/raid1/www/Hosts/bankrupt/TCRLA_Public/031114.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
Friday, November 14, 2003, Vol. 4, Issue 226
Headlines
A R G E N T I N A
APSA: Local Moody's Rates $380M of Bonds `D'
BETTERWARE DE ARGENTINA: To Undergo Reorganization
CABLEVISION: Extends Expiry Date On Debt Offer As Approval Wanes
CLINICA Y MATERNIDAD: Declared "Quiebra" by Court
CRESER CREDITO: Deadline For Credit Check Expires Today
EMPRENDIMIENTOS PLASTICOS: Receiver Closes Verifications Today
ESIMAX: Enters Bankruptcy on Court Orders
INTEGRAL MERGE: Court Approves Creditor's Motion for Bankruptcy
JORGE LANATA: Enters Bankruptcy
METROGAS: Reports Nine-Month Gain of ARS30.1Mln
MIAMI HOUSE: Credit Verification in Reorganization Ends Today
PE & ME: Court Approves Creditor's Petition For Bankruptcy
PETROBRAS ENERGIA: Reports Improvement in its Financial Results
SANCOR: $300M in Bonds Rated `D' by LatAm Moody's
SINCLAIR'S: Court Sets Reorganization Schedule
SINTELAR: Court Assigns Receiver for Bankruptcy Process
ULTIMATE SYSTEM: Court Approves Reorganization Petition
VISION ARGENTINA: Receiver Closes Credit Check
B E R M U D A
SEA CONTAINERS: Reports Best Quarter, 9-Month Results In Years
TYCO INTERNATIONAL: To Cancel Listing Of Common Shares In London
B R A Z I L
CFLCL: Issues Relevant Info Regarding Asset Sale
EMBRATEL: Report Of Independent Public Accountants
EMBRATEL: MCI Decides To Sell Stake
TELEMAR: Issues $50M Worth of 2-Yr Bonds on Foreign Markets
C H I L E
ENERSIS: Reveals Plan to Offer 10-Yr. Notes In Int'l Markets
C O L O M B I A
TERMOEMCALI: S&P Affirms Funding Rating
C O S T A R I C A
ICE: Audit Proves Government Wrong
D O M I N I C A N R E P U B L I C
TRICOM: Posts $21.8M Net Loss For 3Q03
J A M A I C A
CABLE & WIRELESS: Revenue Declines in 1H03
M E X I C O
LUZ Y FUERZA: Director Blames CFE for its Financial Woes
PEMEX: Exec Expresses Concern on Heavy Taxes
SATMEX: Commits To Launch Satmex 6 Before Year-End
V E N E Z U E L A
HOVENSA: S&P Rates New Debt; Affirms Other Ratings
- - - - - - - -
=================
A R G E N T I N A
=================
APSA: Local Moody's Rates $380M of Bonds `D'
--------------------------------------------
Moody's Latin America Calificadora de Riesgo S.A. rates a total
of US$380 million worth of corporate bonds issued by Autopistas
del Sol S.A. `D', relates the Comision Nacional de Valores,
Argentina's securities regulator. The rating, issued last Friday,
was based on the Company's finances as of the end of June this
year.
Some US$170 million of the affected bonds are called "Obligaci¢n
Negociable - Serie A". These come due on August 1 next year. The
remaining US$210 million of bonds are described as "Obligaci¢n
Negociable - Serie B", due August 1, 2009. All of them were under
the "Simple Issue" classification.
BETTERWARE DE ARGENTINA: To Undergo Reorganization
--------------------------------------------------
Betterware de Argentina S.A., which was undergoing the bankruptcy
process, will reorganize instead, relates local news portal
Infobae. An order from Buenos Aires Court No. 26 effectively
overturned an earlier ruling that placed the Company under
bankruptcy.
Without revealing the receiver assigned to the case, Infobae said
the credit verification process will end next February 5. The
individual and general reports come due on March 18, 2004 and May
4, 2004, respectively.
The court has also set the date for the informative assembly,
which is one of the last parts of the reorganization process.
Creditors are requested to attend the meeting on October 9, 2004.
CABLEVISION: Extends Expiry Date On Debt Offer As Approval Wanes
----------------------------------------------------------------
Holders of the US$797 million in bonds that Argentina cable
operator Cablevision SA is trying to restructure now have until
Dec. 1 to approve the Company's proposal.
According to Dow Jones Business News, this is the fifth extension
from Cablevision's original expiry date of Oct. 10.
In a statement to the local stock exchange, the Company revealed
that creditors representing about US$241.9 million of the
potential US$725 million in eligible bonds had accepted the offer
as of Nov. 10, the previous deadline.
After reaching US$270.4 million on Oct. 20, a previous deadline,
Cablevision has seen bondholder approval drop. The Company needs
creditors representing two-thirds of eligible bonds to accept the
proposal in order to obtain legal approval for its offer.
Cablevision is offering to buy back up to $270 million of the
debts at 37% of their original value. The Company will spend
US$54.9 million of its own cash, with the remaining $45 million
coming from its two main shareholders, Hicks, Muse, Tate & Furst
(HIX.XX) and Liberty Media Corp. (L).
CLINICA Y MATERNIDAD: Declared "Quiebra" by Court
-------------------------------------------------
Buenos-Aires based Clinica y Maternidad Mayo was pronounced
"Quiebra" - bankrupt by Court No. 25 of Buenos Aires. Working
with Clerk No. 49, the court designated local accountant Eduardo
Simon Akoskin as receiver for the process, Infobae relates.
The deadline for the verification of creditors' claims is
December this year. Creditors must present their proofs of claim
to the receiver before that date in order to qualify for any
payments the Company might make at the end of the process.
The individual reports, which are prepared after the verification
process is completed, must be submitted to the court on March 10
next year. The general report must follow on April 26.
CONTACT: Eduardo Simon Akoskin
Viamonte 1453
Buenos Aires
CRESER CREDITO: Deadline For Credit Check Expires Today
-------------------------------------------------------
The receiver assigned to the bankruptcy process of Argentine
company Creser Credito y Servicio S.A. has until today to
authenticate creditors' claims. Subsequently, the receiver, Ms.
Cecilia B. Motelvetti, will start preparations for the individual
reports.
The Troubled Company Reporter - Latin America earlier revealed
that Buenos Aires Court No. 22 declared the Company bankrupt. The
court also ordered the receiver to file the individual reports on
December 30 this year.
The general report, which is prepared after individual reports
are processed at court, must be filed next March 12. The
Company's assets will be liquidated at the end of the process to
pay its creditors.
CONTACT: Cecilia Montelvetti
General Urquiza 2134
Buenos Aires
EMPRENDIMIENTOS PLASTICOS: Receiver Closes Verifications Today
--------------------------------------------------------------
Ms. Patricia Monica Lopez, the designated receiver for the
reorganization of Mercedes company Empredimientos Plasticos S.A.,
is to close the credit verification period today. This part of
the reorganization process determines the nature and amount of
the Company's debts.
The receiver will prepare the individual reports on the results
of the verifications. Local sources, however, did not reveal the
deadline for the filing of these reports, not the deadline for
the general report.
Court No. 1, which handles the Company's case, ordered the
informative assembly to be held on September 8 next year.
CONTACT: Emprendimientos Plasticos S.A.
Belgrano 1342
Bragado, Mercedes
Patricia Monica Lopez
Calle 28, No. 524
Mercedes
ESIMAX: Enters Bankruptcy on Court Orders
-----------------------------------------
Judge Taillade of Buenos Aires Court No. 20 ordered the
bankruptcy of local bakery Esimax S.A. following a petition filed
by the Company's creditor for nonpayment of debt. The court
assigned Mr. Ricardo Fernandez as the receiver for the process.
The credit verification period ends on March 1 next year.
Creditors must present their claims to the receiver for
authentication before that date. This part of the bankruptcy
process is conducted to assess the nature and amount of the
Company's debts.
The receiver will also be responsible for the preparation of the
individual and general reports on the process. The source,
however, did not reveal the deadlines for the submission of these
reports.
CONTACT: Esimax S.A.
Azcuenaga 727/29
Buenos Aires
Ricardo Fernandez
10th Floor, Room 10
Tucuman 1567
Buenos Aires
INTEGRAL MERGE: Court Approves Creditor's Motion for Bankruptcy
---------------------------------------------------------------
Acersa S.R.L.'s petition for the bankruptcy of fellow Argentine
company, Integral Merge S.R.L., received approval from the court,
La Nacion reports. Integral Merge's failure to meet its financial
obligations to Acersa prompted the latter to file the motion.
Buenos Aires Court No. 17's Judge Bavastro, who handles the
Company's case, assigned Mr. Marcos Livszyc as receiver for the
process. Mr. Livszyc will authenticate creditors' claims until
March 10 next year.
Clerk No. 33, Dr. Trebino Figueroa assists the court on the case,
which will close with the liquidation of the Company's assets to
pay off creditors.
CONTACT: Integral Merge S.R.L.
Ave Rivadavia 3410
Buenos Aires
Marcos Livszyc
1st Floor
Nunez 3687
Buenos Aires
JORGE LANATA: Enters Bankruptcy
-------------------------------
Argentine company Jorge Lanata Producciones y Asociados S.R.L.
entered bankruptcy on orders from Buenos Aires Court No. 12. The
city's Clerk No. 24 aids the court on the case.
A report by local news portal Infobae indicates that the
Company's receiver is Ms. Norma Alicia Balmes, an accountant from
Buenos Aires. Ms. Balmes will be authenticating creditors'
claims until February 2 next year, as ordered by the court.
The court also instructed Ms. Balmes to have the individual
reports ready by March 15 next year. These are prepared after the
verification process is completed. The receiver will consolidate
the data in these reports into a general report, which is due for
filing on April 26, 2004. The Company's assets would then be
liquidated to reimburse creditors.
CONTACT: Norma Alicia Balmes
Roque Saenz Pena 1185
Buenos Aires
METROGAS: Reports Nine-Month Gain of ARS30.1Mln
-----------------------------------------------
Argentine natural gas distributor Metrogas posted a nine-month
gain of ARS30.1 million, against a loss of ARS535.1 million in
the year-earlier period, reports Dow Jones Business News.
Net assets as of Sept. 30 totaled ARS816 million.
The Company revealed its gross profits slipped to ARS74.5 million
in the last nine months of the year, compared with ARS141.5
million in the same period a year ago due to the inflation
adjustments that were applied to the 2002 results.
The Company reported higher sales volumes of gas to commercial
customers, thanks to a "an increase in the industrial activity
due to the slight economic recovery." Sales volumes to
residential consumers rose 2.1% in the nine months compared with
the year-earlier period because of lower temperatures in 2003,
Metrogas said.
However, net sales dropped to ARS501.7 million in the nine-month
period from ARS607.9 million a year earlier. The Company again
cited inflation adjustments for the decrease.
In the third quarter, Metrogas reported a net loss of ARS68.9
million against a gain of ARS185.3 million in the same quarter
last year. The Company blamed an exchange loss that has increased
its foreign currency denominated debt, as the peso has lost
ground against the dollar in the last quarter.
Gross profit slipped to ARS21.8 million from ARS55.0 million in
the year-earlier quarter. The Company posted an operating loss of
ARS830 million, down significantly from a gain of ARS17.7 million
in the third quarter of 2002.
On Monday, Metrogas launched a debt-restructuring offer on US$440
million in debt. The Company is proposing to spend up to US$100
million to buy back debt at 50% of face value, or to add
capitalized interest to the principal and pay creditors in
installments for nine years.
Metrogas, hammered by the peso's devaluation and a government-
imposed freeze on utility rates that remains in place, suspended
payments on all its debt in March 2002. Its debt offer expires on
Dec. 10.
CONTACT: METROGAS, S.A.
Gregorio Araoz de Lamadrid 1360
Buenos Aires
Argentina
CPA C 1267
Phone: +54 11 4309 1010
Fax: +54 11 4309 1025
Home Page; http://www.metrogas.com.ar
Contact:
William Harvey Alvarez, President
MIAMI HOUSE: Credit Verification in Reorganization Ends Today
-------------------------------------------------------------
The credit verification process for creditors of Buenos Aires-
based Miami House S.R.L. is due to conclude today, said the
Troubled Company Reporter - Latin America. The Company's
receiver, Ms. Maria del Carmen Amandule, who verified the claims,
will prepare the individual reports, which are due for filing on
February 3 next year.
After the individual reports are processed at court, the receiver
will prepare a general report, summarizing the information in the
individual reports. The court ordered the receiver to have this
report ready by March 16, 2004.
The city's Court No. 5, which handles the Company's case, set the
informative assembly to be held next September 7.
CONTACT: Maria del Carmen amandule
24 de Noveimbre 1226
Buenos Aires
PE & ME: Court Approves Creditor's Petition For Bankruptcy
----------------------------------------------------------
Pe & Me S.A., which is based in Buenos Aires, has entered
bankruptcy. Local newspaper La Nacion indicates that Judge Braga
of the city's Court No. 22 approved a petition for the Company's
bankruptcy filed by a creditor for nonpayment of debt.
The Company is now in the hands of its receiver, Mr. Federico
Mansbach, a local accountant. Mr. Mansbach will authenticate
creditors' claims until December 23 this year. He is also
required to prepare the individual and general reports on the
process. Infobae, however, did not indicate whether the court,
which is assisted by Clerk No. 44, Dr. Julianelli on the case,
has set the filing deadlines for the receiver's reports.
CONTACT: Pe & Me S.A.
Zapata 476
Buenos Aires
Federico Mansbach
4th Floor, Room 402
Tucuman 1506
Buenos Aires
PETROBRAS ENERGIA: Reports Improvement in its Financial Results
---------------------------------------------------------------
Petrobras Energia Participaciones S.A. (Buenos Aires: PBE, NYSE:
PZE) announces the results for the third quarter ended September
30, 2003. Net income for 2003 third quarter was P$109 million
(P$0.051 per share and P$0.51 per ADS) compared to a P$6 million
loss in 2002 quarter.
This improvement in results is mainly attributable to the
following:
- A recovery in contribution margins and sales volumes for the
electricity and refining business segments.
- A P$134 million reduction in financial (income) expense and
holding gains (losses) mainly attributable to: (1) losses
recorded in 2002 quarter resulting from de-pesification of the
debt related to the acquisition of a 10% interest in Distrilec
Inversora S.A, and (2) a P$74 million drop in net interest
expense attributable to both a decline in the US dollar and a
5.8% reduction in average dollardenominated indebtedness.
- An 8% drop in administrative and selling expenses.
- Lower exploration expenses in the amount of P$17 million in
2003 quarter.
In contrast, in the 2003 quarter, equity in earnings of
affiliates significantly declined P$102 million, mainly as a
result of the positive effect of income from exposure to
inflation generated on these investments in 2002 quarter. The
2003 quarter does not include adjustment for inflation effects
since such adjustment was discontinued as from March 1, 2003
pursuant to Resolution No. 441 adopted by the National Securities
Commission.
EBITDA for 2003 quarter calculated as operating income plus
depreciations totaled P$580 million. During the first nine months
of 2003 fiscal year, shareholders' equity increased to P$4,960
million or 11.8%.
Net Sales
In 2003 quarter, net sales increased to P$1,317 million or 2.9%.
2002 quarter includes P$28 million attributable to sales from the
farming and forestry activities and P$11 million attributable to
Conuar sales, which assets were divested during 2002 fiscal year.
Excluding these effects, sales increased P$76 million or 6.1%.
Such rise derives from a P$24 million increase in the electricity
business segment and a P$20 million increase in the Refining
business segment, both units reflecting increased volumes and
prices. Such rises were offset by a P$37 million decrease in the
Oil and Gas Exploration and Production business segment as a
consequence of a 8.5% drop in combined oil and gas sales volumes.
Gross Profit
Gross profit for 2003 quarter increased to P$491 million or 7.7%.
2002 quarter includes P$10 million attributable to farming and
forestry activities which were divested in 2002 fiscal year.
Excluding this effect, gross profit rose P$45 million due to
increased volumes and margins for the electricity and refining
business segments that resulted in P$33 million and P$29 million
gross profit increases, respectively. In contrast, and due to
lower contribution margins, gross profit for the Petrochemical
business segment dropped P$17 million.
Administrative and Selling Expenses
During 2003 quarter administrative and selling expenses dropped
to P$133 million or 8.3%, mainly due to the effect of reduced
expenses incurred abroad in terms of dollars and reduced expenses
in Argentina in terms of pesos. Administrative and selling
expenses include charges for Affiliates under Joint Control in
the amount of P$16 million and P$18 million for 2003 and 2002
quarters, respectively. Excluding such charges, the ratio of
administrative and selling expenses to sales for Petrobras
Energ¡a Participaciones and its affiliates was 9.7% for 2003
quarter and 10.8% for 2002 quarter.
Other Operating Expenses
Other operating income accounted for P$19 million and P$13
million losses for 2003 and
2002 quarters, respectively.
The loss recorded in 2003 quarter is mainly attributable to the
following:
- A P$12 million loss attributable to the tax on banking
transactions
- A P$9 million loss for increased commercial and labor
contingencies
- A P$7 million gain for advisory services provided to other
companies
The loss recorded in 2002 quarter is mainly attributable to the
following:
- A P$10 million loss attributable to the tax on banking
transactions
- An P$8 million provision for environmental remediation
- A P$9 million gain for advisory services provided to other
companies
Operating Income
The Corporate line for 2002 quarter includes a P$2 million gain
attributable to operating income from the farming and forestry
activities and Conuar, which assets were divested in 2002 fiscal
year.
Equity in Earnings of Affiliates
Equity in earnings of affiliates decreased to P$24 million in
2003 quarter from P$126 million in 2002 quarter. In 2003, equity
interest in CIESA/TGS and Citelec are valued up to their
recoverable value and impairment charges are provided in the
amount of P$156 million and P$41 million, respectively.
Equity in earnings of CIESA and TGS recorded a P$8 million gain
in 2003 quarter. The Company's share in the results of CIESA/TGS
accounted for a P$52 million loss which was offset by a P$60
million positive variation in recoverable value. In 2003 quarter,
operating income increased 30.3% boosted by a rise in income from
the liquids processing unregulated segment while financial income
(expense) and holding gains (losses) recorded a P$210 million
loss mainly derived from the peso devaluation. Operating income
for 2002 quarter was mainly attributable to income from exposure
to inflation.
Equity in earnings of Citelec dropped to P$5 million in 2003
quarter. The Company's share in the results of Citelec accounted
for a P$26 million loss in 2003 quarter which was offset
by a P$31 million positive variation in the recoverable value.
Operating income for 2003 quarter declined 41.2% while financial
income (expenses) and holding gains (losses) accounted for a P$87
million loss primarily derived from the peso devaluation.
Operating income for 2002 quarter was mainly attributable to
income from exposure to inflation generated on its borrowing
monetary position.
Financial income (expense) and holding gains (losses)
- Financial income (expense) and holding gains (losses) accounted
for P$194 million and P$328 million losses in 2003 and 2002
quarters, respectively. Such reduction was mainly attributable
to:
- A P$286 million loss recorded in 2002 quarter resulting from
de-pesification of the debt related to the acquisition of a 10%
in Distrilec Inversora S.A..
- A P$67 million drop in net interest expense to P$103 million
from P$170 million, derived from a 37% peso appreciation in 2003
quarter compared to 2002 quarter and a 5.8% reduction in average
dollar-denominated indebtedness.
- Conversely, the impact of the evolution of the exchange rate
and inflation rates on the Company's net borrowing position
generated a P$139 million net profit in 2002 quarter compared to
a P$32 million loss in 2003 quarter as a consequence of the peso
devaluation.
Other Expenses, net
- In 2003 quarter, the P$56 million loss is mainly attributable
to estimated future losses in the amount of P$44 million related
to compliance with the crude oil transportation contract
subscribed with OCP.
- In 2002 quarter, the P$75 million loss was mainly attributable
to:
- P$22 million loss attributable to estimated future
contingencies related to compliance with the crude oil
transportation contract subscribed with OCP.
- P$119 million impairment charge for the Forestry business.
- P$38 million impairment charge for the San Carlos area.
- P$13 million reserve on the book value of loans granted to
hydrocarbon production joint ventures in Venezuela.
- P$122 million gain from the sale of Cerro Vanguardia S.A.
- P$27 million gain from the sale of the Farming business.
Balance Sheet
The Consolidated Balance Sheet as of September 30, 2003 includes
the following amounts attributable to Affiliates under Joint
Control:
- P$1,297 million for Fixed Assets
- P$243 million for Short-Term Debt
- P$13 million for Long-Term Debt
Statement of Cash Flows
The Statement of Cash Flows as of September 30, 2003 includes for
2003 third quarter the following amounts attributable to
Affiliates under Joint Control:
- P$28 million for depreciation
- P$10 million for acquisition of property, plant and equipment
- P$35 million for cash at closing
Oil and Gas Exploration and Production
- Net sales for 2003 quarter decreased to P$677 or 5.1% mainly
due to the drop in oil and gas sales volumes. The drop in sales
volumes is in line with the restrictive investment policy
implemented during 2002. Though such policy proved to be
effective in 2002 context to protect operating cash flow, it
delayed the development of hydrocarbon projects. This allowed to
only partially offset the fields natural decline. Oil and gas
daily sales volumes for 2003 quarter declined to 161.1 thousand
barrels of oil equivalent or 8.5%. Oil sales volumes dropped to
115.6 thousand barrels per day or 4.5% in 2003 quarter. Gas sales
volumes dropped to 272.7 million cubic feet per day or 17.3% in
2003 quarter.
During 2003 quarter, including the effects of hedging
transactions and tax on exports, the average crude oil price
decreased to P$57.5 per barrel or 0.3%. The average crude oil
sales price for 2003 third quarter was affected by a 37% peso
appreciation against the US dollar which had a negative impact on
dollar-denominated flows from foreign operations and exports.
Such effect was mostly offset by a 6.7% increase in the WTI to
US$ 30.2 per barrel.
- In Argentina, combined oil and gas sales decreased to P$380
million or 12% mainly due to a 15.4% decline in sales volumes as
a consequence of the mature fields decline as a result of
investments cuts. In addition, Catriel Oeste area sale resulted
in lower oil deliveries in the amount of 1.2 thousand barrels per
day.
Oil sales dropped to P$340 million or 12.6% in 2003 quarter. Oil
sales volumes decreased to 55.4 thousand barrels per day or 12.1%
in 2003 quarter. Oil price per barrel was P$67.1 in 2003 and 2002
quarters.
Natural gas sales revenues declined to P$40 million or 7%. Daily
gas sales volumes dropped to 205 million cubic feet or 20.1%.
Sales prices increased to P$2.09 per thousand cubic feet or 14.2%
in 2003 quarter.
Combined sales of oil and gas outside of Argentina increased to
P$297 million or 5,3%. Total oil and gas sales volumes rose to
71.5 thousand boe/d or 1.8% mainly as a consequence of the start
up of operations in Block 18 in Ecuador. The average sales price
per barrel of oil increased to P$48.7 or 2.6% in 2003 quarter
mainly as a consequence of a rise in the international price.
Combined oil and gas sales in Venezuela dropped to P$146 million
or 7% in 2003 quarter. Oil sales volumes dropped to 42.1 thousand
bbl/d or 7.1 % mainly due to the natural fields decline as a
result of the beforementioned investment cuts.
Oil sales in Ecuador totaled P$31 million in 2003 quarter. In
2002 quarter, no significant sales were recorded since approval
of the Development Plan for Block 18 was obtained in 2002 fourth
quarter. Daily oil sales volumes in 2003 quarter, net of the
Government's interest, totaled 4.8 thousand bbl/d at a price of
P$72.6 per barrel.
- Gross profit in 2003 quarter increased to P$302 million or 1%.
Gross margin increased to 44.6% in 2003 quarter from 41.9% in
2002 quarter.
- Administrative and selling expenses to sales dropped to P$44
million or 2.2% in 2003 quarter. Margin on sales was 6.5% in 2003
quarter and 6.3% in 2002 quarter.
- Operating expenses totaled P$3 million in 2003 quarter and P$20
million in 2002 quarter due to discontinued drilling activities
at wells located in Lote 35 in Peru and in Block 18 in Ecuador.
- Other operating income for 2002 quarter recorded a P$17 million
loss attributable to a provision for environmental remediation.
Refining
- Operating income for the Refining business segment totaled P$23
million in 2003 quarter compared to a P$4 million loss in 2002
quarter, boosted by a recovery in the business contribution
margins.
- Gross profit increased P$29 million to P$39 million in 2003
third quarter. Gross margin on sales increased to 12.7% in 2003
third quarter from 3.5% in 2002 quarter mainly as a consequence
of the combined effect of increased sales volumes and improved
operational competitiveness resulting from lower costs. In 2003
third quarter the average crude oil price decreased 11.4%. This
reflects the application of Resolution 85/03 whereby refineries
committed themselves to reflect a reference crude oil price of
US$28.5 per barrel in the prices offered by them to the domestic
market.
However, such drop in costs was not fully reflected in
contribution margins since sales prices dropped an average of 4%
with 23% and 10% drops in benzene and heavy products,
respectively. The price of such products, which is in line with
its international reference price, was adversely affected by the
peso appreciation. Conversely, and partially offsetting such
drop, sales prices of gasoline and diesel oil increased 6% and
5%, respectively. In line with the strategy designed to maximize
product contribution margins implying the optimization of crude
oil processed, crude oil volumes processed increased to 33,133
bbl/d or 2.8% in 2003 third quarter.
- Net sales for the Refining business increased to P$306 million
or 7% in 2003 quarter as a consequence of higher sales volumes
that rose 11% proportionally distributed between the domestic and
export markets, partially offset by an average of 4% drop in
sales prices.
Sales volumes in the local market in 2003 quarter grew an average
of 8%, with increases of 96%, 216%, 5% and 24% in paraffins,
asphalts, diesel oil and heavy products. The diesel oil market
recorded a 2.7% increase and the company's market share rose to
4.7% in 2003 quarter from 4.5% in 2002 quarter, due to a recovery
in the wholesale market sales. In contrast, gasoline, benzene and
aromatics sales volumes dropped 28%, 24% and 36%, respectively.
The gasoline market recorded a 7.1% drop attributable to
increased consumption of substitute fuels such as CNG which rose
29% in such period. Export volumes increased an average of 19% in
2003 quarter, mainly boosted by higher exports of diesel oil to
Paraguay, by-products of the reformer process, asphalts and
aromatics, offset by lower heavy product exports.
- The ratio of administrative and selling expenses to sales was
4.9% for 2003 quarter and 4.2% for 2002 quarter mainly due to
increased freight costs related to the rise in sales volumes and
higher fixed costs associated with the increase in the number of
gas stations.
Petrochemicals
- Operating income for the Petrochemicals business segment
decreased to P$62 million or 26.2% in 2003 quarter, mainly due to
reduced margins as a result of the behavior of macroeconomic
variables in both quarters and, to a lesser extent, to the effect
of higher costs of supplies in the fertilizers business.
- Gross profit dropped to P$92 million or 15.6% in 2003 quarter.
Gross margin on sales decreased to 26.3% in 2003 quarter from
31.2% in 2002. This reduced margin is attributable to the impact
of the peso appreciation on sales prices which went up along with
dollar-denominated reference prices. This effect was partially
mitigated by an increase in the international reference price.
- Sales were similar in both quarters. The drop in sales prices
was offset by increased sales volumes.
In Argentina, styrenic sales rose to P$121 million or 10% in 2003
quarter due to a 23% increase in sales volumes (18% for exports
and 27.4% for the domestic market), offset by reduced prices (27%
and 6% for styrene and polystyrene, respectively). Lower prices
are mainly attributable to the peso appreciation partially offset
by 3% and 9% increases in international prices, respectively.
Styrene sales volumes increased 98% due to a sharp increase in
exports particularly to Chile and other markets. Domestic market
sales increased 16% reflecting the internal market recovery.
Polystyrene sales volumes increased 13% in 2003 quarter. Crystal
and high impact polystyrene sales volumes rose 18% in the
domestic market while export volumes remained unchanged. Bops
(bi-oriented polystyrene) sales volumes increased 31% as a
consequence of increased exports to the European market and the
USA (34%.
Synthetic rubber total sales volumes remained unchanged in 2003
quarter compared to 2002 quarter. Average sales prices increased
10% in 2003 quarter.
Fertilizers sales rose to P$102 million or 3%, mainly due to a
33% increase in sales volumes. Average sales prices decreased 22%
in 2003 quarter as a result of the peso appreciation in spite of
the 50% increase in international prices.
Innova sales in Brazil decreased to P$128 million or 11.7% in
2003 quarter as a consequence of reduced sales prices due to the
impact of the peso appreciation. Average sales prices dropped 24%
and 5% in 2003 quarter and in 2002 quarter respectively. As a
result of an upturn in economic activity in Brazil, the demand
for products increased compared to 2003 second quarter shrinkage
and total volumes for 2003 quarter increased and matched 2002
quarter levels. Styrene sales volumes increased 5% and
polystyrene sales volumes dropped 4%. Styrene and polystyrene
average sales prices dropped 24% and 5%, respectively.
Hydrocarbon Marketing and Transportation
Sales revenues from the company's own operations including oil,
gas and LPG brokerage activities significantly increased to P$18
million in 2003 quarter. However, due to the business specific
features, characterized by low contribution margins, gross profit
did not record a similar increase.
Electricity
- Net sales of electricity generation increased to P$80 million
or 73.9% in 2003 quarter as a consequence of the combined effect
of increased sales prices and higher sales volumes.
The increase in energy sales prices was mainly attributable to
the following:
- The effect of the following regulatory changes: (i) during the
2003 April/October period, collection of additional energy income
for guaranteed supply to the electricity market, with higher
sales (P$10 million) in 2003 third quarter and (ii) increased
power price.
- Energy deliveries by less efficient machines at higher market
prices as a result of reduced gas supply during 2003 quarter as a
consequence of lower temperatures and increased gas consumption
by industries. The latter circumstance did not affect Genelba
Power Plant operations given its gas supply contract modality.
- An 11% increase in market demand attributable to a higher
industrial activity level and lower temperatures in the current
period.
Net sales attributable to Genelba Power Plant in 2003 quarter
increased to P$66 million or 78.4%. The average price of energy
and power delivered increased to P$47.6 per MWh or 38% in 2003
quarter, reflecting the above mentioned effects. In 2003 quarter
energy delivered increased to 1,392 GWh or 28.7% as a result of
the above mentioned increase in demand and Genelba's better
positioning as regards dispatch to the network vis-…-vis its
competitors with a plant factor increase to 89.6% in 2003 quarter
from 61.4% in 2002 quarter. The Genelba Power Plant availability
factor was 99.8% in 2003 quarter and 94.7% in 2002 quarter, which
values evidence the excellent technical conditions of the
equipment. Net sales attributable to Pichi Pic£n Leuf£
Hydroelectric Complex increased P$13 million or 63% in 2003
quarter. The average price of energy and power delivered
increased to P$30.9 per MWh or 25.6% in 2003 quarter. Energy
delivered by Pichi Pic£n Leuf£ increased to 406 GWh or 31% in
2003 quarter from 310 GWh in 2002 quarter, as a result of the
increased hydraulic generation share mentioned above. In
accordance with the Energy Support Price Method mechanisms and as
a result of the prices recorded in both fiscal years and future
estimates, the Company recorded a P$1 million gain in 2003 and
2002 quarters.
- Gross profit for the generation business totaled P$39 million
in 2003 quarter and P$4 million in 2002 quarter, mainly as a
result of higher sales prices and generation volumes. Gross
margin on sales increased to 49% in 2003 quarter from 9% in 2002
quarter, mainly boosted by increased prices.
Future Outlook
In the next quarter we will continue to evaluate all our assets
with a view to consolidating the Company's portfolio in assets
regarded as having the greatest potential and highest
profitability.
As regards the Oil and Gas Production and Exploration activities,
the Company plans to increase production levels at an average of
170 thousand boe/d. Such increase would be mainly recorded in
Venezuela, reflecting drilling investments made. In Argentina a
slight drop is anticipated as a result of the continuous decline
in some fields. As regards Peru and Bolivia, no significant
changes are expected.
Current trends are expected to be maintained in the Refining
business segment, with a diesel oil market that will keep a
recovery pace as a result of the good performance of the farming
sector and a weakened gasoline market as a consequence of an
increased use of substitute fuels (CNG). The refinery will
continue operating at almost its maximum capacity in order to
supply export markets and diesel oil sales to other local oil
companies.
Regarding the Petrochemicals business segment, styrenics are
expected to have a low price scenario given the poor
international demand. However, the Brazilian market is expected
to consolidate the recovery evidenced in 2003 third quarter. With
respect to fertilizers, a consumption reduction in the
nitrogenous fertilizer local market in addition to a possible
decline in current international high prices of urea are expected
by the end of the year, and this will have an impact on current
contribution margins.
As regards the Electricity business, a scenario with higher
energy prices is foreseen for 2003 fourth quarter, since a water
supply lower than the average supply is expected. In addition,
demand for energy is estimated to continue growing.
Investments for 2003 fourth quarter would total approximately US$
110 million and be basically focused on oil and gas activities,
especially in Argentina and Venezuela. In the field of utility
companies, the Board of Directors of such companies will continue
to work in two fronts: with national authorities in order to
achieve a reasonable and fair recovery in rates and with
financial creditors in order to restructure their debts extending
short term maturities and simultaneously align any cash flow
required for debt repayment with estimated cash flow from
operations.
Petrobras Energia Participaciones S.A. is a leading company in an
important sector of the Argentine and Latin American industry,
including oil and gas production and transportation, refining and
petrochemicals, electricity generation, transmission and
distribution.
CONTACT: INVESTOR RELATIONS
Daniel E. Rennis
drennis@petrobrasenergia.com
Alberto Jankowski
ajankows@petrobrasenergia.com
Tel: (5411) 4344-6655
SANCOR: $300M in Bonds Rated `D' by LatAm Moody's
-------------------------------------------------
Some US$300 million worth of corporate bonds issued by Argentine
company Sancor Coop. Unidas Ltda. were given default ratings by
Moody's Latin America Calificadora de Riesgo S.A. last Friday.
The `D' rating was based on the Company's financial health as of
June 30 this year.
Argentina's securities regulator, the Comision Nacional de
Valores described the affected bonds as "Titula de Deuda de
Mediano Plazo". These were classified under "Program". The
maturity date, however, was not disclosed.
SINCLAIR'S: Court Sets Reorganization Schedule
----------------------------------------------
The schedule for the reorganization process of Buenos Aires
company Sinclair's S.R.L. has been set. Argentine news portal
Infobae relates that the individual and general reports are to be
filed on March 3, 2004 and April 22, 2004, respectively. The
court has also set the informative assembly to be held on
September 24 next year, the source adds.
An earlier report by the Troubled Company Reporter - Latin
America revealed that the city's Court No. 20 approved the
Company's motion for "Concurso Preventivo". Clerk No. 39 assists
the court on the case.
The Company's receiver, Mr. Luis Maria Remeteria, will
authenticate claims until December 19, after which he will
prepare the individual reports.
CONTACT: Sinclair S.R.L.
Ave del Libertador 7278
Buenos Aires
Luis Maria Remeteria
Piedras 1319
Buenos Aires
SINTELAR: Court Assigns Receiver for Bankruptcy Process
-------------------------------------------------------
Estudio Canapeti y Llovera will oversee the bankruptcy process of
Argentine company Sintelar S.A., as the Company's receiver. The
receiver takes charge of the credit verifications, which end on
December 2 this year.
Buenos Aires Court No. 3 issued the bankruptcy order earlier,
local news portal Infobae reveals in a report. Clerk No. 5
cooperates with the court on the case, which is set the close
with the liquidation of the Company's assets after due process.
The receiver will prepare the individual reports after the
verifications are closed and submit these to the court next
February 17. The general report, which is prepared after the
individual reports are processed at court, is due for filing
March 30.
CONTACT: Sintelar S.A.
Villarino 2411
Buenos Aires
Estudio Canapeti y Llovera
11 de Septiembre 1503
Buenos Aires
ULTIMATE SYSTEM: Court Approves Reorganization Petition
-------------------------------------------------------
Court No. 2 of Buenos Aires approved the "Concurso Preventivo"
motion recently filed by local company Ultimate System S.A. The
Company will start its reorganization process with Mr. Raul
Horacio Trejo as receiver, relates Argentine news portal Infobae.
The credit verification process ends on February 9 next year,
after which the receiver will prepare the individual reports. The
court ordered the receiver to submit the individual reports by
March 22, 2004, followed by the general report May 3.
The informative assembly, which is one of the last processes in a
reorganization, will be held next October 11.
CONTACT: Ultimate System S.A.
Tucuman 1441
Buenos Aires
Raul Horacio Trejo
Montevideo 205
Buenos Aires
VISION ARGENTINA: Receiver Closes Credit Check
----------------------------------------------
Ms. Amelia Marta Iglesias, receiver for bankrupt Buenos Aires-
based Vision Argentina S.A., will soon prepare the individual
reports as the deadline for the credit verifications expires
today. The Troubled Company Reporter - Latin America earlier
revealed that the individual reports are to be filed by December
30.
The receiver will also prepare a general report after the
individual reports are processed at court. This report is to be
submitted on March 12 next year.
Buenos Aires's Court No. 14 handles the Company's case.
CONTACT: Amelia Marta Iglesias
Pareja 4152
Buenos Aires
=============
B E R M U D A
=============
SEA CONTAINERS: Reports Best Quarter, 9-Month Results In Years
--------------------------------------------------------------
Sea Containers Ltd. (NYSE: SCRA and SCRB, www.seacontainers.com)
marine container lessor, passenger and freight transport operator
and leisure industry investor, announced Wednesday its best
quarter and nine months in 13 years, with net earnings of $100.7
million ($4.68 per common share diluted) for the quarter and
$99.7 million ($4.66 per common share diluted) for the nine
months ended September 30, 2003. Total debt was reduced by $250
million in the quarter to $1.55 billion.
Revenue for the quarter was $480 million, up 2% from the year
earlier period while revenue for the nine months was $1.3
billion, up 22%. The third quarter 2003 did not include earnings
or revenue from the Isle of Man Steam Packet Company which was
sold effective July 1, 2003.
The gain on sale of this unit was $100 million, however, the
company also recognized non-recurring charges of $40 million
resulting in a net $60 million increase in earnings. The non-
recurring charges are principally for restructuring of the
company's U.K. fast ferry operations, the write down of an old
containership to current market value (the vessel has now been
sold), and to cover the expected loss on disposal of certain
containers being held for sale.
Apart from the gain on sale, the company enjoyed a strong third
quarter in all its main business units. Silja, the leading
Baltic passenger and freight transport operator with a fleet of
12 modern ships, had operating profits (EBIT) of $27.4 million in
the third quarter, up 27% over the $21.5 million earned in the
year earlier period.
GNER, the company's U.K. rail subsidiary, had operating profits
of $28.8 million in the quarter, up 48% from the prior year due
largely to cost reductions and increasing passenger volumes.
The company's container division reported operating profits for
the quarter of $8.7 million, up 61% from the prior year period.
$2 million of the $3.3 million increase was in GE SeaCo, the
company's 50/50 joint venture with GE Capital, due to strong
demand for marine containers in many regions of the world. The
balance of the increase derived from the company's factories,
depots and equipment operated outside the joint venture (the
joint venture does not include new container chassis leasing nor
lease purchase transactions).
Net finance costs dropped 25% in the quarter to $19.8 million
from $26.8 million due to the retirement of bond debt at the
beginning of the third quarter and lower floating rate interest
costs.
The reduction of $2.7 million in operating earnings from "other"
ferry business reflects a $7 million reduction due to the absence
of earnings in the quarter from the Isle of Man Steam Packet
Company and an increase of $6.1 million in operating profits from
U.K. fast ferry operations compared to the prior year period.
The company operates 4 fast ferries on English Channel routes and
one on a route between Northern Ireland and Scotland. Operating
earnings of SeaStreak in New York were down $0.6 million in the
quarter from the prior year period due to rental costs of two
port facilities which could not be used pending delivery of new
ships under construction. The first of these vessels, "SeaStreak
Wall Street", entered service on October 15th and is the largest
and most luxurious commuter ferry in service between New Jersey
and Manhattan and should command an excellent following. It has
capacity for 405 passengers and a maximum speed of 50 m.p.h. The
second vessel is expected to enter service in March, 2004.
The company's SNAV-SeaCat joint venture in the Adriatic had a
satisfactory season and the partners have decided to introduce a
second vessel, a Sea Containers owned SeaCat, on the
Pescara/Hvar/Split route starting next summer.
The company reported under "other" operating profit a gain of $5
million arising from the sale of property in the port of
Newhaven, England. An agreement has been reached in principle
for the sale of the company's port interests in Folkestone,
England while retaining a long lease for a nominal sum of the
inner harbor for use as a lay-up berth for Hoverspeed's vessels
and the train station car park for use by Orient-Express Hotels
for its Venice Simplon-Orient-Express tourist train.
Orient-Express Hotels, in which the company has a 47%
shareholding, announced its third quarter results earlier. Net
earnings were $8.2 million compared with $9.1 million in the year
earlier period. The modest decline was largely due to the
effects of Hurricane Isabel which caused cancellation of bookings
at its hotels in Maryland, Virginia and South Carolina in
September.
Sea Containers 47% share of that company's net earnings for the
third quarter was $3.8 million compared with $5.3 million in the
year earlier period when its shareholding was 58% of Orient-
Express Hotels.
Mr James B Sherwood, President, said there had been a number of
important developments to report. Of particular significance,
GNER has reached agreement in principle with Network Rail in the
U.K. on GNER's claims arising out of the Hatfield rail disaster
in October, 2000. The agreement provides for GNER to pay Network
Rail $7.2 million of track access charges over-withheld. The
settlement is currently being audited by the Strategic Rail
Authority and if they concur, the matter should be finally
resolved by the end of this year.
Mr Sherwood said that GNER's franchise comes up for renewal in
April, 2005 and while it will be put to public tender it has so
far generally been the practice of the Strategic Rail Authority
to renew with incumbents who have performed satisfactorily. GNER
is considered to be one of the best run railways in the United
Kingdom. GNER is planning to bid for two other franchises if
permitted by the Strategic Rail Authority. In both cases these
are new franchises and not an attempt to wrest franchises from
incumbents. GNER believes it can bring the same "tender loving
care" to the passengers on the routes to be operated by these
other franchises as it brings to GNER passengers. GNER is one of
the few U.K. railroads which operates without subsidy.
Mr Sherwood said that consultations are well advanced towards
changing its U.K. fast ferry operations from year-round to
seasonal. The operation of larger fast ferries on Dover-Calais
and Belfast-Troon has been successful this year and will be
continued in 2004.
Silja's m.v. Finnjet will undergo modifications and upgrade of
passenger spaces in the spring of 2004 at a cost of Euros 15
million to prepare her for operation on the Rostock-Tallin-St.
Petersburg route under a different European Union flag. One
third of the ship's capacity on the new route has already been
booked for 2004. This service will dovetail with Silja's two
large SuperSeaCat fast ferries which operate on the Helsinki-
Tallinn route and which had a successful season in 2003,
capturing a significantly larger market share.
Mr Sherwood said that at September 30, 2003 GE SeaCo had taken
delivery of $142 million of new containers and it appeared that
new container deliveries for the year would surpass $190 million.
GE SeaCo's owned container fleet currently enjoys 98% utilization
while the "pool fleet" of containers owned by Sea Containers and
GE Capital prior to the creation of GE SeaCo in 1998 has a
utilization of 81%. "Demand for containers is holding up well
and our customers are buying more and larger new containerships
to meet the expected growth in world trade. The ocean carriers
now seem to be operating profitably and the "tone" of the market
is excellent with lessee bad debts at historic lows and length of
receivables historically short. Our idle container stocks in
North America have dropped by 30,000 units in the last 12
months," he commented.
Mr Sherwood indicated that the company's EBITDA for the nine
months was $251 million excluding earnings on its investment in
Orient-Express Hotels and cash and undrawn credit lines at
September 30, 2003 were $164 million. The company's 14.4 million
common shares in Orient-Express Hotels have a current market
value of about $245 million.
"The company's results for the quarter, nine months and surely
the year are splendid, despite a slow start due to the
consequences of the Iraq War, SARS (which affected the container
leasing business in Asia), an exceptionally harsh winter in the
Baltic and high fuel costs. We've made major inroads into
lingering problems such as excess idle container stocks in the
U.S. and poor fast ferry performance in the U.K. Through our
sale of the Steam Packet Company we have demonstrated the
enormous underlying value of our assets and have made a
substantial debt reduction. We will continue to strengthen our
balance sheet while leaving the door open to expansion
opportunities." he concluded.
To see financial statements:
http://bankrupt.com/misc/Sea_Containers.htm
CONTACT: Sea Containers Services Ltd.
Sea Containers House
20 Upper Ground
London SE1 9PF.
Steve Lawrence, Public Relations and Communications
Phone: +44 20 7805 5830
Email: steve.lawrence@seacontainers.com
TYCO INTERNATIONAL: To Cancel Listing Of Common Shares In London
----------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC; BSX: TYC; LSE: TYI) announced
Wednesday that it intends to delist Tyco common shares from the
Official List of the UK Listing Authority and from trading on the
London Stock Exchange plc, effective from close of business on
December 12, 2003.
This action is being taken due to the low trading volume of Tyco
shares on the London Stock Exchange and the costs associated with
the maintenance of the London listing. Tyco common shares will
continue to be listed on the New York Stock Exchange and on the
Bermuda Stock Exchange.
Until the cancellation of the listing on close of business
December 12, 2003, Capita Registrars (formerly IRG plc) will
continue to act as Tyco's transfer agent in the United Kingdom.
After that date, as Tyco will no longer retain a branch register
or transfer agent in the UK, all communications relating to share
registration, dividends and similar matters should be sent to
Tyco's global transfer agent, Mellon Investor Services, LLC, at
Mellon Investor Services, LLC, 85 Challenger Road, Ridgefield
Park, NJ 07660, U.S.A. (telephone: 001-201-329-8810). A letter
was being sent to shareholders with registered addresses in the
UK Wednesday informing them of this change.
About Tyco International
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest manufacturer, installer and provider of fire protection
systems and electronic security services; and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in medical device products, and plastics and
adhesives. Tyco operates in more than 100 countries and had
fiscal 2003 revenues from continuing operations of approximately
$37 billion.
CONTACTS: Media: Gary Holmes, (001) 609-720-4387
Investor Relations: Ed Arditte, (001) 609-720-4621
John Roselli, (001) 609-720-4624
===========
B R A Z I L
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CFLCL: Issues Relevant Info Regarding Asset Sale
------------------------------------------------
Under the terms of Article 34 of CVM Instruction 358/2002 and in
accordance with its corporate strategy, the company Companhia
For‡a e Luz Cataguazes-Leopoldina declares:
1) The subsidiary CAT-LEO Energia S/A has signed a sale and
purchase agreement (through the corporate restructuring of the
aforementioned company with rights and liabilities surviving),
subject to prior approval by the respective creditors and
regulatory agencies, of the SHPs Ivan Botelho I (newly named SHP
Ponte) and T£lio Cordeiro de Mello (newly named SHP Granada) of
total capacity of approximately 40 MW to Brascan Energetica S/A.
2) The Company will inform the public, the outcome of the
aforementioned sale, as soon as it has been performed.
EMBRATEL: Report Of Independent Public Accountants
--------------------------------------------------
To the Shareholders and Board of Directors of Embratel
Participa‡oes S.A. Rio de Janeiro:
1. We have made a special review of the balance sheets of
Embratel Participa‡oes S.A. (a Brazilian corporation) and
subsidiaries (parent company and consolidated) as of September 30
and June 30, 2003 and the statements of income for the nine-month
periods ended September 30, 2003 and 2002, and the report on
performance, prepared under the responsibility of the Company's
management, in accordance with accounting practices adopted in
Brazil.
2. Our review was conducted in accordance with specific standards
established by the Brazilian Institute of Independent Auditors -
Ibracon, together with the Federal Accounting Council, for review
of quarterly information (Standard #NPA 06) and comprised: (a)
inquiries of and discussions with Company's Management
responsible for the accounting, financial and operating areas as
to the principal criteria adopted in the preparation of the
quarterly information; and (b) review of information and
subsequent events that had or might have had significant effects
on the financial position and operations of the Company.
Considering that this special review does not constitute an
examination in accordance with generally accepted auditing
standards, we do not express an opinion on the aforementioned
financial statements.
3. Based on our special review, we are not aware of any material
modification that should be made to the information contained in
the financial statements referred to in paragraph 1, for them to
be in accordance with accounting practices adopted in Brazil.
DELOITTE TOUCHE TOHMATSU Celso de Almeida Moraes
Auditores Independentes Engagement Partner
To see latest financial statements:
http://bankrupt.com/misc/EMBRATEL.htm
EMBRATEL: MCI Decides To Sell Stake
-----------------------------------
Embratel Participacoes S.A. (Embrapar) announced Wednesday that
it has been informed by MCI about its intention to sell its
majority stake. MCI currently owns 51.79% of Embrapar common
stock (19.26 percent of the total capital). Embrapar holds 98.73%
of Embratel shares. The Company was also informed that MCI has
initiated a process to identify a buyer for its ownership
interest, and that the outcome of this process cannot be assured.
This process has no effect on Embratel's ability to continue to
pursue its objectives.
"We are committed to our customers, our employees and our
stockholders. We will continue to pursue Embratel's interests,
and to advance in our goal to reinforce Embratel's leadership
position as the premium telecommunications service provider in
Brazil. We maintain our commitment to servicing an increasing
number of corporate, government and residential customers with
high-quality end-to-end telecommunications solutions, while
consistently improving the Company's performance, as demonstrated
by our results for the last six quarters", Jorge Rodriguez,
President of Embratel and Embrapar, said.
Embratel is the premium telecommunications provider in Brazil and
offers and ample variety of telecom services -local and long
distance telephony, advanced voice, highspeed data transmission,
Internet, satellite data communications, and corporate networks.
The company is a leader in the country for data services and
Internet, and is highly qualified to be an all-distance network
carrier in Latin America. Embratel's network spreads countrywide,
with almost 29 thousand kms of optic cables, which represents
about one million and sixty-nine thousand km of fiber optics.
CONTACT: Silvia M.R. Pereira, Investor Relations
Phone: (55 21) 2121-9662
Fax: (55 21) 2121-6388
Email: silvia.pereira@embratel.com.br
invest@embratel.com.br
TELEMAR: Issues $50M Worth of 2-Yr Bonds on Foreign Markets
-----------------------------------------------------------
Brazilian telecom operator Tele Norte Leste Participacoes (NYSE:
TNE) (Telemar) issued two-year bonds worth US$50 million on
foreign markets, according to a Valor Online report. The bonds
will pay a coupon of 5.75% a year, adds the report.
The recently issued bonds are part of the US$100-million senior
unsecured notes program, which last week received a B+ from
credit rating agency Standard & Poor's. S&P said proceeds would
be used to strengthen Telemar's cash position in light of the put
option on its approximately US$145mn local debentures due March
2004.
=========
C H I L E
=========
ENERSIS: Reveals Plan to Offer 10-Yr. Notes In Int'l Markets
------------------------------------------------------------
Chilean power company Enersis SA scheduled a roadshow
presentation to begin next week as part of a plan to offer ten-
year notes in the international markets. According to Dow Jones,
the size of the deal is yet to be determined.
Citing a company press release, the report reveals that Enersis
is planning to use funding from the deal to partially repay a
US$1.5 billion senior secured syndicated term loan facility that
Enersis entered into on May 15, 2003. At the moment around US$1
billion of this loan hasn't been repaid.
CONTACT: Enersis SA
Avenida Kennedy Vitacura No 5454
Santiago Chile 1557
Phone: +56 2 353 4400
Fax: +56 2 378 4768
Home Page: http://www.enersis.cl
Contacts:
Engr Alfredo Llorente Legaz, Chairman
Engr Rafael Miranda Robredo, Vice Chairman
===============
C O L O M B I A
===============
TERMOEMCALI: S&P Affirms Funding Rating
---------------------------------------
Standard & Poor's Ratings Services said Wednesday that it
affirmed its 'CC' rating on TermoEmcali Funding Corp.'s US$165
million senior secured notes.
The rating is contingent upon TermoEmcali's full and timely
coverage of its next coupon payment of US$5.1 million, which is
due in December 2003.
The outlook remains negative.
"The negative outlook reflects the expectation for continued
deterioration of TermoEmcali's ability to repay its debt
considering that the project's off-taker, Emcali, defaulted on
its payment and
TermoEmcali's debt reserve fund is being depleted," said Standard
& Poor's credit analyst David Gonzalez.
Emcali and TermoEmcali are in the process of renegotiating a new
power purchase agreement (PPA).
TermoEmcali is the owner of a 234 MW combined-cycle natural gas-
fired power generation facility that sells capacity and energy to
Emcali under the PPA.
Emcali is a Colombian municipal utility that provides diversified
services to two million inhabitants in and around Santiago de
Cali.
ANALYSTS: David Gonzalez, Mexico City (52) 55-5279-2062
Santiago Carniado, Mexico City (52) 55-5279-2013
===================
C O S T A R I C A
===================
ICE: Audit Proves Government Wrong
----------------------------------
The results of an audit conducted by a committee contradicted the
Costa Rican government's claim that state-run electric power
company and telecoms monopoly ICE was losing money, Business News
Americas indicates.
Earlier this year, a conflict broke out between the government
and the workers' union over ICE's investment plans after the
government blocked ICE's plans to raise its debt level, claiming
the Company was losing money.
The unions rejected the claim and subsequently went on strike.
The recently concluded audit, however, backed the workers'
petition for extra working capital, saying the Company should
seek price hikes more frequently. It said that discrepancies
between investigations by Costa Rica's comptroller general and
the International Monetary Fund were due to different
terminologies.
Furthermore, the committee suggested that the government had
mistakenly treated state investments using ICE profits as company
expenses, without taking into account the government assets or
productive capacity that would result from those investments.
Simultaneously, the report encouraged ICE to meet outstanding
demand for electricity and telecoms services, and said the
government should take responsibility for monitoring demand.
===================================
D O M I N I C A N R E P U B L I C
===================================
TRICOM: Posts $21.8M Net Loss For 3Q03
--------------------------------------
Tricom, S.A. (NYSE:TDR) announced Wednesday its consolidated
unaudited financial results for the third quarter and first nine
months of 2003.
Operating revenues totaled $50.0 million for the 2003 third
quarter, a decrease of 23.8 percent from the 2002 third quarter.
For the first nine months, operating revenues totaled $160.9
million, an 18.1 percent decrease from the year-ago-period.
Adjusted EBITDA totaled $12.6 million for the 2003 third quarter
and $44.1 million for the first nine months, compared to Adjusted
EBITDA of $21.6 million and $63.8 million for the third quarter
and first nine months of 2002, respectively. Net loss for the
2003 third quarter was $21.8 million, or $.34 per share, and
$61.9 million, or $.96 per share during the first nine months of
the year.
During the 2003 third quarter, the Company's operations continued
to be under pressure from the devaluation of the Dominican peso,
which reached approximately 90 percent over the last twelve
months. As a result, the Company did not make an approximate
$11.4 million interest payment on its 11-3/8% Senior Notes due
2004, originally scheduled for September 2, 2003. The Company is
in active dialogue with its bank lenders as well as an ad hoc
committee representing holders of its 11-3/8% Senior Notes due
2004.
The Company has engaged Bear, Stearns & Co. Inc. to assist in
evaluating financial and strategic alternatives, and formulate a
restructuring plan, which may include the refinancing or
restructuring of its existing debt or the sale of all, or a
portion, of its assets or business to a third party. The Company
is in discussions with a number of strategic and financial
investors regarding a potential sale or recapitalization.
Results of Operations
The Company's operating results reflect the impact of currency
devaluation, which reached approximately 23 percent in the third
quarter and 84 percent during the first nine months of the year,
affecting the translation of Dominican peso-generated revenues
into U.S. dollars. The Central Bank of the Dominican Republic
reported that the inflation rate was approximately 27 percent for
the nine-month period ended September 30, 2003, compared to
approximately 5 percent for the nine-month period ended September
30, 2002.
Despite adverse economic conditions, the Company's peso-
denominated revenues increased by approximately 10.6 percent
quarter-over-quarter and 4.1 percent year-over-year in peso terms
primarily due to price increases and the continued efforts to
improve the Company's customer mix, prioritizing those with
higher added value.
Long distance revenues grew by 2.5 percent to $24.2 million in
the 2003 third quarter and by 3.8 percent to $73.3 million for
the first nine months of 2003. The revenue increase resulted
primarily from higher international long distance termination
rates into the Dominican Republic and strong international
traffic volume derived from the Company's U.S.-based retail
operations.
Domestic telephony revenues totaled $13.5 million in the 2003
third quarter, a 35.3 percent decrease from the 2002 third
quarter. For the first nine months, domestic telephony revenues
totaled $46.2 million, a 28.0 percent year-over-year decrease.
The decrease in domestic telephony revenues was primarily the
result of the devaluation of the Dominican peso, coupled with
lower new line additions. Total lines in service at September 30,
2003 decreased 24.2 percent to approximately 136,000 compared to
total lines in service at September 30, 2002. The decrease in
lines in service reflects the Company's strategy of improving its
customer mix by focusing on higher value customers and phasing
out low usage wireless local loop (WLL) customers.
Mobile revenues decreased by 33.3 percent to $8.0 million in the
2003 third quarter and by 24.3 percent to $27.2 million for the
first nine months of 2003. The decrease in mobile revenues was
the result of the devaluation of the Dominican peso combined with
a $1.7 million reclassification of commissions from expenses to
revenues during the 2003 second quarter in accordance with Staff
Accounting Bulletin (SAB 101) "Revenue Recognition" issued by the
Securities and Exchange Commission (SEC). Average revenue per
mobile subscriber for the 2003 third quarter increased by
approximately 11.2 percent from the 2003 second quarter primarily
as a result of higher interconnection revenues and a greater
number of post-paid mobile subscribers. Cellular and PCS
subscribers totaled approximately 429,000 at September 30, 2003,
a 4.4 percent increase from September 30, 2002.
Data and Internet revenues totaled $1.1 million in the 2003 third
quarter and $3.4 million in the first nine months, representing a
63.5 percent quarter-over-quarter and 59.2 percent year-over-year
decrease. The decrease in data and Internet revenues is
attributable to the cancellation by the Company of its government
contract to provide broadband satellite Internet access to every
public high school in the Dominican Republic coupled with the
devaluation of the Dominican peso.
Cable revenues totaled $3.1 million in the 2003 third quarter, a
47.9 percent decrease from the year-ago period. For the first
nine months, cable revenues totaled $10.6 million, a 37.2 percent
decrease from the year-ago- period. The decrease in cable
revenues is primarily the result of currency devaluation coupled
with subscriber loss. Cable subscribers totaled approximately
64,000 at September 30, 2003, a 10.1 percent decrease year-over-
year.
The Company has instituted expense control measures and
eliminated all non-essential expenditures. These initiatives
include a 30 percent year-to- date reduction in monthly cable
programming fees, lower domestic prepaid commission structure by
7-percentage point's year-over-year and a reduction of its
advertising expenses by 43 percent year-over-year. Going forward,
the Company expects to generate additional expense savings
through planned staff reductions. The Company will continue to
assess its operations and conduct certain asset divestitures with
a continued focus on profitability.
Consolidated operating costs and expenses totaled $57.8 million
in the 2003 third quarter compared to $64.9 million in the 2002
third quarter. For the first nine months, consolidated operating
costs and expenses totaled $178.1 million compared to $193.5
million during the first nine months of 2002. The year-over-year
decrease in operating costs and expenses reflect expense control
efforts and streamlined operations, coupled with the elimination
of expenses in lieu of income taxes, as well as lower Dominican
peso-denominated costs and expenses resulting from currency
devaluation. The decrease in consolidated operating costs and
expenses was partially offset by higher depreciation and
amortization charges.
Cost of sales and services, consisting primarily of transport and
access charges, cable programming fees and cost of goods sold,
decreased by 6.3 percent to $20.9 million during the 2003 third
quarter and increased by 0.9 percent to $66.1 million during the
first nine months. Selling, general and administrative (SG&A)
expenses decreased by 24.0 percent to $17.7 million in the 2003
third quarter and by 24.7 percent to $53.7 million for the first
nine months. As a percentage of total operating revenues, SG&A
expenses decreased to 33.4 percent for the first nine months of
2003, compared to 36.3 percent for the first nine months of 2002.
Interest expense totaled $15.2 million in the 2003 third quarter
compared with $17.2 million in the prior year quarter, and
totaled $47.0 million for the first nine months of 2003 compared
to $46.9 million during the first nine months of 2002.
Liquidity and Capital Resources
Total debt, including capital leases and commercial paper,
amounted to $454.5 million at September 30, 2003, compared to
$528.9 million at September 30, 2002 and $467.6 million at
December 31, 2002. Total debt included $200 million principal
amount of 11 3/8% Senior Notes due 2004, approximately $36
million of secured debt and approximately $218.4 million of
unsecured bank and other debt. At September 30, 2003, the Company
had approximately $7.1 million in cash and investments. Net debt
totaled $447.4 million at September 30, 2003. The Company's net
cash provided by operating activities totaled $10.4 million for
the first nine months of 2003 compared to $6.3 million for the
first nine months of 2002. Capital expenditures were $1.7 million
during the 2003 third quarter and $11.8 million during the first
nine months of 2003, representing an approximate 87 percent
quarter-over-quarter and 78 percent year-over-year reduction. The
Company's free cash flow totaled $9.4 million during the first
nine months of 2003 compared to negative free cash flow of $36.2
million during the first nine months of 2002.
About TRICOM
Tricom, S.A. is a full service communications services provider
in the Dominican Republic. It offers local, long distance,
mobile, cable television and broadband data transmission and
Internet services. Through Tricom USA, it is one of the few Latin
American-based long distance carriers that is licensed by the
U.S. Federal Communications Commission to own and operate
switching facilities in the United States. Through its
subsidiary, TCN Dominicana, S.A., it is the largest cable
television operator in the Dominican Republic based on its number
of subscribers and homes passed.
EBITDA, Adjusted EBITDA and Free Cash Flow should not be
considered as substitutes for operating income (loss), net income
(loss), net cash provided by operating activities or other
measures of performance or liquidity reported in accordance with
GAAP. Net Debt should not be considered a substitute for total
debt.
To see financial statements: http://bankrupt.com/misc/Tricom.htm
CONTACT: Miguel Guerrero, Investor Relations
Phone: (809) 476-4044 / 4012
Email: investor.relations@tricom.net
URL: www.tricom.net
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J A M A I C A
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CABLE & WIRELESS: Revenue Declines in 1H03
------------------------------------------
Chairman's statement:
"We are now six months into our restructuring and performance
improvement plans for the Group. There have been some encouraging
indicators in terms of cash management and control of capital
expenditure.
"Progress to date supports our intention, as stated in June 2003,
to pay a final dividend for the financial year ending 31 March
2004. The level of the payment will be dependent on progress made
in the second half of the year, and particularly on establishing
the long term sustainable requirement for capital expenditure.
"When we published our full-year results in June the CEO and COO
had been with Cable & Wireless for two months. They are now well
established. Having determined the priorities of the Group, they
have acted decisively in setting the agenda and driving
performance to create a sustainable business going forward.
"We have nearly completed the reconstruction of the Board and I
welcome Charles Herlinger, who joins as CFO on 1 December, and
Lord Robertson, who joins as Executive Deputy Chairman on 1
February 2004. George Robertson will, alongside Rob Rowley, lead
our new approach to building and developing constructive
relationships with governments in our national telco territories
and in areas of the world that are working towards
liberalisation.
"In line with the priorities I set at the beginning of the year,
we have further improved the financial stability of the Group by
disposing of our PCCW stake for GBP229 million. The issue of the
new convertible bond in June for GBP258 million has locked in a
low rate of interest and also improved our funding repayment
profile.
"In the first six months we have been tackling the route for exit
from the US and implementing the first steps in improving the
performance of the UK business, as we lay the foundations for a
clearer direction for the Group. However, there is much to change
operationally. This will impact all our businesses around the
world and restructuring them to be fit for the future will
inevitably lead to a wider range of possible results by country."
Francesco Caio, CEO of Cable & Wireless said:
"On 4 June I set out three priorities for the Group: exit the US;
restructure the UK and drive performance; and build on national
telcos.
"We are making good progress in ensuring we are able to exit the
US whilst maintaining continuity of services to our customers and
reducing the cost of continuing operations. We have exited eight
data centres and reduced headcount by more than 1,000 to
approximately 1,700. Pre-exceptional operating losses have been
reduced by GBP100 million and free cash outflow by GBP156 million
compared to the second half of 2002/3. Cable and Wireless plc and
the US business have signed a separation agreement to maintain
continuity of international services to respective customers.
Cable and Wireless plc has built a tailored network in the US to
continue to offer US termination to non-US customers. Together
these preparations provide a good basis to evaluate and pursue a
range of options to exit the US market.
"We continue to review and reduce the US lease exposure,
including the negotiation for early termination with landlords.
The net effect of this, and taking into account lease payments in
the period, is an estimated fall of some GBP200 million in the US
lease commitment.
"We announced a transformation plan for the UK that would take
three years to implement. The performance we have seen in the six
months since then is consistent with our objective to stabilise
the business in the first year of this plan. Operating cash flow
has improved by GBP260 million to GBP21 million compared with the
second half of 2002/3, primarily due to rigorous controls on
capital expenditure and renewed focus on working capital. Our
1,500 headcount reduction programme, originally anticipated to be
over an 18 to 24 month period, is proceeding well. Over 600
people have now left the business and we anticipate a similar
number leaving in the second half of this year. We are
rationalising our property portfolio and insourcing some IT
activities. It is anticipated that the benefits of all these
initiatives will lead to approximately a GBP40 million reduction
in the operating cost base of the UK business in the second half
of the year, compared with the first half. Revenue is flat
compared with the prior six month period, following a decline of
approximately 12 percent per annum over the last two years.
"Many of our National Telcos have now entered a challenging phase
of competition and liberalisation, reflected in the first half
results. The markets in Jamaica and Panama have been fully
competitive throughout this period and, as reported in our last
update, international revenues have declined. In this new
environment we have responded by reducing headcount by almost
800, de-layering and simplifying the management structure and
strengthening the Boards in Panama and certain Caribbean islands.
Our aim has to be to produce a stable level of profits from a
markedly different sales mix. Our operating priority therefore
over the next six months will be to increase efficiency,
strengthen our marketing capabilities and enhance our competitive
position in mobile in the Caribbean. We also recognise the
importance of constructive dialogue with governments and
regulators. This is key to creating a `win-win' scenario, where
investments in new services will benefit customers and businesses
while generating adequate returns capable of balancing, over
time, the decline in margins of more mature and increasingly
competitive offerings.
"We have also focused on repositioning our businesses in
continental Europe and Japan. In continental Europe we have
completed our divestment programme, reduced cash outflow and are
now concentrating on serving wholesale and large corporate
accounts. In Japan we are also focusing the business on wholesale
and large corporate accounts, capitalising on our position in the
international and data markets.
"We have just begun our transformational journey towards a
renewed and profitable Cable & Wireless. I am under no illusion
about the challenges that are still ahead of us. At the same time
I am increasingly confident that our business has great
potential. The progress we have made in the first six months is
an encouraging beginning."
Cash and funding
Tight cash management remains a key focus. Cable & Wireless ended
the period with gross cash balances of GBP2,891 million
(including GBP12 million of treasury instruments). Total
borrowings were GBP1,268 million, of which long term debt was
GBP937 million. Included in the short-term portion are US$400
million of bonds maturing in December 2003.
The net cash balance at 30 September was GBP1,623 million. Cable
& Wireless continues to believe it has the necessary liquidity to
carry out its restructuring plans.
Dividend
On 4 June 2003 the Group announced that the Board had decided to
suspend dividends for 12 months in order to give greater
financial flexibility during this transitional period. There is
therefore no interim dividend declared for this financial year.
It remains the Board's intention to pay a final dividend for this
financial year and the level of the payment will be determined by
reference to progress made against the restructuring plan, the
resultant improved financial performance and the likely future
capital expenditure requirements of the Group.
Exceptionals
In the six months to 30 September 2003 the Group recognised
GBP148 million of exceptional charges. The Group has incurred
GBP40 million in the year to date in respect of the US, related
initially to restructuring the business, and later, in
preparation for exiting the business. The review of the UK
business has resulted in the closure of a number of properties
and employee redundancies, with related costs of GBP81 million at
the half year. Other exceptional operating costs of GBP27 million
mainly relate to restructuring in the Caribbean, Panama, the
corporate centre and Japan.
Progress on restructuring initiatives
Since Cable & Wireless announced its intention to withdraw from
its US domestic operations on 4 June 2003, it has continued to
explore a range of options for doing so at the lowest cost whilst
taking into account customers' interests. In line with this
strategy, the ongoing commercial dealings between the US
operations and the rest of the Cable & Wireless Group have been
formalised and Cable & Wireless has put in place a tailored US
network to maintain termination and continuity of service for
customers with US requirements. In addition, Cable & Wireless is
continuing to implement a rigorous cost reduction programme
throughout its US operations. Key milestones in the US since 31
March 2003 include:
- Eight further data centres closed.
- Headcount reduced by 1,028.
In addition, Cable & Wireless has continued to refocus operations
in continental Europe on multinational Wholesale and Enterprise
customers. Key milestones in continental Europe since 31 March
2003 have been:
- Disposal of domestic businesses in Sweden, Belgium, the
Netherlands, Italy, Switzerland, France and Germany as well as
the domestic data business in Russia.
- Headcount reduced by 543.
Insurance
Cable & Wireless continues to review and monitor the status of
Pender Insurance Limited and the claims it receives. Since making
the disclosure in our Annual Report 2003, there have been no
material developments that would substantially change that
disclosure.
Statement on results for the six months to 30 September 2003
The results and commentary that follow focus on the continuing
activities of the Group and the geographic businesses within the
Group. In presenting financial information for the period ended
30 September 2003 a management approach has been used regarding
revenue and cost allocation.
Exchange rate movements have had a significant impact on the
results of the Group, especially those in geographies with US
dollar denominated transactions. Since the second half of
financial year 2002/3 there has been a 1% devaluation of the US
dollar against sterling and a 17% devaluation of the Jamaican
dollar against sterling. Since the first half of the financial
year 2002/3 there has been an 8% devaluation of the US dollar
against sterling and a 29% devaluation of the Jamaican dollar
against sterling.
Financial Results
Cable & Wireless Group
Group Profit and Loss
The Group has recorded a total operating loss of GBP47 million
for the six months ended 30 September 2003. Exceptional costs of
GBP148 million were charged in the period in connection with
restructuring activities across the Group.
The Group made a total operating profit before exceptionals of
GBP101 million in the six months to 30 September 2003; some
GBP189 million improvement on the second half of 2002/3. This
largely reflects the lower depreciation charge following the
exceptional fixed asset impairment of GBP2,266 million in the
year ended 31 March 2003.
The Group made a loss before tax of GBP3 million in the six
months to 30 September 2003.
The Group's share of profit before tax of associates and joint
ventures has decreased over H2 2002/3 principally due to the
reduction of the Group's share in Mobile One, resulting in its
reclassification as an investment and reduced operating margin in
Telecom Services of Trinidad and Tobago (TSTT).
Net interest and other similar income has fallen by 58% to GBP11
million since H2 2002/3. This reflects the reduction in gross
cash invested, the decline in interest rates, the repayment of
the PCCW zero-coupon exchangeable bonds and the issue in July
2003 of Cable and Wireless plc's convertible bonds due 2010.
In the six months to 30 September 2003 the Group recognised
GBP148 million of exceptional charges. The Group has incurred
GBP40 million in the year to date in respect of the US related
initially to restructuring the business, and later, in
preparation for exiting the business. The review of the UK
business has resulted in the closure of a number of properties
and redundancies with related costs of GBP81 million at the half
year. Other exceptional operating costs of GBP27 million mainly
relate to restructuring in the Caribbean, Panama, the corporate
centre and Japan.
The tax effect of exceptional items is GBP3 million (2002: GBP174
million).
Cable & Wireless Group Performance Analysis
United States
Revenue for the period was GBP176 million, a decline of 14% on H2
2002/3 and 41% on H1 2002/3 at reported rates. Revenue decline
has arisen due to the restructuring announced on 13 November
2002, which led to the disposal of eMessaging and the
international voice business, the closure of five data centres
and the selective disposal of unprofitable frame, ATM and private
line contracts in the second half of last year. The announcement
of Cable & Wireless' intention to withdraw from its US domestic
operations on 4 June 2003 has also led to increased levels of
customer churn.
Operating costs before depreciation, amortisation and exceptional
items were GBP225 million in the period, a decline of 25%
compared to H2 2002/3 and 46% compared to H1 2002/3 at reported
rates. Cost reductions have been achieved across all cost
categories as a result of restructuring and reflect more cost
effective network configuration, improvements in bad and doubtful
debt performance and headcount reductions. Headcount was 1,746 at
30 September 2003 compared to 2,774 at 31 March 2003.
United Kingdom
In the six months to 30 September 2003, UK revenue was GBP825
million, flat compared with H2 2002/3 and a decline of 4% over H1
2002/3.
Revenue in the first half of this year was supported by a 6%
increase in Wholesale compared with H2 2002/3, reflecting short
term international contracts wins. This was offset by a 7%
decline in Business due to the impact of customer churn and
tariff erosion. Enterprise remained broadly flat over the same
period. Total operating costs before depreciation, amortisation
and exceptional items in the period were GBP798 million. These
include approximately GBP25 million relating to the IBM contract
which, due to the termination of that contract, are not
capitalised (as corresponding costs in 2002/3 were). In addition,
due to the significant fall in capital expenditure, specifically
the almost complete suspension of network build, the amount of
costs capitalised in the period is some GBP15 million lower than
in H2 2002/3. A proportion of these costs will be eliminated in
the restructuring process in H2 2003/4.
Headcount at 30 September 2003 was 5,047 compared to 5,682 at 31
March 2003.
Total operating loss before exceptionals of GBP9 million was
GBP139 million lower than H2 2002/3, which is primarily
attributable to a reduction in the depreciation charge following
the impairment of fixed assets at 31 March 2003.
A number of restructuring initiatives were launched in the UK
business in the first half of the year. It is anticipated that
the benefits of these initiatives will lead to approximately a
GBP40 million reduction in the operating cost base of the UK
business in the second half of the year, compared with the first
half.
Europe
Revenue for the period was GBP151 million, up 10% on H2 2002/3,
but down 10% on H1 2002/3 at reported rates. At constant
currency, revenue grew by 2% compared to H2 2002/03 but declined
18% against H1 2002/3.
Revenue growth over H2 2002/3 has been achieved as a result of a
12% increase in Wholesale revenue at constant currency,
reflecting increased seasonal demand. Enterprise revenue more
than doubled over H2 2002/3 as the roll out of major contracts
continues. Overall, revenue growth has been achieved despite the
disposal of domestic operations in Sweden, Belgium, the
Netherlands, Italy, Switzerland, France, Germany and the domestic
data business in Russia, leading to a 67% decline in Business
revenue over H2 2002/3 at constant currency.
Operating costs before depreciation, amortisation and exceptional
items were GBP158 million in the period, down 6% over H2 2002/3
and 12% over H1 2002/3 at reported rates and 13% and 20%
respectively at constant currency. Cost savings have been
achieved as a result of a reduction in employee numbers, property
disposals and network rationalisation as well as the exit of
domestic operations described above. Headcount reduced to 593 at
30 September 2003 compared to 1,136 at 31 March 2003.
Total operating loss before exceptionals was GBP5 million, 86%
and 88% lower than H2 and H1 2002/3 respectively at constant
currency, reflecting strong cost performance and solid revenue as
well as the impact of lower depreciation charges following asset
impairments recognised in the prior year.
Japan & Asia (excl. Macau)
Revenue was GBP158 million for the period, a decline of 5%
compared to H2 2002/3 and 26% lower than the same period last
year at reported rates. Exchange rates had a minimal impact on
the results for the business.
Total revenue in the first half of the year declined due to
pricing pressure on globally managed contracts and the
termination of provision of local services in Hong Kong, leading
to a 21% decline in Enterprise revenue compared to H2 2002/3.
Business revenue was 1% higher than H2 2002/3, driven by growth
in voice revenues, while declines in Wholesale revenue slowed
after sharp falls in the prior year, following migration of
traffic on to customers' own networks.
Operating costs before depreciation, amortisation and exceptional
items were GBP149 million for the period, down 4% compared to H2
2002/3 and 27% compared to H1 2002/3 at reported rates, with
similar trends at constant currency. Excluding the effect of a
pension credit in H2 2002/3, staff costs continued to decline.
Headcount continued to decline with staff numbers decreasing from
1,157 at 31 March 2003 to 1,039 at 30 September 2003.
Total operating loss before exceptional items was GBP5 million
for the period, an improvement of 80% and 74% respectively at
constant currency compared to H2 2002/3 and H1 2002/3
respectively. The improvement is due to lower depreciation
charges resulting from asset impairments charged in the prior
year.
Caribbean
Revenue was GBP341 million for the six months ended 30 September
2003, a decline of 10% over H2 2002/3 and 16% over H1 2002/3 at
reported exchange rates; and 2% compared to H2 2002/3 and H1
2002/3 at constant currency.
Revenue decline was principally the result of liberalisation of
the international fixed line market in Jamaica from 1 March 2003.
At this point the main mobile competitor began operating an
independent earth station for delivery of international traffic,
which materially impacted results for the period. In addition,
international revenues also reflect the impact of declining
international inpayments and rate rebalancing across the region.
Benefits of increases in domestic charges from rebalancing were
reflected in 2001/2 and 2002/3.
The decline in international revenue has been partly offset by
growth in mobile revenue, which has increased by 14% and 26% at
constant currency compared to H2 2002/3 and H1 2002/3
respectively. The mobile customer base has increased from 733,000
at 31 March 2003 to 1,122,000 at 30 September 2003, driven by
continued marketing activity together with the launch of GSM
services in Jamaica, Barbados and Cayman. Domestic revenue also
showed continued growth at constant currency, up 4% over H2
2002/3 and 6% over H1 2002/3, reflecting higher fixed to mobile
revenue and increased interconnect as liberalisation continues.
Operating costs before depreciation, amortisation and exceptional
items were GBP229 million, an increase of 1% compared to H2
2002/3, but a decline of 12% compared to H1 2002/3 at reported
rates. At constant currency operating costs before depreciation,
amortisation and exceptional items increased by 10% and 2%
respectively.
Despite changes in the revenue mix, outpayments and network costs
remain relatively stable as a proportion of revenue. Staff costs
when compared to H1 2002/3 reflect the benefit of headcount
reductions, however the slight increase compared to H2 2002/3 is
primarily the result of higher pension contributions in Barbados
following an actuarial review. Other operating costs reflect
increases in marketing spend to support growth opportunities in
liberalising markets. In addition H2 2002/3 included the effect
of a credit relating to release of accruals made in prior years
that were no longer required.
Total operating profit before exceptional items was GBP87
million, a decline of 30% and 20% at constant currency when
compared to H2 and H1 2002/3 respectively.
Panama
Revenue for the period was GBP135 million, 3% lower than H2
2002/3 and 4% lower than H1 2002/3 at reported rates. At constant
currency, revenue declined by 1% over H2 2002/3 and increased by
4% over the same period last year.
International and domestic revenues have declined relative to
both periods last year, due to the liberalisation of
international and domestic voice services from 1 January 2003.
However, these reductions were offset in whole or in part by
continued double digit growth in mobile revenue as the business
increased its share of the prepaid market and delivered strong
growth in post paid, driven by the introduction of GSM. Internet
revenue continued to show strong growth and is becoming more
important as demand for ADSL increases. At 30 September 2003 the
number of mobile and ADSL subscribers stood at approximately
422,000 and 12,000 respectively.
Operating costs before depreciation, amortisation and exceptional
items were GBP72 million in the period, up 6% over H2 2002/3 and
down 4% over the same period last year at reported rates. At
constant currency, operating costs before depreciation,
amortisation and exceptional items have increased in both
periods, by 8% over H2 2002/3 and by 4% over H1 2002/3.
Outpayments and network costs reflect changes to the sales mix,
which have led to an increase in mobile subscriber acquisition
costs, and the introduction of competition, which has led to
higher outpayments as more traffic terminates on third party
networks. Headcount continues to decline with staff numbers at
1,873 at 30 September 2003 compared with 2,218 at 31 March 2003.
Increases in other costs reflect additional marketing spend
following the liberalisation of the domestic and international
markets.
Total operating profit before exceptionals was GBP44 million, a
decline of 12% compared to H2 2002/3 but an increase of 19%
compared to H1 2002/3 at constant currency.
Macau
Revenue for the period was GBP71 million, flat compared to H2
2002/3 and down 5% on H1 2002/3 at reported rates. Despite the
impact of SARS in the first quarter of this year, revenue was up
1% over H2 2002/3 and up 3% over H1 2002/3 at constant currency,
due to continued growth in international voice traffic. Domestic
voice revenue was flat over H1 2002/3 and H2 2002/3 at constant
currency, while Mobile revenue declined against both periods due
to lower income from handset sales and reduced service charges in
the light of increasing competition.
Operating costs before depreciation, amortisation and exceptional
items were GBP41 million, down 5% compared to both H2 and H1
2002/3 at reported rates. Operating costs before depreciation,
amortisation and exceptional items declined by 4% over H2 2002/3
but increased by 4% over H1 2002/3 at constant currency. Other
operating costs have reduced substantially against H2 2002/3,
principally due to reduced marketing spend in the period. Staff
costs have shown a decline over both periods last year, with
headcount declining to 919 at 30 September 2003 compared with 947
at 31 March 2003.
Total operating profit before exceptionals was GBP21 million, an
increase at constant currency of 17% compared with H2 2002/3 and
flat over H1 2002/3.
Rest of the World
Revenue for the period was GBP98 million, down 3% compared to
both H2 and H1 2002/3 at reported exchange rates. At constant
currency, revenue declined by 2% over H2 2002/3 and increased by
5% over H1 2002/3.
International revenue in Yemen was affected by falling
international accounting rates. Mobile revenue grew 23% at
constant currency compared to H1 2002/3, due to continued growth
in subscribers in the Maldives and Guernsey.
Operating costs before depreciation, amortisation and exceptional
items were GBP56 million, an increase of 2% and 4% over H2 and H1
2002/3 respectively at reported rates. In constant currency,
operating costs before depreciation, amortisation and exceptional
items declined by 2% against H2 2002/3, but increased by 13%
compared to H1 2002/3; this increase was largely attributable to
the acquisition of Guernsey in May 2002.
Total operating profit before exceptional items was GBP41 million
in the period, a decline at constant currency of 13% against H2
2002/3 and 16% against H1 2002/3.
The telecommunications licence to operate in Yemen will expire on
31 December 2003. The Group expects to cease operations in Yemen
from that date. In a full year Yemen contributes approximately
GBP60 million in revenue and GBP14 million profit before tax.
Cash Flow
The increase in cash of GBP743 million since 31 March 2003 was
largely due to a GBP1,001 million movement in liquid resources
following the release of GBP1.5 billion from escrow on 1 April
2003 offset by net repayment of debt of GBP265 million.
Operating activities utilised GBP7 million of cash in the six
months to 30 September 2003. Tax paid relates to the Caribbean,
Panama, Macau and the Rest of the World.
Capital expenditure at GBP172 million declined 52% and 62%
compared to H2 2002/3 and H1 2002/3 respectively as the focus
moved to customer related capital expenditure rather than large
scale network build.
The Group realised GBP229 million of cash in disposing of its
stake in Pacific Century CyberWorks (PCCW).
At 30 September 2003 the Group's net cash was GBP1,623 million,
compared to GBP1,619 million at 31 March 2003 and GBP2,216
million at 30 September 2002. The Group's net cash balance at 30
September 2003 comprised GBP2,891 million of cash (including
treasury instruments held as current investments of GBP12
million) and GBP1,268 million of debt.
CONTACTS: INVESTOR RELATIONS:
Louise Breen
Director, Investor Relations
020 7315 4460
Caroline Stewart
Manager, Investor Relations
020 7315 6225
Virginia Porter
Vice President, Investor Relations, New York
001 646 236 1758
MEDIA:
Susan Cottam
Director, Corporate Communications
020 7315 4410
Peter Eustace
Head of Media Relations
020 7315 4495
Ed Knight
Manager, Corporate Communications
020 7315 6759
===========
M E X I C O
===========
LUZ Y FUERZA: Director Blames CFE for its Financial Woes
--------------------------------------------------------
Luis de Pablo Serna, director of Luz y Fuerza del Centro (LyFC),
blamed the Comision Federal de Electricidad (CFE), as well as
other high costs, for causing a financial deficit that is
suffocating the State-owned power company and limiting its
competitiveness.
According to an El Economista report, Serna slammed CFE for not
providing it with discounted electricity prices considering that
LyFC is one of the CFE's biggest clients.
Serna said that the firm spends 90% of its budget to buy energy
from the CFE. He said that the LyFC's financial deterioration is
demonstrated by its MXN2.5-billion (US$225.38 million) past-due
portfolio. This is equal to one-quarter of its assigned budget
for 2004.
Serna said that the budget recommended by the Fox administration
is insufficient, especially considering its massive debt. The
recommended budget is MXN20 billion (US$1.80 billion) for 2004.
PEMEX: Exec Expresses Concern on Heavy Taxes
--------------------------------------------
Petroleos Mexicanos Chief Executive Raul Munoz Leos expresses
concern that the Company's tax burden might prove to be too much
for it to handle. Mr. Munoz Leos said that the current rate could
cause a lot of financial difficulties in two to three years.
"If you have a net income of `X' and taxes are larger than this,
then you have to report this difference as a loss, and this eats
up your capital. And with a company that doesn't have capital, we
would be in a big mess," Bloomberg News quoted the executive as
saying.
The Company's tax accounts for more than one third of the
government's total revenue, with about two thirds of its $60
billion annual revenue going to taxes.
SATMEX: Commits To Launch Satmex 6 Before Year-End
--------------------------------------------------
Mexican satellite operator Satmex aims to launch Satmex 6 this
year amid technical and financial difficulties that are
threatening to delay such objective, Business News Americas
reports, citing Satmex vice president Arturo Gonzalez.
"The company's main objective is to launch this year. That is the
goal," Gonzalez said. "Even though management wants to launch it
depends on other factors... because we really need the revenues."
In order to access US$230mn in loan guarantees pledged by the
US's Ex-Im Bank and French export financer Cofase to launch
Satmex 6, the Company must first reach an agreement with
bondholders to extend the term on US$320 million in high-yield
bonds due November 2004.
Furthermore, technical problems with the Ariane Space launch
vehicle must also be resolved and a launch date set.
On the lighter side, a group of investment banks headed by Bank
of America have agreed to loan Satmex US$70 million to pay the
launch insurance, provided the Company restructures its high-
yield bonds.
=================
V E N E Z U E L A
=================
HOVENSA: S&P Rates New Debt; Affirms Other Ratings
--------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BBB-' rating to
the Virgin Islands Public Finance Authority's $74.175 million
tax-exempt revenue bonds due 2022 that will be repaid with cash
flow from the HOVENSA LLC crude oil refinery project located in
St. Croix, V.I.
At the same time, Standard & Poor's affirmed its 'BBB-' rating on
HOVENSA's $272 million senior bank facility and $150 million
working capital facility.
Standard & Poor's also affirmed its 'BBB-' ratings on the $63.02
million bonds due 2001 issued by the government of the U.S.
Virgin Islands and the $63.7 million bonds due 2021 issued by the
Virgin Islands Public Finance Authority, each of which are repaid
with cash flows from HOVENSA.
The outlook remains negative. HOVENSA plans to use the new issue
proceeds plus cash to make $81 million in prepayments on its $272
million credit facility.
"The negative outlook reflects the potential for downward
pressure on HOVENSA's ability to meet debt obligations during the
clean fuels capital expenditure program if refining margins are
poor and cash flows forecasts are not achieved," said Standard &
Poor's credit analyst Terry Pratt.
"Furthermore, the negative outlook reflects to some degree the
negative outlook on Amerada Hess Corp., a liquidity provider to
the project. If the rating on Amerada Hess falls, the ratings on
HOVENSA-related debt could also fall," added Mr. Pratt.
Standard & Poor's also said that a movement in the outlook to
stable will require additional comfort that the project will have
sufficient liquidity to meet all of its obligations during the
clean fuels capital program under reasonable market price
scenarios.
A revision to a stable outlook would also require a movement in
the outlook on Amerada Hess to stable from negative.
HOVENSA is 50% owned by a wholly owned subsidiary of Amerada Hess
(BBB/Negative/A-3) and 50% by a wholly owned subsidiary of
Petroleos de Venezuela S.A. (foreign currency rating B-/Stable/--
).
ANALYST: Terry A Pratt, New York (1) 212-438-2080
***********
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.
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