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/raid1/www/Hosts/bankrupt/TCRLA_Public/030318.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, March 18, 2003, Vol. 4, Issue 54 Headlines A R G E N T I N A ROYAL AHOLD: Disco Deal Sparks Probe in Netherlands, Uruguay ROYAL AHOLD: Claims Local Management Revamp Unrelated to Scandal B E R M U D A TYCO INTERNATIONAL: To Investigate Smaller Operations' Books B O L I V I A COTEL: Anticipates Profitability This Year B R A Z I L AES CORP.: Seeks Consnet To Amend Defaulted Notes CESP: S&P Drops Corporate Rating to 'CCC' On Cashflow Concerns CESP: Reports BRL3.42 Billion Net Loss for 2002 GERDAU: Assures Auto Makers' Supply, Price Hikes May Continue C H I L E ENERSIS: Capital Increase Report Available to All Market Players C O L O M B I A PAZ DEL RIO: Ready To Buy Equipment to Jumpstart Plant Upgrade J A M A I C A AIR JAMAICA: Cuts 29 More Workers; Plans to Shave Fares Further M E X I C O ALESTRA: Announces Expiration of Early Consent Payment Deadline CFE: Reduces Instances of Power Interruption EMPRESAS ICA: Constructora Internacional Wins El Cajon Contract EMPRESAS ICA: Shares Soar on El Cajon Win PEMEX: Moody's Will Maintain `Baa1' Ratings SATMEX: Announces Extension of Floating Rate Notes Expiration P A N A M A BICSA: Standard & Poor's Withdraws Ratings P E R U CEPSA: Court Rejects US$300 Million Lawsuit Versus PepsiCo, Inc. T R I N I D A D & T O B A G O CARONI LTD.: Parliament Belittles Government Rehab Plan CARONI LTD: Daily-paid Workers Deem Severance Package 'Unfair' U R U G U A Y * Uruguay Expects Creditor Restructuring Plan Approval mid-May * Govt Pays JPY330 Million to Meet Japanese Bond Repayment * Uruguay Bonds Continue Decline on Default Concerns V E N E Z U E L A PDVSA: Reassures Inventory For Domestic Gasoline Demands VENEZUELAN COMPANIES: Need US$7.25 Billion For Survival - - - - - - - - - - ================= A R G E N T I N A ================= ROYAL AHOLD: Disco Deal Sparks Probe in Netherlands, Uruguay ------------------------------------------------------------ A Deloitte & Touche auditor could lose his license if an investigation finds him liable for concealing Royal Ahold's obligation in a Latin American joint venture. According to Dow Jones Newswires, The Dutch Foundation for the Investigation of Corporate Information, or SOBI, has asked Deloitte & Touche to identify the auditor who signed off the Dutch retailer's accounts prior to 2001 in preparation for a plan to file a disciplinary complaint. Under Dutch law, a complaint may only be filed against an individual and not the accounting firm, says SOBI Founder Peiter Lakeman. Mr. Lakeman says the complaint is for the auditor's seeming or willful negligence in not mentioning the possible liabilities of the retailer in relation to its Argentinean joint venture, Disco Ahold International Holdings, in the annual reports prior to 2001. These liabilities, the report says, include among others, an obligation to buyout partner, Velox Retail Holding, in case it defaults. Mr. Lakeman says this buyout obligation should have been noted in the reports beginning the fiscal year 1998; the year Ahold bought its stake in the joint venture. This obligation was only referred to in Ahold's annual report for 2001, the report says. According to Dow Jones, Velox Retail Holding eventually defaulted in July last year, forcing Ahold to pay US$492 million to the Peirano family, which owns Velox's 44.1 percent in Disco. Mr. Lakeman says he will file the disciplinary complaint with the Disciplinary Council for Registered Auditors in Amsterdam. The council consists of judges and auditors, and its disciplinary powers vary from a reprimand to suspension of an accountant's practice, the report says. Meanwhile, a Uruguayan court has requested the Interpol to serve a subpoena to former Ahold CEO Cees van der Hoeven and former Chief Financial Officer Michael Meurs. Both have been ordered to appear before Judge Pablo Eguren next month to testify about Ahold's purchase of the Velox stake, which is now subject of a criminal complaint. About 150 depositors of failed bank, Banco de Montevideo -- also owned by the Peiranos -- filed the complaint, seeking an investigation into where the money that Ahold paid for its Velox stake went. Mr. van der Hoeven is also facing a suit in Amsterdam filed by SOBI, alleging that the ousted executive may have been an accomplice to embezzlement as a result of the company's dealings with the Peirano family in the Disco retail joint venture, Dow Jones says. Disco operates supermarkets in Argentina, Chile, Peru and Paraguay. ROYAL AHOLD: Claims Local Management Revamp Unrelated to Scandal ---------------------------------------------------------------- Roberto Britto, vice-president for operations, has been named the new CEO of the Brazilian supermarket chain, as the accounting scandal besetting Dutch parent, Royal Ahold, spills over to Latin America. The promotion, according to Dow Jones Newswires, will allow Ahold's top executive in Brazil, Tom den Hertog, to concentrate on supervising the overall business in Brazil, BomPreco said in a statement last week. The report says the management revamp appears to be a simple promotion rather than another wave of fallout from the accounting scandal, triggered by the revelation last month that earnings at U.S. Foodservice unit had been inflated by at least US$500 million over the last two years and that its top two executives had quit. Dow Jones clarifies that Ahold's Brazilian operations are so far untainted by the scandal. ============= B E R M U D A ============= TYCO INTERNATIONAL: To Investigate Smaller Operations' Books ------------------------------------------------------------ Tyco International Ltd. said that hundred of its smaller operations overseas could be "ripe territory" for more accounting embarrassments as the Company probes their books. Earlier this week, the Company discovered accounting problems at a European division. Tyco Chief Finance Officer David Fitzpatrick said, "Our internal audit, our external audit, our control structure let us down." "That's why we're going through and scrubbing every balance sheet of every itty-bitty entity," he said. Formerly, these smaller companies were beyond the scope of the Company's external auditor, PricewaterhouseCoopers, and its internal audit staff. "When you look at a lot of these entities, many of them were too small to either be on PwC's or internal audit's radar screen over the past few years. And that's what we are in the process of changing. We need to go down to that next lowest level," said Mr. Fitzpatrick. Profit-and-loss statements from about 1,000 entities company-wide are to be audited, said Tyco. Company officials said that its fire and security division alone has 300 entities with less than US$10 million in annual revenue each. Last week, Tyco disclosed accounting problems it uncovered at the fire and security division's European operations that may trigger up to US$325 million in pre-tax charges, according to a report from FowxNews.Com. Lawyers and accountants overseen by Boies did an investigation into the company's books last year, and found no big-time fraud. The Boies accounting investigation and related legal work will cost Tyco $75 million to $100 million this year, according to company estimates. "Clearly (the Boies investigation) did not touch on everything," said Tyco CEO Edward Breen. ============= B O L I V I A ============= COTEL: Anticipates Profitability This Year ------------------------------------------ The new administration of Bolivian telecoms cooperative, Cotel, hopes to create profits this year by expanding into the long distance and Internet segments, reducing operating costs, offering non-paying clients the chance to program their debts and adjusting rates in line with Bolivians' spending power, reports Business News Americas. To reduce costs further, the company is expecting 50 employees to accept voluntary retirement. Cotel's new chairman Heriberto Konn Kruse said that the Company expects to close this year with a US$400,000 profit, from earnings of US$1.3million before accounting for financing costs. The Company is also expected to decide on a winner of a US$2 million billing solution contract in two weeks. Business News Americas reported that as of Friday, the Company received bids from Hansa, Accenture, Remaq, Norsupply and Sisteco. A sixth bidder, T-Systems, withdrew because of its association with Cotel's former administrator, Detecon. BNAmericas cited a source from the Company's information department saying that the billing solution, along with the installment of about 21,000 lines are part of Cotel's US$4 million investment plan for this year. The new lines will bring Cotel's total infrastructure to 206,000 line by year-end, said the source. Cotel has been mired with controversy ever since German telecoms consultancy Detecon signed a five-year contract in May 2001 to administer Cotel in return for US$138,000 in monthly management fees. Detecon has aroused the ire of the cooperative's directors and workers alike in their efforts to modernize the telco, lay off excess employees, and transform Cotel from a cooperative to a publicly registered company. CONTACT: COOPERATIVA DE TELEFONOS DE LA PAZ-COTEL Avenida Mariscal Santa Cruz 980 La Paz Bolivia Phone: 591 2373432 Fax: 591 2310331 Home Page: Homepage: http://www.cotel-bo.net/ Contact: Jurgen Kurz DETECON Germaniastra? 18 - 20 D-12099 Berlin Telephone : (+49-30) 7508-1100 Fax : (+49-30) 7508-1444 Home page: http://www.detecon.com/ Contact: Karen Litters Phone: (0049) (0)6196-903-131 Fax: (0049) (0)6196-903-465 E-Mail: info@detecon.com =========== B R A Z I L =========== AES CORP.: Seeks Consnet To Amend Defaulted Notes ------------------------------------------------- The AES Corporation (NYSE:AES) announced Friday that it has launched a consent solicitation seeking to amend certain of the events of default contained in certain of its outstanding senior and senior subordinated notes to generally conform such provisions to those contained in its recently issued senior secured notes due 2005. AES is offering a consent fee of $1.25 per $1,000 principal amount to holders of record of such securities at the close of business on March 13, 2002 that validly tender consents to the proposed amendments by 5:00 p.m., New York City time, on March 27, 2003. AES' obligation to accept consents and pay a consent fee to consenting holders is subject to numerous conditions which are set forth in the consent solicitation statement. The consent solicitation relates to AES' 8.75% Senior Notes, Series G, Due 2008, 9.50% Senior Notes, Series B, Due 2009, 9.375% Senior Notes, Series C, Due 2010, 8.875% Senior Notes, Series E, Due 2011, 7.375% Remarketable or Redeemable Securities Due 2013 (puttable in 2003), 8.375% Senior Subordinated Notes Due 2007, 10.25% Senior Subordinated Notes Due 2006, 8.50% Senior Subordinated Notes Due 2007 and 8.875% Senior Subordinated Notes Due 2027. AES intends to launch a consent solicitation on substantially similar terms with respect to its 8.00% Senior Notes, Series A due 2008, 8.375% Senior Notes, Series F due 2011 and 4.50% Convertible Junior Subordinated Debentures due 2005 to holders of record thereof as of the close of business on March 24, 2002 once it has complied with certain notification and filing requirements of the Securities Exchange Act of 1934, the New York Stock Exchange and the Luxemburg Stock Exchange. No default or event of default currently exists under any of these instruments. Holders of all such securities are urged to read the applicable consent solicitation statement when it becomes available because it contains important information. Holders can obtain a copy of the applicable consent solicitation statement, when available, free of charge from AES. In addition, the consent solicitation statement applicable to the 4.50% Convertible Junior Subordinated Debentures will be available for free from the Securities and Exchange Commission's website at www.sec.gov once it is available. Questions concerning the terms of the consent solicitation or requests for copies of the consent solicitation statement, the consent form or other related documents should be directed to the solicitation agent: Salomon Smith Barney, 390 Greenwich Street, New York, New York 10013, Attn: Liability Management Group. The solicitation agent can also be reached at (212) 723-6106 or (800) 558-3745 (toll free). "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release may contain "forward- looking statements" regarding The AES Corporation's business. These statements are not historical facts, but statements that involve risks and uncertainties. Actual results could differ materially from those projected in these forward-looking statements. For a discussion of such risks and uncertainties, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 160 facilities totaling over 55 gigawatts of capacity, in 30 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. For more general information visit our web site at www.aes.com or contact investor relations at investing@aes.com. CONTACT: The AES Corporation Kenneth R. Woodcock, 703/522-1315 CESP: S&P Drops Corporate Rating to 'CCC' On Cashflow Concerns -------------------------------------------------------------- Standard & Poor's Ratings Services lowered Friday its global scale foreign currency and local currency corporate credit and senior debt ratings on Brazilian utility Companhia Energetica de Sao Paulo (CESP) to 'CCC' from 'B+'. The ratings remain on CreditWatch, where they were placed with negative implications on Jan. 31, 2003. The ratings assigned to CESP in the Brazil National Scale were also lowered to 'brCCC' from 'brBBB+', and remain on CreditWatch. The rating actions are due to Standard & Poor's expectation of a sudden and severe drop in CESP's cash flow generation; its further deteriorated liquidity position; and its announcement that it was hiring a financial advisor to help it restructure short-term maturities of about BrR3 billion (approximately US$850 million), including a May 2003 put option on a US$150 million medium term note (MTN) and the final maturity of another US$500 million MTN issue due in February 2004. The remaining BR700 million ($200 million) is due to the federal government. Due to the importance of CESP's assets in the Brazilian generation industry, it is still possible that CESP will receive some financial support from its majority shareholder, the state of Sao Paulo (74% stake of voting capital), or even from the federal entities, such as Eletrobras or BNDES, as previously occurred in 2002. However, up to this point there is no clear evidence that such support will occur, or even if some is forthcoming, whether it will prevent a default. While an exchange offer has not been formalized, the company will try to negotiate with bondholders new terms and conditions to the notes coming due in the next few months, conditions that will probably include a smoother maturity schedule that CESP can accommodate in its cash flow. According to Standard & Poor's criteria, such negotiation is seen as a distressed exchange offer, as there exists the prospect that the company will not be able to meet its debt service absent the restructuring involved in the exchange. Such offers are deemed "coercive" by virtue of investors' contemplation that refusal to accept the offer may lead to non-payment. The CreditWatch will be resolved as soon as a financial strategy for the payment of the May 2003 and February 2004 maturities is decided. If a government support plan does not materialize within the next month, it is likely that ratings will be downgraded to 'CC' pending an expected exchange offer. If an exchange offer is made and completed, the corporate credit rating on CESP will be lowered to 'SD' (selective default) and the issue ratings will be lowered to 'D'. The ratings on CESP would be reviewed subsequent to a successful completion of an exchange offer, and the new rating level will depend on the financial profile resulting from the debt renegotiation, the price and volume level at which CESP is able to sell the energy freed from initial contracts, and the regulatory environment. ANALYSTS: Juliana Gallo Sao Paulo Phone: (55) 11-5501-8948 Milena Zaniboni Sao Paulo Phone: (55) 11-5501-8945 CESP: Reports BRL3.42 Billion Net Loss for 2002 ----------------------------------------------- Companhia Energetica de Sao Paulo SA (CESP), Sao Paulo's state power company posted a 2002 net loss of BRL3.42 billion, more than four times its 2001 net loss of BRL813.3 million. In a table presented by Dow Jones Newswires on Friday, the Company indicated that its revenue went down to BRL2.03 billion from BRL2.27 billion in the same annual comparison. Bloomberg News said that sudden increase in the Company's loss was due to the decline of the Brazilian reais' value against the dollar. The country's currency declined by as much as 35 percent last year. CFE, like many utility companies, particularly in the power sector, in the country is having difficulties in honoring financial obligations as debt costs rise faster than electricity rates. Foreign-owned companies like AES Corporation said that they may have to exit the country because of regulations capping energy rates, relates Business News Americas. Last week, the company hired JP Morgan Chase & Co. to help manage its debt, which stood at BRL12 billion by the end of last year. BNAmericas reported that approximately 80 percent of CESP's debt is linked to foreign currencies. As of the end of last year, the Company's foreign-currency-linked debt was valued at BRL9.64 billion. CESP, whose shares closed down 4.06 percent at BRL5.9 on Friday, provides energy to the state of Sao Paulo with a population of about 40 million. GERDAU: Assures Auto Makers' Supply, Price Hikes May Continue ------------------------------------------------------------- Jorge Gerdau Johannpeter, president of Brazilian steel-maker, Gerdau, assures that this year's supply to the auto industry will be sufficient, although a price hike may not be avoided. Brazilian steel is considered the cheapest in the world, making the country a major car-manufacturing hub. A recent forecast predicted, however, that a domestic supply deficit is looming. Meanwhile, Business News Americas says, carmakers have become dissatisfied with the hike in steel prices. They claim flat steel rose 63 percent in the 12 months to January, while long steel prices rose 50 percent. As a result, automakers have upped domestic prices because of higher costs of steel that accounts for 20-25 percent of car costs. "I don't know if this sector is collaborating [towards lower inflation] by raising prices unexpectedly," Ricardo Carvalho, president of the country's automakers association Anfavea, was quoted as saying by AE-Setorial recently. This month alone, steel-makers are requesting a 9.75-15 percent increase depending on the type of steel, Mr. Carvalho said. Despite this, Brazil heavy plates is still cheaper at only US$288 per ton or 17 percent cheaper than in Japan and 53 percent cheaper than in Europe. Gerdau is coming off a good year, reporting in January a 49 percent increase in consolidated net profit, from BRL551 million to BRL821 million. CONTACT: GERDAU, S.A. Avenida Farrapos, 1811 90220-005 Porto Alegre Rio Grande do Sul, Brazil Phone: +55-51-3323-2000 Fax: +55-51-3323-2080 http://www.gerdau.com.br Contacts: Jorge Gerdau Johannpeter, President Osvaldo Burgos Schirmer, EVP Finance/Investor Relations ========= C H I L E ========= ENERSIS: Capital Increase Report Available to All Market Players ---------------------------------------------------------------- Chilean power sector holding Enersis said that a report on its planned capital increase has been made available to all market participants. The announcement came after institutional investors and analysts accused the Company of withholding information from the market. A report from Business News Americas said that beginning Friday, the report will be available at Enersis offices, Enersis' website, Chile's securities commission SVS, on the Santiago, New York and Madrid stock markets, at its depositary bank for ADRs and the company's representative office for investors on the Latibex exchange. An earlier announcement from the Company shocked investors and analysts. Enersis initially said that the report would be available only to shareholders and for only two hours at its Santiago office per day. Local paper El Mercurio reported that the market thinks the value of a US$1.3 loan Enersis plans to capitalize from parent company Endesa Spain in its US$2 billion capital increase should be lower, considering Endesa's reduced payment capacity. CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Contacts: Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl =============== C O L O M B I A =============== PAZ DEL RIO: Ready To Buy Equipment to Jumpstart Plant Upgrade -------------------------------------------------------------- The plan to upgrade Colombian steel-maker, Acerias Paz del Rio, has been approved and the company is now preparing to purchase the needed equipment to complete the technological conversion, Business News Americas said late last week. The approval came after President Alvaro Uribe picked out one of the industrial rationalization suggestions made by Colombia's National University and the University of Pedagogy and Technology of Colombia. According to the paper, the economic development ministry presented the various suggestions to Mr. Uribe recently. A company spokesperson did not identify which plan was picked, but disclosed that the company's requirements for the conversion work have been identified. "Whether we will buy machine A or machine B or C, has been decided," the official told Business News Americas in an interview. The universities have also evaluated the question of financing. "At the moment the project we have designed is worth US$13.5 million and this will cover the basic requirements needed by Paz del Rio to carry out the conversion work," he said. He said the machinery needed is not available in the country and it is necessary to see it before signing a purchase order. "The best alternative is machinery in Taiwan where we will send a commission to see it and if they recommend it, then Paz del Rio will buy it," he added. The company expects the technological upgrade to double output at the plant in Belencito in central Colombia's Boyaca department to 500,000 tons per year within seven years. The paper says Mr. Uribe has pledged support to the project in the form of loan guarantees. Accordingly, there are three potential investors interested in financing the conversion, one from the Colombian department of Antioquia and two from the United States. It is estimated that the whole project would cost around US$45 million if it were to involve new equipment, including a ladle furnace and a continuous casting machine to produce billets, the paper said. CONTACT: ACERIAS PAZ DEL RIO S.A. Carrera 8 # 13-31, Pisos 7 al 11 Bogota, D.C. Phone: (091) 282-8111 Fax: (091) 282-6268 282-3480 E-mail: apdr@multi.net.co ============= J A M A I C A ============= AIR JAMAICA: Cuts 29 More Workers; Plans to Shave Fares Further --------------------------------------------------------------- Citing dim prospects for international air travel, Air Jamaica terminated 29 employees last week and admitted the likelihood of further rate cuts to stay afloat. RJR News did not identify the dismissed workers or the division from which they were cut. Meanwhile, CEO Chris Zacca admitted additional fare cuts might be considered based on current market conditions. This admission follows the announcement by Chairman Gordon Stewart earlier this month that the airline will seek US$35 million in financing. Mr. Stewart had admitted that although the airline is in "fighting shape," it is in need of a capital injection to keep afloat. Before the job cuts last week, the carrier, according to Troubled Company Reporter-Latin America, had already laid off 66 workers. Ironically, the company has been reporting brisk sales, claiming that about 72 percent of U.S. airline passengers to the Caribbean, and about 60 percent of U.K. passengers choose Air Jamaica. In fact, the airline is planning to increase its flight frequency to the U.K., hoping to make it a daily service, TCR- Latin America previously reported. CONTACT: Air Jamaica 4 St. Lucia Avenue Kingston 5, Jamaica Phone: 876/922-3460 Fax: 929-5643 E-mail: webinfo@airjamaica.com Contact: Gordon Stewart, Chairman Allen Chastanet, Vice President for Marketing and Sales =========== M E X I C O =========== ALESTRA: Announces Expiration of Early Consent Payment Deadline --------------------------------------------------------------- Alestra, S. de R.L. de C.V. ("Alestra") announced on Friday that the early consent payment deadline for its outstanding exchange offers and cash tender offers has passed. As of the March 13th deadline for early consents, Alestra had not received the requisite consents required for it to consummate the exchange offers and the cash tender offers. However, as disclosed in Alestra's prospectus dated February 28, 2003, the offers remain open until the expiration date of March 27, 2003, unless extended. If tenders and consents are received from holders representing the requisite 95% of the principal of Alestra's outstanding senior notes by March 27, 2003, those holders who tendered their notes and granted consents prior to the early consent payment deadline will receive the early consent fee as detailed in Alestra's prospectus. You may obtain copies of the prospectus and transmittal documents from the Information Agent: D.F. King & Co., Inc., 48 Wall Street, New York, New York, 10005. Banks and brokers call collect: (212) 269-5550. All others call toll free: (800) 549- 6697. This announcement and the cash tender offers, exchange offers, and consent solicitations which are the subject hereof are not being made in any jurisdiction in which, or to any person to whom, it is unlawful to make such announcement and/or cash tender offers, exchange offers and consent solicitations under applicable securities laws. The new senior notes may not be sold nor may offers to buy be accepted prior to the time Alestra has obtained the necessary authorizations from the Comision Nacional Bancaria y de Valores de Mexico. This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall any sale of these securities in Mexico or in any U.S. state or territory in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of Mexico and any such U.S. state or territory. This announcement shall not under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date hereof, or that there has been no change in the information set forth herein or in the affairs of Alestra or any of its affiliates since the date hereof. No indications of interest in the offers are sought by this press release. Headquartered in San Pedro Garza Garcia, Mexico, Alestra is a leading provider of competitive telecommunications services in Mexico that it markets under the AT&T brand name and carries on its own network. Alestra offers domestic and international long distance services, data and internet services and local services. CONTACT: ALESTRA, S. DE R.L. DE C.V. Sergio Bravo Phone: (52-818) 625-2269 E-mail: sbravo@alestra.com.mx Alberto Guajardo Phone: (52-818) 625-2219 E-mail: aguajard@alestra.com.mx or MORGAN STANLEY & CO. INCORPORATED Heather Hammond Phone: 800/624-1808 (domestic US) 11 212 761-1893 (international callers call collect) CFE: Reduces Instances of Power Interruption -------------------------------------------- Mexican state power company CFE reduced the number of power interruptions to large-scale industrial users in January. According to local paper La Reforma, the number of power interruptions went down from 35 in December 2001, to only 22 in January this year. A report from Business News Americas Friday indicated that the number of power interruptions has been going down since last year. In October, power was interrupted 81 times, but the number decreased to 36 in November. Presently, the CFE has 15 industrial clients that require zero power interruptions. These clients receive power at reduced prices, but face the risk of CFE cutting back power supplies. Majority of these clients are from the steel making, cement manufacturing, and pipe making industries. The CFE is allowed to cut back on power supplies 15 minutes after a warning is issued. In any given day, the state-owned utility is not allowed to reduce supplies more than once. It is also required to store sufficient supplies to enable the companies to continue the operation of their industrial processes, said the report. 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 Home Page: http://www.cfe.gob.mx Contacts: Alfredo Elias Ayub, General Director Arturo Hernandez Alvarez, Director of Operations Francisco J. Santoyo Vargas, Director of Finance EMPRESAS ICA: Constructora Internacional Wins El Cajon Contract --------------------------------------------------------------- Empresas ICA Sociedad Controladora, S.A. de C.V. (BMV and NYSE: ICA), the largest engineering, construction, and procurement company in Mexico, announced that the Federal Electricity Commission (CFE) has awarded the El Cajon hydroelectric project to Constructora Internacional de Infraestructura, S.A. de C.V. This consortium includes two ICA subsidiaries, Promotora e Inversora Adisa, S.A de C.V., as the project leader, with a 40 percent shareholding, and Ingenieros Civiles Asociados, with 25 percent. Energomachexport Power Machines and Peninsular Compa�ia de Constructora, S.A. de C.V. own 20 percent and 15 percent of the consortium, respectively. The bid presented by Constructora Internacional de Infraestructura was for approximately US$ 750 million, with a term of completion of 1,620 days. The El Caj�n project, in the state of Nayarit, comprises the execution of civil construction, electromechanical, and ancillary work including procurement, engineering, fabrication, transport, assembly, testing, start-up and commissioning of two turbogenerating units with a guaranteed combined design power rating, under different hydraulic loads, in excess of 670 MW. This is the first EPC (engineering, procurement, and construction) contract for the complete execution of a hydroelectric project, under the financed public works program. Under this program, the contractor obtains financing for the total amount, and the client will pay upon completion - i.e., 1,620 days. During this period, the project will be consolidated in ICA's financial statements. The contract also includes the creation of a retention account, which will be released upon the delivery and final payment of the project. Bernardo Quintana, CEO of ICA said, We are very pleased that ICA was selected as the best option to bring this infrastructure project to a successful conclusion. This is the kind of project that enables us to take advantage of our experience and human and capital resources, and to demonstrate our skill in project completion. We will develop this project under the highest standards of safety, quality, cost control, and in order to minimize any environmental impact. This release may contain projections or other forward-looking statements related to ICA that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Factors that could cause actual results to differ materially and adversely include, but are not limited to: changes in general economic, business or political or other conditions in Mexico or changes in general economic or business conditions in Latin America, changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies, increased costs, unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms. Readers are referred to the documents filed by ICA with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F which identifies important risk factors that could cause actual results to differ from those contained in the forward- looking statements. All forward-looking statements are based on information available to ICA on the date hereof, and ICA assumes no obligation to update such statements. EMPRESAS ICA: Shares Soar on El Cajon Win ----------------------------------------- Shares of Mexican construction firm soared after the company won the contract for the construction of the El Cajon project. Last week, a report from Bloomberg News indicated, the Company's shares have risen by as much as 33 percent. On Friday, ICA shares went up 6.7 percent to MXP2.06 just before the Mexican Stock Exchange closed, said Bloomberg. Shares closed at MXP2.09 on Friday, recording an 8.29 percent increase. The Company has been performing well recently, winning two major contracts in the span of less than a week. Empresas ICA, along with Fluor Corporation and Schlumberger won US$500 million contract to develop the Chicontepec oil fields for state oil monopoly Petroleos Mexicanos (PEMEX) earlier last week. On Friday, the ICA-led consortium won the El Cajon project by a US$750 million bid. Its only competition tendered a bid of just over US$800 million. CONTACT: Dr. Jos, Luis Guerrero (5255) 5272-9991 x2060 jose.guerrero@ica.com.mx Lic. Paloma Grediaga (5255) 5272-9991 x3470 paloma.grediaga@ica.com.mx In the United States: Zemi Communications Daniel Wilson (212) 689-9560 d.b.m.wilson@zemi.com PEMEX: Moody's Will Maintain `Baa1' Ratings ------------------------------------------- Credit ratings agency Moody's announced on Friday that it will maintain a stable rating outlook for the `Baa1' local currency and `Baa1' foreign currency ratings of Mexico's state oil company Pemex. The rating agency added that on March 12, the rating agency changed the rating outlook for the Baa2 foreign currency country ceiling rating of Mexico to positive from stable. However, it said, that outlook change and any future rating action affecting the country would not merit a change in Pemex's ratings. As of now, the ratings agency does not currently expect any positive change in either Pemex's rating outlook or its Baa1 ratings. Pemex's Baa1 foreign currency debt rating is already rated above Mexico's foreign currency ceiling, said Business News Americas. The Company's large tax contribution to the Mexican government will continue to constrain free cash flow available to meet its substantial internal capital needs and will keep financial leverage high, said the BNAmericas report. SATMEX: Announces Extension of Floating Rate Notes Expiration ------------------------------------------------------------- Satelites Mexicanos, S.A. de C.V. ("Satmex") announced on Friday that it has extended the expiration date for its previously announced consent solicitation to the holders of its Senior Secured Floating Rate Notes due 2004 (the "Floating Rate Notes"). The consent solicitation will expire at 5:00 p.m. EST, on Tuesday, March 18, 2003, unless further extended by Satmex. All other terms and conditions of the consent solicitation remain the same. Satmex, a leading satellite operator in the Americas, owns and operates a satellite system through which it offers broadcast, telephone and telecommunications services to 39 countries in the region. The Satmex fleet also helps develop rural areas by offering distance learning and rural telephony services. And, through its business partners in the NAFTA region and Latin America, Satmex provides high-speed connectivity to ISPs and Digital Broadcast Services (DBS), thus contributing to the integration of Latin America with the rest of the Continent. Satmex is ISO 9001 certified. Satmex is a member of the Loral Global Alliance and offers its customers the advantages of a worldwide network of satellite capacity, providing global satellite solutions to the needs and requirements of the Americas. For more information, please visit the Satmex website at www.satmex.com. CONTACT: Cynthia Pelini Phone: (52-55) 5201-0808 Kristi King Etchberger Phone: (52-55) 5201-0804 =========== P A N A M A =========== BICSA: Standard & Poor's Withdraws Ratings ------------------------------------------ Standard & Poor's Ratings Services said Friday that it affirmed its 'BBB-/A-3' counterparty credit and CD ratings on Banco Internacional de Costa Rica Ltd. (Bicsa Ltd.) based on its adequate track record of operations, regional infrastructure, and specialization in trade finance, a lower-risk activity. Standard & Poor's also said that it revised the outlook on Bicsa Ltd. to negative from stable. Standard & Poor's subsequently withdrew these ratings. In a similar action, Standard & Poor's assigned its 'BBB-/A-3' counterparty credit and CD ratings to Banco Internacional de Costa Rica S.A., Panama (Bicsa Panama). The outlook is negative. "Standard & Poor's revised the outlook on Bicsa Ltd. to negative to reflect the bank's diminished operating performance in 2002 compared with prior years," noted Standard & Poor's credit analyst David Olivares. As a lender of trade financing in Central and Latin America, Bicsa Ltd. did not escape the difficult economic environment affecting the region in general and certain countries more specifically. The ratings on Bicsa Ltd. were withdrawn because this company will cease to exist. Bicsa Ltd. was headquartered in the Bahamas since 1989 and was the holding of Bicsa Costa Rica and Bicsa Panama (both operating banks). The headquarters has been changed to Panama, where a new holding company has been established--Bicsa Corporaci�n Financiera S.A.-- which holds the shares of the operating banks. The rating assigned to former Bicsa Ltd. has now been assigned to Banco Internacional de Costa Rica S.A. in Panama, because this entity holds the majority of the assets of the former Bicsa Ltd. Standard & Poor's will continue monitoring Bicsa on a consolidated basis. Difficult operating and economic conditions remain in 2003 in the region where the company operates. This puts pressure on the bank's financial performance. If its results in 2003 are lower than reported in prior years, then the ratings could be lowered. ANALYSTS: Olivares, Mexico City Phone: (52) 55-5279-2006 Ursula M Wilhelm, Mexico City Phone: (52) 55-5279-2007 ======= P E R U ======= CEPSA: Court Rejects US$300 Million Lawsuit Versus PepsiCo, Inc. ---------------------------------------------------------------- A US$300 million lawsuit filed by insolvent Peruvian bottler, Cia. Embotelladora Del Pacifico SA (CEPSA) against a unit of PepsiCo, Inc., was rejected by U.S. District Judge Richard Owen, reports Bloomberg News on Friday. Judge Owen's ruling said that CEPSA's creditors did not authorize the liquidator to act, as required by the country's laws. "We felt that the case had no merit and are pleased that it has been dismissed," said PepsiCo spokesman Charles Nicolas. CEPSA, which was declared insolvent in May 1999, accused Pepsi of breaching a contract, which allows CEPSA exclusive rights to bottle the soft drinks in various areas in the country. Pepsi allegedly ended the contract within the same month CEPSA was declared insolvent, and aligned with CEPSA rivals Embotelladora Frontera SA and Embotelladora Rivera SA to take advantage of tax exemptions that allows the two companies to sell soft drinks at a lower price than CEPSA. Before CEPSA's liquidation, Pepsi was seeking its three Peruvian bottlers to merge in order to cut costs and regain market share. Pepsi, the world's second-largest soft drink maker, trails behind archrival Coca-Cola, and local favorite Inca Kola in market shares in Peru. The Heredia family owned CEPSA, until creditors moved for the bottler's liquidation. PepsiCo shares rose 0.4 percent (14 cents), closing at US$39 in New York. CONTACT: PEPSICO INC 700 Anderson Hill Road Purchase NEW YORK United States 10577-1444 Phone: +1 914 253-2000 Home Page: http://www.pepsico.com Contacts: Steven S. Reinemund, Chairman & Chief Executive Indra K. Nooyi, President & Chief Financial Officer ================================= T R I N I D A D & T O B A G O ================================= CARONI LTD.: Parliament Belittles Government Rehab Plan ---------------------------------------------------------------- Trade Minister Ken Valley admitted last week that workers who refuse Caroni's Voluntary Separation of Employment Plan would be terminated, although paid according to existing laws. Speaking before the House of Representatives, Mr. Valley tempered the announcement, however, by claiming that up to 75 percent of the workers would be re-absorbed into the restructured Caroni. He said over 1,500 workers have already accepted the government's VSEP offer. Opposition members had earlier chastised both Mr. Valley and Agriculture Minister John Rahael over the government's plan for Caroni. Citing their lack of intelligence and expertise in the sugar industry, members of parliament from Couva South, Caroni East and St Augustine, whose constituents stand to lose their jobs, lambasted the two ministers for failing to adequately negotiate with labor unions. But Mr. Valley responded by saying that the government had held over 15 meetings with trade unions and that the VSEP package had tremendous input from the unions. He also reminded parliament that "every time Caroni produces a tonne of sugar it loses US$1,000." "So it stands to reason that if you cut production from 100,000 to 70,000 the company will save itself from losing US$30,000. And if you extend that logic if you produce no sugar at all there will be no loss at all. But the Government understands that we are dealing with humans and not statistics," Mr. Valley was quoted by the Trinidad Express as saying. Still, Couva South MP Kelvin Ramnath belittled the government's plans to offer a spectrum of training programs designed to assist displaced Caroni workers. He said the courses were irrelevant and would have a further debilitating effect on Caroni workers. Prime Minister Patrick Manning, on the other hand, took the floor to acknowledge that there was a larger question of race relations to be considered in the issues surrounding Caroni. This admission, according to the paper, was met with general approval in the parliament. However, bipartisan consensus was quickly supplanted when Mr. Manning offered the opposition side the opportunity to form a committee to analyze the race question at Caroni. Opposition Chief Whip and Caroni East MP Ganga Singh told Mr. Manning that if the Government intended to show parity among the races, its plan for Caroni, not a committee, would be the best opportunity to do that. 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 CARONI LTD: Daily-paid Workers Deem Severance Package 'Unfair' -------------------------------------------------------------- Some of the 9,000 Caroni (1975) Ltd. workers offered Voluntary Separation of Employment Plans (VSEPs) are planning to take their grievances to Prime Minister Patrick Manning himself, bypassing the All Trinidad Sugar Workers Union. The group, composed mostly of daily-paid workers who claim to have been short-changed in relation to separation benefits, has accused union leader Rudy Indarsingh of failing to come to their defense and playing too much politics. In an interview with The Trinidad Guardian recently, these daily- paid workers claim they are unfairly treated compared with regular staff. Kray Babwah, an electrical technician who have been with Caroni for 19 years, claims his VSEP only offers him US$44,000 in separation pay, while permanent staff members holding similar positions are going home with up to US$400,000. "People have lost confidence with (Rudy) Indarsingh as a leader. He choose too much politics in this thing," Mr. Babwah told The Trinidad Guardian. They said as a member of Caroni's Board of Directors, Mr. Indarsingh should have foreseen the present situation and negotiated a better package for them. They alleged their severance package is based on an agreement negotiated in the 1980s and say contributions made to the company's pension plan are not included in the package. They hope the prime minister will step in and address their demand for equal treatment. The VSEP offer is part of the government's restructuring program of the state-run sugar company. In just ten years of operation, Caroni has now amassed US$3.2 billion of debts and this does not include yet the US$2.1 billion government has already written off. The restructuring plan also includes shutting down Brechin Castle, a factory in Usine Ste Madeleine. ============= U R U G U A Y ============= * Uruguay Expects Creditor Restructuring Plan Approval mid-May -------------------------------------------------------------- Uruguay is confident it can get approval on its restructuring offer from majority of its creditor by mid-May, says Reuters citing Van Eck Global analyst Ravin Gupta. Mr. Gupta, following a meeting with Uruguayan central bank chief Julio de Brun last week, said the government is planning to "have investors on board by the middle of April and then to have the deal completed by mid-May." "They are looking for an 85 percent participation rate," he told Reuters. The government announced last week that it is offering a voluntary restructuring on debts maturing within the next five years. The move is one of the primary measures pledged by the government to the IMF last month in order to stay solvent. "They are talking about extending the maturities on all their external debt, but they did not want to discuss any change in the coupon rate," Mr. Gupta said. "That's something they will have to negotiate with the creditors over the next month." Mr. De Brun, who visited New York last week, is on an international trip aimed at getting investors on board with the restructuring. Sovereign Debt Restructuring, a sister publication of Troubled Company Reporter-Latin America, said last week this trip will also take the central bank chief to Italy. * Govt Pays JPY330 Million to Meet Japanese Bond Repayment ---------------------------------------------------------- Bank of Tokyo-Mitsubishi confirmed Friday that Uruguay had indeed met its scheduled coupon obligation on its yen-denominated Samurai bonds, dispelling fears that the country would default on its foreign debts Argentina-style. Reuters says the confirmation means an estimated JPY330 million (US$2.8 million) worth of interest payments have been allocated to noteholders. Uruguay has one tranche of outstanding Samurai bonds worth JPY30 billion (US$253 million) in 2.2 percent five- year bonds. The bond was issued in 2001 and matures on March 14, 2006. Speculations that Uruguay would go the way of neighbor, Argentina, which defaulted on some US$95 billion foreign bonds early last year, have been speculating for months now. On Tuesday, however, the government announced a voluntary restructuring scheme covering debts maturing within five years. A central bank delegation is now on a trans-Atlantic swing to sell the idea to creditors. Although Uruguay has already redeemed JPY10 billion of five-year Samurai bonds, investors still doubt it can meet future payments. Underwriters believe, however, there is no cause for worries, since the country's yen bonds only account for 0.3 percent of an estimated US$6.5 billion outstanding bonds. Japan's Rating and Investment Information Inc., nonetheless, has downgraded the country's rating to CCC-plus from B-minus. * Uruguay Bonds Continue Decline on Default Concerns ---------------------------------------------------- Uruguay's 7.625 percent bond due 2012 fell 3.2 on the dollar to an offer price of 49.1, boosting the yield to 20.2 percent at 4:00 p.m. in New York, based on J.P. Morgan Chase & Co. prices, relates Bloomberg News. The yield is up from 7.8 percent early last year. The decline was attributed to investors' concerns that the country, with US$6.5 billion of bonds outstanding, might default on its debts. The government announced the long-speculated voluntary debt- restructuring program last Tuesday, offering longer-term bonds for debt coming due over the next five years. Citigroup's Inc.'s Salomon Smith Barney is the country's advisor on the exchange. "It is aimed at clearing financing over the next five years. This will work if there is a high level of participation," Reuters quoted Central Bank President Julio de Brun as saying recently. Siobhan Manning, an emerging market debt strategist at Caboto IntescaBci SpA, Italy's largest bank said, "The concept of this swap raises lots of risks. It may well start as voluntary but could spiral into a distressed one." The country, whose economy contracted by about 10 percent last year, is struggling to fulfill its financial obligations after its benchmark 7 percent bond due 2008 declined by about 50 percent after its neighbor, Argentina defaulted on a record US$95 billion of debt in December 2001. Since Argentina's default, Uruguay's currency plunged by more than 50 percent to about UYP28.5 per dollar, and its economy contracted by about 10 percent. Rating agencies S&P, and Moody's rated Uruguay, which has US$6.5 billion of debt outstanding, in the junk category, while services at four of its banks had to be suspended. Furthermore, the International Monetary Fins withheld a US$308 million disbursement to the country, as result of its failure to close down the suspended banks. ================= V E N E Z U E L A ================= PDVSA: Reassures Inventory For Domestic Gasoline Demands -------------------------------------------------------- Petroleos de Venezuela, S.A. (PdVSA), the country's state oil company said it can now satisfy domestic gasoline demands after a number of the Company's refineries resumed operations. Production at PdVSA was reduced to almost zero during the recently-ended national strike, forcing the company to import gasoline to cover production shortages. Energy and Mines Minister Rafael Ramirez said, "We have built up an inventory, and every day our domestic production is greater.... the market is well supplied right now." Last month, Mr. Ramirez said that some US$600 million has been spent on imports, but PdVSA said that only US$540 million was spent on imports. The strike, which resulted in the dismissal of at least 15,000 workers, was aimed at ousting president Hugo Chavez, or have him call early elections. Recent reports indicate that at least two of the Company's refineries have problems with their catalytic crackers: El Palito and La Isla. Nevertheless, production has resumed, although at levels significantly lower than pre-strike outputs. VENEZUELAN COMPANIES: Need US$7.25 Billion For Survival ------------------------------------------------------- Companies in Venezuela need about US$7.25 billion in foreign currency to stay alive for the rest of the year, reports local paper El Universal, citing Lope Mendoza, head of Conindustria, the country's industrial association. The source said that companies in the country need to import raw materials to survive, but imports have been slashed by the government's decision to restrict dollar sales. The government banned dollar sales in January to stem a decline in international reserves after the two-month strike cut oil production, which accounts for 43 percent of government revenue, by as much as 95 percent, reports Bloomberg News. Bloomberg added that the government has said it would resume selling dollars on Monday. *********** 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 * * *