/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/030702.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, July 2, 2003, Vol. 4, Issue 129 Headlines A R G E N T I N A AEROLINEAS ARGENTINAS: AA2000 Seeks To Annul Deal With Creditors AGROINDUSTRIAS DEL VALLE: Takes First Step Towards Reorganization BANRURAL: Government Decides On Liquidation CANAL 9: Former Bank Owner Analyzes Possible Acquisition CICCONE CALCOGRAFICA: Govternment Mulls Canceling Contract CORREO ARGENTINO: Cooperating With Government To Keep Concession DEPORTIVO ESPA¥OL: Court Authorizes Auction DIAL CORP: Completes Sale of Argentine Business GATIC: To Present Debt Plan To Court Next Week IEBA: Argentine Court Authorizes Bankruptcy Protection JUAN MINETTI: Possible Rate Hike Threatens Survival LA ANONIMA: Restructures Debt With Bondholders MIEL CARRASCO: Files "Concurso Preventivo" MUSIMUNDO: Sale To Pegasus To Come This Week SCP: Settles Debts With Bank Creditors TELEFONICA DE ARGENTINA: Extends Deadline of Exchange Offers TELEFONICA DE ARGENTINA: Cointel States Exchange Offer Position B E R M U D A GLOBAL CROSSING: Releases Operating Results for May 2003 GLOBAL CROSSING: XO Announces Preliminary Results of Tender Offer GLOBAL CROSSING: Names New Regional VP of Enterprise Sales SEA CONTAINERS: Announces Expiration Of Exchange Offer For Notes B R A Z I L GERDAU: Joins the Level 1 Program Of Corporate Governance C H I L E ENERSIS: Issues Update on $2B Capital Increase ENERSIS: Unveils Organizational Restructuring C O L O M B I A FERROVIAS: Director Quits Post on Word of Liquidation Plans PAZ DEL RIO: Shares Soar On Improved Results, Rescue Expectations H O N D U R A S GEOMAQUE EXPLORATIONS: Completes Statutory Amalgamation M E X I C O AHMSA: Postpones Annual Report Publication GRUPO IUSACELL: Movil@access Launches Tender Offers for Shares PEMEX: Awards Halliburton $23M Pact TV AZTECA: Distributes $125M To Shareholders TV AZTECA: Announces Pact With KAZA-TV N I C A R A G U A UNION FENOSA: Nicaraguan Generators Threaten to Suspend Services * Moody's Downgrades Nicaragua's Credit Rating To Caa1 P A N A M A CHIQUITA BRANDS: Completes Sale Of Armuelles Division T R I N I D A D & T O B A G O CARONI: Opposition Will Raise Dispute At Senate Meeting CARONI: Union President Dares Government To Violate Ruling V E N E Z U E L A PDVSA: Files Notification of Late Filings PDVSA: To Discuss Tacata Development With Spain's Repsol YPF - - - - - - - - ================= A R G E N T I N A ================= AEROLINEAS ARGENTINAS: AA2000 Seeks To Annul Deal With Creditors ---------------------------------------------------------------- Aeropuertos Argentina 2000 (AA2000), concessionaire of 33 airports in Argentina, requested the annulment of the accord subscribed between airline Aerolineas Argentina and its creditors during the company's formal restructuring proceeding. The airport concessionaire thinks Aerolineas deliberately inflated its liabilities. AA2000's lawyer, Diego Gonzalez, filed a claim before court Nø 15, in charge of the airline's restructuring proceeding, in which he alleges Aerolineas committed fraud. Spokesmen from Aerolineas said this is just one of the moves made by AA2000 in order to complicate the process and added that the claim was filed too late. However, it was reported that the term for the filing of this type of claims expires next Thursday, even though Judge Norma Di Notto has already validated the debt restructuring accord and Aerolineas paid the first installment, 15% of its ARS1.2 billion debt, in March. According to the agreement, the Company will have to pay another 30% by the end of the year and the remnant 55% in late 2004. AGROINDUSTRIAS DEL VALLE: Takes First Step Towards Reorganization ----------------------------------------------------------------- Agroindustrias del Valle S.A., based in Guaymallen, Mendoza, Argentina, filed its motion for "Concurso Preventivo" to the Civil and Commercial Tribunal. A report by Infobae indicates that Court No. 1 assigned Ms. Silvia Nelida Nunez as receiver for the proceedings. Creditors are advised to have their claims verified before August 5, 2003. The receiver is scheduled to submit the individual reports on September 16 and the general report on October 27 this year. The informative assembly will be held June 11 next year. CONTACT: Agroindustrias del Valle S.A. Tupungato 519, Guaymallen Mendoza Ms. Silvia Nelida Nunez Mitre 565, Guaymallen Mendoza BANRURAL: Government Decides On Liquidation ------------------------------------------- Banrural, a Mexican development bank, entered liquidation yesterday, reports Business News Americas. The government, under President Vicente Fox decided to liquidate the bank because of its huge nonperforming loan portfolio. In the meantime, local newspaper Reforma relates that the bank's mission of lending to the country's farmers will be taken up by its successor, Financiera Rural. CANAL 9: Former Bank Owner Analyzes Possible Acquisition -------------------------------------------------------- The controversial businessman Raul Moneta, former owner of Banco Republica, is interested in re-entering the media industry. According to newspaper El Cronista, Moneta is analyzing the figures of Canal 9, the channel owned by Daniel Hadad. Since the channel is carrying out a formal restructuring proceeding -with a debt of ARS60 million - Moneta needs the approval of the court that oversees the process in order to acquire a stake in Canal 9. Moneta leads a group of businessmen willing to inject capital in the channel. The final decision has yet to be made and Moneta has not decided whether to take part in the group in person, taking into account his questioned public image. CICCONE CALCOGRAFICA: Govternment Mulls Canceling Contract ---------------------------------------------------------- Argentina's government is analyzing the possibility of canceling Ciccone Calcografica's contract for passport and ID card production, due to a series of contract breaches and the Company's poor financial status. Ciccone recently applied for the opening of a formal restructuring proceeding. A few months ago, Ciccone was criticized for the amount of time it was taking to deliver passports. Waiting time reached a peak of three months and currently ranges from 30 to 45 days. Furthermore, the Company accrued a US$30-million debt with its suppliers, sum that grew after the devaluation of the Argentine peso, as a result of higher costs of imported materials. CORREO ARGENTINO: Cooperating With Government To Keep Concession ---------------------------------------------------------------- Faced with a tough government, Correo Argentino, concessionaire of postal services in Argentina, is willing to give up some of its claims, so as not to loose the concession. We just want to negotiate. The exclusivity on registered letters and postage stamps, for example, an old and never fulfilled obligation of the state, we could rule out, Correo Argentino's CEO Raul Casa said. They don't have to give us all we ask for, he added. However, the Company still thinks the ARS103 million annual fee it has to pay the state is too high and should be reviewed. Correo Argentino has not paid this fee since 2000, accruing ARS450 million in debt. Correo Argentino is carrying out a formal restructuring proceeding, with a debt of ARS730 million. DEPORTIVO ESPA¥OL: Court Authorizes Auction ------------------------------------------- Argentine sport club 'Deportivo Espa¤ol' is in such deep trouble that the court Juzgado Nacional de Primera Instancia en lo Comercial Nø 2, in charge of the Dr. Juan Roberto Garibotto, has put it up for auction at a base price of US$11 million, reports El Cronista Comercial. Included in the auction will be the club's main building, as well as the soccer court. Although the auction is obviously an inevitable event, the club's president, Mr. Daniel Calz¢n, said he would do anything to prevent it from taking place. According to sources, a Spanish businessman is eyeing the club, which registered debts of US$15 million. DIAL CORP: Completes Sale of Argentine Business ----------------------------------------------- The Dial Corporation (NYSE: DL) announced Monday that it has completed the divestiture of its Argentine business to The Value Brands Company de Argentina S.C.A. and TVBC S.P.A., entities designated by Southern Cross Group, a private equity investor in Argentina. The transaction was structured as the sale of assets of Dial Argentina, S.A., including the stock of its two subsidiaries, Sulfargen, S.A., and The Dial Corporation San Juan, S. A. In the fourth quarter of 2002, the Company recorded a $62.4 million after-tax loss from the pending sale of the Argentina business and classified it as a discontinued operation. The sale resulted in cash proceeds to Dial of approximately $7.0 million and tax benefits of approximately $61 million. The sale of the Argentina business does not impact previous earnings guidance for the second quarter and full year 2003. The Dial Corporation, headquartered in Scottsdale, Ariz., is one of America's leading manufacturers of consumer products, including Dial(R) soaps, Purex(R) laundry detergents, Renuzit(R) air fresheners and Armour(R) Star canned meats. Dial products have been in the marketplace for more than 100 years. For more information about The Dial Corporation, visit the Company's Web site at www.dialcorp.com. CONTACT: The Dial Corporation, Scottsdale Cynthia A. Demers - Corporate and Government Affairs Phone: 480/754-4090 Steve Blum - Investor Relations Phone: 480/754-5040 GATIC: To Present Debt Plan To Court Next Week ---------------------------------------------- Argentine textile company Gatic is planning to present a plan to settle its liabilities before the court in the second week of July. The Company applied for a formal restructuring proceeding in September 2001 and has been working on a proposal to restructure its ARS250 million debt since then. Even though the firm did not reveal the proposal's details, sources familiar with the process said Gatic wants to achieve a 40% cut and up-to-8-year payment terms. Adidas and British bank Standard Charter, Gatic's most important creditors, have already backed the proposal, which has to be accepted by the rest of the creditors. We are currently carrying out negotiations with creditors, but are optimistic and believe we will successfully close our restructuring, Angel Coerezza, Gatic's institutional relations manager, explained. IEBA: Argentine Court Authorizes Bankruptcy Protection ------------------------------------------------------ Argentine power holding company Inversora Electrica de Buenos Aires (IEBA) informed the Buenos Aires bourse in a statement that a local court has granted its request for protection from creditors. Business News Americas recalls that IEBA, which defaulted on US$230 million of bonds in September 2001, following the conversion of rates from US dollars into Argentine pesos, last month filed the Argentine equivalent of Chapter 11 bankruptcy in the US. The bankruptcy process will entail a local judge taking control of IEBA's remaining US$162 million in debt, and meeting with creditors to renegotiate the payments. IEBA has scheduled a shareholders meeting for July 1 to discuss the move. IEBA is 55% controlled by Luxemburg-based Camuzzi International through Buenos Aires Energy Company. In April, Camuzzi offered to buy back the defaulted bonds. However, just 30% of creditors accepted the terms, and the Company cannot pay the remaining debts. IEBA's only source of income is its controlling stake in Buenos Aires province-based distributor Edea, whose cash flow has fallen sharply because of Argentina's reduced power demand, the tariff conversion into pesos, and the subsequent rates freeze. Worse yet, United Utilities, which owns the remaining 45% of IEBA, has said it will not put any additional equity into the holding. JUAN MINETTI: Possible Rate Hike Threatens Survival --------------------------------------------------- Argentine cement producer Juan Minetti's CEO, Eduardo Kretschmer Castaneda, said during a recent interview that the relief the Company obtained through its recent debt restructuring is threatened by a possible increase in gas and electricity fares, taking into account that these are key inputs for the cement industry. Minetti was severely affected by the fall in Argentina's construction activity and the impossibility to export a heavy and low-priced product. We became suited to the current activity levels thanks to an important capital injection made by Holcim (Minetti's controlling shareholder), Kretschmer Castaneda affirmed. However, an increase in energy costs would make it impossible for us to survive, he added. Minetti recently closed a debt restructuring process, reducing its debt with third parties from US$276 million (with a 7.6% interest rate and a 2.2-year term) to US$101.5 million, with a 5.53% rate and a 5-year term. Its total debt, including liabilities with its parent company, was reduced from US$387.5 million to US$351.5 million. This process was made possible thanks to a US$150-million loan granted by Cemasco (a unit of Holcim) and a US$26 million self- contribution. LA ANONIMA: Restructures Debt With Bondholders ---------------------------------------------- Argentine supermarket chain Sociedad Anonima Importadora y Exportadora de la Patagonia (La Anonima) has announced it reached a debt restructuring agreement with holders of its US$75 million Series 04 notes due 2003. La Anonima already paid US$11.4 million in year 2002 and agreed to pay the remaining US$63.6 million in six installments. The new maturity date was set on September 30, 2004. MIEL CARRASCO: Files "Concurso Preventivo" ------------------------------------------ Argentine honey producer Miel Carrasco S.A. has presented a motion seeking permission to start reorganization to the Civil and Commercial Tribunal of Tandil. According to local news source Infobae, Court No. 2 of Tandil has set October 15 this year as the date for the informative assembly. MUSIMUNDO: Sale To Pegasus To Come This Week -------------------------------------------- The investment fund Pegasus Venture Capital is about to take over the Argentine chain of record stores Musimundo. The accord for the sale of the company would be closed on June 30 or July 1st. Even though the amount of the operation was not disclosed, market sources affirmed the new owners would make an initial payment of US$ 15 million in order to settle part of Musimundo s liabilities. Pegasus was founded by a group of entrepreneurs headed by Mario Quintana and Dirk Donath, former executives of the drugstore chain Farmacity. At first, Pegasus planned to acquire Musimundo partnered with the holding Ilhsa, owner of the book and CD retailer Yenny-El Ateneo. However, Ilhsa decided to withdraw its offer a couple of weeks ago. Musimundo has 57 outlets and has a 60% share in the records market. Citibank leads its management pool of banks. Musimundo's former owner, The Exxel Group, had some overdue debts with these banks, situation that led to the transfer of the company. A few months ago, Musimundo reached an accord with its creditors that involved a 60% cut in its debt, which currently amounts to some ARS100 million (US$ 35.71 million). SCP: Settles Debts With Bank Creditors -------------------------------------- On June 25, 2003, a trust headed by Dresdner Bank agreed to take over the theme park Parque de la Costa. With this operation, Sociedad Comercial del Plata (SCP) - the holding that owned the park - settled its ARS245 million (US$ 88.13 million) debt with this group of banks. Banco Nacion, Citibank and Societe Generale also compose the committee of creditors that will manage Parque de la Costa. Dresdner Bank is the most important creditor in this group, with ARS170 million out of ARS245 million. A 17% cut was applied on the said ARS245-million debt. The proposal announced by SCP contemplated giving up its stakes in Parque de la Costa and the tourist train Tren de la Costa for the settlement of the holding s liabilities, while the casino Trillenium would remain in hands of SCP. Tren de la Costa will be used to pay a ARS60 million (US$ 21.68 million) preferred credit of Banco Provincia and to settle tax debts with the municipalities of Tigre, San Fernando, San Isidro and Vicente Lopez, totaling some ARS5 million. This package also included other ARS35 million - a 35% stake in Tren de la Costa - for commercial creditors, although most of them would have opted for a 25-year discount bond denominated in US dollars -converted at a rate of ARS3.5 = US$ 1 - with a 0% interest rate. Such alternative was destined to those that did not want to take part in the park or the train. In this way, SCP would keep the mentioned 35% stake in Tren de la Costa. CONTACT: Sociedad Comercial del Plata SA 3/F 1056 Reconquista Buenos Aires Capital Federal Argentina Phone: +54 11 4311 6854 Contact: Dr. Santiago T. Soldati, Chairman Dr. Matias M Brea, Vice Chairman TELEFONICA DE ARGENTINA: Extends Deadline of Exchange Offers ------------------------------------------------------------ Telefonica de Argentina S.A. ("TASA") announced Monday that it has extended the proxy delivery deadline of its offer to exchange two series of existing TASA notes (the 11.875% TASA Notes due 2004 and the 9.125% TASA Notes due 2008) for two new series of TASA notes plus a cash payment, and its offer to exchange two series of existing notes issued by TASA's holding company, Compania Internacional de Telecomunicaciones S.A. ("Cointel"), (the Cointel 8.85% Series A Notes due 2004 and the 10.375% Cointel Series B Notes due 2004) for two new series of TASA notes plus a cash payment. The proxy delivery deadline for all exchange offers and proxy solicitations has been extended from 5:00 p.m., New York City time, on June 30, 2003, to 5:00 p.m., New York City time, on July 1, 2003. All other terms of the exchange offers remain in effect as set forth in the relevant prospectus and proxy solicitation, each dated June 17, 2003, included in TASA's registration statement filed with the Securities and Exchange Commission on June 17, 2003. 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. 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. 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. Morgan Stanley & Co., Incorporated (including its affiliates) is acting as dealer manager for the exchange offers. BBVA Banco Frances S.A. (Reconquista 199, (C1003ABE) Buenos Aires, Argentina, Tel. 5411 4346-4600) is acting as solicitation agent in Argentina. CONTACT: Morgan Stanley Simon Morgan Phone: (212) 761-2219 Heather Hammond Phone: (212) 761-1893 TELEFONICA DE ARGENTINA: Cointel States Exchange Offer Position -------------------------------------------------------------- Compania International de Telecomunicaciones S.A. ("Cointel") refers to the announcement of Telefonica de Argentina S.A. ("Telefonica Argentina") on June 17, 2003 concerning the launch of an offer to exchange and a solicitation of proxies regarding all 8.85% Series A Notes due 2004 and 10% Series B Notes due 2004 (collectively, the "Notes") of Cointel, the purpose of which is to acquire all of Cointel's outstanding Notes, in an aggregate principal amount of US$225.0 million for the 8.85% Series A Notes and Ps. 175 million for the 10% Series B Notes. Cointel is the majority shareholder of Telefonica Argentina. Additionally, Cointel refers to Rule 14e-2 of the Securities and Exchange Act of 1934, that requires Cointel to take a position with respect to the exchange offer of the Notes. Pursuant to Rule 14e-2, Cointel hereby informs the holders of the Notes that (i) it has determined that the exchange offer and proxy solicitation proposed by Telefonica Argentina for the Notes is reasonable and is in the best interest of Cointel and (ii) it recommends that its holders accept the exchange offer and proxy solicitation of the Notes proposed by Telefonica Argentina. 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. Copies of the prospectuses may be obtained by calling D.F. King & Co., Inc., at +1-800- 549-6697 or 212-269-5550, or by mail at 48 Wall Street, 22 nd Floor, New York, NY 10005, Attention: Thomas A. Long. ============= B E R M U D A ============= GLOBAL CROSSING: Releases Operating Results for May 2003 -------------------------------------------------------- Global Crossing filed Monday a Monthly Operating Report (MOR) with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. Results reported in the May 2003 MOR are unaudited. In May 2003, Global Crossing reported consolidated revenue of approximately $247 million. Consolidated access and maintenance costs were reported as $171 million, while other operating expenses were $76 million. "Our overall results in the first five months of the year reflect continued success in maintaining our customer relationships and improved profitability during this difficult time," said John Legere, Global Crossing's CEO. "May's breakeven EBITDA performance and revenue up-tick are encouraging indicators and, by focusing new sales recruits on customer acquisition, we hope to position the company for stronger revenue growth and profitability upon emergence from bankruptcy later this year." Global Crossing's consolidated cash balance of approximately $537 million as of May 31, 2003 was comprised of approximately $202 million in unrestricted cash (the $202 million includes $70 million of cash held by Global Marine) and $335 million in restricted cash. Consolidated EBITDA was reported at breakeven. The consolidated net loss for May 2003 was $86 million. As discussed below, the reported May 2003 depreciation and amortization of $95 million, and therefore the May operating loss and net loss, would have been reduced substantially if the financial statements in the May MOR had reflected the tangible asset impairment anticipated by the company. In connection with the independent audits being conducted for 2001 and 2002, Global Crossing has concluded that its Global Marine subsidiary no longer qualifies to be classified as a discontinued operation as the newly emerged Global Crossing is expected to retain this business. As a result, Global Marine has been reclassified into Global Crossing's continuing operations in the May MOR. When historical financial statements are filed for 2001 and 2002 Global Marine will be presented as continuing operations for all periods presented. The March and April financial tables below have been amended from previous press releases to include Global Marine as part of continuing operations to enhance comparability with May financial results MOR RESULTS MONTHLY RESULTS MARCH THROUGH MAY 2003 MONTH CONSOLIDATED CONSOLIDATED NET REVENUE EBITDA INCOME (LOSS) May 2003 $247 million $0 million $(86) million April 2003 $241 million $(10) million $(75) million March 2003 $245 million $2 million $(89) million Notes The MOR reports revenue and cash balances according to generally accepted accounting principles in the United States of America (US GAAP). US GAAP revenue includes revenue from sales of capacity in the form of indefeasible rights of use (IRUs) that occurred in prior periods, recognized ratably over the lives of the relevant contracts. Beginning on October 1, 2002, Global Crossing ceased recognizing revenue from exchanges of leases of capacity. Consolidated EBITDA is defined as operating income/(loss) from the consolidated statements of operations, less depreciation and amortization expense. EBITDA is not a measurement under US GAAP and may not be similar to EBITDA measures of other companies. Management believes that EBITDA is a relevant indicator of operating performance, especially in a capital-intensive industry such as telecommunications, since it excludes items that are not directly attributable to ongoing business operations. In addition, the depreciation and amortization of $95 million for the month of May 2003, and therefore the May operating loss, would have been reduced substantially if the financial statements in the May MOR had reflected the tangible asset write- down described below. Pursuant to Regulation G, the following table provides a reconciliation of consolidated EBITDA, which is a non-GAAP financial metric, to net income, which is the most directly comparable GAAP measure. MONTH CONSOLIDATED DEPRECIATION OTHER REORG NET EBITDA AND INCOME ITEMS-GAIN INCOME AMORTIZATION (LOSS) (LOSS) May 2003 $0 mn $95mn $13mn $(4 mn) $(86mn) April 2003 $(10)mn $98mn $24mn $9mn $(75mn) March 2003 $2mn $90mn $(13)mn $12mn $(89mn) The information contained in this press release is qualified in its entirety by reference to the MORs for the months of February 2002 through May 2003, including the footnotes to the financial statements contained therein, copies of which are available through the U.S. Bankruptcy Court for the Southern District of New York and on Global Crossing's Web site http://www.globalcrossing.com/pdf/investors/inv_mor_may_03.pdf. These MORs have been prepared pursuant to the requirements of the Bankruptcy Code and the unaudited consolidated financial statements contained in these MORs do not include all footnotes and certain financial presentations normally required under GAAP. In addition, any revenues, expenses, realized gains and losses, and provisions resulting from the reorganization and restructuring of Global Crossing are reported separately as reorganization items in these MORs. As discussed more fully in the footnotes to the financial statements contained in the MORs, Global Crossing has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2001. On November 25, 2002, the United States Trustee appointed Martin E. Cooperman, a partner of Grant Thornton LLP, as the Examiner in Global Crossing's bankruptcy proceedings. In general, the Examiner's role is limited to reviewing the financial statements of the Global Crossing companies in bankruptcy for the fiscal years ended December 31, 2001 and 2002 and earlier periods if any restatement of those periods is necessary. As part of his role, the Examiner, with the assistance of Grant Thornton LLP, will audit any revised financial statements and issue a report as to such financial statements. Separately, on January 8, 2003, Grant Thornton was appointed as independent auditors of Global Crossing effective as of November 25, 2002. The Examiner's first interim report to the Bankruptcy Court was filed on February 24, 2003. Certain matters relating to Global Crossing's accounting for, and disclosure of, concurrent transactions for the purchase and sale of telecommunications capacity between Global Crossing and its carrier customers are being investigated by the Securities and Exchange Commission (SEC) and other governmental authorities. In addition, the U.S. Department of Labor is conducting an investigation into the administration of Global Crossing's benefit plans. These and other investigations are described more fully in footnote one to the financial statements contained in the May MOR. Any changes to the financial statements resulting from any governmental investigations and adjustments arising out of the 2001 and 2002 financial statement audits could materially affect the unaudited consolidated financial statements contained in the MORs and the information presented in this press release. On October 21, 2002, Global Crossing announced that it would restate certain financial statements previously filed with the SEC. These restatements, which are more fully described in footnote one to the financial statements contained in the May MOR, will record exchanges between carriers of leases of telecommunications capacity at historical carryover basis, resulting in no recognition of revenue. Reflecting this accounting treatment, the May MOR excludes amounts previously recognized as revenue over the lives of the lease contracts governing these capacity exchanges. The restatements have no impact on cash flow. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001, which has not yet been reported pending the completion of the audit of financial statements for 2001, is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, as previously disclosed, Global Crossing has determined that it will write down its tangible assets in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, and the bankruptcy filings of Asia Global Crossing and its subsidiary, Pacific Crossing Ltd. Global Crossing is in the process of evaluating its cash flow forecasts and other pertinent data to determine the amount of the impairment of its long-lived tangible assets. The impairment is anticipated to be at least $7 billion, an estimate that excludes any amounts attributable to the restatement of exchanges of capacity leases described above and excludes any impairment attributable to the assets of Asia Global Crossing and its subsidiaries, which Global Crossing deconsolidated effective November 18, 2002. The financial information included within this press release and the May MOR reflects the restatement of exchanges of capacity leases as described above and the $8 billion write-off of all of the goodwill and other identifiable intangible assets, but does not reflect any write-down of tangible asset value. Accordingly, the net loss of $86mn for the month of May 2003 would have been reduced substantially if the financial statements in the May MOR had reflected the reduction in depreciation and amortization expense resulting from this tangible asset write-down. The write-off of the intangible assets and the write-downs of tangible assets are described more fully in the May MOR. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 26, 2002, does not include a capital structure in which existing common or preferred equity will retain any value. On November 18, 2002, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda, both of which are separate from the cases of Global Crossing. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. Asia Netcom, a company organized by China Netcom Corporation (Hong Kong) on behalf of a consortium of investors, has acquired substantially all of Asia Global Crossing's operating subsidiaries except Pacific Crossing Ltd., a majority-owned subsidiary of Asia Global Crossing that filed separate bankruptcy proceedings on July 19, 2002. Global Crossing no longer has control of or effective ownership in any of the assets formerly operated by Asia Global Crossing. Please visit www.globalcrossing.com for more information about Global Crossing. CONTACT: GLOBAL CROSSING Press Contacts Tisha Kresler + 1 973-937-0146 Tisha.Kresler@globalcrossing.com Kendra Langlie Latin America + 1 305-808-5912 Kendra.Langlie@globalcrossing.com Mish Desmidt Europe + 44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril + 1 310-385-3838 investors@globalcrossing.com GLOBAL CROSSING: XO Announces Preliminary Results of Tender Offer ----------------------------------------------------------------- XO Communications, Inc. announced that the preliminary results of its offer for Senior Secured Loans of Global Crossing, which terminated on June 27, 2003, indicate that approximately $495 million principal amount of such Loans were tendered to XO. With the tendered amount, XO will own approximately $790 million principal amount of the approximately $2.214 billion of such Loans outstanding. About XO Communications XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in more than 60 markets throughout the United States. GLOBAL CROSSING: Names New Regional VP of Enterprise Sales ---------------------------------------------------------- Global Crossing announced Monday that Michael Cromwell has been named regional vice president of enterprise sales for the western region, overseeing all sales and sales support functions in 26 states, effective immediately. In his new position, Mr. Cromwell reports directly to Dave Carey, executive vice-president, enterprise sales. "Mike Cromwell's exceptional track record and strong customer relationships have been a key asset to Global Crossing since its inception, and I'm thrilled to see him take on an even greater role in our continued success," said Dave Carey. "With his experience and know-how, I'm confident that Mike will be instrumental in challenging our enterprise sales team to new levels of achievement." Mr. Cromwell has held positions within Global Crossing's sales organization and that of its predecessors, Frontier Communications and Allnet Communications, since 1990. As area vice president for the western region since 1997, he directed all sales, service and engineering efforts for a $48 million business unit, encompassing a 10-state area and more than 90 employees. During this time, Mr. Cromwell successfully focused the organization on providing complex data solutions, both domestically and internationally, to major accounts, growing monthly revenues between 40 and 100 percent each year. Mr. Cromwell has received numerous awards during his tenure at Global Crossing, all of which recognized him as a top performer. He holds a Bachelor of Arts degree from the University of Massachusetts at Amherst. SEA CONTAINERS: Announces Expiration Of Exchange Offer For Notes ---------------------------------------------------------------- Sea Containers Ltd. (NYSE: SCRA and SCRB, www.seacontainers.com), marine container lessor, passenger and freight transport operator, and leisure industry investor, announced Monday the expiration of the exchange offer for its outstanding 9-1/2% Senior Notes due 2003 and 10-1/2% Senior Notes due 2003. The exchange offer expired Friday, June 27, 2003 at 5:00 p.m., New York City time. Based on the information provided by the exchange agent for the exchange offer, approximately $22.5 million aggregate principal amount of the Notes has been tendered for exchange. The exchange offer is expected to close on Wednesday, July 2, 2003 and, upon the closing, Sea Containers will cancel the Notes accepted for exchange and will issue an equal aggregate principal amount of 13% Senior Notes due 2006. The 13% Senior Notes will be listed on the New York Stock Exchange (CUSIP No. 811371 AL 7). The exchange offer for Sea Containers' 12-1/2% Senior Subordinated Debentures due 2004, which commenced on May 28, 2003, remains open and is scheduled to expire on July 9, 2003. Holders of the debentures may obtain exchange offer materials by contacting Georgeson Shareholder Communications Inc., the information agent for that exchange offer, 17 State Street, New York, New York 10004. Banks and brokers call 1-212-440-9800; U.S. holders call toll free 1-866-324-5897; and foreign holders call collect +44-207-335-8700. CONTACT: Sea Containers Services Ltd., Sea Containers House, 20 Upper Ground, London SE1 9PF. Contact: Steve Lawrence, Public Relations and Communications Phone: +44 20 7805 5830 Email: steve.lawrence@seacontainers.com =========== B R A Z I L =========== GERDAU: Joins the Level 1 Program Of Corporate Governance --------------------------------------------------------- June 25, 2003 - BOVESPA announces that today, Metal£rgica Gerdau (negotiation code GOAU) joined the Level 1 Program of Corporate Governance designed for the listing of companies whose administrators and controlling shareholders have made a voluntary commitment to follow a series of corporate rules. These rules, known generically as "good practices of corporate governance" are more rigid than those required by the current legislation in Brazil. The company The largest producer of long steel in the Americas, the Gerdau Group started on its course more than a century ago. From Brazil, it expanded its base to Uruguay, Canada, Chile, Argentina and the United States and, in 2002, reached a net profit of R$ 821 million, 49% higher than in the previous year. The Group's businesses, divided into geographic regions and product lines, service the civil construction, industrial and agricultural sectors. Exported to all parts of the world, Gerdau steel has endless applications. It is part of the structure of bridges, overpasses, roads, hydroelectric plants, office buildings and houses. It is used in the manufacturing of agricultural machinery, steel structures, components for the automotive industry, power transmission lines and telephone networks, among others. It also meets the needs of agriculture in the form of fencing wire and accessories. The IGC - Special Corporate Governance Stock Index As from today, GERDAU MET PN (GOUA4) is included in the IGC - Corporate Governance Index with a participation of 1.635%. This index serves as a benchmark for the performance of stocks listed under the Special Corporate Governance Program. NIVEL 1 (Level 1) of Corporate Governance The N¡vel 1 is a listing segment designed for the trading of shares issued by companies that voluntarily undertake to abide by corporate governance practices and disclosure requirements in addition to those already requested by the Brazilian legislation. Some of these practices are listed below: - Maintenance of a free-float of at least 25% of the capital; - Improved disclosure of quarterly information including the obligation of reporting consolidated figures and special audit revisions; - Joining the disclosure rules for transactions involving assets issued by the company on the part of the controlling shareholders or company management; - Disclosure of shareholder agreements and stock option programs and contracts with related parties; - The holding of annual meetings with analysts and any other interested parties; - Provision of an annual calendar of corporate events; and - The holding of public offerings for placing shares through mechanisms that favor capital dispersion to a broader spectrum of shareholders. ========= C H I L E ========= ENERSIS: Issues Update on $2B Capital Increase ---------------------------------------------- Chilean power sector holding company Enersis on Friday sold US$1.6 billion of new stock, or 77.3% of the total US$2-billion capital increase authorized by shareholders, Business News Americas reports, citing a company statement. The statement reveals that minority shareholders bought US$381 million, and international investment company Elesur, through which Endesa Spain owns Enersis, bought US$1.22 billion. Endesa subscribed to the increase through the capitalization of inter- company loans from Elesur to Enersis. Subscription by minority shareholders reached a peak of US$122.6 million on June 27, and US$65.9 million on June 26, the statement said. The period for Enersis shareholders to subscribe to the capital increase ended Monday, and the preferential period for shareholders outside the Endesa group for the remaining shares will begin in November. The capital increase also includes a buyback of bonds issued on the Chilean market. From November 1-15 holders will be able to exchange their bonds for Enersis stock at 60.4202 pesos a share, the same price as the new stock issued in the increase. Endesa has previously said it will buy any shares that are not subscribed by shareholders or bondholders. CONTACT: Enersis SA Avenida Kennedy Vitacura No 5454 Santiago Chile 1557 Phone: +56 2 353 4400 Fax: +56 2 378 4768 Home Page: http://www.enersis.cl Contacts: Engr Alfredo Llorente Legaz, Chairman Engr Rafael Miranda Robredo, Vice Chairman Endesa SA Principe de Vergara 187 28002 Madrid Spain Phone: +34 91 213 10 00 Fax: +34 91 563 81 81 Telex: 22917 ENE Home Page: http://www.endesa.es Contacts: Rodolfo M. Villa, Chairman Rafael Miranda Robredo, Managing Director ENERSIS: Unveils Organizational Restructuring --------------------------------------------- Enersis, after concluding Monday another stage in its capital increase, unveiled its biggest organizational shakeup since Endesa Spain took control of the Company in 1999, reports Business News Americas. As part of the overall restructuring, Enersis will refocus as a financial holding, while retaining ownership of its Endesa Chile SA and Chilectra SA units, Enersis said Monday. Endesa Chile will hold Enersis' power generation units in Latin America, while Chilectra will handle the power distribution units, Enersis added. The move deepens the division between the group's generation and distribution activities, while Enersis' greater financial focus was underlined by the appointment of former CFO Mario Valcarce as CEO, replacing Madrid-bound Enrique Garcia. In Chilectra, Rafael Lopez Rueda replaces Julio Valenzuela as CEO, and also takes interim charge of a new Chilean distribution unit, while Marcelo Silva heads up a new regional distribution and services unit. Lopez is ultimately responsible for all Latin American distribution. Valenzuela resigned after 29 years with Chilectra. Hector Lopez remains as Endesa Chile CEO, takes responsibility for all regional generation, and heads up a newly created energy department of Endesa Spain's international arm. =============== C O L O M B I A =============== FERROVIAS: Director Quits Post on Word of Liquidation Plans ----------------------------------------------------------- Colombian state railroad corporation Ferrovias is saying goodbye to its director, Horacio Arroyave Soto, reports Business News Americas. Soto, who officially resigns July 1, has already submitted his resignation to President Alvaro Uribe Velez. The director's move came after the national government unveiled plans to liquidate Ferrovias, which was established in 1989 after the government liquidated national railroad company FNC. A future organization - dubbed the "concessions institute" - will assume responsibility of Ferrovias' two major projects: the US$300 million Atlantic and the US$120 million Pacific railroad concessions. Under consortium Fenoco's control, the Atlantic project entails repairing and managing 1,500km of railroad for about 30 years. The Pacific project, contracted to concessionaire Tren de Occidente, involves fixing and operating 500km of track for 30 years. PAZ DEL RIO: Shares Soar On Improved Results, Rescue Expectations ----------------------------------------------------------------- Share value of Colombian steelmaker Acerias Paz del Rio increased eight-fold last month in anticipation that the government will save the Company from liquidation, reports local newspaper La Nota, citing analyst Willintong Ospina. Mr. Ospina added that the Company's improved results for the first quarter also contributed to the increase. The Company, controlled by the Boyaca departmental government, is under a form of bankruptcy protection after reporting losses for the last five years, said Business News Americas. =============== H O N D U R A S =============== GEOMAQUE EXPLORATIONS: Completes Statutory Amalgamation ------------------------------------------------------- Geomaque Explorations Ltd. (TSX: GEO) ("Geomaque") and Defiance Mining Corporation ("Defiance") are pleased to announce the completion, effective June 25, 2003, of the statutory amalgamation of Geomaque with a wholly-owned subsidiary of Defiance, a Canadian corporation. Defiance has been approved for listing on the Toronto Stock Exchange (the "TSX") and will commence trading on the TSX under the symbol DM, on Wednesday, July 2, 2003. Until that time, trading will continue under the Geomaque symbol, GEO. Geomaque will cease to be a TSX-listed company with the listing of Defiance. Please note that the former Geomaque website will be closed. The Defiance website is: www.defianceminingcorp.com. Geomaque further announces that Mr. Mario Caron, Vice President, Operations, will be leaving the company effective July 1, 2003, to pursue a senior management position in another company. We are pleased to announce that Mr. Caron will be replaced by Mr. Christian Marti, currently the General Manager, Geomaque de Honduras, S.A. de C.V., who will be Vice President, Operations of Defiance. Mr. Marti will be relocating to the Toronto office of Defiance, and will assume responsibility for all operations of Defiance. Much of the turnaround in the Honduran operations is due to Mr. Marti's efforts, while he also brings extensive experience in the development of new mines, including involvement in a number of operations in Africa. Geomaque wishes to thank Mr. Caron for his excellent contribution to the company during his tenure and wishes him success in his new position. Defiance holds 100% of the Tasiast project in Mauritania and 100% of the Vueltas Mine in Honduras. Tasiast currently has indicated resources of 8.3 million tonnes at 2.3g/t Au containing 611,000 ounces of gold and a further inferred resource of 21 million tonnes at 1.8 g/t Au containing 1,176,000 ounces of gold. An updated resource calculation, incorporating the results of the recently completed drilling program, is expected by the end of the third quarter. Defiance also operates the Vueltas Mine which is currently expected to produce in the order of 40,000 ounces of gold in 2003. Defiance has 73,306,119 common shares issued and outstanding. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. CONTACT: Defiance Mining Corporation John W. W. Hick, President & CEO Tel. (416) 956-7470 Fax: (416) 956-7471 Ian Shaw, Vice-President Finance & CFO Tel: (416) 956-7470 Fax: (416) 956-7471 =========== M E X I C O =========== AHMSA: Postpones Annual Report Publication ------------------------------------------ Troubled steelmaker Altos Hornos de Mexico (AHMSA) said that it is postponing the publication of its annual report and best corporate practices code. A report by Business News Americas relates that the Company did not provide the details but said, the necessary documents will be published "until documentation is ready." AHMSA has two plants in Monclova, in the northern state of Coahuila. It is Mexico's largest steelmaker in terms of production and sale of flat products such as hot- and cold-rolled plates, sheets and chrome-plated steel. It also makes long products such as profiles, structures and wire rod. The Company, which is controlled by Mexican industrial holding GAN (Grupo Acereros del Norte), has been in a form of bankruptcy protection for the last four years. CONTACT: AHMSA Prolongacion B. Juarez s/n, Monclova , Coahuila 25770 Mexico http://www.AHMSA.com Phone: +52 86 33 81 72 Fax: +52 86 33 65 66 Contacts: Alonso Ancira Elizondo, CEO, Vice Chairman, Pres/CEO Jorge Ancira Elizondo, Chief Financial Officer Manuel Ancira Elizondo, Chief Operating Officer GRUPO IUSACELL: Movil@access Launches Tender Offers for Shares -------------------------------------------------------------- Biper SA announced that its Mexican telecoms unit Movil@access formally launched Monday simultaneous tender offers for the shares of mobile operator Grupo Iusacell traded in the US and Mexico in an operation valued at US$10 million. In a statement to the Mexican Stock Exchange, Biper revealed that it already has clearance from the US and Mexican regulators for the offer. Movil@access will offer about MXN0.057 per Series A share and Series V share, and in the US offer the dollar equivalent of MXN5.71/ADS. The offer in Mexico will expire 4pm Mexico time (5pm in New York) on July 29. Verizon and Vodafone currently own 39.4% and 34.5% of Iusacell respectively, and public investors in Mexico and the US hold the remaining shares. Both companies have agreed to tender their shares into the Mexican offer. The sale represents the exit, at a huge loss, from the Mexican telecommunications market for both companies. Verizon has invested more than US$1 billion in Mexico, while Vodafone paid US$973.4 million in 2001 for its stake in the country's No. 3 mobile phone operator. Movil@ccess and Biper are part of Ricardo Salinas' business empire, which includes retail group Elektra, portal Todito.com, broadcasting group TV Azteca, and Mexico's fourth largest mobile operator Unefon. PEMEX: Awards Halliburton $23M Pact ----------------------------------- Halliburton de Mexico has been awarded a three-year contract by Pemex to provide tools and testing services and products for its Bateria Artesa field in Reforma Chiapas Mexico. The contract, with an estimated value of (USD) $23 million, will include the operation and maintenance of the Carmito CO2(a) Gas Separation Plant. Halliburton de Mexico is a subsidiary unit of Halliburton (NYSE:HAL). "We are very pleased with the confidence that Pemex has shown through this award," said Armando Galan, Mexico country manager, Halliburton's Tools Testing and Tubing Conveyed Perforating (TTTCP) product service line. "Halliburton has been providing this service to Pemex for the last six years and we're very pleased that they have chosen to continue using our service." The Carmito CO2(a) Gas Separation Plant was built by Halliburton in 1997 and has been in operation ever since. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services Group and Engineering and Construction Group business segments. The company's World Wide Web site can be accessed at www.halliburton.com. (a) Note: The number 2 in CO2 is a subscript. CONTACT: Halliburton, Houston Zelma Branch Phone: 713/759-2601 Email: zelma.branch@halliburton.com TV AZTECA: Distributes $125M To Shareholders -------------------------------------------- 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 that it made on Monday a US$125 million distribution to shareholders, equivalent to US$0.04 per CPO, or US$0.67 per ADR. The distribution represents a 10% yield based on the closing price of the ADR as of June 27, 2003. On April 30, TV Azteca's Annual Ordinary Shareholders' Meeting approved distributions for an aggregate amount of US$140 million to be paid during 2003, which include the payment of US$125 million made Monday, and another payment of US$15 million to be made on December 5. The company noted the US$125 million distribution is the start up of its previously announced 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 within the six-year period. "Our plan for uses of cash substantially strengthens our capital structure, while providing our shareholders with solid and steady returns, a combination that creates remarkable value for all of our stakeholders," said Pedro Padilla, Chief Executive Officer of TV Azteca. 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. CONTACT: TV Azteca, S.A. de C.V. Investor Relations: Bruno Rangel Phone: +5255-3099-9167 Email: jrangelk@tvazteca.com.mx Omar Avila Phone: +5255-3099-0041 Email: oavila@tvazteca.com.mx Media Relations: Tristan Canales Phone: +1-5255.3099.5786 Email: tcanales@tvazteca.com.mx Home Page: http://www.tvazteca.com.mx TV AZTECA: Announces Pact With KAZA-TV -------------------------------------- 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 Monday that Azteca America Network, the company's wholly-owned network focused on the U.S. Hispanic market, will on July 1 begin to operate Los Angeles television station KAZA-TV under the terms of a previously announced three- year local marketing agreement (LMA). In addition, Azteca America has an option (subject to applicable law) to purchase the assets of KAZA-TV for US$250 million by July 1, 2006. The LMA and the purchase option were entered in February of this year in connection with the settlement of certain lawsuits and disputes between Azteca America and certain affiliates of Pappas Telecasting Companies. As part of that settlement, Pappas Telecasting repurchased Azteca America's 25% equity interests in KTNC-TV in San Francisco-Sacramento, California and KAZH-TV in Houston, Texas. For that equity plus other consideration, the Pappas affiliate in Los Angeles delivered a US$128 million note to TV Azteca. Under the terms of the settlement, as Pappas Telecasting elected not to pay the note in full by June 30, the LMA and the option will become effective on July 1. The note's principal amount increased to US$129 million on April 30, 2003 and will bear an interest rate of 11.6279% per year. Under the terms of the LMA, Azteca America will be entitled to retain all advertising revenue generated from the programming it supplies to the station. Azteca America will pay an annual LMA fee of US$15 million to Pappas Telecasting, which will be offset dollar-for-dollar by the interest payable on the note. Accordingly, if during the three-year LMA period no principal payments are made on the note, then no cash payments will be required to be made by Azteca for the LMA. However, the note may be prepaid by Pappas Telecasting, in whole or in part, at any time. If so, then the US$15 million LMA fee would be paid by Azteca America to Pappas Telecasting in quarterly installments during the term of the LMA agreement. Azteca America also has a three year option to purchase, up to the permissible statutory maximum of 25%, the assets of KAZA-TV and to nominate a qualified U.S. person to acquire the remaining interest from Pappas, for a total price of US$250 million, less any then-unpaid principal and interest on the note. KAZA-TV is a full power station with complete cable coverage in a market that represents 18% of the total US Hispanic population. As the pioneer station of Azteca America, KAZA-TV is also a recognized name that offers promotional opportunities for the Los Angeles market. KAZA-TV is the flagship for the entire Azteca America network. Los Angeles is the largest Hispanic media market in the United States in terms of advertising expenditures. Nearly one in five Hispanics in the United States resides in the Los Angeles television market. Azteca America, which will also be responsible for promotional activities, will provide programming to the Los Angeles station 24 hours daily and manage the sales team that will be responsible for local and national spot sales. The remaining three Pappas Telecasting stations in Houston, Reno and San Francisco-Sacramento will continue as Azteca America affiliates. As previously announced, Pappas Telecasting and Azteca America plan that a number of additional stations owned by Pappas will become Azteca America affiliates in other U.S. markets. "Azteca America has over 11 hours a day of live programming, a unique product that connects with the dynamic Hispanic audience," said Mario San Roman, COO of TV Azteca. "Bringing our full programming, including novelas, soccer, live shows, news and variety entertainment to Los Angeles, represents an enormous opportunity to enhance Azteca America brand equity throughout the entire network." "We are excited about the mutual benefits this transaction represents for Azteca America and our company. I sincerely wish Azteca America the best in their operation of KAZA. And, I'm confident they will enhance the service offerings and competitive capabilities of KAZA-TV;" said Harry J. Pappas, Chief Executive Officer of Pappas Telecasting. "While our business relationship has gone through a sometimes tumultuous process, the core commitment of Ricardo Salinas, the visionary chairman of TV Azteca, and of our company to bring more choice to Hispanic television viewers in the U.S. has not wavered. Frankly, it is noteworthy that both parties have disagreed without being disagreeable. And, our relationship has matured such that Pappas Telecasting intends to continue investing in additional stations to strengthen and enhance Azteca America's distribution in the U.S." "We're very excited about the opportunity that this operation will bring to our distribution network," said Luis J. Echarte, CEO of Azteca America. "This is an important step for us as we continue to build our dynamic network and brand equity. The scale of our commitment to Hispanic viewers is further demonstrated by this major opportunity." ================= N I C A R A G U A ================= UNION FENOSA: Nicaraguan Generators Threaten to Suspend Services ---------------------------------------------------------------- Disnorte and Dissur, the Nicaraguan distributors owned by Spain's Union Fenosa, are likely to stop receiving services from the local power generators due to non-payment of debts, Business News Americas indicates. According to Enron Nicaragua manager Cesar Zamora, Fenosa has been 60% behind on payment for the last three weeks. Local Fenosa VP Jose Maiz, however, confirmed that debts are US$6.6 million and said that the amount is not excessive. Maiz added that the company has asked the regulator, INE, for a rates increase, although he did not say by how much. * Moody's Downgrades Nicaragua's Credit Rating To Caa1 ------------------------------------------------------ Moody's Investors Service downgraded Nicaragua's credit rating from B2 to Caa1, or seven levels below investment grade, on concern a drop in deposits threatens the solvency of the nation's banks, reports Bloomberg. Moody's warned that Nicaragua's widespread use of dollars as its currency will make it difficult for the government to bail out banks, heightening the risk of default. "Nicaragua continues to cope with the effects of the major financial crisis it endured in 2000-2001, which included large drops in deposits in the banking system," Moody's said in a report. "This is the kind of event that poses additional risks in a dollarized system because the government cannot print the currency of another nation in order to check a run on deposits." Nicaragua, the second-poorest nation in the Western Hemisphere, with 46% of its population living in poverty, has US$6.4 billion in debt, a large chunk of which is owed to international lenders, such as the Inter-American Development Bank, and the so-called Paris Club of nations, an informal group of creditors, including the U.S. and the U.K. The country is part of the International Monetary Fund's program of support for highly indebted poorer countries. =========== P A N A M A =========== CHIQUITA BRANDS: Completes Sale Of Armuelles Division ----------------------------------------------------- Chiquita Brands International (NYSE: CQB) completed Monday the previously announced sale of its Puerto Armuelles Fruit Co. (PAFCO) division to a local worker cooperative led by members of the Armuelles banana workers union. The cooperative also entered into a 10-year contract to sell fruit to Chiquita at market prices. Chiquita is providing the new owners with technical support in agricultural and logistics operations. The purchase price paid to Chiquita for PAFCO's assets was approximately $20 million. Proceeds of the sale include approximately $15 million in cash financed by a Panamanian bank and a $5 million note receivable. The cooperative will repay this $5 million loan from Chiquita by discounting the fruit price during the initial years of the contract by 20 cents per box. Under the sale agreement, Chiquita will pay approximately $20 million to cover the costs of workers' severance and other liabilities. As a result of this sale and productivity improvements taken before the transaction was completed, the company expects its costs related to Armuelles to be approximately $12 million lower in 2003 compared to 2002 levels. Chiquita Brands International is a leading global marketer, producer and distributor of high-quality fresh and processed foods. The company's Chiquita Fresh division is one of the largest banana producers in the world and a major supplier of bananas in North America and Europe. Sold primarily under the premium Chiquitar brand, the company also distributes and markets a variety of other fresh fruits and vegetables. For more information, visit the company's web site at www.chiquita.com. CONTACT: News Media: Michael Mitchell Tel: 513-784-8959 Email: mmitchell@chiquita.com Investors: Monique Wise Tel: 513-784-8935 mwise@chiquita.com ================================= T R I N I D A D & T O B A G O ================================= CARONI: Opposition Will Raise Dispute At Senate Meeting ------------------------------------------------------- The Opposition United National Congress said it will take the issue of the dispute between the government and unions representing workers of Caroni (1975) Ltd. when the Senate meets Monday. The Trinidad Guardian reports that Wade Mark, the Opposition's leader in the Senate, will raise the issue at the meeting. Recently, the Opposition criticized the government's statement that Caroni workers may have to be retrenched after the Industrial Court ruled against lifting the injunction preventing the government from promoting the VSEP. Trinidad and Tobago Agriculture Minister John Rahael said on Sunday that the government will not back out on its restructuring plans. CARONI: Union President Dares Government To Violate Ruling ---------------------------------------------------------- The president of the All Trinidad Sugar and General Workers' Trade Union challenged Trinidad & Tobago Minister of Agriculture John Rahael to violate the Indutrial Court's ruling and retrench workers of state sugar company Caroni (1975) Ltd., reports the Trinidad Guardian. However, Mr. Rahael said that the Government will not move to retrench the workers before the July 10 deadline set by the Court, contrary to an earlier statement saying that the government may send home workers if the controversial Voluntary Separation of Employment Plan (VSEP) does not work. The Court earlier ordered the management to negotiate with the unions and submit the results of their talks on July 10. On Monday, Mr. Rahael said, "If we cannot implement the VSEP programme then we would go back to collective agreement between the union and workers." He hopes that the VSEP plan will work out, because it in the workers' best interest. The ATSGWTU was scheduled to meet with Caroni at 9.30 am Tuesday, says the report. ================= V E N E Z U E L A ================= PDVSA: Files Notification of Late Filings ----------------------------------------- Petr¢leos de Venezuela, S.A. (PDVSA) announced Monday that PDVSA Finance Ltd.'s audited financial statements for the year ended December 31, 2002 have been completed and furnished to the trustee for its outstanding bonds and to the U.S. Securities and Exchange Commission (SEC) on Form 6-K. PDVSA's U.S. subsidiaries, Citgo Petroleum Corporation and PDV America Inc., filed their annual reports on Form 10-K for 2002 with the SEC, on a timely basis, in March 2003. PDVSA also announced that it has filed with the SEC Notification of Late Filings on Form 12b-25 with respect to the annual reports on Form 20-F for PDVSA and its subsidiaries, PDVSA Finance Ltd. and Propernyn B.V. In its filings, PDVSA stated that it is not able to file its annual report on Form 20-F within the prescribed time period due to a work stoppage of its operations during December 2002 and January 2003, resulting in a 45% reduction in the number of PDVSA employees between December 2002 and the end of the first quarter of 2003, from approximately 40,000 employees to 22,000 employees, respectively. Also affected by the work stoppage were PDVSA's financial and computer systems in Venezuela. As a result of the work stoppage and the resulting loss of personnel assigned to the financial control function, PDVSA and PDVSA Finance Ltd. implemented alternative control systems. Most of PDVSA's financial and computer systems started to operate on a progressive basis from February 2003. As a result of the disruption, PDVSA could not begin the process of closing its year-end accounting records until May 2003. Historically, PDVSA began closing its year-end accounting records in January. PDVSA hired and trained new personnel and managerial positions were reassigned to new managers. Consequently, additional time was required to complete PDVSA's financial statements and to prepare the annual reports on Form 20-F for PDVSA, PDVSA Finance Ltd. and Propernyn B.V. This also delayed PDVSA's external auditors commencing the final phase of the audit of the company's financial statements. As part of the financial systems recovery process, the activities of the Department of Internal Control were reestablished, both in the operational areas and at the headquarters. The Department of Internal Control implemented alternative procedures in the interim and is in the process of reestablishing internal control systems previously disrupted during the work stoppage. Currently, The Department of Internal Control constantly monitors adherence to the operational and financial standards of PDVSA. PDVSA currently is undergoing a restructuring process to reduce its operating costs and to simplify its organizational structure. PDVSA also initiated an Optimal Recruiting Plan based on best practices and by key competencies such as engineering, information technology, finance and administration, to fill vacancies caused by the work stoppage. Despite the crisis, PDVSA has successfully recovered its operations. Presently, PDVSA produces more than 3.0 million barrels, refines more than 1.0 million barrels and exports more than 2.5 million barrels of crude oil per day. In June 2003, Fitch, Inc., a nationally recognized statistical rating organization, upgraded PDVSA's credit ratings from CCC+ to B-. PDVSA: To Discuss Tacata Development With Spain's Repsol YPF ------------------------------------------------------------ Petroleos de Venezuela S.A. (PdVSA), Venezuela's state oil enterprise, is set to discuss with Spanish operator Repsol YPF this week on the development of the Tacata field, relates Business News Americas, citing PdVSA's Johnny Gonzalez, manager of the northern district in the eastern division. Presently, an exploratory well has been drilled at the field and another two in the Chaguaramal area of Orocual has given rise to "great expectations for crude and gas in the northern part of Monagas," said Mr. Gonzalez. He added that the discovery could prove to be another Furrial, which hold giant reserves. Mr. Gonzalez said that the Tacata development is important to the Company, because of its large reserves. He added that another exploratory well will be drilled before the year ends. *********** 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 * * *