/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030606.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, June 6, 2003, Vol. 4, Issue 111 Headlines A R G E N T I N A CORREO ARGENTINO: First Official Financial Results Show Loss CTI MOVIL: Reports $1.38B in Losses DIRECTV LA: Court Okays $300M DIP Loan From Hughes SIDERAR: Siderperu Expects To Sign Advisory Deal Next Week TELECOMA ARGENTINA: Concludes Debt Buyback Offer B E R M U D A ADVANTAGE (BERMUDA) FUND: Calls Creditors to First Meeting TYCO INTERNATIONAL: Fitch Leaves Ratings Unchanged VC ADVANTAGE FUND: First Reorganizatinal Meeting Announced B R A Z I L ALCOA ALUMINIO: Fitch Revises FC Rating Outlook to Positive ARACRUZ CELULOSE: Fitch Ups Foreign Currency Rating Outlook AMBEV: Foreign Currency Rating Outlook Revised to Positive CEMIG: Board Appoints New Executive Vice-President COMPANHIA PETROLIFERA: Fitch Improves `B' FC Rating Outlook COPEL: Injunction Halts Araucaria Arbitration Proceedings CST: Fitch Bumps Currency Outlook to Positive CSN: Fitch Changes Foreign Currency Rating Outlook MRS LOGISTICA: FC Rating Outlook Revised to Positive By Fitch PETROBRAS: Fitch Changes `B' FC Rating Outlook RIPASA CELULOSE: Fitch Revises FC Rating Outlook to Positive SADIA S.A.: Fitch Changes Foreign Currency Rating Outlook SAMARCO: FC Rating Outlook Revised to Positive By Fitch TELE NORTE LESTE: Fitch Changes `B' FC Rating Outlook TELEMAR: Fitch Comments On Corporate Structure Change TRIKEM S.A.: Fitch Improves Foreign Currency Rating Outlook C H I L E TELEFONICA CTC: Proposes Extraordinary Dividend to Shareholders M E X I C O GRUPO MINSA: Restores Financial Health MEXICANA DE AVIACION: Executive Denies Potential Bankruptcy PEMEX: Closes $750M Bond Issue in International Markets * Mexico: Fitch Assigns 'BBB-` to EUR750 Mln In Global Bonds U R U G U A Y ANCAP: S&P Upgrades to 'B-' Following Upgrade on Uruguay - - - - - - - - - - ================= A R G E N T I N A ================= CORREO ARGENTINO: First Official Financial Results Show Loss ------------------------------------------------------------ For the first time since it was awarded the concession of postal services in Argentina, the firm Correo Argentino revealed its financial results on June 3, 2003. The Company announced it lost ARS78 million (US$27.37 million at the current exchange rate) during 2002 and said it accrued a loss of ARS320 million (US$112.28 million) since October 1997. Correo Argentino, which started a formal restructuring proceeding two years ago, wants to renegotiate its concession contract with the government and is calling for the issue of a new law to change its fixed ARS101 million annual fee for a percentage over the invoicing. The Company has not been paying the fee and accrued a ARS400- million debt with the State. CTI MOVIL: Reports $1.38B in Losses ----------------------------------- Argentine cellular telephony firm CTI Movil, which has been under investment holding company Coinvest's control since 2002, announced it accrued losses of ARS3.93 billion (US$1.38 billion) and a working capital deficit of ARS3.49 billion, while its nets assets are a negative figure of ARS2.05 billion. In the first quarter of 2003, CTI registered a profit of ARS318.08 million, amount that is considered low in comparison with the accrued losses. The Company said it is carrying out a plan destined to counterbalance the negative impact caused by the country's macroeconomic situation and is analyzing its status of indebtedness in order to restructure its financial debt. CTI has been in default since early 2002 and its liabilities amount to some US$1.05 billion. Its major creditor is Lucent Technologies, with US$486.7 million. The rest of the debt is owed to bondholders (US$250 million); a group of banks headed by Citibank (US$210 million); and Siemens, among others (US$50 million). DIRECTV LA: Court Okays $300M DIP Loan From Hughes -------------------------------------------------- The U.S. Bankruptcy Court in Wilmington, Delaware, gave DirecTV Latin America LLC approval of a US$300 million debtor-in- possession loan from majority owner Hughes Electronics Corp.. The loan will be used to finance the Company until it emerges from Chapter 11 bankruptcy, the AP reveals. According to Jannice Reyes, spokeswoman for the satellite broadcaster, some minor changes were made to the agreement that clarify and modify Hughes' rights, should DirecTV Latin America default on the loan. Hughes of El Segundo, Calif., made the changes to address concerns from its unsecured creditors committee. Fort Lauderdale, Florida-based DirecTV Latin America filed for Chapter 11 in March, listing assets of US$600 million and liabilities of US$1.6 billion. Soon after the bankruptcy filing, the court gave interim approval for the Company to borrow US$30 million on the Hughes credit line, pending the final approval. DirecTV Latin America said in its request for the interim loan that without the financing, it would be forced to cease operations. The satellite-television company already owes Hughes about US$1.35 billion. In return for the DIP loan, Hughes received first-priority liens and security interests in all of DirecTV Latin America's property. SIDERAR: Siderperu Expects To Sign Advisory Deal Next Week ---------------------------------------------------------- Peru's biggest steel firm Siderperu has found a technical adviser that will help it strengthen its operations, as it struggles to deal with slumping sales due to imports of low-priced steel products. Citing a Siderperu executive, Reuters reports that the Company will sign an agreement with Argentine steel firm Siderar this week. "A deal has been reached ... Siderar will be our technical adviser, but not our operator," Siderperu's director Arturo Torres said, in response to reports that Siderar, part of Argentina's huge Techint group, could take over operations for the Peruvian firm. Torres said a group of experts from Siderar would work with executives at Siderperu to improve production after analyzing its current activities "This will be a 90- to 120-day job," he said. Siderperu's sales fell last year to US$110 million from an average of US$122 million in previous years. However, the Company had improved its margin as it cut costs, the executive said. TELECOMA ARGENTINA: Concludes Debt Buyback Offer ------------------------------------------------ Telecom Argentina Stet-France Telecom SA and its mobile subsidiary Telecom Personal revealed that they have completed their respective cash tender offers for a portion of their debt instruments, which began on April 16, Business News Americas relates. According to preliminary calculations, Telecom managed to exchange US$210 million in cash for discounted debt, while Telecom Personal racked up US$80 million. Originally, the telcos planned to spend US$260 million and US$45 million, respectively, though these amounts were boosted to US$310 million and US$55 million on May 19. To sweeten the offer for their creditors, the companies also raised the buyback price on May 19 to 48-55% of the outstanding principal, from 43.5-50%. An Argentine analyst who wished to remain unnamed suggested that the discount will more likely be closer to 55% than 48%. Although the projected final amount is less than what the companies were originally expecting, US$290 million is "reasonable" and shows that the company is on the right track to restructure its debt. According to the companies, the final calculations will be released on Thursday, June 5, and bondholders will receive their respective payments on or before June 9. Telecom Argentina defaulted on US$3.2 billion of debt, making it the biggest corporate defaulter and one of the first to begin restructuring debt after the government's US$95 billion bond default in late 2001 and devaluation. 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 ============= B E R M U D A ============= ADVANTAGE (BERMUDA) FUND: Calls Creditors to First Meeting ---------------------------------------------------------- Notice is hereby given that the First Meeting of Creditors of Bermuda-based Advantage (Bermuda) Fund Ltd. (in liquidation) will be held at the offices of PricewaterhouseCoopers at the following address: Dorchester House, 7 Church Street Hamilton HM11 Bermuda. The said meeting starts at 11:00 am of July 2, 2003. Forms of Proof of Debt and General and Special Proxies are available from the Official Receiver/Provisional Liquidator. To entitle you to vote thereat, Proofs of Debt and Proxy forms to be used at the Meeting, must be lodged with the Official Receiver/Provisional Liquidator, at the address shown below, marked for the immediate attention of Ian Ridge not later than 5:00pm on June 30, 2003. Those documents sent by fax, and received before the allotted time will be accepted by the Official Receiver/Provisional Liquidator. Dated this May 22, 2003 NOTES: A. Statement of the Company's Affairs has not been lodged. (Refer to the First Report to Creditors) At the First Meetings of the Creditors and Contributories they may be amongst other things: 1. By resolution determine whether or not an application is to be made to the Court to appoint a Liquidator other than the Official Receiver. 2. By resolution determine whether or not an application should be made to the Court for the appointment of a Committee of Inspection to act with the Liquidator, and who are to be the members of the Committee if appointed. B. If a Liquidator is not appointed by the Court, the Official Receiver will be Liquidator. CONTACT: PwC Consulting Limited (for and in behalf of the Official Receiver/Provisional Liquidator) Advantage (Bermuda) Fund Ltd. - In Liquidation PricewaterhouseCoopers, Dorchester House, 7 Church Street, Hamilton HM11, Bermuda Phone: (441) 295 2000 Fax: (411) 295 1242 TYCO INTERNATIONAL: Fitch Leaves Ratings Unchanged -------------------------------------------------- Fitch Ratings has affirmed its ratings on the senior unsecured debt and commercial paper of Tyco International Ltd. (Tyco), as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A., at 'BB'/'B', respectively. The Rating Outlook has been changed to Stable from Negative. The ratings affect approximately $21 billion of debt securities. The change to Outlook Stable reflects Tyco's progress with respect to reestablishing access to capital, addressing its liability structure, implementing steps to improve operating performance, and demonstrating cash generation despite a difficult economic environment in a number of key end-markets. The impact of fundamental favorable changes in Tyco's financial policies and profile since late fiscal 2002 is constrained by economic weakness in its markets, potential legal liabilities related to shareholder lawsuits and SEC investigations, and the possibility, although reduced, of further accounting charges and adjustments. The ratings could improve over time as Tyco demonstrates more consistent results and that it has put behind it the accounting concerns that have obscured the transparency of its financial reporting in the past. Tyco has continued to see improvements in recent months in addressing various concerns relating to liquidity and corporate governance. In late April, 2003 the company disclosed charges, mostly non-cash, totaling nearly $1.4 billion on a pretax basis. The action is viewed by Fitch as a move to a more conservative accounting approach along with a more conservative, disciplined approach to growth in the Fire & Security segment. The extensive nature of the internal investigations since 2002 has reduced the likelihood of further significant charges. Liquidity, while improving, remains a constraining factor in the ratings. At March 31, 2003, Tyco's debt totaled $21.8 billion. Projected free cash flow, along with planned debt retirement of $4.5 billion (assuming $2.5 billion of convertible debt is put by the holders in November), would leave the company with debt of $17.3 billion and cash balances of $464 million as of Dec. 31, 2003. While this cash level is well below Tyco's historical levels, additional liquidity is available under a $1.5 billion bank facility expiring Jan. 30, 2004 that is currently undrawn. In addition, Tyco could consider issuing modest amounts of new debt given its improved access to capital. After December, continuing cash flow and limited debt maturities (approximately $900 million in calendar 2004 and $800 million in 2005) should allow Tyco to begin rebuilding cash balances. Despite modest debt reduction during the past 12 months, weak operating earnings have had a negative impact on leverage as measured by debt/EBITDA of 4.0 times (x) at March 31, 2003. A small rebound in margins since the fiscal fourth quarter of 2002 may signal an improving trend in EBITDA and cash flow that would have a positive effect on the ratings if borne out in future periods. Cash flow is supported by Tyco's emphasis on minimizing working capital and capital expenditures, minimal TyCom expenditures and moderating losses, no significant acquisition spending outside of ADT dealer contracts, and limited share repurchases. These benefits will be reduced during the near future by any pension contributions and by cash spending against reserves for restructuring, purchase accounting and holdback/earn-out liabilities that totaled just over $1.0 billion at March 31, 2003. While liquidity will be somewhat constrained through the end of 2003, free cash flow still is expected to remain positive despite weak economic conditions, potentially providing further confidence to lenders and opportunities to extend debt maturities. CONTACT: Eric Ause, CFA Chicago Phone: +1-312-606-2302 Mark Oline Chicago Phone: +1-312-368-2073 Media Relations: James Jockle New York Phone: +1-212-908-0547 VC ADVANTAGE FUND: First Reorganizatinal Meeting Announced ---------------------------------------------------------- Notice is hereby given that the First Meeting of Creditors of Bermuda-based VC Advantage Fund Ltd. (in liquidation) will be held at the offices of PricewaterhouseCoopers at the following address: Dorchester House, 7 Church Street Hamilton HM11 Bermuda. The said meeting starts at 3:00 pm of July 2, 2003. Forms of Proof of Debt and General and Special Proxies are available from the Official Receiver/Provisional Liquidator. To entitle you to vote thereat, Proofs of Debt and Proxy forms to be used at the Meeting, must be lodged with the Official Receiver/Provisional Liquidator, at the address shown below, marked for the immediate attention of Ian Ridge not later than 5:00pm on June 30, 2003. Those documents sent by fax, and received before the allotted time will be accepted by the Official Receiver/Provisional Liquidator. Dated this May 22, 2003 NOTES: A. Statement of the Company's Affairs has not been lodged. (Refer to the First Report to Creditors) At the First Meetings of the Creditors and Contributories they may be amongst other things: 1. By resolution determine whether or not an application is to be made to the Court to appoint a Liquidator other than the Official Receiver. 2. By resolution determine whether or not an application should be made to the Court for the appointment of a Committee of Inspection to act with the Liquidator, and who are to be the members of the Committee if appointed. B. If a Liquidator is not appointed by the Court, the Official Receiver will be Liquidator. CONTACT: PwC Consulting Limited (for and in behalf of the Official Receiver/Provisional Liquidator) Advantage (Bermuda) Fund Ltd. - In Liquidation PricewaterhouseCoopers, Dorchester House, 7 Church Street, Hamilton HM11, Bermuda Phone: (441) 295 2000 Fax: (411) 295 1242 =========== B R A Z I L =========== ALCOA ALUMINIO: Fitch Revises FC Rating Outlook to Positive ----------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Alcoa Aluminio S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 ARACRUZ CELULOSE: Fitch Ups Foreign Currency Rating Outlook ----------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Aracruz Celulose S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 AMBEV: Foreign Currency Rating Outlook Revised to Positive ---------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Companhia de Bebidas das Americas S.A. (Ambev) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 CEMIG: Board Appoints New Executive Vice-President -------------------------------------------------- Companhia Energetica de Minas Gerais - CEMIG (NYSE: CIG; BOVESPA: CMIG3, CMIG4; LATIBEX: XCMIG), a leading fully integrated electricity company in Brazil, announced on Wednesday that holders of preferred shares elected one member of CEMIG's Board of Directors at the Extraordinary General Shareholders' Meeting held on May 28, 2003. The new Board of Directors is comprised of the following members: 1. Elected by the shareholder Estado de Minas Gerais: Wilson Nelio Brumer (Chairman) and his alternate, Fernando Lage de Melo Djalma Bastos de Morais (Vice-President) and his alternate, Luiz Antonio Athayde Vasconcelos Francelino Pereira dos Santos and his alternate, Marco Antonio Rodrigues da Cunha Antonio Adriano Silva and his alternate, Francisco Sales Dias Horta Flavio Jose Barbosa de Alencastro and his alternate, Guilherme Horta Goncalves Junior Aecio Ferreira da Cunha and his alternate, Eduardo Lery Vieira Maria Estela Kubitschek Lopes and her alternate, Fernando Henrique Schuffner Neto Alexandre Heringer Lisboa and his alternate, Franklin Moreira Goncalves 2. Elected by the shareholder Southern Electric Brasil Participacoes Ltda.: Oderval Esteves Duarte Filho and his alternate, Geraldo Dannemann Marcelo Pedreira de Oliveira and his alternate, Luiz Felippe Leal da Fonseca Junior Joao Bosco Braga Garcia and his alternate, Carlos Suplicy de Figueiredo Forbes Sergio Lustosa Botelho Martins and his alternate, Marc Leal Claassen Mario Lucio Lobato and his alternate, Andre Luis Garbuglio 3. Elected by minority holders of preferred shares: Francisco Roberto Andre Gros and his alternate, Arnaldo Jose Vollet At the same meeting, shareholders approved amendments to CEMIG's By-laws allowing, among other things, the modification of the composition of the Board of Executive Officers, creating the position of the Executive Vice-President. The newly elected Board of Directors appointed Francisco Sales Dias Horta as the Executive Vice-President in a meeting held on June 2, 2003. CONTACT: CEMIG Luiz Fernando Rolla, Investor Relations Phone: +55-31-3299-3930 Fax: +55-31-3299-3933 Email: lrolla@cemig.com.br or Eliza Gibbons The Anne McBride Company Phone: +1-303-477-1350 Fax: +1-212-983-1736 Email: eliza@annemcbride.com COMPANHIA PETROLIFERA: Fitch Improves `B' FC Rating Outlook ---------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Companhia Petrolifera Marlim to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 COPEL: Injunction Halts Araucaria Arbitration Proceedings --------------------------------------------------------- Brazil's Parana state power company Copel announced Wednesday that it has obtained a court injunction suspending arbitration proceedings with the 480MW Araucaria thermoelectric power plant, Business News Americas relates. It was reported earlier that the Brazilian unit of US-based El Paso and Brazil's federal energy company Petrobras approached the International Chamber of Commerce in Paris, France, to resolve a dispute with Copel. Copel signed a power purchase agreement with the Araucaria thermoelectric project in May 2000. Copel owns 20% of the plant, Petrobras owns 20% and US power company El Paso owns 60%. Copel stopped paying for power bought under contract from Araucaria in January, saying it was too expensive, and has said it wants to renegotiate cheaper prices. El Paso and Petrobras sought international arbitration to recover those payments frozen since January. CST: Fitch Bumps Currency Outlook to Positive --------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Companhia Siderurgica de Turbarao S.A. (CST) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 CSN: Fitch Changes Foreign Currency Rating Outlook -------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Companhia Siderurgica Nacional S.A. (CSN) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 MRS LOGISTICA: FC Rating Outlook Revised to Positive By Fitch ------------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for MRS Logistica S.A. (MRS) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 PETROBRAS: Fitch Changes `B' FC Rating Outlook ---------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Petroleo Brasileiro S.A. (Petrobras) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 RIPASA CELULOSE: Fitch Revises FC Rating Outlook to Positive ------------------------------------------------------------ Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Ripasa Celulose e Papel S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 SADIA S.A.: Fitch Changes Foreign Currency Rating Outlook --------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Sadia S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 SAMARCO: FC Rating Outlook Revised to Positive By Fitch ------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Samarco Mineracao S.A. (Samarco) to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 TELE NORTE LESTE: Fitch Changes `B' FC Rating Outlook ----------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Tele Norte Leste Participacoes S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 TELEMAR: Fitch Comments On Corporate Structure Change ----------------------------------------------------- Fitch Ratings views the recently announced change in the corporate structure of Telemar as neutral to credit quality. Fitch Ratings currently maintains local currency debt ratings for Tele Norte Leste Participacoes S.A. (TNE) and its fixed-line operating subsidiary, Telemar Norte Leste S.A. (TMAR) of `BB+'; and `BBB-`;, respectively. The Rating Outlook for these ratings is Negative. Fitch also maintains foreign currency debt ratings of `B'; for TNE and TMAR, which are constrained by the sovereign rating of Brazil. The Rating Outlook for these ratings is Positive. TNE and TMAR are collectively known as Telemar. Fitch has national scale ratings of `AA-(bra)'; for TNE, which apply to its local debentures, and `AA(bra)'; for TMAR. On May 28, 2003, TMAR announced that it is acquiring the affiliate wireless unit Telemar PCS (Oi) from parent company TNE for the price of BRL 1 plus the assumption of BRL 3.0 billion of third party debt and BRL 1.8 billion of intercompany loans from TNE. Oi is a wholly owned direct subsidiary of TNE. After the transaction is completed, Oi will be a wholly owned subsidiary of TMAR and an indirect subsidiary of TNE. Telemar expects the transaction will allow the company to optimize its tax position and generate tax savings that will modestly boost free cash flow. The change in the corporate structure of Telemar is not expected to affect consolidated gross debt levels, which totaled BRL 12.3 billion at March 31, 2003 excluding effects from hedging. Of this amount, third party debt of BRL 6.0 billion is currently located at the TNE holding company level, BRL 3.1 billion (plus BRL 2.3 billion of intercompany loans) at the TMAR operating company level, and BRL 3.2 billion (plus BRL 2.2 billion of intercompany loans) at the Oi operating company level. After the transaction is completed, approximately BRL 6.0 billion of third party debt is expected to be located at the TNE level and BRL. 6.3 billion (plus BRL 4.0 billion of intercompany loans) at TMAR on a consolidated basis, including debt at both the TMAR and Oi operating company level. According to Fitch's methodology, debt at the TNE holding company level is viewed as structurally subordinated to debt at the TMAR and Oi operating company level, since TNE relies on cash flow from its subsidiaries to service its debt obligations. Telemar is one of the leading telecommunications providers in Brazil with more than 15 million fixed lines in service and 2.0 million wireless subscribers. The company provides telecommunications services in 16 Brazilian states located in northern, northeastern, and southeastern Brazil. TRIKEM S.A.: Fitch Improves Foreign Currency Rating Outlook ----------------------------------------------------------- Fitch Ratings has revised the Rating Outlook on the `B' foreign currency rating for Trikem S.A. to Positive from Stable. This rating action follows the recent revision of the Rating Outlook to Positive from Stable on the foreign currency rating of the Federative Republic of Brazil. The Company's foreign currency rating is constrained to the ratings of the sovereign. The sovereign's Rating Outlook revision reflects 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 sovereign ratings, both foreign and local currency (Brazilian Real), remain at 'B'. CONTACT: Daniel R. Kastholm CFA, Chicago Phone: +1-312-368-2070 Anita Saha Chicago Phone: +1-312-368-3179 Rafael Guedes Sao Paolo Phone: +55-11-287-3177 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 ========= C H I L E ========= TELEFONICA CTC: Proposes Extraordinary Dividend to Shareholders --------------------------------------------------------------- Compa��a de Telecomunicaciones de Chile S.A. (NYSE:CTC)("Telef�nica CTC Chile" or the "Company") announces that its Board of Directors agreed to hold an Extraordinary Shareholders Meetings to approve the distribution of a dividend of CH$17.5 per share (approximately US$0.10 per ADR1), to be charged to retained earnings as of December 31, 2002. This Extraordinary Shareholders Meetings will be held on July 11, 2003 at 12:00 P.M. in the "Claudio Garc�a" Auditorium Located in the Company's corporate headquarters building in Santiago, Chile. Compan�a de Telecomunicaciones de Chile S.A. the first South American company to list shares on The New York Stock Exchange, is the largest telecommunication enterprise in Chile, providing local service throughout the country. Additionally, the Company provides equipment marketing, data transmission, value-added services and information systems services and operates a nationwide cellular network. CONTACT: TELEFONICA CTC CHILE Gisela Esobar, gescoba@ctc.cl Ver�nica Gaete, vgaete@ctc.cl M.Jos� Rodr�guez, mjrodri@ctc.cl Florencia Acosta, macosta@ctc.cl Tel: 562-691-3867 Fax: 562-6912392 THE GLOBAL CONSULTING GROUP Richard Huber, rhuber@hfgcg.com Mariana Crespo, mcrespo@jfgcg.com Tel:646-284-9413 =========== M E X I C O =========== GRUPO MINSA: Restores Financial Health -------------------------------------- Grupo Minsa, the second largest producer of corn flour for tortillas in Mexico, revealed that on May 23, it fulfilled its financial obligations committed in the debt restructuring process, which the Company said ended on April 28. To fulfill the term of the debt-restructuring contract, Minsa shareholders committed to carry out a capital increase for US$10 million, according to a report by Internet Securities. Grupo Minsa, led by Juan Jaime Petersen Farah, had accumulated a debt equivalent to more than US$90 million as a result of the economic deceleration that has affected the country during the last few years, especially the corn flour industry. But with the culmination of the debt-restructuring process, the Company has improved its financial situation, thus reinforcing its position before clients, suppliers, employees and shareholders. MEXICANA DE AVIACION: Executive Denies Potential Bankruptcy ----------------------------------------------------------- Mexican airline Mexicana de Aviacion slammed reports that suggested the Company, which is owned by government-controlled holding company Cintra, is on the verge of bankruptcy due to accrued losses. "We are not in the best possible situation, but neither are we at the bottom. We have to be creative to solve our problems, for which we cannot blame outsiders," company chairman Fernando Flores told local newspaper Reforma. He insisted that the Company would solve its financial problems without government help. According to the executive, the airline would be able to pull through with the support of its workers. Flores said that Mexicana had achieved operating savings of some MXN300 million (US$29.4 million) in the first four months of the year and that it was studying ways to further reduce costs this year. CONTACT: MEXICANA DE AVIACION Adolfo Crespo, V.P. of Public Affairs Division of Mexicana Airlines, +1-210-491-9764 PEMEX: Closes $750M Bond Issue in International Markets ------------------------------------------------------- Mexico's state oil company Pemex concluded Wednesday the issue of US$750 million in bonds on international markets, reports Business News Americas. Pemex revealed that US investors bought 63% of the bonds that expire December 15, 2014, pay a coupon of 7.38% per semester, and yield 6.14% for investors, 270 basis points above the US treasury bonds. The remainder was split between Latin America, Europe and Asia. Total demand was for over US$1 billion, Pemex said. The proceeds of the issue, led by Lehman Brothers and Credit Suisse First Boston, will be used to finance projects under the Pidiregas scheme. Pemex uses the Pidiregas scheme to attract private sector investors, who pay for development costs and are repaid once projects are operating. The conclusion of the bond placement effectively wraps up the US$1.5 billion foreign currency denominated bonds that Pemex said it would place on international markets during 2003. In February, Pemex issued US$750 million of 5.5-year bonds. * Mexico: Fitch Assigns 'BBB-` to EUR750 Mln In Global Bonds ------------------------------------------------------------ Fitch Ratings assigned on Wednesday a long-term foreign currency rating of 'BBB-' to the Republic of Mexico's global bond issued Tuesday. The Rating Outlook is Stable. The EUR750 million of 10- year global bond was issued primarily to fund the amortization of federal government liabilities that have less favorable financial terms. The bond contains the Collective Action Clause, similar to the bonds that have been issued by Mexico since February 2003. Mexico's ratings are supported by the reduction in its external debt burden, the country's prudent policy framework and liability management, and the ongoing integration of the country with the U.S. The ratings remain constrained by the structural weaknesses in public finances, slow progress on structural reforms, and high regional and income inequality. Mexico has experienced a sharp slowdown in growth over the past two years. Given the uncertainty regarding the U.S. and global growth, Mexico's growth would be subdued this year as well. However, the authorities have followed a restrictive fiscal policy to contain the increase in government indebtedness. The budget for 2003 aims to reduce the non-financial public sector deficit to 0.5% of GDP from 1.2% in 2002. Although GDP growth is likely to come under the 3% assumed in the budget, higher than budgeted oil prices should help the authorities in achieving this target. The fiscal outturns for the first four months of 2003 corroborate the improved fiscal position of Mexico, which has been primarily due to higher oil receipts. Moreover, Fitch believes that the authorities would employ automatic adjusters to cut spending if revenues fall short of expectations to meet the fiscal target. Monetary policy has remained restrictive, responding to the rising inflationary pressures in the country. Inflationary pressures have shown a decline in recent months, although the annual inflation rate of 5.2% in April 2003 remains above the central bank's inflation target of 3% for this year. At the same time, external imbalances have also moderated, although exports of manufactured goods remain sluggish, given the slowdown in the U.S. growth. Future rating changes will depend on improvements in Mexico's public finances, external debt burden and progress on key structural reforms. Given the high dependence of fiscal accounts on oil, further fiscal reforms are needed to place public finances on a stronger footing. Similarly, labor sector and energy sector reforms are critical to improving Mexico's competitiveness, attract greater foreign direct investment and place the country on a higher growth path. International competitiveness has gained even importance, given the increasing competition that Mexico faces from China. So far, the Fox administration has found it difficult to pass the energy sector reform in a divided Congress. In this context, Mexico's mid-term Congressional elections in July 2003 will be important, as its results could influence the passage of critical reforms in the country. ============= U R U G U A Y ============= ANCAP: S&P Upgrades to 'B-' Following Upgrade on Uruguay -------------------------------------------------------- Standard & Poor's Ratings Services said Wednesday that it raised its corporate credit rating on Uruguay's 100% state-owned fuel, alcohol, and cement company, Administraci�n Nacional de Combustibles Alcohol y Portland (ANCAP), to 'B-' from 'CCC'. The outlook is stable. The rating action is in line with the recent upgrade of the Republic of Uruguay to 'B-' from 'SD' (selective default). As of Dec. 31, 2002, ANCAP had approximately US$105 million in debt (including a syndicated loan) that represented less than 30% of capitalization. "ANCAP's credit quality continues to be conditioned by that of the Republic of Uruguay, its 100% owner. Therefore, an improved financial situation for the Republic, a more favorable economic environment, and prospects of a slight recovery from the recession will positively affect ANCAP," stated Standard & Poor's credit analyst Pablo Lutereau. Because Standard & Poor's sees a relatively low risk of the government interfering with the company's cash to serve its financial obligations, the rating on ANCAP will not necessarily follow the exact rating trajectory as the sovereign unless changes in this matter are observed. "The stable outlook indicates both the linkage of ANCAP's credit quality to the sovereign's financial health and the fact that ANCAP's current maturity profile does not represent a significant challenge to the cash generation ability of the company," Mr. Lutereau said. The upgrade of Uruguay follows the completion of the distressed debt exchange that cures Uruguay's selective default and significantly reduces the sovereign's debt amortization burden (with non-official creditors) through 2007. While the exchange alleviated near-term funding pressures, Uruguay's debt burden remains high-with net general government debt at a projected 90% of GDP in 2003, and interest just over 18% of general government revenue. The ratings on the sovereign also assume that the lighter amortization schedule and progress on fiscal adjustment will boost business confidence and permit a decline in real interest rates, which, in turn, would contribute to a much-needed economic recovery. Although the economic rebound is not expected to be strong enough initially to preclude 2003 from being the fifth consecutive year of recession, growth in 2004-2005 is projected to surpass 3% annually. The rating on ANCAP is conditioned by the risks inherent in operating as a single-asset refiner and the challenging economic environment of Uruguay. Nevertheless, the rating also incorporates Standard & Poor's expectations that ANCAP will maintain its dominant market position. ANALYSTS: Pablo Lutereau, Buenos Aires (54) 114-891-2125 Marta Castelli, Buenos Aires (54) 114-891-2128 *********** 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. 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