/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030507.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 Wednesday, May 7, 2003, Vol. 4, Issue 89 Headlines A R G E N T I N A * Argentina Seeks IMF OK To Ease Money Supply Restrictions B E R M U D A MUTUAL RISK: Fitch Lowers Debt Ratings to 'D' TYCO INTERNATIONAL: Prosecutor Opposes Proposed Trial Date Delay B R A Z I L COSIPA: Board Authorizes Sale of Certain Assets COSIPA: BNDES Approves $29M Loan For Expansion VARIG: Debt Service Prompts Further Layoffs This Week VARIG/TAM: Begin Sharing International Flights C H I L E EDELNOR: Fitch Withdraws Rating SANTA ISABEL: Sale To Cencosud To Be Completed End of May C O L O M B I A FERROVIAS: President Uribe To Issue Decree Ordering Liquidation * IDB to Release Major Funding to Colombia E C U A D O R * Ecuador Seeks $41M IMF Disbursement J A M A I C A RFL: Closes Doors Following Imposition of Environmental Levy M E X I C O CFE: Operating Costs Lead to MXP3.86 Billion 1Q03 Net Loss U R U G U A Y ABN AMRO: Moody's Confirms LTFC, STFC Deposit Ratings BANCO A.C.A.C.: Moody's Announces Various Rating Actions BANCO DE LA NACION: Moody's Confirms LTFC, STFC Ratings BANCO SANTANDER: Moody's Assigns New BFSR of `E' BANKBOSTON: Moody's Confirms Ratings In Line With Review LLOYDS TSB BANK: Confirms LTFC Deposit Ratings, Negative Outlook UTE: Recovers $1.8M In Overdue Bills V E N E Z U E L A CORIMON: Capitalization Falters, Faces NYSE Delisting ELECTRICIDAD DE CARACAS: Reduces Net Losses In 1Q03 PETROZUATA FINANCE: S&P Removes 'B' Rating From CreditWatch - - - - - - - - - - ================= A R G E N T I N A ================= * Argentina Seeks IMF OK To Ease Money Supply Restrictions ---------------------------------------------------------- Argentine paper El Clarin reports that the country is asking for the International Monetary Fund's approval to issue ARS3 billion in new funds on the open market. According to Bloomberg, the move is part of the country's efforts to stop the local currency from strengthening further. Economy Minister Roberto Lavagna made the decision after the Argentine peso rose to its strongest level since its devaluation in the January last year. The country needs a weak currency to boost its exports and dollar revenue, the report suggests. Such a stance would help the country recover from the deep recession it presently faces. However, Argentina has promised the IMF to limit the number of pesos in circulation, under a loan agreement with the multilateral lender. The IMF is permitting the country to defer payment on US$6.8 billion in debt earlier this year. The Argentine peso is currently the strongest currency tracked by Bloomberg, notching another 0.2 percent growth against the dollar on Friday, at ARS2.79 =US$1. ============= B E R M U D A ============= MUTUAL RISK: Fitch Lowers Debt Ratings to 'D' --------------------------------------------- Fitch Ratings has downgraded Mutual Risk Management Ltd.'s (MRM) long-term issuer rating, which provides an indication of MRM's credit quality at a senior unsecured level, to 'D' from 'C'. Fitch also downgraded the rating of MRM's convertible exchangeable subordinated debt to 'D' from 'C'. The rating actions follow creditor and judicial approval of MRM's plan to restructure its senior debt. Fitch Ratings considers the restructuring to be a distressed debt exchange since the alternative to the restructuring would have been liquidation. Fitch expects to withdraw the ratings on May 31, 2003 and no longer follow the company. The following ratings are affected: Entity/Issue/Type Action Rating/Watch Mutual Risk Management Ltd. --Long-term issuer Downgrade 'D'; --Conv. Exch. Sub. Debt Downgrade 'D'. NOTE: The noted ratings were initiated by Fitch as a service to users of Fitch ratings. The ratings are based primarily on public information. CONTACT: Donald F. Thorpe CPA, CFA, +1-312-606-2353 James B. Auden CFA, +1-312-368-3146, Chicago Media Relations: James Jockle +1-212-908-0547, New York TYCO INTERNATIONAL: Prosecutor Opposes Proposed Trial Date Delay ---------------------------------------------------------------- Assistant District Attorney John Moscow wrote to state Supreme Court Justice Michael Obus, the Manhattan trial judge, seeking a rejection of a 2-month trial delay request made by a lawyer representing former Tyco International finance chief Mark Swartz, the AP reports. Mr. Swartz and former Tyco CEO Dennis Kozlowski are facing charges of grand larceny and enterprise corruption for allegedly stealing more than US$600 million from Company coffers. Both men have entered pleas of not guilty and are presently out on bail. Mr. Moscow noted that the first US$600 million of each defendant's assets has been frozen for possible restitution if there is a conviction, however, a two-moth delay in the trial would allow the defendants to spend more than US$1 million out of their frozen assets. "Prior to trial, the defendants' living expenses and counsel expenses come out of the money frozen in the forfeiture action. The defendants' expenses, monthly, including taxes and property maintenance, but not legal expenses, have averaged more than US$500,000 a month, so that a two-month adjournment costs the forfeiture beneficiaries more than US$1 million," said Mr. Moscow in his letter to Judge Obus. "Our trial team cannot be asked to wait at defendants' pleasure while the defendants are running up bills of US$500,000 a month. We are entitled to a trial," he added. Money that the defendants spend has been approved by state Supreme Court Justice Martin Shulman, who is presiding over the asset forfeiture case, the report reveals. Mr. Swartz' lawyer, Charles Stillman, earlier wrote Justice Obus asking for a 60-day delay so he could properly prepare for the trial in New York and a federal tax evasion trial in New Hampshire. He commented that to deny him the delay would be "terribly unfair" to Mr. Swartz. 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 =========== B R A Z I L =========== COSIPA: Board Authorizes Sale of Certain Assets ----------------------------------------------- Sao Paulo-based flat steelmaker Cosipa gained approval from its board to sell two buildings and land located in the state. Citing AE-Setorial news service, Business News Americas reports that the assets include two warehouses, one of which was used to store iron ore and steel, and the land is in Guarulhos, a port city that lies near Cosipa's mill in Cubatao. Simultaneously, the board authorized the sale of metal-working machinery and equipment. Cosipa, which is owned by the Usiminas steel group, reported a US$548.65 million net loss for 2002 despite net revenues of BRL2.71 billion and gross profits of BRL831.75 million. The Company's good performance was shadowed by a sharp decline in net financial expenses, which topped BRL1.54 billion. The Company also reported operating losses of BRL816.78 million for 2002. CONTACT: COSIPA Avenida do Cafe, 277 Torre B, 8 e 9 andar Vila Guarani 04311-000 Sao Paulo, Brazil Phone: +55-11-5070-8800 Fax: +55-11-5070-8863 URL: http://www.cosipa.com.br COSIPA: BNDES Approves $29M Loan For Expansion ---------------------------------------------- Cosipa gained financial backing from Brazil's federal development bank BNDES for its plan to expand production. A BNDES statement states that the BNDES board approved Monday a BRL88.9-million (US$29mn) loan for the steelmaker to back its plans to boost annual production of steel liquid from 2.71Mt to 4.5Mt. The Company is investing BRL178 million in the project, which involves revamping its blast furnace No.2 in the city of Cubatao and biological treatment of cyanide and ammonium, among other aspects. The plan was announced in 1995 after the Company was privatized, and is due to be completed in the third quarter of this year. VARIG: Debt Service Prompts Further Layoffs This Week ----------------------------------------------------- Embattled Brazilian airline Viacao Aerea Rio Grandense SA (Varig) will cut 350 jobs this week, as it struggles to service more than US$1 billion in debt, according to a Dow Jones report. Varig is looking to merge with rival TAM Linhas Aereas. Although the proposed merger is still under study, Brazil's government is letting the airlines cooperate now in order to avoid an official bankruptcy proceeding. In return, government officials asked the airlines to postpone layoffs last month while they considered ways to revamp regulations for the sector. But, according to a Varig spokesman, the government's grace period ended last week, thus the job cuts that are expected to take place this week. Varig posted a loss of BRL2.02 billion ($1=BRL2.96) over the first nine months of 2002 and had a negative book value of BRL2.54 billion at the end of September. VARIG/TAM: Begin Sharing International Flights ---------------------------------------------- The Ruben Berta Foundation, the holding firm that controls Varig, approved Wednesday a move to combine the airline's international flights with TAM Linhas Aereas SA. Citing daily Correio Braziliense, Bloomberg reports that the two companies were scheduled to start offering on Monday 11 daily flights to Buenos Aires, eight of them leaving from Sao Paulo, two from Rio de Janeiro and one from the southern city of Porto Alegre. The companies were also expected to start offering on Monday internal flights to 10 cities in Brazil, according to the daily. The government's administrative council for economic defense authorized the measures, the paper added. ========= C H I L E ========= EDELNOR: Fitch Withdraws Rating ------------------------------- Fitch Ratings has withdrawn the 'DD' senior unsecured certificates due June 15, 2005, and the foreign and local currency ratings of Edelnor S.A. Fitch has withdrawn the ratings due to the successful completion of the company's debt restructuring. CONTACT: Jason T. Todd +1-312-368-3217 Giovanny Grosso +1-312-368-2074, Chicago or Carlos Diez +562-206-7171, Santiago MEDIA RELATIONS: James Jockle +1-212-908-0547, New York SANTA ISABEL: Sale To Cencosud To Be Completed End of May --------------------------------------------------------- The US$150-million sale of Dutch peer Royal Ahold NV's Chilean Santa Isabel SA's local supermarket operations to retail holding Cencosud SA is expected to close May 30, Dow Jones reports, citing Cencosud Chief Executive Laurence Golborne. The transaction had been expected to close by the end of April. However, the sale has been delayed pending the results of the additional audit of Santa Isabel to ensure its earnings have been properly presented to Chilean securities regulators. The audit followed revelations of large-scale accounting irregularities in the accounts of Ahold's North American operations and at its Argentine unit Disco SA, which controlled Santa Isabel until the Dutch parent took over some 99.7% of the shares in a buyout that included a public offer. Whether Cencosud will launch a bid below the CLP190 per share ($1=CLP700.15) of Ahold's bid last August is still unclear, Golborne said. =============== C O L O M B I A =============== FERROVIAS: President Uribe To Issue Decree Ordering Liquidation --------------------------------------------------------------- Colombian state railroad corporation Ferrovias is facing liquidation, reports Business News Americas. According to a Ferrovias official, the liquidation is attributed to lawsuits stemming from disputes under the previous presidential administration that have plagued current President Alvaro Uribe's government. The official said that Uribe will unveil details about the liquidation on Friday, when he publishes the decree ordering the liquidation. The official suggests that another government organization will emerge in part to manage concessions under Ferrovias' mandate. Ferrovias, established in 1989 after the government liquidated national railroad company FNC, largely manages the Atlantic and Pacific railroad concessions. Under consortium Fenoco's control, the US$300-million Atlantic project entails repairing and managing 1,500km of railroad for about 30 years. The US$120-million Pacific project, contracted to concessionaire Tren de Occidente, involves fixing and operating 500km of track for 30 years. * IDB to Release Major Funding to Colombia ------------------------------------------ Colombia is set to receive a "record amount" of loans from the Inter-American Development Bank this year, Bloomberg reports, citing the bank's spokesman Dan Drosdoff. The loans, which would probably be more than US$1.6 billion, demonstrated growing confidence in the country's economy. Mr. Drosdoff added that this total includes a US$400 million disbursement in July. The new funds will be used to finance a government program to provide subsidies for buyers of low-cost housing as well as maintain social spending programs. Last month, the country received US$750 million from a US$1.25 billion IDB loan to help mitigate constraints imposed on Colombia as part of a two-year, US$2.1 billion program signed with the International Monetary Fund, the report recalls. President Alvaro Uribe, who took office last August, managed to gain lenders' confidence for the approval of legislation raising tax revenue and boosting funding for the state pension system. Mr. Uribe met with IDB President Enrique Iglesias in Washington on Saturday. The president disclosed that the IDB is studying ways of boosting disbursements to the country between next year and 2008, when the country faces US$9 billion in loans and bonds coming due, ============= E C U A D O R ============= * Ecuador Seeks $41M IMF Disbursement ------------------------------------- Ecuador is in talks with the International Monetary Fund, as it seeks a US$41 million loan installment from the lender. Bloomberg reports that the country has failed to meet all the requirements from of the IMF's US$250 million aid package. IMF Ecuador mission chief Robert Traa is in Quito for the negotiations. The report adds that the IMF's team intends to file a recommendation to the board prior to the scheduled disbursement of the installment next month. Luis Oganes of JPMorgan Chase & Co., Ecuador may probably get the installment next month, even if it missed the IMF's deadlines for submitting labor law changes to congress and for hiring auditors for the eight banks under liquidation. Mr. Oganes said, "There's been some slacking in the reform drive and a delay in meeting the criteria for IMF aid. Still, there's confidence among investors that none of the obstacles are insurmountable." "The second half of the year will be tough for (President Lucio) Gutierrez," said Mr. Oganes. He noted that the labor law will anger unions by cutting wages and the tax changes will antagonize businesses by slashing exemptions. He added that legislative success is not sure either, as the president would be "stepping on a lot of toes." Ecuador won the US$205 million loan from the IMF last March, after negotiating for more than one year. The Loan is seen as essential for making payments on the country's US$2.1 billion in debt payments this year. The country had difficulties obtaining credit after it defaulted on US$6.5 billion in government debt in 1999. The IMF loan has paved the way for the country to obtain US$300 million in credit from the World Bank, Inter-American Develoipment Bank, and the Andean Development Corporation. ============= J A M A I C A ============= RFL: Closes Doors Following Imposition of Environmental Levy ------------------------------------------------------------ RECYCLE For Life (RFL), a four-year experiment that spent $90 million to buy back and recycle the highly popular polyethylene (PET) bottles, shuttered its doors after its main sponsors withdrew from the conglomerate that funded the entity. According to the Jamaica Observer, the withdrawal of the main sponsors of RFL - Pepsi Cola Jamaica and the manufacturers of Coca Cola, Bigga Soft Drinks, and Busta Soft Drinks - came after Finance Minister Omar Davies announced the imposition of a $2 per kilo environmental tax levy on polyethylene bottles, to raise $192 million as part of a tax package to finance the government's $261.3-billion budget. "The main sponsors of the programme are committed to furthering the efforts of recycling in Jamaica but cannot afford to finance this initiative to the tune of $20 million per year and also absorb a tax on the products as well," said general manager of Pepsi Cola Jamaica, Andrew Reid. According to Reid, the levy would put an already "extremely competitive and not very profitable industry" under severe pressure. Reid, however, indicated the possibility that RFL could return at a future time, depending on the results of a meeting being sought by soft drink manufacturers with Davies to discuss how the two- dollar tax would be levied. The closure of RFL led to the dismissal of 17 workers. =========== M E X I C O =========== CFE: Operating Costs Lead to MXP3.86 Billion 1Q03 Net Loss ---------------------------------------------------------- Mexico's state power company CFE posted a 1Q03 net loss of MXP3.86 billion, reports Business News Americas. For the same period in the previous year, the Company had a profit of MXP898 million. Although the Company's power sales increased, operating costs hindered profit. Income from power sales increased 30.9 percent to MXP30.8 billion, but higher operating costs meant that the CFE posted a MXP2 billion peso operating loss, compared to a MXP1.67 billion profit in the first three months of 2002, reveals Business News Americas. The loss may also be attributed to the MXP2.62 billion shortfall for subsidy payments. Although subsidy for 1Q03 was 51.9 percent higher than that for 1Q02, the MXP12.9 billion received for 1Q03 represented a shortfall. The MXP8.52 billion received in 1Q02 was MXP1.25 billion higher than what the Company needed. 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 http://www.cfe.gob.mx Contacts: Alfredo Elias Ayub, General Director Arturo Hernandez Alvarez, Director of Operations Francisco J. Santoyo Vargas, Director of Finance ============= U R U G U A Y ============= ABN AMRO: Moody's Confirms LTFC, STFC Deposit Ratings ----------------------------------------------------- Moody's confirmed the long and short-term foreign currency deposit ratings of ABN AMRO Bank N.V., Montevideo Branch. The move is in line with the ratings agency's annual review of the Uruguayan banking system. The outlook on the long-term foreign currency deposit ratings remains negative in line with the outlook of the Uruguayan country ceiling for deposits. Moody's also confirmed the National Scale Ratings (NSRs) of ABN AMRO Bank. Moody's pointed out that the NSR is not globally comparable, and is intended primarily for domestic use. The NSR ranks the likelihood of credit loss on local currency obligations of issuers in a particular country relative to other local issuers. The NSR also incorporates external shareholder and institutional support. The NSR is not an opinion on absolute default risks and does not address systemic risk. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a negative outlook at Caa1 - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at Aaa.uy BANCO A.C.A.C.: Moody's Announces Various Rating Actions -------------------------------------------------------- Moody's confirmed the long and short term foreign currency deposit ratings of Banco A.C.A.C. S.A.. The move is in line with Moody's annual review of the Uruguayan banking system. The outlook on the long-term foreign currency deposit ratings remains negative in line with the outlook of the Uruguayan country ceiling for deposits. Moody's also confirmed the National Scale Ratings (NSRs) of Banco A.C.A.C. S.A. The rating agency also assigned a new E BFSR to Banco A.C.A.C. S.A., a 91%-owned subsidiary of Credit Agricole SA of France. The ratings reflect the bank's weak stand-alone financial strength and operating environment, and do not incorporate shareholder or institutional support. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a negative outlook at Caa1 - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at A3.uy - New Bank Financial Strength Rating: E BANCO DE LA NACION: Moody's Confirms LTFC, STFC Ratings ------------------------------------------------------- In connection with its annual review of the Uruguayan banking system, Moody's confirmed the long and short term foreign currency deposit ratings of Banco de la Nacion Argentina (Uruguay). The outlook for the long term foreign currency deposit rating remains with a stable outlook. Moody's also confirmed the National Scale Ratings (NSRs) of Banco de la Nacion Argentina. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a stable outlook at Ca - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at Caa1.uy BANCO SANTANDER: Moody's Assigns New BFSR of `E' ------------------------------------------------ In connection with its annual review of the Uruguayan banking system, Moody's confirmed the long and short-term foreign currency deposit ratings of Banco Santander, S.A. (Uruguay). The outlook on the long-term foreign currency deposit ratings remains negative in line with the outlook of the Uruguayan country ceiling for deposits. Moody's also confirmed the National Scale Ratings (NSRs) of Banco Santander. The rating agency assigned a new bank financial strength rating (BFSR) of E to Banco Santander, a 100%-owned subsidiary of Santander Central Hispano of Spain. The ratings reflect the bank's weak stand-alone financial strength and operating environment, and do not incorporate shareholder or institutional support. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a negative outlook at Caa1 - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at A1.uy - New Bank Financial Strength Rating: E BANKBOSTON: Moody's Confirms Ratings In Line With Review -------------------------------------------------------- Moody's confirmed the long and short term foreign currency deposit ratings of BankBoston, N.A.. The move is in line with the rating agency's annual review of the Uruguayan banking system. The outlook on the long term foreign currency deposit ratings remains negative in line with the outlook of the Uruguayan country ceiling for deposits. Moody's also confirmed the National Scale Ratings (NSRs) of BankBoston. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a negative outlook at Caa1 - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at Aaa.uy LLOYDS TSB BANK: Confirms LTFC Deposit Ratings, Negative Outlook ---------------------------------------------------------------- In connection with its annual review of the Uruguayan banking system, Moody's confirmed the long and short-term foreign currency deposit ratings of Lloyds TSB Bank plc (Uruguay). The outlook on the long-term foreign currency deposit ratings remains negative in line with the outlook of the Uruguayan country ceiling for deposits. Moody's also confirmed the National Scale Ratings (NSRs) of Lloyds TSB Bank. The following ratings were affected: - Long term foreign currency deposit rating confirmed with a negative outlook at Caa1 - Short term foreign currency deposit rating confirmed with stable outlook at Not Prime - National Scale Rating confirmed at Aaa.uy UTE: Recovers $1.8M In Overdue Bills ------------------------------------ Uruguay's state power company UTE has collected US$1.8 million in overdue bills, reports local paper El Pais, citing the Company's president Ricardo Scaglia. Mr. Scaglia said that the money was collected from some 27,000 costumers through the Company's refinancing plan. Earlier estimates indicate the some 40,000 customers have overdue bills outstanding. The plan runs through May 31 and allows overdue customers with debts of less than 3,000 pesos (US$102) to refinance their debts over 24 months. For debts of between 3,000-10,000 pesos, UTE is waiving the fines, but is charging annual interest of 47.6 percent on the debts, said Business News Americas. Reconnection fees are also waived, under the plan. In other news, UTE is stepping up its efforts to reduce power losses due to theft. Mr. Scaglia said that power theft has risen by 30-40 percent in recent months. Last year, the Company's losses due to technical loss was about US$140 million, while average loss was about 20 percent of the total power produced. ================= V E N E Z U E L A ================= CORIMON: Capitalization Falters, Faces NYSE Delisting ----------------------------------------------------- Corimon CA, Venezuela's largest publicly traded paint company, announced that the New York Stock Exchange will delist its shares after the Company fell short of the U.S. exchange's US$50 million capitalization requirement, reports Bloomberg. Corimon, one of two Venezuelan companies traded on the New York Stock Exchange, has seen its share price fall in the face of the country's recession, which has reduced its profitability. The price of its American depositary receipt has fallen from a high of US$47.45 on Feb. 21, 2001. "We will not appeal the decision of the New York Stock Exchange," Corimon said in a statement. Its shares will be traded through Wednesday. ELECTRICIDAD DE CARACAS: Reduces Net Losses In 1Q03 --------------------------------------------------- CA Electricidad de Caracas, Venezuela's largest private energy generator and distributor, slashed net losses in the first- quarter of the year, as the Company cut operating costs. EDC, an affiliate of U.S. power firm AES Corp., reported a first quarter 2003 net loss of VEB25.6 billion (US$16 million), or VEB8.18 per share, compared with year-earlier loss of VEB34.1 billion, or VEB10.92 a share. Revenue fell 4% to VEB190.6 billion from VEB198.6 billion. Operating costs fell 10% to VEB141.9 billion from VEB157.6 billion. PETROZUATA FINANCE: S&P Removes 'B' Rating From CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services removed Monday its 'B' rating on Petrozuata Finance Inc.'s $1 billion bonds from CreditWatch, where it was placed with negative implications on Dec. 10, 2002. Standard & Poor's affirmed the 'B' rating on the bonds, which are guaranteed by Petrolera Zuata, Petrozuata C.A (Petrozuata). The outlook is stable. Petrozuata is a heavy oil production and upgrading project located in Venezuela that is owned by Conoco Venezuela Holding (50.1%), a subsidiary of ConocoPhillips (A-/Stable/A-2), and PDVSA Petroleo (49.9%), a subsidiary of Petroleos de Venezuela S.A. (PDVSA: CCC+/Stable/--). "The removal of the rating from CreditWatch is due mainly to the project's ability to restart and stabilize operations and to make offshore debt payments without exposure to foreign exchange controls," said credit analyst Terry Pratt. "The removal is further supported by the outlook for the Bolivarian Republic of Venezuela and PDVSA, which was revised to stable on April 16, 2003, by Standard & Poor's because of the government's improving liquidity and a reduction, albeit limited, in economic and political pressures." The Petrozuata project restarted upgrader operations in early March 2003 following the redelivery of natural gas and hydrogen feedstocks by PDVSA Gas and third parties supplied by PDVSA Gas. Petrozuata reports that its current operations are in line with year 2003 business forecasts. Continued operation of the upgrader relies on continued operations of PDVSA. PDVSA has improved oil production levels to about 3.1 million barrels per day despite the dismissal of about 40% of its employees in response to a general strike. However, PDVSA operations, and thus potentially feedstock supplies to Petrozuata, remain exposed to renewed disruptions caused by continuing political and social tensions and uncertain capital available for investment. The stable outlook reflects Petrozuata's current production above or at pro forma rates and general expectations that the project will continue to receive sufficient feedstocks from PDVSA Gas to support production and will not be subject to foreign exchange controls. The outlook could change to negative if the project's ability to maintain steady production becomes questionable, or if the credit outlook for the sovereign or PDVSA worsens. The outlook could be revised to positive if the outlook on PDSVA and the government improves. ANALYSTS: Terry A Pratt, New York (1) 212-438-2080 Bruce Schwartz, CFA, New York (1) 212-438-7809 *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. 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