/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030625.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Wednesday, June 25, 2003, Vol. 4, Issue 124 Headlines A R G E N T I N A ALBETE: Calls Creditors to a Formal Meeting ANTONIO A VAZQUEZ: Under Receivership CANAL 9: Seeks Reorganization After Suffering Huge Losses CASTRO Y COMPANIA: Files Motion For Reorganization CENTRO TECNICO: Creditor Seeks Bankruptcy CORREO ARGENTINO: Runs Into Serious Trouble With Government DIRECTV LA: Court Gives Go-Ahead to Huron's Retention DISTRIBUIDORA MORICE: Requests Creditors To Attend Meeting DOTTI HERMANOS: Seeks Court's Nod To Reorganize EMILIO LOPEZ: Calls Creditors To Formal Meeting GRUPO TEXTIL: Files For 'Concurso Preventivo' KYO EI PLASTIC: Union Bankruptcy Motion Approved LAS MARIANAS: Deemed Bankrupt By Local Court LLANEZA HERMANOS: Takes First Step Towards Reorganization MUSIMUNDO.COM: Calls Creditors to a Meeting NEG GROUP: Deemed Bankrupt By Buenos Aires Court SEG MEDICAL: Court Calls Creditors To Formal Meeting SERVICIOS FINANCIEROS: Signs Acuerdo Preconsursal With Creditors SISTEMAS INTEGRALES: Court Grants Creditor's Bankruptcy Request TRI NOI: Declared Bankrupt Upon Creditor's Request 41 PLAZA: Under Receivership After Concurso Filing B E R M U D A GLOBAL CROSSING: Exclusivity Hearing to Continue June 25 TYCO INTERNATIONAL: Appoints New Senior Vice President TYCO INTERNATIONAL: Judge Denies Motion To Dismiss Ex-Execs' Case B R A Z I L AES CORP.: Announces Completion of Common Stock Offering CEMAR: Sale Process Resumes ENRON: Brazil Power Holdings' Voluntary Ch. 11 Case Summary SABESP: Announces Offering's Completion VARIG/TAM: To Ink Merger Deal This Week, Says Advisor C H I L E EDELNOR: Local and Foreign Corp Credit Ratings Raised to 'B-' ENDESA CHILE: Completes Infraestructura Sale to OHL for $273M M E X I C O CFE: Invites Bids For Equipment Overhaul N I C A R A G U A ENITEL: Govt. Receives Bids From SCH, BNP Paribas P A N A M A BLADEX: Announces Preliminary Results of Rights Offering P E R U SIDERPERU: Asks AGR Trustees To Call Meeting Of Creditors P U E R T O R I C O CENTENNIAL COMMUNICATIONS: Consummates $500M Notes Offering ENRON: Gas Natural To Buy Puerto Rican Asset For $130M U R U G U A Y * Uruguay: IMF Managing Director Issues Statement V E N E Z U E L A CANTV: Court Ditches Suit Filed by Multiphone PDVSA: Reiterates Plans To Open Service Stations in Argentina SIDOR: Accomplishes Financial Restructuring SIDOR: Tenaris Issues Comments on Debt Restructuring * Venezuela: Fitch Upgrades Sovereign Ratings to 'B-' - - - - - - - - ================= A R G E N T I N A ================= ALBETE: Calls Creditors to a Formal Meeting ------------------------------------------- Court No. 23 of Buenos Aires, under Dr. Villanueva calls creditors of Albete S.A. to a formal meeting, following the Company's filing for "Concurso Preventivo" earlier. The Court, with assistance from by Dr. Cufari of Secretary No. 46, assigned Ms. Liliana Montoro as receiver for the proceedings. Ms. Montoro will verify claims until September 3. The informative assembly will be on June 3 next year. CONTACT: Albete S.A. Santa Fe Ave. 1537 Buenos Aires Ms. Lilina Montoro 3rd Florr 'B' Sarmiento Street No. 517 Buenos Aires ANTONIO A VAZQUEZ: Under Receivership ------------------------------------- The Civil and Commercial Tribunal of Lomas de Zamora placed construction company Antonio A Vazquez e Hijos S.A. under receivership with Mr. Marcelo Edgardo Miraos as receiver. The news came after the Company filed for "concurso preventivo" recently. Infobae relates that the receiver will verify claims until July 14. He will then file the individual reports on September 18 and the general report on December 17. Creditors are invited to attend an informative assembly on February 17 next year. CONTACT: Antonio A Vazquez e Hijos S.A. Ferrando 1448 Longchamps Mr. Marcelo Edgardo Miraos Rodriguez Pena 296 Banfield CANAL 9: Seeks Reorganization After Suffering Huge Losses --------------------------------------------------------- Operative losses pushed Argentine TV channel Canal 9 to seek court permission to start a reorganization process. The Company has submitted its plea for "Concurso Preventivo" to Commercial Court No. 9. The owner, Daniel Hadad, relates that the move was aimed to reduce costs at the ailing company. Local sources say that Mr. Hadad bought the Company for US$3 million plus a UD$9 million debt payment to Telefonica. However, losses drove the Company's debt to as much as US$60 million. CASTRO Y COMPANIA: Files Motion For Reorganization -------------------------------------------------- Construction materials distributor Casto Y Compania S.R.L. has filed for "Concurso Preventivo" at the Civil and Comercial Tribubal of the Argentine state of Mendoza. According to local news portal Infobae, Court No. 2 of Mendoza has set the informative assembly for the reorganization process to be held on October 27 next year. CENTRO TECNICO: Creditor Seeks Bankruptcy ----------------------------------------- Acordar Cooperativa se Credito y Consumo Ltda. filed a request seeking the bankruptcy of Argentine air conditioner seller Centro Tecnico Buen Aire SA. A local source reveals that Centro Tecnico owes Acordar Cooperativa some ARS17,130. Court No. 1, which handles the case, assigned Mr. Tito Gargalione as receiver for the process. The deadline for verification of claims is August 13 this year. CONTACT: Centro Tecnico Buen Aire S.A. Rincon Street No. 85 Buenos Aires Mr. Tito Gargaglione 1st Floor C Medrano Avenue No. 833 Buenos Aires CORREO ARGENTINO: Runs Into Serious Trouble With Government ----------------------------------------------------------- Argentinean mail company Correo Argentino is in serious legal trouble with the Government. The Company, which is in the hands of the 'Macri' holding, is being accused of maintaining large and ongoing debts with the Government. The Government has not reached a clear decision regarding what measures it will take. What is under consideration now is whether the concession will be taken from the hands of the Macri Group, and either given to another private concession or returned to the Estate which originally owned it. DIRECTV LA: Court Gives Go-Ahead to Huron's Retention ----------------------------------------------------- The Official Committee of Unsecured Creditors of DirecTV Latin America, LLC, sought and obtained the Court's authority to retain Huron Consulting Group LLC as its financial advisors pursuant to Sections 328(a) and 1103 of the Bankruptcy Code and Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, nunc pro tunc to March 31, 2003. As financial advisors, the Committee Huron will: (a) review all financial information prepared by the Debtor or their accountants or other financial advisors as the Committee requested, including, but not limited to, a review of the Debtor's financial statements as of the date of the filing of the petitions, showing in detail all assets and liabilities and priority and secured creditors; (b) monitor the Debtor's activities regarding cash expenditures, loan drawdowns and projected cash requirements; (c) attend meetings of the Committee, the Debtor, creditors, their attorneys and financial advisors, and federal, state and local tax authorities, if required; (d) assist, as the Committee requests, in this case with respect to, among other things: -- review of any plan of reorganization suggested or proposed with respect to the Debtor; -- review and analysis of proposed transactions for which the Debtor seeks Court approval; -- valuation and corporate finance assistance with any sale and portfolio valuation matters as may be required; -- preparation of a going concern sale and liquidation value analysis of the estate's assets; -- review of the Debtor's periodic operating and cash flow statements; -- any investigation that may be undertaken with respect to the prepetition acts, conduct, property, liabilities and financial conditions of the Debtor, including the operation of its business; and -- other services as the Committee or its counsel and Huron may mutually deem necessary. Pursuant to Section 330(a) of the Bankruptcy Code, the Committee and Huron have agreed that Huron will be compensated on a fixed monthly rate. The Parties agreed to a $165,000 monthly compensation for April and May 2003. The Committee and Huron will reassess the adequacy of the $165,000 monthly fee based on the actual time incurred and if necessary, seek Court approval to adjust the rate for work to be performed subsequent to May 2003. Moreover, Huron will bill: (a) if approved by the Committee, out-of-pocket legal fees and expenses incurred related to and as a result of this case; and (b) fees associated with administration of filings and reporting required by the Bankruptcy Court related to the Committee's retention of Huron. (DirecTV Latin America Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) DISTRIBUIDORA MORICE: Requests Creditors To Attend Meeting ---------------------------------------------------------- Argentine clothing company Distrubuidora Morice S.A. is calling its creditors to a meeting, according to a local source. No specific date and place have been announced. Court number 14 under Dr. Sala handles the case with assistance from doctor Aleman of Secretary No,. 27. The Company stopped making debt payments last May. CONTACT: Distribuidora Morice S.A. Caracas Street No. 2157 Buenos Aires DOTTI HERMANOS: Seeks Court's Nod To Reorganize ----------------------------------------------- The Civil and Commercial Tribunal of San Francisco, Cordoba has received a motion for "Concurso Preventivo" from Dotti Hermanos S.H., relates Infobae. San Francisco's Court No. 2 designated Mr. Ruben Ghione as receiver for the reorganization proceedings. CONTACT: Dotti Hermanos S.H. Cabrera 2447 San Francisco Cordoba Rubben Ghione Pasaje Cesar Ferreo San Francisco, Cordoba EMILIO LOPEZ: Calls Creditors To Formal Meeting ----------------------------------------------- Emilio Lopez SA, which recently sought the Court's permission to start reorganization proceedings, is calling its creditors to a formal meeting, said a local source. The Company, which manufactures colored fabrics, frames and clothed cardboard, filed for "Concurso Preventivo" after it stopped making debt payments in November 2001. The case is presently at Court No. 9, under Dr. Javier Dubois. The Company declared having total assets of ARS3.59 million (US$1.28 million) and US$18,196 and liabilities of ARS4.85 million (US$1.73 million) and US$11,337. CONTACT: Emilio Lopez S.A. 3rd Floor Libertad Street No 417 Buenos Aires GRUPO TEXTIL: Files For 'Concurso Preventivo' --------------------------------------------------- Grupo Textil Morja y Asociados S.A., which is based in La Pampeana, is seeking approval from an Argentine Court to start a reorganization process, according to local newspaper El Clarin. The Company's "concurso preventivo" motion was filed at Court No. 12 of Buenoes Aires. KYO EI PLASTIC: Union Bankruptcy Motion Approved ------------------------------------------------ The Union de Obreros y Empleados Plasticos succeeded in asking for the bankruptcy of Argentine plastic maker Kyo Ei Plastic SRL. The Company owes some ARS31,823 to the Union, according to a local source. The bankrupt company is in the hands of its receiver, Mr. Juan Alberto Gianazzo, who will verify credit claims until August 26, 2003. Presently, Buenos Aires Court No. 8 handles the Company's case. CONTACT: Kyo Ei Plastic Corrientes Ave. No. 846 Buenos Aires Mr. Juan Alberto Gianazzo 8th Floor '199' Avenida de Mayo No. 1370 Buenos Aires LAS MARIANAS: Deemed Bankrupt By Local Court -------------------------------------------- Buenos Aires-based Las Marianas S.R.L. has entered bankruptcy, according to a local source. The Company's creditor, Carlos Nunez, reportedly requested that the court declare Las Marianas' bankruptcy after the Company failed to pay him $32,174. Court No. 23, under Dr. Villanueva assigned Ms. Gloria Della Sala as receiver for the proceedings. The deadline for verification of claioms is September 8 this year. CONTACT: Las Marianas S.R.L. Habana 4374 Buenos Aires Ms. Gloria Della Sala 5th Floor 'A' Uruguay Street No. 662 Buenos Aires LLANEZA HERMANOS: Takes First Step Towards Reorganization --------------------------------------------------------- Argentine car dealer Llaneza Hermanos S.A. is seeking permission from the Court to commence reorganization proceedings by submitting its motion for "concurso preventivo". Infobae relates that the Company's case is handled by Court No. 17, with assistance from Secretary No. 33 of Buenos Aires. However, the report did not mention whether a receiver has been assigned to the process. MUSIMUNDO.COM: Calls Creditors to a Meeting ------------------------------------------- The on-line CDs seller Musimundo.com S.A. is requesting that its creditors attend a meeting, said a local source, without revealing its intended date and venue. The Company, which stopped making debt payments earlier this month, recently filed for a formal restructuring at Court No. 1, which is under Dr. Bargallo, with the assistance Dr. Macchi from Secretary No. 21. CONTACT: Musimundo.Com S.A. 8th Floor Office 79 Pte. Roque SAenz Pena Street No. 1150 Buenos Aires NEG GROUP: Deemed Bankrupt By Buenos Aires Court ------------------------------------------------ A request from Merzario Argentina S.A resulted in the bankruptcy of Buenos-Aires based funiture maker Neg Group S.A., according to local sources. Merzario, to whom Neg Group owes some US$16,461 filed the request at the city's Court No. 21, which is under Dr. Paez Castaneda. The Court assigned Ms. Patricia Narduzzi as receiver for the bankruptcy proceedings. Credit claims must be verified before September 19 this year. CONTACT: Neg Group S.A. 11th Floor 'C' Libertad Street 877 Buenos Aires Ms. Patricia Narduzzi 1st Floor Rivadavia Ave. No. 666 Buenos Aires SEG MEDICAL: Court Calls Creditors To Formal Meeting ---------------------------------------------------- Buenos Aires court number 23 calls creditors of Seg Medical A.G. to a formal meeting after the Company is put under receivership with Estudio Carreiro, Harvey & Asociados as receiver. A local source reveals that the claims will be verified until August 15 this year, while the informative assembly will be on May 14, 2004. CONTACT: Seg Medical A.G. Ground Floor 'F' Scalbrini Ortiz Ave. No. 2894 Buenos Aires Estudio Carreiro, Harvey & Asociados Ground Floor '6' Tte. Gral. J.D. Peron 1143 Buenos Aires SERVICIOS FINANCIEROS: Signs Acuerdo Preconsursal With Creditors ---------------------------------------------------------------- Servicios Financieros S.A. has reached an "Acuerdo Preconcursal" agreement with its creditors, relates El Cronista Comercial. The Company's case number 30663332968, is in the hands of the National Commercial Court of First Instance No. 1, which under Dr. Fernando Ottolenghi. Dr. Carlos Alberto Anta, from Secretary No. 8, assists the Court on the matter. SISTEMAS INTEGRALES: Court Grants Creditor's Bankruptcy Request --------------------------------------------------------------- Court No. 20 of Buenos Aires declared data processing firm Sistemas Integrales de Control S.A. under bankruptcy, granting a request from Acron S.A., to whom the Company owes $8,765.98. Mr. Taillade, who is in charge of the Court, assigned Ms. Nora Roger as receiver for the proceedings. Creditors are advised to have their claims verified before September 24 this year. CONTACT: Sistemas Intergrales de Control S.A. 2nd Floor Viamonte Street No. 1511 Buenos Aires Ms. Nora Roger 6th Floor '3' Hipolito Yrigoyen St. No. 1349 Buenos Aires TRI NOI: Declared Bankrupt Upon Creditor's Request -------------------------------------------------- Court No. 22 of Buenos Aires puts Tri Noi S.R.L. under bankruptcy, granting a request by Patricia Di Mundo. A local source said that the Company owes about $27.550 to Ms. Di Mundo. The Court, under Dr. Braga, assigned Angel Mantero as receiver for the proceedings. The court is assisted by Dr. Julianelli from Secretary No. 44 on the matter. The deadline for verification of claims is August 18, 2003. CONTACT: Tri Noi S.R.L. Alvarez Thomas Street No. 2558 Buenos Aires Angel Mantero 8th Floor Lavalle Street No. 1125 Buenos Aires 41 PLAZA: Under Receivership After Concurso Filing -------------------------------------------------- Court No. 11 of Buenos Aires placed 41 palza S.R.L. under receivership following the company's filing of its "concurso preventivo." According to local news source Infobae, the Court assigned Mr. Miguel Angel Marceesi as receiver. He is expected to file the individual reports on September 11 and the general report on October 23. Before the reports, however, the receiver would verify claims until July 17 this year. CONTACT: Mr. Miguel Angel Marceesi Avellaneda 1135 Buenos Aires ============= B E R M U D A ============= GLOBAL CROSSING: Exclusivity Hearing to Continue June 25 -------------------------------------------------------- The hearing on Global Crossing Ltd., and its debtor-affiliates' request to further extend their Exclusive Periods, to file and propose a Plan and to solicit acceptances of that Plan, is adjourned to June 25, 2003. Accordingly, the Debtors' exclusive period is extended until the conclusion of that hearing. At tomorrow's Hearing, the Court will also wade into Carl Ichan- controlled XO Communication's competing $700 million cash bid designed to nix the Hutchison Communications Limited deal and under which XO will successfully acquire Global Crossing's businesses. (Global Crossing Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) TYCO INTERNATIONAL: Appoints New Senior Vice President ------------------------------------------------------ Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced on Monday the appointment of Charles Young as Senior Vice President, Corporate Communications. He comes to Tyco from GE Medical Systems, the healthcare technology division of General Electric, where he served as General Manager of Global Marketing. Mr. Young will be responsible for media relations, brand management, employee communications, corporate philanthropy, community relations, and marketing communications. He will report to Chairman and CEO Ed Breen. Mr. Breen said, "Charlie Young is an outstanding global business leader who brings to Tyco extensive communications and marketing experience from both the manufacturing and services industries. Charlie will be instrumental in building world-class communications processes supporting our internal and external stakeholders globally. He will be an integral part of Tyco's senior leadership team." Mr. Young said: "Ed Breen and his leadership team are committed to creating one of the world's most respected and successful companies. I believe in Tyco's solid operating foundation and exciting future, and I am proud to lead the effort to create a high-credibility, best-in-class communications team to ensure that Tyco's key audiences are closely connected to the Company." During his 15-year tenure with GE, Mr. Young held a number of positions of increasing responsibility, including global marketing leader for GE Medical, General Manager of Corporate Communications for GE Medical, and Director of Communications and Public Affairs for GE Global Research. Mr. Young has extensive functional experience in the areas of marketing, public relations, marketing communications, brand management, and government relations. Mr. Young holds a B.S. degree in Liberal Arts and Journalism from the State University of New York College at Cortland. About Tyco International Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. CONTACT: Gary Holmes (Media) Phone: 212-424-1314 Ed Arditte (Investors) Phone: 212-424-1390 TYCO INTERNATIONAL: Judge Denies Motion To Dismiss Ex-Execs' Case ----------------------------------------------------------------- A Manhattan judge denied Monday a motion to dismiss a lawsuit filed against former Tyco International executives, the AP reports. Dennis Kozlowski, 51, Tyco's former CEO, and Mark Swartz, 45, the Company's former chief financial officer, have been indicted on larceny charges for allegedly stealing some US$600 million from Tyco. Both have pleaded innocent. A motion was filed to dismiss the charges, but State Supreme Court Justice Michael Obus rejected the motion, saying: "There is sufficient evidence to support the finding of the grand jury." "There is compelling evidence the defendants took money from Tyco that they were not permitted to take." He scheduled the trial for Sept. 29 but told the lawyers to return July 10 for a pretrial conference. Charles Stillman, Swartz's lawyer, said he was not surprised by Obus' ruling. "Winning a motion to dismiss does not happen very often," he said. "The die is cast. We're going to turn to preparing this case for trial." Based in Bermuda but with U.S. headquarters in Portsmouth, N.H., Tyco has numerous subsidiaries that make products from ADT alarms systems to coat hangers to telecommunications equipment. Tyco had sales of about $36 billion last year. =========== B R A Z I L =========== AES CORP.: Announces Completion of Common Stock Offering -------------------------------------------------------- The AES Corporation (NYSE:AES) announced Monday that it has completed an offering of 49,450,000 shares (including 6,450,000 shares issued pursuant to the underwriters' exercise of the over- allotment option) of common stock at $7 per share. The joint book-running managers for the offering were Banc of America Securities LLC and Lehman Brothers. AES received net proceeds of $334,900,125 in the offering. AES will use $75 million of the proceeds to prepay a portion of its secured equity-linked loan due 2004 issued by AES New York Funding LLC. As AES is currently exploring the possibility of refinancing its senior secured credit facilities, AES has obtained a waiver from the lenders under its senior secured credit facilities which postpones AES's obligation to prepay its senior secured credit facilities with a portion of the offering proceeds until September 30, 2003. AES intends to use any net proceeds remaining from the offering (after it makes any required prepayments) for general corporate purposes, including the potential repayment or repurchase of debt. CONTACT: AES Corporation Kenneth R. Woodcock, 703/522-1315 CEMAR: Sale Process Resumes --------------------------- The process to sell Maranhao state power company Cemar resumed following a series of delays caused by injunctions filed by the Company's workers union, reports Business News Americas. Power sector regulator Aneel plans to wrap up the sale by mid- August, according to a statement published by the current administrator, Sinval Zaidan. In an effort to complete the sale before his current six-month term ends on August 15, Zaidan designed a new timetable, which includes receiving pre-qualification documents by June 30, approving the companies by July 7, receiving bids on July 25, announcing a winner on August 11 and transferring control of the Company by August 15. US-based PPL Global owns a majority stake in Cemar, but chose to abandon its investment in the Company due to financial troubles. In July 2002, PPL reached an agreement to sell its stake to US- based Franklin Park Energy for US$1, but creditors blocked the deal. PPL then allowed Cemar to file for protection from creditors, at which point Aneel stepped in to take over operations at the company. Aneel still plans to sell the Company to the bidder that presents the best solution for Cemar's debts, with the shares changing hands for a token US$1. Cemar distributes electricity to about 1 million people in Maranhao, one of the country's poorest states. CONTACT: COMPANHIA ENERGETICA DO MARANHAO Av. Colares Moreira, 477 65075-441 - Sao Luiz- MA PHONE: (98) 217-2119 FAX: (98) 235-3024 WEBSITE: http://www.cemar.com.br/ CREDITORS: CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS Avenida Presidente Vargas 409, 13 Andar 20071-003 Rio de Janeiro Brazil Phone: (21) 2514-5151 Fax: +55-21-2242-2697 Home Page: http://www.eletrobras.gov.br Contacts: Cladio da Silva avila, President Jose Alexandre Nogueira de Resende, Director of Financial and Market Relations Investor Relations Division Phone: (0XX21) 2514-6207 / 2514-6333 Av. Presidente Vargas, 409 - 9 andar 20071-003 - Rio de Janeiro - RJ Email: arlindo@eletrobras.gov.br CENTRAIS ELETRICAS DO NORTH DO BRAZIL - ELETRONORTE Av. Presidente Vargas, 489 -13 andar. 20071-003- Rio do Janeiro RJ Phone: + (55+61) 429 5139 Fax: +(55+61) 328 1373 E-mail: elnweb@eln.gov.br Home Page: http://www.eln.gov.br/ Contact: Mr. Arlindo Soares Castanheira, Investor Relations Phone: 55 21 2514.6331 55 21 2514.6333 Fax: 55 21 2242.2694 E-mail: arlindo@eletrobras.gov.br FLEETBOSTON FINANCIAL CORP. 100 Federal Street Boston, MA 02110 Phone: (617) 434-2200 Fax: (617) 434-6943 URL: http://www.fleet.com/home.asp ENRON: Brazil Power Holdings' Voluntary Ch. 11 Case Summary ----------------------------------------------------------- Debtor: Enron Brazil Power Holdings I Ltd. Huntlaw Corporate Services Limited 75 Fort Street The Huntlaw Building George Town Cayman Islands Bankruptcy Case No.: 03-14053 Type of Business: The Debtor is an affiliate of Enron Corp. Chapter 11 Petition Date: June 20, 2003 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: 212-310-8602 Fax : 212-310-8007 Estimated Assets: $50 Million to $100 Million Estimated Debts: $10 Million to $50 Million SABESP: Announces Offering's Completion --------------------------------------- Companhia de Saneamento Basico do Estado de Sao Paulo -- SABESP (NYSE:SBS) (Bovespa:SBSP3), one of the largest water and sewage companies in the Americas (based on 2002 revenues), announced Monday that it has completed an offering of US$225 million principal amount of its 12% Notes due 2008, with interest payable semiannually. The notes were offered in the United States only to qualified institutional investors pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended, and, outside the United States, only to non-U.S. investors. The proceeds of this offering will be used to refinance SABESP's 12% Notes due 2003 and to repay certain of its other indebtedness from time to time. The securities have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful. VARIG/TAM: To Ink Merger Deal This Week, Says Advisor ----------------------------------------------------- Brazil's largest airlines, Varig and TAM, are expected to seal a deal to merge their operations this week after problems, which hindered the process, were resolved last week. Reuters recalls that on Friday, Varig's shareholders fired Gilberto Rigoni as president of the FRB-Par, the Company that administers the airline. Rigoni was opposed to the merger and he was replaced with Joaquim dos Santos, who had actively participated in the talks with TAM. With that out of the way, the deal should be put on paper this week, according to a spokesman for Banco Fator, which was hired by the two airlines to put together the merger. "The trend is that it will be signed this week. Everything has been resolved and the contract is being written up," Fator spokesman Roberto Muller told Reuters. The new, yet unnamed carrier would be Latin America's largest airline and control 67% of the Brazilian market with a fleet of 180 planes and 19,000 employees. Under the terms of the agreement, VEM will begin providing maintenance services to the merged airline only three years after it begins operating, said a source at Varig. The previous accord gave VEM an exclusivity contract with the new airline for seven years, a deal that did not sit well with TAM, which has its own maintenance firm. Once Varig and TAM agree to merge, the state-run National Social and Economic Development Bank, or BNDES, is expected to free up US$100 million in credit so that Varig can continue flying until the fusion. CONTACT: VARIG (Viacao Aerea Rio-Grandense, S.A.) Rua 18 de Novembro No. 800, Sao Joao 90240-040 Porto Alegre, Rio Grande do Sul, Brazil Phone: (51) 358-7039/7040 (51) 358-7010/7042 Fax: +55-51-358-7001 Home Page: www.varig.com.br/english/ Contacts: Dorival Ramos Schultz, EVP Finance and CFO E-mail: dorival.schultz@varig.com.br Investor Relations: Av. Almirante Silvio de Noronha, n 365-Bloco "B" - s/458 / Centro Rio de Janeiro, Brazil TAM Daniel Mandelli Martin, President Buenos Aires Tel. (54) (11) 4816-0001 URL: www.tam.com.br ========= C H I L E ========= EDELNOR: Local and Foreign Corp Credit Ratings Raised to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services raised Monday its local and foreign corporate credit ratings on Chilean electric generator Empresa El�ctrica del Norte Grande S.A. (Edelnor) to 'B-' from 'CC', reflecting a more favorable maturity schedule after the company completed its Chapter 11 reorganization and strategic plan. At the same time, Edelnor's rating was removed from CreditWatch with positive implications. Standard & Poor's also assigned its 'B-' rating to Edelnor's US$217 million debt certificates. The outlook is stable. Edelnor completed a Chapter 11 reorganization on Nov. 5, 2002, which replaced US$340 million in bank debt with US$217 million 15-year debt certificates and a US$46 million subordinated shareholder loan. The new debt certificates carry a 4% coupon (with step up rates after 2005) and amortize in 20 semi-annual installments starting in May 5, 2008. "Although this reorganization improved Edelnor's debt and maturity profile, financial performance remains fairly weak as a result of the significant oversupply in the SING, which is Edelnor's area of operation," said Standard & Poor's credit analyst Sergio Fuentes. "Although we expect Edelnor's funds from operations interest coverage, including cash inflows from its 21% owned Norandino Natural Gas Pipeline, to improve to levels of about 2.5x-3x times from 1.8x in 2002, financial flexibility is expected to remain significantly restricted," continued Mr. Fuentes. Edelnor's rating reflects its still weak financial performance, a very limited financial flexibility, and the uncertainties regarding the maturity of a great portion of its sale contracts between 2005 and 2008. These weaknesses are mitigated by Edelnor's equity stake in Gasoducto Norandino, which is projected to provide a stable cash flow stream, and by the ownership of transmission assets, a competitive advantage to face the high competitive pressures in the SING. The stable outlook incorporates Standard & Poor's expectations that Edelnor will be able to sign new sale contracts and/or renew a great portion of the contracts that are due between 2005 and 2008, although at lower prices than the current ones. If the company fails to reach this goal, the ratings could be revised. In addition, Standard & Poor's anticipates that the company will continue to show weak debt coverage ratios of 5%-6% in the next three to four years. However, this risk is mitigated by a very low interest rate and by the fact that there are no maturities until 2008. Edelnor is a partially integrated utility, mainly engaged in power generation and, to a lesser extent, transmission in northern Chile. The company owns and operates generating facilities with a capacity of 687MW, leases another 29MW of diesel units, and owns about 1,056km of transmission lines. Edelnor is 82.34% owned by Inversiones Mejillones S.A, a holding company that is owned by Belgium's Tractebel S.A. (not rated) and Chilean copper producer Corporacion Nacional del Cobre de Chile (LCR: 'A+'/Stable; FCR: 'A-'/Positive). ANALYST: Sergio Fuentes, Buenos Aires (54) 114-891-2131 Marta Castelli, Buenos Aires (54) 114-891-2128 Luciano Gremone, Buenos Aires (54) 11-4891-2143 ENDESA CHILE: Completes Infraestructura Sale to OHL for $273M ------------------------------------------------------------- Endesa Chile, a unit of Enersis SA, revealed Monday it has completed the US$273-million sale of its highway construction subsidiary Infraestructura 2000, to OHL, a Spanish construction company, says Reuters. The sale is part of Enersis' plans to reduce debt through asset sales and a capital increase of up to US$2 billion. "The sale of Infraestructura 2000 is an important step toward fulfilling our financial strengthening plan," Endesa Chile said in a statement. The transaction, which had been under negotiation with OHL for the past two years, was made possible in April after Infraestructura 2000 subsidiary Autopista de los Libertadores issued US$85 million in domestic bonds to pay back a debt with Endesa, which was a condition of the sale. Endesa Chile's parent Enersis is the Latin American investment arm of Spain's Endesa SA. 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 =========== M E X I C O =========== CFE: Invites Bids For Equipment Overhaul ---------------------------------------- Mexico's state power company CFE is inviting bids for the overhaul of the steam generator and auxiliary equipment at unit 1 of its 750MW Valle de Mexico plant, reports Business News Americas. The Company is offering the contract under the financed public works (OPF) mechanism, and will award it to the lowest bidder that meets technical requirements. The CFE has made bid documents available for general review at http://www.cfe.gob.mx/www2/negocios/notainversionistas.asp?seccio n=canal+inversionistas&seccion_id=2955&seccion_nombre=Rehabilitac i%F3n+mayor+Valle+de+M%E9xico. Bidding rules are available through August 13. The CFE will receive bids August 19 and will open economic bids September 9. Work is scheduled to start by year-end and be completed by December 2004. CONTACT: COMISION FEDERAL DE ELECTRICIDAD Rio Rodano 14, Col. Cuauhtemoc 06598 Mexico, D.F., Mexico Phone: +52-55-5229-4400 Fax: +52-55-5310-4614 Home Page: http://www.cfe.gob.mx Contacts: Alfredo Elias Ayub, General Director Arturo Hernandez Alvarez, Director of Operations Francisco J. Santoyo Vargas, Director of Finance ================= N I C A R A G U A ================= ENITEL: Govt. Receives Bids From SCH, BNP Paribas ------------------------------------------------- Nicaragua's government received technical bids from investment banks Santander Central Hispano (SCH) of Spain and BNP Paribas of France, as it continues with the selection process to complete the privatization of fixed line telecoms operator Enitel. Citing local daily La Prensa, Business News Americas reports that the banks are scheduled to submit financial bids on June 26. The eventual sale of the government's 49% stake is expected to take place in early November. Government holding Uretel represents the government's remaining 49% stake in Enitel, which was partially privatized in 2001. On that occasion, the Megatel consortium, formed by Honduran power company Emce and Swedish telco Telia Swedtel, won a 40% stake in the operator for US$33 million. Enitel employees hold the remaining 11%. =========== P A N A M A =========== BLADEX: Announces Preliminary Results of Rights Offering -------------------------------------------------------- Banco Latinoamericano de Exportaciones, S.A. (NYSE: BLX) ("BLADEX" or the "Bank"), a specialized multinational bank established to finance trade in the Latin American and Caribbean region, announced Monday that it received actual subscriptions for approximately 20.5 million shares in the Bank's 22 million share rights offering, which expired on June 20, 2003, and notices of guaranteed delivery representing subscriptions for up to an additional 2.6 million shares. The subscription agent is working to confirm the actual number of notices of guaranteed delivery subscriptions and the Bank expects to announce the final subscription amount after the end of the notice of guaranteed delivery protection period, which expires at 5:00 pm on June 25, 2003. For further information regarding the Bank and its rights offering, please contact the Information Agent for this offering, MacKenzie Partners, Inc., at (800) 322-2885, or call collect at (212) 929-5500. To obtain a written prospectus meeting the requirements of Section 10 of the United States Securities Act of 1933, as amended, please contact the Information Agent or: Carlos Yap S. Senior Vice President, Finance BANCO LATINOAMERICANO DE EXPORTACIONES, S.A. Head Office Calle 50 y Aquilino de la Guardia Apartado 6-1497 El Dorado Panama City, Republic of Panama Tel No. (507) 210-8581 Fax No. (507) 269 6333 E-mail Internet address: cyap@blx.com -- or -- William W. Galvin The Galvin Partnership 76 Valley Road Cos Cob, CT 06807 U.S.A. Tel No. (203) 618-9800 Fax No. (203) 618-1010 E-mail Internet address: wwg@galvinpartners.com ======= P E R U ======= SIDERPERU: Asks AGR Trustees To Call Meeting Of Creditors --------------------------------------------------------- Peruvian steelmaker Siderperu asked the trustees of its global restructuring agreement (AGR), dated April 24 last year, to call a meeting of its creditors to discuss the restructuring of certain payments agreed in the AGR, Business News Americas reports. According to the Company, the goal of the restructuring was to give "adequate priority" to the Company's providers that would result in greater operational cash flow. The proposal includes postponing a payment to general financial creditors of fixed quotas that fall on June 30, September 30 and December 30, Siderperu said. The company noted that to date it has paid a total of US$28mn under the AGR, made up of US$13mn this year and US$15mn in 2002. Meanwhile, the firm told the Lima stock exchange that its bondholders are scheduled to meet June 25 to discuss a report on the Company's progress and future prospects, and "other issues of interest." ===================== P U E R T O R I C O ===================== CENTENNIAL COMMUNICATIONS: Consummates $500M Notes Offering ----------------------------------------------------------- Centennial Communications Corp. ("Centennial" or the "Company") (NASDAQ: CYCL) announced Friday that it has closed on its previously announced offering of $500 million of 10 1/8% senior unsecured notes due 2013 issued in a private placement transaction. The senior notes are co-issued by Centennial Communications Corp. and Centennial Cellular Operating Co. LLC and guaranteed by Centennial Puerto Rico Operations Corp. In addition, the Company announced Friday that it has entered into an amendment to its senior credit facility which provides the Company with additional flexibility under the financial and other covenants in the credit facility. Net proceeds of the notes offering were used to permanently repay $300 million of the term loans under the Company's senior credit facility and the balance of the net proceeds were used to repay amounts outstanding under the revolving portion of the senior credit facility and to pay fees and expenses related to the transactions. "I am very pleased that we were able to consummate this bank amendment and ten-year financing transaction," said Michael J. Small, chief executive officer. "I believe these transactions provide a solid financial foundation for the profitable growth of our U.S. Wireless and Caribbean businesses." 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. CONTACT: Centennial Communications Corp., Wall Thomas J. Fitzpatrick 732-556-2220 ENRON: Gas Natural To Buy Puerto Rican Asset For $130M ------------------------------------------------------ Gas Natural SDG SA, Spain's largest natural gas company, informed the CNMV securities regulator that it agreed to buy a gas fired power plant in Puerto Rico from bankrupt U.S.-based energy trader Enron Corp. for US$130 million. The Barcelona-based company will buy Enron's 50% stake in EcoElectrica Holdings Ltd., which owns a 540-megawatt gas-fired power station and a plant that converts liquefied natural gas into gas for sale to consumers. US company Edison International owns the other 50% in EcoElectrica through its Edison Mission Energy unit. According to Gas Natural, the deal was an important step in its policy of overseas expansion, which has already seen it reach 3.9 million clients in Latin America. In a shareholders' meeting Monday, the company said it plans to invest EUR850 million (today US$981 million) in Latin American expansion, especially in Mexico and Brazil, in 2003-2007, increasing the number of clients to 5.7 million by 2005. By the same date, it plans to increase sales to 214,000GWh from 126,000GWh in 2002. ============= U R U G U A Y ============= * Uruguay: IMF Managing Director Issues Statement ------------------------------------------------- Mr. Horst K�hler, Managing Director of the International Monetary Fund (IMF), issued the following statement on Monday in Montevideo: "This is my first visit to Montevideo as IMF Managing Director. The visit has provided my colleagues and myself a valuable opportunity to obtain a closer understanding of Uruguay's economic outlook and discuss the regional economic situation. Yesterday, I had the privilege of meeting with President Batlle and his economic team-Minister Atchugarry, Central Bank President de Brun, and other senior officials. I also met with political leaders and representatives of the banking and business community. "I commended President Batlle on his government's firm pursuit of sound economic policies that has improved the economic and financial situation in Uruguay. In the face of severe economic shocks, the government has resolutely maintained prudent fiscal and monetary policies, as well as Uruguay's traditionally strong legal and institutional framework. This firm resolve has significantly contributed to the success of Uruguay's recent landmark debt exchange. Helped by strengthened policies, and an improving outlook in several other countries in the region, Uruguay's economy should return to positive growth in the second half of 2003. "Uruguay now faces the challenge of consolidating these achievements to ensure sustained growth. Improving Uruguay's competitiveness and trade share in today's globalized world, and nurturing new areas of growth, are core to this challenge. The task has a number of dimensions that were the subject of our discussions. There was broad recognition of the need to build a strong intermediation role for the banking system, streamline the public sector and improve its savings and efficiency, and attract new private investments by making the business climate fully supportive-while retaining a well targeted social safety net that is consistent with fiscal capacity. There was agreement with the political and economic groups with whom I met of the need to build a strong domestic consensus for such structural changes that would decisively improve the living standards of all Uruguayans. "I also discussed with President Batlle the regional and global outlook. We agreed that the regional outlook has improved, underpinned by strengthened policies in a number of countries to advance stabilization, fiscal sustainability, and structural reforms while paying attention to well-targeted social spending. I conveyed to President Batlle the IMF's unwavering commitment to work with the region to build strong growth with improved equity. "I congratulate the Uruguayan people and their government for their firm commitment to taking the necessary steps to surmount the recent crisis and foster the resumption of growth. The IMF is proud to have been able to play a part in this process, and we look forward to continuing strong cooperation with the authorities. In that respect, the next step will be consideration by the Executive Board of the Fund of the third review under the Stand-By Arrangement, and I am hopeful that this review will be completed by mid-July." CONTACT: IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: Phone: 202-623-7300 Fax: 202-623-6278 Media Relations: Phone: 202-623-7100 Fax: 202-623-6772 ================= V E N E Z U E L A ================= CANTV: Court Ditches Suit Filed by Multiphone --------------------------------------------- It was good news for CA Nacional Telefonos de Venezuela SA, Venezuela's largest telephone company, when a high court threw out a lawsuit filed against it by a certain company. Business News Americas recalls that long distance operator Multiphone sued Cantv because it refused to renew an interconnection agreement. But Cantv defended its move, saying Multiphone had failed to pay an outstanding bill of VEB3 billion (US$1.9 million today) for interconnection services, necessary for Cantv clients to select Multiphone as their preferred carrier. Cantv also revealed that Multiphone owes it VEB40 million for commercial services rendered. PDVSA: Reiterates Plans To Open Service Stations in Argentina ------------------------------------------------------------- Citgo, the international downstream distribution unit of Venezuela's state oil company PDVSA, is studying at present the economic situation in Argentina as part of the parent company's plan to invest US$80 million in that country beginning September. Business News Americas recalls that PDVSA has been planning to open a chain of about 400 service stations in Argentina but had to postpone the project twice: first, because of the Argentine economic crisis in late 2001, and again last year due to the national strike in Venezeula. According to local newspaper Infobae, PDVSA plans to open 30-40 service stations in Argentina after the September launch, and that it is negotiating a fuel supply contract with one of Argentina's main refiners. SIDOR: Accomplishes Financial Restructuring ------------------------------------------- ALFA announced Monday the closing of a financial restructuring of Sidor, a non-consolidated affiliated company in the Venezuelan steel industry, by means of which Sidor has improved its financial condition. According to the terms and conditions of the agreement signed between Sidor, Amazonia, a group of creditor banks and the Venezuelan Government, Sidor's total debt was reduced from US$1,883 million, to US$ 791 million. The restructured debt is comprised of the following tranches: 1) US$ 350.5 million, to be repaid in 8 years, with one year of grace. 2) US$ 26.3 million, to be repaid in 12 years, one of grace. 3) US$ 368.6 million, to be repaid in 15 years, one of grace. Another US$ 45.4 million owed by Sidor to certain Venezuelan government-owned suppliers will be repaid over five years. As a part of the agreement, shareholders in Amazonia contributed to the recapitalization of Sidor with fresh resources in the amount of US$ 133.5 million through convertible debt in Amazonia. ALFA's share of that amount was US$ 15 million. Apart from this amount, Hylsamex capitalized US$ 41.5 million owed to it by Amazonia, after which its stake in Amazonia amounts to 36.73%. As a result of the capitalization, the Venezuelan Government increased its stake in Sidor from 30.0% to 40.3%. Upon occurrence of the capitalization of Amazonia's convertible debt, Hylsamex's ownership in Amazonia will be 12.0%, while ALFA's will be 7.5%. Another important agreement involved the cancellation of all guarantees granted by the shareholders in Amazonia, which were replaced with a security on the fixed assets of Sidor, together with pledges on the shares in Amazonia and the shares that Amazonia holds in Sidor, for the benefit of the Venezuelan Government and Sidor's financial creditors. CONTACT: Enrique Flores Tel: 011 52 81 8748 1207 Email: eflores@alfa.com.mx SIDOR: Tenaris Issues Comments on Debt Restructuring ---------------------------------------------------- Tenaris S.A. (NYSE:TS) (Buenos Aires:TS) (BMV:TS) (MTA Italy:TEN), announced Monday that its associated companies, Consorcio Siderurgia Amazonia Ltd. (Amazonia) and Siderurgica del Orinoco C.A. (Sidor), have reached an agreement with their financial creditors and the Venezuelan government relating to the restructuring of Sidor's and Amazonia's financial debt. Under the terms of the agreements, Sidor's and Amazonia's aggregate financial debt has been reduced from US$1,883 million to US$791 million. Certain Amazonia shareholders have contributed US$133.5 million in cash to a newly created company for the acquisition and capitalization of Sidor's and Amazonia's financial debt. The government of Venezuela has increased its participation in Sidor from 30% to 40.3% and all the guarantees provided by the shareholders of Amazonia with respect to loans made to Sidor have been released and replaced with a security on the fixed assets of Sidor which, together with the pledges on the shares of Amazonia and the shares that Amazonia holds in Sidor, have been placed in trust for the benefit of Sidor's financial creditors and the Venezuelan government. In addition, a portion of Sidor's excess cash (determined in accordance with an agreed-upon formula) will be applied to repay Sidor's financial debt and the remainder will be distributed to the Venezuelan government and the newly created company referred to above. Tenaris's subsidiary, Tubos de Acero de Mexico S.A. (AMEX: TAM) (BMV:TAMSA) (Tamsa), has participated in this restructuring agreement by making an aggregate cash contribution (mainly in the form of new subordinated convertible debt) of US$32.9 million to the newly created company and by capitalizing in Amazonia convertible debt previously held by Tamsa in the amount of US$18.0 million plus accrued interest. Tamsa's indirect participation in Amazonia has increased from 14.1% to 14.5% and may further increase up to 21.2% if and when all of its new subordinated convertible debt is converted into equity. Sidor's remaining financial debt is now made up of three tranches, one of US$350.5 million to be repaid over 8 years with one year of grace, one of US$26.3 million to be repaid over 12 years with one year of grace and the remaining tranche of US$368.6 million, to be repaid over 15 years with one year of grace. In addition, Sidor's commercial debt with certain Venezuelan government-owned suppliers has been fixed in the amount of US$45.4 million, to be repaid over the next five years. As a result of this restructuring, Tenaris, through its subsidiary, Tamsa, has retained participation in a business with competitive costs and an improved financial structure that will continue to supply the steel bars used as raw material for Tenaris's seamless pipe operations in Venezuela. Tenaris is a leading global manufacturer of seamless steel pipe products and provider of pipe handling, stocking and distribution services to the oil and gas, energy and mechanical industries and a leading regional supplier of welded steel pipes for gas pipelines in South America. Organized in Luxembourg, it has pipe manufacturing facilities in Argentina, Brazil, Canada, Italy, Japan, Mexico and Venezuela and a network of customer service centers present in over 20 countries worldwide. * Venezuela: Fitch Upgrades Sovereign Ratings to 'B-' ----------------------------------------------------- Fitch Ratings upgraded Monday the Bolivarian Republic of Venezuela's long-term foreign currency rating to 'B-' from 'CCC+'and its long-term local currency (Venezuelan bolivar) rating to 'B-' from 'CCC'. These rating actions reflect the government's success in getting oil production back up to levels achieved prior to the national strike earlier this year, thereby relieving public financing pressures. Furthermore, voluntary domestic debt swaps and recent external bond payments have mitigated concerns about debt service willingness over the near term. The Rating Outlook is Stable. The Venezuelan government's near-term financing outlook has improved given the resumption of oil production and the measures implemented to avoid a liquidity crisis. Fitch believes that the risks of further oil production disruptions have been reduced due to the failure of the strike to achieve its objectives and increased government control over PdVSA. Yet the highly polarized social situation and severe economic contraction could provide future political challenges, including sporadic outbursts of social unrest. In the midst of an unprecedented political confrontation, which has translated into one of Venezuela's worst economic declines in recent history, the government has met all of its debt obligations. In this environment, the government made a US$275 million payment on its Brady bond obligations last week. At the onset of the national strike, Fitch was concerned that pressures on the government's capacity to service its debt as a result of oil revenue losses could ultimately affect its willingness to pay. To its credit, the government reduced its 2003 budget by 10% and has been under-executing this revised budget by 40%. Similar to the authorities' projections, Fitch expects the central government deficit to reach 1.8% of GDP this year, compared with 3.4% of GDP in 2002, representing a significant fiscal adjustment. However, a collapse of more than 50% in non-oil revenues combined with increased spending pressures, due either to the deteriorating social situation or a ramp-up in expenditures prior to a referendum and/or early elections, cannot be ruled out. The authorities continued to conduct market-based domestic debt swaps, extending close to US$754 million in DPN maturities over the medium-term. In addition, the authorities have been successful in securing new financing through private placements, which could reach US$950 million in 2003. Venezuela's debt service capacity remains strong relative to similarly rated sovereigns and has been strengthened with the end of the oil strike. Since the implementation of capital controls and the resumption of oil exports, the country's international reserves have increased from a low of US$13.5 billion in January to US$16.5 billion in mid-June. At 153% (not including assets in the macroeconomic stabilization fund, the FIEM), Venezuela's external liquidity ratio currently exceeds the 123% median of 'B/C/D' rated countries. Assuming capital controls are not liberalized this year, this ratio could increase to an estimated 224% by year-end. Including an estimate for the loss of revenue due to the halt in oil exports, Venezuela's expected current account surplus position in 2003 will still be more than enough to cover its external amortizations and stock of short-term external debt this year, which Fitch estimates at about US$6.6 billion. The government should not have any difficulty meeting its financial requirements for the remainder of 2003. External amortizations amount to US$915 million, while domestic amortizations are about US$1 billion in the second half of this year. Although recent changes to macroeconomic policy, including a fixed exchange rate and capital controls, have strengthened the government's ability to service its debt, the non-oil private sector is paying the cost of these measures. Future upgrades would be dependent on a viable resolution of the political crisis and improvements in the government's macroeconomic policy framework. A comment detailing Fitch's analysis for this rating upgrade will be available shortly. CONTACT: Theresa Paiz Fredel New York Phone: +1-212-908-0534 or Roger M. Scher New York Phone: +1-212-908-0240 Media Relations: Matt Burkhard New York Phone: +1-212-908-0540 *********** 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 * * *