 'BBB(ven)' from 'A-(ven)'. (See Fitch notes below for explanations) BANCO MERCANTIL: Fitch Takes Various Actions On Ratings ------------------------------------------------------- Fitch Ratings took various actions on the ratings of Banco Mercantil. The ratings affected are: --Long-term foreign currency lowered to 'CCC-' from 'CCC' (Rating Outlook Negative); --Short-term foreign currency affirmed at 'C'; --Long-term local currency affirmed at 'CCC-'; --Short-term local currency affirmed at 'C'; --Individual downgraded to 'D/E' from 'D' (Rating Watch Negative); --Support affirmed at '5T'; --Long-Term National rating downgraded to 'BBB+(ven)' from 'A(ven)'. (See Fitch notes below for explanations) BANCO OCCIDENTAL: Fitch Cuts LTFC To `CCC-` ------------------------------------------- Fitch Ratings downgraded the long-term foreign currency of Banco Occidental de Descuento to 'CCC-' from 'CCC' and assigned a negative outlook on the rating. At the same time, the ratings agency affirmed Banco Occidental's short-term foreign currency at 'C'; long-term local currency at 'CCC-'; short-term local currency at 'C'; and support at '5T.' Fitch further affirmed the bank's individual rating at 'D/E' and placed the rating on watch negative. (See Fitch notes below for explanations) BANCO PROVINCIAL: Fitch Downgrades, Affirms Ratings --------------------------------------------------- International rating agency Fitch Ratings downgraded the long- term foreign currency rating of Venezuelan bank Banco Provincial to CCC- from CCC. The rating outlook is negative. Fitch also downgraded the bank's individual rating to 'D/E' from 'D' and placed the rating on Watch Negative. The long-term national rating was also lowered to 'BBB+(ven)' from 'A(ven)'. At the same time, Fitch affirmed the bank's other ratings: Short- term foreign currency at 'C'; Long-term local currency at 'CCC-'; Short-term local currency at 'C'; and Support at '5T'. (See Fitch notes below for explanations) BANCO VENEZOLANO: Fitch Downgrades, Affirms Ratings --------------------------------------------------- Fitch Ratings, the international rating agency, took various actions on the ratings of Banco Venezolano de Credito. The ratings affected are: --Long-term foreign currency downgraded to 'CCC-' from 'CCC' with a negative outlook; --Short-term foreign currency affirmed at 'C'; --Long-term local currency affirmed at 'CCC-'; --Short-term local currency affirmed at 'C'; --Individual lowered to 'D/E' from 'D', Rating Watch Negative; --Support affirmed at '5T'. (See Fitch notes below for explanations) BANESCO BANCO: Fitch Cuts Foreign Currency Rating; Neg. Outlook --------------------------------------------------------------- Fitch Ratings lowered Banesco Banco Universal long-term foreign currency rating to 'CCC-' from 'CCC' and assigned the rating with a negative outlook. At the same time, the ratings agency affirmed the bank's short- term foreign currency at 'C'; individual at 'D/E' (Rating Watch Negative); and support at '5T'. (See Fitch notes below for explanations) FITCH NOTES: Subsequent to mounting political pressure, intensified capital flight and severe currency depreciation in the past few weeks, Venezuela's Finance Ministry and the Central Bank on Wednesday agreed to halt U.S. dollar trading for five working days. During this period, the authorities expect to decide on and put in place a formal scheme to manage the foreign exchange market. In previous economic crises in Venezuela, foreign exchange controls remained in effect for a significant period of time (22 months in the last incidence, from 1994 to 1996) whilst only some activities and individuals were allowed to access the FX market. While exchange controls impose yet more pressure over the Venezuelan banks' performance, limiting their ability to repay U.S. dollar denominated liabilities and affecting the capacity and willingness of borrowers in the economy to repay U.S. dollar denominated loans, most banks maintain prudent foreign exchange exposure. This results from both regulatory limits on open foreign currency position and banks having generally long positions due to the exchange rate's historical volatility, which has boosted their income in previous critical periods. In recent months, Fitch Ratings has downgraded Venezuelan banks ratings reflecting the severe deterioration in the local operating environment, the increased likelihood of a default or distressed debt exchange by the banking system's largest borrower - the government - and the increasing possibility that actions motivated by the unsettled political environment might interfere with the economy's payment chain. As Fitch has stated in previous opportunities, the banking system will continue to be exposed to a growing risk of politically motivated interference, a risk that will remain in the foreseeable future. The lowering of the banks' long-term foreign currency rating to a level two notches below the sovereign reflects the foreign exchange restriction imposed by the government to the banks and other individuals, while the lowering of the individual and national ratings reflect the much higher risk inherent in the volatile and deteriorated operating environment, and the likelihood that any recovery could be prolonged. Contact: Franklin Santarelli, +58 212 286 3356, Caracas Carlos Fiorillo, +58 212 286 3356, Caracas Peter Shaw 1-212-908-0553 Gustavo Lopez-Cortes 1-212-908-0853 Agatha Pontiki 1-212-908-0306, New York London Ratings Desk +44 (0) 20 7417 6300 Media Relations: James Jockle 1-212-908-0547, New York. CANTV: Moody's Downgrades LTFC Rating To Caa1 --------------------------------------------- Compania Anomina Nacional Telefonos de Venezuela (CANTV) had the rating on its long-term foreign currency downgraded from B2 to Caa1 by Moody's Investors Service. The downgrade came in conjunction with Moody's downgrade of Venezuela's country ceiling for foreign currency bonds from B3 to Caa1. The rating outlook for CANTV has been changed from stable to developing. Cantv is a full service telecoms provider and the largest telco in Venezuela. HAMACA: Moody's Lowers Ratings on $470M Senior Bank Loans --------------------------------------------------------- Moody's Investors Service downgraded the US$470 million senior secured bank loans of Venezuelan heavy oil project Hamaca Holding LLC to B3 from B2 with a developing outlook. The rating action follows the downgrade of Venezuela's foreign currency rating to Caa1 from B3 and in turn the downgrade of PDVSA's foreign currency rating to Caa1 from B3. Moody's, in its previous report, said that the Hamaca Project is more exposed to the financial capacity of PDVSA owing to the magnitude of PDVSA's obligations for its share of equity contributions toward the completion of the project and the repayment of debt in the event of non-completion. Moody's will continue to monitor Venezuela's socio/political turmoil, its impact on the independence, operating capacity and financial condition of PDVSA, and the resultant effect these factors may have on the Hamaca project. PDVSA: Hourly Workers Return To Work ------------------------------------ PDVSA Ali Rodriguez announced that 75% of the state oil company's hourly workers have gone back to work, breaking a 53-day nationwide strike that has reduced output by more than two- thirds, relates Bloomberg. Strikers, however, disputed the figure. "More than 85 percent of our membership remains on strike," Vladimiro Blanco, secretary general of the Fedepetrol oil union said. "Oil operations are shut down." Fedepetrol has about 20,000 members, he said. The strike, which is aimed at ousting President Chavez, has raised investor concern of a debt default due to a slump in government revenue as a result of very low oil production. The strike has also led the government to suspend currency trading after the bolivar fell 27% this month. Petroleos de Venezuela had about 33,000 employees, about 70% of them hourly workers, before the strike began December 2. At least 1,700 have been fired for participating in the work stoppage. The Company also has 37,000 contract workers. PDVSA: Fitch Sees Shaky Short Term, Long Term Return to Normal -------------------------------------------------------------- Despite current difficulties, the competitive advantages of Venezuela's hydrocarbon industry will ensure that Petroleos de Venezuela S.A. (PDVSA) continues to be an important player in global energy, according to a new Fitch Ratings report. 'The company's near term performance and reliability, however, will remain casualties of a broader and unprecedented political confrontation,' noted Alejandro Bertuol, Senior Director, Latin American Corporates. 'Upstream production remains severely curtailed and even with the full support and cooperation of a majority of the industry's employees, the reactivation of significant crude oil production volumes could take 30-60 days,' Bertuol added. The report estimates a current strike adherence rate of 75% among oil workers. The new Fitch report outlines the rationale of recent PDVSA- related rating actions, including PDVSA Finance Ltd.'s downgrade to 'BB-' from 'BBB'. The latter reflects the severe disruptions in oil exports intended for designated customers and PDVSA'S deteriorating ability to service the transaction. According to Greg Kabance, Senior Director of Latin America Structured Finance, following cessation of normal exports during the first week of December, export flows for the month were calculated as low as US$100 million-US$125 million. 'Total January crude exports will be in the US$150 million to US$200 million range. At present, CITGO Petroleum Corp. (CITGO) and, to a lesser degree, Lyondell CITGO Refining L.P. are the principal recipients of these flows. CONTACT: Fitch Ratings Alejandro Bertuol, 1-212-908-0393 Matt Burkhard, 1-212-908-0540 (Media Relations) *********** 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. 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