/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030513.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, May 13, 2003, Vol. 4, Issue 93 Headlines A R G E N T I N A ACINDAR: Argentine S&P Issues Junk Ratings To Bonds AUTOPISTAS DEL SOL: S&P Rates $380M of Bonds `raD' CENTRAL COSTANERA: 1Q03 Financial Results Improve CENTRAL PUERTO: Fitch Confirms "Category 3" Stock Rating CRM: S&P Lowers Ratings on $150M Senior Unsecured Notes to 'D' HIDROELECTRICA PIEDRA: Fitch Assigns Default Ratings To Bonds IEBA: Fitch Confirms D(arg) Ratings On $230M Debentures IMAGEN SATELITAL: $80M of Bonds Rated `D(arg)' by Fitch INTERANDES: Fitch Rates Bonds `BBB(arg)-' INVERSORA ELECTRICA: Fitch Issues Corporate Bonds Junk Ratings LAPA: Industry Minister Presents Proposal MUPEBNA: Opens Recourse Period for Creditors ROYAL AHOLD: Likely To See LatAm Units Go On The Block First SANITARIOS GRAL. MOSCONI: Creditors Advised to Present Claims SOCIEDAD COMERCIAL: S&P Issues Default Ratings TERMOANDES: Fitch Rates $250 Million of Bonds `BBB(arg)-' B E R M U D A FOSTER WHEELER: 1Q03 Financial Results Show Modest Improvement GLOBAL CROSSING: US Official Lobbies For Sale Intervention TYCO INTERNATIONAL: Former Exec Authorized to Pay Taxes B R A Z I L AES CORP.: Closes $1.8B Senior Note Private Placement AES CORP.: Brazilian Unit Ownership Still Hangs In The Balance C H I L E ARTIKOS: Gets $6.5M Capital Injection From Shareholders G U A T E M A L A * S&P Lowers LTFC Rating on Guatemala to 'BB-', Stable Outlook M E X I C O ALESTRA: Extends Deadline for Debt Buyback Offer AZTECA HOLDINGS: Majority of Noteholders Agree to Exchange Terms DESC: Moody's Cuts Ratings; Initiates Review for Downgrade GRUPO ELEKTRA: Sells MXN600 Mln In Debt to Improve Debt Profile GRUPO MEXICO: Predicts Better Copper Prices To Improve Cashflow TFM: Completes Purchase of 51% of Mexrail P E R U MINERA VOLCAN: Potential Partner To Submit Proposal This Week SIDER: Indecopi Okays Bankruptcy Filing U R U G U A Y * Moody's Affirms Uruguay's `B3' Ratings, Negative Outlook V E N E Z U E L A CANTV: Mulling Extension Talks With Debt-Holders HOVENSA: Fitch Removes 'BBB-' Rating From Negative Watch Status PDV AMERICA/CITGO: Ratings Improve, Off CreditWatch PDVSA: Enbridge Seeks Int'l Arbitration To Resolve Dispute - - - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Argentine S&P Issues Junk Ratings To Bonds --------------------------------------------------- The Argentine branch of Standard & Poor's International Ratings, Ltd moved corporate bonds issued by Acindar Industria Argentina de Aceros S.A. into junk rating territory. According to the National Securities Commission of Argentina, the ratings agency issued an `raD' rating to US$100 million of corporate bonds described as "Obligaciones Negociables simples, no convertibles en acciones, autorizadas por AGOyE de fecha 5.8.96," maturing on Feb 16, 2004. The affected bonds were classified under "Simple Issue." Standard & Poor's said that an obligation is rated `raD' when it is in payment default, or if the obligor has filed for bankruptcy. The same rating may also be used when interest or principal payments are not made on the date due, even if the applicable grace period has not expired, unless the ratings agency believes that such payments will be made during such grace period. Meanwhile, Acindar's equity known as "Acciones Ordinarias en circulaci¢n Clase B de 1 voto c/u, V/N $1," were given a rating of `3'. Both ratings were issued last Monday, and were based on the Company's finances as of December 31, 2002. CONTACT: Acindar Industria Argentina de Aceros SA 2739 Estanislao Zeballos Beccar Buenos Aires Argentina B1643AGY Phone: +54 11 4719 8500 Fax: +54 11 4719 8501 Home Page: http://www.acindar.ar.com Contact: Arturo Tomas Acevedo, Chairman AUTOPISTAS DEL SOL: S&P Rates $380M of Bonds `raD' -------------------------------------------------- A total of US$380 million in corporate bonds were issued junk ratings by Standard & Poor's International Ratings, Ltd. Sucursal Argentina last Monday. The bonds, which the National Securities Commission described as "Obligaciones Negociables simples, autorizadas por AGO de fecha 16.5.97," were rated `raD'. The ratings agency said that such ratings are issued when the obligation is in payment default or when the obligor has filed for bankruptcy. It may also be issued if the Company fails to make interest or principal payments on the due date, even if the grace period has not expired, except when S&P sees reason to believe the payments will be made during such grace period. The ratings made were based on the Company's financial performance as of the end of December 2002. Some US$170 million of the affected bonds matures on August 2, 2004, while the rest matures on August 3, 2009. Both set of bonds were classified under "simple issue." CENTRAL COSTANERA: 1Q03 Financial Results Improve ----------------------------------------------------- Argentine thermoelectric generation company Central Costanera reported net income of ARS23.7 million ($1=ARS2.755) for the first quarter of this year, reversing a ARS70.7-million loss in the same year-ago period. According to Dow Jones, better results were attributed to some financial adjustments that were enhanced by the recent increase in the value of the peso against the dollar. Net sales, however, fell 20.6% from ARS111.2 million the first quarter of 2002 to ARS88.3 million in the latest quarter, and operating profit was only slightly higher than the previous period at ARS42.3 million, compared with last year's ARS41.1 million. The Company reported a net financial and holding loss on its assets and liabilities of ARS20.5 million, which marked a significant improvement from the loss of ARS111.8 million in March 31, 2002. Included in this was an exchange gain of ARS7.4 million on its liabilities, compared with a loss of ARS193.5 million in the first quarter of 2003 and a reduction in interest expense to ARS16.4 million from ARS21.4 million that was mostly explained by the inflation adjustment. It also included an exchange rate loss of ARS11.4 million on its assets, compared with a gain of ARS81.6 million in 2002. Central Costanera is majority-owned by Chilean generator Endesa Chile. CENTRAL PUERTO: Fitch Confirms "Category 3" Stock Rating -------------------------------------------------------- The Argentine office of credit rating agency Fitch Ratings confirmed its "Category 3" rating for shares in thermo power generator Central Puerto. Citing a Fitch statement, Business News Americas says the rating reflects low cash generation capacity and the high illiquidity of shares in the Company. The utility saw a 31% decline in sales by volume last year compared to 2001 because of lower demand, higher hydro availability. Failure to renew certain sales contracts also contributed to the slump. In February 2002, Central Puerto suspended payments on interest and capital. Currently, the Company has some US$220 million in expired and unpaid debt. Total debts stand at US$337 million. Central Puerto is 63.9% owned by France's TotalFinaElf, and together with its subsidiaries has 2,165MW installed capacity, accounting for 10% of Argentina's thermo generation. CONTACTS: CENTRAL PUERTO Jacques Chambert Loir, CEO 2701 Avenida Tomas A Edison Buenos Aires, Argentina Phone +54 1 317 5074 Home Page http://www.centralpuerto.com CRM: S&P Lowers Ratings on $150M Senior Unsecured Notes to 'D' -------------------------------------------------------------- Standard & Poor's Ratings Services said Friday it lowered its rating on Compa¤¡a de Radiocomunicaciones M¢viles S.A.'s (CRM) US$150 million 9.25% senior unsecured notes due 2008, to 'D' from 'CC', after the company missed interest payments for US$6.9 million on these notes on May 8, 2003. The local and foreign currency corporate credit ratings on the Argentine mobile provider remain at 'D'. "The mismatch between CRM's dollar-denominated debt and peso- denominated revenues, its weakened cash generation ability, and limited financial flexibility in the current economic environment are the main drivers for the company's current default," said Standard Poor's credit analyst Ivana Recalde. In January 2003, CRM announced its decision to suspend principal and interest payments on its financial obligations, in order to preserve liquidity to continue funding its operations, and to restructure the terms of the debt to adapt them to the company's expected cash generation. As of December 2002, CRM's debt amounted to US$504 million, including the US$150 million rated notes and two syndicated loans for a total of US$268 million. CRM is 65% owned by BellSouth Corp. (A+/Stable/A-1), 25% by Motorola Inc. (BBB/Stable/A-2), and the remaining 10% is held by other minority shareholders. ANALYSTS: Ivana Recalde, Buenos Aires (54) 114-891-2127 Marta Castelli, Buenos Aires (54) 114-891-2128 HIDROELECTRICA PIEDRA: Fitch Assigns Default Ratings To Bonds ------------------------------------------------------------- Fitch Argentina Calificadora assigned `D(arg)' ratings to Hidroelectrica Piedra del Aguila S.A.'s corporate bonds, said the National Securities Commission of Argentina. The ratings, issued on May 02, were based on the Company's financial health as of the end of 2002. The default ratings applies to the following bonds: -- US$97.3 million of "Clase I dentro del Programa de US$ 300 milliones" -- US$97.3 million of "Clase II dentro del Programa de US$ 300 milliones" -- US$62.5 million of "Clase III dentro del Programa de US$ 300 milliones" -- US$62.5 million of "Clase IV dentro del Programa de US$ 300 milliones" -- US$62.5 million of "Clase V dentro del Programa de US$ 300 milliones" The maturity dates of the bonds were not indicated, and all of them are classified under "Series and/or Class." Fitch said that the ratings are issued to financial obligations that are currently in default. IEBA: Fitch Confirms D(arg) Ratings On $230M Debentures ------------------------------------------------------- The Argentine arm of credit rating agency Fitch Ratings announced it was leaving its D(arg) local scale ratings unchanged for US$100 million class A debentures and US$130 million class B debentures issued by investment group Inversora Electrica de Buenos Aires (IEBA), Business News Americas reports, citing a Fitch statement. The ratings reflect the Company's non-payment of capital and interest on the debentures since March 2002. IEBA's financial condition started to dwindle after Buenos Aires province-based distributor Edea, upon which it owns a controlling stake, saw its cash flow fall sharply because of Argentina's reduced power demand, as well as the pesofication and freezing of rates. Edea is IEBA's only source of income, Business News Americas reveals. IMAGEN SATELITAL: $80M of Bonds Rated `D(arg)' by Fitch ------------------------------------------------------- Imagen Satelital's corporate bonds were issued default ratings, said the National Securities Commission of Argentina. The affected bonds were worth a total of US$80 million with an undisclosed maturity date. Fitch Argentina Calificadora de Riesgo S.A. assigned a rating of `D(arg)' to the said bonds on May 02, based on the Company's financial status as of December 31, 2002. The ratings agency said that such ratings are assigned to bonds that are currently in default. The bonds were classified under "Simple Issue" and described as "Obligaciones negociables." Imagen Satelital is a subsidiary of Claxson Interactive Group, Incorporated. INTERANDES: Fitch Rates Bonds `BBB(arg)-' ----------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. rated corporate bonds issued by Interandes S.A. `BBB(arg)-' on May 02. The bonds, described as "Obligaciones Negociables" were classified under "Program." The rating denotes an adequate credit risk relative to other issues in Argentina. However, Fitch said changes in circumstances or economic conditions may affect the capacity for timely repayment of these financial commitments than for financial commitments denoted by a higher rated category. The `-' modifier of the rating shows a relative status within a major rating category. The issued rating was based on the Company's financial standing as of the end of 2002. It affects US$50 million worth of bonds whose maturity date was not indicated. INVERSORA ELECTRICA: Fitch Issues Corporate Bonds Junk Ratings -------------------------------------------------------------- Bonds issued by Inversora Electrica de Buenos Aires S.A. were moved into junk territory on May 02, said the National Securities Commission of Argentina. Fitch Argentina Calificadora de Riesgo S.A. rated a total of US$240 million of corporate bonds `D(arg)', based on the Company's finances as of the end of December 2002. The affected bonds include US$100 million worth of "Obligaciones Negociables Clase A" and US$140 million of "Obligaciones Negociables Clase B." Both set of bonds were classified under "Series and /or Class", and their maturity dates were not indicated. Fitch said that such ratings are issued to obligations that are currently in payment default. LAPA: Industry Minister Presents Proposal ----------------------------------------- In an effort to resolve Argentine airline LAPA's conflicts, Industry Minister Anibal Fernandez presented a proposal that would see the state owning the airline but with the intention of selling it in the future to a private investor. However, according to an Infobae report, implementing the proposal will take at least a couple of months. The airline will also need additional planes to get the proposal working. The report suggests that it's still unclear who will continue to take responsibility for the employees' salaries. LAPA filed for protection from creditors in May 2001 due to increasing costs of fuel, excessive taxes and the recession plaguing the region. The filing listed debts of US$130 million to local bank units of Citibank (C), BBVA Banco Frances (BBV), Banco BanSud and Banco Rio. The airline also owed around US$52 million to energy company Repsol YPF SA; Royal Dutch Shell; Exxon Mobile Corp; Aeropuertos 2000, the concession that runs most of Argentina's airports; and the Argentine air force for airspace fees. MUPEBNA: Opens Recourse Period for Creditors -------------------------------------------- "Concurso Preventivo" has been opened for Argentine bank, Mutual del Personal del Banco de La Naci¢n Argentina y Entidades Financieras (MUPEBNA), reports local paper, La Nacion. Creditors are required to present their claims on or before June 27, 2003 to: Sindico Dr. Lauferman, Silvio Ernesto Av. Callao 499 Piso 11 `A' Federal Capital The bank's case is handled by the "Juzgado Nacional de Primera Instancia en lo Comercial No. 11." In charge is Dr. Miguel F. Bargallo, Secretary No. 21. ROYAL AHOLD: Likely To See LatAm Units Go On The Block First ------------------------------------------------------------ Analysts believe that Royal Ahold NV, the world's third-largest retailer, will put its Latin American units on the block first in a bid to sell assets to cut spending and alleviate a debt load equal to more than twice the Company's market value. "Getting rid of Latin America would be the first move," said Arnold Gast, who helps manage the equivalent of $2.3 billion at Theodoor Gilissen Bankiers in Amsterdam. "That could be a substantial first step." Royal Ahold has 429 supermarkets in Argentina, Brazil, Peru and Paraguay. Last year, the units had a combined revenue of EUR2.34 billion. Ahold is in talks to sell its Chilean unit. According to a report by Bloomberg, Ahold is aiming to reverse a series of acquisitions that cost more than US$19 billion over the past decade. Chief Executive Officer Anders Moberg, appointed last week, said the Company will consider the sale of any Ahold business. "I can imagine the new CEO saying that consolidation of current businesses is priority No. 1, said Han van Lamoen, an analyst at FBS Bankiers NV. 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 SANITARIOS GRAL. MOSCONI: Creditors Advised to Present Claims ------------------------------------------------------------- On April 2, 2003, "Concurso Preventivo" opened for Sanitarios Gral. Mosconi, reports local paper El Clarin. Creditors are required to present their claims by July 07, 2003 to: Cr. Luis Alberto Claom, CI N 10.547.528 Bernardo de Irigoyen No. 1554, Zarate City, Buenos Aires Phone: (005411) 3487-420815 The case is handled by the Nacional Civil and Commercial Court of First Intanc of the Justice Department of Zarate-Campana, under Dr. Osvaldo C. Henricot. Court Secretary is Dr. Roberto Crussoni. SOCIEDAD COMERCIAL: S&P Issues Default Ratings ---------------------------------------------- The Argentine branch of Standard & Poor's International Ratings, Ltd. issued default ratings to corporate bonds issued by Sociedad Cinercial del Plata S.A.. According to the National Securities Commission of Argentina, the following bonds were rated `raD': -- US$400 million worth of "obligaciones negociables", classified under "program", but maturiy date is not indicated. -- US$60 million of "Serie 4, emitida bajo Progr. Global de Obligaciones Negociables por U$S 400 Millones", classified under "Series and\or Class," due on December 21, 2002. -- US$125 million of "Serie 6, emitida bajo Progr. Global de Obligaciones Negociables por un monto de U$S 400 Millones", classified under "series and/or class." Maturity date is not indicated. --US$40 million of "Serie 7, emitida bajo el Progr.Global de Obligaciones Negociables por un monto de U$S 400 Millones," under "series and / or class", but undisclosed maturity date. -- US$25 million of "Serie 8, emitida bajo el Progr. Global de Obligaciones Negociables por un monto de U$S 400 Millones", classified under "series and/or class", matured in August 2002. Concurrently, the Company's shares, described as "" Aciones en Circulacion de 1 voto c/u, de V/N $ 10" were rated `4' by the agency. TERMOANDES: Fitch Rates $250 Million of Bonds `BBB(arg)-' --------------------------------------------------------- Fitch Argentina Calificadora de Riesgo S.A. issued a `BBB(arg)-' ratings to Termoandes S.A.'s corporate bonds on Wednesday, said the National Securities Commission of Argentina. The affected bonds are described as "obligaciones negociables," and will expire on January 11, 2009. The bonds, worth a total of US$250 million, were classified under "program." The `BBB(arg)-' denote an adequate credit risk relative to other issues in Argentine. However, said Fitch, changes in circumstances or economic conditions are more likely to affect the capacity for timely repayment of these financial obligations to a greater degree than for financial commitments denoted by a higher rated category. The `-' sign denotes a negative implication. The rating issued was based on the Company's finances as of the end of December 2002. ============= B E R M U D A ============= FOSTER WHEELER: 1Q03 Financial Results Show Modest Improvement -------------------------------------------------------------- Foster Wheeler Ltd. (NYSE: FWC) -- Cash position increased -- Sale of Foster Wheeler Environmental Corporation assets completed -- Restructuring continues on plan Foster Wheeler Ltd. (NYSE: FWC) reported Friday a net loss for the first quarter of 2003 of $19.8 million, or $0.48 per share diluted, compared to a net loss of $176.1 million, or $4.30 per share diluted, for the same quarter last year. Revenues for the first quarter of 2003 totaled $810.9 million compared to $806.0 million in the first quarter of last year. Higher revenues in the European engineering and construction and energy businesses more than offset slowdowns in the North American operating units and the reduced revenues resulting from selling substantially all of the assets of Foster Wheeler Environmental Corporation (FWENC) in early March. "One of our key goals for 2003 is to generate operating EBITDA, which we expect to be approximately 30 percent higher than the average we achieved over the last three years, and the first- quarter operating results are on track. However, this quarter also included a significant level of planned restructuring spending," said Raymond J. Milchovich, chairman, president and chief executive officer. "Our cash balance increased during the quarter, although we anticipate some level of future outflows due to the timing of cash flows for certain projects in our portfolio." The net loss for the first quarter included several items related to the company's realignment of its operations. The company completed the sale of substantially all of the assets of FWENC and recognized a gain of $15.3 million and charges of $21.1 million for revisions to the estimates on environmental contracts that were retained. In addition, $18.4 million of planned pre-tax expenses were incurred this quarter for professional fees, severance and other expenses related to the company's ongoing restructuring. Cash balances worldwide at the end of the quarter were $473 million, compared to $429 million at year-end, and $423 million at the end of the first quarter of 2002. As of March 28, 2003, the company's indebtedness was $1.1 billion, essentially unchanged from year-end 2002 and the end of the first quarter of 2002. On March 7, 2003, the company received approximately $80 million in net cash proceeds from the FWENC transaction. During the quarter, the company's operations used $17 million of cash, primarily due to the anticipated outflows related to projects for which substantial advances had been received during 2002. Bookings and Segment Performance New orders booked during the first quarter of 2003 were $476.3 million compared to $792.8 million in the first quarter of last year. The company's backlog was $3.5 billion, compared to $6.0 billion at the end of the first quarter of 2002. During the first quarter of 2003, $1.7 billion was removed from the backlog, representing the orders sold with the assets of the environmental business. "The decrease in the company's backlog is primarily due to soft market conditions and the FWENC sale," added Mr. Milchovich. "However, current backlog is not directly comparable with backlog in prior periods, which included a number of problem projects and did not serve as an adequate measure of future profits. As a result of the contracting and project management initiatives that were put in place early last year, we are highly confident that the quality of our existing backlog will support our 2003 operating plan." First-quarter new bookings for the Engineering and Construction Group (E&C) were $262.8 million, compared to $383.3 million during the year-ago quarter. The decline was due to the absence of bookings from the company's environmental assets sold during the quarter. The Group's backlog was $2.2 billion, compared to $4.3 billion at quarter-end 2002. Backlog was reduced by $1.7 billion to account for the environmental asset sale. Revenues for E&C grew from $421.1 million in last year's first quarter, to $482.8 million in the first quarter of 2003, mainly due to increases in Continental Europe. Excluding costs of $8.6 million for the environmental transactions and restructuring items described above, earnings before interest, taxes, depreciation and amortization (EBITDA) were $20.7 million this quarter, compared to $24.6 million for the same period last year. New bookings in the first quarter for the Energy Group declined to $210.1 million, compared to $414.0 million in the year-ago quarter, mainly due to weakness in the North American power market. Backlog at quarter-end was $1.3 billion, compared to $1.6 billion at quarter-end 2002. Energy Group revenues for the quarter were $326.4 million, compared to $387.4 million in the same quarter of 2002. EBITDA for the quarter was $30.5 million compared to EBITDA of $11.6 million last year, which included special charges of $24.7 million. Improved revenues and EBITDA in the company's Finnish subsidiary were offset by weakness in the U.S. power operations. To see financial statements: http://bankrupt.com/misc/Foster_Wheeler.htm CONTACT: Foster Wheeler Ltd. Media Contact: Richard Tauberman, 908/730-4444 or Shareholder Contact: John Doyle, 908/730-4270 or Other Inquiries: 908/730-4000 GLOBAL CROSSING: US Official Lobbies For Sale Intervention ---------------------------------------------------------- A U.S. lawmaker is calling on the government to intervene in a plan by bankrupt telecommunications company Global Crossing Ltd. to sell a controlling stake to Singapore Technologies Telemedia Pte., reports Reuters. Global Crossing had originally planned to split the US$250 million, 61.5% stake sale between ST Telemedia and Hong Kong- based Hutchison Whampoa Ltd. But Hutchison walked away from the deal last month after U.S. national security officials balked at its ties to China. Singapore Technologies is a unit of Temasek Holdings Ltd., the investment arm of the Singapore government. Now, Democrat Rep. Edward Markey wants the U.S. government to intervene in the planned transaction, saying that it is contrary to U.S. interests. "Our government has to intervene in the Global Crossing acquisition issue," Markey said during a House Energy and Commerce Committee trade subcommittee hearing into free trade agreements with Singapore and Chile. "U.S. companies will have to end up competing with companies owned by the government of Singapore," complained Markey. U.S. law restricts the purchase of a U.S. telecommunications company by a company that is owned or controlled by a foreign government. In response, ST Telemedia spokeswoman Haidee Schwartz said it acts independently of the government and that the transaction was supported by current U.S. policies as well as past precedent. "Singapore Technologies Telemedia operates as an independent commercial company and does not receive any subsidy from the Singapore government," said Schwartz. "The Singapore government does not exercise any control over how ST Telemedia conducts its commercial business." 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 TYCO INTERNATIONAL: Former Exec Authorized to Pay Taxes ------------------------------------------------------- Former Tyco International Ltd. finance chief Mark Swartz, accused of looting the Company and tax evasion, received court permission to tap his investment accounts to pay federal and state tax bills totaling $12.7 million, reports Reuters. Swartz, who was Tyco's chief financial officer until 2002, received court approval last month to pay $10.5 million to federal tax authorities in connection with his 2002 and 2003 personal income tax obligations, court papers show. He owed another $2.2 million to the state of New York for 2002. Last September, a New York grand jury in Manhattan indicted Swartz and former Tyco chairman Dennis Kozlowski on charges they looted Tyco of $600 million through unauthorized pay and fraudulent stock sales. A New York judge granted a temporary restraining order against the former Tyco executives that prevents them from spending any of their assets without court permission. Justice Martin Shulman of the Supreme Court for the state of New York granted Swartz permission to pull $2.2 million from a Merrill Lynch account and another $10.5 million from an account at Wachovia Bank. Swartz claims Tyco should reimburse him for his New York taxes but wants to pay the amount to stop interest from accruing. The Tyco reimbursement is in dispute, according to court papers. In February, a New Hampshire grand jury indicted Swartz on a single count of tax evasion, accusing him of filing a federal tax return that failed to report a $12.5 million Tyco bonus he received in 1999. The charge says he evaded nearly $5 million in federal income tax on his tax return for 1999. The New Hampshire trial is set for July 8, and the New York trial is expected to begin in September. Swartz has pleaded not guilty to the charges in both cases. =========== B R A Z I L =========== AES CORP.: Closes $1.8B Senior Note Private Placement ----------------------------------------------------- The AES Corporation (NYSE:AES) announced that it completed its private offering of $1.8 billion of second priority senior secured notes. The notes were issued in two tranches: $1.2 billion of 8.75% Second Priority Senior Secured Notes due 2013 and $600 million of 9.00% Second Priority Senior Secured Notes due 2015. AES also announced that the tender offer for its senior subordinated notes had expired and that it had purchased approximately $104 million face amount of senior subordinated notes pursuant to the tender offer. The proceeds from the private offering were used to purchase the senior subordinated notes in the tender offer and to repay $475 million under AES's senior secured credit facilities, and will also be used to purchase approximately $1.1 billion face amount of senior notes in the tender offer and for general corporate purposes. The transactions substantially eliminate all scheduled parent maturities at AES until 2005, improve financial flexibility and parent liquidity, and lengthen the average life of AES's parent debt maturities. Barry Sharp, Chief Financial Officer, stated, "The completion of these transactions is another major step in AES's plan to strengthen the balance sheet, improve financial flexibility and increase liquidity. We sincerely appreciate the support and the confidence expressed by our lenders and investors." 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 158 facilities totaling over 55 gigawatts of capacity, in 28 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. CONTACT: AES Corporation Kenneth R. Woodcock, 703/522-1315 AES CORP.: Brazilian Unit Ownership Still Hangs In The Balance -------------------------------------------------------------- May 14 marks the start of negotiations between AES Corp. and Brazil's state development bank to resolve a dispute stemming from debt defaults, Bloomberg reports. AES chief restructuring officer, Joseph Brandt, will represent the Company in the talks "Both sides are looking to Wednesday as an important day," Brandt said, adding, "They will be the penultimate talks." He expects an agreement by the end of next week. BNDES has revealed plans to auction AES Corp.'s controlling stake in Eletropaulo Metropolitana SA, moving a step closer to seizing Latin America's biggest power distributor. The bank plans to arrange the sale of 70% of Eletropaulo's voting shares owned by AES Elpa, one of two holding companies that defaulted on loans taken out to buy the utility, said Carlos Lessa, the bank's president. "We are still open to any proposals they have to pay us," Lessa said in a news conference. "Until now, we've seen a lot of proposals from them but none has met our principal requirement, getting paid back." The auction will take at least 107 days to arrange, and AES could try to block it in court, Lessa said. BNDES is hoping to raise cash from the share auction should talks fail, an analyst said. "A promissory note from AES gives them nothing," said Christopher Ellinghaus, an analyst at Williams Capital Group, who rates AES shares `buy' and owns less than 600 of them. If BNDES sells the Eletropaulo shares "then they'll have money to lend for other proposed development in Brazil." CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations ========= C H I L E ========= ARTIKOS: Gets $6.5M Capital Injection From Shareholders ------------------------------------------------------- Chilean e-marketplace Artikos (www.artikos.cl) boosted its total equity to ARS7 billion after two investors injected ARS4.5 billion (US$6.5 million) in cash into the Company, reports Business News Americas. The cash injected by Chilean banks BCI and Banco de Chile will go to finance the Company's expansion and investment for the next few years. Meanwhile, Artikos also reported US$86 million in transaction volume in 2002. The number of transactions for the first quarter this year was up 10% on year, at 45,000. Clients now number 1,200, and Artikos has alliances with Microsoft, Soluziona, Prego, Pivotal and iXcatalog, among other companies. The e-marketplace, which was launched in September 2001 on a 50/50 US$9 million investment by BCI and Banco de Chile, offers an integrated solution to facilitate the commercial and financial aspects of the business relationship between buyers and sellers. Specifically, Artikos focuses on the development and operation of e-commerce services. ================= G U A T E M A L A ================= * S&P Lowers LTFC Rating on Guatemala to 'BB-', Stable Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services said Friday that it lowered its long-term local currency sovereign credit rating on the Republic of Guatemala to 'BB' from 'BB+' and its long-term foreign currency sovereign credit rating to 'BB-' from 'BB'. Standard & Poor's also affirmed its 'B' short-term ratings on the republic. The outlook on the long-term ratings was revised to stable from negative. The downgrade reflects the negative effects of political polarization on the government's implementation of economic policy. An intransigent relationship between the government and the opposition, exacerbated by the upcoming November elections, has prevented meaningful discussion of economic policy. "With the exception of the significant progress made in strengthening the financial system, the current political rift has shifted policymakers' focus away from the critical responsibility of reforming the structural economic deficiencies that constrain medium-term economic growth," said sovereign analyst Sebastian Briozzo. "Guatemala is experiencing its third year of negative per capita GDP growth despite several years of macroeconomic stability, and exports to GDP have actually dropped since 2000. Providing for economic expansion is critical in Guatemala, a country with extremely high economic and social needs," he added. According to Mr. Briozzo, the level of political confrontation is unlikely to either ebb as the presidential election nears or moderate significantly thereafter, given the magnitude of the divide between different political groups. Nonetheless, the stable macroeconomic framework-with low fiscal deficits, declining inflation, and a stable exchange rate-and the almost certain renewal of the International Monetary Fund (IMF) agreement that expired on March 31, 2003, limit the effects of the political discord on creditworthiness. "Despite recent difficulties, Standard and Poor's expects the government to cover its financing gap-albeit at relatively higher interest rates," noted Mr. Briozzo. While an electoral year could add expenditure pressures, Guatemala's fiscal accounts have already shown reasonable levels of flexibility: the public sector deficit accounted for only 1% of the GDP in 2002, the country more than satisfied IMF's fiscal and international reserves targets in 2002, and debt levels remain low, with public sector debt accounting for only 22% of GDP," he said. According to Standard & Poor's, the current ratings and stable outlook on Guatemala balances political strain with a sound macroeconomic framework and low debt levels. While Standard and Poor's does not expect the political situation to improve significantly over the next year, the IMF agreement (over the short term) and prospects of a free trade agreement with the U.S. (over the medium term) will somewhat offset the negative effects of political developments on advances in the policymaking framework. The Guatemalan government still needs to finance most of its only moderate financing gap in 2003, estimated at US$600 million (about 2.6% of GDP). While Standard and Poor's assumes that the government will be able to satisfy its financing needs, the ratings could come under pressure if political tensions inhibit the government's access to the financial markets. ANALYSTS: Sebastian Briozzo, New York 212-438-7342 Jane Eddy, New York (1) 212-438-7996 =========== M E X I C O =========== ALESTRA: Extends Deadline for Debt Buyback Offer ------------------------------------------------ Alestra, S. de R.L. de C.V., a Mexican long distance and datacoms operator, extended the deadline for its debt buyback offer to May 21 from May 7. Business News Americas recalls that the offer applies to US$270 million of 12 1/8% Senior Notes due 2006, and US$300 million of 12 5/8% Senior Notes due 2009. Alestra is offering to buyback each US$1,000 of principal amount for US$400, or US$430 if bondholders give early consent. To date, the offer has been accepted by investors holding US$143 million of the 2006 notes and US$95 million of the 2009 notes. A group of creditors represented by UBS Warburg, Fintech and Huff is holding out in the hope of negotiating a US$500 payback for each US$1,000. Instead of cashing in the debt, bondholders also have the option of reducing the interest rate to 5%, plus a two-year maturity extension with interest set at 7%, so the notes would mature in 2008 and 2011, respectively. Alestra is 49% owned by AT&T and 51% by Onexa - a 50:50 joint venture between local bank BBVA Bancomer and Mexican industrial group Alfa. 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. AZTECA HOLDINGS: Majority of Noteholders Agree to Exchange Terms ---------------------------------------------------------------- Azteca Holdings, S.A. de C.V., the controlling shareholder of TV Azteca, S.A. de C.V., one of the two largest producers of Spanish language television programming in the world, announced Friday that a majority of the holders of its 10-1/2% Senior Secured Notes due 2003 agreed to exchange their existing notes for new 10-3/4% Senior Secured Amortizing Notes due 2008 and gave their consent to amendments to the terms and conditions of the 10-1/2% notes. As of 5:00 p.m. on May 9, 2003, the expiration date of the exchange offer and the consent solicitation, approximately US$80,082,000 in aggregate principal amount of the 10-1/2% notes had been tendered for exchange; the exact amount is subject to final verification. On the exchange date, the outstanding principal amount of the 10- 1/2% notes will be reduced to approximately US$69,918,000 and a supplemental indenture implementing the amendments consented to by the tendering holders of the 10-1/2% notes will be executed. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the new 10-3/4% notes, nor shall there be any sale of the new 10-3/4% notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The exchange offer and consent solicitation are being made pursuant to an Offering Memorandum and Consent Solicitation Statement dated March 3, 2003, as supplemented by that certain Supplement to the Offering Memorandum and Consent Solicitation dated April 25, 2003, and the related Letter of Transmittal and Consent, which more fully set forth the terms and conditions of the exchange offer and consent solicitation. Company Profile Azteca Holdings, S.A. de C.V. is a holding company whose principal asset is 55.5% of the capital stock of TV Azteca, S.A. de C.V. TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca's affiliates include Azteca America Network, a broadcast television network focused on the rapidly growing United States Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. CONTACT: AZTECA HOLDINGS, S.A. DE C.V. Diego Oyo +5255-3099-1333 Web site: http://www.tvazteca.com.mx DESC: Moody's Cuts Ratings; Initiates Review for Downgrade ---------------------------------------------------------- Moody's Investor Service downgraded its ratings for Desc S.A. de C.V. and initiated a review for possible further downgrade of the Company's ratings. The following ratings were downgraded: - US$73 million (of US$150 million original issuance by Dine subsidiary) Gtd Sr Unsec Notes due 2007 -- to Caa1 from B2 - Senior Implied Rating -- to B2 from Ba3 - Senior Unsecured Issuer Rating -- to Caa1 from B2 The downgrades, according to Moody's, reflect continued deterioration in the operating performance of the Company, weak liquidity, near-term refinancing risk and correspondingly heightened default risk over the intermediate term. Desc has short-term debt obligations of US$250 million due this year, with another US$125 million of maturities in 2004. Moreover, Moody's expects the Company to operate at breakeven or slightly negative free cash flow levels through at least 2004. With an estimated US$100 million in cash and US$200 million in undrawn credit lines including a committed portion of US$100 million, the ability to draw under which may be increasingly suspect given the ongoing technical defaults under the existing syndicated facilities, refinancing risk remains quite high. The Company continues to explore the possibility of selling some non-core assets and hopes to realize as estimated US$100-to-$200 million in proceeds, nonetheless. Headquartered in Mexico City, Desc is a diversified industrial conglomerate with operations in the autoparts, chemical, food and real estate sectors. The Company reported annual revenues of US$2 billion and EBITDA of US$234 million for fiscal year 2002. CONTACTS: Marisol V zquez-Mellado Alejandro de la Barreda / Carolina Rend›n Tel.: (5255) 5261 8037 abarredag@mail.desc.com.mx GRUPO ELEKTRA: Sells MXN600 Mln In Debt to Improve Debt Profile --------------------------------------------------------------- Grupo Elektra S.A. de C.V. (NYSE: EKT, BMV: Elektra*), Latin America's leading specialty retailer, consumer finance and banking services company, announced Friday that it successfully placed Ps. 600 million in unsecured short-term Certificados Burs tiles. The issue has a total term of 343 days and yields a rate of interest of TIIE+190 basis points per annum (TIIE is the inter-bank peso rate). Scotia Inverlat Casa de Bolsa and Acciones y Valores de M‚xico Casa de Bolsa were the placement agent and syndicate, respectively, on the issue. These resources will be used towards the achievement of its financial strategy for 2003. The main objectives of this strategy are to pre-pay expensive debt and to reduce the exposure to fluctuations in the foreign exchange, therefore ultimately improving Grupo Elektra's debt profile. Grupo Elektra's Certificados Burs tiles issue carries one of the highest credit ratings --"F2(mex)"-- from Fitch Mexico for local currency issues. Rodrigo Pliego, Chief Financial Officer of Grupo Elektra, commented, "The positive reception of our new short-term program is an indication of the trust the market has built upon the Company, supported by our excellent track record. Investors feel increasingly comfortable with our debt instruments as shown by the demand placed for this program which easily surpassed our initial expectations." GRUPO MEXICO: Predicts Better Copper Prices To Improve Cashflow --------------------------------------------------------------- Grupo Mexico hopes to increase its cashflow by 50% to US$400 million, according to local paper El Financier. The Company is likely to achieve this goal as copper prices rise and its debt is being restructured. The Company's vice-president of international relations Juan Rebolledo Gout said that conditions are expected to improve as long as the Company is able to sell at 950,000 tons of copper at US$0.75 per pound. Business News Americas said that the Company is relying on an average copper price of US$0.75 per pound next year. The report added that recovery may be slow this year, but is expected to climb n 2004. TFM: Completes Purchase of 51% of Mexrail ----------------------------------------- Kansas City Southern (KCS) (NYSE:KSU) and Grupo TMM, S.A. (Grupo TMM) announced Friday that in accordance with the Mexrail Stock Purchase Agreement entered into on April 20, 2003, KCS has finalized the purchase of 51% of the Mexrail stock from TFM, S.A. de C.V. (TFM). KCS has placed the stock into an Independent Voting Trust pending approval by the U.S. Surface Transportation Board (STB) of KCS's common control of the Texas Mexican Railway Company (Tex-Mex; Mexrail's wholly owned subsidiary), The Kansas City Southern Railway Company (KCSR), and the Gateway Eastern Railway Company (GWER). Kansas City Southern already indirectly owned a significant minority interest in Mexrail through its ownership interest in TFM, which had wholly owned Mexrail before this transaction. As a result of today's transaction, KCS will own 51% of Mexrail, but its controlling ownership will be in trust pending approval by the STB of the common control application. KCS holds an option to acquire the remaining 49% of Mexrail from TFM. KCS anticipates filing its common control application soon. As previously announced, KCS paid $32,680,000 for the Mexrail shares. The purchase was financed by KCS from its existing cash. Thomas F. Power, Jr., former president and chief executive officer of the Wisconsin Central Transportation Corporation, has been named as trustee of the Independent Voting Trust and will exercise control over Mexrail and Tex-Mex until the trust is dissolved and KCS has received approval by the STB of its common control application. James Riney will continue as Tex-Mex general manager. KCS believes that the transaction should be treated as a "minor" transaction under current STB procedures, since it only involves common control of a Class I (KCSR), Class II (Tex-Mex) and Class III (GWER) carrier in an end-to-end manner, with no reductions in the number of carriers serving any customers. KCS is a transportation holding company that has railroad investments in the United States, Mexico, and Panama. Its primary holding is The Kansas City Southern Railway Company. Headquartered in Kansas City, Missouri, KCS serves customers in the central and south central regions of the U.S. KCS's rail holdings and investments are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States, Canada, and Mexico. Headquartered in Mexico City, Grupo TMM is the premier Mexican multimodal transportation company and logistics provider. Through its branch offices and network of subsidiary companies, Grupo TMM provides a dynamic combination of ocean and land transportation services within Mexico. Grupo TMM also has the controlling interest in TFM, which operates Mexico's Northeast Rail Lines and carries over 40 percent of the country's rail cargo. CONTACT: KANSAS CITY SOUTHERN William H. Galligan, 816/983-1551 william.h.galligan@kcsr.com ======= P E R U ======= MINERA VOLCAN: Potential Partner To Submit Proposal This Week ------------------------------------------------------------- Peruvian zinc miner Volcan expects an unnamed party interested in becoming a strategic partner of the Company to submit its proposal this week after it completed an "analysis phase," according to business daily Gestion. Volcan did not name the interested party but widespread speculation has tagged Brazilian metals company Votorantim Metais (VM) to be the interested party. Last month, Volcan's board gave authorization to VM to have access to company information and visit its production units to allow the Brazilians to evaluate whether to become a company shareholder. Formerly the country's largest zinc producer until hit by financial difficulties in light of weak commodity prices, Volcan operates the Yauli unit in central Peru's Junin department and Cerro de Pasco unit in Pasco department. CONTACT: COMPANIA MINERA VOLCAN Av Gregorio Escobedo 710 Jesus Mara Lima, Peru Tel: +51 1 219-4000 Fax: +51 1 261-9716 Contact: Mr. FMG Sayan (Francisco), Chairperson SIDER: Indecopi Okays Bankruptcy Filing --------------------------------------- Sider Corp. obtained approval from the Indecopi (Instituto Nacional de Defensa de la Competencia y de la Proteccion de la Propiedad Intelectual) to go into 'concursal preventivo,' the Peruvian equivalent of Chapter 11, reports South American Business Information. In July 2002, Sider Corp. undertook a global financing agreement with debts totalling US$23 million, plus another US$3 million in interest. The Company's creditors will now be able to make a decision on the viability of the refinancing proposal to be presented by Sider Corp. Creditors include ProInversion - the largest creditor holding US$73.1 million in debt owed from the privatization of Siderperu - and Banco Wiese Sudameris holding US$37.9 million. Sider Corp. has assets valued at PEN48 million, and investments worth PEN623 million. ============= U R U G U A Y ============= * Moody's Affirms Uruguay's `B3' Ratings, Negative Outlook ---------------------------------------------------------- Moody's Investors Service affirmed Uruguay's country ceiling of B3, or six notches into investment grade, and affirmed its B3 foreign and local currency ratings, on Friday, Reuters reports. The outlook on all of the ratings remains negative. The rating agency believes that the country's debt swap offer "would privde substantial liquidity relief for Uruguay at a critical time when access to private capital markets is virtually closed to the government." Reuters also reports that Moody's assigned a prospective B3 rating with a negative outlook to any bonds issued as a result of the government's exchange offer. Uruguay proposes to swap about one-half of its US$11 billion in public debt to avoid a possible default. Recent reports say the country needs an 8) percent acceptance rate for the offer to succeed. In related news, the IMF also believes that the debt swap is likely to succeed, although the final outcome is often determined during the lat minutes of the voting. ================= V E N E Z U E L A ================= CANTV: Mulling Extension Talks With Debt-Holders ------------------------------------------------ Armando Yanes, the chief financial officer of CA Nacional Telefonos de Venezuela SA (CANTV), said that the Company may ask some holders of its U.S. dollar-denominated debt whether they'd be willing to extend the current January 2004 maturity, Dow Jones relates. Yanes revealed that the telecommunications company, the largest in the country, has about US$100 million of the so-called Yankee bonds coming due then, but Venezuela's current foreign exchange shortage may force the move. "We're not contemplating a rollover at this time ... but we're looking at an option to talk to some of the major holders to see if the possibility exists," Mr. Yanes said. As of March 31, CANTV listed US$124 million in short term debt and US$122 million in long term debt. Cash and temporary investments stood at US$255 million, some of which are in foreign currency. Before Venezuela's government blocked foreign exchange purchases on Jan. 22, CANTV had a policy of holding around 85% of its cash overseas. At the same time, Mr. Yanes said the Company is in talks with the government about facilitating dollar purchases in time to settle the maturing Yankee bonds. Although dollars are hard to get officially in Venezuela, they can be bought on the black market at rates ranging between VEB2200 and VEB2500, a practice the government is working to criminalize. CONTACT: CA NATIONAL TELEFONOS DE VENEZUELA Institutional Investor Relations Edificio CANTV, Primer Piso Avenida Libertador Caracas, Venezuela Phone: 58212-500-1831 Fax: 58212-500-1828 Email: invest@cantv.com.ve Web site: www.cantv.com.ve HOVENSA: Fitch Removes 'BBB-' Rating From Negative Watch Status --------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB-' senior secured debt rating of HOVENSA LLC (HOVENSA), and has removed the rating from Rating Watch Negative. The rating applies to HOVENSA's $272 million senior secured term loan due 2008, $150 million senior secured reducing bank revolver due 2007 and $126.8 million senior secured tax-exempt bonds due 2021. HOVENSA is a limited liability company which owns and operates a crude oil refinery in the U.S. Virgin Islands. The refinery, which has the capacity to process up to 495,000 barrels per day (bpd) of crude oil, is indirectly owned 50% by Amerada Hess Corporation (Hess) and 50% by Petroleos de Venezuela (PDVSA). As detailed in the Dec. 20, 2002 Fitch press release 'Fitch Places HOVENSA's Senior Secured Debt on Rating Watch Negative', the Rating Watch Negative status reflected the suspension of crude oil and feedstock supply from PDVSA and related entities as a result of the national strike in Venezuela, which lasted two months, from early December 2002 until early February 2003. PDVSA is contractually obligated to supply approximately 60% of HOVENSA's crude feedstock requirement under two crude oil supply agreements (155,000 bpd of Mesa and 115,000 bpd of Merey). While the ability of PDVSA to honor its crude supply obligations is a key determinant of HOVENSA's credit quality, the refinery does have the operating flexibility to process a wide variety of crude oils. Throughout the strike, HOVENSA was successful in acquiring substitute crude oils from a wide variety of sources at volumes sufficient to maintain relatively high operating rates. HOVENSA began receiving a portion of its contractual volumes from PDVSA in late January 2003 and has been receiving 100% of contractual volumes since the beginning of March 2003. HOVENSA's liquidity position has improved substantially over the past few months primarily as a result of the solid operating performance and favorable refining margins, resulting in record EBITDA of $132 million for the first quarter of 2003. In addition to the revolver being untapped, and a fully funded debt service reserve, HOVENSA currently has approximately $200 million of cash on hand. Last week, HOVENSA prepaid $78 million of its senior secured term loan, representing scheduled principal payments due in December 2003 and June 2004. Fitch believes the debt prepayment reflects conservative financial management, a credit positive given the cyclical nature of the oil refining industry. While HOVENSA's present liquidity position is strong, the refinery's planned capital expenditure program (Clean Fuels Program) needed to comply with recently enacted low sulfur gasoline and diesel regulations requires a significant financial commitment over the intermediate term. As such, Fitch is concerned with the significant estimated cost of the Clean Fuels Program (approximately $450 million planned to be spent over the next four years) and the potential strain on liquidity. While HOVENSA has some flexibility related to the timing of the program, Fitch is also concerned that a significant delay of the Clean Fuels Program could hinder the refinery's ability to sell into the U.S. market. The new Environmental Protection Agency (EPA) standards go fully into effect in January 2007. HOVENSA's debt is currently supported by completion guarantees from the sponsors, which will remain in place until financial completion of the delayed coker project is achieved, which is expected in the coming months. While HOVENSA is a joint venture, Fitch believes the refinery is a strategically important asset to Hess and as such, Fitch continues to view Hess's committed sponsorship as a key factor in HOVENSA's debt rating. Fitch currently rates the senior unsecured debt of Hess 'BBB-'. CONTACT: John W. Kunkle, CFA Chicago Phone: +1-312-606-2329 Caren Y. Chang Chicago Phone: +1-312-368-3151 Bryan Caviness Chicago Phone: +1-312-368-2056 Alejandro Bertuol New York Phone: +1-212-908-0393 Media Relations: James Jockle New York +1-212-908-0547 PDV AMERICA/CITGO: Ratings Improve, Off CreditWatch --------------------------------------------------- Standard & Poor's Ratings Services said Friday that it raised its corporate credit ratings on PDV America Inc. and its wholly owned subsidiary CITGO Petroleum Corp. to 'BB-' from 'B+', and removed the ratings from CreditWatch with developing implications. In addition, Standard & Poor's upgraded by one notch PDV America's senior unsecured debt rating and CITGO's senior unsecured debt and secured term loan ratings. The upgrades reflect the improved liquidity of PDV America and CITGO. PDV America and CITGO now have sufficient liquidity to meet financial obligations for 2003 without relying on material external financing or triggering a violation of financial covenants. The ratings were originally placed on CreditWatch Feb. 6, 2003. The outlook is stable. "During the past year, CITGO's financial condition has been buffeted by a severe downturn in refining margins and political instability in Venezuela that reduced crude shipments to its CITGO subsidiary. This combination of events caused CITGO's trade credit terms to worsen sufficiently to strain CITGO's liquidity and significantly increased the cost of accessing credit markets," said Standard & Poor's credit analyst Bruce Schwartz. "However, in recent months, refining margins have rebounded, crude shipments from Venezuela have normalized, and the company has successfully raised external financing, bringing total cash and available borrowing capacity to about $1.2 billion. As such, CITGO's fiscal crisis has abated," added Mr. Schwartz. Standard & Poor's also said that CITGO/PDV America still faces serious challenges over the intermediate term, most significantly a likely decline in refining margins later in 2003 and funding about $1.1 billion (through 2006) of required investments to meet new clean fuels standards. PDV America is the holding company for CITGO, a large U.S. refining and marketing company. PDV America and its subsidiaries are an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., which is the national oil company of the Republic of Venezuela. ANALYST: Bruce Schwartz, CFA, New York (1) 212-438-7809 PDVSA: Enbridge Seeks Int'l Arbitration To Resolve Dispute ---------------------------------------------------------- Canadian pipeline company Enbridge announced Friday that it has applied for international arbitration to help wrest a financial settlement from Venezuela's state oil company PDVSA, which barred it from resuming a contract to run a major oil terminal, reports Reuters. Enbridge has a 45% stake in the SWEC consortium that ran the eastern export terminal at Jose. Enbridge stopped operating the terminal in December 2002 when a national strike started, and since then PDVSA has hired replacement workers to operate the terminal. PDVSA's actions violate an agreement reached in 2001 by which PDVSA retained ownership of the facilities while the consortium was entitled to maintain and operate the port for ten years, as well as providing personnel, Enbridge claimed. "We've applied for arbitration with the International Chamber of Commerce," Enbridge spokesman Jim Rennie said. "They will put a panel together and it will be an arbitration hearing." Enbridge Chief Executive Pat Daniel revealed last week the contract included terms for settlement if his firm is not able to return to operate the facility, which has generated earnings of C$3 million ($2.1 million) annually for Enbridge over the past three years. But Mr. Rennie said PDVSA has not responded to requests to discuss the matter. "We haven't really received any kind of official word from the new PDVSA management," he said. Other partners in the consortium are Williams (45%) and Northville (10%). *********** 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. 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