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/raid1/www/Hosts/bankrupt/TCRLA_Public/030521.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, May 21, 2003, Vol. 4, Issue 99 Headlines A R G E N T I N A ACINDAR: Extends Cash Tender Offer Deadline CAPSA: Revises Debt Payback Schedule With IFC CLAXSON INTERACTIVE: 1Q03 Financial Results Modestly Improve SOLFINA: Court OK's Debt-Restructuring Proposal TELECOM ARGENTINA: Increases Buyback Offer, Extends Deadline TELEFONICA DE ARGENTINA: S&P Lowers Ratings to `SD' B A R B A D O S C&WJ: OUR Awaits Response To Complaints B E R M U D A TYCO INTERNATIONAL: May Face US$120M One-Time Charge on Debt B R A Z I L BANESTES: Reports BRL34.6M 1Q03 Net Loss CATAGUAZES-LEOPOLDINA: 1Q03 Net Losses Up 130% From 1Q02 CEMIG: 1Q03 Numbers Show Revenues Up, Net Income Down ELETROPAULO METROPOLITANA: CEMIG Angling for Controlling Stake SEB: Defaults On $85M Loan Payment To BNDES USIMINAS: Reports 1Q03 Financial Results C H I L E EDELNOR: 1Q03 Loss Reaches BRL2.85 Billion ENDESA CHILE: Judge's Ruling Deals Blow To Ralco Project ENERSIS: SC Upholds Antitrust Ruling SANTA ISABEL: Transfers Paraguay, Peruvian Ops To Parent D O M I N I C A N R E P U B L I C BANCO INTERCONTINENTAL: Three Execs Arrested for Fraud BANCO INTERCONTINENTAL: Government Takes Over Exec's Media Ties G U A T E M A L A * S&P Lowers Long-Term Foreign Currency Rating on Guatemala M E X I C O GRUPO IUSACELL: US$750M, 5Yr-Plan Hinges On Debt-Restructuring VITRO: S&P Lowers Ratings to 'BB-'; Outlook Negative U R U G U A Y BANCO SANTANDER: Fitch To Review Foreign Currency Debt Rating BANCO SUDAMERIS: Debt Exchange Prompts Further Fitch Review CACDU: Fitch To Place Foreign Currency Debt Rating Under Review COFAC: Fitch To Review Foreign Currency Debt Rating FUCAC: Fitch To Place Foreign Currency Debt Rating Under Review FUCEREP: Sovereign Cut Prompts Further Review from Fitch HSBC BANK: Fitch To Review Ratings in the Short Term V E N E Z U E L A PDVSA: Executive Explains Investment Terms - - - - - - - - - - ================= A R G E N T I N A ================= ACINDAR: Extends Cash Tender Offer Deadline ------------------------------------------- Acindar Industria Argentina de Aceros S.A. (the "Company") announced Monday that it is extending until 12:00 p.m., New York City time, on Wednesday, May 28, 2003 (the "Expiration Date", unless the offer is terminated earlier or further extended by the Company in its discretion or otherwise in accordance with the terms of the Offer (as such term is defined below)), its offer to purchase for cash (the "Cash Tender Offer," as amended pursuant to the press release dated May 2, 2003) upon the terms and subject to the conditions set forth in the Offer to Purchase dated April 10, 2003 (the "Offer to Purchase") and in the related letter of transmittal (the "Letter of Transmittal" and, together with the Offer to Purchase, the "Offer") its 11-1/4% Notes due 2004 (the "Notes") and certain of its U.S. dollar denominated indebtedness (the "Dollar Debt") for an aggregate purchase price of up to U.S.$30 million. The purchase price for each U.S.$1,000 principal amount of Notes or Dollar Debt will be determined pursuant to a modified Dutch auction procedure in which a Holder of Notes or Dollar Debt (each a "Holder") may tender such Notes or Dollar Debt at prices within a price range from U.S.$450 per U.S.$1,000 of principal amount to U.S.$650 per U.S.$1,000 of principal amount of Notes or Dollar Debt. The Cash Tender Offer was scheduled to expire at 12:00 p.m., New York City time, on Friday, May 16, 2003. The Company also announced Monday that it is extending until 12:00 p.m., New York City time, on Wednesday, May 28, 2003, unless further extended by the Company in its discretion or otherwise in accordance with the terms of the Offer, the Early Tender Date (as such term is defined in the Offer to Purchase) pursuant to which a Holder who validly tenders and does not validly withdraw Notes or Dollar Debt prior to such date will be paid U.S.$50.00 per U.S.$1,000 principal amount of Notes or Dollar Debt tendered by such Holder, provided the Cash Tender Offer is consummated and such Notes and Dollar Debt are purchased in the Cash Tender Offer. The Early Tender Date was scheduled to occur at 12:00 p.m., New York City time, on Friday, May 16, 2003. The Company will not pay any accrued and unpaid interest (including default interest and additional amounts, if any) on any Notes and Dollar Debt that are tendered for purchase pursuant to the Offer. Notes and Dollar Debt tendered in the Cash Tender Offer may not be withdrawn unless the Company extends the Expiration Date to a date after June 9, 2003 or makes an amendment to the terms and conditions of the Offer that is, in the Company's reasonable judgment, adverse to any Holder that has tendered such Notes or Dollar Debt in the Cash Tender Offer. As of 12:00 p.m., New York City time, on May 16, 2003, Holders of approximately U.S.$39.2 million aggregate principal amount of Notes and Dollar Debt had tendered in the Cash Tender Offer. The Cash Tender Offer is made only by, and will remain subject to, all of the other terms and conditions described in the Offer. The Dealer Manager for the Cash Tender Offer is Credit Suisse First Boston LLC ("CSFB"). The Depositary for the Cash Tender Offer is JPMorgan Chase Bank. The Information Agent for the Cash Tender Offer is Georgeson Shareholder and its telephone numbers are North America: Banks and Brokers Call: +1(212) 440-9800, toll - free (800) 368-2245 and Europe and Latin America: +39 06 42 171 777. You can also contact the Information Agent at acindarinfo@gscorp.com. Additional information concerning the terms of the Cash Tender Offer, including all questions relating to the mechanics thereof, may be obtained by contacting the Information Agent or CSFB at +1 (212) 538-8474 or U.S. toll - free at (800) 820-1653. CAPSA: Revises Debt Payback Schedule With IFC --------------------------------------------- Independent Argentine oil company Capsa reached an agreement with the International Financial Corporation (IFC) to reschedule the repayment of US$27.5 million in A and C loans from the IFC itself, as well as a syndicated B-loan, reports Business News Americas. The agreement is part of the overall rescheduling of Capsa's outstanding debt of US$94.7 million equivalent, the IFC said in a statement, adding that the rescheduling of Capsa's debt helps the Company withstand the current difficult environment in Argentina. "The successful closure of this debt rescheduling was largely due to the confidence of the lenders in the long-term viability of the company," IFC oil, gas, mining, and chemicals director Rashad Kaldany said. "The transaction will have an important demonstration effect for other Argentine projects, many of which have strong business prospects but are constrained by liquidity problems," he added. "The transaction will contribute to business confidence in Argentina, especially on the part of foreign investors," IFC director for syndications Suellen Lazarus said. CLAXSON INTERACTIVE: 1Q03 Financial Results Modestly Improve ------------------------------------------------------------ Claxson Interactive Group Inc. (XSON.OB; "Claxson" or the "Company"), announced Monday financial results for the three- month period ended March 31, 2003. Financial Results Operating results for the three-month period ended March 31, 2003 represented a loss of $0.2 million, reflecting a $1.6 million improvement from an operating loss of $1.8 million for the three month period ended March 31, 2002. The operational results of the first quarter reflect a near break-even operation in what is historically the weakest advertising sales quarter of the year, continuing on a path of operational improvement. As a result of the new agreement with Playboy Enterprises, Inc., Claxson consolidates, as of January 1st, 2003, the operations of Playboy TV Latin America & Iberia (PTVLA) into the operations of its Pay TV division for financial reporting purposes. Net revenues for the first quarter of 2003 were $18.5 million, a 4% decrease from net revenues of $19.2 million for the first quarter of 2002. Net revenues are affected by a devaluation of currencies and a decrease in the rates from DIRECTV„ Latin America. Net revenues earned in Argentina, where Claxson has significant operations, were 19% of total net revenues for the three months ended March 31, 2003 compared to 25% for the same period in 2002. During the first quarter of 2003, the average exchange rate of the Argentine peso as compared to the U.S. dollar decreased 54%, versus the same period in 2002. "Claxson's first quarter results confirm the positive operational and financial trend in which we have put the company due to last year's reengineering," said Roberto Vivo, Chairman and CEO. "Having overcome last year's challenges, we are concentrating in efficiently managing the operation and taking full advantage of the rationalization process undertaken in 2002. Revenues have stabilized and we continue to aggressively manage cost, hence we expect to continue on this improvement path." Subscriber-based fees for the three-month period ended March 31, 2003 totaled $9.8 million, representing approximately 53% of total net revenues and an 8% increase from subscriber-based fees of $9.1 million for the first quarter of 2002. The increase is primarily attributed to the consolidation of PTVLA, partially offset by devaluation of currencies in the region and the effect of the renegotiation of our agreement with DIRECTV„ Latin America, which reduced per subscriber rates and translated prices to local currencies, in exchange for a two year extension in the contract's maturity. Advertising revenues for the three-month period ended March 31, 2003 were $7.0 million, representing approximately 38% of Claxson's total net revenues and a 3% decrease from advertising revenues of $7.2 million for the first quarter of 2002. Production services revenues for the three-month period ended March 31, 2003 were $0.9 million, which represented a 39% decrease over the $1.5 million for the first quarter of 2002. This decrease was primarily due to the consolidation of PTVLA, as services rendered to PTVLA are now eliminated upon consolidation, and a decrease in volumes handled by The Kitchen, Inc., Claxson's Miami-based broadcast and dubbing facility, as a result of the adverse economic situation in Latin America. Other revenues for the three-month period ended March 31, 2003 were $0.7 million, which represented a 50% decrease from $1.4 million for the first quarter of 2002. This decrease is explained by the consolidation of PTVLA, as services rendered to PTVLA are now eliminated upon consolidation, as well as the discontinuation of services provided to Playboy TV International. Operating expenses for the three months ended March 31, 2003 were $18.6 million, a decrease of 11% from the $21.0 million in the first quarter of 2002, due primarily to the general restructuring of all operating areas of the company and the devaluation of the Argentine Peso where the company has significant operations, partially offset by the consolidation of PTVLA. Interest expense for the three-month period ended March 31, 2003 was $0.7 million compared to $3.5 million for the first quarter of 2002. This decrease is attributable to the Exchange Offer and consent solicitation as all future interests on the new Claxson Notes are reflected as part of the balance of the debt. As interest on these Notes is paid, the debt will be reduced proportionately. Net income for the three months ended March 31, 2003 was $5.7 million ($0.31 per common share), including a $7.3 million foreign exchange gain as a result of the appreciation in value of the Argentine Peso during 2003. The first quarter net income represented a turnaround of $141.0 million over the $135.0 million net loss for the same three months of 2002. Claxson has not yet completed the annual valuation and assessment of the carrying value of its goodwill in accordance with the Statement of Financial Accounting Standards No. 142 in 2003. As of March 31, 2003, Claxson had a balance of cash, cash equivalents and investments of $8.1 million and $90 million in debt, which includes $21.0 million in future interest payments as dictated by accounting principles applicable to Claxson's debt restructuring. First Quarter Highlights During the first quarter of 2003, Claxson's main client, DIRECTV„ Latin America, filed for protection under Chapter 11. At filing date, Claxson's contract with DIRECTV was not rejected and account receivables added up to approximately $4.2 million. Claxson's management expects DIRECTV to honor its contract going forward. On March 1st Claxson launched a new pan regional channel called Retro, featuring the best classic movies and television series. Leveraging the success achieved in the Southern Cone by its classic series channel Uniseries, Retro launched throughout Spanish-speaking Latin America and the Caribbean on DIRECTV„ Latin America and on major cable operators in the Southern Cone, to more than five million Latin American subscribers. About Claxson Claxson (XSON.OB) is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed on September 21, 2001 in a merger transaction, which combined El Sitio, Inc. and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc. and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero-American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. CONTACT: Press: Alfredo Richard, SVP, Communications Phone: 305 894 3588 Investors: Jose Antonio Ituarte, Chief Financial Officer Phone: 011 5411 4339 3700 SOLFINA: Court OK's Debt-Restructuring Proposal ----------------------------------------------- An Argentine court approved on May 8, 2003 Solfina SA's proposal to restructure debts to creditors, which include Citibank, BNL and Administradora Fiduciaria. The proposal consists of converting its US$50 million debt into ARS50 million without any adjustments or corrections. The first payment of ARS42.5 million (US$15.18mn), or 85% of the total, will be carried out in year 2011. In addition, Solfina has the right to settle the debt in advance by paying only 10% of the total, as long as it does so within the first 18 months. Solfina is the financial firm of entrepreneur Santiago Soldati. The Company holds the shares of Sociedad Comercial del Plata Tren de la Costa, Parque de la Costa, Casino of Tigre and Compania General de Combustibles (CGC). TELECOM ARGENTINA: Increases Buyback Offer, Extends Deadline ------------------------------------------------------------ Telecom Argentina and its mobile subsidiary Telecom Personal informed the Buenos Aires stock exchange in a letter that it will increase by US$60 million the amount they intent to spend on their pending cash tender offers for financial debt instruments. Business News Americas recalls that the telco and the mobile operator originally offered up to US$260 million and US$45 million, respectively, when the operation commenced on April 16. Now, Telecom Argentina and Telecom Personal intend to spend US$310 million and US$55 million respectively. The companies have also raised the buyback price to 48-55% of the outstanding principal, from 43.5-50%. Telecom Argentina will prefer offers at the lower end of the range in what is a modified Dutch auction. Furthermore, Telecom Argentina has extended expiration of the offer to June 2 from May 23. If the offer is fully accepted at the minimum price, Telecom Argentina will succeed in reducing its end-2002 total debt load by US$646 million or 26%, while Telecom Personal would eliminate US$115 million or 18%. The two operators ended 2002 with combined debt of some US$3.4 billion. CONTACT: TELECOM ARGENTINA STET - FRANCE TELECOM SA(TELECOM) Alicia Moreau de Justo 50, 10th Floor Capital Federal (1107) Repoblica Argentina Phone: +54 11 4968 4000 Home Page: http://www.telecom.com.ar Contacts: Alberto J. Ricciardi, Chief Financial Officer Elvira Lazzati, Finance Director Pedro Insussarry, Investor Relations Manager Phone: (5411) 4968-3626/3627 Fax: (5411) 4313-5842/3109 Email: inversores@intersrv.telecom.com.ar TELEFONICA DE ARGENTINA: S&P Lowers Ratings to `SD' --------------------------------------------------- Standard & Poor's Rating Services downgraded the ratings of Telef¢nica de Argentina (TASA) from 'CC' to 'SD' (selective default), reports Infobae. Telefonica de Argentina, owned by Spain's Telefonica, recently submitted to the Buenos Aires Stock Exchange its profit and loss statement for the quarter ended March 31. The report showed a net profit of US$564 million, which came due to the revaluation of the peso versus the dollar during the period. The net profit reported was the result of the revaluation of the peso versus the dollar amounting to more than 11%, when the dollar price decreased from US$3.37 per US dollar as of December 31, 2002 to US$2.98 per US dollar at March 31, 2003. This revaluation of the peso generated a net profit pursuant to the exchange difference of US$708 million, which was partially offset by financial interests totaling US$119 million and the exploitation a US$4-million operating loss. The exchange difference resulted in a negative consolidated net position in foreign currency (assets less liabilities in foreign currency of approximately USD $1.7 billion), which is the result of the indebtedness in foreign currency when compared to the assets mostly stated in local currency. The negative effect of the peso devaluation, net of inflation, has been a loss of US$1.8 billion during the last five quarters ended as at March 31, 2003. The variations in exchange rate also had an impact on interest for indebtedness the Company has incurred amounting to approximately an US$800-million loss; this figure is also net of the effect of inflation exposure. Since the beginning of the deep crisis Argentina faces, particularly since January 2002, Telefonica de Argentina has suffered a net loss of approximately 2.9 billion pesos as a direct consequence of the above-mentioned devaluation, as well as inflation, pesification and the freezing of its rates. CONTACT: TELEFONICA DE ARGENTINA Tucuman 1, 18th Floor, 1049 Buenos Aires, Argentina Phone: (212) 688-6840 Home Page: http://www.telefonica.com.ar Contacts: Carlos Fernandez-Prida Mendez Nunez, Chairman Paul Burton Savoldelli, Vice Chairman Fernando Raul Borio, Secretary =============== B A R B A D O S =============== C&WJ: OUR Awaits Response To Complaints --------------------------------------- The Office of Utilities Regulation (OUR) of Jamaica said that it has not received a response from Cable & Wireless Jamaica, Ltd. on issues regarding the Company's operations. Local news portal RLRNews.Com reports that OUR reprimanded C&WJ last week after other entities complained of having difficulties in launching or varying their pre-paid calling card services because they are unable to obtain toll-free lines from C&WJ. Under the liberalized telecommunications policy, which took effect earlier this year, calling card holders should be able to access the pre-paid platforms of all domestic and international providers by a toll free number, said OUR. However, C&WJ has reportedly indicated that it is awaiting directions from the OUR as it does believe that the regulations dictate it to provide the said services. In the meantime, OUT says that it expects the Company to begin offering the service without further delay. CONTACT: Cable & Wireless PLC 124 Theobalds Road London England WC1X 8RX Phone: +44 (0)20 7315 4000 Fax: +44 (0)20 7315 5000 Home Page: http://www.cw.com Contacts: Sir Ralph Robins, Non Executive Chairman Sir Winfried W. Bischoff, Non Executive Deputy Chairman Graham M. Wallace, Chief Executive Robert E. Lerwill, Executive Director Finance ============= B E R M U D A ============= TYCO INTERNATIONAL: May Face US$120M One-Time Charge on Debt ------------------------------------------------------------ Bermuda-based Tyco International faces the possibility of having to take a one-time charge of US$120 million if it fails to restructure a US$750 million in debt maturing next month. Tyco could be required to repurchase the debt outright, at an estimated cost of US$870 million, says Reuters. This means that Tyco, which has US$2.1 billion in debt as of last March, would have to pay US$120 million on top of the debts' US$750 million value. Reuters suggests that Tyco would sustain a loss of US$0.06 per share. For the fiscal year 2003, the Company hopes to earn US$1.30 to US$1.40 per share. The higher cost of repurchasing the debt would represent the difference between the 10-year U.S. treasury yield-to- maturity in June and the 5.55 percent base rate, the report suggests. Under the terms of the said debt, the dealer of the securities has the option to remarket the debt next month and reset the interest rate, according to recent SEC filings. However, Tyco spokesman Gary Holmes expressed confidence that the Company will surmount this new problem. "We are looking at a variety of options to handle these (dealer remarketable securities) but are confident we will be able to get an exchange of new debt if we decide that is the right approach... We are currently discussing that possibility with a number of banks," said Mr. Holmes. J.P Morgan analysts Donald MacDougall commented, "While the news of a potential (6-cents) hit to earnings is a potential concern, we note that it is of a nonrecurring nature and it appears Tyco is considering a way to spread it over a longer period of time." In any event, payments above the par value of the US$750 million in debt would be recorded as a loss to income, said the Company. CONTACT: TYCO INTERNATIONAL, LTD. Media Gary Holmes Phone: 212-424-1314 Investor Relations Kathy Manning Phone: 603-334-3900 =========== B R A Z I L =========== BANESTES: Reports BRL34.6M 1Q03 Net Loss ---------------------------------------- Espirito Santo state bank Banestes suffered a net loss of BRL34.6 million (US$11.5 million) during this year's first quarter, compared to a 1Q02 profit of BRL10.21 million, Brazilian newspaper Gazeta Mercantil reports. Furthermore, the bank has to pay a fine to the country's security regulator, CVM, for filing the results 45 days after the deadline. Banestes CEO Joao Scardua was quoted by Business News Americas as saying that the bad results were due to a stalemate in the bank's privatization process, and partly due to bad management in the part of the former Espiritu Santo State administration. Mr. Scardua, who hopes to see the bank post a net income of BRL15.5 million by year-end, said, "They relaxed controls and forgot to focus on their market. Employees felt they were in a dead end and the bank stagnated. This was a disaster." Espirito Santo state governor Paulo Hartung, who took office this year, has pledged not to privatize the bank. However, the bank's CFO Sebastiao Bussular said that during the first four months of the year Banestes recovered its profitability and posted net income of BRL5.21 million through April this year. Mr. Bussular said that the financial turnaround is a result of new cost cutting measures that saved the bank BRL33.4 million reais and incorporated the closure of 12 branches. CATAGUAZES-LEOPOLDINA: 1Q03 Net Losses Up 130% From 1Q02 -------------------------------------------------------- Brazil's Cataguazes-Leopoldina power sector holding had a BRL15.6 net loss (US$5.21 million) for the first three months of this year, despite having positive cash flow. The figure is 130% higher than its 1Q02 net loss of BRL6.78 million. The group of five distributors had consolidated revenue of BRL285 million, 11.7% more than the BRl255 million figure in 1Q02. EBITDA was BRL68.8 million, up 31.6% from 1Q02, for an EBITDA margin of 32%, compared to 25.8% last year, says Business News Americas. About 1,491 GWh were sold during the said quarter, up 19.4% from 1QO2. The Cataguazes-Leopoldina is made up of Energipe, CELB and Saelpa in the northeast, and CFLCL and CENF in the southeast. The report indicates that the northeast operators had better results than their southeast counterparts. Northeast sales were up 2.6% compared to 1Q01, while sales in the southeast are 5.9% lower than 1Q01. Average consumption per capita is up 21.9% at Energipe, CELB and Saelpa, rising to 317kWh in 1Q03 from 260kWh in January and February 2002 (the last two months of rationing). By comparison, average consumption at CFLCL and CENF has risen 13.2% from 258kWh to 292kWh in the same comparable periods, says Business News Americas. The Company explained that higher financial costs led to the losses, because the company was forced to seek short-term financing to cover the lower revenues during 2002, because of delays in receiving credits from the federal government and delays to settlement from the MAE wholesale market, resulted in the negative results. The Company added that it still has BRL89 million collectable from MAE. Last week, main distributor CFLCL, and Sergipe state distributor Energipe, received approval to issue up to BRL380 million to refinance debts. The report adds that the group also plans to renegotiate BRL140 million in bank loans and raise BRL20 million from capital increase. CEMIG: 1Q03 Numbers Show Revenues Up, Net Income Down ----------------------------------------------------- Companhia Energetica de Minas Gerais -- CEMIG -- (NYSE: CIG; BOV: CMIG4, CMIG3 and LATIBEX: XCMIG), a leading fully-integrated electricity company in Brazil, reported Monday net income of R$151.7 million for the first quarter of 2003, a drop from net income of R$219.9 million in the first quarter of 2002. CEMIG's first quarter 2003 results were aided by higher revenues from gross electricity supply, and by financial revenues from appreciation of the real in relation to the U.S. dollar. Mr. Djalma Bastos, our CEO, had the following to say about the results: "We are happy with the Company's performance in the first quarter. Not only did we see energy sales volumes rise but we are profitable again thanks to the Company's solid fundamentals. Our unchanged focus on the core business and our ability to develop profitable projects and remain financially sound make Cemig one of the greatest investment opportunities in Brazil. Profitability will continue to be a priority in the coming quarters. The measures we took earlier in the year to cut operating expenses, as well as the comprehensive capital budget review we performed, should enable us to produce strong returns." Revenues from gross electricity supply were R$1.458 billion in the first quarter of 2003, a 23.56% increase over the R$1.180 reported in the first quarter of 2002. This result was fundamentally due to a 10.51% tariff readjustment as of April 8, 2002, an increase in the Charges for Emergency Capacity in the first quarter of 2003, and a 5.58% increase in the volume of energy sold. Revenues from electricity supply to other concessionaires were R$4.3 million in the first quarter, an 89.15% reduction from the R$39.2 million recorded in the first quarter of 2002. These revenues are mainly from energy transactions on the Wholesale Electricity Market (MAE) in the prior period, which amounted to R$32.27 million. In the first quarter CEMIG recognized revenues of R$315.2 million from the extraordinary tariff readjustment, which refers to billing losses and the parcel of expenses from the energy sold on the MAE during the Rationing Program. The Company is receiving the amounts recognized as revenues from the extraordinary tariff readjustment by means of an additional readjustment, effective for 82 months as of January 2002. General and administrative expenses were R$965 million in the first quarter, a 0.21% increase over G&A expenses in the first quarter of 2002. The higher number was due substantially to higher personnel expenses and the Fuel Consumption Account (CCC), which offset the reduction in expenses from energy purchased for resale and post-employment obligations. The financial result was impacted by exchange rate variations in relation to foreign currency loans and financing, and to the reversal of the provision for devaluation to market value of the National Treasury Notes. Net non-operating expenses of R$9.3 million in the first quarter of 2003 rose 33.42% over the R$7 million reported in the same quarter of the prior year. The non-operating result is comprised of losses on projects and damages in the deactivation of Fixed Assets. Mr. Flavio Decat, our CFO, said: "Our major concern in the quarter was to preserve the Company's liquidity despite the volatility of the country's major indicators. In particular, appreciation of the dollar caused heavy losses to companies doing business in Brazil. In addition, Brazil's major bonds had wide spreads, which affected corporate bond and syndicated loan costs, which are the main instruments used to roll over maturing debt or to finance expansion projects. Accordingly, we have taken measures to reduce the operating expenses to the level required by the new electricity rate as well as the capital expenditure forecasted for this year in order to significantly reduce the Company's indebtedness. Thus, with a more favorable outlook and expectations of stronger cash flow due to the rate adjustment granted to us last April by ANEEL, we will be able to meet the goals established by the Board of Directors early this year and add value to shareholders' investments. 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 ELETROPAULO METROPOLITANA: CEMIG Angling for Controlling Stake -------------------------------------------------------------- Cemig revealed Monday that it is interested in taking over AES Corp.'s cash-strapped utility Eletropaulo, reports Reuters. However, Cemig's chief of investor relations Luiz Fernando Rolla admits that the operation could take a few months before it will be completed due to regulatory issues. Already the two largest energy firms in Brazil, together Cemig and Eletropaulo would serve 26% of Brazilian power users while generating more than 7% of the country's energy. Under current Brazilian antitrust law, no single utility can control more than 30% of the national energy market. Government regulators are expected to revise those rules in the coming weeks, and Cemig is among those lobbying for more flexibility. 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 SEB: Defaults On $85M Loan Payment To BNDES ------------------------------------------- Southern Electric Brazil Part., a consortium which includes U.S. power group AES Corp. and local investment bank Opportunity, missed a loan payment of about US$85 million to Brazil's development bank BNDES last Thursday, reports Dow Jones. The payment is part of a US$600-million loan the consortium took out in 1997 to buy its 33% interest in Brazil's state-controlled power group Companhia Energetica de Minas Gerais (Cemig) at an auction. According to Dow Jones, SEB's debt had been rescheduled a few times before by the BNDES administration after a state governor canceled a shareholders agreement between the state government and the private minority shareholders in Cemig. USIMINAS: Reports 1Q03 Financial Results ---------------------------------------- Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA (Usiminas) had a BRL2.12-billion net revenue for the first quarter of this year, compared to the 1Q03 net revenue of BRL1.31 billion. The results boil down to a net profit of BRL356.2 million, a dramatic increase from BRL30.9 million in the same annual comparison. According to Dow Jones, the Company's consolidated sales volumes of 1.8 million tons in the first quarter, a 5% increase from the same period a year earlier. About three-fourths of its output was sold in the domestic market, while the rest were exported. Usiminas, which has a gross consolidated debt of BRL8.7 billion at March 31, had an EBITDA of BRL888.8 million, up from its 1Q02 EBITDA of BRL349.1 million. ========= C H I L E ========= EDELNOR: 1Q03 Loss Reaches BRL2.85 Billion ------------------------------------------ Chilean thermoelectric generator Edelnor suffered a CLP2.85- billion net loss for the first three months of this year, Business News Americas reports, citing a Company statement to the SVS, Chile's securities commission. The Company's 1Q03 net loss is 49.9 percent lower than its 1Q02 net loss. Operating losses billed CLP2.35 billion compared to profits of CLP662.3 million in 1Q02. Operating margins recorded losses of CLP1.41 billion compared to profits of CLP1.33 billion at the same time last year, while operating revenues increased 7.66 percent to CLP13.1 billion, said the report, adding Non-operating losses went down 80.4 percent to CLP1.47 billion in 1Q03. Edelnor, which is based in Mejillones in northern Chile's Region II, and operates in the country's northern grid (SING) is owned by Belgian power company Tractebel and Chile's state copper company Codelco. CONTACT: Empresa Electrica Del Norte Grande SA Avenida Grecia 750 Antofagasta, Chile Phone: +56 55 248500 +56 55 248094 Contact: Fernando del Sol, Chairman Tractebel Energia SA Registered Office Rua Antonio Dib Mussi, no 366 Centro 88015 - 110 Florianopolis - SC Brazil Phone: +55 48 221-7016 Fax: +55 48 221-7015 Home Page: http://www.gerasul.com.br Contacts: Mauricio Stolle Bahr, Chairman Eric L.J. de Muynck, Vice Chairman ENDESA CHILE: Judge's Ruling Deals Blow To Ralco Project -------------------------------------------------------- Chilean Judge Hadolff Ascensio ruled that a permit given by the national environmental authority Conama to power generator Endesa for the construction of the Ralco hydro project is "irregular," reports local newspaper El Mercurio. The 750MW Ralco project, constructed in Region VII, is 82 percent complete. Business News Americas said that if the ruling is held, the existing infrastructure built will have to be demolished. However, Endesa has 10 days to appeal the ruling once it receives official notification, said a spokesman for the Company. The Judge pointed out that state entities Conama consulted while evaluating environmental impact studies for the project opposed to the plan, making the permit Conama issued irregular. According to Business News Americas, the ruling might "provide ammunition" to a group of four Pehuenche families that refused to leave their lands in the upper Bio Bio basin. Endesa needs the area in order to fill the Ralco reservoir. The Company offered CLP200 million and 77 hectares of land to each of the families in an attempt to convince them to abandon their lands. The report added that the Company would not pay more than what it offered. However, the May 12 deadline has passed without an agreement between the two parties. A national court will be called to rule over the dispute if no agreement is reached. The Inter-American Commission of Human Rights has issues an injunction freezing the Ralco project after the four families filed a case against the country at the Commission. In related new, workers at Ralco went on strike last week, blocking access roads and complaining that a bonus promised to them was not paid. Local papers said that the protest was a peaceful one. ENERSIS: SC Upholds Antitrust Ruling ------------------------------------ Chilean lawyers Ramon Briones and Hernan Bosselin lost in their appeal to overturn a ruling by the country's antitrust commission that rejected accusations that the vertical integration of assets held by power sector holding Enersis would affect consumers. Business News Americas recalls that in October 2002, the antitrust commission voted four to one in favor of Enersis and against Briones and Bosselin. Briones and Bosselin appealed the decision to the Supreme Court, claiming that the vertical integration between Enersis and its subsidiaries gives the Company unfair control over the end-price paid by power consumers. However, Enersis lawyers argued that the claim was unfounded given that the Company sold its transmission subsidiary Transelec to Canada's Hydro Quebec for US$1.1 billion in 2001. The Supreme Court, which heard closing arguments on March 15 from Enersis and the lawyers, decided to uphold the antitrust commission's ruling. Enersis owns 60% of generator Endesa Chile and 98.5% of distributor Chilectra. Enersis had been forbidden from buying or selling shares in Endesa Chile until the Supreme Court gave its ruling. In addition, no board member of Enersis, Chilectra or Endesa Chile had been permitted to sit on the board of one of the other two companies. CONTACT: ENERSIS Investor Relations: Ricardo Alvial Chief Investments & Risks Officer of Enersis Email: ram@e.enersis.cl Phone: (562) 353-4682 Contacts: Susana Rey, srm@e.enersis.cl Ximena Rivas, mxra@e.enersis.cl Pablo Lanyi-Grunfeldt, pll@e.enersis.cl SANTA ISABEL: Transfers Paraguay, Peruvian Ops To Parent -------------------------------------------------------- Chilean supermarket chain Santa Isabel, which is close to completing the sale of its operations to retail holding Cencosud SA, said on Monday it had transferred its units in Paraguay and Peru to its parent company, Dutch food retailer Disco Ahold. TCR-LA earlier reported that Ahold, the world's No. 3 food retailer, reached an agreement with Cencosud to sell its 97% owned Santa Isabel for around US$150 million. However, the Paraguay and Peru operations don't form part of that planned deal. Disco will now assume the debts of Supermercados Stock in Paraguay and Santa Isabel in Peru. The US$150-million sale of Santa Isabel to Cencosud SA is expected to close May 30, Cencosud Chief Executive Laurence Golborne said earlier. The transaction had been expected to close by the end of April. However, the sale has been delayed pending the results of the additional audit of Santa Isabel to ensure its earnings have been properly presented to Chilean securities regulators. The audit followed revelations of large-scale accounting irregularities in the accounts of Ahold's North American operations and at its Argentine unit Disco SA, which controlled Santa Isabel until the Dutch parent took over some 99.7% of the shares in a buyout that included a public offer. CONTACT: Royal Ahold Investor Relations: Huibert Wurfbain, 011-31-75-659-5813 or Media Relations: Annemiek Louwers, 011-31-75-659-5720 or Taylor Rafferty New York Media Relations: Ethan Sack, 212/889-4350 or Taylor Rafferty London Media Relations: Matthew Nardella, + 44 20 7936 0400 =================================== D O M I N I C A N R E P U B L I C =================================== BANCO INTERCONTINENTAL: Three Execs Arrested for Fraud ------------------------------------------------------ Three executives of Dominican Republic bank Banco Intercontinental (BanInter) were arrested for an alleged involvement in a $2.2-billion fraud, the New York Times reports, citing central bank officials. BanInter's president and chief shareholder, Ramon Baez Figueroa, is one of the arrested executives, the Times says without revealing the names of the other two executives. In 1989, Baninter set up an unsupervised bank to use deposits to purchase companies linked to company executives and forgive millions of dollars in bad loans, the newspaper recalls, adding that Baninter officials ordered staff to erase all bad or secret loan records. The losses, which equal two thirds of the island republic's annual budget, were responsible for weakening the Dominican peso, which fell 40% against the dollar in the last year, says the Times. Just recently, Standard & Poor's Rating Services placed its 'BB-' long-term ratings on the Dominican Republic on CreditWatch with negative implications. The CreditWatch placement reflected the risk that the ratings will be lowered if the emerging problems at BanInter further weaken political institutions, the external reserve position, and economic policy flexibility. BANCO INTERCONTINENTAL: Government Takes Over Exec's Media Ties --------------------------------------------------------------- Media companies owned by Ramon Baez Figueroa were taken over by Dominican authorities in the wake of the scandal that involved the businessman. According to an EFE report, Baez Figueroa owns Listin Diario, El Expreso, El Financiero and Ultima Hora newspapers, as well as Radio Cadena Comercial radio network and two television outlets, Red Nacional de Noticias Canal 27 and Telecentro Canal 13. The Central Bank would say only that it took possession in the name of the government to "protect assets," and that the action was "legitimate." Meanwhile, Jose Lois Malkun, the head of the Dominican Republic's National Bank, said that the government's takeover of media companies owned by Baez Figueroa does not place employees' jobs at risk. "The Monetary and Financial Administration's court action (confiscating) assets linked to Banco Intercontinental (Baninter) does not threaten the jobs of any employees of those companies," Malkun said in a communiqu‚ clarifying the issu. ================= G U A T E M A L A ================= * S&P Lowers Long-Term Foreign Currency Rating on Guatemala ----------------------------------------------------------- Standard & Poor's Ratings Services said Monday 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 & 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 =========== GRUPO IUSACELL: US$750M, 5Yr-Plan Hinges On Debt-Restructuring -------------------------------------------------------------- Mexico's third largest mobile operator Iusacell drafted a five- year development plan in which majority shareholders will invest US$750 million pending the success of an US$822-million debt restructuring. According to Business News Americas, Iusacell and financial advisor Morgan Stanley are scheduled to publish a restructuring plan by the end of June. CEO and Chairman Carlos Espinal was quoted in a local daily El Financiero report as saying that Iusacell's main problem is that it is paying interest rates of around 14%, while its main US shareholder Verizon, for example, is generating capital at 4%. Iusacell met with creditors last week to provide company information that could qualify the firm for exemption of obligations, such as debt to EBITDA ratio limits, applicable to a US$266-million debt restructured in March 2001. The Company has secured temporary modifications to the obligations, but these are due to expire May 22. Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE:CEL; BMV:CEL) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc.. CONTACT: Grupo Iusacell, S.A. de C.V., Mexico City Russell A. Olson, 011-5255-5109-5751 russell.olson@iusacell.com.mx or Carlos J. Moctezuma, 011-5255-5109-5780 carlos.moctezuma@iusacell.com.mx Web site at http://www.iusacell.com VITRO: S&P Lowers Ratings to 'BB-'; Outlook Negative ---------------------------------------------------- Standard & Poor's Ratings Services said Monday that it lowered its local and foreign currency corporate credit ratings on glass manufacturer Vitro S.A. de C.V. to 'BB-' from 'BB'. The downgrade reflects the continued increase in the Mexican company's debt leverage relative to its cash flow generation over the past two years, a result of the economic slowdown in Mexico and the U.S. The outlook is negative. Standard & Poor's also lowered the rating of Vicap S.A. de C.V.'s 11.375% notes due 2007 to 'B' from 'B+'. The lower rating on the notes reflects the structural subordination of the issue. Vitro has around $1.6 billion in total debt. The weakness in the company's performance is reflected in its financial indicators, which consider Vitro's off-balance-sheet debt (factoring programs that total $60 million), for the last 12 months ended March 31, 2003. For this period, EBITDA interest coverage, total debt to EBITDA, and FFO to total debt ratios were 2.5x, 4.2x, and 9.5%. These ratios compare unfavorably to the 2.6x, 2.9x, and 16% posted in 2000. The company's consolidated EBITDA during the first quarter decreased 22% versus the first quarter of 2002. In particular, the company's flat glass business was hurt by the lower sales in the non-residential construction sector in the U.S. and in sales to auto OEMs. Sales of glass containers in Mexico and the U.S. were also lower because of lower demand for beer and soft drinks in the domestic and export markets. The performance of the glassware business was also weak in light of the drop of 15% in domestic sales. Liquidity is limited. Vitro faces short-term debt maturities of $495 million (of which $279 million are revolving trade finance facilities) over the next 12 months. The negative outlook reflects the challenging operating and economic environment faced by Vitro's business that could lead to further weakness in the company's operating performance and key financial measures. ANALYST: Jose Coballasi, Mexico City (52) 55-5279-2014 ============= U R U G U A Y ============= BANCO SANTANDER: Fitch To Review Foreign Currency Debt Rating ------------------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Banco Santander in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. BANCO SUDAMERIS: Debt Exchange Prompts Further Fitch Review ----------------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Banco Sudameris in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. CACDU: Fitch To Place Foreign Currency Debt Rating Under Review --------------------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Primera Cooperativa de Ahorro y Credito de Paysandu (CACDU) in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. COFAC: Fitch To Review Foreign Currency Debt Rating --------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Cooperativa Nacional de Ahorro y Credito (COFAC) in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. FUCAC: Fitch To Place Foreign Currency Debt Rating Under Review --------------------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Federacion Uruguaya de Cooperativas de Ahorro y Credito (FUCAC) in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. FUCEREP: Sovereign Cut Prompts Further Review from Fitch -------------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank Cooperativo de Ahorro y Credito (FUCEREP) in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. HSBC BANK: Fitch To Review Ratings in the Short Term ---------------------------------------------------- Credit rating agency Fitch Ratings will review the `CCC' foreign currency debt rating of Uruguayan bank HSBC Bank (Uruguay) in the short term. The review follows the distressed debt exchange carried out on a sovereign debt last week, Business News Americas reports, citing Fitch Ratings Argentina managing director Lorna Martin. Fitch lowered last week the Uruguayan foreign currency rating to default after the country completed a distressed debt exchange, which was aimed at extending the debt profile to make repayments easier. ================= V E N E Z U E L A ================= PDVSA: Executive Explains Investment Terms ------------------------------------------ Petroleos de Venezuela, S.A. (PDVSA) director Felix Rodriguez said that the Company remains open to new investment from the private sector in the basis of a "win-win" perspective. Business News Americas relates that Mr. Rodriguez indicated that PdVSA is open to investment on three areas: The first is to get the highest value possible from reserves in the Orinoco and traditional areas through state-of-the-art technology and the production of high quality crude. Secondly, PDVSA is exploring areas adjacent to existing oil fields with its own resources, and exploring new areas in joint ventures with the private sector. And thirdly, the Company is seeking a balance between its own operations and the private sector's in the exploration and production of natural gas. At the XII Annual Latin America Energy Conference in California, Mr. Rodriguez said that the recent awarding of exploration and production contracts on the offshore Deltana platform shows that Venezuela is an "attractive and reliable country in which to do business." Some 55 companies representing 18 countries are currently involved in Venezuela's oil industry. "We are the sixth in the world in terms of proven reserves, which represents 45 percent of total crude reserves in the Americas and 57 percent of Latin America's crude reserves," Mr. Rodriguez said. Venezuela has about 313 billion barrels of crude reserves. Some 78 billion barrels are of conventional crude, while the remaining 235 billion barrels of extra-heavy Orinoco crude. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *