/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030225.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Tuesday, February 25, 2003, Vol. 4, Issue 39 Headlines A N T I G U A & B A R B U D A LIAT: Immediate Financing Deficit Gets Critical A R G E N T I N A FOREIGN BANKS: Analysts See End to Argentine Exodus METROVIAS: No Improvement, Category 3 Share Rating Remains OIL COMPANIES: Lavagna Proposes Devastating Special Local Tax REPSOL YPF: Investing Heavily in Loma de la Lata Gas Facilities TELECOM ARGENTINA: SeCom Approves ISP Services Expansion B A H A M A S BAHAMASAIR: Announces New Appointments to Important Positions B E R M U D A TRENWICK GROUP: Receives NYSE Suspension, Delisting Notification TYCO INTERNATIONAL: CalPERS Urges `Go Back To U.S.' Resolution TYCO INTERNATIONAL: Analysts Suggest Asset Sale B O L I V I A HUANUNI: Political Exodus Hampers Conflict Resolution HUANUNI: Bolivia Awaits Dissolution of JV Contract B R A Z I L ACESITA: Better Sales, Higher Prices Prompt Analyst `Buy' Rating BCP: Debt Load May Alter Oi Purchase Plans CEMAR: Eletrobras May File Legal Suit Against US Parent KLABIN: Asset Sales Seen Unavoidable to Fend Off Trouble SANEPAR: Vivendi Retains A Seat On Board VARIG/TAM: Gets Approval To Reduce Flights C H I L E ENERSIS/ENDESA CHILE: S&P Lowers Ratings to 'BBB-'; Outlook Neg C O L O M B I A MINERCOL: Awaits Government Decree for Liquidation Specifics M E X I C O CFE: Technical Bids Received on El Cajon Project T R I N I D A D & T O B A G O BWIA: Reaffirms Commitment To Barbados CARONI LTD.: Asset Freeze Remains in Effect Until March 6 U R U G U A Y BANCO DE CREDITO: Talks With Moon Group May Collapse * IMF and Uruguay Agree on Basis of an Economic Program for 2003 V E N E Z U E L A CANTV: To Appeal Rate Freeze Decision CANTV: Cutting 2003 Investments by Two Thirds PDVSA: Layoffs Escalate in Wake of Strike - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Immediate Financing Deficit Gets Critical ----------------------------------------------- Troubled Eastern Caribbean regional carrier LIAT is in need of fresh capital to stay alive, reports The Antigua Sun. "LIAT needs $25 million (US$9 million) to stay in business, however, if LIAT does not obtain this financing our suppliers could reclaim the airline or we could foreclose," said LIAT chief executive Gary Cullen. He added that Caricom heads are expected to disclose the level of support they would give the ailing airline this week. Mr. Cullen said, in the present circumstances, LIAT has only three choices, to obtain immediate financing from regional government, merge, with BWIA, Air Jamaica, or Caribbean Sun, or simply close down. In an interview with the Antigua Sun, Mr. Cullen said that, contrary to some reports, the leaders of Caricom countries were very sympathetic with LIAT, during their meeting with LIAT's board. According to him, the member governments recognized the need for competition but also understood the importance of having a regional carrier. Caricom heads formed a special aviation committee tasked with carrying out a preliminary review of the airline's business plan, financial audit, and help member governments design proposals for funding. Maurice Edwards, director of finance in St. Vincent & the Grenadines, is chairman of the committee. Mr. Cullen also revealed that former BWIA chairman Ken Gordon is setting up a group to study a possible merger between LIAT, BWIA and Air Jamaica. CONTACT: LIAT Corporate Headquarters V.C. Bird International Airport, P.O. Box 819, St. John's, Antigua West Indies Phone: 1 (268) 480-5600/1/2/3/4/5/6 Fax: 1 (268) 480-5625 Homepage: http://www.liatairline.com/ Contacts: Garry Cullen, Chief Executive Officer David Stuart, Vice President of Marketing ================= A R G E N T I N A ================= FOREIGN BANKS: Analysts See End to Argentine Exodus --------------------------------------------------- Local banking analysts expect that no more major foreign banks will exit Argentina, as the country's economy begins showing improvement. Business News Americas cited a local brokerage saying all large foreign players have already recovered their loses, adding that the banks' decision to voluntarily return frozen assets is a sign of their commitment to stay. Carina Lopez, from Standard and Poor's said, "We are not likely to see any other dramatic exit like Scotiabank and Credit Agricole." Canadian bank Scotiabank sold its Argentine unit, Scotiabank Quilmes, after liquidity problems made it decide to leave the country. French bank Credit Agricole's three national banks were taken over by federal bank Banco Nacion. Italian group IntesaBci also announced last year that it will leave Argentina, and sold Banco Sudameris Argentina. Spanish group SCH, which owns Banco Rio in Argentina, was also rumored to leave the country. Citibank and BankBoston are among the foreign players in the country that has started returning frozen time deposits to clients. METROVIAS: No Improvement, Category 3 Share Rating Remains ---------------------------------------------------------- Credit rating agency Fitch is maintaining its Category 3 rating on the shares of Argentine public transport company Metrovias, reports Business News Americas. Category 3 is for low liquidity shares whose issuers have a good capacity to generate profits. Fitch said that the rating reflects Metrovias' exclusive 24-year concession that began in 1994 and improved service quality. The Company's economic-financial imbalance and operative deterioration due to adverse external factors was also taken into consideration, Fitch added. Fitch pointed out that a government-dictated fare freeze in face of increasing costs and dollar-denominated supplies have created pressure on Metrovias' cash flow, while the country's economic situation has led to a drop in passengers. The rating agency also highlights the sector's highly regulated service. Metrovias, which operates capital Buenos Aires' subway system, is a division of Argentine construction and transportation company Compania Latinoamericana de Infraestructura & Servicios SA (CLISA). The Company recently revealed a ARS27.4 million (US$8.83mn) net loss for 2002. The loss added to CLISA's financial woes, which include a missed interest payment on US$100 million of guaranteed senior notes in December. Last month, CLISA offered to exchange the defaulted bonds with new bonds. TCR-LA recalls that CLISA offered to exchange US$100 million of 11 5/8% bonds that mature in 2004 for new 6% bonds that mature in 2012. The exchange offer is open until February 25. CONTACT: CLISA Adalberto Campana +1-54-11-4959-6857 FINANCIAL ADVISOR: BANC OF AMERICA SECURITIES LLC Jonah Hirsch +1-888-292-0070 or, +1-704-388-4807 from outside the US OIL COMPANIES: Lavagna Proposes Devastating Special Local Tax ------------------------------------------------------------- Argentine Economy Minister Roberto Lavagna threatened to impose a 100-percent tax on extraordinary earnings, if local oil companies sell oil at more than US$30 per barrel to the local market. A report by Dow Jones Newswires said that the government official believes that other Latin American countries would adopt the same attitude. Mr. Lavagna was reacting to oil companies' petition to renegotiate domestic oil prices to compensate for high global prices. He added that no negotiations between the government and oil companies are underway, and that there is no reason for an increase in domestic oil prices. Under an agreement signed two months ago, oil companies are required to sell oil at US$28.50 per barrel, to keep local oil prices under control. In return, companies can continue selling oil at US$28.50 per barrel, even if world oil prices have gone down below that price. However, the agreement had a clause saying that the agreement ends if world oil prices exceed US$35 per barrel for more than 10 days. Global oil prices went above the US$35 level last week. If the prices remain extended, the agreement would expire by its terms on Friday of this week. Mr. Lavagna's statements were incongruent with Cabinet Chief Alfredo Atanasof's, who said on Thursday, "We are permanently in contact with the companies in the sector, precisely to avoid there being increases in the domestic market. We will soon have new suggestions, new ideas to study and also to resolve, and it's clear that we don't have much time, given that on Monday the timeframe that we put in place with the oil companies will expire, so that before that you will surely have news about this matter." Last year, the country required oil companies to retain 30 percent of their export revenue in the country, coupled with a 20 percent tax on exports. REPSOL YPF: Investing Heavily in Loma de la Lata Gas Facilities --------------------------------------------------------------- Repsol-YPF Vice President for Exploration and Production Ramon Gil said that the Spanish oil company would invest US$120 million in Loma de la Lata gas block this year. Mr. Gil told Business News Americas during operations start-up of the field's 11th compression station on Thursday that the crisis has passed for the Company. Last year, Argentina was hard hit by a sharp currency devaluation, and economic crisis. Business News Americas cited an unnamed source saying that two more compression stations in Loma de la Lata are under construction, and operations are to start later this year. The source also said that the station opened Thursday is for re- injection in 13 wells in the field, rather than leading to a production increase seeks to improve efficiency. Production in Argentina's Loma de la Lata is seasonal, recording peaks of 54 million cubic meters/day during winter. This accounts for about 31% of natural gas demand in the country. The block, which has 145 wells and is in Neuquen province, also supplies the Neuba I and II, Centro Oeste and Gasoducto del Pacifico pipelines, the last of which exports to Chile, said the report. CONTACT: REPSOL YPF SA Head Office Paseo de la Castellana 278 28046 Madrid Spain Phone: +34 91 348 81 00 Fax: +34 91 348 28 21 Telex: 48162 RESOLE Web Site: http://www.repsol.com Contact: Alfonso Cortina de Alcocer, Chairman Jose Vilarasu Salat, Vice Chairman Antonio Hernandez, Vice Chairman TELECOM ARGENTINA: SeCom Approves ISP Services Expansion -------------------------------------------------------- Argentine fixed line operator Telecom Argentina obtained approval from the country's telecoms regulator SeCom to expand Internet services to more than 300 towns in the north of the country, reports Business News Americas. The present extenstion adds areas within 30-55km the operator's current coverage. Telecom Argentina, majority owned by France Telecom SA and Telecom Italia SpA, had the biggest corporate default in Argentina after the government defaulted on US$95 billion of debt and devalued the currency in January 2002. The Company earlier proposed to buy back a portion of US$3.2 billion in defaulted debt. Under the proposal, Telecom Argentina would use US$260 million in cash to buy back debt. The Company would pay up to 50% of face value, and the plan may allow it to cancel about US$700 million in debt. However, reports have it that banks including BankBoston NA and Citigroup Inc. that hold about US$1.2 billion in Telecom Argentina SA's defaulted debt were dissatisfied with the proposal and may call for a bankruptcy proceeding to set new repayment terms. CONTACT: Telecom Argentina Stet France Telecom SA Head Office 10th Floor Alicia Moreau de Justo 50 Buenos Aires Argentina 1107 Tel +54 11 4968 4000 Fax +54 11 4313 5842 Web Site http://www.telecom.com.ar Contacts: Juan Carlos Masjoan, Chairman Christian Chauvin, Vice Chairman Franco Bertone, Vice Chairman Susana Malcorra, Chief Executive ============= B A H A M A S ============= BAHAMASAIR: Announces New Appointments to Important Positions ------------------------------------------------------------- Bahamasair managing director Paul D. Major announced the appointment of Captain Vincent Beneby to the position of Director of Safety & Standards. The Nassau Guardian reports that Mr. Major also appointed Willamae Kemp as manager of West Palm Beach Airport and Milo B. Butler III as chief customer service officer. A report from the Caribbean Investor enumerated the responsibilities of the new appointees. Effective on Jan. 13, 2003, Capt. Beneby's responsibilities would include maintaining the flight Safety and Accident Prevention Programme, and ensuring that the airline complies with the mandatory and voluntary reporting systems. Mrs. Kemp's tasks involves processing passengers traveling to Marsh Harbous, complying with regulatory requirements, and ensuring that passengers receive good quality service during their travel experience with Bahamasair, starting on November 15 last year. Starting February 10, Mr. Butler's duties will include leading and inspiring all customer contact staff to provide the highest possible quality service to all customers and to provide reliable cargo service. He would also oversee the airline's Customer Relations and Security Departments. Last year, the airline was reprimanded by Bahamas Parliamentary Secretary for the Ministry John Carey, for "using much of the government's revenue while failing to satisfy expectations." According to the Secretary, the airline, which received US$45 million from the Free National Movement Government, is becoming an economic burden to the country's taxpayers, using approximately US$125,000 per day. He added that employees are continually complaining of the poor leadership in the management. CONTACT: Bahamasair Holdings Limited P.O.Box N 4881 Nassau, Bahamas Phone: (242) 377-8451 Fax: (242) 377-7409 ============= B E R M U D A ============= TRENWICK GROUP: Receives NYSE Suspension, Delisting Notification ---------------------------------------------------------------- Trenwick Group Ltd.(NYSE: TWK) announced Sunday that it has been notified by the New York Stock Exchange (NYSE) that its common stock could be subject to trading suspension and delisting within the next six months. Trenwick received this notification because the average share price of its common stock for the previous 30 days has been below $1.00. The NYSE's criteria for continued listing require that a Company's common stock trade at a minimum average share price of $1.00 over a 30-day period. Under NYSE guidelines, Trenwick must return to compliance with the NYSE's criteria for continued listing within six months following receipt of the NYSE's notification. In the event that the Company fails to return to compliance during this time period, or the NYSE otherwise determines to institute delisting proceedings, the common stock could be subject to trading suspension and delisting. The NYSE also notified Trenwick that it may review the continued listing status of the Series A Perpetual Preferred Stock of LaSalle Re Holdings Ltd. (NYSE:LSH_pa), Trenwick's Bermuda-based subsidiary. Although it noted that LaSalle has not failed to meet any specific financial listing criteria at this time, the NYSE indicated that it may make determinations as to suitability for continued listing based on other factors including the performance of Trenwick and the ongoing scope of LaSalle's operations. Background Information Trenwick is a Bermuda-based specialty insurance and reinsurance underwriting organization with two principal businesses operating through its subsidiaries located in the United States, the United Kingdom and Bermuda. Trenwick's reinsurance business provides treaty reinsurance to insurers of property and casualty risks from offices in the United States and Bermuda. Trenwick's operations at Lloyd's of London underwrite specialty insurance as well as treaty and facultative reinsurance on a worldwide basis. In 2002, Trenwick voluntarily placed into runoff its U.S. specialty program business and its specialty London market insurance company, Trenwick International Limited, and sold the in-force business of LaSalle Re Limited. TYCO INTERNATIONAL: CalPERS Urges `Go Back To U.S.' Resolution -------------------------------------------------------------- The California Public Employees' Retirement System (CalPERS) issued a Shareowner Alert today, asking fellow shareowners to join the System in voting for a resolution which urges the Tyco board to bring its legal incorporation back to the United States from Bermuda. In a letter to the top 100 of Tyco's shareowners, CalPERS asked for an affirmative vote on proposal number #7, sponsored by the American Federation of State County & Municipal Employees (AFSCME) pension plan. CalPERS owns more than 1.4 million shares of Tyco common stock. Tyco is schedule to hold their annual meeting in Bermuda on March 6, 2003. Even though the Tyco Board has agreed to study this issue, CalPERS believes it is critical to keep the company on task through this resolution. "America's recent corporate scandals demonstrate it is very important that, in the event of legal violations by officers or directors of a U.S.-domiciled company, that shareowners everywhere have the ability to pursue legal recourse in the event of mismanagement or illegal actions by a company," said Fred R. Buenrostro, Jr., Chief Executive Officer of CalPERS. "Offshore incorporations weaken shareholder protections and severely limit shareowners' abilities to pursue their rightful legal remedies if necessary. "Shareowners lost a significant level of accountability when Tyco reincorporated from Delaware to Bermuda," said Buenrostro in the letter to fellow shareowners. "Bermuda incorporation makes it more difficult for shareholders to hold companies, their officers and directors legally accountable in the event of wrongdoing; class actions are generally not available under Bermuda law; and shareholders have extremely limited ability to sue officers and directors derivatively on behalf of the corporation." CalPERS is the nation's largest public pension fund with assets totaling approximately $133 billion. The System provides retirement and health benefits to 1.3 million State and local public agency members and their families. CONTACTS: Brad Pacheco/Pat Macht Office of Public Affairs (916) 326-3991 http://www.calpers-governance.org/ TYCO INTERNATIONAL: Analysts Suggest Asset Sale ----------------------------------------------- Some Wall Street analysts said Tyco International, Ltd. is better off selling its Fire and Security division, particularly ADT, Ltd., according to a Reuters report. David Bleustein of UBS Warburg said that Tyco may find the true value of the division by selling it. He estimates that the Company will grow only 5 percent in the revenue in the fiscal year ending on September 30. In a research report, MR. Bleustein wrote, "We have assumed a 2.5 times revenue multiple for Tyco's security (ADT) business. We believe ADT represents one of Tyco's most readily marketable assets given its potential attractiveness to strategic buyers." Tyco's plastic unit is most likely to be sold, in the opinion of Nick Heymann from Prudential Financial Research in New York. Aside from the fact that the unit was put up for sale last year, it is also vulnerable to the rising cost of oil, said Mr. Heymann. He added that the Company should sell ADT, too, because it will "take time to sort out." Tyco spokesperson Liz Mather said the Company is reviewing which units it might sell but declined to comment on the analysts' statements. Tyco CEO Edward Breen reportedly wants to fix the said division, after it presented disappointing figures in the fiscal first quarter ended on December 31. Mr. Breen and the Company's Chief Finance Officer David Fitzpatrick would spend a significant amount of time resolving the division's bad debt, while reducing costs. The Company doesn't break out sales for ADT, but its fire and security business had $11 billion in sales last year, said the report. But investors are wary of Tyco's debt, which stands at US$24 billion as of the end of December last year. As of this month, Mr. Breen has secured US$4.5 billion in financing to cover a US$3.6 billion shortfall by the end of the year. 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) Phone: +1-212-424-1314 or Kathy Manning (Investors) Phone: +1-603-778-9700 ============= B O L I V I A ============= HUANUNI: Political Exodus Hampers Conflict Resolution ----------------------------------------------------- The Bolivian government and the unemployed miners, who are requesting to exploit the Posokini tin deposit at the Huanuni mine, nearly reached a lasting solution to their conflict, Business News Americas indicates. Talks between the two parties had just finalized when the entire cabinet of President Gonzalo Sanchez de Lozada resigned on February 18, leaving all documents linked to the negotiations unsigned. "We had just finished negotiations with the Huanuni cooperative and the documents were awaiting the signature [of the economic development minister]. Now the question is, what line is the new cabinet going to take?" asked Rolando Delaunde, mining and metallurgy director of the department. According to the official, state mining corporation Comibol has also been in contact with the workers and cooperative members in Huanuni. At present the unemployed miners have access to level 120 of Posokoni, and are asking for access to the lower levels to exploit more of the mine, one of Bolivia's most important tin deposits with 948,599t of reserves that, with production of 200t/d, would have a useful life of 16 years. HUANUNI: Bolivia Awaits Dissolution of JV Contract -------------------------------------------------- Bolivia is yet to see a solution to its conflict with UK-based RBG over the control of the Huanuni mine, Business News Americas reports, citing a spokesperson for the country's mines department. "We are awaiting a judgment for the dissolution of that contract," Rolando Delaunde, mining and metallurgy director of the department. Allied Deals, as RBG was known at the time, took over Huanuni, under the joint venture contract with state mining authority Comibol, in April 2000. The same company bought the Vinto tin smelter, which is supplied by the mine, from Comibol for US$14.7 million and a pledge to invest US$14 million. But RBG has since gone bankrupt after becoming embroiled in a US$600-million fraud scandal. The court-appointed liquidator obliged it to sell Vinto to Bolivian mining company Comsur and the UK government's Commonwealth Development Corporation in June last year for US$6 million. Comsur, a company connected to President Sanchez de Lozada, also wanted to take RBG's place in the joint venture for Huanuni with Comibol, but backed down after protests from miners. =========== B R A Z I L =========== ACESITA: Better Sales, Higher Prices Prompt Analyst `Buy' Rating ---------------------------------------------------------------- Katia Brollo, a steel analyst for Unibanco investment bank, recommends investors buy up shares of Brazilian stainless steelmaker Acesita. Ms. Brollo's forecasts Acesita's shares will appreciate 40% to a target price of BRL1.60. The steelmaker's share price closed at BRL1.14 on Friday. According to a Business News Americas report, Ms. Brollo also expects a 38% increase in Acesita's sales this year, to 434,800t of stainless steel, compared to 2002. The analyst believes that exports will push up the Company's sales and account for 60% of the total. "It is worth noting that in 2002, stainless steel accounted for 39% of the company's sales in the first half, and then increased to 54% in 2H02," she said. Acesita's output and sales last year were hurt by an accident at its No. 2 blast furnace. Complete recovery of the blast furnace will not be verified until the steelmaker undertakes a maintenance check of the equipment in November this year. Mr. Brollo says Acesita's learning curve in stainless steelmaking is coming to a close and that lost sales resulting from the accident will gradually be recovered. Due to the incident, sales of Acesita's other two products, silicon and carbon steel, fell 10% and 40%, respectively, between 3Q02 and 4Q02. Demand from Asia and Europe is seen keeping average prices up this year compared to 2002. "For 2004, we forecast a 1% increase in prices in dollars and for 2005 we are assuming that dollar prices will remain the same," the analyst said. The price of stainless steel is around US$1,200/t, much higher than the price of slabs, which currently change hands for US$235/t. "It [stainless steel] is the most value-added steel product on the market," she added. Mr. Brollo forecasts Acesita's net sales will rise 52% to BRL2.58 billion in 2003 compared to last year; EBITDA will jump 70% to BRL729 million; and net profit will reach BRL441 million versus the BRL290-million loss reported for 2002. Belo Horizonte-based Acesita, controlled by Luxembourg-based steel group Arcelor, is Latin America's sole producer of stainless and silicon steel with installed capacity of 800,000t/y. CONTACT: Acesita SA Registered Office Av Joao Pinheiro, 580 Centro 30130-180 Belo Horizonte - MG Brazil Tel +55 31 3235-4211 Fax +55 31 3235-4300 Web http://www.acesita.com.br Contacts: Valmir Marques Camilo, Chairman Bruno Le Forestier, Vice Chairman BCP: Debt Load May Alter Oi Purchase Plans ------------------------------------------ Brazilian PCS operator Oi, the mobile unit of Rio de Janeiro- based incumbent telco Telemar, is looking to buy Sao Paulo-based mobile operator BCP as part of its expansion efforts, local broadsheet Jornal do Comercio reports, citing an Oi executive. "We are negotiating the purchase of BCP. This is part of our expansion strategy," Oi COO Paulo Goncalves said at the 3GSM World Congress in Cannes, France. According to Bear Stearns analyst Alex Constantini, Oi's purchase of BCP could be good for the buyer as it would gain BCP's 1.7 million subscribers and "excellent operation." The analyst also noted that the Sao Paulo operator's end-3Q02 blended ARPU of BRL51 (US$14) is the market's highest. However, BCP's BRL7-billion debt load could pose a big problem for Oi. "No one will buy BCP today without debt renegotiations," Constantini said. BCP controlling shareholders BellSouth and local group Safra defaulted on a US$375-million debt payment nearly a year ago, and have since been squabbling over how to dump BCP. Meanwhile, according to an earlier report by the TCR-LA, BCP is reportedly nearing a deal with creditors. The report suggested that the agreement would essentially leave creditor banks in control of the Company, as they would accept a debt-for-equity swap. CONTACT: BCP S.A. Rua Fl>rida, 1970 4o andar Sao Paulo - SP Tel: 55 11 5509-6428 Fax: 55 11 5509-6257 Home Page: http://www.bcp.com.br BELLSOUTH CORPORATION 1155 Peachtree St. NE Atlanta, GA 30309-3610 Phone: 404-249-2000 Fax: 404-249-5599 Home Page: http://www.bellsouth.com/ Contacts: Investor Relations Phone (US): 800.241.3419 Fax: 404.249.2060 E-mail: investor@bellsouth.com CEMAR: Eletrobras May File Legal Suit Against US Parent ------------------------------------------------------- US-based PPL Global may face legal problems in connection with the debts accumulated by its unit in Brazil, the Maranhao state power company Cemar. According to a Business News Americas report, Brazil's federal power company Eletrobras is examining whether it can make PPL pay for the BRL350 million (US$96mn) in debts Cemar owed to Eletrobras. Eletrobras executives were scheduled to travel to Maranhao on Wednesday to discuss the issue with Sinval Zaidan, appointed by Aneel, Brazil's power regulator, to run Cemar. PPL acquired Cemar at privatization in 2001, but decided to sell its share in the Company because, the Pennsylvania-based company claims, the operations were not viable. PPL tried to sell Cemar to an investment group, Franklin, but creditors blocked the move. Cemar then filed for bankruptcy and Aneel stepped in to run the Company and try to sell it. Aneel was supposed to conclude its intervention in Cemar last February 17, but the regulator extended the intervention for 180 days to allow more time to resolve Cemar's financial difficulties. CONTACT: COMPANHIA ENERGETICA DO MARANHAO Av. Colares Moreira, 477 65075-441 - Sao Luiz- MA PHONE: (98) 217-2119 FAX: (98) 235-3024 WEBSITE: http://www.cemar.com.br/ CREDITORS: CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS Avenida Presidente Vargas 409, 13 Andar 20071-003 Rio de Janeiro Brazil Phone: (21) 2514-5151 Fax: +55-21-2242-2697 Home Page: http://www.eletrobras.gov.br Contacts: Cladio da Silva avila, President Jose Alexandre Nogueira de Resende, Director of Financial and Market Relations Investor Relations Division Phone: (0XX21) 2514-6207 / 2514-6333 Av. Presidente Vargas, 409 - 9 andar 20071-003 - Rio de Janeiro - RJ Email: arlindo@eletrobras.gov.br CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE Av. Presidente Vargas, 489 -13 andar. 20071-003- Rio do Janeiro RJ Phone: + (55+61) 429 5139 Fax: +(55+61) 328 1373 E-mail: elnweb@eln.gov.br Home Page: http://www.eln.gov.br/ Contact: Mr. Arlindo Soares Castanheira, Investor Relations Phone: 55 21 2514.6331 55 21 2514.6333 Fax: 55 21 2242.2694 E-mail: arlindo@eletrobras.gov.br FLEETBOSTON FINANCIAL CORP. 100 Federal Street Boston, MA 02110 Phone: (617) 434-2200 Fax: (617) 434-6943 URL: http://www.fleet.com/home.asp KLABIN: Asset Sales Seen Unavoidable to Fend Off Trouble -------------------------------------------------------- Market speculation abounds that Klabin, Brazil's biggest paper and pulp company, is close to selling some key assets. Most likely to be sold are its Riocell pulp plant and its stake in a local joint venture with U.S. paper-product giant Kimberly-Clark Corp.. "These rumors have been heard before, but they're picking up steam now," said Monica Araujo, a paper and pulp analyst at Espirito Santo Securities in Rio de Janeiro. "If they're true, it's very positive because the company is in a very delicate financial situation and needs to reduce its debt load." A spokesman for Klabin declined to comment, but the Company said late last year that it was planning to raise US$300 million with the sale of assets in a bid to improve its cash flow. Klabin had BRL3.1 billion ($863 million) of debt as of the end of September, almost a third of which is owed in foreign currency. According to a report by Jornal do Brasil, the Klabin hired Uniao de Bancos Brasileiros SA to help it sell the assets. But Klabin denied the report, saying it hadn't hired a bank to assess the transaction. Rumors about the possible sale kicked Klabin's shares 18 centavos or 14% higher, to BRL1.44 at the Sao Paulo Stock Exchange, the biggest single-day gain since May 1999, and the highest closing price since February 2001. CONTACT: Klabin SA Rua Formosa, 367 - 12o Andar Centro 01075-900 Sao Paulo - SP Brazil Tel +55 11 3225-4000 Fax +55 11 3225-4241 Web http://www.klabin.com.br Contact: Pedro Franco Piva, Chairman SANEPAR: Vivendi Retains A Seat On Board ---------------------------------------- Roberto Requiao, governor of Brazil's Parana state, met with Olivier Orsini, a representative from Vivendi Environnement SA, on Tuesday to discuss control of state water utility Cia. de Saneamento do Parana (Sanepar). Domino Holding SA, a conglomerate whose members include Vivendi Water, Andrade & Gutierrez and Banco Opportunity, holds just 40% of Sanepar. But even so, a deal with the previous governor gave them power over staffing, loans, deals with shareholders and final say over tariffs. That deal was terminated by Requiao less than two weeks ago following complaints about both poor water quality and under- investment. But in order to ease relations with the world's largest water company, Requiao said Vivendi may remain involved in the management of Sanepar. Sanepar will hold a general shareholders assembly March 10 to vote on new directors and board members, Requiao said. Sanepar serves 7.5 million customers in 623 municipalities. VARIG/TAM: Gets Approval To Reduce Flights --------------------------------------------- Brazil's two biggest airlines, Viacao Aerea Rio-Grandense SA (Varig) and TAM Linhas Aereas SA, obtained authorization from the Civil Aviation Department to cut 22 out of 69 flights between Sao Paulo and Rio de Janeiro. The flight reductions are aimed at cutting costs. The plan is part of the airlines' recent agreement to combine their businesses to avoid bankruptcy after failing to get government aid to pay maturing debt and aircraft leases and to purchase fuel. According to a Valor Economico newspaper, the airlines aren't expected to implement any cuts before the Carnival celebrations in early March. 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 TAM Daniel Mandelli Martin, President Buenos Aires Tel. (54) (11) 4816-0001 URL: www.tam.com.br ========= C H I L E ========= ENERSIS/ENDESA CHILE: S&P Lowers Ratings to 'BBB-'; Outlook Neg --------------------------------------------------------------- Standard & Poor's Ratings Services lowered Friday its long-term corporate credit and debt ratings on Chile-based electricity provider Enersis S.A. (Enersis) and on its 60%-owned subsidiary, Chilean power generator, Empresa Nacional de Electricidad S.A. (Endesa Chile) to 'BBB-' from 'BBB'. The outlook remains negative. "The rating action is based on concerns about the companies' refinancing risk stemming from difficult market conditions that have caused delays in completing the rollover of their high short-term debt maturities. The downgrade also reflects limited support from parent Endesa Spain and the relative weakness of projected financial ratios for the rating category," said credit analyst Sergio Fuentes. As of Dec. 31, 2002, consolidated debt reached US$8.9 billion, including a US$1.4 billion loan from Enersis' major shareholder, Endesa S.A. (A/Negative/A-1). About US$700 million in bonds and US$1.5 billion in bank debt mature during 2003. Enersis and Endesa are currently working on the refinancing of these maturities and on a financial strengthening plan that involves the sale of Rio Maipo and Canutillar, which Standard & Poor's expects will be completed by March 2003, other asset sales, the capitalization of the loan from Endesa S.A., and other measures. Standard & Poor's expects Enersis and Endesa to complete the refinancing before the end of April. After the process is completed, Enersis and Endesa Chile will not face major maturities until 2006 except for the bond maturities mentioned above. The negative outlook reflects the uncertainties related to the refinancing and the negative effect it could have on the companies' financial flexibility going forward. Standard & Poor's does not expect Endesa S.A. to provide support in excess of the capitalization of the loan and a US$150 million asset purchase as announced in 2002. Rating stability would require a successful refinancing and meaningful improvement of the companies' cash flow generation measures to levels more in line with the rating category. "Both Enersis' and Endesa Chile's financial situations are constrained by the high level of debt and interest payments combined with high debt maturities coming due in 2003 and 2004," Fuentes said. "In addition, Endesa Chile also needs to face relatively high capital expenditures in 2003 related to the construction of Ralco. This power plant is projected to start generating cash flow by mid 2004." Enersis and Endesa Chile present solid business positions in Chile, partly offset by the deterioration of their investments in Argentina and Brazil, and their aggressive financial profiles. Enersis has a dominant position in electricity distribution and also in power generation in Chile - the latter through its 60% equity stake in Endesa Chile. This represents more than 11,000 gigawatt-hours (GWh) per year of electricity distributed to around 1.6 million customers, and approximately 16,000 GWh of annual power generated by around 4,000 megawatts of installed capacity in Chile. Enersis' consolidated financial ratios slightly weakened in 2002 in spite of Endesa Chile's slight improvement. Funds from operations (FFO) interest coverage and FFO-to-total average debt reached 2.4x and 12% in fiscal 2002, respectively, compared to 2.8x and 16% in fiscal 2001. This was partly due to the weaker results at the level of its distribution companies, mainly in Argentina and Brazil. Endesa Chile's consolidated financials slightly improved during 2002 when FFO interest coverage and FFO- to-average total debt reached 2.5x and 10.6%, respectively, compared to 2.3x and 10.0% the previous year. Standard & Poor's expects ratios to weaken in 2003 slowly recovering afterwards. Enersis and Endesa Chile should show consolidated FFO interest coverage in excess of 2.8x and 2.6X and FFO-to-total debt over 15% and 13% in 2004. ANALYSTS: Sergio Fuentes, Buenos Aires (54) 114-891-2131 Marta Castelli, Buenos Aires (54) 114-891-2128 Luciano Gremone, Buenos Aires (54) 11-4891-2143 =============== C O L O M B I A =============== MINERCOL: Awaits Government Decree for Liquidation Specifics ------------------------------------------------------------ Minercol president Hector Piedrahita announced that the Colombian government has decided to liquidate the state mining company, relates Business News Americas. "The decision will be made official when a decree is published by the President of the Republic [Alvaro Uribe], who ordered the company's liquidation. In the meantime, Minercol keeps going," Piedrahita said. The decree is expected to be published by the end of this month or early March, he said. Following Minercol's dissolution, a new smaller agency will be set up to carry out the duties of both Minercol and state coal company Carbocol, which is also being liquidated. CONTACTS: MINERCOL Hector Piedrahita, President Carrera 7 #31-10 Piso 5 Bogot D.C. Tel:+57 (1) 350 3111 / 9111 Fax:+57(1) 350 3569 / 2380 www.minercol.gov.co =========== M E X I C O =========== CFE: Technical Bids Received on El Cajon Project ------------------------------------------------ Mexican state power company, CFE, received technical bids from three consortia by the February 19, deadline, reports Business News Americas. The Company said it will announce a winner for the construction of the 750MW El Cajon hydro project on March 14. The US$812 million project will be developed on the Santiago river in the Mexican state of Nayarit. It is projected to generate an average of 1,228GWh/year. According to the report, of Brazil's Andrade Gutierrez, the Construcoes e Comercio Camargo Correa subsidiary of Brazil's Camargo Correa and the Mexican unit of the US' General Electric made up the first consortium. The second consortium consists of Mexican companies Constructora Cota, Tradeco Infraestructura, Compania Contratista Nacional and Consorcio Aristos. The third consortium includes Constructora Internacional de Infraestructura, Promotora Inversora Visa, Ingenieros Civiles Asociados, La Peninsular Compania Constructora, and Russia's Energomachexport Power Machines. Meanwhile, the CFE said it would open economic bids by March 7. CONTACT: COMISION FEDERAL DE ELECTRICIDAD Rio Rodano 14, Col. Cuauhtemoc 06598 Mexico, D.F., Mexico Phone: +52-55-5229-4400 Fax: +52-55-5310-4614 Web Site: http://www.cfe.gob.mx Contacts: Alfredo Elias Ayub, General Director Arturo Hernandez Alvarez, Director of Operations Francisco J. Santoyo Vargas, Director of Finance ================================= T R I N I D A D & T O B A G O ================================= BWIA: Reaffirms Commitment To Barbados -------------------------------------- "Barbados is very strategic to BWIA's operations. Trinidad is the home-base but our commercial headquarters are right here in Barbados," declared Conrad Aleong, chief executive of cash- strapped Trinidad and Tobago flag carrier, British West Indies Airways (BWIA), in Barbados. Mr. Aleong made the statement after meeting with Barbados' Minister of Tourism and International Transport Noel Lynch, and other officials of the Barbados Tourism Council, recalls the Trinidad Express. Mr. Aleong confirmed BWIA's commitment to Barbados. The airline did not reduce flights to the said country, after restructuring. Only one of the 617 workers retrenched last month was from Barbados. BWIA brings in about 25 percent of all its traffic to Barbados. "Despite what you have been hearing in the news, we are now cleared for take-off," said Mr. Aleong. Mr. Lynch said that his country has not made any cash commitments to the airline. 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.: Asset Freeze Remains in Effect Until March 6 --------------------------------------------------------- Justice Amrika Tiwary-Reddy ruled that an injuction preventing Trinidad and Tobago state sugar company, Caroni (175), Ltd., from disposing or transferring its assets, is to remain in effect until March 6, when the next hearing takes place. The decision comes after Caroni filed a request to Justice Tiwary-Reddy in the Civil Chamber Court for a speedy determination of the issues surrounding an injunction that prevents the Company from disposing or transferring its assets. Reginald Armour, who filed the request in behalf of the Company, said that he, and fellow Caroni legal counsels, Senior Counsel Allan Alexander and Kerwyn Garcia, would need some time to take instructions from their client. Former Caroni employees, Eric Roberts and Edul Muhammed filed the application for the injunction through Senior Counsel Seenath Jairam, who led Henley Wooding, Gillian Lucky and Derek Ali, according to a report from the Trinidad Express on Thursday. Members of the All Trinidad Sugar and General Workers' Trade Union, led by their president Rudranath Indarsingh, also attended the hearing on Wednesday. An injunction granted by Justice David Myers on February 15 prevents Caroni, from selling or transferring specific assets, the Trinidad Express recalls. In the meantime, the Company is only allowed to dispose of its stock in trade, and sell its sugar and rum products. Sale of lands, and other like assets is strictly forbidden. CONTACT: Caroni Limited Old Southern Main Road, Caroni, Trinidad & Tobago Phone: (868) 663-1781 or 662-0879 Fax: (868) 663-1404 ============= U R U G U A Y ============= BANCO DE CREDITO: Talks With Moon Group May Collapse ---------------------------------------------------- St. George Co., an investment company of the South Korean Moon group, is about to break off talks with the Uruguayan government over the acquisition of local bank Banco de Credito. The Moon group holds a minority stake in Banco de Credito. Earlier, St George proposed to capitalize Banco de Credito with its own funds and 20-30% of the bank's frozen deposits in exchange for a majority stake. St George and depositors would then become the new owners. Recent media reports however, suggested that the group is about to withdraw from the talks. The government is yet to confirm on the reports. Banco de Credito, along with Banco Comerical, Montevideo and Caja Obrera, were intervened and suspended between July and August last year due to capital and liquidity problems. * IMF and Uruguay Agree on Basis of an Economic Program for 2003 ---------------------------------------------------------------- Mr. Anoop Singh, Director of Western Hemisphere Department of the International Monetary Fund (IMF) said in Washington, D.C. today: "As announced on February 17, an IMF mission returned from Montevideo earlier this week and discussions with the authorities have continued in Washington. We have reached agreement with the Uruguayan authorities on the basis of an economic program for 2003. This program defines a fiscal and financing framework to pave the way for medium-term economic sustainability and growth. The program will also carry forward bank reforms aimed at strengthening the domestic banking system. The authorities are finalizing a letter of intent which they expect to complete in the coming days. We are confident that the envisaged economic program will be supported by the international community and build a strong foundation for Uruguay to return to sustained growth. We plan for Board consideration of the program in mid March." IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: 202-623-7300 - Fax: 202-623-6278 Media Relations: 202-623-7100 - Fax: 202-623-6772 ================= V E N E Z U E L A ================= CANTV: To Appeal Rate Freeze Decision ------------------------------------- Venezuela's largest telco Cantv said it plans to file an appeal over a recent decision by the government to freeze local service rates, Business News Americas reports, citing CEO Gustavo Roosen. Venezuela froze domestic residential rates for the Company last week as part of setting prices for basic foodstuffs and services. "This decision is in conflict with the nation's telecommunications law," Roosen said. "It means a change of the agreement we had negotiated with the telecommunications regulator Conatel," he said, adding that he believes the government may yet reconsider its decision because it has acknowledged that certain legal clauses may have been overlooked. National Telefonos is 28.5% owned by Verizon Communications Inc., 6.9% by Spain's Telefonica SA, 6.6% by the government, and 12% by employees. The rest, or about 46%, is traded. CANTV: Cutting 2003 Investments by Two Thirds --------------------------------------------- Cantv will reduce this year's investments to US$100 million from US$360 million last year, reports Business News Americas, citing CFO Armando Yanes. Speaking at a conference call to explain the Company's financial results, Mr. Yanes said the figure may go up if the economy improves. Capex was also higher last year because the Company spent US$150 million toward upgrading the CDMA network of mobile subsidiary Movilnet to CDMA2000 1X. Meanwhile, exchange controls imposed by the government in the wake of the country's devastating two-month general strike in December and January are likely to hamper Cantv's efforts in making dividend payments Business News Americas recalls that on December 10, 2002, Cantv's shareholders approved the payment of a portion of the ordinary dividend for 2003 of VEB140/share (VEB980 /ADS), which was subsequently paid on January 15. The Company now seeks to pay out the remaining VEB71/share (VEB497 /ADS) portion of that ordinary dividend for 2003. The dividend is subject to shareholders approval at the Annual Shareholders' meeting to be held on March 28, 2003, and the payment of this dividend would be effected on April 23, 2003 to shareholders of record on April 9, 2003. PDVSA: Layoffs Escalate in Wake of Strike ----------------------------------------- The total number of firings at Venezuela's state oil company Petroleos de Venezuela SA has reached 14,948, or 45% of the Company's pre-strike workforce of 33,000, reports Bloomberg. Recently, the Company fired 1,785 more employees in a bid to break a protracted strike that has reduced its operations and slashed exports. According to PdVSA officials, those dismissed had reportedly worked in the western part of the country. Labor unions, business leaders and former oil executives organized the national work stoppage to pressure President Hugo Chavez to step down and hold elections. The strike ended February 1. But reports have it that opposition leaders could call a strike anew after the arrest of one of the strike leaders late Wednesday by the secret police. Carlos Fernandez, the leader of the private business sector chamber Fedecamaras, was detained following a judge's order, and was charged with treason and instigating violence, in addition to other charges. PdVSA workers have said they won't be joining the strike, if one were re-introduced. "There's absolutely no chance oil workers will heed a possible strike call," Rafael Gomez told Dow Jones Newswires early Thursday. "We can guarantee normal operations and supply in the case a strike were to happen," Gomez said. "What happened to Fernandez is what should and will happen to PdVSA executives who called for the strike in December," Gomez added. *********** 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 * * *