/raid1/www/Hosts/bankrupt/TCRLA_Public/030509.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, May 9, 2003, Vol. 4, Issue 91
Headlines
A R G E N T I N A
BANCO DE GALICIA: S&P Ceases Ratings at Bank's Request
BANCO DE LA NACION: Conflict Continues With San Luis Province
ROYAL AHOLD: D&S Files $45M Lawsuit
VINTAGE PETROLEUM: Reports Strong First Quarter Earnings
VINTAGE PETROLEUM: Posts 1Q03 Operations Update
B E R M U D A
GLOBAL CROSSING: Files Required Monthly Results for March 2003
GLOBAL CROSSING: IDT Seeks Proposed Sale Investigation
B R A Z I L
AES CORP.: Extends Tender Offer for Senior Subordinated Notes
BSE: Telecom Americas Concludes Acquisition
CATAGUAZES-LEOPOLDINA: To Refinance $178M In Short-Term Debts
VARIG: Filing Delay Prompts Corporate Governance Status Dispute
VARIG/TAM: To Present Merger Details To BNDES
E C U A D O R
ECUADORIAN BANKS: AGD Inks Audit Contracts With Three Firms
M E X I C O
AEROMEXICO: Fitch Lowers Senior Unsecured Rating To 'B+'
AXTEL: Nortel Swaps Debt, Becomes Shareholder
IUSACELL: Negotiating SMS Interconnection With Telcel
IUSACELL: Continues Losing Market Share
V E N E Z U E L A
AEROPOSTAL: Sends Workers Home To Cut Spending
EDC: Emphasizes Need For Rates Increase
PDVSA: Exxon Mobil Seeks To Restart Talks With Unit Over JV
PDVSA FINANCE: Moody's Confirms Caa1 Long-Term Debt Rating
- - - - - - - - - -
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A R G E N T I N A
=================
BANCO DE GALICIA: S&P Ceases Ratings at Bank's Request
------------------------------------------------------
Standard & Poor's Ratings Services said Wednesday that it
withdrew all its ratings on Banco de Galicia y Buenos Aires S.A.
at the request of the issuer. All of the ratings on the bank were
placed in 'D' after the bank's announcement of a suspension of
payments on all debts in June 2002, and the beginning of a
restructuring process that is still underway.
As is the case with most of the Argentine banks, Banco de
Galicia's asset quality problems are heavily dominated by the
large holdings of government debt, whose continuing default
impairs a large part of the bank's assets.
"The bank's remaining dollar-denominated debt is unsustainable
given the cash flows that its assets are expected to generate,"
said credit analyst Carina Lopez. The bank will have to overcome
many challenges to emerge from this crisis in a financial
condition that will preserve its chances of long-term survival.
Many of these challenges are outside the bank's ability to
control, namely those related to the Argentine government's
creditworthiness. Still, management has shown that it is
responsible for the bank's leading role in the Argentine
financial system.
ANALYST: Carina Lopez, Buenos Aires (54) 11-4891-2118
BANCO DE LA NACION: Conflict Continues With San Luis Province
-------------------------------------------------------------
It's still not clear when Argentine state-controlled Banco de la
Nacion will be made to return US$138 million in dollar-
denominated deposits to San Luis province.
Citing the Wall Street Journal, Bloomberg reports that
Argentina's Supreme Court was supposed to issue a ruling Tuesday
after a 60-day negotiating period between the bank and the
province ended on Monday. However, the deadline passed without a
ruling from the court.
Court representatives couldn't indicate when the court might rule
on the case or whether it might order the two parties to continue
negotiating a settlement, the Journal said.
The Supreme Court ruled on March 5 that the government's
conversion of dollar deposits into devalued pesos early last year
was unconstitutional.
Banco de la Nacion offered to return 30% of San Luis's deposits
in cash and the rest in 10-year bonds, the Journal said, citing
the bank's spokesman Guillermo Saldomando. The province's demand
for a payment of 30 percent in cash immediately and the remainder
in two-year bonds wasn't "viable," Saldomando said.
CONTACT: Banco de la Nacion Argentina
Bartolome Mitre, 326
1036 Buenos Aires, Argentina
Phone: +54-11-4347-6000
Fax: +54-11-4347-8078
Home Page: http://www.bna.com.ar/
Contacts:
Enrique Olivera, President
Adolfo Martin Prudencio Canitrot, Deputy VP
ROYAL AHOLD: D&S Files $45M Lawsuit
-----------------------------------
Another legal woe threatens to rock the already embattled Dutch
supermarket giant Royal Ahold. EFE reports that Ahold is now
facing a US$45-million lawsuit filed against it by Chile's
Distribucion y Servicio (D&S). The lawsuit is linked to the 1999
sale of 10 stores by D&S to Disco SA, Ahold's Argentine unit, for
US$150 million, of which US$60 million was paid at the time the
deal was closed.
Just recently, Ahold paid D&S only half of the remaining US$90
million, claiming that the US$45 million it already paid was a
fair price considering the currency devaluation that reduced the
value of the assets.
"With the payment of $45 million, we have met our obligations,"
an Ahold spokesman said.
Now, the court will have to determine which firm should bear the
currency risk for the transaction, since that subject was not
part of the original negotiations.
CONTACT: AHOLD NV, KONINKLIJKE
3050 Albert Heijnweg1
1507 EH Zaandam
Netherlands
Phone: +31 75 6599111
Fax: +31 75 6598350
Telex: 1 9010
Home Page: http://www.ahold.com
Contact:
Norbert L.J. Berger, Secretary
VINTAGE PETROLEUM: Reports Strong First Quarter Earnings
--------------------------------------------------------
Vintage Petroleum, Inc. posted Wednesday net income of $40.7
million, or $0.63 per diluted share, in the first quarter of 2003
driven by a dramatically higher oil and gas price environment.
Income from continuing operations for the quarter ended March 31,
2003, was $22.7 million, or $0.35 per diluted share. Net income
for the quarter includes income from discontinued operations of
$10.8 million ($49.1 million before tax), or $0.17 per diluted
share related primarily to the gain on the sale of the company's
operations in Ecuador. Also included is a non-cash gain of $7.1
million ($11.2 million before tax), or $0.11 per diluted share,
related to the cumulative effect of a mandated change in
accounting principle regarding asset retirement obligations.
These results compare to a net loss of $66.2 million, or $1.05
per share, in the same quarter last year. Included in the prior
year's quarter was a non-cash charge for $60.5 million reflected
as a cumulative effect of a mandated change in accounting
principle resulting from the adoption of SFAS 142 which requires
impairment assessments of goodwill.
Oil and gas production from continuing operations were in line
with the company's expectations for the quarter at 7.0 million
equivalent barrels (BOE), down 13 percent from 8.1 million BOE in
last year's period. Oil production during the first quarter of
2003 totaled 4.5 million barrels and natural gas production was
15.3 Bcf. Decreases in production from the prior year's first
quarter were attributable to natural production declines
compounded by the effects of substantially curtailed capital
expenditures in 2002 and the company's property divestitures made
in the United States. Capital expenditures in 2002 were limited
to $129.7 million, or approximately 54 percent of cash flow
provided by operating activities, as a result of management's
decisions to use a portion of cash flow to execute its debt
reduction program during 2002 and to restrict the level of
capital expenditures in Argentina pending stabilization of the
economic and political environment.
The average price received for gas (including the impact of
hedges) was dramatically higher than the average price received
in the year-ago quarter, rising 99 percent to $3.88 per Mcf in
the current quarter compared to $1.95 per Mcf in the first
quarter of last year. The average realized price for oil
(including the impact of hedges) also rose a substantial 74
percent to $28.20 per barrel compared to $16.21 per barrel in
last year's quarter.
Oil and gas sales rose 57 percent to $185.7 million from $118.5
million in last year's quarter. The effect of higher prices more
than offset the decline in production and translated into
substantially increased total revenues of $216.0 million compared
to $135.8 million in the year-ago quarter.
Lease operating costs per BOE for the quarter (excluding the
impact of the tax on Argentine oil exports of $10.2 million, or
$1.45 per BOE) increased nine percent to $6.26 per BOE compared
to $5.73 per BOE in last year's first quarter, primarily as a
result of the negative impact on peso-denominated costs from the
strengthening of the Argentine peso and higher severance taxes in
the United States resulting from higher product prices. Total
lease operating, general and administrative and oil and gas DD&A
expenses per BOE of $7.71, $2.05 and $5.16, respectively, were
all in line with the company's expectations for the quarter and
are expected to decline as oil prices moderate (reducing export
and severance taxes) and production increases throughout the
year.
Exploration expense during the first quarter of 2003 of $14.1
million included $2.3 million in seismic, geological and
geophysical costs and $11.8 million in dry hole costs and lease
impairments compared to a total of $9.0 million during the first
quarter of 2002 which included $3.5 million in seismic,
geological and geophysical costs and $5.5 million in dry hole
costs and lease impairments.
Cash flow from continuing operations (before all exploration
costs and changes in working capital) was $85.0 million for the
first quarter of 2003 compared to $40.2 million in the year-ago
quarter, reflecting the dramatic rise in oil and gas prices from
the year-ago levels. See the attached table for Vintage's
calculation of cash flow from continuing operations (before all
exploration costs and changes in working capital), a non-GAAP
financial measure. Cash provided by operating activities for the
first quarter of 2003 was $80.8 million compared to $22.9 million
in the year earlier quarter.
Cumulative Effect of Change in Accounting Principle
The company adopted Statement of Financial Accounting Standards
No. 143, Accounting for Asset Retirement Obligations ("SFAS
No.143"), effective January 1, 2003. This mandated change in
accounting principle requires companies to record the discounted
fair value of estimated future retirement obligations as a
liability at the time a well is drilled or acquired, with a
corresponding entry to oil and gas assets, which is then
amortized to expense over the life of the asset. In addition, the
liability accretes over time with a charge to accretion expense.
The adoption of SFAS No. 143 resulted in a non-cash cumulative-
effect after-tax gain of $7.1 million and the recording of an
asset retirement liability of approximately $83.0 million. The
company had previously accrued future retirement obligations
through its depreciation calculation and included the cumulative
accrual in accumulated depreciation in accordance with the
provisions of Statement of Financial Accounting Standards No. 19,
Financial Accounting and Reporting by Oil and Gas Producing
Companies, and industry practice.
Strengthened Balance Sheet
As previously announced, culminating with the January 2003
closing of the sale of its interests in Ecuador, Vintage achieved
its stated 2002 goal to reduce debt by $200 million. Additional
non-strategic property sales in the first quarter and strong cash
flow from higher product prices further reduced debt. Net long-
term debt (long-term debt less cash and cash equivalents) was
$688.5 million at March 31, 2003, compared to $1,004 million at
year-end 2001.
"We have made significant progress in our efforts to strengthen
our balance sheet and position the company for future growth,"
said S. Craig George, CEO. "Our net long-term debt-to-book
capitalization ratio is now 51.9 percent, down from the 60.5
percent at year-end 2002. In addition to the $111 million of cash
on hand, we have $290 million of availability under our bank
revolving credit facility. All of these factors position the
company to pursue acquisition opportunities with significant
upside potential that can be financed with an appropriate amount
of equity."
2003 Targets
The company's 2003 targets remain at 29.1 million BOE for
production and $185 million for capital expenditures. Due to the
strong first quarter, the company has increased its annual target
for cash flow from continuing operations (before all exploration
expenses, current taxes on any property sales and working capital
changes) in 2003 to $250 million from $235 million and its target
for EBITDAX to $350 million from $330 million. These revised
targets are based on assumed average NYMEX prices for 2003 of
$27.00 per barrel of oil and $5.00 per MMBtu of gas versus its
previously assumed NYMEX prices of $26.00 per barrel of oil and
$4.50 per MMBtu of gas. Net realized prices for the year (before
the impact of hedging) as a percent of NYMEX are expected to be
85 percent for oil and 67 percent for gas.
Vintage Petroleum is an independent energy company engaged in the
acquisition, exploitation, exploration and development of oil and
gas properties and the marketing of natural gas and crude oil.
Company headquarters are in Tulsa, Oklahoma, and its common
shares are traded on the New York Stock Exchange under the symbol
VPI. For additional information visit the company website at
www.vintagepetroleum.com.
To see financial statements:
http://bankrupt.com/misc/Vintage_Petroleum.pdf
CONTACT: Robert E. Phaneuf
Vice President - Corporate Development
(918) 592-0101
VINTAGE PETROLEUM: Posts 1Q03 Operations Update
-----------------------------------------------
Vintage Petroleum, Inc. announced Wednesday the results and
status of its first quarter operational activities and plans for
2003. During the first quarter, $46.3 million of the company's
2003 planned non-acquisition capital budget of $185 million was
spent to drill 21 net (29 gross) wells and perform in excess of
50 workovers. The company plans to drill 132 net wells and
undertake a variety of exploitation projects with approximately
70 percent of the budget during 2003. The remaining 30 percent of
the budget will be allocated to exploration in the United States,
Canada, Italy and the frontier areas of Yemen, Northwest
Territories, Nova Scotia and Bulgaria.
United States
During the quarter, 9 net (11 gross) exploitation and exploration
wells were drilled with a 93 percent success rate. Exploitation
drilling in the Luling field in Texas resulted in 7 net (7 gross)
horizontal completions with an initial production buildup of just
over 1,000 net barrels of oil per day. Additionally, 4 net (4
gross) wells in the Luling, West Ranch and Pleito Ranch fields
were being drilled at the end of the quarter with completions
planned during the second quarter. The 2003 exploitation budget
of $49 million set for the United States calls for a total of 35
net (39 gross) wells to be drilled by year-end.
Using an established play concept in the Permian Basin of west
Texas and eastern New Mexico, Vintage has generated three, multi-
well, lower-risk gas prospects predicated on the utilization of
horizontal drilling and fracture stimulation technology to enable
establishment of commercial production from known gas-bearing
tight carbonate rocks.
Vintage has an interest in over 19,500 gross acres encompassing
these three exploration prospects. The first exploration well in
this play, the Muleskinner #1, is located in the Leatherwood
prospect in Terrell County, Texas. The vertical portion of the
hole has been completed and the well is currently drilling
horizontally in the targeted Devonian formation. Vintage has a 33
percent working interest in the Muleskinner #1 and results from
this well are expected during the second quarter. The initial
well in the Austin prospect, which targets a similar play concept
in the Mississippian formation, is planned to spud during the
second quarter. Drilling on the third prospect is anticipated to
begin during the third quarter. The company estimates net
unrisked reserve potential of these three horizontal drilling
prospects to be approximately 145 Bcfe.
The drilling of the Norman #1 well in the Richaud prospect in
Terrebonne Parish of south Louisiana was completed during the
first quarter. Although the Miocene objectives were encountered
in a structurally favorable position as predicted from the 3-D
seismic evaluation, the sands were found to be tight and
therefore non-productive. Vintage is finalizing its evaluation of
additional prospects in south Louisiana and anticipates drilling
one of these prospects before year-end.
Vintage is pursuing Oligocene and Miocene targets in the Texas
Gulf Coast area and was the successful bidder on state leases
covering two shallow water Gulf of Mexico prospects that were
internally generated based on 3-D seismic and geochemical
evaluations. Vintage acquired a 720 acre tract covering the
Mustang Island 860-L prospect and two tracts covering 1,440 acres
that contain the High Island 55-L prospect. The first exploration
well in the Texas Gulf Coast is expected to spud late this year.
Argentina
Vintage reinitiated its drilling program in Argentina in late
2002 and increased the capital budget to $48 million for 2003. A
second drilling rig was added in February. Seven exploitation
wells were drilled in the San Jorge Basin during the first
quarter with a success rate of 100 percent. A third rig was added
in late April in order to support the 2003 program objective of
increasing oil production in the fourth quarter of 2003 by
approximately 10 percent above the level in the comparable year-
ago quarter. The stabilization in Argentina's currency exchange
rate, reduction in the rate of inflation and Argentina's ongoing
negotiations with the IMF combined with attractive drilling
economics, resulted in the company's decision to reinitiate
drilling late in the fourth quarter 2002. The $48 million capital
budget in 2003 calls for 63 net (64 gross) wells to be drilled.
The presidential election was held in Argentina on April 27,
2003. Based on the results of the election and Argentine law, a
run-off election will be held between former president Carlos
Menem and Santa Cruz province governor Nestor Kirchner on May 18,
2003. The winner of the election will succeed the current
president Eduardo Duhalde and begin a four-year term on May 25,
2003. Vintage will monitor the presidential transition and the
economic policy decisions of the newly elected president.
Continued drilling activity will be predicated upon a smooth
transition and continued economic and political stability.
Canada
Vintage drilled 5.3 net (11 gross) wells with an 81 percent
success rate during the first quarter. Exploitation activities
comprised 52 percent of the $11.5 million in capital expenditures
with the remainder allocated to exploration. During the second
quarter, three wells are planned to test Devonian Leduc fore-reef
oil accumulations in the Sturgeon Lake area. Regulatory hearings
on the infill drilling of the Cretaceous Badheart gas pool have
occurred and approval is anticipated during the second quarter.
Vintage plans to drill five to seven Cretaceous Badheart infill
wells this year. The company is currently reviewing non-binding
bids recently received in connection with its marketing of
certain non-strategic Canadian assets. Should the company elect
to pursue any such bids, closings would be anticipated during the
second or third quarters.
As the result of its ongoing exploration initiative, Vintage and
its partners have embarked on an exploratory program targeting
gas in Triassic Age formations in the foothills trend of
northeastern British Columbia. During the first quarter 8,400 net
(21,000 gross) acres were acquired in the Cypress prospect area
at Crown land sales. Drilling operations are expected to commence
late in the second quarter and continue throughout the remainder
of the year. Vintage plans to drill five wells ranging in depths
from 5,000 to 8,250 feet that are characterized as shallow to
medium depth gas reservoirs in proximity to marketing
infrastructure. Vintage has a 40 percent, non-operated interest
in this prospect area.
Italy
Vintage has a 70 percent working interest in two exploration
blocks situated in the Po Valley, an industrial region of
northern Italy which has a long-established production history
and well-developed pipeline infrastructure serving a highly
developed gas market. Using seismic attributes analysis from
reprocessed 2-D seismic combined with newly acquired geochemical
studies, Vintage is targeting shallow Pliocene gas sands in
structural-stratigraphic traps. The process of well permitting is
underway and the company plans to begin drilling the first of two
exploration wells during the fourth quarter of 2003. Vintage is
the operator of the Bastiglia and Cento blocks covering
approximately 275,000 gross acres.
Frontier Exploration
The company's frontier exploration effort exposes Vintage to
exploration programs with high-impact potential using a small
portion of the non-acquisition capital budget. The strategy is to
have a portfolio of projects in the pipeline at any point in
time. In Yemen, the An Nagyah #4 well has been drilled and cased
at a total depth of 5,075 feet to provide a further assessment of
the sub-salt Lam formation oil discovery made by the An Nagyah #2
during the fourth quarter of 2002. Results from the testing of
the An Nagyah #4 well are expected late in the second quarter.
Vintage has a 75 percent working interest in the S-1 Damis block.
Vintage has expanded its frontier exploration efforts into Nova
Scotia, Canada and the western Black Sea off the coast of
Bulgaria. Vintage has signed an agreement to conduct exploration
activities as operator on four onshore blocks in the province of
Nova Scotia, Canada. The four blocks, Antigonish, Bras D'Or,
Sydney and Pictou, cover approximately 1.5 million gross acres.
Vintage plans to drill a well to an approximate total depth of
4,900 feet on the Antigonish block during the third quarter of
2003 targeting a Carboniferous Age reef. Additionally, the
company will acquire a minimum of 12.4 miles (20 kilometers) of
2-D seismic and conduct geological studies on each of the other
three blocks. Depending on the evaluation of the acquired
geologic information, Vintage may elect to proceed with the
drilling of wells on these blocks. Vintage has the opportunity to
earn up to an 80 percent working interest in the Antigonish block
and a 75 percent working interest in the other three blocks.
Vintage also has been awarded an exploration permit for the
Bourgas-Deep Sea block in the exclusive economic zone of the
Republic of Bulgaria in the western Black Sea. Vintage has a 100
percent working interest and is operator of this unexplored block
that encompasses nearly two million acres (7,958 square
kilometers). The obligatory work program involves geologic
studies, reprocessing approximately 620 miles (1,000 kilometers)
of existing 2-D seismic and acquisition of approximately 310
miles (500 kilometers) of new 2-D seismic. This exploration
program is targeting two play concepts: large Eocene Age
anticlines and deep water fan deposits of Oligocene and Miocene
Age. The permit's initial term expires in December 2005 and has
provisions for extension.
In the Northwest Territories, Vintage and its operating partner
initiated drilling operations during late January on the Tree
River C-36 well. The well was successfully drilled to a total
depth of 6,160 feet into the targeted Devonian section; however,
it did not test commercial quantities of hydrocarbons. Three
gross (1.5 net) wells that were drilled but unevaluated from the
2000/2001 winter drilling season were tested during the quarter
and were also deemed non-commercial. Vintage is evaluating other
exploration play concepts on the company's licenses that are 50
percent owned and cover 440,000 net (880,000 gross) acres in the
central Mackenzie Valley of Canada.
=============
B E R M U D A
=============
GLOBAL CROSSING: Files Required Monthly Results for March 2003
--------------------------------------------------------------
Global Crossing filed Wednesday a Monthly Operating Report (MOR)
with the U.S. Bankruptcy Court for the Southern District of New
York, as required by its Chapter 11 reorganization process.
Unaudited results reported in the March 2003 MOR include the
following:
For continuing operations in March 2003, Global Crossing reported
consolidated revenue of approximately $231 million. Consolidated
access and maintenance costs were reported as $164 million, while
other operating expenses were $63 million.
"March results showed improvement in several areas compared to
February. Our revenues increased by $9 million, while access and
maintenance costs were reduced by $4 million. In addition, we
posted a positive EBITDA of $4 million, an improvement of $13
million over February," said John Legere, Global Crossing's chief
executive officer. "These results are clear evidence that the
company's restructuring is having a positive impact as we move
closer towards our goal of profitability."
Global Crossing reported a consolidated cash balance of
approximately $662 million as of March 31, 2003. The cash balance
is comprised of approximately $257 million in unrestricted cash,
$332 million in restricted cash and $73 million of cash held by
Global Marine.
Global Crossing posted a consolidated net loss of $89 million for
March 2003. Consolidated EBITDA was positive in March, reported
at $4 million.
MOR RESULTS - MONTHLY RESULTS JANUARY THROUGH MARCH 2003
MONTH CONSOLIDATED CONSOLIDATED NET INCOME
REVENUE EBITDA (LOSS)
Mar 2003 US$231mn US$4mn (US$89mn)
Feb 2003 US$222mn (US$9mn) (US$142mn)
January US$236mn (US$11mn) (US$93mn)
Notes
The MOR reports revenue and cash balances according to generally
accepted accounting principles in the United States of America
(US GAAP). US GAAP revenue includes revenue from sales of
capacity in the form of indefeasible rights of use (IRUs) that
occurred in prior periods, recognized ratably over the lives of
the relevant contracts. Beginning on October 1, 2002, Global
Crossing ceased recognizing revenue from exchanges of leases of
capacity.
Consolidated EBITDA is defined as operating income/(loss) from
the consolidated statements of operations, less depreciation and
amortization expense. EBITDA is not a measurement under US GAAP
and may not be similar to EBITDA measures of other companies.
Management believes that EBITDA is a relevant indicator of
operating performance, especially in a capital-intensive industry
such as telecommunications, since it excludes items that are not
directly attributable to ongoing business operations. In
addition, the depreciation of $89 million for the month of March
2003, and therefore the March operating loss, would have been
reduced substantially if the financial statements in the March
MOR had reflected the tangible asset write-down described below.
Pursuant to Regulation G, the following table provides a
reconciliation of consolidated EBITDA, which is a non-GAAP
financial metric, to operating income, which is the most directly
comparable GAAP measure.
MONTH CONSOLIDATED DEPRECIATION OPERATING
AND INCOME
(LOSS)
Mar 2003 US$4mn US$89mn (US$85mn)
Feb 2003 (US$9mn) US$86mn (US$95mn)
January (US$11mn) US$87mn (US$98mn)
ABOUT GLOBAL CROSSING
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services.
On January 28, 2002, Global Crossing Ltd. and certain of its
subsidiaries (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York
(Bankruptcy Court) and coordinated proceedings in the Supreme
Court of Bermuda (Bermuda Court). On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
Bankruptcy Court and the Bermuda Court. Additional Global
Crossing subsidiaries commenced Chapter 11 cases on April 23,
August 4 and August 30, 2002, with the Bermuda incorporated
subsidiaries filing coordinated insolvency proceedings in the
Bermuda Court. The administration of all the cases filed
subsequent to Global Crossing's initial filing on January 28,
2002 has been consolidated with that of the cases commenced on
January 28, 2002. Global Crossing's Plan of Reorganization, which
was confirmed by the Bankruptcy Court on December 26, 2002, does
not include a capital structure in which existing common or
preferred equity will retain any value. Global Crossing expects
to emerge from bankruptcy in the first half of 2003.
On November 18, 2002, Asia Global Crossing Ltd., a majority-owned
subsidiary of Global Crossing, and its subsidiary, Asia Global
Crossing Development Co., commenced Chapter 11 cases in the
United States Bankruptcy Court for the Southern District of New
York and coordinated proceedings in the Supreme Court of Bermuda,
both of which are separate from the cases of Global Crossing.
Asia Global Crossing has announced that no recovery is expected
for Asia Global Crossing's shareholders. Asia Netcom, a company
organized by China Netcom Corporation (Hong Kong) on behalf of a
consortium of investors, has acquired substantially all of Asia
Global Crossing's operating subsidiaries except Pacific Crossing
Ltd., a majority-owned subsidiary of Asia Global Crossing that
filed separate bankruptcy proceedings on July 19, 2002. Global
Crossing no longer has control of or effective ownership in any
of the assets formerly operated by Asia Global Crossing.
CONTACT: GLOBAL CROSSING
Press Contacts
Tisha Kresler
+ 1 973-410-8666
Tisha.Kresler@globalcrossing.com
Kendra Langlie
Latin America
+ 1 305-808-5912
Kendra.Langlie@globalcrossing.com
Mish Desmidt
Europe
+44 (0) 118 908 6788
Mish.Desmidt@globalcrossing.com
Analysts/Investors Contact
Ken Simril
+1 310-385-3838
investors@globalcrossing.com
GLOBAL CROSSING: IDT Seeks Proposed Sale Investigation
------------------------------------------------------
The proposed sale of Global Crossing Ltd. to Singapore
Technologies Telemedia Pte may be delayed following request by a
US company to scrutinize the transaction, reports Bloomberg.
New Jersey-based IDT Corp., which has been buying up distressed
rivals, wrote to the U.S. Federal Communications Commission
asking the commission to investigate the proposed sale.
In its letter, IDT claimed that American telecommunications
companies would be put at a competitive disadvantage if ST-
Telemedia Pte were to acquire a controlling stake in Global
Crossing, a bankrupt fiber-optic network operator.
ST-Telemedia, which is owned by the Singapore government, is
seeking to buy Global Crossing, without a partner after Hutchison
Whampoa Ltd. last week pulled out of the US$250 million bid amid
U.S. objections. IDT wants the U.S. to scrutinize a restructured
transaction because it raises public policy and national security
issues, it said.
===========
B R A Z I L
===========
AES CORP.: Extends Tender Offer for Senior Subordinated Notes
-------------------------------------------------------------
The AES Corporation (NYSE:AES) announced Wednesday that it had
extended the expiration of its pending tender offer for its
outstanding senior subordinated notes from 5:00 p.m. New York
City time on Wednesday, May 7, 2003, until 9:00 a.m. New York
City time on Thursday, May 8, 2003. AES extended the expiration
time of the tender so that it could close concurrently with the
closing of its $1.8 billion private placement. AES expects that
settlement for the senior subordinated notes purchased in the
tender offer will occur on Thursday, May 8, 2003. The following
table shows the principal amount of each series of senior
subordinated notes tendered as of 5:00 p.m. New York City time on
Wednesday, May 7, 2003.
Amount
The Notes Tendered
------------------------------------------ ------------
10.25% Senior Subordinated Notes Due 2006 $18,915,000
8.375% Senior Subordinated Notes Due 2007 $40,558,000
8.50% Senior Subordinated Notes Due 2007 $34,643,000
8.875% Senior Subordinated Notes Due 2027 $9,742,000
The other terms of AES's pending tender offer remain unchanged.
AES's obligation to accept notes tendered and pay the tender
offer consideration and any early tender premium is subject to a
number of conditions which are set forth in the Offer to Purchase
and Letter of Transmittal for the tender offer. The conditions
include (1) the completion of the proposed private placement and
(2) the effectiveness of the amendment to AES's senior credit
facility.
CONTACT: AES Corporation
Kenneth R. Woodcock, 703/522-1315
BSE: Telecom Americas Concludes Acquisition
-------------------------------------------
Telecom Americas completed the acquisition of BSE (BCP Nordeste)
in a transaction valued at an estimated US$180 million. The
culmination followed approval of the Brazilian telecom agency
Anatel (Agencia Nacional de Telecomunicacoes), the Administrative
Council for Economic Defense - Cade (Conselho Administrativo de
Defesa Economica) and of a pool of creditor banks, according to
an article released by South American Business Information.
In March, Fitch Ratings affirmed BSE's 'CC'(bra) rating and
revised the Rating Watch to Positive from Negative. The rating
reflected BSE's high debt leverage and weak liquidity position
amid an increasingly competitive wireless telecom environment. At
Sept. 30, 2002, BSE's debt levels reached approximately US$580
million.
However, the potential operational and financial support provided
by Telecom Americas is expected to significantly enhance BSE's
competitive position.
BSE is a wireless service provider with approximately one million
subscribers throughout Northeastern Brazil in the states of
Alagoas, Ceara, Paraiba, Pernambuco, Piaui and Rio Grande do
Norte.
Telecom Americas is 96.5% held by America Movil.
CATAGUAZES-LEOPOLDINA: To Refinance $178M In Short-Term Debts
-------------------------------------------------------------
Brazilian power distributor Cia. Forca Luz Cataguazes Leopoldina,
which ended 2002 with total debts of BRL1.15 billion, will embark
on several measures to refinance BRL524 million (today US$178mn)
in debts that come due by the end of this year.
The measures include a debenture issue, a capital increase and
direct negotiations with banks, Business News Americas reports,
citing Cataguazes investor relations manager Carlos Aurelio
Pimental.
The debenture issue will involve issues of BRL130 million and
BRL250 million in non-convertible debentures secured by a
floating guarantee. The planned issuance is expected to see the
approval of the main operating company, CFLCL, and a distribution
subsidiary, Energipe, at a shareholders meeting scheduled for May
15.
The 54-month CFLCL debentures will pay the CDI inter-bank rate
plus 4.5% a year while the 72-month Energipe debentures will pay
the IGP-M inflation index plus 12% a year.
Meanwhile, the CFLCL board of directors has also approved a
BRL20-million capital increase through the issue of 5.25 new
shares for each group of 100 shares currently held. The
subscription price is BRL3 per lot of 1,000 shares, to be paid in
cash or credits against the Company. The preference period ends
May 30, 2003.
According to Pimentel, the debentures and the shares can be paid
for in cash or credits. During last year's rationing the
Company's main shareholders lent money to the Cataguazes group,
and the debentures and share issue are convenient ways of
capitalizing these loans, he explained.
Cataguazes is also in direct negotiations to restructure BRL124
million of loans with a group of about 10 banks.
Cataguazes serves the states of Minas Gerais, Rio de Janeiro,
Paraiba and Sergipe.
VARIG: Filing Delay Prompts Corporate Governance Status Dispute
---------------------------------------------------------------
The Sao Paulo Stock Exchange stripped Viacao Aerea Rio Grandense
SA (Varig) of its top-tier corporate governance status after the
embattled airline declined to submit its 2002 financial
statements Wednesday as requested by the bourse, reports Dow
Jones.
In a letter to the stock exchange, Varig explained that its
attention has been centered on its bid to pursue a merger with
rival TAM Linhas Aereas to stave off a collapse.
The airline, all but bankrupt after Brazil's currency plunged 35%
against the dollar last year, is struggling to keep up even with
basic items like payrolls and fuel bills, says Dow Jones. Rising
debts and falling traffic prompted the carrier in February to
agree to study an operating merger with its biggest domestic
rival, TAM. Most observers view the merger plan as Varig's best
hope for survival.
Stripping Varig of the status was merely symbolic, says Dow Jones
The original filing deadline was March 31, and Varig is already
under investigation for some BRL1.3 billion ($1=BRL2.95) in
accounting errors discovered in first half results from last
year.
VARIG/TAM: To Present Merger Details To BNDES
---------------------------------------------
Brazil's state-run National Development Bank was expecting to
receive a letter Wednesday detailing the Varig-TAM merger plan
and asking for some US$600 million in financing from the bank.
Citing a spokesman, Dow Jones reports that the bank would
consider loaning US$600 million to the new entity, if that's what
was needed to foster the merger and clean up an aviation sector
plagued by poor regulation and volatile economic times.
The bank would also consider taking a majority stake in the new
airline if necessary, Development Bank director Carlos Lessa said
this week.
Varig's existing creditors, which include Brazil's airport
authority Infraer, General Electric Co.'s aviation leasing unit
Gecas, Unibanco SA, and BR Distribuidora, an arm of state oil
company Petroleo Brasileiro, could also end up swapping financing
for a stake in the new carrier.
Varig, which posted a loss of BRL2.02 billion over the first nine
months of 2002 and had a negative book value of BRL2.54 billion
at the end of September, is expected to get a 5% stake in the new
company.
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
TAM
Daniel Mandelli Martin, President
Buenos Aires
Tel. (54) (11) 4816-0001
URL: www.tam.com.br
=============
E C U A D O R
=============
ECUADORIAN BANKS: AGD Inks Audit Contracts With Three Firms
-----------------------------------------------------------
Ecuador's Deposit Guarantee Agency (AGD) on Wednesday moved a
step closer toward the eventual sale of the assets belonging to
nine failed financial institutions.
According to Dow Jones, AGD signed contracts with local
associates of three London-based firms - Full Member, HLB
International Limited and AGN International -- that will carry
out audits on the failed financial institutions.
The audits are expected to be completed in two months, according
to AGD manager Wilma Salgado. Subsequent to that, a base price
will be established to kick off the plan to put the assets on the
auction block.
Once the audit phase is complete, the banks will be declared in
liquidation and their assets will be placed in a trust to be
managed by independent administrators, who will be responsible
for their sale to speed the return of deposits to clients of the
financial institutions, which went bankrupt between 1998 and
2000.
===========
M E X I C O
===========
AEROMEXICO: Fitch Lowers Senior Unsecured Rating To 'B+'
--------------------------------------------------------
Fitch Ratings has lowered the senior unsecured rating of Aerovias
de Mexico, S.A. de C.V. (Aeromexico) to 'B+' from 'BB' and has
removed the rating from Rating Watch Negative status. The Rating
Outlook for the rating is Stable.
The rating action reflects continued weak profitability for
Aeromexico and incorporates expectations of a further decline in
profitability during early 2003. Aeromexico has faced weak
passenger demand in both its domestic routes, which account for
close to 70% of revenues, and international routes, which account
for the remaining 30%. As a result, the company was slightly
under EBITDA breakeven levels during 2002, with EBITDAR/Interest
Expense + Rents at 0.9 times (x). Cash flow generation has been
further pressured by the combination of lower passenger traffic
on routes to the United States and a spike in fuel prices due to
the conflict between the United States and Iraq. Aeromexico's
cash flow generation could gradually improve in the second half
of 2003 as the end of the conflict may result in a recovery in
passenger traffic on routes to the United States and lower fuel
prices. Nevertheless, EBITDAR/Interest Expense + Rents is
expected to remain below 1.0x during 2003.
Aeromexico continues to maintain a solid liquidity position
despite weak profitability. Aeromexico maintained cash balances
of US$194 million at 12/31/2002. Aeromexico does not face
significant liquidity risk given the large size of its cash
balances compared to its debt refinancing needs. At 12/31/2002,
Aeromexico's on-balance sheet debt was composed of US$49 million
outstanding of Trust Certificates due 2006, US$61 million in bank
loans, and approximately US$50 million in capital leases and
other. Refinancing needs for 2003 are estimated at between US$20-
US$25 million.
Fitch Ratings currently maintains a rating of 'A+' Rating Watch
Negative on Aeromexico's Receivables US Trust. The ratings of the
Trust Certificates are tied to the financial strength of Centre
Solutions. The Trust Certificates are secured by current and
future U.S. dollar receivables generated by airline ticket sales
in the United States owed to Aeromexico. In addition, the Trust
Certificates include a surety bond provided by Centre Solutions,
which unconditionally and irrevocably commits to cover any
shortfalls of scheduled principal and interest payments for the
life of the Trust Certificates.
Aeromexico has a solid business position in the Mexican airline
sector, with the largest market share in domestic routes and the
second largest market share in international routes. Aeromexico
serves 35 domestic destinations and 18 international destinations
with a fleet of 69 aircraft. Aeromexico is in the process of
replacing 14 DC-9 aircraft, which have an average age of
approximately 25 years, with 15 new Boeing 737 aircraft. The new
aircraft, which will be delivered between October 2003 and
December 2004, will be financed with a combination of sale-
leasebacks and operating leases. Therefore, the aircraft renewal
plan will not impact on-balance sheet debt levels. No other major
fleet changes are expected over the medium term. Aeromexico is a
full member of the SkyTeam alliance and maintains code-share
alliances with several airlines, including Delta Airlines, Air
France, and Alitalia.
CONTACT: Guido Chamorro, +1-312-368-5473, Chicago
Samuel Fox +1-312-606-2307, Chicago
Giovanna Caccialanza, +1-212-908-0898, New York
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
AXTEL: Nortel Swaps Debt, Becomes Shareholder
---------------------------------------------
Canadian telecommunications equipment maker Nortel Networks took
a 10% stake in Mexican telephone operator Axtel. In a statement,
Axtel explained that incorporating Nortel - its main equipment
provider - into its shareholder mix is part of a recent debt
restructuring process that led to a US$400-million reduction in
its debts.
Due to the debt restructuring, Bell Canada International's 27%
stake in Axtel was reduced to 1.5%, while Axtel's Mexican
shareholders raised their stake to 65% from 51%.
Axtel also received money this year from the AIG-GE Capital Latin
American Infrastructure Fund, AIG Latin American Equity Partners,
American International Underwriters Overseas, Ltd, Metropolitan
Life Insurance Company, the Soros Group and WorldTel Limited.
Together these foreign investors hold close to 24% of the
Company's equity.
Axtel also said in the statement that the deal with Nortel would
extend its technology provider contract by an additional five
years.
Axtel, a small phone company that offers residential and business
phone lines in competition with dominant Mexican operator Telmex,
is struggling to strengthen finances and extend payment deadlines
on debt.
IUSACELL: Negotiating SMS Interconnection With Telcel
-----------------------------------------------------
Mexico's third-biggest mobile operator Iusacell, and rival Telcel
- the biggest in the country - are negotiating SMS
interconnection, reports Reuters. Talks are going well and a deal
is expected to close soon.
"There are talks (between Iusacell and Telcel) and we believe
that very soon we will be able to reach an agreement. (Telcel)
has come to understand that this benefits everyone," Carlos
Hirsch, Iusacell's director of regulatory affairs, told Reuters.
A few months ago, Iusacell entered an agreement so that its
subscribers could exchange short messages with clients of
Telefonica Moviles, the No. 2 mobile operator in Mexico. In
April, it made another such deal with Unefon, the fourth-biggest
mobile operator, recalls Reuters.
Iusacell's messaging traffic has risen 10% in the last month, due
to the new deals, Hirsch said.
Iusacell also has agreements with U.S., Canadian and Peruvian
mobile telephone operators so that its customers can send short
messages to many mobile subscribers in those countries for 66
Mexican centavos ($0.06) per message.
Hirsch said Iusacell's goal was to keep adding a country every
week, at the same messaging rate.
To see financial statements:
http://bankrupt.com/misc/GRUPO_IUSACELL.htm
CONTACT: Grupo Iusacell, S.A. de C.V.
Investor Contacts:
Russell A. Olson, (5255) 5109-5751
russell.olson@iusacell.com.mx
or
Carlos J. Moctezuma, (5255) 5109-5780
carlos.moctezuma@iusacell.com.mx
Web site at www.iusacell.com
IUSACELL: Continues Losing Market Share
---------------------------------------
Iusacell's client base is still shrinking, an article released by
the Internet Securities indicates. Currently, the Company has
2.04 million clients, 2% less than in the first quarter last
year.
The downward trend has been occurring since the third quarter of
2002 bringing down Iusacell's market share to 7.6%, lowest level
ever, from a level of 9% a year ago, according to an analysis
report conducted by Banamex Citigroup.
However, Iusacell explained that losing its market share did not
counter its current strategy, which is to become the best service
provider on the market by 2004.
But in the report, Banamex Citigroup analysts emphasized one
point: "A worrying fact is that the company has been registering
a reduction not only in its base of prepay subscribers but also
in its postpay subscribers, which tend to be the most profitable
sector."
Postpay clients fell 11% from the first quarter of 2002 to the
same period this year and Iusacell now has 343,000 such
customers.
=================
V E N E Z U E L A
=================
AEROPOSTAL: Sends Workers Home To Cut Spending
----------------------------------------------
In a bid to trim losses incurred in the wake of Venezuela's
economic plunge and dollar crunch, Aeropostal Alas de Venezuela,
the country's largest airline, will slash roughly 600 of its
2,600 workers this week, Knight Ridder Business News reports.
Aeropostal had been turning a profit before Venezuela's economy
contracted nearly 9% last year. It ended US$7 million in profits
in 2001. However, the profits turned to US$23 million in losses
last year, as Venezuela's currency plunged in value and interest
rates soared.
While the passenger volume kept steady at about 3.1 million,
revenues translated into fewer dollars, at the same time that
costs rose for fuel and other basics paid in dollars.
In the first quarter this year, revenues fell almost by nearly
half to US$30 million and losses topped US$7 million.
"Slowly, slowly, we're dying," chief executive officer Nelson
Ramiz said. "And we're one of the companies in Venezuela in the
strongest position."
To survive, Ramiz said Aeropostal has trimmed flight schedules
and curtailed spending on all but essential items. Ramiz hopes
the measures will allow Aeropostal to end 2003 at roughly break-
even -- provided Venezuela averts new political upheaval that
could further cripple its struggling economy.
EDC: Emphasizes Need For Rates Increase
---------------------------------------
CA Electricidad de Caracas, the Venezuelan subsidiary of AES
Corp., is hoping against hope that a ruling by the government to
suspend power companies' rate increase will be a temporary thing.
Bloomberg reports that the Venezuelan ministries of energy and
mines decreed to forego an inflation-adjusted rate increase until
further notice to protect consumers as inflation may reach 35%
this year.
"We hope that this is a temporary measure," EDC Regulatory
Affairs Vice President Marco de la Rosa said in an interview.
"The government knows that the industry can't make needed
investments unless rates are raised."
The suspension threatens to hurt investments in Venezuela's
electricity industry, which is increasingly plagued by power
outages and shortages, caused by a drought that has reduced
output at the country's Guri hydroelectric complex. Venezuela
froze power rates, along with prices of 168 other items in
February when it put restrictions on dollar sales. The initial
freeze was ambiguous, and it was unclear whether a mandated
increase based on inflation would be allowed.
The country needs to invest $7 billion in its power industry over
the next five years, de la Rosa said.
TCR-LA recently reported that Electricidad de Caracas ended the
first quarter of the year with US$743 million of debt. The figure
is 28% less than the total debt the Company reported in the same
quarter a year ago.
Electricidad de Caracas is managing to reduce its debt even after
Venezuela imposed restrictions on the sale of dollars, which has
frozen companies' ability to repay dollar-denominated debt. The
Company recently reported a VEB25.6-billion net loss (US$16
million) in the first quarter.
CONTACT: AES VENEZUELA
Avenida Rio de Janeiro
Qta. Tres Pinos
Chuao, VE-1061 Caracas, Venezuela
Phone: +58 14 929 2552
Fax: +58 2 9937296
E-mail: venezuela@aes.org
Contact: Elmar Leal, Chairman
Juan Font, Vice Chairman
AES CORP
Investor Relations
Kenneth R. Woodcock, 703/522-1315
www.investing@aes.com
Website: http://www.aesc.com/
PDVSA: Exxon Mobil Seeks To Restart Talks With Unit Over JV
-----------------------------------------------------------
Exxon Mobil Corp., the world's largest publicly traded oil
company, hopes to resume talks with Pequiven, the petrochemical
unit of Petroleos de Venezuela SA, to complete a US$2-billion
plastics joint venture, reports Bloomberg.
"We are re-establishing contacts with the new leadership of
Pequiven, and we are waiting for the state oil company and the
Energy and Mines Ministry to say they are ready to sit down and
negotiate," Exxon Mobil Venezuelan chief Mark Ward said.
The plastics plant is a key part of Venezuela's plans to raise
petrochemical output and reduce dependence on crude oil exports.
Pequiven and Exxon Mobil will each have a 49% stake in the
project, and 2% will be reserved for the project's financiers.
PDVSA FINANCE: Moody's Confirms Caa1 Long-Term Debt Rating
----------------------------------------------------------
Moody's Investors Service confirmed the Caa1 long-term debt
rating of PDVSA Finance Ltd., a Cayman Islands corporation and an
indirect, wholly-owned subsidiary of Petroleos de Venezuela SA
(PDVSA), Venezuela's national oil company.
PDVSA Finance acts as a financing vehicle for PDVSA by issuing
notes and using the proceeds to purchase current and future oil
export receivables from PDVSA's principal operating and exporting
arm. The receivables' cash flows are generally PDVSA Finance's
only source of revenues, as well as the only source of payment of
the notes.
Moody's said the rating confirmation reflects the sustained
improvement in production, exports and collections; the ability
of PDVSA Finance to comply with the debt service coverage ratio
and the debt to equity ratio throughout the crisis; and the
resolution of the two-month strike that virtually stopped all the
Company's production and exports.
The complete rating actions are:
Issuer: PDVSA Finance Ltd.
- $400,000,000 6.45% Notes due 2004, rating confirmed at Caa1
- $300,000,000 6.65% Notes due 2006, rating confirmed at Caa1
- $300,000,000 6.80% Notes due 2008, rating confirmed at Caa1
- $400,000,000 7.40% Notes due 2016, rating confirmed at Caa1
- $400,000,000 7.50% Notes due 2028, rating confirmed at Caa1
- $400,000,000 8.750% Notes due 2004, rating confirmed at Caa1
- $250,000,000 9.375% Notes due 2007, rating confirmed at Caa1
- $250,000,000 9.750% Notes due 2010, rating confirmed at Caa1
- $100,000,000 9.950% Notes due 2020, rating confirmed at Caa1
- EURO 200,000,000 6.250% Notes due 2006, rating confirmed at
Caa1
- $500,000,000 8.50% Notes due 2012, rating confirmed at Caa1
***********
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
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or balance thereof are $25 each. For subscription information,
contact Christopher Beard at 240/629-3300.
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