/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/031002.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Thursday, October 2, 2003, Vol. 4, Issue 195 Headlines A R G E N T I N A A QUINTERO: Claims Process Ends, Receiver Prepares Reports AGROPECUARIA TEC NECOCHEA: Court Declares Company Bankrupt BALANCEADOS AYACUCHO: Court OK's Reorganization Petition BANCO HIPOTECARIO: Extends Timing on Debt Offer BATTAGION: Court Declares Official Bankruptcy CALDENIA Y ASOCIADOS: Starts Reorganization Proceedings COLEGIO MODELO: Receiver Due To End Proof of Claims Process CONFORT ESTILO: Reorganization Petition Gets Court's Nod CONINGAS: Receiver Prepares Individual Reports DISCO: Cencosud Expects Buyer Shortlist By Year-End EL CORCHO: Receiver Analyzes Claims For Bankruptcy Process ESTIMAQ: Court Assigns Receiver For Bankruptcy Process GOMERIAS MARCOS: Proof of Claims Filing Period Ends LAMITECNICA: Claims Verfication Closes Today METROVIAS: Fitch Maintains Share Ratings at `3' N Y H: Individual Reports Due For Filing Today NSC: Court Gives Approves Reorganization Process PETROBRAS ENERGIA: Posts Oil, Gas Production for August 2003 PLAZA AUSTRIA: Receiver Reviews Creditors' Claims TELEFONICA DE ARGENTINA: To Sell Radio Movil To Nextel * Argentine Banks Vow To Extend Financial Help To Government B O L I V I A BANCO DE CREDITO: Moody's Assigns Initial Ratings B R A Z I L ELETROPAULO METROPOLITANA: Initiates Debt Talks With Creditors EMBRATEL: Carriers Get Inflation-Indexed Rate Clarification GERDAU: To Invest R$626 Million In Rio Grande Do Sul C H I L E CAP: To Receive $150M Syndicated Loan C O L O M B I A AVIANCA: Chilean Airline Considers Stake E C U A D O R PETROECUADOR: Extends Insurance Bidding Deadline Once Again J A M A I C A FISCAL SERVICES: Continues To Report Losses M E X I C O AEROMEXICO: Negotiates With Union To Avert Planned Strike GRUPO IUSACELL: Reveals 2-Year, $300M Investment Plan GRUPO MEXICO: Shareholders OK Rights Offering for New Funds TFM: Fitch Lowers Debt Ratings to 'B+' from 'BB-' VITRO: Moody's Assigns B2 Rating to $250M of Notes U R U G U A Y UTE: Accord With Rima Over Power Price Proves Elusive - - - - - - - - - - ================= A R G E N T I N A ================= A QUINTERO: Claims Process Ends, Receiver Prepares Reports ---------------------------------------------------------- The bankruptcy of Buenos Aires-based company A Quintero S.R.L. moves a step further as the deadline for claims verification ends today. The Company's receiver, Mr. Antonio Garguilo, who was in charge of the authentication, will prepare the individual reports, as ordered by the court. Buenos Aires' Court No. 2 holds jurisdiction over the case. An earlier report indicated that the Company entered bankruptcy after the court approved a petition filed by the Company's creditor for nonpayment of debt. The individual reports must be filed at the court on November 27 this year. The general report, which is prepared after the individual reports are processed at court, must be submitted on February 2, 2004. CONTACT: A Quintero S.R.L. Leopardi 36 Buenos Aires Antonio Garguilo Uruguay 385 Buenos Aires AGROPECUARIA TEC NECOCHEA: Court Declares Company Bankrupt ---------------------------------------------------------- The Civil and Commercial Tribunal of Necochea orders the bankruptcy of local company Agropecuaria Tec Necochea S.R.L., according to a report by Argentine news source Infobae. Ms. Dora Canon, the receiver designated to the case, will verify creditors' claims until October 14 this year. After that, she will prepare the individual general reports, and then the general report. However, Infobae did not mention whether the court has set the deadlines for the submission of these reports. CONTACT: Dora Canon Calle 65 No. 2836 Necochea BALANCEADOS AYACUCHO: Court OK's Reorganization Petition -------------------------------------------------------- Balanceados Ayacucho S.R.L., which is based in the Argentine province of Dolores, will undergo reorganization. A report by local news portal Infobae indicates that the province's Civil and Commercial Tribunal approved the Company's motion for "Concurso Preventivo". The province's Court No. 2, which handles the Company's case, assigned Ms. Angela Elma Miletti as receiver for the process. Her tasks include the verification of credit claims, and the preparation of the required reports. Creditors have until October 28 to have their claims authenticated by the receiver. After that date, the receiver will prepare the individual reports, which must be presented to the court on December 12. The receiver will also prepare a general report after the individual reports are processed at court. This report should be submitted on February 27 next year. Infobae adds that the informative assembly will be on June 29, 2004, the intended location for the meeting will be announced at a later date. CONTACT: Balaceados Ayacucho S.R.L. Alem 941 Ayacucho, Dolores Angela Elma Miletti Mendoza 143 Dolores BANCO HIPOTECARIO: Extends Timing on Debt Offer ----------------------------------------------- Banco Hipotecario S.A. revealed in a statement to the Buenos Aires stock exchange that it is extending its pending offer to restructure US$1.2 billion of defaulted debt, reports Dow Jones. The delay comes as the bank is awaiting approval of the documentation for its offer by the securities regulator in Italy, where certain bonds are registered. Banco Hipotecario now expects approval from the regulator on Oct. 10 and that the expiry of Italian offers will now occur on Nov. 3. Due to delay, the bank said it has extended until Oct. 24 an early payment date that is incorporated into the entire offer. Previously, creditors had the option of agreeing to the offer by Sept. 15 to avoid a 10% haircut on the capital value of their bonds. Meanwhile, the final expiry date for international offers has now been extended to Nov. 3, Banco Hipotecario said. However, until the documentation has been approved in Italy, Italian responses to the offer will not be accepted, the bank said. In a filing made to the stock exchange last month, the bank stated it is offering to exchange all of its dollar- and euro- denominated debt for bonds of the same value and currency, but with a longer maturity and lower interest rate. The offer involves swapping various existing bonds that expire from this year through 2008 for new securities that would fall due in 2013, a move that analysts said would significantly reduce its immediate debt servicing requirements. The longer-term bonds would pay interest of 3% to 6%, less than the 8% to 13% of the existing paper. Creditors accepting the offer may also choose to take a payment in cash equal to 45% of the face value of their bonds. They can also opt to swap the 2013 securities for a government bond with a shorter life of seven years, but would take a 30% haircut. Banco Hipotecario is 44% owned by the Argentine government. The other main shareholders are local real estate giant IRSA Inversiones y Representaciones S.A. and an investment fund owned by financier George Soros. Prior to the Argentine financial crisis, the bank was a leader in the individual residential mortgage loans segment, with a total portfolio of more than US$4 billion, and a market share of around 40%. BATTAGION: Court Declares Official Bankruptcy --------------------------------------------- Battagion S.R.L., which is domiciled in the Argentine province of Mendoza, enters bankruptcy on orders from the province's Civil and Commercial Tribunal. Mendoza's Court No. 3, which handles the Company's case, assigned Mr. Roberto A. Pala as receiver for the process. His duties include the verification of credit claims, and preparation of the individual and general reports. However, the source did not reveal whether the court has set the deadlines for these processes. The Company's assets are expected to be liquidated at the end of the bankruptcy process. Proceeds will be used to reimburse its creditors. CONTACT: Battagion S.R.L. Espana 124 Lujan de Cuyo Mendoza Roberto A. Pala Pedro Vargas 567 Mendoza CALDENIA Y ASOCIADOS: Starts Reorganization Proceedings ------------------------------------------------------- The Civil and Commercial Tribunal of Bahia Blanca approved a petition for reorganization filed by Caldenia y Asociados S.A., reports local news source Infobae. Local accountant, Mr. Luis Alberio, was assigned as the Company's receiver. The province's Court No. 1, which handles the case, ordered the receiver to verify creditors' claims until November 12 this year. Clerk No. 1 aids the court on the case. Aside from verifying creditors' claims, the receiver is also required to prepare the individual and general reports. However, Infobae did not mention whether the court has set the deadlines for the submission of these reports. CONTACT: Caldenia y Asociados S.A. Zelarrayan 640 Bahia Blanca Luis Alberio Moreno 317 Bahia Blanca COLEGIO MODELO: Receiver Due To End Proof of Claims Process ----------------------------------------------------------- The receiver for Colegio Modelo de Buenos Aires S.R.L. will prepare the individual reports for the Company's bankruptcy. The Troubled Company Reporter - Latin America earlier reported that the receiver, Mr. Juan Lewin is due to complete the credit verification process today. Buenos Aires Court No. 3, which holds jurisdiction over the case, expects the individual reports to be filed on November 13 this year. The receiver will also prepare an individual report on the process and have it ready by December 29. The city's Clerk No. 5 works with the court on the case. CONTACT: Colegio Modelo de Buenos Aires, S.R.L. Cochabamba 1601 Buenos Aires Juan Lewin Quirno 353 Buenos Aires CONFORT ESTILO: Reorganization Petition Gets Court's Nod -------------------------------------------------------- Confort Estilo S.R.L., which is based in Buenos Aires, will undergo reorganization after the city's Court No. 1 approved its motion for "Concurso Preventivo". Infobae relates that a local accountant, Mr. Luis Guevara was assigned receiver to the case. He will verify creditors' claims until October 30 this year. After that, he will prepare the individual reports, which must be submitted to the court on December 12, followed by the general report on February 25 next year. The court also called for an informative assembly to be held on August 12 next year. CONTACT: Luis Guevara Ayacucho 242 Buenos Aires CONINGAS: Receiver Prepares Individual Reports ---------------------------------------------- Today is the last day for credit verifications for the bankruptcy of Argentine company Coningas S.A., according to an earlier report by the Troubled Company Reporter - Latin America. The court-appointed receiver, Mr. Antonio Grinblat, will prepare the individual reports, which must be submitted to the court on November 13 this year. The receiver will also prepare a general report, to be passed on December 30. The Company's assets will likely be liquidated at the end of the process to reimburse its creditors. CONTACT: Coningas S.A. Evita 373 Madero Arnoldo Grinblat Perdo B Palacios 1380 Ramos Meija DISCO: Cencosud Expects Buyer Shortlist By Year-End --------------------------------------------------- Laurence Golborne, Chief Executive Officer at Cencosud, said that the Chilean retailer expects a short-list for Dutch peer Royal Ahold's Argentine Disco supermarket chain to be compiled by the end of this year, relates Dow Jones. Cencosud is participating in the bidding for Disco's 236 stores in response to an invitation by Dutch bank ABN Amro, which is managing the sale. However, Golborne wouldn't say how much Cencosud was willing to offer for the Disco stores. Golborne said he didn't know how many other bidders are involved. Market speculation puts the price tag on Disco at between US$250 million - $400 million. EL CORCHO: Receiver Analyzes Claims For Bankruptcy Process -------------------------------------------------------- Stamati Luis Horacio Stamati, the designated receiver for the bankruptcy of Buenos Aires company El Corcho S.A., will verify creditors' claims until November 26 this year. A report by local news source Infobae indicates that the city's Court No. 10 issued the bankruptcy order. Upon completion of the verification process, the receiver will prepare the individual reports, which are to be submitted to the court on February 12 next year. The general report should follow on March 3. CONTACT: Luis Horacio Stamati Ave Rivadavia 3320 Buenos Aires ESTIMAQ: Court Assigns Receiver For Bankruptcy Process ------------------------------------------------------ Buenos Aires Court No. 15 assigns Mr. Jorge Oddi as receiver for bankrupt Argentine company Estimaq S.A., reports local news portal Infobae. Working with Clerk No. 30, the court ruled that the Company is "Quiebra Decretada". Creditors are given until December 12 to have their claims authenticated by the receiver. After that, the receiver will prepare the individual reports, and then the general report. However, the source did not mention whether the court has set the deadlines for the submission of these reports. CONTACT: Estimaq S.A. Corrales 2435 Buenos Aires Jorge Oddi Manuel Trelles 2350 Buenos Aires GOMERIAS MARCOS: Proof of Claims Filing Period Ends --------------------------------------------------- Mr. Marcelino Ovies, receiver for Gomerias Marcos S.A. closes the credit verification process for the Company's reorganization today, October 2, 2003. This means that the receiver is set to prepare the individual reports. According to an earlier report by the Troubled Company Reporter - Latin America, the Civil and Commercial Tribunal of Mar del Plata in Argentina gave the go signal to the Company's reorganization by approving its motion for "Concurso Preventivo". The province's Court No. 13, which holds jurisdiction over the case, also expects the receiver to prepare the general report. However, local sources did not reveal whether the court has set the deadline for the filing of the receiver's reports. CONTACT: Gomerias Marcos S.A. Ave. Colon 3469 Mar del Plata Marcelino Ovies 25 de Mayo 3727 Mar del Plata LAMITECNICA: Claims Verfication Closes Today -------------------------------------------- Ms. Patricia Narducci, receiver for Lomas de Zamora-based Lamitecnica S.A., will prepare the individual reports for the Company's bankruptcy. An earlier report by the Troubled Company Reporter - Latin America revealed that the deadline for credit authentication expires today. The province's Civil and Commercial Tribunal, which issued the bankruptcy order, expects the receiver to submit the individual repots on December 2 this year. She is also required to prepare a general report, to be submitted on February 19, 2004, after the individual reports are processed at court. The Company's assets will be liquidated at the end of the process to reimburse its creditors. CONTACT: Lamitecnica S.A. Liniers 271 Lanus, Lomas de Zamora Patricia Monica Narduzzi Rodriguez Pena 296 Banfield, Lomas de Zamora METROVIAS: Fitch Maintains Share Ratings at `3' ------------------------------------------------- Credit rating agency Fitch said that it maintained the ratings on shares of Argentine public transport company Metrovias at Category 3, reports Business News Americas. The analysis indicates the shares have low-liquidity shares but the company maintains a good capacity to generate profits. The Company, a division of local infrastructure and services company CLISA, posted a ARS100,000 (US$34,000) net loss in the first semester, compared to a ARS15.1 million net loss in the first half of last year, due to increased efficiency through procedural and cost adjustments. N Y H: Individual Reports Due For Filing Today ---------------------------------------------- The Civil and Commercial Tribunal of Concordia expects the receiver of Argentine restaurant services company N. y H. Bruno S.R.L. to file the individual reports for the Company's reorganization today. The receiver, Mr. Sergio Daniel Argoitia, prepared these reports after the credit verification process was completed last August 13. The court also ordered the receiver to prepare a general report after the individual reports are processed at court. This report should be file on November 14. The informative assembly, which is one of the last steps in reorganization, will take place on March 1 next year, local sources say, without indicating the venue. CONTACT: N. y H. Bruno S.R.L. 1 de Mayo 59, Concordia, Entre Rios Mr. Sergio Daniel Argoitia Andrade 124 Concordia NSC: Court Gives Approves Reorganization Process ------------------------------------------------ Buenos Aires Court No. 26 approves a motion for "Concurso Preventivo" filed by local company NSC S.A., according to a report by Argentine news portal Infobae. The Company will now undergo reorganization. A local accountant, Ms. Maria Cosoli, was assigned as the Company's receiver, the report adds. She will verify creditors' claims until November 3 this year. The receiver will prepare the individual reports after the credit verification process is completed. These reports are to be presented to the court on December 16, followed by the general report the general report on March 2. The court has called for an informational assembly to be held on June 24 next year, Infobae, adds without revealing the venue. CONTACT: Maria Cosoli Uruguay 750 Buenos Aires PETROBRAS ENERGIA: Posts Oil, Gas Production for August 2003 ------------------------------------------------------------ Petrobras Energia Participaciones S.A. (Buenos Aires: PBE, NYSE:PZE), controlling company with a 98.21% stake in Petrobras Energ�a S.A. (Buenos Aires: PESA), announced Petrobras Energia S.A.'s oil and gas average production for August 2003. Oil & Gas Average Production (*) (thousands of boe/day) Aug03 - Oil Argentina 57,2 - Oil Venezuela 42,5 - Oil Peru 11,7 - Oil Bolivia 1,5 - Oil Ecuador 4,6 Total Oil Production 117,5 - Gas Argentina 38,4 - Gas Venezuela 3,7 - Gas Peru 1,5 - Gas Bolivia 6,1 Total Gas Production 49,7 Total Oil & Gas Production 167,2 (*) Includes consolidated & nonconsolidated operations PLAZA AUSTRIA: Receiver Reviews Creditors' Claims ------------------------------------------------- The credit verification process for the reorganization of Argentine company Plaza Austria S.A. will end of November 5 this year. Local news source Infobae relates that the Company's receiver, Ms. Lydia Podliszewski, will check the claims. The receiver will prepare the individual reports after the verification process is completed. These reports are to be presented to the court on December 17 this year. The court expects a general report on March 1 next year. This is to be prepared after the individual reports are processed at court. On July 5, 2004, the informative assembly will take place, the source adds. CONTACT: Lydia Podliszewski Ave. Rivadavia 3356 Buenos Aires TELEFONICA DE ARGENTINA: To Sell Radio Movil To Nextel ------------------------------------------------------ Telefonica Moviles Argentina SA, the cellular division of Telefonica de Argentina SA, signed a contract to sell 100% of trunking operator Radio Movil Digital Argentina to Nextel Communications Argentina SA and NII Holdings Inc.. In a filing to the Buenos Aires stock exchange Tuesday, Telefonica Moviles said the transaction worth US$13 million will be "subject to a suspended condition" until it receives approval from Argentina's Secretary of Communications and the National Commission of Defense of Competition within the time frame of one year. When approval is granted, Nextel will pay 65% of the sum and hand over the remaining amount within another six months, the Company said. Telefonica de Argentina is a subsidiary of Spanish telecom Telefonica SA. * Argentine Banks Vow To Extend Financial Help To Government ------------------------------------------------------------ A group of Argentine banks signed an agreement Monday at President Nestor Kirchner's office to provide ARS500 million in special loans to finance public works programs, reports Dow Jones. The initiative, drawn up by the Association of Private Argentine Capital Banks (Adeba), involves 17 banks and is specifically targeted at highway projects. Among the banks are Banco Bansud S.A., which along with its parent Grupo Macro S.A., agreed to lend US$155 million, and Grupo Financiero Galicia S.A. unit Banco Galicia S.A., which is lending US$50 million. The agreement, according to Dow Jones, sets up the first case of voluntary lending to the Argentine government since it went into default in December 2001. ============= B O L I V I A ============= BANCO DE CREDITO: Moody's Assigns Initial Ratings ------------------------------------------------- Moody's Investors Service assigned first-time ratings to Banco de Credito de Bolivia S.A. - Long term foreign currency deposit rating Caa1 - Short term foreign currency deposit rating Not Prime - Global local currency deposit rating Caa1 - National scale rating A1.bo - Bank financial strength rating E The foreign currency deposit ratings are at Moody's foreign currency country ceilings for Bolivia's bank deposits. Global local currency deposits for Bolivia are rated the same as foreign currency deposits reflecting the banking system's high level of dollarization coupled with the country's weak financial resources and operating environment. The national scale rating of A1.bo reflects the importance of Banco de Credito's retail franchise to the banking system as well as the financial and management support of its parent, Banco de Credito del Peru. The bank's E financial strength rating, Moody's opinion of a bank's intrinsic creditworthiness, reflects its weak financial fundamentals and continuing need for external support, as is the case for most banks in Bolivia. =========== B R A Z I L =========== ELETROPAULO METROPOLITANA: Initiates Debt Talks With Creditors -------------------------------------------------------------- Eletropaulo Metropolitana SA, Latin America's biggest power distributor, kicked off Tuesday debt negotiations with 35 private bank creditors, reports Reuters. The talks, which the unit of U.S. power firm AES Corp. hopes to conclude by December 15, focus on the rescheduling of BRL2.5 billion (US$863 million) in debt, part of which Eletropaulo had already defaulted. According to Eletropaulo President Eduardo Bernini, the Company is seeking an agreement with the creditors, under which Eletropaulo would pay back its dues in four installments between 2006 and 2008, extending maturities on most of its debt. "The company feels better for having taken this step, just as the financial market feels more receptive to the (rescheduling) proposal," Bernini said. "The problem is not the size of Eletropaulo's debt, but its concentration in 2003, 2004 and 2005," he added. The rescheduling, according to Reuters, is divided into "commercial paper" totaling US$67 million, an additional US$519 million of debt and US$266 million of credit lines. It also includes US$305 million representing the balance of a loan from a syndicate of 15 banks, led by BankBoston. Half of the BRL2.5-billion debt would mature in the next 12 months. Eletropaulo's total debt is BRL5.3 billion. CONTACT: ELETROPAULO METROPOLITANA Avenida Alfredo Egidio de Souza Aranha 100-B, 13 andar 04726-270 San Paulo Brazil Phone: +55-11-548-9461, +55 11 5696 3595 Fax: +55-11-546-1933 URL: http://www.eletropaulo.com.br Contacts: Luiz D. Travesso, Chairman and President Orestes Gonzalves Jr., VP Finance/Investor Relations EMBRATEL: Carriers Get Inflation-Indexed Rate Clarification ----------------------------------------------------------- Last Friday (September 26), judge Rodrigo Navarro de Oliveira of the 2nd Federal Court of the Federal District issued a decision, in reply to an appeal filed by Embratel, which clarified the content of the former decision (of September 11) concerning the application of the variance of the Amplified Consumer Price Index (IPCA) to the calculation formula provided on the concession agreements entered into by Anatel and the telephone utility companies. The consumers are directly benefited by such decision. For instance, while another carrier was applying the full rate of 17.24% for all its telephone services, Embratel had already been adjusting its services in conformity with the legal decision, applying the IPCA to the formula of the concession agreements, coming to an average adjustment of 12.55% for Long Distance Domestic calls, and 0% for Long Distance International calls. The reason is that the formula contemplated in the concession agreements does not authorize any telephone company to adjust its target-rates and its network rates through the maximum ratio of the indexation - either 30.05% in case of utilization of the IGP- DI, or 17.24% in case of the IPCA. The judge's decision affects the interconnection rates as well (charged by the carriers for the use of their networks) and therefore the full IPCA adjustment does not apply to them as well. According to Embratel's Legal Director Cl udia de Azer�do Santos, Empresa Brasileira de Telecomunica�oes has complied with the decision from the beginning, by using the IPCA to replace the ratio contemplated in the formula of the concession agreements - however keeping in mind that the adjustment ratio of the telephone rates ratified by Anatel (IGP-DI) is the legitimate one because it was the ratio agreed upon in the concession agreement entered into with Anatel. Embratel is the premium telecommunications provider in Brazil, offering a wide range of telecommunication services, such as advanced voice, high-speed data transmission, internet, data communication by satellite and corporate networks. The company is national leader in data and internet services, in a privileged position to become the Latin American carrier with an all- distance network. Embratel network has national coverage with almost 17,500 miles of optic cables, representing around one million miles of fiber optics. CONTACT: EMBRATEL Advertising, Press and Public Relations Department Further information: (02121) 2121 7837 / 2121 6291 Fax: (02121) 2121 7791 Mid-West- Phone: (02161) 242-9058 / 2845 / 916-9188 Attention: Flavio Resende E-mail: cmsocial@embratel.net.br Embratel on the internet: www.embratel.com.br GERDAU: To Invest R$626 Million In Rio Grande Do Sul ---------------------------------------------------- The Gerdau Group will invest R$ 626 million over the next four years in the technological modernization of the Gerdau Riograndense and Gerdau A�os Finos Piratini steel mills, both of which are located in the state of Rio Grande do Sul. Of this total, R$ 348 million will be destined for Gerdau A�os Finos Piratini, manufacturer of specialty steels for the domestic market. Based in the city of Charqueadas, 80% of the unit's production is targeted at the automotive sector. The primary investment in the plant will be the installation of rolling mill equipment that will contribute to increase the annual production capacity of finished products by 200,000 tons, for a total production capacity of 500,000 tons. In 1992, when the Gerdau Group acquired the unit, the annual production consisted of approximately 100,000 tons of specialty steels and 60,000 tons of common steels. Currently, 100% of the unit's production consists of specialty steels. A total of R$ 278 million is planned for Gerdau Riograndense, and the highlight of the investment will be the installation of a new set of drawing mills. This will result in the improvement of the product line with higher value added products- oval-shaped wires for cattle raising and wires for agricultural (more specifically fruit crops) products. "These investments reflect the company's position of consolidating the competitive efficiency of the Gerdau mills in Rio Grande do Sul in terms of the main segments of the Brazilian economy," said Gerdau Group president Jorge Gerdau Johannpeter. -- Investments in automation systems reinforce Total Quality practices at the steel mills -- Of the total investment, 13% will be directed at the implementation of various new automation systems in the two units, such as the Manufacturing Execution System (MES) Project, which provides a comprehensive overview of all stages of the production process. This automation process allows for detailed follow-up in the management and industrial areas. The financial resources also include the installation of technology to supplement the SAP R/3 integrated management platform, such as, for example, improvements in the Product Identification System. Such technological additions ensure the quality and accuracy of the product shipment process through the use of bar code readers. Also planned is the update of the infrastructure to fit the new technological configuration of the plants, in addition to the technical training of the personnel who will operate the systems. In the environmental area, the investments in the two mills total R$ 38 million and are mainly directed at the adjustment of atmospheric and water protection systems for the new production capacities. GERDAU ACOS FINOS PIRATINI -- Rolling mill will have a new reheating furnace -- Investments in Gerdau Acos Finos Piratini will be directed at the rolling mill, finishing, quality inspection and environmental areas. At the rolling mill, where steel is transformed into final products, a new billet reheat furnace will be installed, and the bar cooling beds will be expanded. The reheat furnace is used to elevate the temperature of the billets produced at the melt shop to a temperature of 2,192 �F, which permits hot rolling. The cooling beds are used during the final stage of the rolling process, effectively reducing the temperature of the products so that the specified quality is maintained. The new equipment, in addition to increasing the production capacity, will also increase the steel yield and optimize operational costs. Due to the investments, the constructed steel mill area will be expanded by nearly 5,000 square meters. The additional area will also be used for storage and shipment. During the heat treatment stage- when the characteristics of the steel being produced are adjusted through controlled reheating and cooling - there will be an increase of approximately 30% in production capacity. The installation of yet another inspection line for rolled bars is planned to keep pace with new production volumes, since 100% of products are inspected before being delivered, guaranteeing their quality. Inspection lines ensure that clients can use Gerdau steel directly on the automotive industry production line, without the need for further quality inspections. -- Resources to guarantee air quality reinforce the commitment with sustainable development -- The efficiency of air quality protection practices will also be enhanced with the increased use of natural gas (a cleaner fuel than fuel oil) in the rolling and forging processes. It is during the forging stage that products with large gauges (200mm - 500mm) are produced. GERDAU RIOGRANDENSE -- New galvanizing line increases durability of wires produced for agriculture -- The investment program for Gerdau Riograndense includes the installation of new high speed wire-drawing machines for wire production. In addition, the program allots resources for a new galvanizing line that will bring important gains for clients in the agricultural sector by increasing by up to 50% the durability of wire. The improved durability is the result of a thicker zinc layer covering for the products, which provides higher resistance to corrosion. In the meltshop, the continuous casting equipment (used to cast liquid steel into billets) will also be modernized to increase both the yield and quality of products. The use of natural gas will also be increased, permitting the reduction of electricity consumption in the electric furnace. The rolling mill will also improve product excellence with new investments geared toward the rebar and profile finishing line. To reinforce environmental protection practices, new dust removal system technologies will be incorporated over the coming years. The dust removal system filters the solid particles and gases generated during the steel production process with high efficiency. Also planned for the environmental area is the adjustment of the process water treatment and re-circulation system due to the modernization of the continuous casting process. This equipment treats and allows the reuse of waters used in the production process and has already reached a re- circulation rate of 95%. CONTACT: Press Office +55(51) 3323-2170 imprensa@gerdau.com.br www.gerdau.com.br ========= C H I L E ========= CAP: To Receive $150M Syndicated Loan ------------------------------------- In mid October, Chilean iron and steel company Compania de Aceros del Pacifico (CAP) will be granted a US$150-million syndicated loan it will use to refinance its debt, local newspaper El Diario reports. The loan will have semi-annual interest and principal payments and a 2.5-year grace period. CAP ended the first half of the year with a total debt of US$367 million, falling from the US$424 million it owed in December 2002. The Company has been facing a difficult situation as a result of low iron prices, an unfair competition from Turkey and other countries, as well as the subsidies granted by developed countries. =============== C O L O M B I A =============== AVIANCA: Chilean Airline Considers Stake ---------------------------------------- Chilean airline LanChile SA told the country's securities regulators that it is mulling an ownership position in Colombian airline Avianca (Aerovias Nacionales de Colombia S.A.), relates Dow Jones Business News. "We have received an invitation from people with ties to Avianca, which has led to preliminary conversations with it, to evaluate the company," LanChile said. However, no decision on a stake or takeover has been taken, nor have any possible financial effects on LanChile been evaluated, it added. Founded in 1919, Avianca is one of the oldest airlines in the world. The carrier filed for chapter 11 protection on March 21, 2003, with estimated debts and assets of more than US$100 million each. ============= E C U A D O R ============= PETROECUADOR: Extends Insurance Bidding Deadline Once Again ----------------------------------------------------------- In an effort to attract more companies to bid for its insurance policies, Ecuador's state oil company Petroecuador extended the bidding deadline from September 29 to October 7, Business News Americas reports, citing Petroecuador's assistant finance manager Monica Alvarez. The deadline has been extended several times since the original August 27 deadline because bidders have requested more time to find reinsurers for their policies. Alvarez said four companies -La Union, Colonial, Rocafuerte and Panamericana- have bought bid rules so far, but according to the executive, other companies can still buy. Petroecuador will study the bids and award the contract in mid-October, she added. Petroecuador is seeking coverage of up to US$500 million. Its assets are now valued at US$3.6 billion. Petroecuador's current insurer is Colonial, which agreed to extend its insurance policy for another 30 days to October 27 to give Petroecuador enough time to choose a winner. ============= J A M A I C A ============= FISCAL SERVICES: Continues To Report Losses ------------------------------------------- Jamaican state-run company Fiscal Services Limited (FSL) swims deeper into red, the Jamaica Gleaner suggests. According to information contained in Ministry Paper #59/03, FSL incurred a deficit of $15.12 million for the year ended March 31, 2002, nearly $3 million more than the shortfall recorded in 2001. The document, which was tabled in the House of Representatives last Tuesday, explained that the shortfall was "due mainly to a $38.78 million increase in expenditure which grew to $250.88 million." "Staff related costs of $174.75 million, representing 78 per cent of total expenses increased by $29.73 million, due primarily to the recruitment of 22 additional members of staff," the Ministry Paper added. The Ministry Paper recalled that FSL was established in 1985 to provide "efficient, cost effective, quality information systems and support services primarily to the Revenue Departments and other government agencies as directed by the Ministry of Finance and Planning." =========== M E X I C O =========== AEROMEXICO: Negotiates With Union To Avert Planned Strike --------------------------------------------------------- Aeromexico, Mexico's leading airline, is currently in talks with union pilots to avert a strike scheduled for Wednesday, Reuters reports, citing Aeromexico spokesman Mario Maraboto. The Union Association of Aviation Pilots of Mexico has demanded a 7% wage hike for its 830 affiliates. However, Aeromexico said it could not afford to raise pay at all due to its dire financial status. The Company posted a US$160-million loss for the first half of this year on the back of high operating costs, a fall in ticket sales and high fuel costs, "We can't offer any wage increase for the same reason we haven't done with air stewards or ground staff," Maraboto said. Meanwhile, the union's press representative, Francisco Ezquivelzeta, said there was little likelihood of a strike but that the pilots had not received a wage hike for nearly two years. GRUPO IUSACELL: Reveals 2-Year, $300M Investment Plan ----------------------------------------------------- Mexican mobile phone operator Grupo Iusacell, which was recently bought by media mogul Ricardo Salinas, revealed Tuesday it is planning to invest about US$300 million to develop its network over the next two years. Citing Iusacell Chief Executive Gustavo Guzman, Reuters reports that the Company plans to offer Wi-Fi access services, which allow wireless connection to the Internet in Mexico City in early 2004. Prodigy, the main provider of Internet services and a unit of leading telecommunications company Telefonos de Mexico, is the only commercial provider of Wi-Fi services in Mexico. It charges non-Prodigy customers about US$21 a month for the service. For current users of Prodigy's dial-up and high speed Internet, the monthly charge for Wi-Fi access can range from free to about $10. CONTACT: Grupo Iusacell S.A. De C.V. Prolongacion Paseo dela Reforma 1236 Col Santa Fe Delegacion Cuajimalpa 05348 Mexico Distrito Federal Mexico Phone: +52 5 109 4400 Home Page: http://www.iusacell.com.mx GRUPO MEXICO: Shareholders OK Rights Offering for New Funds ----------------------------------------------------------- Shareholders of Grupo Mexico approved Tuesday the Mexican copper mining and railroad company's proposal to increase capital by MXN2.77 billion (US$252mn) via a rights offering. The approval allows Grupo Mexico to issue 213.4 million new class B shares to stockholders at a rate of one new share per 3.05 shares held. The price of each new share will be MXN13. Earlier, Grupo Mexico, the world's third-largest copper producer, said the additional capital will be used to "improve its financial structure, reduce debt and optimize its financial and operating performance." The Company completed its financial restructuring earlier this year when mining subsidiary Grupo Minero Mexico (GMM) concluded and signed an US$879-million deal with institutional investors and banks. The news followed credit repayment of US$550mn by another G-Mex subsidiary, US copper producer Asarco, on March 31. TFM: Fitch Lowers Debt Ratings to 'B+' from 'BB-' ------------------------------------------------ Fitch Ratings has downgraded the foreign and local currency senior unsecured debt ratings of TFM, S.A. de C.V (TFM) to 'B+' from 'BB-'. The Rating Outlook for these ratings is Stable. The rating action applies to TFM's $150 million senior notes due 2007, $443 million senior notes due 2009 and $180 million senior notes due 2012. The rating action reflects the combination of the termination of the announced acquisition of TFM, S.A de C.V (TFM) by Kansas City Southern (KCS) and TFM's weaker than expected financial performance. Originally, the transaction was viewed as a mild positive to the extent that it would ultimately have replaced controlling shareholder Grupo TMM, S.A. (TMM), which is currently under financial distress, with KCS, which is financially stronger albeit highly leveraged. TMM is currently in payment default as it did not pay its $177 million bullet maturity on May 15, 2003 after failing to complete a bond exchange offering. Fitch does not currently rate TMM's outstanding bonds. In August 2003, TMM announced that its board of directors notified KCS of the termination of the acquisition transaction after its shareholders voted not to approve the sale of its controlling stake in TFM to KCS. KCS is proceeding with legal action against TMM as the controlling TMM shareholders had agreed to the acquisition and de facto voted for the transaction; the outcome of the litigation is uncertain. The current conflict between TFM's shareholders holds the potential to distract and divert management time attention away from operating the railroad as well as negotiating the best possible outcome with the Mexican government regarding the pending value-added tax payment to TFM and the government's sale of its stake in TFM. The challenges facing TFM shareholders, such as TMM's default and the potential legal battle between TMM and KCS also could lower financial flexibility and liquidity at the operating company, due to the greater perceived risks associated with the disputing shareholder groups. Positively, TFM does not have significant financing needs until 2007. TFM's financial performance has deteriorated over the past several quarters. TFM's gross interest coverage, as measured by EBITDA/Interest, declined to about 2.0 times (x) during the first six months 2003 compared to 3.0x during the first six months 2002. During the same period, Debt/EBITDA weakened to 4.6x from 4.2x. The decline in credit protection measures is a result of weaker profitability caused by weak cargo demand from the Mexican automotive sector and higher fuel costs, and the depreciation of the Mexican peso against the U.S. dollar. In April 2003, TMM had announced an agreement to sell its 41% economic stake and controlling interest in TFM to minority shareholder KCS to generate much-needed cash. KCS and the Mexican government currently own 39% and 20% economic stakes in TFM, respectively. Under the proposed structure, TFM and KCS would have been held by a new holding company named NAFTA Rail. According to the terms of the agreement, TMM would have received $200 million in cash and a 22% economic stake (20% voting stake) in NAFTA Rail. In addition, TMM could have received an incremental payment of between $100 million and $180 million based on the resolution of a tax-related legal dispute between TFM and the Mexican government. The transaction was subject to approval by the appropriate regulatory agencies, TMM bondholders, and TMM/KCS shareholders and was initially expected to close in 6 to 9 months. TFM has a solid business position as the largest railroad in Mexico, long term growth opportunities in the North American market, and a moderate financial position. Five years after privatization, TFM has improved the operating efficiency of its rail network and achieved relatively high profitability margins. During 2002, TFM had revenues of $712 million and EBITDA of $259 million. TFM had total debt of $966 million at June 30, 2003. TFM has little refinancing risk as more than 90% of debt is long term. CONTACT: Anita Saha, CFA +1-312-368-3179, Chicago Guido Chamorro, +1-312-368-5473, Chicago MEDIA RELATIONS: James Jockle +1-212-908-0547, New York VITRO: Moody's Assigns B2 Rating to $250M of Notes -------------------------------------------------- Moody's Investors Service issued a B2 rating to the US$250 million proposed senior notes of Mexican glass producer Vitro S.A. de C.V. and confirmed existing ratings. In addition, it changed Vitro's ratings outlook to negative from stable. The ratings recognize Vitro's ability to weather its adverse operating environment which is primarily caused by spikes in natural gas and utility costs that exceeded expectations, increased competition from large off-shore multinationals, and prolonged economic malaise throughout its geographies. The ratings continue to reflect weak free cash flow relative to its sizable debt, high financial leverage, and thin coverage of interest expense after capital expenditures. Given the pressures on volume and profitability, the ratings are particularly sensitive to any further erosion in interest coverage, increased financial leverage, and/or further deterioration of liquidity. The change in the ratings outlook to negative from stable primarily reflects the absence of cushion under credit statistics to withstand further tightening and remain at current rating levels. The ratings are subject to the review of final executed documentation. Proceeds from the proposed bond issue are intended to call and/or repurchase some portion, if not all, of the existing US$218 million (US$250 million at issuance) 11 3/8% senior notes, due 2007 and use the remaining funds to permanently reduce short and medium term debt and to pay related fees. Upon completion of the proposed bond issuance, Moody's will withdraw the B2 rating of the 11 3/8% notes and make the necessary ratings assessment of the coupons, if any. Moody's does not rate the bank debt at Vitro or its subsidiaries, however there is concern regarding possible covenant violations of certain existing unsecured bank facilities given the current reduction in operating and financial performance. At the time of this review, Vitro was in the latter stages of negotiations with the banks to possibly receive waivers and permanently reset certain compliance hurdles. While Vitro's working capital needs and maintenance capital expenditures are expected to be met with internally generated funds, Moody's expresses some concern about near term liquidity as it relates to covenant compliance. Vitro, S.A. de C.V., through its subsidiaries, is a leading global producer of glass serving multiple product markets including construction and automotive lass; fiberglass; food and beverage, wine, liquor, cosmetics and pharmaceutical glass containers; and glassware for commercial, industrial and retail uses. ============= U R U G U A Y ============= UTE: Accord With Rima Over Power Price Proves Elusive ----------------------------------------------------- Uruguay's state power company UTE has agreed to supply power to Brazilian company Rima for a period of eight years as part of the latter's plan to build a metallic silicon project in Uruguay's Durazno department. But according to Business News Americas, the companies are yet to reach an agreement over power prices. UTE had previously been reluctant to commit itself to supplies for more than six years, as changes in the power market could make such a long-term deal unprofitable. Rima chairman Ricardo Vicintin criticized UTE's stance, saying that it had wanted a risk-free contract, despite standing to profit US$74 million over eight years in the event of high hydro power generation levels under Rima's proposal, or lose a maximum of US$3 million in the worse-case scenario. Rima will make a final decision on the project in 30-45 days, Vicintin said. *********** 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 America 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 * * *