/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030605.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 Thursday, June 5, 2003, Vol. 4, Issue 110 Headlines A N T I G U A & B A R B U D A LIAT: Ramping Up for Summer With Two More Planes A R G E N T I N A AUSOL: Restructuring Procedure Includes Debt Buy Back Plan BANCO FRANCES: 1Q03 Net Loss Swells To ARS154 Million BANCO GALICIA: Reduces Losses to $20M in 1Q03 CARABIE: Seeks To Reorganize Finances CLISA: Argentine S&P Assigns Default Ratings To Bonds CTG: Successfully Reorganizes Debts DECRISALEX: Involuntary Bankruptcy Proceeding Commenced ELECTRYTEL: Court Declares Bankruptcy IEBA: Local Standard & Poor's Assigns Junk Ratings To Bonds INSTITUTO PSICOPEDAGOGICO: Seeks "Concurso Preventivo" MULTICANAL: Postpones Deadline For APE Votes NAY LYC TEXTIL: Court Declares Bankruptcy REPSOL YPF: S&P Revises Outlook To Stable on Improving Debt SPELL: Petitions Court to Commence Reorganization B O L I V I A COTEL: To Advertise LD Multicarrier Code in 3-Week's Time B R A Z I L KLABIN: S&P Places 'CCC+' Rating on Watch Positive TELESP CELULAR: Prepares To Offer Up To $150M in Foreign Bonds * Fitch Revises Brazil's Sovereign Credit Outlook To Positive H O N D U R A S HONDURAN BANKS: Governemnt Completes Capitalization, Liquidation M E X I C O AHMSA: Postpones Start-up of No.3 Blast Furnace Until 3Q03 DAISYTEK INTERNATIONAL: Chap. 11 Filing Excludes Mexican Ops GRUPO IUSACELL: Standard & Poor's Lowers, Withdraws Ratings GRUPO MEXICO: Awaits Audit Results HAYES LEMMERZ: Chapter 11 Reorganization Completed N I C A R A G U A NICARAGUAN BANKS: Two Foreign Firms Eyeing Assets P A R A G U A Y MULTIBANCO/CORPORACION FINANCIERA: Government Contemplates Sale U R U G U A Y AMERICAN EXPRESS: S&P Ups Local, Foreign Currency Credit to B BBVA ARGENTARIA: Long-term Local, Foreign Credit Ratins Improve CITIBANK N.A.: S&P Ups CD and Currency Credit Ratings DISCOUNT BANK: Currency Credit & CD Ratings Upgraded to B - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= LIAT: Ramping Up for Summer With Two More Planes ------------------------------------------------ Antigua-based LIAT will be adding two more aircraft to its fleet in preparation for the summer. The additional aircraft brings LIAT's fleet to 12. The airline indicates that it is taking its business seriously. "We are happy also to announce that we intent to add two more aircrafts to our fleet this summer and these will be Dash 8's and the intention is that they will be Dash 8 300 aircrafts," the Antigua Sun quoted LIAT chief Gary Cullen. "There is no standing still at LIAT. We are a very progressive company with an old and very proud brand name that is adapting very successfully with the changing business environment," said Mr. Cullen. Mr. Cullen also praised the airline's workforce for the improvement LIAT has in hand. "The amount of progress made in LIAT in recent years is due to the fact that we have some of the most dedicated and professional people who are working in the Caribbean. LIAT is a very exciting company to work with and it is a company that is going place," he said. CONTACT: LIAT Corporate Headquarters V.C. Bird International Airport, P.O. Box 819, St. John's, Antigua West Indies Tel. 1 (268) 480-5600/1/2/3/4/5/6 Fax: 1 (268) 480-5625 Homepage: http://www.liatairline.com/ Contacts: Garry Cullen, Chief Executive Officer David Stuart, Vice President of Marketing ================= A R G E N T I N A ================= AUSOL: Restructuring Procedure Includes Debt Buy Back Plan ---------------------------------------------------------- Autopistas del Sol S.A. (Ausol) announced recently that its debt restructuring proceeding continues to be executed through an agreement known as "Acuerdo Preventivo Extrajudicial" (APE), which prevents the Company from being forced into a "concurso preventivo". Ausol needs the approval of two-thirds of its creditors in order to be co-validated. The Company is offering to buy debt for cash, a procedure, which Infobae describes as "Ofrecimiento de Compra en Efectivo." Ausol is seeking to buy back bonds called "obligaciones negociables clase A" due 2004 and "obligaciones negociablesclase B" due 2009. The Company also intends to buy back other financial liabilities, known as "deuda bancaria", in order to give credence to its APE proceedings. The offer expires on June 20, 2003 at 5:00 p.m. New York time. For more information about the buy back offer, please contact: D.F.King & Co., Inc. 48 Wall Street, 22nd Floor New York, NY 10005 Phone: (212) 493-6920 Fax: (212) 809-8839 or Agent of the Offer: J.P. Morgan Securities INC. 270 Park Avenue, 7th Floor New York, NY 10017 Attn.: Liability Management Group: Phone:(866) 846-2874. BANCO FRANCES: 1Q03 Net Loss Swells To ARS154 Million ----------------------------------------------------- Argentina's BBVA Banco Frances SA widened its net loss in the first-quarter of the year to ARS154 million, against a net loss of ARS42.1 million in the same period a year earlier. The Company, in a press statement announcing the results, said the loss was "mainly due to a drop in Net financial income." Net financial income fell to ARS8.2 million in the recent quarter from ARS449.3 million a year ago. This was due to the effect of the appreciating peso on the Company's assets and liabilities, which lowered financial income and raised financial expenses. Financial expenses were also magnified by the cost of paying high interest rates on the growing number of certificate of deposit accounts that flowed into the banks this year, as the government phased out year-old banking freeze and confidence in the financial system grew. Since March, interest rates on CDs have plummeted. Banco Frances pointed out, however, that the peso's sharp appreciation in the first months of 2003 also allowed it to set aside less in loan provision than previously expected, since its debtors found it easier to settle their dollar debts. The bank set aside ARS91.5 million in provision for loan losses in the first quarter as against ARS251.3 million a year earlier. The Company also reported some ARS9.0 billion in outstanding loans. Banco Frances also said it had slashed administrative expenses to ARS133.9 million in the first quarter - some 37% below the level of a year earlier. Around 6% of staff were laid off during the first quarter. The Company reported that total deposits at the bank fell to ARS7.5 billion on March 31, 2003, from ARS13.2 billion a year earlier. Deposits, however, were higher from their Dec. 31, 2002, level of ARS7.1 billion and likely have risen in the past two months as the banking freeze on CDs has been lifted. Banco Frances is one of Argentina's largest private banks, with 13.6% of total deposits in the banking system, as of March 31. The bank reported total assets of ARS15.3 billion and total liabilities of ARS13.4 billion. The Company's results have been adjusted to account for inflation up to the period ended February 28, the date at which a securities regulator requirement for converting accounts into constant pesos ended. CONTACT: BBVA Banco Frances SA 199 Reconquista Buenos Aires Argentina 1003 Phone: +54 11 4346 4000 Home Page: http://www.frances.com.ar Contacts: Jaime Guardiola Romajaro, Chairman BANCO GALICIA: Reduces Losses to $20M in 1Q03 --------------------------------------------- Grupo Financiero Galicia SA, Argentina's biggest banking group, narrowed its loss the first-quarter of the year to ARS58.6 million (US$20.6mn) from a ARS2-billion loss in the same period a year ago. Banco Galicia, one of the country's biggest banks, lost ARS40.1 million (US$14.1 million) during the period, the group said in a statement. Grupo Galicia owns 93.58% of Banco Galicia. Galicia was hurt by the government's US$95-billion bond default in December 2001 and devaluation one month later. The government also froze accounts and turned dollar assets and liabilities into pesos at different exchange rates. The government gave Galicia billions of pesos in discount loans last year to help restore its liquidity. CONTACT: GRUPO FINANCIERO GALICIA Teniente General Juan D. Peron 456, Piso 3 1038 Buenos Aires, Argentina Phone: (54 11) 4343 7528 / 9475 Web site: http://www.gfgsa.com Contacts: Eduardo J. Escasany, Chairman and CEO Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires CARABIE: Seeks To Reorganize Finances ------------------------------------- Textile company Carabie S.A. is applying for "concurso preventivo", relates Infobae. The report reveals that the Company ceased paying debts about three years ago. The Company's case is heard at Court no. 1, under Dr. Dieuzeide, and Secretary No. 2 of Buenos Aires. CONVACT: Carabei S.A. Ave. Del Libertador 1784 9 Piso Buenos Aires Argentina CLISA: Argentine S&P Assigns Default Ratings To Bonds ----------------------------------------------------- Standard & Poor's International Ratings, Ltd. Sucursal Argentina assigned junk ratings to various bonds issued by CLISA. According to an announcement in the official Web site of the National Securities Commission of Argentina, S&P rated US$100 million worth of bonds called "obligaciones negociables con garatia" `raD'. The rating is issued to entities that are in payment default, or if the company has filed for bankruptcy. The bonds would mature on June 1, 2004. At the same time, some US$120 million worth of bonds called "obligaciones negociables con garantia (AGO 21-01-03, AD 23-01- 03)" were rated `raB-', which means that the obligation denotes rather weak protection parameters relative to other obligations around the country. The maturity date of this one is June 01, 2012. The ratings were issued on May 29, based on the Company's financials as of the end of March 2003. CTG: Successfully Reorganizes Debts ----------------------------------- Argentine thermo generator Central Termica Guemes (CTG) considers its recent debt swap offer a success, reports Business News Americas. CTG informed the Buenos Aires stock market that a total of 66% of holders of US$54 million in debentures agreed to the exchange offer. "Practically two third of the creditors subscribed to the exchange offer, so we think this has been a success for the company," CFO Jorge Reston said, attributing this to the stability of the Argentine economy and recovery of investor confidence. Creditors representing US$35.4 million of the debentures opted to swap existing notes for new notes that mature in 2013, paying 2% a year interest on outstanding interest payments and a bonus of US$7.50 for every US$1,000 worth of bonds. Creditors representing US$255,400 of debentures subscribed to the alternative, which is to convert the debentures into CTG shares. The Salta province judge managing CTG's bankruptcy process will now decide what happens to the creditors holding US$18.1 million of debentures that did not subscribe to either option, Reston said. CTG, which operates a 260MW thermoelectric plant in Salta province in northwest Argentin, is 60% owned by local company Powerco, 30% state-owned, and 10% owned by its employees. CONTACT: Central Termica Guemes S.A. Avenida Leandro N Alam 822 Piso 12 Ciudad Autonoma de Buenos Aires C1001AAQ ARGENTINA Tel. +54 4311-6064/6065/6066 DECRISALEX: Involuntary Bankruptcy Proceeding Commenced ------------------------------------------------------- Buenos Aires Court No. 19 declared Decrisalex S.A. bankrupt following a request from Bodegas Chandon S.A., to whom the Company owes some $17,208.74. The court, under Dr. Fernandez assigned Mr. Juan Carlos Ozores as receiver. The receiver may be contacted at the address: 5th Floor, No. 599, Bartolome Mitre Street Buenos Aires Claims may be verified until July 8, 2003. CONTACT: DECRISALEZ SRL Corner Rafael Obligando Street & Sarmiento Avenue Buenos Aires ELECTRYTEL: Court Declares Bankruptcy ------------------------------------- Court No. 17 of Buenos Aires has declared Buildings maintenance company Electrytel S.R.L. bankrupt. The bankruptcy came after a request from its creditor, Acindar Industria Argentina de Aceros S.A.. The court assigned Ms. Marta Tignarelli as receiver. Claims may be verified until August 8, 2003. CONTACT: ELECTRYTEL S.R.L. Amancio Alcorta 2862 Buenos Aires Ms. Marta Tignarelli, receiver Reconquista St. No. 715 Buenos Aires Acindar Industria Argentina de Aceros SA 2739 Estanislao Zeballos Beccar Buenos Aires Argentina B1643AGY Phone: +54 11 4719 8500 Fax: +54 11 4719 8501 Home Page: http://www.acindar.ar.com Contact: Arturo Tomas Acevedo, Chairman IEBA: Local Standard & Poor's Assigns Junk Ratings To Bonds ----------------------------------------------------------- Corporate bonds issued by Inversora Electrica de Buenos Aires S.A. (IEBA) received junk ratings from the local arm of Standard & Poor's International Ratings, Ltd. The rating applies to a total of US$230 million of "obligaciones negociable simples no Convertibles en ecciones", said the National Securities Commission of Argentina. Some US$100 million of this expired on September 16, 2002, while the rest expires two years after that. The ratings, given on Thursday, apply to obligations that are in payment default. It may also be given when the Company has applied for bankruptcy. The issued ratings were based on the Company's financials as of the end of March 2003. INSTITUTO PSICOPEDAGOGICO: Seeks "Concurso Preventivo" ------------------------------------------------------ Instituto Psicopedag�gico San Pablo S.A. is seeking permission to organize itself. According to Infobae, the Company has applied for "concurso preventivo" at Coiurt No. 25, Secretary No. 49 of Bunoes Aires through case no. 3065523681. The report did not indicate whether the court has assigned a receiver for the company. CONTACT: INSTITUTO PSICOPEDAGOGICO SAN PABLO S.A. Asuncion 2983, Buenos Aires Argentina MULTICANAL: Postpones Deadline For APE Votes -------------------------------------------- Multicanal has postponed the deadline for its creditors to accept the "Acuerdo Preventivo Extra-Judicial" (APE) proceedings, relates Infobae. The Company needs the approval of two-thirds of its creditors for the commencement of the APE proceedings, which would keep it from having to apply for "concurso preventivo" proceedings. At present, the Company has received the approval of 50 percent of its creditors. It hopes to achieve the approving vote of the required number of creditors before the deadline expires. The Company is currently continuing negotiations with the remaining banks. NAY LYC TEXTIL: Court Declares Bankruptcy ----------------------------------------- Argentine textile company Nay Lyc Textil S.A. is declared bankrupt. The declaration came after Sniafa SAICIFI, to whom the Company owes $33,488.36 petitioned Court No. 13 to declare Nay Lyc as bankrupt. Claims may be verified up to July 17, 2003. The court assigned Mr. Jorge Del Hoyo was receiver. He may be reached at No. 610, Julio Argentino Roca Street. CONTACT: NAY LYC TEXTIL No. 1865 Virrey Loreto Street Buenos Aires REPSOL YPF: S&P Revises Outlook To Stable on Improving Debt ----------------------------------------------------------- Standard & Poor's Ratings Services said on Tuesday that it had revised its outlook on Spain-based energy group Repsol-YPF S.A. (Repsol) to stable from negative, and raised its short-term corporate credit rating on the company to 'A-2' from 'A-3'. In addition, the 'BBB' long-term corporate credit rating on Repsol was affirmed. At the same time, Standard & Poor's revised to positive from developing the outlook on its 'BB+' long-term local currency corporate credit rating on Repsol's 99%-owned Argentina-based subsidiary YPF S.A., and raised its long-term foreign currency corporate credit rating on YPF to 'BB' from 'B+'. The outlook on the foreign currency rating is stable. "The ratings actions reflect the combination of both companies' deleveraging in recent quarters, the expected maintenance of prudent policies, and the resilience of the group to challenging conditions in Argentina," said Standard & Poor's credit analyst Emmanuel Dubois-Pelerin. The upgrade of the foreign currency rating on YPF reflects Standard & Poor's perception of higher economic incentives for Repsol to support YPF in the context of more relaxed transfer and convertibility restrictions in Argentina. Moreover, YPF's reduced debt burden means that any potential temporary financial assistance from Repsol would be of a manageable amount. The positive outlook on the local currency rating on YPF reflects the potential for an upgrade if the operating environment for the company in Argentina remains relatively stable and YPF continues to perform well. Repsol's strengths include massive, low-cost hydrocarbon operations (which generate around half of midcycle consolidated EBIT); locally leading and highly profitable Spanish downstream oil operations (around 40%), partially mitigating upstream earnings volatility; strong parent-company liquidity, at least until year-end 2004; and prudent financial policies, with net debt having been cut by almost 50% during 2002, excluding the effect of the deconsolidation of 76% of Spanish utility Gas Natural SDG, S.A.'s debt. At midcycle crude price and refining margins, Repsol's non-Argentine EBIT should cover financial fixed charges by over 3x in coming years. "The key risk facing Repsol is its exposure, through YPF, to the continuingly volatile monetary, economic, and fiscal conditions prevailing in Argentina, where it generates almost all its free cash flow," said Mr. Dubois-Pelerin. Repsol's access to YPF's cash flow--highlighted by a total of $1.1 billion in dividends already received from YPF against 2002 earnings--will continue to depend on Argentine monetary authorities maintaining a 1989 decree under which oil exporters can keep 70% of export proceeds outside the country. The government confirmed the decree in late December 2002. "YPF's better-than-expected resilience to the local crisis, during which it managed to reduce debt, its currently smooth debt maturities, and the existence of cross-default clauses between YPF's and some of Repsol's debt, all support YPF's ratings, notably through the increasing economic incentives for and decreasing cost of supporting YPF," said Standard & Poor's credit analyst Pablo Lutereau. "Should the new Argentine administration of President Kirchner demonstrate a supportive framework for the oil industry, the local currency rating on YPF could be raised to investment-grade within a year," said Mr. Lutereau. At March 31, 2003, YPF's total debt represented only 9.9% of its capitalization, and in no year do maturities exceed a modest $300 million. Even at midcycle international prices, YPF's total funds from operations should exceed 150% of third-party debt, and even only a limited portion of export proceeds would cover foreign debt repayments. CONTACT: Emmanuel Dubois-Pelerin Paris Phone: (33) 1-4420-6673 Email: emmanuel_dubois-pelerin@standardandpoors.com Pablo Lutereau Buenos Aires Phone: (54) 114-891-2125 Email: pablo_lutereau@standardandpoors.com SPELL: Petitions Court to Commence Reorganization ------------------------------------------------- Argentine promotional service company Spell S.A. is seeking approval to commence reorganization proceedings. A report from Infobae reveals that the Company has filed for "concurso preventivo" at Court No. 5, Secretary No. 10 of Buenos Aires. However, the report did not indicate if the court has already assigned a receiver for the case. CONTACT; Spell S.A. Teniente General Juan Domingo Peron 685 Piso A Buenos Aires ============= B O L I V I A ============= COTEL: To Advertise LD Multicarrier Code in 3-Week's Time --------------------------------------------------------- Cotel intervener Javier Tapia informed Bolivia's telecoms regulator Sittel that the La Paz-based local telephony cooperative expects to start advertising its long distance multicarrier code in two or three weeks, relates Business News Americas. In addition, Cotel is preparing to offer Internet and call center services, Sittel head Rene Bustillo told Business News Americas, after meeting with Tapia. Tapia, Sittel's former head, began supervising Cotel early April in a 90-day intervention scheduled to end July 2. Sittel ordered the intervention after a breakdown in relations between the independent Cotel administrator Detecon and the cooperative's management boards. In a bid to bring order to the company Tapia has asked Cotel's 100,000 member-users to meet on June 20 to vote in new administrative and oversight boards. However, according to a report by local daily El Diario, local business chamber the La Paz union of institutions has made a claim for control of Cotel and aims to run the board elections itself. The union also claimed that Sittel plans to renew Tapia's term of intervention and threatened to call a general strike if that is the case. Bustillo slammed the report, saying that Sittel has made no such announcement. It is up to Tapia himself to request an extension of intervention, which he must do at least 15 days before the end of his term, Bustillo added. =========== B R A Z I L =========== KLABIN: S&P Places 'CCC+' Rating on Watch Positive -------------------------------------------------- Standard & Poor's Ratings Services said on Tuesday that it placed its 'CCC+' corporate credit rating of Brazilian paper goods company Klabin S.A. on CreditWatch with positive implications. The CreditWatch placement follows the company's announcement that it agreed to transfer its controlling stake in Riocell S.A. to Aracruz Celulose S.A. (local currency: BBB-/Watch Neg/--; foreign currency: B+/Stable/--) for approximately US$610 million. Klabin has about US$1 billion of total debt outstanding. "Standard & Poor's expects the proceeds of the transaction to resolve Klabin's most critical short-term refinancing issues," said credit analyst Milena Zaniboni. Large maturities in the short term were the main constrain to the rating, because the company's access to bank or capital markets was very limited after the liquidity problems Klabin faced in 2002. Expected free cash flow of $170 million in 2003 allows for only partial repayment of such maturities, which totaled $470 million in 2003, including the put option of Brazilian Reais (BrR) 500 million (approximately US$170 million) debentures issued in 2002. The decision to sell Riocell is in line with Klabin's strategy to sell assets to amortize debt, but was not incorporated in the ratings due to the uncertain timing and success of the company's strategy. Standard & Poor's will analyze the use of the sale proceeds and Klabin's new capital structure to assign a new rating for the company upon closing of the transaction (expected for the next 30 days). If debt is significantly reduced and refinancing is no longer an immediate concern, the ratings on Klabin could be raised by at least two notches. Analyst: Milena Zaniboni Sao Paulo Phone: (55) 11-5501-8945 TELESP CELULAR: Prepares To Offer Up To $150M in Foreign Bonds -------------------------------------------------------------- Brazilian mobile carrier Telesp Celular is on its way to issuing US$100 million - 150 million in foreign bonds, Business News Americas reports, citing business daily Valor Economico. BBVA of Spain and BES of Portugal will co-manage the offer. Early this week, Merrill Lynch downgraded Telesp Celular to "sell" due to its "unattractive valuation," an ML analyst said. "With Telesp Celular up 65% over the past three months on the back of an improved macro outlook for Brazil, we believe it is now overvalued," said ML Equity Analyst Mauricio Fernandes. The "fair value" for Telesp Celular would be US$3.60 per American Depositary Receipt of the company, "implying a 13% downside potential," the analyst added. ML also cited "increasing competition as not reflected in the stock price." "We believe our Ebitda margin estimates are not conservative at 41%-42%, slightly ahead of management's 40%. This represents high earnings risk," Fernandes said. CONTACT: Telesp Celular Participacoes S.A. Fernando Abella Garcia, Investor Relations Officer * Fitch Revises Brazil's Sovereign Credit Outlook To Positive ------------------------------------------------------------- Fitch Ratings revised the Rating Outlook on Brazil's sovereign ratings to Positive from Stable, reflecting signs that President Lula could succeed in building a consensus on economic policies that would place Brazil's public and external finances on a sustainable path. The ratings, both foreign and local currency (Brazilian Real), remain at 'B'. The performance of President Lula's administration since taking office on January 1, 2003, has been supportive of sovereign creditworthiness and has eased one of Latin America's most marked political transitions from the center-right to a coalition dominated by the left. Credible economic policy appointments were made, monetary and fiscal policies were tightened, a commitment to push through important structural reforms was affirmed, and a coalition with enough votes to amend the constitution has been assembled. Given that President Lula has largely adopted the reform program of his opponents, there now appears to be a higher degree of policy consensus in Brazil than before the election. Against this backdrop, market sentiment has improved, with domestic debt rollover rates at 100%, international capital market access re-established, and the Brazilian Real rallying 32.5% from its pre-election lows, underpinning lower public debt to GDP ratios. With the announcement by the PMDB leadership in late May that it will vote with the government coalition in Congress, the government can count on greater than 60% of votes in both houses, needed for constitutional amendments, assuming no defections. On the policy front, the Lula administration affirmed its commitment to public sector primary surpluses of 4.25% of GDP for four years (2003-2006), 50 basis points above the previous government's target. Yet sharply higher interest expense, driven by the 850 basis points in interest rate hikes since last October, could still mean a public sector deficit of above 6% of GDP this year. Public wage hikes were kept below inflation. And, the government has moved quickly to put before Congress bills that would reform the social security and tax regimes in Brazil, though the fiscal savings from these reforms will be modest (estimated at under 1% of GDP). Yet Brazil faces formidable credit challenges. Key among these is the economy's capacity to sustain higher levels of GDP and export growth in order to underpin declining public debt and external debt burdens. Brazil's gross general government debt represented 85.7% of GDP at year-end 2002, and is expected to close 2003 at above 80% of GDP, higher than most sovereigns rated in the 'BB' or 'B' range. Furthermore, the profile of Brazil's public sector liabilities remains unfavorable, heavily weighted towards short- term, floating rate, foreign currency-linked, or inflation- indexed obligations. The country's net external debt relative to current external receipts (CXR), at 234% at year-end 2002, is higher than all similarly-rated sovereigns. Although net new external borrowing is negative (equity financing exceeds the current account deficit), Brazil is burdened with a heavy debt amortization schedule. Capital inflows have not yet recovered strongly, with rollover rates on medium and long-term borrowing below 50% in the first four months of 2003 and most refinancing being done short term. FDI inflows remain at approximately 40% of last year's levels. Brazil is expected to draw the full US$11.7 billion in loans (in net terms) from the IMF this year. Key to improving creditworthiness going forward will be President Lula's ability to hold together his reform coalition in order to pass key measures such as social security and tax reform, but also bankruptcy and central bank autonomy reforms. Likewise a convincing resumption of medium and long-term capital inflows would be important to balance of payments stability. And, progress in setting inflation on a convincing downward trajectory would underpin a strengthening of the central bank's credibility. In the medium term, Fitch will monitor whether the Lula government can keep its policy commitments, notably the primary surplus targets, and maintain its reform momentum, for example, in presenting legislation that would ease the pressures of revenue-earmarking and providing a stable, market-friendly regulatory environment in key sectors, such as energy and telecommunications. Continued strong trade performance, potentially at risk from a strengthening Real, will be important going forward. Finally, clear signs of sustained stronger GDP and export growth without balance of payments problems could underpin future ratings upgrades. CONTACT: Roger M. Scher New York Phone: +1-212-961-9060 Morgan C. Harting New York Phone: +1-212-908-0820 or Richard Fox London Phone: +44 (0)20 7417 4357 Media Relations: James Jockle New York Phone: +1-212-908-0547 =============== H O N D U R A S =============== HONDURAN BANKS: Governemnt Completes Capitalization, Liquidation ---------------------------------------------------------------- The Honduran government spent HNL4.2 billion (US$243 million) to liquidate local banks Bancorp, Banhcreser, Capital and Solfisa, local daily Tiempo Digital reports, citing chief banking regulator Ana Cristina Mejia. The amount, which is equivalent to 5% of the country's GDP, was split between the government, deposit insurance agency Fosede and the central bank, Mejia said, adding the process also incorporated the capitalization of local private bank Sogerin. According to a report by Business News Americas, the country's banking and securities regulator, CNBS, has kicked off an international auction for 100% of Sogerin. Pre-qualification was completed last month and Fosede is yet to set a definitive bidding date. Banking regulators intervened Capital and Sogerin in May 2002, opting to capitalize the banks through Fosede, but Sogerin's inherent financial instability finally forced CNBS to close the bank last December. =========== M E X I C O =========== AHMSA: Postpones Start-up of No.3 Blast Furnace Until 3Q03 ---------------------------------------------------------- The need to reschedule maintenance work for its No.5 furnace prompted Mexican steelmaker to delay the lighting of its No.3 blast furnace, which has capacity of 1,600t/d pig iron, reports Business News Americas, citing an Ahmsa executive. The No.3 furnace was originally scheduled to start operating, as a backup, in the first quarter of this year. However, the Company postponed the start-up until the third quarter, when the No.5 furnace comes up for a brief maintenance period, company spokesperson Francisco Orduna said. Meanwhile, Orduna revealed that Ahmsa has completed revamping its rebar and wire rod lines. "They're ready to start production, but we won't begin again with these products until prices internally and abroad guarantee the expected rate of return, which hasn't happened yet," he said. Ahmsa stopped production of the two lines late 2002 because of low rates of profitability. Ahmsa, which describes itself as Mexico's largest integrated steelmaker, has two plants in Monclova, Coahuila state, and four operable blast furnaces. Nos. 4 and 5 operate on a permanent basis and Nos. 2 and 3 are backups, with lower capacity. The Company, controlled by the GAN group, has been in a form of bankruptcy protection for the last four years. CONTACT: AHMSA Prolongacion B. Juarez s/n, Monclova , Coahuila 25770 Mexico http://www.AHMSA.com Phone: +52 86 33 81 72 Fax: +52 86 33 65 66 Contacts: Alonso Ancira Elizondo, CEO, Vice Chairman, Pres/CEO Jorge Ancira Elizondo, Chief Financial Officer Manuel Ancira Elizondo, Chief Operating Officer DAISYTEK INTERNATIONAL: Chap. 11 Filing Excludes Mexican Ops ------------------------------------------------------------ Daisytek International Corporation (Nasdaq:DZTK) announced Tuesday that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The petition was filed in Dallas, Texas. Prior to Tuesday's Chapter 11 filing by Daisytek International Corp., the company's primary operating subsidiary, Daisytek, Incorporated and a number of its U.S. operating subsidiaries, including Arlington Industries, Inc., Digital Storage Inc. and The Tape Company, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on May 7, 2003 in Dallas, Texas. On May 16, 2003 the boards of directors for U.K.-based ISA International plc and Daisytek Australia each appointed a Voluntary Administrator to assume day-to-day management of operations. PricewaterhouseCoopers LLP, the Voluntary Administrator appointed by ISA International's board of directors, subsequently sold the business and assets of the U.K. and the Republic of Ireland businesses, together with the equity in the Swedish and Norwegian companies of ISA International. It is unlikely that the shareholders of Daisytek International Corp. will realize any value from the company's Chapter 11 case. Last week, Daisytek's U.S. lending syndicate filed a Motion for Relief from the Automatic Stay with the bankruptcy court as contemplated by the Agreed Cash Collateral Order of May 21, 2003. Such motion, if granted, would enable the lenders to enforce their liens on Daisytek assets. Daisytek intends to vigorously oppose such a motion. Under the cash collateral order, Daisytek's U.S. subsidiaries received consensual approval from the bankruptcy court and its U.S. lending syndicate to use a significant percentage of the lenders' cash collateral through June 13, 2003 to pay for operating expenses and to increase inventory levels at Arlington Industries and The Tape Company. The company continues to conduct negotiations with creditors of its U.S. subsidiaries and to pursue the reorganization process in the court. Currently, the company does not anticipate that it will resume taking orders from the Allen, Texas operations facility, nor does the company intend to resume shipments from its Memphis, Tenn., Bakersfield, Calif. or Albany, NY distribution centers. These locations comprised the primary operational facilities for the Daisytek, Incorporated subsidiary. Daisytek's Mexico and Canadian operations, which are independently funded in their respective countries and have not been included in any bankruptcy filings, continue to report business as usual. About Daisytek Daisytek is a global distributor of computer supplies, office products and accessories and professional tape media. Daisytek is a registered trademark of Daisytek, Incorporated. All rights reserved. GRUPO IUSACELL: Standard & Poor's Lowers, Withdraws Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it lowered its long-term corporate credit rating on Mexican wireless service provider Grupo Iusacell S.A. de C.V. (Grupo Iusacell) to 'D' from 'CC'. The senior unsecured debt rating was also lowered to 'D' from 'C'. The senior secured rating on subsidiary Grupo Iusacell Celular S.A. de C.V. (Iusacell Celular) was affirmed at 'CC', and its senior unsecured debt rating was affirmed at 'C'. Subsequently, Standard & Poor's withdrew all the ratings assigned to these companies and their debt instruments. Grupo Iusacell had $805 million of consolidated debt outstanding at March 31, 2003. "The downgrade followed Grupo Iusacell's June 2, 2003, announcement that it would not make the US$25 million interest payment due June 1, on its US$350 million 14.25% bonds due 2006," stated Standard & Poor's credit analyst Patricia Calvo. It is unlikely that Grupo Iusacell will make the required interest payment within the 30-day grace period allowed by the indentures governing the notes to avoid an event of default. The company indicated last November that it had hired a financial advisor for the restructuring of its debt and up to now has not given any public indication of the terms. Standard & Poor's expects the debt restructuring to be distressed and that creditors will receive less than full recovery given the company's negative cash flow and depressed valuations for telecommunications assets. The companies' financial profiles have been adversely affected by weak economic conditions and increased competition. Although management has implemented measures aimed at retaining and attracting higher-end postpaid and prepaid customers that could have a positive impact on its cash flow generation in the future, its ability to service its overall debt has been hampered because of tight liquidity. At the end of the first quarter 2003, the companies had about $5 million in cash and limited credit line availability. Analyst: Patricia Calvo Mexico City Phone: (52) 55-5279-2073 GRUPO MEXICO: Awaits Audit Results ---------------------------------- Independent auditors examining the 2002 results of mining-metals company Grupo Mexico are yet to finalize their study, Business News Americas reports. Presently, the auditors could not vouch for the liabilities and provisions needed to cover the legal necessities of Group Mexico's US subsidiary Asarco. A thorough study is pending of Asarco's liabilities, including those related to asbestos exposure and environmental clean-up commitments, G-Mex told the Mexico City bourse. Asarco has set up a US188-million reserve and an environmental trust fund with another US$100 million to deal with the liabilities. CONTACT: GRUPO MEXICO S.A. DE C.V. Avenida Baja California 200, Colonia Roma Sur 06760 M,xico, D.F., Mexico Phone: +52-55-5264-7775 Fax: +52-55-5264-7769 Home Page: http://www.gmexico.com Contacts: Germ n Larrea Mota-Velasco, Chairman and CEO Xavier Garca de Quevedo Topete, President and COO Alfredo Casar P,rez, COO, Ferrocarril Mexicano Daniel Ch vez Carre>n, COO, Industrial Minera M,xico Daniel Tellechea Salido, VP and Administration and Finance President ASARCO 2575 E. Camelback Rd., Ste. 500 Phoenix, AZ 85016 Phoenix City Phone: 602-977-6500 Fax: 602-977-6701 Home Page: http://www.asarco.com Contacts: Germ n Larea Mota-Velasco, Chairman and CEO Genaro Larrea Mota-Velasco, President Daniel Tellechea Salido, VP and CFO HAYES LEMMERZ: Chapter 11 Reorganization Completed -------------------------------------------------- Hayes Lemmerz International, Inc. announced that it has emerged from its voluntary Chapter 11 reorganization. Hayes Lemmerz, substantially all its U.S. subsidiaries and one subsidiary organized in Mexico successfully concluded its reorganization Tuesday, after completing all required actions and satisfying all remaining conditions to its Plan of Reorganization. The Company now has a more manageable capital structure and a reduced level of debt. As previously reported, creditors overwhelmingly accepted the Plan, which was confirmed on May 12, 2003, by the U.S. Bankruptcy Court for the District of Delaware. In conjunction with its emergence from Chapter 11, Hayes Lemmerz closed on its exit financing facilities Tuesday. The Company's current total financing package is valued at $800 million and includes: a $100 million senior secured revolving credit facility maturing in 5 years; a $450 million senior secured term loan facility maturing in 6 years; and $250 million of senior unsecured notes, maturing in 7 years. Curtis J. Clawson, CEO said, "This is the positive outcome that we've all been working so hard to achieve. First and foremost, I want to thank all of our dedicated employees who stayed focused on our goal. I want to extend my sincere thanks to our suppliers and customers who gave their support and cooperation. Additionally, I would like to thank our restructuring advisors, AlixPartners, LLC, Lazard Freres & Co., LLC and Skadden, Arps, Slate, Meagher & Flom. They are leaders in their respective fields and provided invaluable assistance to us during the Chapter 11 process. I am very pleased that we have emerged from Chapter 11 as a stronger, more competitive company." Mr. Clawson continued, "Now with the Chapter 11 behind us, we not only have significantly reduced the Company's debt level, but have also improved our capital structure in a way that allows for our future growth. We have improved the operating structure and practices of the business -- and effectively transformed it -- into a healthier company. We are re-energized and will continue to aggressively pursue our goals of satisfying our customers, becoming a low-cost producer and having the best people." Effective upon Tuesday's emergence, six of seven members of the new Board of Directors of Hayes Lemmerz are in place, including CEO Curtis J. Clawson; Laurence M. Berg, Senior Partner, Apollo Management, LLP; Dr. William H. Cunningham, James L. Bayless Chair for Free Enterprise, The University of Texas at Austin; Steve Martinez, Principal, Apollo Management, LLP; Henry D.G. Wallace, retired Group Vice President, Ford Motor Company; and Richard F. Wallman, Senior Vice President and Chief Financial Officer, Honeywell International, Inc. In accordance with the Plan of Reorganization, approximately $2.1 billion in pre-petition debt and other liabilities are being discharged. Holders of pre-petition secured claims will receive approximately $478.5 million in cash and 53.1% of the New Common Stock. Holders of senior note claims will receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims will receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. The new shares of Hayes Lemmerz common stock, being issued to certain Hayes Lemmerz' creditors in accordance with the Plan of Reorganization are expected to be publicly traded on the over-the-counter market. The Company has applied for listing on the NASDAQ Stock Exchange. Hayes Lemmerz International, Inc. is one of the world's leading global suppliers of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 43 plants, 3 joint venture facilities and 11,000 employees worldwide. ================= N I C A R A G U A ================= NICARAGUAN BANKS: Two Foreign Firms Eyeing Assets ------------------------------------------------- An executive from First Financial Networks, the firm that's handling the auction of the assets of intervened Nicaraguan banks worth at least US$206 million, revealed that two international investor groups have shown interest in the sale, local daily La Prensa reports without disclosing the investors' names. Business News Americas recalls that Nicaragua's central bank intervened Banco Intercontinental, Banco del Cafe, Banco Mercantil and Banco Nicaraguense de Industria y Comercio in 2000 and 2001. The central bank is selling 5,500 loans and 1,000 properties located throughout Nicaragua to recoup part of the US$500 million bailout cost. According to First Financial Networks project manager, Alberto Berber, the firm has closed the auction and plans to announce the winning bid on Wednesday. The winning bid could top the US$206 million valuation figure, Berber estimated. Berber also noted one of the two foreign groups may not necessarily be the winner as the US firm received a total of 5,500 individual offers and more than 8,000 combined offers in the auction and one of the combined offers could top the international groups' individual offers, he said. =============== P A R A G U A Y =============== MULTIBANCO/CORPORACION FINANCIERA: Government Contemplates Sale --------------------------------------------------------------- The government of Paraguay plans to sell in the coming months two financial institutions it has recently intervened, relates Business News Americas. The government intervened local bank Multibanco this week, and Corporacion Financiera last month. Liquidity woes prompted the government to step in. A government spokesperson said that the central bank will release a statement regarding the sales this Friday. The report says that the central bank is mulling whether to sell the institutions as whole entities, or though separate sale of the bank's loan portfolios and other assets. The county's financial system, presently composed of 17 banks and 20 finance companies, suffered a major setback after the intervention of Banco Aleman after a run on the bank's deposits. Worried depositors and companies promptly withdrew some US$435 million - about one-third of the total deposits in the country - after the intervention, fearing a run from the remaining banks, or a government-imposed bank freeze. Paraguay's financial system currently comprises 17 banks and 20 finance companies, says the report. ============= U R U G U A Y ============= AMERICAN EXPRESS: S&P Ups Local, Foreign Currency Credit to B ------------------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it raised its long-term local and foreign currency credit and CD ratings on Uruguayan bank American Express Bank (Uruguay) S.A. to 'B-' from 'CCC'. The move follows a similar rating action on the sovereign credit ratings on the Oriental Republic of Uruguay. The outlook on the bank's credit rating remains stable. (See Standard & Poor's Notes below) BBVA ARGENTARIA: Long-term Local, Foreign Credit Ratins Improve --------------------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it raised its long-term local and foreign currency credit and CD ratings on Uruguayan bank Banco Bilbao Vizcaya Argentaria Uruguay to 'B-' from 'CCC'. The move follows a similar rating action on the sovereign credit ratings on the Oriental Republic of Uruguay. The outlook on the bank's credit rating remains stable. (See Standard & Poor's Notes below) CITIBANK N.A.: S&P Ups CD and Currency Credit Ratings ----------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it raised its long-term local and foreign currency credit and CD ratings on Uruguayan bank Citibank N.A. (Uruguay Branch) to 'B-' from 'CCC'. The move follows a similar rating action on the sovereign credit ratings on the Oriental Republic of Uruguay. The outlook on the bank's credit rating remains stable. (See Standard & Poor's Notes below) DISCOUNT BANK: Currency Credit & CD Ratings Upgraded to B --------------------------------------------------------- Standard & Poor's Ratings Services said Tuesday that it raised its long-term local and foreign currency credit and CD ratings on Uruguayan bank Discount Bank Latin America S.A. (Uruguay Branch) to 'B-' from 'CCC'. The move follows a similar rating action on the sovereign credit ratings on the Oriental Republic of Uruguay. The outlook on the bank's credit rating remains stable. (See Standard & Poor's Notes below) STANDARD & POOR'S NOTES: The sovereign upgrades follow the completion of the distressed debt exchange that cures Uruguay's selective default and significantly reduces the sovereign's debt amortization burden through 2007. The exchange offer was carried out without compromising the banking system's financial standing. "At this point, the ratings of Uruguayan financial institutions remain constrained by the sovereign credit ratings and the outlook follows that of the sovereign," said credit analyst Carina Lopez. Analyst: Carina Lopez Buenos Aires Phone: (54) 11-4891-2118 Ursula M Wilhelm Mexico City Phone: (52) 55-5279-2007 *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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