/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030619.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 19, 2003, Vol. 4, Issue 120 Headlines A N T I G U A & B A R B U D A ALEX BENJAMIN: Fate Uncertain as Retailer Enters Receivership A R G E N T I N A ALBETE: Seeks Court OK For Reorganization Process DINAR: Previnder May Take Over Soon, Says Shareholder NYSE: Deemed Bankrupt By Court TELEFONICA DE ARGENTINA: Announces Exchange Offers B E R M U D A TYCO: Shares Rise Following Earnings Restatement TYCO INTERNATIONAL: S&P Affirms Ratings, Outlook TYCO INTERNATIONAL: Bernstein Liebhard Begins Class Action Suit B R A Z I L AES CORPORATION: Announces Common Stock Offering Pricing ARACRUZ CELULOSE: To Sell Bonds To Finance Riocell Buy, Says Paper METRORED: Plans Expansion Following Restructuring Completion VARIG: Merger Pose Dismissal Threat To 5,343 Workers C H I L E ENDESA: Grants Chilean Subsidiary Exclusive License For Software C O L O M B I A EMCALI: Cali Municipality Should Pay COP204B In Subsidies D O M I N I C A N R E P U B L I C AES ANDRES: US$400 Million Plant Starts Operations BANCO INTERCONTINENTAL: Central Bank Chief Admits Grave Mistake BANCREDITO: Individual Ratings Down To `D' On Market Uncertainty E C U A D O R PETROECUADOR: Workers End Strike, Operation Starts Recuperating * Ecuador: S&P Affirms Sovereign Credit Ratings H O N D U R A S AES: Seeks Partners or Buyers For El Faro Project J A M A I C A AIR JAMAICA: Antigua Ops Encouraging; Still Battling Losses M E X I C O GRUPO TMM: Creditors Hire U.S. Law Firm to Collect Debts PEMEX: Outlines Fleet Upgrade Forecast TV AZTECA: Shares Skyrocket On Assurance Concerning Iusacell TV AZTECA: End of Unefon-Nortel Spat Boosts 46% Stake Sale TV AZTECA: Board Reaffirms Commitment for Uses of Free Cash Flow P U E R T O R I C O CENTENNIAL COMMUNICATIONS: $300M Senior Debt Rated 'CCC' CENTENNIAL COMMUNICATIONS: Appoints New President For Caribbean T R I N I D A D & T O B A G O BWIA: Targets Labor Cost to Meet Cost Reduction Requirement U R U G U A Y * Uruguay: Fitch Removes Default Rating on External Bonds V E N E Z U E L A SIDOR: Receives US$61 Million in Hard Currency Allocation - - - - - - - - - - ================================= A N T I G U A & B A R B U D A ================================= ALEX BENJAMIN: Fate Uncertain as Retailer Enters Receivership ------------------------------------------------------------- PricewaterhouseCoopers has been appointed receiver of E. Alex Benjamin Ltd., one of Antigua's oldest family stores that entered receivership Wednesday last week, The Antigua Sun says. Receiver Charles Walwyn told the Sun he will reveal in three weeks whether the company, also known as Benjies, can be saved or, if not, be declared bankrupt. The Benjamin family, which owns the business, did not reveal the reason for the application for receivership, but the paper said it is due to inability to pay debts. The report did not say how much money the company owed. The company's collapse is not entirely surprising, the paper said, adding that former Trade Minister Hilroy Humphreys had hinted it would happen during a mass public rally two Sundays ago, although he did not name Benjies. During the rally, Mr. Humphreys blasted the government for not giving enough assistance to local businesses. The Sun says Benjies employees were summoned to an emergency meeting Thursday to bring them up to date on the future of the company. One staff member, who understands the company's decision, told the Sun: "We believe strongly that they will know in three weeks whether or not they will close the business." Established in 1972, the company employs 100 employees and is one of the leading members of the Antigua Employer's Federation. The Sun says financial difficulties began last year, forcing the company to layoff a number of workers. The Benjies group of companies, according to the paper, consists of the Benjies Department Store on Redcliffe Street, a Business Centre located in the Bencorp Business on High Street, Benjies Printery at Michael's Mount, Benjies Photo Centre-Heritage Quay and a real estate development located at Boon Haven. Minister of Trade and Planning Gaston Browne told the Sun he was saddened by the development: "I am indeed concerned about the situation as minister responsible for commerce. Benjies has been one of the major retail businesses in the country. I can't say definitely the nature of their problem whether or not it has to do with the economy, whether or not they may have stretched themselves too thin or they made bad decisions." "[After] 31 years of operation it is cause for concern indeed. I am really sorry that is the case because you are looking at an indigenous family that took a very small family business and made it into one of the largest national retail businesses... I would have believed that the Benjies group would have had the expertise and financial resources to expand regionally and internationally by expanding the brand into different markets," he added. ================= A R G E N T I N A ================= ALBETE: Seeks Court OK For Reorganization Process ------------------------------------------------- Albete S.A. is asking court permission to start reorganization as it files for "concurso preventivo" at Court No. 23, which is under Dr. Julia Villanueva. Dr. Stella Timpanelli of Secretary No, 46 assists the Court on the matter. Ms. Liliana Maria Montoro is the assigned receiver for the company, which stopped paying its debts on December 5, last year. Creditors are advised to have their claims verified by September 3, 2003. CONTACT: ALBETE S.A. Viamonte 1454 Buenos Aires Ms. Liliana Maria Montoro Sarmiento 517 Buenos Aires Phone: 005411 43949297 DINAR: Previnder May Take Over Soon, Says Shareholder ----------------------------------------------------- Investment group Previnder is about to take control of Argentine airline Dinar, reported El Cronista Comercial on Tuesday, citing Dinar shareholder Walter Perochena. Mr. Perochena, who owns 25 percent of Dinar, reportedly filed a case against Eduardo Maurizzio, leader of an investment group, whose name was not revealed. Earlier reports dismissed rumors that the government plans to take over the ailing company. NYSE: Deemed Bankrupt By Court ------------------------------ Court No. 23 of Buenos Aires declared NYSE S.A. bankrupt following a request from its creditor, Eduardo Posdeley. The company reportedly owes Mr. Posdeley some $74,412. Dr. Julia Villanueva is in charge of the court, assisted by Dr. Stella Timpanelli from Secretary No. 45. The Court assigned Zulma Glave as receiver, to whom creditors must have their claims verified before August 11. CONTACT: NYSE S.A. 3rd Floor Corrientes Ave. 1373 Buenos Aires Zulma Glave Deheza Street No. 4883 Buenos Aires TELEFONICA DE ARGENTINA: Announces Exchange Offers -------------------------------------------------- Telefonica de Argentina S.A. ("TASA") announced on Tuesday that it has commenced an offer to exchange two series of existing TASA notes for two new series of TASA notes plus a cash payment, and an offer to exchange two series of existing notes issued by TASA's holding company, Compania Internacional de Telecomunicaciones S.A. ("Cointel"), for two new series of TASA notes plus a cash payment. TASA's 9.875% notes due 2006 that were issued last year are not part of the exchange offers. In addition, TASA has agreed with its main indirect shareholder, Telefonica Internacional S.A. ("TISA"), that immediately after the consummation of the exchange offer for Cointel notes, TASA will transfer all of the acquired Cointel notes to TISA in exchange for a like reduction of TASA's short term indebtedness owed to TISA. As a result of the proposed overall transaction, TASA will not be increasing its net debt position. TASA is also soliciting proxies from the holders of the TASA and Cointel existing notes subject to the exchange offers to amend or eliminate substantially all of the covenants and events of default contained in those notes. The terms of the exchange offers and proxy solicitations are as follows: -- For each U.S.$1,000 principal amount of TASA's existing U.S.$300 million 11.875% Notes due 2004, TASA is offering to exchange: -- For holders tendering before the proxy delivery deadline, U.S.$850 principal amount of newly issued 11.875% Notes due 2007 and U.S.$150 in cash (U.S.$75 of which constitutes a proxy payment). -- For holders tendering after the proxy delivery deadline, U.S.$925 principal amount of newly issued 11.875% Notes due 2007 and U.S.$75 in cash. -- For each U.S.$1,000 principal amount of TASA's existing U.S.$368.5 million 9.125% Notes due 2008, TASA is offering to exchange: -- For holders tendering before the proxy delivery deadline, U.S.$900 principal amount of newly issued 9.125% Notes due 2010 and U.S.$100 in cash (U.S.$50 of which constitutes a proxy payment). -- For holders tendering after the proxy delivery deadline, U.S.$950 principal amount of newly issued 9.125% Notes due 2010 and U.S.$50 in cash. -- For each U.S.$1,000 principal amount of Cointel's existing U.S.$225 million 8.85% Series A Notes due 2004, TASA is offering to exchange: -- For holders tendering before the proxy delivery deadline, U.S.$850 principal amount of newly issued TASA U.S. dollar- denominated 8.85% Notes due 2011 and U.S.$150 in cash (U.S.$75 of which constitutes a proxy payment). -- For holders tendering after the proxy delivery deadline, U.S.$925 principal amount of newly issued TASA U.S. dollar- denominated 8.85% Notes due 2011 and U.S.$75 in cash. -- For each Ps.1,000 principal amount of Cointel's existing Ps.175 million 10.375% Series B Notes due 2004, TASA is offering to exchange either: -- For holders tendering before the proxy delivery deadline, the U.S. dollar equivalent of Ps.850 principal amount of newly issued TASA U.S. dollar-denominated 8.85% Notes due 2011, calculated using the forward exchange rate as described in the relevant prospectus related to the exchange offer, and Ps.150 in cash (Ps.75 of which constitutes a proxy payment). -- For holders tendering after the proxy delivery deadline, the U.S. dollar equivalent of Ps.925 principal amount of newly issued TASA U.S. dollar-denominated 8.85% Notes due 2011, calculated using the forward exchange rate as described in the relevant prospectus related to the exchange offer, and Ps.75 in cash. or, -- For holders tendering before the proxy delivery deadline, Ps.850 principal amount of newly issued TASA peso-denominated Conversion Notes due 2011 and Ps.150 in cash (Ps.75 of which constitutes a proxy payment). -- For holders tendering after the proxy deliver deadline, Ps.925 principal amount of newly issued TASA peso-denominated Conversion Notes due 2011 and Ps.75 in cash. The new Conversion Notes will be initially denominated in Argentine pesos and accrue interest at 10.375% until August 1, 2004. Thereafter, the new Conversion Notes will be denominated in U.S. dollars and accrue interest at 8.85%. The principal amount of the new Conversion Notes will be converted from pesos into U.S. dollars at the average reference spot exchange rate quoted by the Argentine Central Bank for the last five available trading days ending on or prior to July 30, 2004. The proxy delivery deadline is at 5:00 p.m. New York City time, on June 30, 2003, unless extended. Each of the exchange offers expire at 11:59 p.m. New York City time, on July 15, 2003, unless extended. Holders wishing to accept the exchange offers should tender their notes sufficiently in advance of these dates to allow enough time for processing. In light of recent macroeconomic developments in Argentina, and the negative impact that such macroeconomic events had on TASA's financial condition, TASA and Cointel are unable to access the capital markets, and third-party financing sources, both domestically and internationally, are no longer available in amounts sufficient to enable them to meet their debt obligations. In addition, as a result of the devaluation of the peso and the pesification and freezing of TASA's tariffs, TASA's internally generated funds alone are not sufficient for TASA to meet its substantial short-term debt obligations, and may not be sufficient to meet TASA and Cointel's debt obligations maturing or subject to repurchase in 2004. Cointel is a holding company whose only significant asset is its 64.83% interest in TASA. Cointel's only significant source of cash flows is from liquidity and subsequent dividend payments made by TASA. Cointel bondholders that participate in the exchange offers will become creditors of TASA, the operating company. Holders who tender their notes will be receiving any accrued and unpaid interest up to, but not including, the settlement date for the exchange offers for those existing notes. The exchange offers are subject to customary conditions, which TASA may waive, including the condition that 90% of the outstanding principal amount of each series of existing notes be validly tendered prior to the expiration date of the exchange offer. None of the exchange offers is conditioned upon the success of any other exchange offer. Should less than all of the exchange offers be consummated, TASA may accept for exchange those notes that are tendered in those exchange offers where all of the conditions to such exchanges have been met or waived by TASA. Morgan Stanley & Co. Incorporated (including its affiliates) will act as dealer manager for the exchange offers. BBVA Banco Frances S.A. (Reconquista 199, (C1003ABE) Buenos Aires, Argentina, Tel.: +54-11-4346-4600) will act as solicitation agent in Argentina, D.F. King & Co., Inc. will act as the information agent and the Bank of New York will act as the exchange agent for the exchange offers. Prospectuses are being mailed to holders of record of those notes offered for exchange. Copies of the prospectuses may be obtained by calling D.F. King & Co., Inc., at +1-800-549-6697 or +1-212- 269-5550, or by mail at 48 Wall Street, 22nd Floor, New York, NY 10005, Attention: Thomas A. Long. A registration statement relating to the new securities has been filed with the Securities and Exchange Commission and has been declared effective. These securities may not be sold nor may offers to buy be accepted prior to the time the company has obtained the necessary authorization from the Comision Nacional de Valores of Argentina. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or Argentina in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or Argentina. You may read a copy of our registration statement and any other document we file at the SEC's public reference room at 450 Fifth Street, N.W. Washington, D.C. 20549. These documents are also available at the public reference rooms at the SEC's regional office in New York City. Please call the SEC at +1-800-SEC-0330 for further information on the public reference rooms. Our filings are also available to the public over the Internet at the SEC's website at http://www.sec.gov. Any questions regarding the exchange offer may be addressed to Morgan Stanley as dealer manager for this transaction at the following numbers: Morgan Stanley Simon Morgan +1-212-761-2219 Heather Hammond +1-212-761-1893 Telefonica de Argentina S.A. Telefonica de Argentina is a licensed supplier of wireline public telecommunications services and basic telephone services in Argentina. Basic telephone services include (1) the supply of fixed telecommunications connections which form part of the public telephone network or are connected to such network and (2) the provision through these links of local, domestic long distance and international telephone services. Compania Internacional de Telecomunicaciones S.A. is a holding company that conducts business through its controlling interest in Telefonica de Argentina. Its only significant asset is its ownership of 64.8% of Telefonica Argentina's capital stock and its only significant source of cash inflows is from dividends paid on this stock. Cointel's current shareholders consist of three affiliates of Telefonica S.A., which together beneficially own approximately 100% of Cointel's capital stock. CONTACT: Morgan Stanley Simon Morgan Phone: +1-212-761-2219 or Morgan Stanley Heather Hammond Phone: +1-212-761-1893 ============= B E R M U D A ============= TYCO: Shares Rise Following Earnings Restatement ------------------------------------------------ Shares of Bermuda-based Tyco International Ltd. rose 18 cents to close at US$19.75 on Tuesday afternoon after the Company released its earnings restatement for the last 5-1/2 years. Reuters News quoted Jean Marie Eveillard from First Eagle Global Fund as saying, "There was a major mess left by (former Tyco CEO) Kozlowski, and new management is trying to put the company on the right path. The fact that they seem to have come to the end of discovering new problems is good news." Former Tyco CEO Dennis Kozlowski is facing charges of grand larceny and enterprise corruption, along with former CFO Mark Swartz and former Tyco legal counsel Mark Belnick. The former officers are accused of awarding themselves with illegal loans. The restatement mainly affects US$696.1 million of pretax charges, or US$527.7 million after taxes, taken in the quarters ending December 2001 and March 2003. The change will boost results for fiscal 2002 and 2003, and reduce them for fiscal 1998 through 2001, said the report. CONTACT: Gary Holmes (Media) Phone: 212-424-1314 Edward Arditte (Investors) Phone: 212-424-1390 TYCO INTERNATIONAL: S&P Affirms Ratings, Outlook ------------------------------------------------ Standard & Poor's Ratings Services said on Tuesday that it affirmed its 'BBB-' corporate credit rating and stable outlook on Tyco International Ltd. and related entities. At the same time, Standard & Poor's withdrew its 'BBB-' rating on Tyco International Group S.A.'s (TIGSA) $750 million dealer remarketable securities due 2013, following the company's announcement that it has repurchased all of these securities. At March 31, 2003, Tyco had approximately $25.4 billion in total debt. The ratings affirmation follows the Pembroke, Bermuda-based company's disclosures that: --Tyco intends to restate financial results for fiscal years 1998- 2003 in connection with the ongoing review by the SEC, and --The total price paid for repurchasing the dealer notes was $902 million, $152 million over par value, which will be recorded as an expense in the current fiscal quarter. The restatements primarily involve pretax charges of about $696 million taken in the prior two quarters relating to ADT dealer reimbursements, asset reserve adjustments, capitalized costs, gain on Tyco shares, and other reconciliation and accounting adjustments. The restatements are not expected to adversely affect operating results or cash flows in current or future years, they have no impact on Tyco's most recent balance sheet, and they do not put the company out of compliance with any financial arrangements. "Even so, we note that the restatements may strengthen the plaintiffs' position with regard to shareholder lawsuits," said Standard & Poor's credit analyst Joel Levington. "Potential awards, if any, as well as the timing, method of payment, and Tyco's access to the capital markets, are uncertain." The current ratings assume that should the company perform within its public expectations (as noted in Tyco's March 13, 2003, analyst conference), it should have satisfactory access to the capital markets if it has to make any cash settlements. However, these contingencies will need to be reviewed within the context of the ratings if they reach resolution. Tyco International (Tyco), with approximately $36 billion in revenues, is a diversified global manufacturer, with operations in five primary sectors: electronics, health care, fire and security, plastics, and the general industrial markets. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Actions. Analyst: Joel Levington New York Phone: (1) 212-438-7802 TYCO INTERNATIONAL: Bernstein Liebhard Begins Class Action Suit --------------------------------------------------------------- A securities class action lawsuit was commenced in the United States District Court for the Southern District of Florida, West Palm Beach Division, on behalf of all persons who purchased or acquired Tyco International, Ltd. (NYSE: TYC) ("Tyco" or the "Company") securities (the "Class") between December 30, 2002 to March 12, 2003, inclusive (the "Class Period"). A copy of the complaint is available from the Court or from Bernstein Liebhard & Lifshitz, LLP. Please visit our website at www.bernlieb.com or contact us at (800) 217-1522 or by e-mail at TYC@bernlieb.com. The complaint charges Tyco with a violation of Sections 10(b) and Rule 10b-5 promulgated thereunder and Section 20(a) of The Exchange Act. Specifically, the Complaint alleges that Defendants failed to disclose and/or misrepresented the following material adverse facts, among others: (i) that the Company, for as long a period as six years had overstated its income by between $265 million and $325 million by improperly understating its bad debts and its inventory reserves for obsolete product and by improperly amortizing assets in its ADT business segment, in violation of Generally Accepted Accounting Principles ("GAAP"); (ii) that the senior management team in charge of the ADT business segment were honest and capable business managers when, in fact, they were not capable of running the crucial ADT business segment in an honest manner; (iii) that the Company's reported quarterly growth rate was illusory, based in material respects on the improper accounting treatment of its ADT business segment, and that material problems with its accounting and reported financial results continued to plague the Company after the actions disclosed by Defendants in the aftermath of the Boies Investigation; and (iv) that Defendants had no reasonable basis in fact for their statements to the market that Tyco would earn between $1.50 and $1.75 per share for fiscal year 2003, in light of the overstatement of Tyco's income primarily as a result of the violations of GAAP in its ADT business segment. Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired Tyco securities during the Class Period. If you purchased or otherwise acquired Tyco securities during the Class Period, and either lost money on the transaction or still hold the securities, you may wish to join in the action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than August 18, 2003. A"lead plaintiff" is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard & Lifshitz, LLP, or other counsel of your choice, to serve as your counsel in this action. Bernstein Liebhard & Lifshitz, LLP has been retained as one of the law firms to represent the Class. The attorneys at Bernstein Liebhard & Lifshitz, LLP have extensive experience in securities class action cases, and have played lead roles in major cases resulting in the recovery of hundreds of millions of dollars to investors. For more information about Bernstein Liebhard & Lifshitz, LLP, please visit our website at www.bernlieb.com. If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential Class member or lead plaintiff, you may contact Ms. Linda Flood, Director of Shareholder Relations, at Bernstein Liebhard & Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, (800) 217-1522 or (212) 779-1414 or by e-mail at TYC@bernlieb.com. Contact: Bernstein Liebhard & Lifshitz, LLP Ms. Linda Flood Phone: 212-779-1414 Email: TYC@bernlieb.com =========== B R A Z I L =========== AES CORPORATION: Announces Common Stock Offering Pricing -------------------------------------------------------- The AES Corporation (NYSE: AES) announced on Tuesday that it has priced its public offering of 43,000,000 shares of common stock at $7.00 per share. AES has granted the underwriters an option to purchase 6,450,000 additional shares of common stock to cover over-allotments. The joint book-running managers for the offering were Banc of America Securities LLC and Lehman Brothers. The common stock was offered under AES's shelf registration statement, which has been filed with, and declared effective by, the Securities and Exchange Commission. Printed copies of the prospectus supplement relating to the offering may be obtained from Banc of America Securities LLC, AND Lehman Brothers. CONTACT: AES Corporation Kenneth R. Woodcock Phone: 703/522-1315 Banc of America Securities LLC Third Floor 100 West 33rd Street New York, NY 10001 Phone: 646-733-4166 Fax: 212-230-8540 Lehman Brothers c/o ADP Financial Services Integrated Distribution Services 1155 Long Island Avenue Edgewood, NY 11717 Phone: 631-254-7106 Fax: 631-254-7268 Email: niokioh_wright@adp.com ARACRUZ CELULOSE: To Sell Bonds To Finance Riocell Buy, Says Paper ------------------------------------------------------------------ Latin America's biggest pulp exporter Aracruz Celulose S.A plans to sell as much as US$200 million in bonds to help finance its acquisition of Riocell's pulp mill from Klabin S.A., reports local paper, Valor Economico. The Company's chief financial officer Isac Zagury said that the bond issue will be backed by exports, which is the best option for raising funds as the Company exports 99 percent of its production. He added that the exports are sold under long-term contracts. Analysts believe that the bond sale may come by the end of this month. In related news, Aracruz is also seeking a US$400 million loan from Brazil's development bank BNDES to help pay for its joint- venture project with Stora Enso Oyj to build a pulp mill, which requires a total investment of US$1.2 billion. The Company's main activities are the production, distribution and export of bleached eucalyptus, high-grade hardwood and eucalyptus pulp and other related activities. Its products are mainly used in the manufacture of products such as tissue and high-quality printing, writing and specialty papers. The Company has distributors in Italy, Spain, Belgium, Holland, Luxembourg, Scandinavia and France. CONTACT: Aracruz Celulose SA Cam. Barra do Riacho, s/n - Km 25 Barra do Riacho 29197-000 Aracruz - RJ Brazil Phone: +55 27 3270-2442 Fax: +55 27 3270-2590 Home Page: http://www.aracruz.com.br Contact: Carlos A. Lira Aguiar, Chairman METRORED: Plans Expansion Following Restructuring Completion ------------------------------------------------------------ Brazilian telecommunications services company MetroRed is prepared to expand, seeking to increase by 40 percent this year, according to South American Business Information. The Company has recently completed restructuring its management board. SABI commented that the company's expansion goal is quite ambitious as it in the data transmission and Internet access industry that is predicted to grow by only 8 percent this year. Nonetheless, Metrored prepared investments of ARS35 million for this year, which are mainly supported by the new shareholder, Brasil Telecom. VARIG: Merger Pose Dismissal Threat To 5,343 Workers ---------------------------------------------------- A merger between Brazilian airlines Varig and TAM could result in the dismissal of about 5,343 workers; local paper Folha de Sao Paulo reports. The number represents about 22.5 percent of the total number of employees from both airlines, said the report, citing an internal airline document. The figure exceeds the unions' earlier estimate of about 3,500 lost jobs. The report added that the dismissals would be heavier at Varig, which has been driven to the brink of bankruptcy under the weight of some $800 million in debt. About 3,000 Varig workers are predicted to be out of job. The two airlines, both under strong financial pressure agreed to carry out a study to determine the feasibility of a merger. The study is supposed to be finished by the second half of this year. According to merger plans, Varig, Brazil's flagship airline will have a 5 percent stake in the new company, while TAM will own close to 35 percent. The Brazilian government and creditors will control the rest. ========= C H I L E ========= ENDESA: Grants Chilean Subsidiary Exclusive License For Software ---------------------------------------------------------------- Endesa S.A. has given exclusive distributor rights to its Chile services and technology unit Synapsis on its SDE-SAC software application for utilities reports Business News Americas, citing a statement from Synapsis. SDE-SAC is an integrated network management system that can be used by electricity, gas and water utilities, and offers network security, quality, reduced losses, lower operating costs and optimal system performance, said the report. Synapsis spokesperson Gloria Salgado said, "This also means we will provide local technical support, so you don't have to go to Spain every time you want to use this application. It can all be done here through our software plant in Argentina." She added that the cost of the software varies, depending on the size and demands of a particular company. The agreement allows Synapsis to adapt the product for use in Latin American markets. Ms. Salgado said that the company will put an "aggressive regional marketing plan" to sell the software. CONTACT: Endesa SA Principe de Vergara 187 - pta3 28002 Madrid Spain Phone: +34 91 213 10 00 Fax: +34 91 563 81 81 Home Page: http://www.endesa.es Contacts: Manuel Pizarro Moreno, Chairman Rafael Miranda Robredo, Chief Executive =============== C O L O M B I A =============== EMCALI: Cali Municipality Should Pay COP204B In Subsidies --------------------------------------------------------- The Colombian municipality of Cali is being asked to pay COP240 billion to Emcali for water and wastewater subsidies, reports Business News Americas, adding that the town's mayor, John Maro Rodriguez, along with the company's residential clients, are also asked to guarantee timely payment of future bills. However, water regulator CRA needs to decide whether the Company should also receive interest for the late payments. Financial advisor Taylor de Jongh-Iberfin commented that due to the new developments in the company's renegotiations, Emcali would be viable through 2020. Colombia's utilities regulator also said that Emcali's contract renegotiation with its power purchase agreement with the Thermoemcali thermoelectric plant is progressing well. US law firm Cleary, Gottlieb, Steen & Hamilton is negotiating with Colombia's Holguin, Neira, Pombo, which is representing Emcali, said the report. At present, the company is required to pay some COP4 billion (US$1.41 million) for capacity charges per month. Local paper El Tiempo said that talks are focusing on giving the company the capacity rights to the plant, and making it available for dispatch to the national grid so that Emcali could receive income from the times when the plant actually generates. The Company is also in negotiations with state oil company Ecopetrol and gas transport company Ecogas over contracts seen as disadvantageous to Emcali, said El Tiempo. Colombia's utilities regulator Superservicios aims to reach agreements with all Emcali creditors by June 26, said the report, citing the agency's chief, Evamaria Uribe. =================================== D O M I N I C A N R E P U B L I C =================================== AES ANDRES: US$400 Million Plant Starts Operations -------------------------------------------------- AES Andres, a unit of U.S.-based power company AES, has started operations in the Dominican Republic, according to a government statement. The Company has reportedly signed power purchase agreements with local utilities. The US$400 million liquefied natural gas (LNG) terminal and 300MW combined cycle power generation plant, located about 30 kilometers from capital city Santo Domingo, gets its LNG from the Atlantic LNG consortium, which is based in Trinidad. The plant is dual-fuel, said the report, meaning it also runs on number 2 oil. CONTACT: AES Corporation 20th Floor 1001 North 19th Street Arlington VIRGINIA United States 22209 Phone: +1 703 522-1315 Fax: +1 703 528-4510 Home Page: http://www.aes.com Contacts: Paul T. Hanrahan, President & Chief Executive Richard Darman, Chairman BANCO INTERCONTINENTAL: Central Bank Chief Admits Grave Mistake --------------------------------------------------------------- The Central Bank is now on the defensive after jailed Banco Intercontinental (BanInter) President Ramon Baez Figueroa accused Central Bank Governor Jose Lois Malkum of violating a fundamental procedure in cases where a bank is intervened. Mr. Baez's defense team said Mr. Malkum violated Article 66 of the Monetary Law, which prescribes that all shareholders' assets must be confiscated in a situation such as that of BanInter. Mr. Baez's group disclosed recently that two days after the revelation of the BanInter fraud, bank treasurer and politician Guaroa Liranzo received US$11 million in cash. Mr. Malkum, who has admitted to the allegations, said he authorized payment of as much as US$22 million to Mr. Liranzo. He, however, defended his action, saying he based it on his perception that Mr. Liranzo had no hand in the fraud uncovered at BanInter. He added Mr. Liranzo has not yet withdrawn the money. BANCREDITO: Individual Ratings Down To `D' On Market Uncertainty ---------------------------------------------------------------- Fitch Ratings Agency downgrades the individual rating of Bancredito from `E' to `D', citing authorities' statements that the bank required external support. This rating could potentially be subject to change once Fitch assesses that the bank's liquidity and capital have been brought to satisfactory levels and if the outflow of deposits has been stemmed. However, Bancredito's national and long-term foreign currency ratings incorporate the expectation that further support, if required, will continue to be provided until the potential acquisition is closed, said the ratings agency. The bank's the long-term foreign currency rating is also lowered to `B' from `BB', citing concerns that the local market has reached a point of nervousness where there is the possibility that issues regarding particular banks could quickly escalate to a loss of confidence in the banking system and in the authorities' capacity to provide generalized support, should it become necessary The lower long-term ratings reflect concerns regarding the pressures placed on sovereign creditworthiness by the BanInter episode, and the potential that the banking system may require further support, which could add significantly to these pressures and leads Fitch to place the long-term ratings on Rating Watch Negative, reflecting concern that any of the banks may prove vulnerable to quick shifts in market confidence. Fitch said that the rating actions reflect concerns that the local market has reached a point of nervousness where there is the possibility that issues regarding particular banks could quickly escalate to a loss of confidence in the banking system and in the authorities' capacity to provide generalized support, should it become necessary. CONTACT: Franklin Santarelli Phone: +58 212 286 3356 Carlos Fiorillo Caracas Phone: +58 212 286 3232 Gustavo Lopez Phone: +1-212-908-0853 Peter Shaw New York Phone: +1-212-908-0553 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 ============= E C U A D O R ============= PETROECUADOR: Workers End Strike, Operation Starts Recuperating --------------------------------------------------------------- Unions representing workers at Ecuador's state oil company Petroecuador have called off a week-long strike, after the government abandoned plans to award association contracts for its five main oil fields to private companies. A report from Reuters News said that administrative workers went bank to work on Tuesday, but oil workers remain on `standby' until the Energy Ministry stops legal proceedings seeking to remove seven union leaders from their posts. In the meantime, gasoline distribution is resumed at Quito, and the Sote pipeline should be back to normal operations, said a source close to the company. So far, the striking workers did not obtain their demand to have Energy Minister Carlos Arboleda resign from his post, however, the abandoning of the contract proposals is deemed more important. The company's board will now decide on a new type of contract structure to offer private companies. The process is expected to take another four weeks. Local paper El Telegrafo reports that President Lucio Gutierrez said that the strike organizers, whom he described as "terrorists and criminials" will pay for their crimes in the court. The Company is also expected to lift the force majeure this week. * Ecuador: S&P Affirms Sovereign Credit Ratings ----------------------------------------------- Standard & Poor's Ratings Services said today that it affirmed its 'CCC+' long-term and 'C' short-term sovereign credit ratings on the Republic of Ecuador. Despite recent political and economic pressures associated with the strikes by teachers and workers at Petroecuador, the state-owned oil company, the outlook on the ratings remains positive. Both the June 13, 2003, submission to Congress of a civil service reform bill that aims to streamline and unify the public sector payroll (a key requirement under Ecuador's US$200 million Stand-By Arrangement with the International Monetary Fund (IMF)) and the conclusion of negotiations with the Paris Club (over US$80 million in debt relief) were positive developments that outweighed the difficulties in managing the strikes, which included some concessions. According to sovereign analyst Lisa Schineller, the government has yet to specify how the salary increases recently awarded to striking teachers will be incorporated into and offset by other spending cuts in the 2003 and 2004 budgets. "Along with passage of civil service reform, this will continue to test the government's commitment to fiscal consolidation," said Ms. Schineller. "In addition, last week's announcement that foreign involvement in the oil sector would be limited to service contracts bodes poorly for Ecuador's growth prospects. Neither Petroecuador nor the government have sufficient funds to boost oil production to levels consistent with robust economic growth," she added. However, the government's policy on private sector participation could be modified yet again following the release of a joint government/multilateral study on the energy sector in the coming months. "Given very limited market interest in holding more Ecuadorean debt, financing from the IMF and other multilateral lenders is crucial if Ecuador is to meet its scheduled amortization payments of US$1.24 billion in 2003," Ms. Schineller said. "Should Ecuador (both the executive and Congress) comply with key fiscal measures (most importantly, the civil service reform) included in the IMF Stand-By Arrangement, Ecuador's ratings could be upgraded. Conversely, failure to secure official financing would impair prospects for servicing commercial debt on time, and the ratings could come under downward pressure," she concluded. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Actions. =============== H O N D U R A S =============== AES: Seeks Partners or Buyers For El Faro Project ------------------------------------------------- AES regional manager Mike Scholey revealed that the company is looking for potential partners who would take a "significant stake", or even take complete control of its US$650 million, 780 MW El Faro thermoelectric project in Honduras, saying that the project no longer fits into the company's future plans. Mr. Scholey denies that difficulty in obtaining financing is the reason behind the company's decision to back out on the project. "The project's still viable," he asserts. "What we are trying to do is follow through on our commitments to the Honduran government and people and make sure that the project gets done," he said, adding that discussions are ongoing and the company is studying all its options. AES has completed feasibility studies on the project and has obtained a power purchase agreement (PPA) with state power company ENEE for the first 210MW stage. Using liquefied petroleum gas, probably from Trinidad and Tobago, the project in Puerto Cortes, next to the Guatemalan border includes transmission upgrades. CONTACT: AES Corporation 20th Floor 1001 North 19th Street Arlington VIRGINIA United States 22209 Phone: +1 703 522-1315 Fax: +1 703 528-4510 Home Page: http://www.aes.com Contacts: Paul T. Hanrahan, President & Chief Executive Richard Darman, Chairman ============= J A M A I C A ============= AIR JAMAICA: Antigua Ops Encouraging; Still Battling Losses ----------------------------------------------------------- Ailing regional carrier, Air Jamaica, says its first year of operation to Antigua has been a big success, citing the increase in flight frequency to and from the country. "We started out last June with flights three days per week and by September, we had increased flights to six days per week," Joyce Henry, sales and marketing executive for Antigua, told The Antigua Sun Monday. The airline is celebrating its first anniversary in Antigua the entire week, according to the paper. The carrier used a flight from JFK, New York that touched down June 20 at the V.C. Bird International Airport as its inaugural flight to the country last year. Ms. Henry says, in just a year, the carrier has become involved in life in Antigua and is a major sponsor of both Carnival and Sailing Week. "Air Jamaica places a premium on linking the development and promotion of indigenous Caribbean culture and life to our tourism product," she said. Travelers using Air Jamaica on Friday will receive a gift and a glass of champagne, she said. Operations in Antigua may be doing well, but outside the country it has struggled to sustain operations. Last year, according to TCR-Latin America, the carrier lost more than US$90 million and projected another US$20 million- drop in revenues to June this year due to the fall-out from the U.S.-Iraqi war. In March, it cut 25 managers to trim operating expenses. CONTACT: Air Jamaica 4 St. Lucia Avenue Kingston 5, Jamaica Phone: 876/922-3460 Fax: 929-5643 E-mail: webinfo@airjamaica.com Contact: Gordon Stewart, Chairman Allen Chastanet, Vice President for Marketing and Sales =========== M E X I C O =========== GRUPO TMM: Creditors Hire U.S. Law Firm to Collect Debts -------------------------------------------------------- Debt-laden Transportacion Maritima Mexicana (Grupo TMM) is expected to feel increasing financial pressure in the coming days. U.S. creditors commissioned a New York law firm to begin negotiations or even legal proceedings against the company in an effort to recover amounts owed to them. Internet Securities Inc., in a briefing paper, said the creditors have hired Akin Gump Strauss Hauer & Feld LLP to begin negotiations with Grupo TMM representatives, along with several committees of investors. "The company's problems have been mounting since May 15, 2003, when it failed to make a payment of bonds and interest, as well as the interest on another debt expiring in 2006," the briefing paper said. The Mexican company has been trying, but without success, to renegotiate debt via a bond swap. TMM has also sold its railroad business and most of its ports, but proceeds from these disposals are just not enough. Internet Securities says TMM shares on the NYSE have dropped by 9.17%, while in Mexico the issue is no longer being quoted. PEMEX: Outlines Fleet Upgrade Forecast -------------------------------------- Mexican state oil company Pemex plans to invest at least US$250 million to upgrade its fleet over the next five years to comply with new security and environment rules. The fleet upgrade is aimed at improving environmental standards to avoid accidents, reports Business News Americas. Presently, Pemex has 19 tankers. Communication and Transport Department ports and merchant fleet general coordinator Cesar Reyes relates that the country will adopt the International Maritime Organization's new rules on ship inspections, port access, equipment and pollution starting July 2004. Reyes signed a memorandum of understanding on merchant fleet technical cooperation with Spain's development undersecretary Adolfo Menendez, agreeing that new security norms are necessary for all countries that have merchant fleets, said the report. TV AZTECA: Shares Skyrocket On Assurance Concerning Iusacell ------------------------------------------------------------ Shares Mexican broadcaster TV Azteca bounced 10.75 percent on Tuesday, closing at MXP4.43, after the company's chief executive Pedro Padilla eased investor concerns that the company would have to shoulder part of the debts of Grupo Iusacell S.A. de C.V., which TV Azteca parent Salinas Group has purchased. The report added that Azteca's American Depositary Receipt (ADR) gained 9.74 percent to US$6.76. Recently, at least two equity analysts downgraded their share recommendation for TV Azteca following the acquisition. Grupo Salinas bought Grupo Iusacell for US$10 million plus the assumption of the latter's US$800 million in debt. Mr. Padilla attempted to ease investor concerns saying that parent company Grupo Salinas plans to isolate the TV Azteca's solid cash generation from other investments. TV Azteca was known to have shouldered part of the debt of Unefon, another Grupo Salinas unit. Grupo Salinas investor relations personnel Hector Romero said that the group would concentrate on turning Iusacell, which is in technical default on a US$266 million syndicated bank loan, around. CONTACT: TV Azteca SA de CV Periferico Sur 4121 Mexico DF Mexico 14141 Phone: +52 55 3099 1313 Fax: +52 55 3099 1418 Home Page: http://www.tvazteca.com.mx Contacts: Ricardo B. Salinas Pliego, Chairman Pedro Padilla, Chief Executive Jose Ignacio Morales, Chief Operating Officer Grupo Iusacell S.A. De C.V. Av Prolongacion Paseo dela Reforma 1236 Col Santa Fe Delegacion Cuajimalpa Mexico DF Mexico 05348 Phone: +52 5 109 4400 Home Page: http://www.iusacell.com.mx TV AZTECA: End of Unefon-Nortel Spat Boosts 46% Stake Sale ---------------------------------------------------------- The settlement of the Unefon-Nortel legal tussle has increased the chances of TV Azteca successfully selling its 46% stake in Unefon, Merrill Lynch said Tuesday. Concurrently, the brokerage firm changed its recommendation on Azteca to "buy" from "sell." Merrill Lynch said, "[the agreement] lifts a major overhang on TV Azteca's stock [and] opens the way for TV Azteca to spin off Unefon." The company, Mexico's No.2 broadcaster, has long been known to be looking for buyers for its 46% stake in Unefon, but prevailing market conditions have prevented it from getting what it considers fair value for the stake. Merrill Lynch said the sharp reversal of its ratings was also influenced by assurances from TV Azteca officials that the company won't use any of its cash flow to support the acquisition of wireless phone concern Grupo Iusacell SA (CEL) by Chairman and CEO Ricardo Salinas Pliego. Mr. Pliego's paging business, Movil@ccess, is planning to buy Iusacell for $10 million and assume $800 million in debt. "Although TV Azteca has been clear that it will not fund a bailout of Iusacell, if this were to happen, we would revisit our rating," Merrill Lynch said. TV AZTECA: Board Reaffirms Commitment for Uses of Free Cash Flow ---------------------------------------------------------------- TV Azteca, S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA), one of the two largest producers of Spanish language television programming in the world, announced n Tuesday that its board of directors reassured the market about the company's six-year guidelines for uses of cash approved earlier this year. Last February the board authorized a plan to allocate a substantial portion of TV Azteca's expected cash generation within the next six years, to gradually reduce the company's outstanding debt for an amount of approximately US$250 million, as well as to make distributions to shareholders for approximately US$500 million in the six-year period. "Our board ratified on Tuesday that the long term plan for uses of cash is a firm and definite commitment with all of the company's investors. Our strict adherence to the guidelines will continue exactly in the same manner as was approved and communicated in the prior months," said Pedro Padilla, Chief Executive Officer of TV Azteca, after a meeting to inform the company's board of directors about Unefon's settlement with Nortel. "Our long term plan relies on our commitment to isolate TV Azteca's solid cash generation from the company's investments- Unefon and Azteca America-and recently the board reaffirmed that the assurance of non-cash outlays from TV Azteca applies to any, related or non-related non-core business, including the investment in Iusacell, recently announced by Grupo Salinas," added Mr. Padilla. Mr. Padilla also commented that, "We are delighted with the fact that Unefon reached an agreement with Nortel Networks, its main vendor equipment supplier and lender, which provides Unefon with a strong capital structure that translates into long term viability. We see that Unefon has become a stand-alone company, with an increasingly solid competitive position, not depending on TV Azteca for growth." Company Profile TV Azteca is one of the two largest producers of Spanish language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing US Hispanic market; Unefon, a Mexican mobile telephony operator focused on the mass market; and Todito.com, an Internet portal for North American Spanish speakers. ===================== P U E R T O R I C O ===================== CENTENNIAL COMMUNICATIONS: $300M Senior Debt Rated 'CCC' -------------------------------------------------------- Standard & Poor's Ratings Services said on Tuesday that it assigned a 'CCC' rating to Centennial Communications Corp.'s $300 million senior unsecured notes due 2013, issued under Rule 144A with registration rights. The notes are being co-issued with intermediate holding company Centennial Cellular Operating Co. LLC. Net proceeds of about $275 million will be used to repay bank debt. At the same time, Standard & Poor's affirmed Wall, N.J.-based Centennial's 'B-' corporate credit rating. "All other ratings are affirmed, and the outlook has been revised from negative to stable; while the notes are guaranteed by Centennial Puerto Rico Operations Corp., they are still rated two levels below the corporate credit rating because of the significant concentration of priority obligations relative to the consolidated assets of the company," said credit analyst Catherine Cosentino. Most of the priority obligations are borrowings under the company's $1.035 billion of secured bank facilities. Even with the bank pay-down from the new note issue, total secured debt will represent a sizeable obligation, at about $900 million after re- capitalization. The outlook change reflects Centennial's receipt of amendments to its bank-facility financial covenants, in conjunction with the new note issue, which is contingent on receipt of amended bank covenants. Relaxation of the covenants, including elimination of the senior leverage test, provides the company more liquidity over the next fiscal year ending May 31, 2004. In addition, the partial pay-down of the revolving credit provides the company added borrowing capacity, subject to adherence to the covenants. Pro forma for the repayment, the combination of cash and bank availability from the revolving credit will total about $200 million, versus the previous $107 million. The rating reflects the relatively high business risk of the wireless industry, particularly for regional carriers. The regional wireless carriers have faced increased competition from the larger, national players such as Verizon Wireless and AT&T Wireless. Carriers such as Centennial are disadvantaged relative to the national players in terms of their ability to offer competitively priced national plans. Moreover, the national players are expected to continue to be aggressive in taking share from the regional carriers, given the fact that overall wireless subscriber growth will continue to slow because of increased overall wireless penetration. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Actions. Analyst: Catherine Cosentino New York Phone: (1) 212-438-7828 CENTENNIAL COMMUNICATIONS: Appoints New President For Caribbean --------------------------------------------------------------- Centennial Communications Corp. (NASDAQ: CYCL) announced on Tuesday John A. de Armas has been appointed to the position of president, Caribbean operations. Mr. de Armas joined Centennial in February 2002 as president, Centennial Dominicana and was promoted to executive vice president, Caribbean operations in October 2002. Previously, Mr. de Armas was president of Home Shopping Espanol, a division of Home Shopping Network, where he developed and launched markets in Puerto Rico, Mexico, and the top 20 Hispanic markets in the U.S., reaching an audience of over 40 million Hispanics. Prior to that, he was vice president of International Strategy and Marketing with Phelps Dodge International Corporation. Prior to Phelps Dodge, Mr. de Armas was in charge of KPMG's South Florida consulting practice. "I am very happy John has accepted the position of president, Caribbean operations. Since his arrival, John's contributions to Centennial have been outstanding. His knowledge of our operations, extensive background and proven leadership skills will continue to be an asset to Centennial," said Michael J. Small, chief executive officer. Centennial is one of the largest independent wireless telecommunications service providers in the United States and the Caribbean with approximately 17.1 million Net Pops and approximately 929,700 wireless subscribers. Centennial's U.S. operations have approximately 6.0 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.1 million Net Pops in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks in the region. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, please visit our websites at www.centennialcom.com and www.centennialpr.com. ================================= T R I N I D A D & T O B A G O ================================= BWIA: Targets Labor Cost to Meet Cost Reduction Requirement ----------------------------------------------------------- BWIA officials are confident its adjusted labor cost reduction plan, submitted Monday night, satisfies the requirement set by the government for state financing to continue. General Manager Nelson Tom Yew told The Trinidad Guardian the proposal was submitted well within the deadline, which lapsed midnight Monday. Mr. Yew did not give any details, other than to say, "I am very hopeful that the plan will give the government the comfort it needs to support BWIA." According to the paper, the government did not set a definite amount of labor cost savings, requiring only that operating costs be reduced by 20%. The paper says the company received a considerable amount of help from workers union, among them the Aviation Communication and Allied Workers Union and the Communication, Transport and General Workers Trade Union, which represent the lower-paid employees at the airline. The carrier's executive management and the airline superintendents have also agreed to give concessions to allow the labor cost reduction plan to materialize. BWIA Chairman Lawrence Duprey, in an interview Monday, said the fate of the airline is now in government's hands. ============= U R U G U A Y ============= * Uruguay: Fitch Removes Default Rating on External Bonds --------------------------------------------------------- Fitch Ratings upgraded on Tuesday Uruguay's sovereign external bonds that were eligible for last month's debt exchange but were not fully extinguished to 'CCC' from 'DDD'. The foreign currency issuer rating is likewise upgraded to 'B-' from 'DDD', where it was placed for thirty days at the time of Uruguay's distressed debt exchange last month. This 'B-' rating is in line with the new bonds issued as part of the exchange. The Rating Outlook is Stable. For three issues fully tendered in the exchange, the ratings are removed. A list of specific bonds follows. The bonds were downgraded to 'DDD' on May 16 on the announcement of the completion of a debt exchange, which Fitch Ratings determined to be an event of default under its distressed debt exchange criteria (see 'Sovereign Distressed Debt Exchanges' at 'www.fitchratings.com'). Fitch's common practice is to keep exchange eligible bonds in the default category for 30 days and to take them out of default if payments have or are expected to resume according to the original terms. Face value equivalent to 89% of eligible externally issued bonds was tendered. The bonds removed from default on Tuesday are rated below the new bonds ('B-') issued as part of the exchange. The distinction is based on Fitch's opinion that the government's willingness to service bonds not tendered on time and in full may be lower than for the new bonds. Although near term amortization payments on the old bonds (estimated at US$27 million for the remainder of 2003 and $31 million in 2004) appear to be covered by net multilateral disbursements and some issuance in the domestic market, the government has not yet made a clear statement of its intention to service holdouts. In the event that financial pressures mount, the government may elect to incur arrears on exchange eligible bonds before doing so on new bonds issued in the exchange. With the exception of the New Money Notes due 2006, a majority of bondholders consented to exit amendments eliminating cross default clauses for holdouts of exchange eligible bonds. As a result, payment delays on these bonds would not trigger defaults on the US$3.5 billion in new bonds issued in the exchange. Uruguay's announcement last week that it has extended the exchange offer for domestically issued bonds does not affect the foreign currency issuer rating, as the remaining amount, equivalent to 1% of domestic issued debt and less than 0.5% of total bond debt, is de minimis. Fitch does not rate the domestically issued U.S. dollar denominated bonds. The ratings on the following bonds are upgraded to 'CCC': --7.875% Bonds due 2003 (USD) --7.00% Bonds due 2005 (EUR) --New Money Notes due 2006 (USD) --8.375% Bonds due 2006 (USD) --Debt Conversion Notes due 2007 (USD) --Debt Conversion Notes due 2007 (GBP) --7.00% Bonds due 2008 (USD) --7.875% Bonds due 2009 (USD) --7.25% Bonds due 2009 (USD) --8.75% Bonds due 2010 (USD) --7.00% Bonds due 2011 (EUR) --7.625% Bonds due 2012 (USD) --Collateralized Fixed Rate Notes Series A due 2021 (USD) --Collateralized Fixed Rate Notes Series B due 2021 (USD) --7.875% Bonds due 2027 (USD) The ratings for the following bonds, which were fully tendered in the exchange, are removed: --Convertible Floating Rate Notes due 2007 (USD) --7.00% (UF) Notes due 2007 (CLP) --6.375% (UF) Notes due 2011 (CLP) CONTACT: Roger M. Scher New York Phone: +1-212-908-0240 David Riley London Phone: +44-207-417-6338 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 ================= V E N E Z U E L A ================= SIDOR: Receives US$61 Million in Hard Currency Allocation --------------------------------------------------------- Venezuelan steelmaker Sidor got over US$61 million in hard currency allocation from the state currency control board CADIVI said the government agency. The Company received US$58.5 million and US$2.6 million payments. "This restructuring permitted a reduction of the amount owed from approximately $1.4 billion to $800 million. A schedule of payments was established which has now begun with this first handover," said CADIVI. Sidor, the largest steel producer in the Andean region, was able to reduce its debt by almost half last year after a major debt restructuring. The Company's debt problems were triggered by a sharp drop in international steel demand and prices and a shrinking domestic economy, said the report. Local reports say that the allocation shows that CADIVI is moving to up hard currency for companies having difficulties with paying their debt. Business leaders have criticized the CADIVI, saying that the slow allocation of funds is strangling economic activity in the country. Sidor is controlled by an Amazonia consortium that consists of Mexico's Hylsamex HYLSAMXB.MX and Tamsa TAMSA.MX , Argentina's Siderar SID.BA , Usiminas USIM3.SA of Brazil and Venezuela's Sivensa SVSa.CR. *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter Latin American is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. John D. Resnick, Edem Psamathe P. Alfeche and Oona G. Oyangoren, Editors. Copyright 2003. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *