/raid1/www/Hosts/bankrupt/TCRLA_Public/030520.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 20, 2003, Vol. 4, Issue 98
Headlines
A R G E N T I N A
AHOLD: 1Q03 Sales Figures Follow Accounting Adjustments
ARTE GRAFICO: Fitch Assigns Default Rating To US$600M of Bonds
AT&T LATIN AMERICA: 1Q03 Results Delayed By Bankruptcy Issues
AUTOPISTAS DEL SOL: Moves To Restructure Unsecured Debts
EDENOR: Fitch Assigns Bonds Junk Ratings
EDITORIAL PERFIL: US$25 Million of Bonds Moved to Junk Territory
ELECTRICIDAD ARGENTINA: Fitch Lowers Bonds to Default
TGS: (SPE) IADB B Loans Ratings Lowered to 'D' from 'CC'
* Argentine Structured Market Still Plagued by Economic Reforms
B E R M U D A
FLAG TELECOM: Audit Delays 10-K, 10-Q Filings
B O L I V I A
BANCO BISA: Moody's Assigns Caa1 Rating on Global LC Deposits
BANCO DE LA NACION: Global LC Deposits Get Ca Rating
BANCO GANADERO: Moody's Takes Multiple Rating Actions
BANCO MERCANTIL: Moody's Assigns Caa1 on Global LC Deposits
BANCO NACIONAL: Moody's Issues Rating on Global LC Deposits
BANCO UNION: Global LC Deposits Rated Caa2 by Moody's
FONDO FINANCIERO: Caa2 Rating Issued on Local Currency
B R A Z I L
BESC: Reports Loss Due to Lawsuit Provisions, Pay Increases
CEMIG: Calls Extraordinary General Shareholders' Meeting
COPEL: Reports Red in the 1Q03
COPEL: Araucaria Partners Resort to Arbitration Court in Paris
SAESA: Reports 16.7% Reduction in Losses
C H I L E
ENERSIS/ENDESA CHILE: S&P Changes Outlook to Stable
C O L O M B I A
EMCALI: Rescue Plan Almost Complete
TEQUENDAMA: Sale Challenges Continue; Past Due Accounts Improve
C O S T A R I C A
ICE: Employees Stage Indefinite Strike
E C U A D O R
PETROECUADOR: April Export Figures Down
J A M A I C A
JUTC: Seeks Rate Increase As Dollar Devalues
M E X I C O
GRUPO TMM: Exchange Offers Officially Expire
GRUPO TMM: Missed Payments Prompts Ratings Cut to 'D'
SAVIA: Extends Seminis Letter of Intent with Fox Paine
N I C A R A G U A
ENITEL: Latin Pacific Defends Bid For Contract
P A N A M A
INTERNATIONAL THUNDERBIRD: Announces Fiscal 2002 Results
U R U G U A Y
* S&P Lowers Uruguay Foreign Currency Rating to 'SD'
* Fitch: Completion of Debt Exchange Marks Uruguay Default
* IMF Managing Director Comments on Uruguay Debt Exchange
V E N E Z U E L A
PDVSA: To Close Puerto La Cruz Refinery For Maintenance Work
- - - - - - - - - -
=================
A R G E N T I N A
=================
AHOLD: 1Q03 Sales Figures Follow Accounting Adjustments
-------------------------------------------------------
- Sales of joint ventures are excluded due to reporting according
to the equity accounting method
- 1Q 2002 sales numbers have been restated
- Consolidated 1Q 2003 sales amounted to Euro 17.4 billion, a
decline of 11.3% compared to the same period last year
- Sales are significantly impacted by lower currency exchange
rates; sales excluding currency impact increased by 4.6%
- Organic sales growth, excluding currency impact, amounted to
2.7%
Ahold announced Friday consolidated sales (excluding VAT) for the
first quarter of the year (16 weeks through April 20, 2003) of
Euro 17.4 billion, a decline of 11.3% compared to the Euro 19.6
billion generated in the 2002 first quarter (16 weeks). In a
difficult trading environment, sales excluding currency impact
increased by 4.6% and organic sales growth excluding currency
impact amounted to 2.7%. All numbers exclude sales of joint
ventures and are, as usual, unaudited.
Ahold 1st quarter sales
Ahold USA - retail
In the United States, retail sales increased by 4.8% to USD 8.3
billion (2002: USD 7.9 billion). Organic sales growth also
amounted to 4.8%. Comparable sales growth amounted to 2.4% and
identical sales growth amounted to 1.5%.
Ahold USA - foodservice
Foodservice sales in the United States declined by 1.5% to USD
5.3 billion (2002: USD 5.4 billion). Organic sales growth also
amounted to -1.5%.
Europe
In Europe (The Netherlands, Spain and Central Europe), sales rose
2.6% to Euro 4.1 billion (2002: Euro 4.0 billion). Organic sales
growth, excluding currency impact, amounted to 2.7%.
South America
In South America (Brazil, Argentina, Chile, Peru and Paraguay),
sales amounted to Euro 580 million (2002: Euro 407 million), up
42.7% from last year mainly due to the acquisition of the
remaining shares in Disco Ahold International Holdings. Organic
sales growth, excluding currency impact, amounted to 12.1%.
Asia
In Asia (Thailand, Malaysia, Indonesia), sales declined 10.0% to
Euro 109 million (2002: Euro 120 million). Organic sales growth,
excluding currency impact, amounted to 7.6%.
Accounting for joint ventures
All current and previous joint ventures will be accounted for
using equity accounting instead of proportionate consolidation as
announced in February of this year. As a consequence, the income
from these joint ventures will be accounted for as income from
unconsolidated subsidiaries. Previously, these joint ventures
were fully consolidated in Ahold's financial statements with the
minority share in earnings and equity then deducted. The main
reason for the change from proportionate consolidation to equity
accounting is to be better aligned with especially US GAAP and to
a lesser extent International Accounting Standards.
This accounting change applies to ICA Ahold in Scandinavia and
Jer¢nimo Martins in Portugal in the 2003 and 2002 first quarters
and Disco Ahold International Holdings (which became 100% owned
by Ahold in July 2002) in the 2002 first quarter.
ARTE GRAFICO: Fitch Assigns Default Rating To US$600M of Bonds
--------------------------------------------------------------
Fitch Argentina Calificadora de Riesgo S.A. issued default
ratings to US$600 million of corporate bonds issued by Arte
Grafico Editorial Argentino S.A. on May 07.
The National Securities Commission of Argentina described the
bonds as "obligaciones negociables". The bonds, whose maturity
date was not indicated, were classified under "program." Fitch
assigned 'D(arg)' to the bonds.
According to Fitch, ratings such as 'D(arg)', are assigned to
financial obligations that are currently in payment default.
AT&T LATIN AMERICA: 1Q03 Results Delayed By Bankruptcy Issues
-------------------------------------------------------------
AT&T Latin America Corp. (ATTL) informed the Securities and
Exchange Commission Friday that it wouldn't be submitting its
first-quarter results on time because of problems related to its
bankruptcy, relates Dow Jones. In a late-filing notice, the
Company said that it plans to file its results for the period
ended March 31 by May 20.
On April 21, AT&T Latin America converted its non-voluntary
bankruptcy filing into a voluntary one. The initial bankruptcy
petition was made by New York-based Matlin Patterson Asset
Management, one of AT&T Latin America's secured creditors, to
counter possible adverse action by an unsecured creditor.
Washington, D.C.-based AT&T Latin America provides data and voice
telecommunications, internet and e-commerce services in Chile,
Argentina, Brazil, Peru and Colombia.
CONTACT: AT&T Latin America
Marcelo Esquivel
Phone: 011-562-241-4706
Email: marcelo.esquivel@attla.com
or
Catherine Castro
Phone: +1-202-689-6336
Email: catherine.castro@attla.com
AUTOPISTAS DEL SOL: Moves To Restructure Unsecured Debts
--------------------------------------------------------
Autopistas del Sol S.A. (the "Company") announced the
simultaneous commencement of a solicitation of consents to
restructure its unsecured financial indebtedness pursuant to an
acuerdo preventivo extrajudicial (the "APE") under Argentine law
and a cash tender offer (the "Cash Tender Offer").
APE Solicitation
The Company commenced Friday a solicitation (the "APE
Solicitation") from holders of its 9.35% Series A Senior Notes
due 2004 and 10.25% Series B Senior Notes due 2009 (together, the
"Existing Notes") and other unsecured financial indebtedness
(together with the Existing Notes, the "Existing Debt"), subject
to certain eligibility requirements, of powers of attorney in
favor of an attorney-in-fact to execute a consent to the APE. An
APE is an insolvency remedy available to debtors under the
Argentine Bankruptcy Law (the "Bankruptcy Law"), consisting of an
out-of-court agreement, between a debtor and a certain percentage
of its unsecured creditors that is submitted to a court for
approval ("Court Approval").
In order to obtain judicial approval of an APE, a debtor must
have the support of a majority of its unsecured creditors (based
on the total number of unsecured creditors) accounting for at
least two-thirds of its total outstanding unsecured indebtedness
(based on the total outstanding amount of principal and accrued
and unpaid interest) as of a date reasonably close to the date an
APE is filed for Court Approval. Once an APE receives Court
Approval, that APE is binding on all unsecured creditors of the
relevant debtor, whether or not such creditors have participated
in the negotiation or execution of the agreement.
If the APE receives Court Approval, the Company will issue to
each consenting holder, at the election of the consenting holder,
for any Existing Debt with respect to which a consent to the APE
Solicitation has been duly delivered, one or a combination of the
following options:
(a) 10-Year Step-Up Notes (the "Par Notes"), in a principal
amount equal to 100% of (i) the principal amount of such Existing
Debt validly tendered and accepted pursuant to this clause (a)
plus (ii) the amount of Capitalized Interest (as defined below)
on such principal amount of such Existing Debt, or
(b) a combination of (i) the Company's 5-Year Fixed-Rate Notes
(the "Discount Notes"), in a principal amount equal to 60% of (A)
the principal amount of such Existing Debt validly tendered and
accepted pursuant to this clause (b) plus (B) the amount of
Capitalized Interest (as defined below) on such Existing Debt and
(ii) for each U.S.$1,000 principal amount of such Existing Debt
validly tendered and accepted, 239 shares of a new class of the
Company's common stock (the "New Shares") (the "Combination
Option").
"Capitalized Interest" will be determined at a rate of 2.4% per
annum and will accrue from the date of the last regular interest
payment made on each Existing Debt obligation or instrument to
the date on which the APE is filed for Court Approval. The amount
of Capitalized Interest corresponding to any principal amount of
Existing Debt will be reduced by the amount of interest paid in
2002 and 2003 by the Company with respect to such Existing Debt,
as described in the offering documents.
Interest on the Par Notes will accrue on the outstanding
principal amount from the date on which the APE is filed for
Court Approval (a) at a rate of 3.0% per annum to (but excluding)
the second anniversary of the date of issuance, (b) thereafter at
3.5% per annum to (but excluding) the sixth anniversary of the
date of issuance, and (c) thereafter at 5.0% per annum to (but
excluding) the maturity date of the Par Notes, which shall be ten
years from the date of issuance.
Interest on the Discount Notes will accrue on the outstanding
principal amount from the date on which the APE is filed for
Court Approval at a rate of 7.0% per annum to (but excluding) the
maturity date of the Discount Notes, which shall be five years
from the date of issuance.
Cash Tender Offer
Also on Friday, the Company commenced a Cash Tender Offer in
which it will apply up to U.S.$18 million to repurchase its
Existing Debt for cash at a purchase price to be determined
through a modified dutch auction. The Company has established a
price range of U.S.$320 to U.S.$380 per U.S.$1,000 principal
amount of Existing Debt tendered, within which it will accept
tenders. The Company will accept Existing Debt validly tendered
in the order of the lowest to the highest tender prices specified
by tendering holders within the established price range, and will
select the single lowest price specified (the "Purchase Price")
that will enable the Company to purchase for up to U.S.$18
million all Existing Debt tendered at or below the Purchase
Price. In the event that the amount of Existing Debt tendered at
or below the Purchase Price exceeds U.S.$18 million, Existing
Debt tendered at the Purchase Price will be subject to proration.
Conditions and Expiration
The APE Solicitation and the Cash Tender Offer are subject to
several conditions precedent, including that (a) consents are
received from at least a majority in number of the holders of
Existing Debt accounting for at least two-thirds of the total
outstanding principal and accrued interest on the Existing Debt,
excluding the principal amount of Existing Debt validly tendered
and accepted in the Cash Tender Offer, and (b) holders of
Existing Debt electing to receive Discount Notes and New Shares
validly tender not more than U.S.$220 million principal amount of
Existing Debt. The Cash Tender Offer and the APE Solicitation are
each scheduled to expire at 5:00 P.M., New York City time, on
June 20, 2003, unless extended.
EDENOR: Fitch Assigns Bonds Junk Ratings
----------------------------------------
Corporate bonds of Argentine distributor Edenor S.A. were given
junk ratings, said the National Securities Commission of
Argentina. Fitch Argentina Calificadora de Riesgo assigned
'D(arg)' to US$600 million of bonds described as "obligaciones
negociables" on May 07. The bonds were classified under
'program.' The NSC did not indicate the bonds' maturity date.
The rating agency said the rating, based on the Company'
financial situation as of the end of December 2002, is given to
obligations that are currently in payment default.
Through direct and indirect holdings, EDF owns 90% of Edenor,
which serves 2.3 million clients in the northern part of Buenos
Aires. At the end of December 2002, Edenor's unpaid and expired
debt totaled US$122 million.
CONTACT: EDENOR S.A.
Azopardo Building
Azopardo 1025 (1107) Capital Federal
Phone: (54-11) 4346-5000
Fax: (54-11) 4346-5300
E-mai: to ofitel@edenor.com.ar
Home Page: http://www.edenor.com.ar
EDITORIAL PERFIL: US$25 Million of Bonds Moved to Junk Territory
----------------------------------------------------------------
The National Securities Commission of Argentina announced that
bonds issued by Editorial Perfil S.A. were given default ratings
on May 07. Fitch Argentina Calificadora de Riesgo issued a rating
of 'D(arg)' to US$25 million of the Company's bonds.
The government agency described the bonds as "primera serie se
obligaciones negociables." The bonds, whose maturity date was not
revealed, were classified under 'series and/or class.'
The rating was based on the Company's financial situation as of
December 21, 2002. Fitch said that such ratings are assiged to
financial obligations that are currently in payment default.
ELECTRICIDAD ARGENTINA: Fitch Lowers Bonds to Default
-----------------------------------------------------
Electridad Argentina's corporate bonds were moved to junk
territory on May 07. According to an announcement from the
National Securities Commission of Argentina, Fitch Argentine
Calificadora de Riesgo S.A. assigned a rating of 'D(arg)' to
US$200 million worth of Electricidad Argentina bonds.
The rating was based on the Company's financials as of December
31, 2002. Fitch said that such ratings are given to bonds that
are currently in payment default.
The NSC describes the bonds as "obligaciones negociables", and
classified them under 'simple issue.' The bonds' maturity date
was not indicated.
TGS: (SPE) IADB B Loans Ratings Lowered to 'D' from 'CC'
--------------------------------------------------------
Standard & Poor's Ratings Services lowered Friday its ratings on
TGS S.A.'s (SPE) $176 million and $75 million IADB B loans to 'D'
from 'CC'. The rating action follows the noncompliance by the
underlying obligor, Transportadora de Gas del Sur S.A. (TGS),
with the semiannual $8.5 million interest payment on the $176.0
million IADB B loan and the semiannual $3.8 million interest
payment on the $75.0 million IADB B loan. Both payments were due
May 15, 2003.
The underlying corporate credit ratings on TGS were lowered to
'D' March 19, 2003, following the company's failure to make a
$100 million principal payment due March 18, 2003. Additionally,
TGS announced May 14, 2003, its decision to withdraw the
restructuring proposal presented to its creditors on Feb. 24,
2003. The decision was based on the lack of acceptance from
certain long-term creditors, which prevented TGS from reaching
the required majorities for an out of court agreement ("acuerdo
preventivo extrajudicial"). Until now, TGS had been honoring part
of the interest accrued on their indebtedness. However, until a
settlement is reached with creditors, the company will postpone
interest and principal payments on all its outstanding financial
debt.
The TGS (SPE) transactions benefit from an Inter-American
Development Bank preferred creditor status umbrella. These
transactions are, however, constrained by the credit quality of
the respective underlying corporate obligor. TGS' (SPE) $176
million bonds were issued April 12, 1999, and $75 million bonds
on Nov. 2, 1999. The bonds are due to mature May 15, 2011.
ANALYSTS: Felicitas Del Cioppo, Buenos Aires (54) 114-891-2120
Juan Pablo De Mollein, New York (1) 212-438-2536
Marta Castelli, Buenos Aires (54) 114-891-2128
* Argentine Structured Market Still Plagued by Economic Reforms
---------------------------------------------------------------
Since Argentina defaulted on its public debt in December 2001,
economic reforms, including devaluation of the Argentine
currency, restrictions on hard currency transfers, and
pesification of most contracts, have made it impossible for some
issuers in the structured finance market to fully comply with
their debt obligations, according to a recently released report
by Standard & Poor's Ratings Services.
According to the report, "Economic Hurdles Continue to Plague
Argentine Structured Market," other issuers have been struggling
with financial stability but continue to pay investors. However,
companies such as YPF Sociedad Anonima S.A. (YPF) have had little
difficulty meeting payments on their export future flow
transactions. "Additionally, certain structural features that are
present in some transactions have allowed those transactions to
continue performing successfully," Juan Pablo De Mollein, an
associate director in Standard & Poor's Structured Finance group
in New York, wrote in the report.
Standard & Poor's has been closely analyzing the performance of
its rated Argentine structured transactions that were issued in
the global markets since the default. "As part of the ongoing
analysis, Standard & Poor's has taken many rating actions and
provided frequent market updates on political and economic events
that affect issuers' ability to meet debt payments in a timely
manner," said Diane Audino, a director in Standard & Poor's
Structured Finance Group in New York, and co-author of the
report.
Many structured transactions in Argentina were affected by the
creditworthiness of their underlying corporate obligors. These
were all affected by general market conditions and regulatory
changes such as pesification. Pesification, the compulsory
conversion of certain U.S. dollar debt into Argentine pesos at a
one-to-one exchange rate, was probably the least anticipated
regulatory change and the most devastating to Argentine
companies. After pesification, due to a severely devalued
Argentine peso, loan assets yielded less than one-third of their
original cash flow. Pesification affected MBS as well as
companies that are local currency generators, like utilities.
Such companies were unable to increase rates needed to offset
higher borrowing costs. YPF's success has highlighted export
future flow transactions as the market's best performing assets
because their revenues are in hard currency and captured
offshore. "These deals not only protect against the risks of
transferability and convertibility, but they also protect against
devaluation relative to other types of structured debt," said Mr.
De Mollein.
"Economic Hurdles Continue to Plague Argentine Structured Market"
is available on RatingsDirect, Standard & Poor's Web-based credit
analysis system, at www.ratingsdirect.com. The article is also
available on Standard & Poor's Web site at
www.standardandpoors.com. Go to "Fixed Income," under "Browse by
Sector" choose "Structured Finance," and under Commentary & News
click on "More" and scroll down to the desired article, dated May
16, 2003.
ANALYSTS: Juan Pablo De Mollein, New York (1) 212-438-2536
Diane Audino, New York (1) 212-438-2388
Felicitas Del Cioppo, Buenos Aires (54) 114-891-2120
=============
B E R M U D A
=============
FLAG TELECOM: Audit Delays 10-K, 10-Q Filings
---------------------------------------------
FLAG Telecom Group Limited (OTC: FTGLF.PK) ("FLAG Telecom")
announced Friday that it expects to delay the filing of its
Quarterly Report for the first quarter ending March 31, 2003.
FLAG Telecom, together with its new auditors, Ernst & Young, is
in the process of completing its 10K audited Annual financial
report for 2002. However, due to the extent of the audit, which
included the re-audits of the financial results of FLAG Telecom's
predecessor for 2000 and 2001, FLAG Telecom has had to delay the
filing of its first quarter results. This will also affect the
timing of the filing of FLAG's Annual Report on form 10K
previously announced for May.
About FLAG Telecom
FLAG Telecom, registered in Hamilton, Bermuda, along with its
group companies, is a leading global network services provider
and independent carriers' carrier providing an innovative range
of products and services to the international carrier community,
ASPs and ISPs across an international network platform designed
to support the next generation of IP over optical data networks.
Recent news releases and further information are on FLAG
Telecom's website at: www.flagtelecom.com .
CONTACT: FLAG Telecom Limited
Willem Baralt, Group Treasurer
Phone: +44 20 7317 0837
Email: Irelations@flagtelecom.com
Suny Borges (Corporate Communications)
Phone: +44 20 74 78 95 79
Email: Sborges@flagtelecom.com
=============
B O L I V I A
=============
BANCO BISA: Moody's Assigns Caa1 Rating on Global LC Deposits
-------------------------------------------------------------
Moody's established first time global local currency deposit
ratings of Caa1 for Banco BISA S.A. At the same time, the ratings
agency confirmed Banco BISA's long term foreign currency deposit
rating at Caa1, downgraded foreign currency issuer rating lowered
to Caa1 from B3, and confirmed short term foreign currency
deposit rating at Not Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the bank to be similar, given the system's high
level of dollarization, the country's limited financial
resources, and the limited powers of the Central Bank to act as a
lender of last resort.
The Caa1 rating implies that Banco BISA is among the Bolivian
banks with the largest deposit market shares and hence Moody's
deems it more likely to receive institutional support.
BANCO DE LA NACION: Global LC Deposits Get Ca Rating
----------------------------------------------------
Moody's assigned global local currency deposit ratings of Ca for
Banco de la Naci¢n Argentina (Santa Cruz). Concurrently, the
ratings agency confirmed long term foreign currency deposit
rating at Ca, and short term foreign currency deposit rating at
Not Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the bank to be similar, given the system's high
level of dollarization, the country's limited financial
resources, and the limited powers of the Central Bank to act as a
lender of last resort.
BANCO GANADERO: Moody's Takes Multiple Rating Actions
-----------------------------------------------------
Moody's assigned a global local currency deposit rating of Caa2
for Banco Ganadero S.A. (Bolivia). Simultaneously, the ratings
agency downgraded Banco Ganadero's long term foreign currency
deposit rating to Caa2 from Caa1, and confirmed short term
foreign currency deposit rating at Not Prime, with stable
outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the bank to be similar, given the system's high
level of dollarization, the country's limited financial
resources, and the limited powers of the Central Bank to act as a
lender of last resort.
The Caa2 rating reflects the bank's weaker earnings capacity and
balance sheet.
BANCO MERCANTIL: Moody's Assigns Caa1 on Global LC Deposits
-----------------------------------------------------------
Moody's assigned a global local currency deposit rating of Caa1
for Banco Mercantil S.A. (Bolivia). At the same time, the ratings
agency confirmed the bank's long term foreign currency deposit
rating at Caa1, and short term foreign currency deposit rating at
Not Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the bank to be similar, given the system's high
level of dollarization, the country's limited financial
resources, and the limited powers of the Central Bank to act as a
lender of last resort.
The Caa1 rating implies that Banco Mercantil is among the
Bolivian banks with the largest deposit market shares and hence
Moody's deems it more likely to receive institutional support.
BANCO NACIONAL: Moody's Issues Rating on Global LC Deposits
-----------------------------------------------------------
Moody's assigned a global local currency deposit rating of Caa1
for Banco Nacional de Bolivia S.A.. Simultaneously, the ratings
agency confirmed the bank's long term foreign currency deposit
rating at Caa1, and short term foreign currency deposit rating at
Not Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the Bolivian bank to be similar, given the
system's high level of dollarization, the country's limited
financial resources, and the limited powers of the Central Bank
to act as a lender of last resort.
The Caa1 rating implies that Banco Nacional de Bolivia is among
the Bolivian banks with the largest deposit market shares and
hence Moody's deems it more likely to receive institutional
support.
BANCO UNION: Global LC Deposits Rated Caa2 by Moody's
-----------------------------------------------------
Moody's assigned a global local currency deposit rating of Caa2
for Banco Union S.A. (Bolivia). At the same time, the ratings
agency downgraded the bank's long term foreign currency deposit
rating to Caa2 from Caa1, and confirmed short term foreign
currency deposit rating at Not Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the Bolivian bank to be similar, given the
system's high level of dollarization, the country's limited
financial resources, and the limited powers of the Central Bank
to act as a lender of last resort.
The Caa2 ratings reflect Banco Union's weaker earnings capacity
and balance sheet.
FONDO FINANCIERO: Caa2 Rating Issued on Local Currency
------------------------------------------------------
Moody's, for the first time, assigned a global local currency
deposit rating of Caa2 for Fondo Financiero Privado FIE S.A..
Concurrently, the ratings agency downgraded Fondo Financiero's
long-term foreign currency deposit rating to Caa2 from Caa1 and
confirmed short-term foreign currency deposit rating at Not
Prime, with stable outlook.
The rating actions reflect Moody's revised approach towards
highly dollarized banking systems as outlined in the recent
Special Comment entitled, "The Implications of Highly Dollarized
Banking Systems for Sovereign Credit Risk."
Moody's global local currency ratings address an issuer's ability
to meet its local currency obligations, and as such, do not
include foreign exchange transfer risk. However, the agency noted
that it views the risk of both foreign and local currency
obligations of the bank to be similar, given the system's high
level of dollarization, the country's limited financial
resources, and the limited powers of the Central Bank to act as a
lender of last resort.
The Caa2 ratings reflect Fondo Financiero's weaker earnings
capacity and balance sheet.
===========
B R A Z I L
===========
BESC: Reports Loss Due to Lawsuit Provisions, Pay Increases
-----------------------------------------------------------
Brazil's Santa Catarina state bank (Besc) reported red in the
first quarter of the year after it made BRL5.3 million in
provisions for labor lawsuits and BRL1.6 million in overdue
payments for a pay raise agreed with trade unions.
According to Business News Americas, BES posted a net loss of
BRL9.17 million (US$3.08mn today) for the first quarter, compared
to BRL27.8 million in profits for the same period last year.
Besc also failed to meet its target of recovering BRL7.5 million
in overdue debt during the quarter, recovering just BRL3.1
million.
"These are debts from operations that no longer exist," Lepka
explained. "Currently we offer loans for civil servants with
repayments made through their wages and to small- and mid-sized
companies with receivables as guarantees. In both cases, the
default rates are very low."
The banks loan portfolio stood at BRL288 million at the end of
the first quarter.
CEMIG: Calls Extraordinary General Shareholders' Meeting
--------------------------------------------------------
CEMIG's (Companhia Energ‚tica De Minas Gerais) shareholders are
hereby summoned to the Extraordinary General Shareholders'
Meeting to be held on May 28, 2003 at 10:00 a.m. (Belo Horizonte,
Brazil time) at CEMIG's headquarters, located at Avenida
Barbacena, 1200 - 18th floor, in the city of Belo Horizonte,
State of Minas Gerais, Brazil, to deliberate on the following
matters:
I- Amendments to CEMIG's By-laws:
1. Amendment of Article 1 to conform CEMIG's corporate purpose to
legal requirements;
2. Amendment of Article 2 to allow CEMIG the possibility of
establishing offices abroad
3. Deletion of the sole paragraph of Article 5 in order to
conform the By-laws to Article 47 of Law 6,404/1976 and its
subsequent amendments;
4. Amendment of the heading of Article 8, but preserving the
current first and second paragraphs, in order to ensure that the
State of Minas Gerais retains the majority of voting shares
unless prior authorization by the State House of Representatives
is given;
5. Insertion of the new sole paragraph of Article 9 to conform
the By-laws to Article 126 of Law 6,404/1976 and its subsequent
amendments, as well as to expedite the procedures necessary to
call shareholders' general meetings;
6. Amendment of the first paragraph of Article 14 to emphasize
the requirements of knowledge by all directors of a board of
directors' meeting in the event of meetings called on an
expedited basis;
7. Insertion of subsections "j" and "l" in Article 17 to better
define the Board of Directors' responsibilities;
8. Amendment of the heading of Article 18 to modify the
constitution of the Board of Executive Officers;
9. Amendment of the heading of Article 19 to assign to the
Executive Vice-President the authority to act as a substitute for
the Chief Executive Officer during his/her temporary absences;
10. Amendment of Article 22 in order to modify the Executive
Officers' duties;
11. Amendment of paragraph 3 of Article 21 to reflect the new
constitution of the Board of Executive Officers;
12. Amendment of paragraph 4 of Article 21 to better define the
Executive Officers' duties;
13. Insertion of the sole paragraph of Article 23 in order to
establish the criteria to elect the chairperson of the Fiscal
Council and to authorize such person to summon and to chair the
Fiscal Council meetings;
14. Amendment of the sole paragraph of Article 28 and of the
heading of Article 30 to conform to Article 189 and its following
articles of the Law 6,404/1976 and its subsequent amendments;
15. Amendment of Article 33 to clearly provide that the actions
authorized by the Bylaws are only authorized to the extent that
they comply with applicable law; and
16. Amendment of Article 12 to modify the Board of Directors'
composition.
II- Election of directors and their respective alternates in
connection with Item I-16 above.
In accordance with Article 141 of Law 6,404/1976, amended by Law
10,303/2001, and considering that actual directors were elected
using cumulative voting, all directors and respective alternates
must be elected through cumulative voting.
Belo Horizonte (Brazil), May 09, 2003
Wilson N‚lio Brumer
Chairman
CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS
Luiz Fernando Rolla, Investor Relations
Phone: + 011-5531-299-3930
Fax: + 011-5531-299-3933
E-mail: lrolla@cemig.com.br
COPEL: Reports Red in the 1Q03
------------------------------
Brazilian integrated power company Companhia Paranaense de
Energia (Copel) posted a net loss of BRL15.5 million in the first
quarter of 2003, reversing a net profit of BRL141.8 million in
the same quarter in 2002, reports Dow Jones.
The Company also reported an operating loss of BRL19.9 million in
the fist quarter this year, against operating profit of BRL224.2
million in the same quarter in 2002. Net revenue increased to
BRL713.75 million from BRL632.6 million in the same quarter in
2002.
Copel is among Brazil's largest power company, serving about
three million people in the highly industrialized state. It has
an installed capacity of 4,580 megawatts.
According to a Dow Jones Newswires survey, analysts expected the
Company to post a net profit of BRL24.8 million, although some
analysts warned of a small loss owing to higher cost of
electricity purchases.
CONTACT: Cia Paranaense de Energia COPEL
Rua Colonel Dulcidio, 800
Batel
80420-170 Curitibia - PR
Brazil
Phone: +55 41 322-3535
Fax +55 41 224-4312
Home Page: http://www.copel.com
Contacts:
Ary Queiroz, Chairman
COPEL: Araucaria Partners Resort to Arbitration Court in Paris
--------------------------------------------------------------
The Brazilian unit of US-based El Paso and Brazil's federal
energy company Petrobras are now seeking an arbitration court in
Paris to resolve its conflict with Parana state power company
Copel. Business News Americas recalls that Copel signed a power
purchase agreement with the 480MW Araucaria thermoelectric
project in May 2000. Copel owns 20% of the plant, federal energy
company Petrobras owns 20% and US power company El Paso owns 60%.
In January 2003, Copel's board decided to renegotiate the
contract, saying the prices being paid for the power were too
high. However, discussions with the two partners fell through,
Copel said, leading to a decision to move to arbitration.
El Paso and Petrobras are seeking to recover those payments
frozen since January.
SAESA: Reports 16.7% Reduction in Losses
----------------------------------------
Chilean distributor Saesa informed Chile's securities commission
that it had a consolidated first quarter net loss of CLP2.39
billion (today US$3.37mn) in the first quarter of 2003. The
figure, according to Business News Americas, is 16.7% less than
the loss posted in the same period a year ago.
Operating profits fell 3.08% to CLP4.75 billion. Operating
margins fell 3.27% to CLP5.26 billion from 1Q02, while operating
revenues increased 10.4% to CLP19.4 billion. Non-operating losses
fell 19.4% to CLP6.63 billion in 1Q03.
Saesa, which is 99.83% owned by US power company PSEG, operates
in Regions IX and X in the south of Chile.
CONTACT: SAESA
Gerencia y Administracion Zonal de Osorno
Bulnes 441, Osorno
Telefono: (64) 206400
Fax: (64) 206209 - Casilla: 21 -0
=========
C H I L E
=========
ENERSIS/ENDESA CHILE: S&P Changes Outlook to Stable
---------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BBB-' corporate
credit ratings on Chile-based electricity provider Enersis S.A.
(Enersis) and its 60% owned subsidiary, Chilean power generator
Empresa Nacional de Electricidad S.A. ( Endesa Chile). The
outlook for both companies has been changed to stable from
negative.
At the same time, the ratings on Enersis' unsecured debt were
lowered to 'BB+' from 'BBB-', reflecting the structural
subordination created by the new financing facility.
The rating actions follow Enersis' and Endesa Chile's
announcement that they have closed the refinancing of their bank
debt maturities that were due during 2003 and 2004. The US$1.588
billion senior secured term loan for Enersis and a US$743 million
senior guaranteed term loan for Endesa Chile will amortize in six
equal semiannual installments of US$265 million and US$124
million, respectively, from November 2005. Enersis' loan will
accrue interest at Libor plus 350 and Endesa Chile's at Libor
plus 300 bps.
The one notch downgrade for Enersis' senior unsecured debt
reflects structural subordination created by the collateral
package securing the new US$1.588 billion bank loan, which
includes a lien on the shares and intercompany loans of Chilean
electric distributor Chilectra S.A, Enersis' largest cash
contributor. In the case of Endesa Chile, as the company
concentrates a large percentage of consolidated debt and has its
own operations, the structural subordination would not result in
a differentiation of the unsecured debt from the corporate credit
rating.
"The closing of these facilities significantly improves the
companies' liquidity position and reduces refinancing risk. After
closing these bank loans, Enersis and Endesa Chile will not face
any meaningful capital maturity until 2005 except for the
repayment of US$551 million in bond maturities, which are already
provided for," said credit analyst Sergio Fuentes. "We expect
that the growing demand in Chile and the startup of Ralco in 2004
should allow the group to improve cash flow generation measures
to levels more in line with the rating category". Standard &
Poor's expects consolidated FFO to exceed 2.5x interest and 15%
of debt after 2004.
The new facilities also include cash flow and leverage covenants,
which are achievable under management projections. However, the
lenders have required a step down in the leverage covenant by
2005 whose compliance, absent other events, would require around
US$500 million cash proceeds from equity issuances to be applied
to repay part of the outstanding bank loans. As the failure to
comply with the covenants is an event of default, this is a
particular challenge for Enersis and Endesa Chile. The stable
outlook on the ratings incorporate Standard & Poor's expectation
that the group will reduce debt in excess of the bond maturities
in 2003--through asset sales or capital increases--to comply with
the step down in the leverage covenant in 2005.
The terms of the new bank loans include the removal of all the
rating triggers contained on many of the current outstanding bank
facilities that will be repaid. In addition, the new loans
include several prepayment provisions, which Standard & Poor's
believes considers a challenge for Enersis and Endesa Chile's
ability to raise new debt going forward.
Updated credit reports on Enersis and Endesa Chile and complete
ratings information are available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis
system, at www.ratingsdirect.com. Alternatively, the updated
credit reports can be obtained from
chile_ratings@standardandpoors.com. All ratings affected by this
rating action can be found on Standard & Poor's public Web site
at www.standardandpoors.com; under Fixed Income in the left
navigation bar, select Credit Ratings Actions.
ANALYSTS: Sergio Fuentes, Buenos Aires (54) 114-891-2131
Marta Castelli, Buenos Aires (54) 114-891-2128
===============
C O L O M B I A
===============
EMCALI: Rescue Plan Almost Complete
-----------------------------------
Colombian President Alvaro Uribe believes that the definitive
salvage plan for Cali-based multi-utility Emcali is 90% complete.
This, after Emcali workers accepted a governmental proposal that
union members' pensions conform to general pension law by January
2008.
The issue had been a sticking point in discussions to avert
liquidation or privatization of the Company, recalls Business
News Americas. What's lacking now is a decision on when the
salvage plan should take effect.
Local daily El Tiempo, however, suggests that entry into the
pension system is conditional upon the government securing
agreements with Emcali creditors. A core component of the plan is
creation of a trust fund to finance Emcali's development. The so-
called social capitalization fund will be fuelled by private
investors, Emcali employees, retired employees and creditors, as
well as revenues.
Meanwhile, the Sintraemcali union also agreed to a reduction in
certain benefits outlined in the workers' collective contract.
TEQUENDAMA: Sale Challenges Continue; Past Due Accounts Improve
---------------------------------------------------------------
Analysts suggested that Peruvian financial group Credicorp must
get rid of its loss-making Colombian bank Tequendama, relates
Business News Americas. Tequendama saw losses widen to US$1.1
million in the first quarter from US$900,000 in the fourth
quarter of 2002.
But according to a Lima-based market observer, even if the bank
is a small bank and that losses Credicorp has incurred in
Colombia are not terrible, "it would be positive if they managed
to get rid of a loss-making unit like Tequendama."
Credicorp management has been trying to sell Tequendama or merge
it with another Colombian bank but a source from the group
admitted it had been "very difficult" to solve the Colombian
problem.
According to analysts familiar with Credicorp and the Colombian
market, the task is unlikely to get any easier this year.
Last year, both the economy and the financial system were
depressed and selling any bank was a daunting task but even with
the economy and the financial system now recovering, Tequendama
will continue to be a hard sell due to its losses and small size,
said risk manager Ricardo Duran at local brokerage house
Corredores Asociados.
At the end of March this year, Tequendama's loans totaled US$211
million and deposits US$164 million. The past due loan ratio was
2.9% in March, improving from 4.3% at the end of December 2002,
while the bank's provision coverage stood at 96.5% in March.
Credicorp is Peru's largest financial group and its main asset is
Peru's largest bank, Banco de Credito del Peru, which also
controls Bolivian bank Banco de Credito de Bolivia. Tequendama
Venezuela is part of Credicorp's Tequendama banking franchise.
===================
C O S T A R I C A
===================
ICE: Employees Stage Indefinite Strike
--------------------------------------
Workers at Costa Rica's state-run electric power company and
telecoms monopoly staged an strike on Friday that will last for
an undetermined period of time, reports local paper La Nacion.
The workers claim that the government has not made good on its
promise to allow a CRC38 billion (US$96 million) bond issue,
needed to fund the Company's operations.
However, the government said that "its hands are tied" as the
central bank has repeatedly rejected the bond issue proposal,
fearing that it might disrupt interest rates. The bank is more
open to the idea of a US$100 million external debt issue, but it
requires more information on details like interest rates, terms
and plans for the proceeds.
The workers are also seeking a 19 percent electricity rates hike.
The report said that President Abel Pacheco tried to negotiate
for the rates hike this week, in an attempt to prevent the
strike.
The strike will affect client attention services, branch offices,
and installation of new services. However, union representatives
assured that basic electricity, telephony and street-lighting
services will continue normal operations.
=============
E C U A D O R
=============
PETROECUADOR: April Export Figures Down
---------------------------------------
Export numbers for Ecuador's state oil company Petroecuador
declined last month. A report from Business News Americas
indicates that Petroecuador exported 2.68 million barrels of
crude last month -- that's 34% less than the 4.08 million barrels
it exported in April last year.
At the same time, export revenue for April 2003 fell to US49
million, even if the average price of crude went up 48 percent to
US$29.21 per barrel last month. In April last year, the average
price of crude is US$19.82 per barrel.
A Company spokesman clarified that the decline is simply the
result of reprogramming the Company's various exports. This does
not mean that production was lower, said the source.
=============
J A M A I C A
=============
JUTC: Seeks Rate Increase As Dollar Devalues
--------------------------------------------
The Office of Utilities Regulation (OUR) is lobbying for a fare
increase for Jamaica Urban Transit Company (JUTC). OUR director-
general Paul Morgan said that they should be ready to present a
report to transport minister Pickersgill by Monday.
The Minister will then forward the report to the Cabinet, if he
approves it. JUTC's last rate hike was in 2001. The OUR will
advise the minister of the current operational costs of the bus
company and the amount by which the fares should be increased,
the Jamaica Observer reports.
JUTC public relations officer Errol Lee said that JUTC's need for
a fare increase has become more urgent as the Jamaican dollar
continues its devaluation. In fact, it has declined 20 percent
since the start of the year.
In January, a team of Swedish consultants recommended a 90
percent hike in bus fare to move JUTC into profitability, after
years of incurring losses. The consultants estimate that some
$200 million might be raised during the first six months after a
90 percent rate hike is imposed.
Commuters travelling on JUTC buses at present pay $20 within
zones and $30 outside -- like the ride from downtown Kingston to
Portmore or Spanish Town, the report reveals.
JUTC has been restructuring itself: obtaining new buses,
organizing new routes recently. Mr. Lee says that aside from the
fare increase, there is no more restructuring scheduled to be
done in the near future.
===========
M E X I C O
===========
GRUPO TMM: Exchange Offers Officially Expire
--------------------------------------------
Grupo TMM, S.A. (NYSE: TMM and BMV: TMM A) ("Grupo TMM" or the
"Company") announced Friday that the exchange offers and consent
solicitations for its 9.5 percent Senior Notes due 2003 (the
"2003 notes") and its 10.25 percent Senior Notes due 2006 (the
"2006 notes") expired at midnight, New York city time, on May 15,
2003. At the expiration date, less than 80% of the outstanding
2003 notes were tendered. Accordingly, the conditions to the
exchange offers were not satisfied at the expiration date. The
Company will return all previously tendered bonds to the holders
thereof.
Headquartered in Mexico City, Grupo TMM is Latin America's
largest multimodal transportation company. Through its branch
offices and network of subsidiary companies, Grupo TMM provides a
dynamic combination of ocean and land transportation services.
Grupo TMM also has a significant interest in TFM, which operates
Mexico's Northeast railway and carries over 40 percent of the
country's rail cargo. Grupo TMM's web site address is
www.grupotmm.com and TFM's web site is www.gtfm.com.mx. Grupo TMM
is listed on the New York Stock Exchange under the symbol TMM and
Mexico's Bolsa Mexicana de Valores under the symbol TMM A.
CONTACT: Grupo TMM Company
Jacinto Marina
Phone: 011-525-55-629-8790
E-mail: jacinto.marina@tmm.com.mx
Brad Skinner
Phone: 011-525-55-629-8725
E-mail: brad.skinner@tmm.com.mx
Luis Calvillo
Phone: 011-525-55-629-8758
E-mail: luis.calvillo@tmm.com.mx
or
Dresner Corporate Services
(general investors, analysts and media)
Kristine Walczak
Phone: 312/726-3600
E-mail: kwalczak@dresnerco.com
GRUPO TMM: Missed Payments Prompts Ratings Cut to 'D'
-----------------------------------------------------
Standard & Poor's Ratings Services said Friday it lowered its
corporate credit rating on Mexican transportation company Grupo
TMM S.A. to 'D' from 'CC'. Standard & Poor's also lowered the
senior unsecured ratings on TMM's 10% notes due 2006, and 9.25%
notes, which were due on May 15, 2003, to 'D' from 'CC'.
"The downgrade follows the company's announcement that it did not
make the interest and principal amount payments due yesterday on
the 2003 and 2006 notes," stated Standard & Poor's credit analyst
Jose Coballasi.
The company also announced that it has initiated a legal
proceeding in a court of local jurisdiction in Mexico. TMM
indicated that the proceeding is a commercial matter and is not a
"Concurso Mercantil" (a Mexican proceeding equivalent to Chapter
11 in the U.S.). The proceeding petitioned the court for an order
effectively imposing a grace period during which creditors of the
company, including the holders of the aforementioned notes and
the receivable securitization trust certificates, would be
prevented from pursuing in Mexico the exercise of remedies based
on a breach of the company's existing debt obligations.
TMM announced Friday that the exchange offers and consent
solicitations for its notes expired. Around 50% of the
outstanding 2003 notes were tendered and the conditions to the
exchange offers were not satisfied at the expiration date. The
company has indicated that it will promptly return all previously
tendered notes to the holders.
Analyst: Jose Coballasi
Mexico City
Phone: (52) 55-5279-2014
SAVIA: Extends Seminis Letter of Intent with Fox Paine
------------------------------------------------------
Savia S.A. de C.V. (Savia)(BMV:SAVIA) (NYSE:VAI) and Fox Paine &
Company announced Friday the extension through May 30th 2003 the
non-binding Letter of Intent signed on December 13th, 2002. Under
the terms of this letter, Fox Paine and parties related to Savia
will acquire the outstanding shares of Seminis (NASDAQ:SMNS).
This Transaction is subject to conditions established by the
agreement.
Also, Savia continues its negotiations for the payment of its
bank debt. These negotiations are directly related to the Letter
of Intent above mentioned.
Savia, S.A. de C.V. (www.savia.com.mx) participates in industries
that offer high growth potential in Mexico and internationally.
Its principal subsidiaries include Seminis, a global leader in
the production and marketing of fruit and vegetable seeds,
Bionova, a company focused on the production, distribution and
commercialization of fruits and vegetables and Desarrollo
Inmobiliario Omega, a company dedicated to the development of
real estate in Northern Mexico.
Seminis, Inc. (www.seminis.com) is the world's largest developer,
producer and marketer of vegetable seeds. The company uses seeds
as the delivery vehicle for innovative agricultural technology.
Its products are designed to reduce the need for agricultural
chemicals, increase crop yield, reduce spoilage, offer longer
shelf life, create better tasting foods and foods with better
nutritional content. Seminis has established a worldwide presence
and global distribution network that spans 150 countries and
territories.
Fox Paine & Company, LCC (www.foxpaine.com) manages investment
funds in excess of US$1.5 billion, providing equity capital for
corporate acquisitions, company expansion and growth programs and
management buyouts. The Fox Paine funds are managed on behalf of
over 50 leading international financial institutions, including
major governmental and corporate pension systems, Fortune 100
companies, major life and property & casualty insurance and
reinsurance companies, money center and super regional commercial
banks, investment banking firms, and university endowments. Fox
Paine was founded in 1997 by Saul A. Fox, a former general
partner of Kolhberg Krawis Roberts & Co., and W. Dexter Paine
III, a former general partner of Kolhberg & Co.
=================
N I C A R A G U A
=================
ENITEL: Latin Pacific Defends Bid For Contract
----------------------------------------------
The selection process for an investment bank to manage the sale
of the Nicaraguan government's 49% stake in fixed line operator
Enitel has suffered a setback. According to Business News
Americas, the government abandoned the operation due to a
conflict involving one bidder -- local investment bank Latin
Pacific Capital.
Pacific Capital's consultant is Javier Tovar, a lawyer, who is
also a member of the privatization committee that will decide the
winner of a contract to complete the privatization of Enitel.
However, Latin Pacific chairman Carlos Montoya insisted that
there was nothing illegal in the way it has bid for the contract.
Montoya stressed that from the outset, Latin Pacific openly
declared its connections with Tovar in other projects, and the
World Bank, which is sponsoring the auction, had no objection to
confirming the company as a shortlisted bidder.
Furthermore, in a letter declaring the selection process void,
Nicaragua's public sector reform committee Ucresep said it hoped
to count on Latin Pacific's participation in future processes,
Montoya said, implying that local press was misinformed.
Rather than filing for damages, Latin Pacific's immediate aim is
"to defend its name and allow the truth to prevail," to which end
it has requested an immediate meeting with the government and its
Enitel shareholding unit Uretel.
===========
P A N A M A
===========
INTERNATIONAL THUNDERBIRD: Announces Fiscal 2002 Results
--------------------------------------------------------
International Thunderbird Gaming Corporation (TSX:INB) announces
the following update:
We are pleased to report that the development efforts and
experience gained in the international market over the past
several years are beginning to generate positive and sustainable
results, which are reflected in the Company's 2002 financial
statements. Operating profits are being generated in each of the
four countries where the Company currently operates. However, the
current operating profits of Venezuela continue to suffer from
the devaluation of the local currency. The Company had a strong
4th quarter with $5.3 million in revenues and net income from
continuing operations of $450,000. This quarterly result included
an extraordinary charge of $149,000 related to the write down of
the balance of the Company's investment in, but not advances to,
Venezuela. The Company recorded net income for the year from
continuing operations of $283,000. The profit in 2002 was largely
attributable to strong revenues and operating performance from
Panama and Guatemala, as well as a reduction of corporate project
development costs and corporate overhead.
Revenues of $18.5 million for the year 2002 reflected a 13%
increase over 2001 revenues. Panama generated revenue growth of
11%, while Nicaragua is reflecting revenues from 12 months of
operations in 2002 compared to 10 months in 2001. The revenue of
Guatemala, as consolidated by the Company, experienced growth of
7%. Net income from continuing operations was $0.3 million
compared to a loss of $1.9 million in 2001. The decrease in
General and Administrative expenses reflects the Company's
efforts to maintain corporate overhead costs and to control
expenses relating to development activities. In 2002, the Company
achieved EBITDA before discontinued operations (Earnings Before
Interest, Taxes, Depreciation and Amortization) of $3.9 million
or $0.17 per share, compared to $1.3 million or $0.05 per share
in 2001.
The working capital deficiency of $3.1 million at the end of 2001
has been reduced to $2.8 million at the end of 2002. While the
decrease is modest, the true improvement over the 2001 deficiency
is closer to $0.8 million, with the potential to have been much
larger. The Company's Panama subsidiary obtained additional debt
of more than $2.6 million to finance expansion of its operations.
The new debt created an additional $0.5 million to the Company's
working capital deficiency as at December 31, 2002. Cash provided
by continuing operations increased to $2.8 million for the year
ended December 31, 2002 from $2.1 million for the year ended
December 31, 2001. In addition to new debt, the Company also used
cash flow from operations for certain expenditures on capital
assets related to the expansion in Panama. Such cash flow would
have otherwise been used to pay down additional obligations,
thereby improving the working capital deficiency. However, the
Company feels the investment will provide added strength and
stability to its future viability.
The Company anticipates paying its obligations and working
capital deficiency from cash flow generated from operations and
collection of amounts receivable and recoverable. The Company
currently does not plan to raise capital by the issuance of
shares in the near future.
The following highlights some of the year's accomplishments,
which have contributed towards building a stronger foundation for
the Company:
-- The Company completed a successful merger in Nicaragua, which
resulted in immediate profits exceeding projections.
-- All outstanding California tribal litigation were successfully
concluded with fair recoveries.
-- Panama operating revenue and profitability increased through
the opening of the Chitre casino, two major expansions of the El
Soloy Casino and a major expansion of the El Panama casino.
-- A new board was constituted with two independent Board members
who immersed themselves in the challenges of the business and
made several trips to Latin America to review the properties,
meet local partners and employees.
-- A long-term contract extension was signed for the Camino Real
in Guatemala, paving the way for additional expansion of the
business in Guatemala.
-- The Lease Agreement and various vendor agreements were
renegotiated in Venezuela to account for the 100% devaluation and
political crisis. Debt was refinanced and is fully amortized over
four years at greatly reduced interest rates.
-- All major corporate debt was renegotiated under favorable
terms and is currently being amortized out of cash flows of the
business.
-- The Mexico NAFTA arbitration team was organized and has
realized early progress on the selection of the arbitrators, the
U.S. location for the arbitration and a prompt schedule for the
hearing, all of which have been furiously opposed by the Mexican
government.
These accomplishments speak to a new phase of the Company's
evolution. Management came to Latin America with few resources
and limited international experience back in 1998. The Company is
now the "market leader" in Central America and now has its sights
on South America. The Company's new phase will be characterized
by increased market share and profitability in the countries in
which the Company operates. Development of new markets will occur
with a much more experienced and risk controlled team. Country
stability, transparency, and the evolution of the gaming
regulatory structure will be closely studied.
The Company's business plan will not change. It will continue to
expand country by country into new developing markets. The
Company will pursue those markets where it can develop a major
market position. The Company will offer a Las Vegas-style product
with a focus on the overall entertainment and service value
offered to the customer. The Company will always work to develop
and promote better regulation, transparency and perception of the
gaming industry in new developing markets. Our brands will be
recognized as the "leading brands" where we do business. The
hundreds of highly trained and dedicated employees allow the
Company to be extremely optimistic about the future of the
business.
The Company continues to pursue the OTCBB (a pre-cursor to the
BBXChange), the soon to be formed Canadian Network Quotation
(CNQ), and will apply to the TSX for a lifting of the suspension
to our stock trading. It is hopeful that this effort will soon
result in shares being traded.
International Thunderbird Gaming Corporation is an owner and
manager of international gaming facilities. Additional
information about the Company is available on its World Wide Web
site at www.thunderbirdgaming.com. The Company moved its
corporate offices to a new location just north of San Diego,
California.
On behalf of the Board of Directors,
Jack R. Mitchell, President and CEO
=============
U R U G U A Y
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* S&P Lowers Uruguay Foreign Currency Rating to 'SD'
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Standard & Poor's Ratings Services said Friday that it lowered
its long-term foreign currency sovereign credit rating on the
Oriental Republic of Uruguay to 'SD', or selective default, from
'CC'. Standard & Poor's also lowered its short-term foreign
currency sovereign credit rating on the republic to 'SD' from
'C'. The long-term local currency sovereign credit rating remains
unchanged at 'CC'; the short-term local currency sovereign credit
rating remains unchanged at 'C'. The outlook on the long-term
local currency rating was revised to stable from negative.
The downgrade follows the republic's announcement that the
exchange offer proposed to holders of local and global bonds on
April 10, 2003 has attracted sufficient participation and will
proceed on May 29, 2003. Standard & Poor's considers the
transaction a distressed exchange because maturities are being
extended at interest rates similar to those in existing bond
agreements (which are significantly below current market rates),
and because of the possible consequences should the exchange
fail.
Uruguay's fiscal position, amortization schedule, and near-term
economic prospects imply that existing bondholders had few
alternatives to accepting the exchange offer.
The rating on the exchanged bonds will be lowered to 'D' from
'CC'. This essentially includes all outstanding bond issues
denominated in foreign currencies, except for some short-term
U.S.-dollar-denominated paper. The rating agency says that
additional details will be forthcoming.
Once the new bonds are issued, on May 29, 2003, Standard & Poor's
will consider the 'SD' to be cured. The ratings on Uruguay could
then be raised to the low 'B' category, reflecting a forward-
looking assessment of the republic's creditworthiness. A
commitment to engineer a sustained fiscal adjustment and improved
expectations following a reprofiling of scheduled amortization
will likely ease real interest rates and boost business
confidence. This in turn, could put the government's robust
growth projections-4% per annum for several years, beginning in
2004-within reach and contribute to a lowering of the debt
burden.
ANALYSTS: Lisa M Schineller, New York (1) 212-438-7352
Sebastian Briozzo, New York 212-438-7342
* Fitch: Completion of Debt Exchange Marks Uruguay Default
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Fitch Ratings downgraded Friday the ratings on Uruguay's long-
term foreign currency debt to 'DDD' from 'C' in anticipation of
the completion of a comprehensive exchange of foreign currency
debt which Fitch deems to be an event of default under its
criteria for distressed debt exchanges. The short-term foreign
currency rating is downgraded to 'D' from 'C'. Ratings on the
securities to emerge from the exchange will be formally rated
when they are issued on May 29 and are likely to be rated around
the 'B-' level. Meanwhile, as local currency securities were
excluded from the debt exchange, Fitch upgraded the long-term
local currency (Uruguayan peso) ratings to 'B' from 'CCC-'. The
Outlook on the ratings is Stable.
The government announced Friday that the exchange offer had
achieved the required minimum participation level and that the
exchange would therefore be completed; in aggregate, about 90% of
eligible bonds' face value was tendered. The offer was extended
through May 22, but May 29 issue date for new securities remains
unchanged.
In Fitch's opinion, although the exchange was deemed 'voluntary'
by the authorities and a payment default has not occurred, a
default has occurred in substance because the exchange imposes
unambiguous losses in economic terms and because bondholders
electing not to participate will become subordinated to the new
issues. Under the terms of the exchange, maturities will be
extended by at least five years without sufficient compensation
in cash or additional interest coupons to offset the loss in the
present value of principal. Furthermore, exit amendments approved
by a majority of bondholders will eliminate cross-default clauses
on the old bonds, and result in their delisting from the
Montevideo and Luxembourg Stock Exchanges, dramatically reducing
credit protection and liquidity.
In accordance with Fitch's practice in distressed debt exchanges,
exchange-eligible bonds will retain a default rating for at least
30 days, to the extent that they are not fully extinguished.
After 30 days, if the government is committed to continuing to
pay principal and interest on any outstanding defaulted bonds
according to their original terms, the ratings on these
securities will be raised out of the default category. Because
these bonds will be subordinate to new issues, and because Fitch
believes that the government's willingness to service these bonds
is uncertain, they will carry ratings below the new issues.
New securities issued as part of the exchange will be assigned
ratings based on Fitch's assessment of the likelihood of timely
and complete payment, potentially at the 'B-' level. In
developing its opinion of the appropriate ratings for the new
bonds, Fitch will evaluate the new debt service burden, the
appropriateness of the fiscal program, and the state of the
financial system. A final determination of the ratings for the
new bonds will be made when they are issued on May 29.
The local currency rating is upgraded on the substantial
improvement in Uruguay's liquidity position as a result of the
exchange. Scheduled 2004 and 2005 amortizations are now due
almost entirely to official creditors. These obligations would
likely be refinanced, assuming IMF performance criteria are met,
providing authorities with breathing room to make improvements to
public finances and the country's competitiveness. An updated
debt service schedule based on the results of the exchange is not
yet available, but the reported aggregate participation rate
through Friday was sufficient to make an analytically meaningful
estimate of revised financing needs. Excluding payments to the
IMF, non-financial public sector amortizations for the remainder
of the year are estimated at up to US$200 million, which should
be financed by multilateral disbursements of US$380 million.
Similarly, 2004 total amortizations of up to US$306 million
should be covered multilateral disbursements of US$316 million.
Apart from holdouts, market amortizations through 2008 were
eliminated by the exchange for all foreign currency bonds.
Although refinancing risk has been reduced substantially by
extending maturities, interest obligations are not significantly
reduced as a result of the exchange and remain high in comparison
with some other 'B' sovereigns. Interest obligations are
estimated at $480 million or 14.7% of revenue in 2003 and at
13.6% of revenue in 2004.
CONTACT: Morgan C. Harting, CFA +1-212-908-0820
Roger M. Scher +1-212-908-0240, New York
MEDIA RELATIONS: Kris Anderson +44 20 7417 4361, London
* IMF Managing Director Comments on Uruguay Debt Exchange
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Mr. Horst K”hler, Managing Director of the International Monetary
Fund (IMF), issued the following statement Friday in reaction to
Uruguay's announcement of its sovereign debt exchange:
"The Uruguayan authorities have decided to complete the debt
exchange, based on strong support from bond holders. This debt
exchange is an important step in addressing Uruguay's financing
needs and debt sustainability through a cooperative approach with
creditors. The authorities should be commended for their
determined commitment to implement strong policies in critical
areas of the program, including this comprehensive debt exchange.
The support being expressed by private sector investors is a key
component of the Uruguayan authorities' efforts to put the
economy on a path of sustained growth and financial stability. We
wish the authorities continued success in their program."
CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT
Public Affairs: 202-623-7300 - Fax: 202-623-6278
Media Relations: 202-623-7100 - Fax: 202-623-6772
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V E N E Z U E L A
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PDVSA: To Close Puerto La Cruz Refinery For Maintenance Work
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Petroleos de Venezuela, S.A. (PdVSA) closed beginning Friday
operations at its Puerto La Cruz refinery for maintenance work,
Business News Americas reports, citing a statement from the
Company.
Venezuela's state oil Company has engaged 10 local companies to
conduct the necessary chores. The maintenance program is to last
for 80,000 man-hours.
Puerto La Cruz processes about 180,000 barrels of crude per day,
and produces 20,000 barrels of gasoline daily. It supplies about
40 percent of fuel demands in the region, said BNAmericas.
However, Mr. Granado said that PdVSA has enough reserves to
guarantee gasoline supplies to Bolivar, Amazonas, Anzoategui and
Sucre states during the shutdown.
PdVSA said that the program is aimed at upgrading the safety and
profitability of the plant in its processes, and guarantee its
operations. The program is also part of the PdVSA's plans to hire
local companies to encourage local competitiveness, said Puerto
la cruz manager Alejandro Granado.
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