/raid1/www/Hosts/bankrupt/TCRLA

/raid1/www/Hosts/bankrupt/TCRLA_Public/031105.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, November 5, 2003, Vol. 4, Issue 219 Headlines A R G E N T I N A AT&T LATIN AMERICA: Court Approves Sale of Assets To Telmex BANCO FRANCES: Acquires Stake In Financial Co. For $11.9M BANCO FRANCES: S&P Rates $1B of Bonds `raD' BUENA LUNA: Credit Check in Bankruptcy Process Ends December 26 CAISSA: Court Assigns Receiver For Reorganization CHACINADOS TACURAL: Court Approves Reorganization Petition CLISA: Bonds Rated `CCC(arg)' by Argentine Fitch DINTRALCHA: Credit Check in Bankruptcy Process Closes Today ESAPEL: Court Orders Bankruptcy EVENTOS Y COMPETENCIA: Court Orders Bankruptcy EZEMAR: General Report Due at Court Today FORTIN CASTRE: Court Approves Bankruptcy Petition PAZTES: Enters Bankruptcy on Court's Order PETROBRAS ENERGIA: Reports On Sales Volumes & Ave. Sales Prices PLAZA AUSTRIA: Receiver Closes Credit Check in Reorganization SITRANS: Credit Verification Period Ends Today TGN: Reports Losses of ARS192.6M in First Nine Months of 2003 B R A Z I L CEMIG: Sees Financial Turnaround Despite Poor Economic Scenario MRS LOGISTICA: Ratings Remain Despite Strong 3Q03 Results TELEMAR: Board Appoints New Chairman TELEMAR: S&P Rates Telemar Participacoes Notes 'B+' C H I L E ENDESA CHILE: In Transmission Dispute With Los Pelambres ENERSIS: Registers A Profit Of $25,537M TELEFONICA CTC: To Lower Next Year's Investments C O L O M B I A CAJANAL EPS: Faces Threat of Liquidation D O M I N I C A N R E P U B L I C BANCO BHD: Fitch Changes Support Rating to `5' from `4' BANCO DOMINICANO: Individual Rating Downgraded to `D/E' BANCO POPULAR: Fitch Places LTFC Rating on Rating Watch Negative BANCREDITO: Fitch Downgrades LTFC Rating To `B-' E C U A D O R PETROECUADOR: Energy Ministry Invites Bids For Oil Fields J A M A I C A AIR JAMAICA: NWU Still Having Trouble Representing Employees P E R U * IMF Approves $40M Disbursement To Peru V E N E Z U E L A CANTV: Board Of Directors Proposes Dividend Payment CANTV: Merrill Lynch Starts Coverage With "Buy" SIDOR: Union Workers Threaten To Go On Strike - - - - - - - - ================= A R G E N T I N A ================= AT&T LATIN AMERICA: Court Approves Sale of Assets To Telmex ----------------------------------------------------------- Telefonos de Mexico, S.A. de C.V. ("Telmex") announced Monday that the United States Bankruptcy Court for the Southern District of Florida approved the purchase agreement, dated October 23, 2003, as amended, between Telmex and AT&T Latin America Corp., relating to the purchase by Telmex of substantially all of the assets of AT&T Latin America Corp. "This acquisition is strategic for TELMEX since it allows us to have a growth platform in Latin America and take advantage of the synergies in voice, data and Internet services with Argentina, Brazil, Colombia, Chile, Peru and our operations in Mexico. Latin America is an area with great potential for the development of the telecommunications industry that is key for any modern economy. For this reason, our company is initiating a network integration in order to serve the different customers in the region, offering them telecommunications services with the quality and support that they need. We have the experience, the financial resources, the talent and dedication of our employees that can place these companies in a leadership position that confirms our long-term commitment regarding the development of telecommunications in the region." said Jaime Chico Pardo, TELMEX CEO. This transaction is subject to the compliance of several conditions and regulatory approvals and it is expected that they conclude during the first quarter of 2004. Telmex is the leading telecommunications company in Mexico with 15.4 million telephone lines in service, 2.2 million line equivalents for data transmission and 1.4 million Internet accounts. Telmex offers telecommunications services through a 74 thousand kilometer fiber optic digital network. Telmex and its subsidiaries offer a wide range of advanced telecommunications, data and video services, Internet access as well as integrated telecom solutions for corporate customers. More information about Telmex can be accessed on the Internet at www.telmex.com BANCO FRANCES: Acquires Stake In Financial Co. For $11.9M --------------------------------------------------------- Argentine bank BBVA Banco Frances SA (BFR) informed the Buenos Aires stock exchange that it completed Friday the purchase of a 50% stake in a financial services company from one of its subsidiaries, relates Dow Jones. In the statement, the Company revealed that it bought shares of PSA Finance Argentina Compania Financiera SA from Credilogros Compania Financiera SA for US$11.9 million. Crediologros is a division of Banco Frances created to extend credit and financial services to low-income consumers. Banco Frances, Argentina's fifth largest bank in terms of assets, is owned by Spanish firm Banco Bilbao Vizcaya Argentaria SA (BBV). CONTACT: BBVA Banco Frances SA 199 Reconquista Buenos Aires Argentina 1003 Phone: +54 11 4346 4000 Home Page: http://www.frances.com.ar Contacts: Jaime Guardiola Romajaro, Chairman BANCO FRANCES: S&P Rates $1B of Bonds `raD' ------------------------------------------- A total of US$1 billion worth of corporate bonds issued by Argentine bank BBVA Banco Frances S.A. received default ratings from the local branch of Standard & Poor's International Ratings, Ltd. on Monday. The rating was based on the Company's finances as of the end of June this year. Argentina's securities regulator, the Comision Nacional de Valores described the bonds as "Programa de Obligaciones Negociables". These were classified under "Program", but the maturity date was not indicated. S&P said that an obligation is rated `raD' when it is in payment default, or the obligor has filed for bankruptcy. The rating may also be issued when interest or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. BUENA LUNA: Credit Check in Bankruptcy Process Ends December 26 --------------------------------------------------------------- Creditors of bankrupt Argentine company Buena Luna S.R.L. must have their claims verified by the receiver before December 26 this year. Proofs of claim must be presented to the receiver, Mr. Juan Carlos Sanguinetti before the said date. The Company entered bankruptcy on orders from the city's Court No. 16. Clerk No. 31 aids the court on the case. CONTACT: Juan Carlos Sanguinetti Lavalle 1569 Buenos Aires CAISSA: Court Assigns Receiver For Reorganization ------------------------------------------------- Buenos Aires accountant Hugo Daniel Pantaleo is assigned as receiver for the reorganization of local company Caissa S.A., relates Argentine news portal Infobae. He is instructed to verify creditors' claims until November 28 this year. The individual reports, which are prepared upon completion of the credit verification process, must be submitted to the court on February 12 next year. The general report is to be filed on March 25, 2004. The city's Court No. 12 handles the Company's case, Infobae adds. Clerk No. 24 works with the court on the case. CONTACT: Caissa S.A. San Martin 201 Buenos Aires Hugo Daniel Pantaleo Avenida Corrientes 1450 Buenos Aires CHACINADOS TACURAL: Court Approves Reorganization Petition ---------------------------------------------------------- Court No. 1 of the Civil and Commercial Tribunal of Santa Fe in Argentina approved the motion for "Concurso Preventivo" filed by local company Chacinados Tacural S.R.L., relates local news source Infobae. The Company will start its reorganization process with Estudio Stringhini y Asociados as receiver. Creditors must have their claims validated by November 3 this year, after which the receiver will prepare the individual reports. The receiver will also prepare a general report after the individual reports are processed at court. The source, however, did not mention whether the court has set the deadlines for these reports. CONTACT: Chacinados Tacural S.R.L. Chaco 6349 Santa Fe Estudio Stringhini y Asociados Velez Sarsfield 3165 Santa Fe CLISA: Bonds Rated `CCC(arg)' by Argentine Fitch ------------------------------------------------ Fitch Argentina Calificadora de Riesgo S.A. rated bonds issued by CLISA `CCC(arg)' based on the Company's financial standing as of June 30 this year determined the given rating. The bonds, described as "Obligaciones Negociables con garant｛ (AGO 21-01-03, AD 23-01-03)", were worth a total of US$120 million. These are classified under "Simple Issue", and are set to mature on June 1, 2012. Fitch said that the given rating denotes am extremely weak credit risk relative to other issues in Argentina. Capacity for meeting financial commitments are solely reliant upon sustained, favorable business or economic conditions. DINTRALCHA: Credit Check in Bankruptcy Process Closes Today ----------------------------------------------------------- Ms. Maria Podesta, receiver for bankrupt Buenos Aires' Dintralcha S.A. closes the credit verification process today. As ordered by the court, the receiver will prepare the individual reports on the results of the verifications. Buenos Aires' Court No. 18 handles the Company's case with assistance from Clerk No. 36, Dr. Vivono, according to an earlier report by the Troubled Company Reporter - Latin America. However, the deadlines for the submission of the individual and general reports were not revealed. CONTACT: Dintralcha S.A. 5th Floor Cerrito 836 Buenos Aires ESAPEL: Court Orders Bankruptcy ------------------------------- Esapel S.A., a papermaker based in Buenos Aires, was declared bankrupt by Judge Gutierrez Cabello of the city's Court No. 7. Argentine newspaper Infobae relates that Clerk No. 14 Dr. Diaz Cordero aids the court on the case. The Company's creditor, Tensioactivos Americanos S.A., filed the bankruptcy petition on the Company's failure to pay its financial obligations. The designated receiver, Mr. Roberto Sapollnik, will verify creditors' claims until December 26 this year. He is also required to prepare the individual and general reports on the process. CONTACT: Esapel S.A. JR Velasco 116 Buenos Aires Roberto Sapollnik Parana 851 Buenos Aires EVENTOS Y COMPETENCIA: Court Orders Bankruptcy ---------------------------------------------- Buenos Aires Court No. 18 orders the bankruptcy of local company Eventos y competencia S.A., relates Infobae. Clerk No. 36 aids the court on the case. Creditors must present their claims to the receiver, Mr. Nestor Agustin Iribe, for verification. The verification period ends on December 22 this year, the source adds, without indicating whether the court has set the deadlines for the submission of these reports. CONTACT: Eventos y competencia S.A. Parana 123 Buenos Aires Nestor Agustin Iribe Avenida Corrientes 1250 Buenos Aires EZEMAR: General Report Due at Court Today ----------------------------------------- The general report for the bankruptcy process of San Isidro-based Ezemar S.A. must be submitted to the court today. The report was prepared by the Company's receiver, Mr. Jose Guillermo Lego, after the individual reports were processed at court. The Troubled Company Reporter - Latin America earlier revealed that the individual reports were due for filing at the court last September 30. These were prepared after the credit verification process was completed earlier in the year. The Company's assets will be liquidated at the end of the process to reimburse its creditors. Payments will be based on the results of the credit verification process. CONTACT: Ezemar S.A. Nazarre 1199 Pilar, San Isidro Jose Guillermo Lego L Martinez 276 Martinez, San Isidro FORTIN CASTRE: Court Approves Bankruptcy Petition ------------------------------------------------- Insolvency Judge Gutierrez Cabello approved a motion for the bankruptcy of local company Fortin Caste S.A., reports Argentine newspaper La Nacion. The Company's failure to pay its debts prompted its creditor, Banco Sidesa S.A., to file the petition. Working with Clerk No. 13, Dr. O'Reilly, the court assigned Mr. Jose Plantas as the Company's receiver. The court instructed the receiver to verify creditors' claims until December 30 this year. This part of the bankruptcy process determines the nature and amount of the Company's debt. CONTACT: Fortin Castre Malabia 1965 Buenos Aires Jose Plantas 4th Floor, Room 16 Ave Belgrano 1123 Buenos Aires PAZTES: Enters Bankruptcy on Court's Order ------------------------------------------ Argentine textile manufacturer, Paztes S.A., entered bankruptcy on orders from the city's Court No. 1, under Judge Dieuzeide. Clerk No. 1, Dr. Fernandez Garello, aids the court on the case. The bankruptcy order was issued upon the request of the Company's creditor. Local accountant Jose Larrory was assigned as the Company's receiver, relates Infobae. He will verify creditors' claims until December 30 this year. The receiver is also required to prepare the individual and general reports, but the source did not reveal the deadlines for these reports. CONTACT: Paztes S.A. Marcos Paz 2558 Buenos Aires Jose Larrory Viamonte 1348 Buenos Aires PETROBRAS ENERGIA: Reports On Sales Volumes & Ave. Sales Prices --------------------------------------------------------------- Petrobras Energ｛ Participaciones S.A. controlling company with a 98.21% stake in Petrobras Energ｛ S.A. announces sales volumes and average prices of the main products marketed by Petrobras Energ｛ S.A. Volumes and net average prices of the main products marketed Oil Sales Million of barrels Pesos/barrel 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Argentina 55,4 63,0 67,1 67,1 Venezuela 42,1 45,3 36,6 36,5 Peru 12,0 11,4 78,4 88,4 Ecuador 4,8 0,1 72,6 80,4 Bolivia 1,3 1,3 74,8 67,4 Total 115,6 121,1 57,5 57,7 Gas Sales Billion Cubic Feet Pesos/thousand cubic feet 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Argentina 205,0 256,6 2,09 1,83 Venezuela 23,4 28,8 1,72 1,63 Peru 8,0 8,6 6,02 8,00 Bolivia 36,3 35,9 5,43 5,44 Total 272,7 329,9 2,43 2,37 Petrochemical Products Sales Thousand Tons Pesos/Ton Argentina 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Styrene 13 6 2.085 2.851 Propylene 6 6 832 978 Polystyrene 16 13 2.905 3.019 SBR 13 13 2.861 2.603 Fertilizers 191 144 521 671 Total 239 182 901 1.068 Petrochemical Products Sales Thousand Tons Pesos/Ton Brasil 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Styrene 23 22 2.157 2.826 Polystyrene 25 26 2.775 2.920 Total 48 45 2.703 2.461 Refining Products Sales Thousand Cubic Meters Pesos/Cubic Meter 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Diesel Oil(M3) 211 177 638 623 Gasolines (M3) 28 39 767 726 Other Middle Dist.(M3) 5 4 732 742 Asphalts (TM) 21 9 521 566 Aromatic & Reform.(TM) 85 75 900 1.019 Other Heavy Products (TM) 91 99 567 587 Electricity Sales Gwh Pesos/Mwh 3鬞rim 2003 3鬞rim 2002 3鬞rim 2003 3鬞rim 2002 Combined Cycle 1.392 1.082 47,6 34,5 Hydro 406 310 30,9 24,6 Total 1.798 1.392 43,8 32,2 PLAZA AUSTRIA: Receiver Closes Credit Check in Reorganization ------------------------------------------------------------- Ms. Lydia Podliszewski, receiver for Argentine company Plaza Austria S.A., closes the credit verification process for the Company's reorganization today, November 5, 2003. The results of the verification process will be conveyed to the court through the individual reports, which are due for filing on December 17 this year. After the individual reports are processed at court, the receiver will consolidate the date gathered into a general report to be submitted to the court on March 1 next year. This report will also contain the receiver's opinions on the factors that prompted the Company to seek reorganization. The informative assembly will be held on July 5 next year, an earlier report by the Troubled Company Reporter - Latin America revealed without indicating the specific time or venue. CONTACT: Lydia Podliszewski Ave. Rivadavia 3356 Buenos Aires SITRANS: Credit Verification Period Ends Today ---------------------------------------------- The receiver for Buenos Aires' Sitrans S.A., Mr. Enrique Jose Battellini, has until today to verify credit claims. This part of the bankruptcy process clarifies the nature and amount of the Company's debts. The receiver will prepare the individual reports on the results of the verification process. These reports must be submitted to the court on December 17 this year. The receiver will also prepare a general report after the individual reports are processed at court. This report, due on March 1, 2004, is to contain a summary of the individual reports and the receiver's opinions on the factors that led to the Company's bankruptcy. CONTACT: Enrique Jose Battellini Parana 774 Buenos Aires TGN: Reports Losses of ARS192.6M in First Nine Months of 2003 ------------------------------------------------------------- Argentine gas distribution company, Transportadora de Gas del Norte (TGN), continues to swim in the red. According to a report released by local news source La Nacion, the ailing company reported losses of ARS192.6 million in the first nine months of 2003. Its net assets were negative at ARS1.237 billion, the report adds. TGN is a natural gas transporter serving northern and central Argentina. It is 29.4% owned by US-based CMS and 70.4% by the Gasinvest consortium of France's TotalFinaElf (27.2%), Argentina's Compania General de Combustibles (27.2%), Argentina's Techint (27.2%), and Malaysia's state oil company Petronas (18.4%). CONTACT: TRANSPORTADORA DE GAS DEL NORTE (TGN) Don Bosco 3672, (C120ABF) Buenos Aires, Argentina. Phone: (+54 11) 4959-2000 Fax: (+54 11) 4959-2242 Home Page: www.tgn.com.ar/ =========== B R A Z I L =========== CEMIG: Sees Financial Turnaround Despite Poor Economic Scenario --------------------------------------------------------------- Brazil's Minas Gerais state integrated power company Cemig saw a turnaround in its financial results in the first nine months of the year, according to Business News Americas. In a filing with the country's securities commission, the CVM, the Company reported a net profit of BRL813 million for the period, reversing a loss of BRL1.15 billion in the same period in 2002. Cemig saw the turnaround despite a negative economic scenario, which limited sales volumes for the first nine months of the year. Apart from that, that Company was also able to reduce debts through appreciation of the real against the dollar. Debts fell 12.4% from December 31, 2002 to BRL3.4 billion at September 30, 2003. CONTACT: COMPANHIA ENERGETICA DE MINAS GERAIS Luiz Fernando Rolla, Investor Relations Phone: + 011-5531-299-3930 Fax: + 011-5531-299-3933 E-mail: lrolla@cemig.com.br MRS LOGISTICA: Ratings Remain Despite Strong 3Q03 Results --------------------------------------------------------- Standard & Poor's Ratings Services said Monday that the ratings and outlook on MRS Log︿tica S.A. (MRS, local currency: BB- /Negative/--; foreign currency: B+/Stable/--) are not affected by the announcement of the company's results in third-quarter 2003. MRS continued reporting strong results, thanks particularly to iron ore exports, boosted by the extremely favorable Chinese demand. Additionally, the company has closed new contracts in other industrial segments (importation of zinc concentrate, containerized autoparts, market pulp) as part of its diversification strategy. Iron ore will continue accounting for the majority of tonnage (71% in 2003), but these new cargoes tend to contribute positively for MRS' already very strong margins. MRS reported an OLA-adjusted EBITDA margin of 52% in the first nine months of 2003, compared with 44% in the same period of 2002. Tariff increases and growing tonnage (up 17% in 2003) help explain the company's robust profitability, despite higher fuel costs. Standard & Poor's expects that MRS will sustain sound operating results to cope with its obligations and to finance capital expenditures, assuring the service quality and gradually diversifying cargo. In September 2003, the company reported a steady short-term debt of $101 million (including $57 million of principal amortization and interest on local debentures and $21 million of accrued lease obligations) compared with cash reserves of $58 million in the same period and EBITDA of $148 million in the first nine months of 2003. ANALYST: Reginaldo Takara, Sao Paulo (55) 11-5501-8932 TELEMAR: Board Appoints New Chairman ------------------------------------ Tele Norte Leste Participacoes S.A. announced that in a meeting held on October 29, 2003, TNE's board of directors accepted the resignation of Mr. Carlos Jereissati from his position as Chairman of the Board. All board members stressed the excellent work and dedication of Mr. Jereissati - who will remain a board member - during the one-year period he was in charge. During the same meeting, board member Mr. Otavio Marques de Azevedo was elected as the new Chairman of the Board, for the one-year period starting on November 01, 2003. Mr. Azevedo, 52 years, electrical engineering, has vast experience in the telecommunications industry in Brazil. He served as Executive Vice President of TNE, acting as Chief Executive Officer, right after the privatization process, from August 1998 to February 1999, and was responsible for the implementation of the first business plan for the new Company. In February 1999, he was elected a member of the consulting board of Anatel, acting as its chairman between February 2001 and February 2002. He is also the CEO of AG Telecom Participacoes, one of the major shareholders of Telemar Participacoes S/A, controlling shareholder of TNE. Mr. Azevedo was the Vice-President of Telebras from 1991 to 1992. TELEMAR: S&P Rates Telemar Participacoes Notes 'B+' --------------------------------------------------- Standard & Poor's Ratings Services said Monday that it assigned its 'B+' rating to Telemar Participacoes' up to $100 million senior unsecured notes program due 2005 (only a $50 million tranche to be issued in the next weeks). The proceeds will be used to strengthen the company's cash position in light of the put option (repactuacao) on its approximately $145 million local debentures due March 2004. Other debts at Telemar's level include debentures outstanding in the amount of $53 million due 2005, and other maturities in 2004 and 2005 in the approximate amount of $33 million. The underlying issuer rating reflects Telemar's 53% controlling participation in Tele Norte Leste Participacoes S.A. (TNL) (local currency, BB/Stable/--; foreign currency, B+/Stable/--) and 18% of its total capital, and the fact that TNL is Telemar's only source of cash. TNL's local currency ratings reflect the challenges of operating in the increasingly competitive landscape of the Brazilian telecom industry, the historically volatile economic conditions of the country, and the potential regulatory risks that affect all local telecom companies. These risks are partially mitigated by the company's dominant market position in the Brazilian fixed telephone industry, its increasing vertical integration, strong cash flows, and wide access to capital and bank debt markets. TNL's foreign currency rating is the same as that of the Federative Republic of Brazil. The 'B+' rating assigned to Telemar's notes is two notches below TNL's 'BB' local currency rating, which reflects the subordination of the notes to all debt at TNL's level. "The rating reflects Standard & Poor's expectation that TNL will continue to present adequate financial performance, with sufficient free cash flow to allow it to distribute the necessary dividend for Telemar to serve its debt obligations. The rating also reflects Standard & Poor's expectation that the proceeds from the notes will be maintained as cash reserves until the debentures' put option, and that Telemar's debt level will not increase," said Standard & Poor's credit analyst Jean-Pierre Cote Gil. Although mitigating part of existing refinancing risk at Telemar- by strengthening the company's cash position-the proceeds of its $50 million issue would not be sufficient to cope with the full repayment of the debentures in March 2004 if all investors choose to exercise the put option. Nevertheless, if such a scenario materializes, Standard & Poor's expects Telemar to be able to find other funding alternatives to resolve refinancing risk. Telemar currently enjoys adequate ability to access both the local and international bank and capital markets, which reflects a market perception that Telemar and TNL's risks are strongly correlated, and that TNL will upstream a fairly stable level of dividends in the next years. TNL's capacity to distribute dividends should only be constrained by its capacity to generate cash, since, besides the positive cash flow generation expected for 2003, TNL could also distribute dividends based on $1.5 billion of retained earnings until September 2003. Besides dividends from TNL, another source of liquidity to Telemar is the issuance and sale of new shares of TNL. Telemar is a holding company created to participate in Telebras privatization process and, as a result, the stake in TNL is the company's only significant asset. Telemar's controlling shareholders are the La Fonte Group, Andrade Gutierrez, GP Participacoes and Opportunity, each of whom own 11.3% of Telemar's total capital; other shareholders are BNDES (through BNDESPar), 25%; two insurance companies owned by Banco do Brasil S.A. (BB), 10%; and five major Brazilian pension funds headed by Previ (BB's pension fund), 19.9%. TNL is Brazil's largest telecom carrier, offering local, long-distance, and data services and wireless communications. The company holds 15.5 million fixed- line accesses in 16 states in the northern, southeastern, and northeastern regions of the country (so-called "Region I") through its operator, Telemar Norte Leste S.A. ("TMAR"). TMAR also operates a 100% digital PCS wireless network within the same 16 states, under the GSM technology, and other, smaller telecommunication-related entities. ========= C H I L E ========= ENDESA CHILE: In Transmission Dispute With Los Pelambres -------------------------------------------------------- Chilean generator Endesa Chile is now facing two allegations from local copper mine Los Pelambres, a US$1.36-billion open-pit mine in Region IV, which started producing commercially in early 2000. Business News Americas recalls that the two companies signed a power supply contract in 1996 and in 2002, Los Pelambres bought the line from Endesa for US$34 million in an agreement in which Endesa promised that the line was in perfect working order, and was designed and built according to the criteria in the power sales contract. But Los Pelambres claims that the line has design defaults, prompting it to file for arbitration to seek US$22.7 million to repair design faults, as well as US$6.4 million compensation. Endesa counters that the line was affected by storms in 2002, and so damages are due to force majeure rather than design faults. The Company has until November 10 to respond to this particular filing. In a separate issue, Los Pelambres is also calling for US$2.6 million damages from Endesa for supply cuts in 2001 and 2002. ENERSIS: Registers A Profit Of $25,537M --------------------------------------- As of September 30, 2003 Enersis made a profit of $25,537 million which corresponds to an increase of $8,079 million, or 46.3%, with respect to September 2002. In the operating area, the basis of the Company's business, we highlight the following increases in physical sales, in the distribution business: Chilectra 5.6% Edesur 3.7% Edelnor 2.0% Cerj 10.3% Coelce 6.6% Codensa 1.2% This signifies, on aggregate, a rise of 5% from 35,484 GWh to 37.243 GWh, in line with what we have been reporting with regard to the recovery of consumption of electricity after two years in which physical sales grew at rates of between 1% and 3%. In turn, physical sales in the generation business also rose by 6.1% from 36,293 GWh to 38.495 GWh. In all, the Operating Result amounted to $427,880 million, 7.2% less than that of the same period of the year 2002. This was due principally to the impact that the lower income from our Argentine distribution subsidiary, Edesur, and from the Brazilian distribution subsidiaries, Cerj and Coelce, had on operating items, partially compensated by the improved operating results of Endesa Chile, Chilectra, Synapsis and CAM. For the purposes of comparison on a similar basis, R︽ Maipo and Infraestructura 2000 should be discounted as both were sold during this period. Nevertheless, this fall by 7.2% calls for a fundamental precision. If, for example, we eliminate the effect of the exchange rate from the Operating Result for the year 2002, the fall is reduced to only 0.8%, from $ 431,186 million as of September 2002 to $ 427,880 million reported as of September 2003. Also with respect to the operating area, we must highlight the increase of 2.1% in the number of clients that rose from 10,063,000 clients to 10,273,000 clients, representing an incorporation of 210,000 new clients, equivalent to incorporating, in one year, a company of a similar size to that of R︽ Maipo. This growth, together with the recovery in demand mentioned above, allows us to expect a sustained improvement in the level of sales for the year 2003. The loss of energy (aggregate of all the companies), another key variable in the distribution business, grew slightly from 11.8% to 12.2%, a variation that is explained principally by the increase that this item experienced in Edesur and in Cerj. This negative effect could not be compensated by the fall in losses of energy registered by Chilectra and Edelnor. The reduction of $ 180,520 million in operating income, equivalent to a fall of 8.8%, was partially compensated by an important reduction of $ 115,341 million (8.1%) in operating costs and a reduction of $ 31,884 million in administration and sales expenses, equivalent to a significant reduction of 19.8%. The Company managed to improve its Net Financial Income by $ 6,685 million, which represents a rise of 2.4% with respect to the year 2002. This was due principally to the benefit of lower interest rates and to an effective control over the level of borrowings. With regard to the financial area, the Company made significant progress on its Financial Strengthening Plan initiated in October 2002. In this context, during the third quarter, the following operations were effected: - Partial amortization of the bank debts of Enersis and Endesa Chile. - Issue of Yankee Bond through Endesa Chile for US$ 600 million. The sales of assets during the first half of the year that were mentioned above, added to the resources received as part of the first phase of the capital increase, permitted Enersis to prepay US$ 582 million and Endesa Chile to prepay US$ 262 million corresponding to the syndicated loan obtained last May. This has contributed towards a significant improvement in the company's liquidity, facilitating the compliance with the various financial obligations of Enersis. In all, the consolidated debt of Enersis was reduced from US$ 8,993 million as of September 30, 2002 to US$ 6,696 million as of September 30, 2003. Also with respect to the financial area, we should remind you that the Extraordinary Meeting of Shareholders that took place on March 31 approved a capital increase for an amount close to US$ 2,000 million. By the end of the first phase last June 30, the controlling shareholder, Endesa (Spain), had capitalized US$ 1,219 million corresponding to a credit granted by the parent company in connection with the acquisition by Enersis of 32% of Endesa Chile in 1999. Furthermore, as a clear sign of support of the strengthening plan, the minority shareholders subscribed the amount of US$ 663 million which permitted a reduction in debt. Considering the above, there is still a balance of 2,269,730,428 shares to be placed. These shares will be offered to local bond holders (Series B1 and B2), who will have the option to trade in papers, duly weighted by the value determined in accordance with an expert report approved by the Extraordinary General Meeting of Shareholders of Enersis S.A. mentioned above, at $ 60.4202 per share. This encashment will take place between November 1 and November 15, both dates inclusive. After the encashment of the local bonds, the balance in shares will be offered to the shareholders registered as of November 14, at the same price of $ 60.4202, during the second period of the preferential offer that will take place between November 20 and December 20. As stated during the Shareholders' Meeting, during this lapse, Enersis Internacional will repurchase Yankee Bonds up to a total value of US$ 50 million, from those bearers that hold an option, that are unrelated to Enersis or its subsidiaries and that are not resident in the United States of America. Thus, and in a preliminary manner, the remainder of the shares for the period for encashing local bonds, repurchasing Yankee Bonds and the second period of the preferential offer, amounts to an initial value of US$ 208 million (considering an estimated rate of exchange of $ 640 per US$ 1). In addition, the improved perception of risk, added to the recovery in demand in most of the areas under concession, was reflected in a sustained growth of the liquidity of Enersis' shares, both on the local market and on the NYSE through the ADRs. The high volatility of the local currencies against the US Dollar, in this case the appreciation since January of this year, has implied registering losses (accounting) of $ 273,723 million, as a consequence of the adjustment on conversion to Chilean norms, as a result of the application of Technical Bulletin 64. This amounts to a loss of $ 35,918 million, net of minority interests. This is related mainly to the appreciations of the Brazilian Real and the Argentine Peso and their impact with regard to the structure of the company's monetary assets and liabilities. We would remind you that as of September 2002, given the depreciation of the currencies mentioned, Enersis recorded profits from the application of Technical Bulletin 64 equivalent to $ 133,419 million, net of minorities. With respect to the net income from investments, this rose from a profit of $ 58 million to a profit of $ 20,853 million as a result of a greater profit from investments in related companies. Consequently, and even when the figures for the third quarter of the year 2003 did not manage to reflect all the positive events described, it is important to highlight them considering the impact that these will have, not only on the results of the fourth quarter and subsequent quarters, but also on the financial strength of the Group as a whole, in the medium and long term. TELEFONICA CTC: To Lower Next Year's Investments ------------------------------------------------ Chilean telecommunications heavyweight Telefonica CTC de Chile SA (CTC) will cut investments next year, Chief Executive Claudio Munoz told reporters Monday, without giving reasons that prompted the move. Citing the executive, Dow Jones reports that the Company will invest some US$180 million next year, down 21.7% from this year's US$230 million. Out of the total, some US$70-80 million will go to investments in mobile telephony, with the remainder going to other business sectors. But while Munoz didn't specify the reasons behind the move, he said that two key important regulatory decisions will shape its upcoming spending. "Regulatory conditions that will ... define any long-term investment strategy and that we'll know only that in February for the mobile world and in May for the fixed-line world," he said. =============== C O L O M B I A =============== CAJANAL EPS: Faces Threat of Liquidation ---------------------------------------- The Cajanal EPS health service company, which has lost 30% of its subscribers this year and is facing debts of COP70 billion, is close to liquidation, says the director of the Company, Mr. Mario Solano. In order to avoid this possibility, the Company will sell off some assets among these is its Santa Rosa clinic in Bogota. The Company has offered to sell the clinic to the National University for COP35 billion. The sale, however, awaits the university board's approval. If approved, the transaction is likely to take place at the end of the year. In the meantime, Cajanal's suppliers are considering making a capital injection of COP40 billion into the Company in order to avoid liquidation. =================================== D O M I N I C A N R E P U B L I C =================================== BANCO BHD: Fitch Changes Support Rating to `5' from `4' ------------------------------------------------------- International rating agency Fitch Ratings changed Monday the support rating for Banco BHD to '5' from '4'. In addition, Fitch placed the `B' long-term foreign currency rating for the bank on Rating Watch Negative (RWN). (Refer to Fitch's Notes below for explanation) BANCO DOMINICANO: Individual Rating Downgraded to `D/E' --------------------------------------------------------- International rating agency Fitch Ratings placed Banco Dominicano del Progreso's `B-' long-term foreign currency rating on Rating Watch Negative (RWN). In addition, Fitch downgraded Banco del Progreso's individual rating to 'D/E' from 'D'. (Refer to Fitch's Notes below for explanation) BANCO POPULAR: Fitch Places LTFC Rating on Rating Watch Negative ---------------------------------------------------------------- International rating agency Fitch Ratings changed Monday the support rating for Banco Popular Dominicano to '5' from '4'. Additionally, Fitch placed the `B' long-term foreign currency rating for the bank on Rating Watch Negative (RWN). (Refer to Fitch's Notes below for explanation) BANCREDITO: Fitch Downgrades LTFC Rating To `B-' ------------------------------------------------ International rating agency Fitch Ratings changed Monday the support rating for Bancredito to '5' from '4'. In addition, the rating agency downgraded the long-term foreign currency rating of Bancredito to 'B-(RWN)' from 'B(RWN).' Fitch, downgraded as well, Bancredito's national long-term and short-term ratings to 'BBB+(dom)' and 'F2(dom)' from 'A(dom)' and 'F1(dom)', respectively. (Refer to Fitch's Notes below for explanation) FITCH's NOTES: The actions reflect the downgrade of the Dominican Republic's Long-term local and foreign currency ratings to 'B' (RWN) from 'B+' (RWN). This stems from liquidity concerns due to continued pressures on the sovereign's slim foreign exchange reserve position. In addition, Fitch remains concerned about the availability of multilateral funding over the coming year due to unresolved issues in the electricity sector. Foreign exchange reserves have fallen to US$520.8 million as of the end of September 2003 from US$583.1 million as of end July, in spite of an infusion of US$123.5 million from the IMF in early September as part of its US$618 million two-year Stand-By Arrangement approved on August 29. Regarding the banking sector, following the collapse of Banco Intercontinental (BanInter) in April 2003 and the subsequent deposit outflows experienced by Bancredito and Banco Mercantil, which had to be supported by the Central Bank and later sold to a local and an international group, respectively, the situation appears to have somewhat stabilized. Moreover, while some banks benefited from deposit flight to quality at the outset of the BanInter crisis, it appears that the stock of deposits at these major institutions has stabilized. However, Fitch sees the banking system as still vulnerable to further shocks and there are some trends of deterioration in many institutions, particularly regarding past-due loans and loan loss reserve coverage, which have weakened since April 2003. Also, equity to assets ratios have declined as a result of the balance sheet growth experienced by the major banks. Nevertheless, as deposits have been channeled mostly into zero risk-weighted central bank paper, the banks' risk-weighted capital ratios have not been significantly affected and remain above the 10% minimum regulatory requirements. In this regard, given the growing level of government exposure and loan loss reserve shortfalls, Fitch considers that higher capital cushions would be desirable. On June 17, 2003, Fitch took rating actions on Dominican banks, downgrading the best-rated banks to 'B' from 'BB-', among other changes. This was explained by the rapid deterioration of the operating environment and the expected impact that this would continue to have on banks' financial indicators. While this weakening has been in line with our expectations at some institutions, some others have deteriorated more rapidly. The downgrade of Progreso's individual rating reflects a sharp increase in reported problem loans in the third quarter of 2003 that will require substantial additional provisioning. In turn, this could absorb the bank's profits for the year and potentially pressure a capital base already burdened by a high level of unproductive assets. However, the bank's foreign currency and national debt ratings remain unchanged. On the other hand, the weaknesses at the sovereign level continue to impair the Dominican Republic's ability to provide substantial additional support in foreign currency to troubled financial institutions, which triggered the changes in the support ratings at the major banks and the downgrade of Bancredito's foreign currency and national ratings. In the meantime, the long-term foreign currency ratings of all banks rated by Fitch in the Dominican Republic are placed on Rating Watch Negative. CONTACTS: Fitch Ratings Carlos Fiorillo, +58 212 286 3356, Caracas Franklin Santarelli, +58 212 286 3356, Caracas Gustavo Lopez, 212-908-0853 James Jockle, 212-908-0547 (Media Relations) ============= E C U A D O R ============= PETROECUADOR: Energy Ministry Invites Bids For Oil Fields --------------------------------------------------------- An invitation for bids on a tender for four oil fields belonging to state oil company Petroecuador has been published in an official bulletin on Saturday (November 1), Business News Americas reports. Ecuador's energy ministry, which published the invitation, will make bidding rules available this week, the report adds, citing a ministry source. The fields on offer are Auca, Culebra-Yulebra, Lago Agrio and Shushufindi. These fields have a combined 870 million barrels in reserves and currently produce 90,000 barrels a day. Companies can bid for 20-year concessions on one or more of the four fields. Bid rules for all fields will cost a total US$200,000. Companies have 60 days to submit bids, and the ministry plans to award the contracts according to a points system in early January. ============= J A M A I C A ============= AIR JAMAICA: NWU Still Having Trouble Representing Employees ------------------------------------------------------------ The National Workers Union (NWU), which represents employees at Air Jamaica, continues to struggle with its dealings with the airline's management, RadioJamaica suggests. Just recently, NWU Negotiating Officer, Granville Valentine, told RJR News that the union has been told by the airline's management that 12 of the 15 positions that the union is trying to bring under its portfolio do not exist. Speaking with RJR News, Air Jamaica's Chief Executive Officer Christopher Zacca insisted that the Company has no record of some of the positions mentioned by the NWU. But Mr. Valentine insists that the union has what he describes as strong evidence to support the claim, which was served on Air Jamaica in August. Zacca has indicated the airline's willingness to discuss the issues at the Ministry of Labour. ======= P E R U ======= * IMF Approves $40M Disbursement To Peru ---------------------------------------- The Executive Board of the International Monetary Fund (IMF) today completed the third review of Peru's performance under a two-year, SDR 255 million (about US$367 million) Stand-By Arrangement that was approved on February 1, 2002. This decision enables the release of SDR 27.87 million (about US$40 million) to Peru, which brings the total amount available to SDR 199.25 million (about US$287 million). So far the country has not made any drawings under the arrangement. Following the Executive Board review of Peru, Agust》 Carstens, Deputy Managing Director and Acting Chairman, said: "Peru's economic performance under the program continues to be favorable. Real GDP is projected to grow by 4 percent in 2003, with inflation around 2 percent and a robust external position. The outlook for next year and the medium term is also positive, assuming continued implementation of prudent macroeconomic policies and structural reforms. At the same time, it will be important to sustain a broad domestic consensus on key reforms to promote growth, keep inflation low, and continue to reduce economic vulnerabilities originated in the current levels of public debt and financial dollarization. "Good progress has been made with the structural reform agenda under the program. The law on fiscal prudence and transparency has been strengthened; a sound legal framework for fiscal decentralization is being put in place, with two key laws expected to be passed by the end of the year. The authorities intend also to implement a comprehensive tax reform, improve the performance of public sector operations, and reform the preferential public pension plan. These reforms, together with increased flexibility on expenditures, concessions, and prudent debt management, will support continued medium-term fiscal consolidation, promote growth, and improve the quality of public services. It will be relevant though, for the authorities to limit as much as possible the distortionary effects of new taxes. "Monetary policy has kept inflation low, consistent with the inflation targeting framework. The floating exchange rate system will continue to serve Peru well in adjusting to external shocks and limiting external vulnerability. In line with the authorities' announced policy, intervention in the foreign exchange market should be limited to smoothing excessive volatility in the exchange rate. "Banking sector indicators continue to improve, although the high degree of financial dollarization, while declining, remains a source of vulnerability. To address this risk, the authorities intend to maintain a high level of official international reserves and to further strengthen prudential oversight. New regulations recently adopted on dollar lending and foreign- currency risk management by banks, as well as a draft law currently in congress to provide adequate legal protection to bank supervisors, are welcome steps to this end," Mr. Carstens said. CONTACT: INTERNATIONAL MONETARY FUND 700 19th Street, NW Washington, D.C. 20431 USA IMF EXTERNAL RELATIONS DEPARTMENT Public Affairs: 202-623-7300 - Fax: 202-623-6278 Media Relations: 202-623-7100 - Fax: 202-623-6772 ================= V E N E Z U E L A ================= CANTV: Board Of Directors Proposes Dividend Payment --------------------------------------------------- Compania Anonima Nacional Telefonos de Venezuela announced that its Board of Directors will propose to shareholders the payment of a dividend of Bs. 350 per share (Bs. 2,450 per ADR). The aggregate amount of the proposed dividend is approximately Bs. 275.5 billion. These dividends are subject to shareholders' approval at an extraordinary shareholders' meeting to be held on December 2, 2003. These dividends would be paid on December 19, 2003, to shareholders of record on December 12, 2003. Under Venezuelan securities regulations, shareholders must approve the declaration of dividends. Dividends are declared and paid in bolivars. Under the existing foreign exchange control regime, the conversion into U.S. dollars of the dividends paid in bolivars to ADR holders requires the prior approval of the Committee for the Administration of Foreign Currency (CADIVI), which timing the Company cannot guarantee. The Company CANTV, a Venezuelan corporation, is the leading Venezuelan telecommunications services provider with approximately 2.7 million access lines in service, 2.5 million cellular subscribers and 1.0 million Internet users as of September 30, 2003. The Company's principal strategic shareholders are affiliates of Verizon Communications Inc. with 28.5% of the outstanding capital stock, and Telef▋ica S.A. with 6.9%. Other major shareholders include the Venezuelan Government with 6.6% of the outstanding capital stock (Class B Shares), and employees, retirees and employee trusts which own 10.0% (Class C Shares). Public shareholders hold the remaining 47.8 % of the outstanding capital stock. CONTACT: Gustavo Antonetti CANTV Investor Relations 011-58-212-500-1831 FAX: 011-58-212-500-1828 E-Mail: invest@cantv.com.ve Mariana Crespo The Global Consulting Group 646-284-9407 E-Mail: mcrespo@hfgcg.com CANTV: Merrill Lynch Starts Coverage With "Buy" ----------------------------------------------- Merrill Lynch announced Monday it has started coverage on CANTV with a "buy" rating, relates Reuters. In a research report, the investment bank said its rating was based on a "rational industry structure," improving margins, compelling yields and attractive valuations on the stock. It opened its coverage with a price objective of $18 per American Depositary Share. "For those who can buy and sell across asset classes, we believe CANTV equity is the best option for investing in Venezuela," the report said. "Compared to sovereign bonds, we believe that CANTV offers significantly higher potential return." Nevertheless, Venezuela's political and economic instability, the country's tight currency controls and increasing competition still were risks to its price outlook. SIDOR: Union Workers Threaten To Go On Strike --------------------------------------------- Union workers at Venezuelan steelmaker Siderurgica del Orinoco (Sidor) revealed a plan Monday that they will go on strike Tuesday to step up a protest over disputed bonuses, Reuters reports, citing SUTISS union leader Ramon Machuca. The report recalls that union workers, who make up about 3,000 of Sidor's 5,700-workforce, began a go-slow of operations in mid- October to protest work conditions and push for changes in the payment of merit bonuses. The labor protest, Sidor said, has halted output at its principal cold-rolling lines and its billet-making plant, which makes products such as wire rods. Other cold-rolling plants and coated products operations were running at 50%. Pellet operations were at 80%, direct reduction operations were at 75% and its slab- making shop and its hot-strip mill were at half capacity. But despite the cut back in production, the Company is confident international and domestic deliveries will not be affected because it has already taken stock provisions to guarantee such deliveries. Argentina's Siderar, Mexico's Hylsamex, Tubos de Acero de Mexico SA, Brazil's Usinas Siderurgica de Minas Gerais and Venezuela's Siderurgica Venezolana Sivensa SA own 60% of the Company while the Venezuelan government owns the rest. CONTACT: SIDERURGICA DEL ORINOCO, C.A. (SIDOR) Edificio General, Piso 9 Avda. La Estancia Chuao, Caracas 1060 Venezuela Tel: (582) 902 3800/3917/3955 Fax: (582) 993 2930 Home Page: www.sidor.com.ve/ *********** 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., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. 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. 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