/raid1/www/Hosts/bankrupt/TCRLA_Public/040205.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Thursday, February 5, 2004, Vol. 5, Issue 25
Headlines
A R G E N T I N A
AP SIRACUSA: Court Reviews Reorganization Petition
ARFOR: Rosario Tribunal Declares Company Bankrupt
ARRIONDAS: Bankruptcy Claims Review Deadline Expires Today
BANCO DE GALICIA: Injects ARS238 Mln To Subsidiaries, Trust Fund
BEGET: Individual Reports Expected Next in Bankruptcy Proceeding
BETTERWARE DE ARGENTINA: Receiver Prepares Individual Reports
CABLEVISION: Improves Debt Restructuring Offer
COMPANIA ARENERA: Individual Reports Due at Court Today
CORREO ARGENTINO: Foreign, Local Investors Express Interest
DAGER: Claims Check in Bankruptcy Ends
DESAROLLOS MEDICOS: Bankruptcy Initiated on Court Order
DIAMETRO: Claims Review Deadline Today
DIRECTV LA: Moves for Music Choice Settlement Pact Approval
ESTABLICIMIENTO DIESEL: Receiver Closes Verification Process
FISHOCEANIC: Last Day for Creditor Claims Validation
HANIMAR: Seeks Court Approval for Reorganization
INDUSTRIA PUBLICITARIA: Files For Preventative Reorganization
LEGGERA: General Report Filing Deadline Expires Today
LOPLINI: Proofs of Claim Due Today
MITSUAR: Submits Reorganization Petition to Court
NEG GROUP: General Report Expected Today, Liquidation Probable
OGDEN-RURAL: De Narvaez To Pass All Income To BAPRO
NICOLOSI: Creditor Claims Verification End Today
PETROBRAS ENERGIA: Updates December 2003 Oil, Gas Production
RANUCCI: Individual Reports Filing at Court Today
TEXTIL GUARA: Individual Reports Today To Be Filed at Court
B A R B A D O S
KINGSWAY FINANCIAL: Completes $100M Notes Private Offering
B E R M U D A
FOSTER WHEELER: Subsidiary Begins Radioactive Waste Processing
TYCO INTERNATIONAL: Earnings Improve, Restructuring Adds Value
B O L I V I A
NQL DRILLING: Closes Debt Refinancing With HSBC Bank
B R A Z I L
BANCO SANTOS: S&P Withdraws Rating at Company's Request
EMBRATEL: 4Q03 EBITDA Reaches BRL482 Million
ODEBRECHT: S&P Assigns `B+' to MTN Program
PARMALAT BRAZIL: Pledges Prompt Filing of Key Documents
UNIBANCO: S&P Rates Eurobond 'B+'
C H I L E
ENAMI: Fitch Revises 'A-' Currency Rating Outlook to Positive
C O L O M B I A
PARMALAT COLOMBIA: Regulator's Probe Shows Healthy Finances
D O M I N I C A N R E P U B L I C
BANCO BHD: Fitch Downgrades Ratings In line with DR's Ratings
BANCO DEL PROGRESO: Fitch Lowers Foreign Currency Ratings
BANCO LEON: Fitch Cuts LTFC Ratings to `CCC+'
BANCO MERCANTIL: Fitch Affirms Ratings
G U A T E M A L A
CABCORP: Moody's Assigns B2 to Proposed 5-Yr., Sr. Secured Bonds
M E X I C O
ALLEGRO: Aviation Consultant Predicts Impending Bankruptcy
UNEFON: Signs Deal With America Movil
U R U G U A Y
SUDAMTEX: Controllers Analyze German Group's Bid
- - - - - - - - - -
=================
A R G E N T I N A
=================
AP SIRACUSA: Court Reviews Reorganization Petition
--------------------------------------------------
Buenos Aires Court No. 3 is studying a "Concurso Preventivo"
motion filed by local company A.P. Siracusa S.A., reports local
news portal Infobae. Clerk No. 5 assists the court on the issue.
Once the motion is approved, the Company will undergo a court-
authorized reorganization.
CONTACT: A.P. Siracusa S.A.
Tucuman 540
Buenos Aires
ARFOR: Rosario Tribunal Declares Company Bankrupt
-------------------------------------------------
Argentine company Arfor S.A. enters bankruptcy on orders from
Court No. 11 of the Civil and Commercial Tribunal of Rosario. The
Company, which is based in Santa Fe, was undergoing the
reorganization process when the ruling was issued, local news
source Infobae reveals.
The Court assigned Ms. Dora Leonoe Ianni as the Company's
receiver. She will examine and authenticate creditors' claims and
prepare the required reports. The individual reports, which
contain the results of the credit verification process, are due
at the court on March 18.
The general report, prepared after the individual reports are
processed at court, must be submitted on May 6. The Company's
assets will be liquidated at the end of the process to repay its
creditors.
CONTACT: Arfor S.A.
Cordoba 1330
Rosario, Santa Fe
Dora Leonor Ianni
Cordoba 1464
Rosario, Santa Fe
ARRIONDAS: Bankruptcy Claims Review Deadline Expires Today
----------------------------------------------------------
Court No. 3 of Buenos Aires ordered the receiver for local
company Arriondas S.R.L. to close the credit verification process
for the Company's bankruptcy today. The receiver, Mr. Santiago
Manuel Quiben, will prepare the individual reports, which are due
for filing on March 18.
Working with Clerk No. 6, the court also requires the receiver to
file the general report on May 6, according to an earlier report
by the Troubled Company Reporter - Latin America. This report is
a consolidation of the individual reports after these are
processed at court.
The Company's assets will be liquidated at the end of the
bankruptcy process to reimburse creditors.
CONTACT: Arriondas S.R.L.
E Bonorino 1250
Buenos Aires
Santiago Manuel Quiben
Esmeraldo 783
Buenos Aires
BANCO DE GALICIA: Injects ARS238 Mln To Subsidiaries, Trust Fund
----------------------------------------------------------------
Banco de Galicia y Buenos Aires SA (GALI.BA) made a ARS238-
million capital injection to credit card subsidiaries - Tarjetas
Naranja and Tarjeta del Mar - and a trust fund managed by
Administraciones Fiduciarias SA. According to local news source
La Nacion, Tarjeta Naranja received ARS20 million, Tarjeta del
Mar ARS51 million and the trust fund ARS167 million.
In December, Banco de Galicia announced details of a US$1.4-
billion debt-restructuring, which it said, had been accepted by a
majority of shareholders. The Company is seeking to get 95%
creditor backing by Feb. 18.
Banco de Galicia was among the banks hit hardest by the Argentine
crisis in 2001 and 2002, which forced it to default on its
obligations and start talks to renegotiate its debt with
creditors, many of whom are international banks.
CONTACT: Banco de Galicia Y Buenos Aires
Tte Gral Juan D Peron 407
Buenos Aires
Argentina
C1038AAI
Phone: +54 11 6329 0000
Fax: +54 11 6329 6100
Home Page: http://www.bancogalicia.com.ar
Contact:
Juan Martin Etchegoyhen, Chairman
Antonio R. Garces, Vice Chairman
Grupo Financiero Galicia SA
2nd Floor
No 456 Tte Gral Juan D Peron
Buenos Aires
Argentina 1038
Phone: +54 11 4343 7528/9475
Home Page: http://www.gfgsa.com
Contact:
Atty. Abel Ayerza, Chairman
BEGET: Individual Reports Expected Next in Bankruptcy Proceeding
----------------------------------------------------------------
The credit verification process for the bankruptcy of Argentine
auto dealer Beget S.A. ends today. The court-appointed receiver,
Ms. Beatriz Muruaga, will prepare the individual reports. Judge
Fernandez of Buenos Aires' Court No. 19 approved last year a
petition for the Company's bankruptcy filed by Xerox Argentina
S.A.I.C. for nonpayment of debt. The city's Clerk No. 37, Dr.
Mazzoni aids the court on the process.
CONTACT: Beget S.A.
5ht Floor, Room A
Mansilla 3050
Buenos Aires
Beatriz Muruaga
4th Flor
Aguero 1290
Buenos Aires
BETTERWARE DE ARGENTINA: Receiver Prepares Individual Reports
-------------------------------------------------------------
The receiver for Betterware de Argentina S.A. will prepare the
individual reports for the Company's reorganization as the credit
verification process officially ends today. The individual
reports, which are to be submitted to Buenos Aires Court No. 26
on March 18, will contain the verification results.
The receiver will also prepare a general report, due at the court
on May 4, after the individual reports are processed at court.
The Company's creditors are requested to attend the informative
meeting, one of the last parts of the reorganization process, on
October 9, 2004.
The Troubled Company Reporter - Latin America said in an earlier
report that the Company was undergoing the bankruptcy process
when the court overturned the ruling by permitting it to
reorganize.
CABLEVISION: Improves Debt Restructuring Offer
----------------------------------------------
Failure to obtain enough approval from creditors on its proposal
to restructure some US$725 million of defaulted debt, Argentine
cable company Cablevision SA (CBV.YY) made amendments to the
repayment terms late Tuesday.
Citing a company filing with the Buenos Aires Stock Exchange, Dow
Jones reports that Cablevision's creditors can now swap existing
debts for new notes coming due in seven years at 69.8% of face
value. Alternatively, creditors can receive shares or 10-year
notes at the same face value of their original holdings.
In another component of the offer, the Company will buy back
existing debts at 40% of their original value. Combinations of
the various options are also possible.
Besides noting amendments such as these, the Company said it has
made agreements with financial institutions that hold a
significant portion of the existing debt.
COMPANIA ARENERA: Individual Reports Due at Court Today
-------------------------------------------------------
Buenos Aires Court No. 25 requires the receiver of local company
Compania Arenera del Norte S.A. to file the individual reports in
connection with the Company's bankruptcy today. The reports were
prepared upon completion of the credit verification process late
last year.
The receiver, Mr. Bernardo Walfogiel, will also prepare a general
report after the individual reports are processed in court. This
report must be submitted to the court on March 18. The Company's
assets will likely be liquidated at the end of the process to
reimburse its creditors.
CONTACT: Bernardo Walfogiel
Loyola 660
Buenos Aires
CORREO ARGENTINO: Foreign, Local Investors Express Interest
-----------------------------------------------------------
Even though Argentina's government has not decided yet how it
will handle the re-privatization of postal service Correo
Argentino, three foreign groups and two local investors have
already showed interest in taking part in the tender process for
the adjudication of the service.
Local business daily Infobae reports that representatives of New
Zealand's, Canada's and Germany's postal service operators and
two local groups with certain background in the postal sector
have met with Eduardo Di Cola, the official receiver that is
currently managing Correo Argentino.
Di Cola said that the new concessionaire of the postal service,
who will replace Sideco Americana, would assume control of the
Company in May. The tender process is expected take place in
March or April.
DAGER: Claims Check in Bankruptcy Ends
--------------------------------------
The period for creditors to file proof of amounts owed to them in
the bankruptcy of Dager S.R.L. ends today. The Company's
receiver, Argentine accountant Roberto Boffa, will prepare the
individual reports on the verification results. These reports are
due at the court on March 18.
After the individual reports are processed, the receiver will
prepare a general report to be submitted on May 4. The Company's
assets will then be liquidated at repay creditors. Payments will
be based on the results of the credit verification process.
Buenos Aires Court No. 6 handles the Company's case the Troubled
Company Reporter - Latin America said in an earlier report.
CONTACT: Roberto Boffa
Uruguay 390
Buenos Aires
DESAROLLOS MEDICOS: Bankruptcy Initiated on Court Order
-------------------------------------------------------
Court No. 11 of the Civil and Commercial Tribunal of Rosario
declares local company Desarollo Medicos S.R.L. "Quiebra",
reports Argentine news source Infobae. The Company is placed in
the hands of its receiver, Ms. Dora Leonor Ianni.
The deadline for the individual reports is March 18. These report
contain the results of the credit verification process done to
determine the nature and amount of the Company's debts. The
general report, to be prepared after the individual reports are
processed at court, must be submitted on May 6.
The Company's assets will be liquidated at the end of the
bankruptcy process to repay creditors. Payment distribution will
be based on the results of the credit verification process.
CONTACT: Desarrollos Medicos S.R.L.
San Luis 3921
Rosario, Santa Fe
Dora Leonor Ianni
Cordoba 1646
Rosario, Santa Fe
DIAMETRO: Claims Review Deadline Today
--------------------------------------
Creditors of Buenos Aires-based company Diametro S.A. must have
their claims authenticated by the Company's receiver as the
deadline for verifications expires today. The receiver, Mr.
Mauricio Nudelman, will relay to the court the verification
results through the individual reports.
Buenos Aires Court No. 23, under Judge Villanueva, issued the
bankruptcy order approving a petition filed by one of the
Company's creditor for nonpayment of debt. Clerk No. 46, Dr.
Robledo, assists the court on the case, the Troubled Company
Reporter - Latin America said in an earlier report.
CONTACT: Diametro S.A.
Ave Saenz 1371
Buenos Aires
Mauricio Nudelman
2nd Floor, Office 22
Tucuman 1539
Buenos Aires
DIRECTV LA: Moves for Music Choice Settlement Pact Approval
-----------------------------------------------------------
As an initial step to address problems caused by uneconomic
agreements, the Debtor rejected its programming agreement with
Music Choice, pursuant to which the Debtor was licensed the right
to broadcast and make available to subscribers certain digital
music programming.
The Court authorized the Debtor to reject the Music Choice
Agreement on March 28, 2003 and, consequently, Music Choice
timely filed a proof of claim for $27,327,001. The Music Choice
claim consists of $4,729,560 in accrued but unpaid prepetition
amounts and rejection damages estimated at $22,597,441.
Music Choice and the Debtor have agreed that the Music Choice
Claim will be reduced by $1,327,001 and that Music Choice will
have an allowed general unsecured claim against the Debtor for
$26,000,000. The Debtor and Music Choice have also agreed to a
mutual release of claims.
Thus, by this motion, the Debtor asks the Court to approve its
settlement agreement with Music Choice.
M. Blake Cleary, Esq., at Young, Conway, Stargatt & Taylor, LLP,
in Wilmington, Delaware, contends that the settlement of the
Music Choice Claim should be approved. The Debtor has negotiated
a $1,327,001 reduction of the Music Choice Claim in a case where
few, if any, grounds exist for reduction or offset to the Claim.
The Debtor has specifically analyzed the rejection damage
component of the Music Choice Claim and generally concurs with
Music Choice's estimation of its rejection damages. Mr. Cleary
notes that the proposed settlement avoids the risk of litigating
the Music Choice Claim. The litigation would involve intricate
commercial issues and damage calculations, and thus, be costly
and complex. The outcome of the litigation would also likely not
benefit the estate beyond the terms of the proposed settlement.
The Debtor has analyzed potential claims it may have against
Music Choice and does not believe that any material claim
exists. The proposed mutual releases are, therefore, fair and
appropriate under the circumstances. (DirecTV Latin America
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ESTABLICIMIENTO DIESEL: Receiver Closes Verification Process
------------------------------------------------------------
Angel Veno Vazquez, the appointed receiver for the reorganization
of Argentine company Establicimiento Diesel Buenos Aires S.A.
closes the credit authentication process today. Verifications
were done to determine the nature and amount of the Company's
debts.
The receiver will prepare the individual reports containing the
results of the verifications. These reports are due at the court
on March 18. The general report, prepared after the individual
reports are processed at court, must be filed on May 5.
The informative assembly, one of the last processes in a
bankruptcy, will be held on October 21 this year.
The Troubled Company Reporter - Latin America said in an earlier
report that Court No. 1 of the Civil and Commercial Tribunal of
La Matanza approved the Company's petition for reorganization.
CONTACT: Establecimiento Diesel Buenos Aires S.A.
Avenida Arieta 4027/4041
San Justo
Angel Veno Vazquez
Cristiania 2563
Isidro Casanova
FISHOCEANIC: Last Day for Creditor Claims Validation
----------------------------------------------------
Today, February 5, is the last day for credit verifications
regarding the bankruptcy of Buenos Aires company Fishoceanic
S.A., according to an earlier report by the Troubled Company
Reporter - Latin America. Verifications were done to establish
the nature and amount of the Company's debts as its assets are
liquidated at the end of the process to reimburse creditors.
The Company's receiver, Mr. Mauricio Gola, will prepare the
individual reports on the verification results. He will also
prepare a general report after the individual reports are
processed at the city's Court No. 1. Clerk No. 1 aids the court
on the case.
CONTACT: Mauricio Gola
Maipu 509
Buenos Aires
HANIMAR: Seeks Court Approval for Reorganization
------------------------------------------------
Hanimar S.R.L., which is based in Buenos Aires, seeks court
permission to undergo reorganization. Argentine news portal
Infobae relates that the city's Court No. 21 handles the
Company's petition for "Concurso Preventivo". Clerk No. 42 works
with the court on the matter.
CONTACT: Hanimar S.R.L.
Salguero 613
Buenos Aires
INDUSTRIA PUBLICITARIA: Files For Preventative Reorganization
-------------------------------------------------------------
Argentine news portal Infobae reports that local company
Industria Publicitaria Ital-Art S.A. filed a petition for
"Concurso Preventivo" at Buenos Aires Court No. 15. If the
petition is approved, the Company will undergo the reorganization
process. Clerk No. 29 assists the court on the case, the source
adds.
CONTACT: Industria Pulicitaria Ital-Art S.A.
Triumvirato 4135
Buenos Aires
LEGGERA: General Report Filing Deadline Expires Today
-----------------------------------------------------
The deadline for the submission of the general report for the
bankruptcy of Buenos Aires company Leggera S.A. expires today. An
earlier report by the Troubled Company Reporter - Latin America
indicates that this report was prepared after the individual
reports were processed at court.
The Company's receiver, Ms. Silvia Pirraglia, prepared the
individual reports, which contained the results of the
verification process.
Buenos Aires Court No. 5 handles the case with the cooperation of
Clerk No. 10.
CONTACT: Leggera S.A.
Carlos Calvo 2907
Buenos Aires
Silvia Pirraglia
Talcahuano 426
Buenos Aires
LOPLINI: Proofs of Claim Due Today
----------------------------------
The deadline for credit verification for the bankruptcy of Buenos
Aires-based company Loplini S.R.L. expires today. Creditors must
have their claims examined by the receiver, Mr. Oscar Alfredo
Arias in order to qualify for payments to be made after the
Company's assets are liquidated.
Buenos Aires Court No. 4 handles the Company's case. The court
also requires the receiver to prepare and file the individual and
general reports on the case.
CONTACT: Oscar Alfredo Arias
Carlos Pellegrini 1063
Buenos Aires
MITSUAR: Submits Reorganization Petition to Court
-------------------------------------------------
Mitsuar S.R.L., which is based in Buenos Aires, filed its motion
for "Concurso Preventivo" at the city's Court No. 21, relates
local news source Infobae. The Company is seeking court
permission to undergo reorganization.
Clerk No. 42 assists the court on the case.
CONTACT: Mitsuar S.R.L.
Donado 1990
Buenos Aires
NEG GROUP: General Report Expected Today, Liquidation Probable
--------------------------------------------------------------
The deadline for the filing of the general report for the
bankruptcy of Argentine company Neg Group S.A. expires today. The
liquidation of the Company's assets looms near. Buenos Aires
Court No. 21 declared the Company bankrupt last year, according
to the Troubled Company Reporter - Latin America in an earlier
report. The furniture maker was declared bankrupt upon the
request of its creditor, Merzario Argentina S.A..
CONTACT: Neg Group S.A.
11th Floor 'C'
Libertad Street 877
Buenos Aires
Ms. Patricia Narduzzi
1st Floor
Rivadavia Ave. No. 666
Buenos Aires
OGDEN-RURAL: De Narvaez To Pass All Income To BAPRO
---------------------------------------------------
Argentine businessman Francisco De Narvaez decided to transfer
present and future income of its exhibition center Predio Ferial
de Palermo to state-owned bank Banco de la Provincia de Buenos
Aires (BARPO), to whom he owes around ARS105 million (US$35.71
million). De Narvaez holds a 50% stake in Rural, the firm that
manages the exhibition center, and the Argentine Rural Society
owns the other 50%.
This money was borrowed by Ogden-Rural in 1998, when De Narvaez
was not part of the company. He acquired Ogden's stake in
December 2002 and inherited this debt.
As part of a debt restructuring accord between De Narvaez and
BAPRO, the Company signed a fiduciary agreement with BAPRO
Mandatos y Negocios, which will be the fiduciary agent, and Banco
Provincia, as beneficiary.
De Narvaez had proposed to extend repayment terms by 13 years,
with a three-year grace period and an annual 7.5% nominal rate in
Argentine pesos. The fiduciary cession secures compliance of the
accord by De Narvaez.
NICOLOSI: Creditor Claims Verification End Today
------------------------------------------------
The credit verification process for the reorganization of Buenos
Aires company Nicolosi S.A. ends today. The Company's receiver,
Mr. Ricardo Jorge Randup, who verified the creditors' claims,
will prepare the individual reports, which are due at the court
on March 15.
An earlier report by the Troubled Company Reporter - Latin
America indicated that Court No. 6 of the Civil and Commercial
Tribunal of Quilmes handles the Company's case.
The court requires the receiver to prepare a general report after
it processed the individual reports. This report must be filed on
May 26. The informative assembly will be held on August 1 this
year. This is one of the last parts of a reorganization process.
CONTACT: Nicolosi S.A.
Camino General Belgrano 6003
Florencio Varela
Ricardo Jorge Randup
Moreno 525
Quilmes
PETROBRAS ENERGIA: Updates December 2003 Oil, Gas Production
------------------------------------------------------------
Petrobras Energia Participaciones S.A. (Buenos Aires: PBE,
NYSE:PZE), controlling company with a 98.21% stake in Petrobras
Energia S.A. (Buenos Aires: PESA), announces Petrobras Energia
S.A.'s oil and gas average production for December 2003.
Oil & Gas Average Production (*)
(thousands of boe/day) Dec-03
- Oil Argentina 54.7
- Oil Venezuela 45.5
- Oil Peru 12.3
- Oil Bolivia 1.3
- Oil Ecuador 6.0
Total Oil Production 119.8
- Gas Argentina 34.2
- Gas Venezuela 4.1
- Gas Peru 1.0
- Gas Bolivia 6.1
Total Gas Production 45.4
Total Oil & Gas Production 165.2
(*) Includes 3.1 thousands of BOE/day from nonconsolidated
operations
RANUCCI: Individual Reports Filing at Court Today
-------------------------------------------------
The individual reports for the bankruptcy of Argentine company
Compania de servicios navales Ranucci S.R.L. must be submitted to
Buenos Aires Court No. 7 today. The Company's receiver, Mr.
Miguel Anghel Loustau, prepared the reports after the credit
verification process was completed last year.
The Troubled Company Reporter - Latin America earlier said that
the receiver is also obligated to prepare a general report after
the individual reports are processed at court. This report, which
contains a summary of the information in the individual reports,
must be turned over the to the court by March 18, 2004.
CONTACT: Compania de Servicios Navales Ranucci S.R.L.
Ave. Pedro de Mendoza 1363
Buenos Aires
TEXTIL GUARA: Individual Reports Today To Be Filed at Court
-----------------------------------------------------------
Buenos Aires Court No. 3 expects the filing of the individual
reports for the bankruptcy of local company Textil Guara today.
These reports contain the results of the credit verification
process concluded late last year.
In an earlier report, the Troubled Company Reporter - Latin
America said that the general report is due for filing on April
18. The receiver will prepare this report after the individual
reports are processed at court. The Company's assets are likely
to be liquidated at the end of the process.
CONTACT: Textil Guara
Juan B Alberdi 1635
Buenos Aires
Nelida Haydee Grunblat
Mendes de Andes 1126
Buenos Aires
===============
B A R B A D O S
===============
KINGSWAY FINANCIAL: Completes $100M Notes Private Offering
----------------------------------------------------------
Kingsway Financial Services Inc. (TSX:KFS, NYSE:KFS) announced
that Kingsway America Inc., its wholly owned subsidiary,
completed the sale of US$100 million 7.50% senior notes due 2014
in a private offering. The notes are fully and unconditionally
guaranteed by Kingsway Financial. The notes will be redeemable at
Kingsway America's option on or after February 1, 2009. Kingsway
America intends to use the net proceeds of the offering to repay
certain short-term indebtedness and for general corporate
purposes, including providing additional capital to the Kingsway
subsidiaries.
The notes were sold in the United States to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act of 1933, as amended. The notes have not been registered under
the Securities Act and may not be offered or sold in the United
States without registration or an applicable exemption from the
registration requirements of the Securities Act. Under the terms
of a registration rights agreement, Kingsway America and Kingsway
Financial agreed to file a registration statement under the
Securities Act with the Securities and Exchange Commission to
permit the exchange of the notes for registered notes having
terms substantially identical to those of the notes (except that
the registered notes will not be subject to restrictions on
ownership and transfer) or the registered resale of the notes.
About the Company
Kingsway's primary business is trucking insurance and the
insuring of automobile risks for drivers who do not meet the
criteria for coverage by standard automobile insurers. The
Company currently operates through nine wholly-owned insurance
subsidiaries in Canada and the U.S. Canadian subsidiaries include
Kingsway General Insurance Company, York Fire & Casualty
Insurance Company and Jevco Insurance Company. U.S. subsidiaries
include Universal Casualty Company, American Service Insurance
Company, Southern United Fire Insurance Company, Lincoln General
Insurance Company, U.S. Security Insurance Company, American
Country Insurance Company and Avalon Risk Management, Inc. The
Company also operates reinsurance subsidiaries in Barbados and
Bermuda. Kingsway Financial, Lincoln General Insurance Company,
Universal Casualty Insurance Company, Kingsway General, York
Fire, Jevco and Kingsway Reinsurance (Bermuda) are all rated "A-"
Excellent by A.M. Best. The Company's senior debt is rated
investment grade 'BBB-' (stable) by Standard and Poor's and 'BBB'
(stable) by Dominion Bond Rating Services. The common shares of
Kingsway Financial Services Inc. are listed on the Toronto Stock
Exchange and the New York Stock Exchange, under the trading
symbol "KFS".
=============
B E R M U D A
=============
FOSTER WHEELER: Subsidiary Begins Radioactive Waste Processing
--------------------------------------------------------------
Foster Wheeler Ltd. (OTCBB:FWLRF) announced Tuesday that its
subsidiary, Foster Wheeler Environmental Corporation, has begun
processing low-level radioactive waste at the Oak Ridge National
Laboratory after receiving the United States Department of
Energy's (DOE) authorization for start-up.
Processing began after the DOE's completion of a multi-phase,
comprehensive Operational Readiness Review (ORR) of the facility
design, programs, procedures, management and staff capability.
Upon completion of the final phase of the ORR, DOE declared that
the facility was authorized to start processing. Initial
operations have processed low-level waste and the first shipment
of waste is being transported to the Nevada Test Site for
disposal.
"The approval by the DOE of this processing phase at our Oak
Ridge waste facility is a significant milestone for Foster
Wheeler and for DOE," said Bernard H. Cherry, president and chief
executive officer of Foster Wheeler Environmental. "Over the last
few years, we have worked closely with the DOE to get to this
point, and the commencement of processing operations is a tribute
to the hard work and dedication of our respective teams. We are
committed to continuing our focus on safety, quality, and
reliability, which is imbedded in our management philosophy."
Processing waste is the third of four phases in a long-term
contract between the DOE and Foster Wheeler. The first and second
phases were for design, engineering, permitting, licensing, and
construction. When the processing phase is completed, the fourth
phase of the contract will commence during which Foster Wheeler
will decontaminate and decommission the facility.
Foster Wheeler invested capital in design, engineering, and
construction of the facility under the DOE "Privatization"
program. The DOE will reimburse Foster Wheeler for this capital
investment during the third phase of operations. Foster Wheeler
expects to receive net cash in excess of $40 million in 2004
during this initial phase of process operations.
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research and
plant operation services. Foster Wheeler serves the refining, oil
and gas, petrochemical, chemicals, power, pharmaceuticals,
biotechnology and healthcare industries. The corporation is based
in Hamilton, Bermuda, and its operational headquarters are in
Clinton, New Jersey, USA. For more information about Foster
Wheeler, visit our Web site at www.fwc.com.
CONTACT: FOSTER WHEELER LTD.
Media Contact:
Richard Tauberman, 908-730-4444
or
Other Inquiries: 908-730-4000
TYCO INTERNATIONAL: Earnings Improve, Restructuring Adds Value
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Tyco International Ltd. (NYSE: TYC; BSX: TYC) reported Tuesday
diluted GAAP earnings per share (EPS) of $0.34 for the first
quarter of 2004, an increase of 21 percent compared with EPS from
continuing operations of $0.28 in the first quarter of 2003. The
company reported revenue of $9.7 billion for the quarter, up 9
percent compared with $8.9 billion a year ago, with foreign
currency contributing 7 percentage points of the increase. Income
from continuing operations increased 27 percent to $719 million
from $566 million in the same period last year.
Cash flow from operating activities totaled $1.0 billion in the
first quarter of 2004. Free cash flow was $736 million in the
quarter, up $600 million from the same period last year. Free
cash flow is a non-GAAP financial measure and is described below.
For a reconciliation of cash flow from operating activities to
free cash flow, see the attached table.
"We had a good first quarter, driven primarily by strong revenue
and operating income in our Electronics and Healthcare segments
and improved operating profit in our Fire & Security segment,"
said Tyco Chairman and Chief Executive Officer Ed Breen. "We also
had significantly improved free cash flow versus a year ago,
demonstrating the quality of the progress we've made over the
past year. We're off to a solid start in 2004, and we have a
great deal of work and opportunity ahead of us as we continue to
improve operating margins and transform Tyco into a world-class
operating company."
HIGHLIGHTS FROM THE QUARTER
- Led by a 6 percent increase at Healthcare and a 3 percent
increase at Electronics, the company's organic revenue growth was
2 percent. Organic revenue is a non-GAAP financial measure and is
described below. For a reconciliation, see the attached table.
- The operating margin at Fire & Security improved by six-tenths
of a percentage point due mostly to productivity improvements in
Worldwide Security and Safety Products.
- Electronics backlog increased more than $300 million, or 16
percent sequentially, and the quarterly book-to-bill ratio
increased to 1.06.
- Debt was reduced by $2.1 billion to $18.9 billion, and the
company had cash on hand of $2.8 billion. The debt-to-
capitalization ratio was 40.4 percent at the end of the first
quarter of 2004, compared with 44.3 percent last quarter.
- The company replaced $3.5 billion of credit facilities with
$2.5 billion of new credit facilities with significantly improved
terms and conditions.
RESTRUCTURING PROGRAM UPDATE
Tyco announced a $390 million restructuring program in the fourth
quarter of 2003 to consolidate facilities and improve operating
margins. Continued progress was made in the execution of this
plan, with the closure of 47 facilities and a staffing reduction
of about 1,200 employees. In the quarter, the total charge
related to this program was $51 million and the company realized
$13 million of savings.
SEGMENT RESULTS
The financial results presented in the tables below are in
accordance with GAAP. All dollar amounts are pre-tax and stated
in millions. All comparisons are to the quarter ended Dec. 31,
2002, unless otherwise indicated.
During the quarter, the company transferred the Precision
Interconnect business ($152 million of annual revenue and $22
million of operating income in 2003) from the Healthcare to the
Electronics segment. The results for the Tyco Global Network
(TGN) have been moved from the Electronics segment to Corporate.
Results for the previous periods shown in the tables below have
been adjusted to reflect these moves.
Fire & Security
Dec. 31, Dec. 31, $ Change % Change
2003 2002
Revenue $2,962.1 $2,759.3 $202.8 7.3
Operating Income $251.6 $217.2 $34.4 15.8
Operating Margin 8.5% 7.9%
Revenue increased $203 million, with foreign currency
contributing $195 million of the increase. Higher demand in the
commercial security market was partially offset by continuing
weakness in non-residential construction.
The improvement in operating income and the operating margin was
due to productivity savings at Worldwide Security and Safety
Products, which more than offset the weakness in the Worldwide
Fire business. Performance improved in Continental Europe
Security, where the business essentially broke even for the
quarter.
Electronics
Dec. 31, Dec. 31, $ Change % Change
2003 2002
Revenue $2,838.1 $2,563.1 $275.0 10.7
Operating Income $424.0 $322.8 $101.2 31.4
Operating Margin 14.9% 12.6%
Revenue increased $275 million, with foreign currency
contributing $188 million. In the connector and cable assembly
businesses, revenue increased 15 percent, with foreign currency
contributing nine percentage points of this increase. Revenue
growth in the connector and cable assembly businesses was
partially offset by weakness in battery packs and power systems.
Operating income and the operating margin benefited from higher
volume, improved TyCom performance (excluding TGN), restructuring
and other credits of $20 million and continued cost reduction
actions. Results were adversely impacted by pricing pressure and
higher copper and gold costs.
Healthcare
Dec. 31, Dec. 31, $ Change % Change
2003 2002
Revenue $2,180.5 $1,969.2 $211.3 10.7
Operating Income $537.8 $443.1 $94.7 21.4
Operating Margin 24.7% 22.5%
Revenue increased $211 million with foreign currency contributing
$95 million. The growth was primarily due to stronger performance
in International, Pharmaceuticals and Respiratory. With stronger
performance in Asian and European markets, International revenue
grew 25 percent, including 16 percentage points from foreign
currency.
Operating income increased 21 percent and the operating margin
expanded by 2.2 percentage points, due to increased volumes,
favorable product mix and continued cost improvements, partially
offset by a $10 million increase in R&D spending.
Engineered Products & Services
Dec. 31, Dec. 31, $ Change % Change
2003 2002
Revenue $1,255.6 $1,183.8 $71.8 6.1
Operating Income $106.2 $121.0 $(14.8) (12.2)
Operating Margin 8.5% 10.2%
Revenue increased $72 million, with a $97 million benefit from
foreign currency. Revenue was adversely impacted by continued
weakness in Flow Control, which was partially offset by growth in
the other businesses. Flow Control backlog increased 9 percent
sequentially in the quarter, with strong gains in the
Asia/Pacific region.
Operating income and the operating margin declined due to
continued pricing pressure in Flow Control and lower margins in
Electrical & Metal Products.
Plastics & Adhesives
Dec. 31, Dec. 31, $ Change % Change
2003 2002
Revenue $459.7 $450.6 $9.1 2.0
Operating Income $10.7 $43.4 $(32.7) (75.3)
Operating Margin 2.3% 9.6%
Revenue increased $9 million, with foreign currency contributing
$7 million of the increase. Growth in films was offset by
weakness in the garment hanger business. Operating income and the
operating margin declined principally due to $30 million of
charges related to the restructuring program announced last
quarter.
OTHER ITEMS
- The effective tax rate was 27.0 percent versus 28.1 percent in
the same period a year ago.
- Net interest expense was $239 million, down 9 percent from $263
million in the same period a year ago.
OUTLOOK
The company's EPS outlook for fiscal year 2004 remains unchanged,
with an EPS range of $1.42 to $1.52. This EPS outlook excludes
any impact from the restructuring and divestiture programs
announced last quarter. The company's full-year cash flow
guidance also remains unchanged, with the company expecting to
exceed 2003 cash flow from operating activities and free cash
flow, which were $5.4 billion and $3.2 billion, respectively.
"The economy appears to be improving consistent with our
expectations for the year," added Breen. "However, stronger
performance in the industrial and non-residential construction
markets remains an important factor in achieving the high end of
the EPS range."
The company expects to achieve EPS of $0.35 to $0.37 in the
second quarter of 2004, excluding any impact from the
restructuring and divestiture programs.
EPS excluding charges is a non-GAAP measure and is described
below.
ABOUT TYCO INTERNATIONAL
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's leading provider of both
electronic security services and fire protection services; the
world's leading supplier of passive electronic components; a
world leader in the medical products industry; and the world's
leading manufacturer of industrial valves and controls. Tyco also
holds a strong leadership position in plastics and adhesives.
Tyco operates in more than 100 countries and had fiscal 2003
revenues from continuing operations of approximately $37 billion.
NON-GAAP MEASURES
"EPS excluding charges," "free cash flow" (FCF) and "organic
revenue" are non-GAAP measures and should not be considered
replacements for GAAP results.
The company has forecast its EPS results excluding restructuring
and divestiture charges to give investors additional perspective
on the underlying business results. Because the company cannot
predict the amount and timing of divestitures or restructuring
and the associated charges or gains that will be taken, it is
difficult to accurately include the impact of those items in the
forecast. The difference between Cash Flows from Operating
Activities (the most comparable GAAP measure) and FCF (the non-
GAAP measure) consists mainly of significant cash outflows that
the company believes are useful to identify. FCF permits
management and an investor to gain insight into the number that
management employs to measure cash that is free from any
significant existing obligation. It is also a significant
component in the company's incentive compensation plans. The
difference reflects the impact from:
- the sale of accounts receivable programs,
- net capital expenditures,
- construction of the Tyco Global Network (TGN),
- acquisition of customer accounts (ADT dealer program),
- cash paid for purchase accounting and holdback/earn-out
liabilities and
- dividends paid.
See the accompanying table to this press release for a cash flow
statement presented in accordance with GAAP and a reconciliation
presenting the components of FCF.
The impact from the sale of accounts receivable programs is added
or subtracted from the GAAP measure because this activity is
driven by economic financing decisions rather than operating
activity. Capital expenditures, construction of the TGN, the ADT
dealer program and dividends are subtracted because they
represent long-term commitments. Cash paid for purchase
accounting and holdback/earn-out liabilities is subtracted from
Cash Flow from Operating Activities because these cash outflows
are not available for general corporate uses.
The limitation associated with using FCF is that it subtracts
cash items that are ultimately within management and the Board's
discretion to direct and that therefore may imply that there is
less cash that is available for the company's programs than the
most comparable GAAP measure. This limitation is best addressed
by using FCF in combination with the GAAP cash flow numbers.
FCF as presented herein may not be comparable to similarly titled
measures reported by other companies. The measure should be used
in conjunction with other GAAP financial measures. Investors are
urged to read the company's financial statements as filed with
the Securities and Exchange Commission, as well as the
accompanying table to this press release that shows all the
elements of the GAAP measures of Cash Flows from Operating
Activities, Cash Flows from Investing Activities, Cash Flows from
Financing Activities and a reconciliation of the company's total
cash and cash equivalents for the period.
"Organic revenue" is an important measure used by the company to
measure the underlying results and trends in the business. The
difference between reported net revenue (the most comparable GAAP
measure) and organic revenue (the non-GAAP measure) consists of
the impact from foreign currency and acquisitions and
divestitures. Organic revenue is an important measure of the
company's performance because it excludes items that: i) are not
completely under management's control, such as the impact of
foreign currency exchange; or ii) that do not reflect the
underlying growth of the company, such as acquisition and
divestiture activity. The limitation of this measure is that it
excludes items that have an impact on the company's revenue. This
limitation is best addressed by using organic revenue in
combination with the GAAP numbers. See the accompanying table to
this press release for the reconciliation presenting the
components of Organic Growth.
To see tables: http://bankrupt.com/misc/Tyco_International.pdf
CONTACTS: Media: David Polk, 609-720-4387
Investor Relations: Ed Arditte, 609-720-4621
John Roselli, 609-720-4624
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B O L I V I A
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NQL DRILLING: Closes Debt Refinancing With HSBC Bank
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NQL Drilling Tools Inc. reports the closing of its previously
announced $55 million (Canadian equivalent) debt refinancing with
HSBC Bank Canada and HSBC Bank USA. Utilizing the proceeds of its
new HSBC facility, the Company has retired approximately $40
million of pre- existing senior indebtedness and a $6 million
short-term liquidity note with CanFund VE Investors II, L.P. The
remaining $9 million of the facility is available for general
corporate purposes. The Company expects to realize significant
interest and administrative cost savings related to this
initiative.
NQL also announces further operational initiatives including a
restructuring of its Barbados office, and the closure of its
Bolivian downhole tools division. The Company continues to
operate a manufacturing facility in Bolivia however; the
elimination of the downhole tools group in this country has
resulted in a rationalization of costs and personnel. The
Bolivian manufacturing facility provides third party machining
services to customers in South America as well as in-house
support for the Company's downhole tools division on a worldwide
basis. In conjunction with its ongoing operational review, NQL is
currently evaluating opportunities to capitalize on the synergies
that exist between its Bolivian and North American manufacturing
capabilities.
NQL Drilling Tools Inc. is an industry leader in providing
downhole tools, technology and services used primarily in
drilling applications in the oil and gas, environmental and
utility industries on a worldwide basis. NQL trades on the
Toronto Stock Exchange under the symbol NQL.A.
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B R A Z I L
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BANCO SANTOS: S&P Withdraws Rating at Company's Request
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Standard & Poor's Ratings Services said Tuesday that it withdrew
its 'B' foreign currency credit rating on Banco Santos S.A. at
the company's request. "The outlook prior to the withdrawal was
negative," said Standard & Poor's credit analyst Claudio Gallina.
ANALYSTS: Claudio Gallina, Sao Paulo (55) 11-5501-8938
Daniel Araujo, Sao Paulo (55) 11-5501-8939
EMBRATEL: 4Q03 EBITDA Reaches BRL482 Million
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Embratel Participacoes S.A. (NYSE:EMT; BOVESPA:EBTP3, EBTP4), the
Company holds 98.8 percent of Empresa Brasileira de
Telecomunicacoes S.A. ("Embratel") announced Tuesday results for
the fourth quarter of 2003 and fiscal year 2003. (All financial
figures are in Reais and based on consolidated financial in
"Brazilian Corporate Law").
HIGHLIGHTS
-- Net revenue was R$1.9 billion in the fourth quarter of 2003
increasing 4.4 percent when compared to the previous 2003
quarter. Compared to the fourth quarter of 2002, net revenue rose
4.9 percent. Total net revenue for 2003 was R$7.0 billion.
-- Fourth quarter 2003 performance resulted from strong long
distance SMP revenues and from a growing stream of revenue from
the local service business.
-- EBITDA in the fourth quarter of 2003 was R$482 million. Full-
year EBITDA was R$1.8 billion, representing a 22.7 percent growth
relative to the prior year.
-- In the fourth quarter of 2003, allowance for doubtful accounts
dropped for eighth consecutive quarter, to 3.3 percent of gross
revenues (4.4 percent of net revenues). In the year of 2003,
allowance for bad debt fell 43.7 percent to R$353 million (3.8
percent of gross revenues) compared to R$627 million in the
previous year (6.6 percent of gross revenues).
-- Net income in the fourth quarter of 2003 was R$69 million
compared to R$15 million in the previous 2003 quarter. Net income
for 2003 was R$224 million compared to a loss of R$626 million in
2002.
-- In the fourth quarter of 2003, Embratel issued a US$275
million bond, completed in December, the purpose of which is to
replace expensive short-term debt by longer maturity financing.
In the same quarter, R$185 million of debt was replaced.
-- Short-term debt declined to R$1.2 billion in the fourth
quarter of 2003 compared to R$2.6 billion in the fourth quarter
of 2002. Net debt fell to R$2.9 billion at the end of the fourth
quarter.
-- Total capital expenditures in 2003 were R$489 million.
-- In December, Embratel concluded the acquisition of Vesper and
has launched its first, Embratel-Vesper service - the
subscription-free phone line called Livre(TM).
Note: 2002 annual and quarterly income statement figures have
been restated to reflect the reclassification of financial
expenses related taxes made in the third quarter of 2003 (see
Earnings Release dated October 27, 2003 for further information -
www.embratel.com.br/ir-earnings)
DATA COMMUNICATIONS SERVICES
Demand for data services remains strong
Embratel's data communications revenues (Data & Internet and
wholesale) were R$426 million in fourth quarter of 2003,
representing a decline relative to the previous 2003, quarter.
Compared to the same 2002 quarter, net data revenues declined 9.6
percent. The decline in data revenues is attributable primarily
to price competition, and partly, in the quarter, to the
consolidation of Vesper.
Demand for data services remains strong as evidenced by the
growth in data volumes. Expressed in 2Mbit circuit-equivalent
data grew 8.1 percent quarter-over-quarter and 39.4 percent year-
over-year.
During the quarter Embratel continued to renew and gain major
data contracts in the insurance, credit card, food and banking
industries. Embratel won the bid for the outsourcing of Banco do
Brasil's data network in Regions II and III. This 60-month
contract represents a growth in the total amount of revenues
obtained from this client. Additional revenue from this contract
has not yet been reflected in the company's revenue stream.
In 2003, total data revenue was R$1,756 million compared to
R$1,832 million in 2002. The decline in data revenues in the year
is explained by the termination of the Service Agreement with UOL
(see Second Quarter Earnings Release - July 29, 2003), overall
price decreases and a weaker independent ISP market.
During the fourth quarter Embratel contracted its first Next
Generation Network (NGN) to be implemented in the first quarter
of 2004. Services will begin to be offered in Porto Alegre in the
first quarter and later expanded to Rio and Sao Paulo. NGN
networks converge the transport of voice, video, data and value
added services in a single platform. The effort will be directed
to the SOHO and residential markets and will allow Embratel to
offer these services at very competitive prices, competing both
in the local and ADSL markets. In contrast to other market
players, Embratel does not have a conventional local switch
network to replace, depreciate or write-off. Therefore, it has
the flexibility to invest quickly and cost-effectively where it
best sees opportunities.
Embratel's Click21(TM) is chosen as the best free Internet
provider
Embratel's own free Internet service provider - Click21(TM),
launched in the third quarter of 2003, ended the year with more
than 400,000 subscribers. The regular users have a 20h/month
usage. The provider's superior quality (storage capacity, fast
access, anti-spam and anti-virus features) was recognized by
customers. On-line research by Acesso-Gratis.com, an Interlink
demonstration site, rated Click21(TM) as the best free Internet
provider in the fourth quarter of 2003. Click21(TM) was appointed
as excellent in all criteria: dial-up speed, connection
stability, speed, availability, uptime, server and technical
support. "We outperformed, by far, all other free Internet
providers in every criteria," said Shamim Khan, Vice President of
Strategic Planning and Development.
VOICE SERVICES
Voice revenues grow 2.8 percent quarter-over-quarter and 5.0
percent compared to the fourth quarter of the prior year
Domestic long distance revenues continues to grow
Domestic long distance revenue was R$1,094 million representing a
2.6 percent increase compared to the previous 2003 quarter.
Compared to the fourth quarter of 2002, domestic long distance
revenue rose 8.3 percent. SMP long distance revenue grew strongly
in the fourth quarter of 2003 as more users were permitted to
choose their carrier of preference. "When customers have a
choice, they overwhelmingly choose Embratel, as evidenced by the
surge in Embratel's long distance SMP traffic " said Jorge
Rodriguez, President of Embratel. It is also a clear
demonstration that there is a key difference between the
Brazilian and the US markets. In Brazil, per call selection on
cellular originated calls, enable long distance service providers
to benefit from the growth of the cellular customers. Advanced
voice services (including ViPphone) continue to replace basic
voice and the growth in SMP revenues has more than offset the
decline in basic voice revenues.
Annual 2003 domestic long distance revenue was R$4.1 billion
compared to R$4.4 billion in the previous year. The decline in
domestic long distance revenues is the result of loss of basic
voice revenues due to line blocking and competition.
International Long Distance
International long distance revenue was R$212 million in the
fourth quarter of 2003 representing a 3.9 percent increase from
the previous 2003 quarter. Growth of inbound traffic and rates as
well as higher international SMP traffic, more than offset
declines in basic outbound traffic. Compared to the fourth
quarter of 2002, international revenues declined 9.1 percent
mainly due to lower outbound traffic.
Year-to-date, international revenue was R$857 million compared to
R$931 million in 2002. This decline resulted from lower traffic
due to line blocking and competition.
OTHER REVENUE INCLUDING LOCAL
Local Services - Vesper - Other Revenues
Local services contribute to quarter-over-quarter revenue growth
Embratel ended the fourth quarter of 2003 with other revenues of
R$143 million compared to R$87 million in the third quarter of
2003 and R$71 million in the fourth quarter of 2002. The increase
in the other revenue line item is entirely attributable to the
growth in local revenues including one month of Vesper's
revenues. The local revenue stream was a strong contributor to
Embratel's fourth quarter of 2003 revenue growth.
The number of Vipline local service clients has continued to grow
and initial price promotions are terminating, allowing revenues
to pick-up.
In 2003, other services revenue was R$379 million compared to
R$251 million in 2003. All the increase in this account, which
includes one month of Vesper's revenue, was due to local service
revenues.
The acquisition of Vesper is enabling Embratel to further
increase local revenues by expanding its addressable market. In
addition to the corporate market, Embratel will be able to
address small companies, SOHOs and the residential market using
individual lines. This further complements Embratel's NGN
strategy to address these segments of the local market.
Embratel launched its first Embratel-Vesper service - Livre(TM).
Livre(TM) is a fixed wireless phone line for which there is no
subscription or installation fee, only per minute usage charges.
The fixed or portable handset is acquired by customers at major
retailers at a cost comparable to 8-13 months subscription fee
for a competing fixed line service. Livre(TM) offers, at no
additional cost, value added services such as caller ID, follow-
me and answering machine services.
EBITDA
EBITDA growth and margin improvement continues
In 2003, EBITDA reached R$1.8 billion representing a growth of
22.7 percent when compared to 2002. EBITDA margin rose to 25.3
percent compared to 19.7 percent in the prior year. This
significant margin improvement results from a lower telco ratio
and much reduced allowance for doubtful receivables as well as
from strict cost controls on operating expenses.
EBITDA was R$482 million (including Vesper) in the fourth quarter
of 2003 compared to R$553 million in the previous 2003 quarter.
Excluding the effect of the reclassification of certain expenses
related to financial transactions made in the third quarter of
2003 and some provision reversals, fourth quarter 2003 EBITDA,
would have been comparable.
EBITDA margin rose to 25.7 percent in the fourth quarter 2003
compared an EBITDA margin of 18.6 in the fourth quarter of 2002.
Allowance for doubtful accounts continued to decline as a
percentage of gross revenues, in the fourth quarter of 2003, to
3.3 percent of gross revenues (4.4 percent of net revenues). This
was the eight consecutive quarter of decline. The slight increase
in the absolute provision value reflects increasing SMP revenues
and Vesper. As these revenues continue to increase, they may put
pressure on the level of allowance. Compared to the fourth
quarter 2002, allowance for doubtful accounts fell by 40.4
percent.
Personnel expenses and other related expenses rose in the quarter
as a result of salary increases (Union agreements in Nov-Dec and
compensation related items). Vesper also contributed to some
increase in personnel expenses. Year-over-year, personnel and
employee profit sharing declined by 3.1 percent. Expenses with
third party services were stable as a percentage of revenues in
the fourth quarter of 2003 compared to the prior quarter despite
added expenses from Vesper which accounted for approximately half
of the increase in the absolute amount of third party expenses.
Compared to the same period of the previous year, third party
expenses declined 16.9 percent.
Interconnection costs, as a percentage of net revenues, rose to
46.4 percent in the fourth quarter of 2003 resulting in part from
higher SMP traffic (which has a higher telco cost) as well as to
the consolidation of Vesper. Compared to the fourth quarter of
2002, when interconnection costs, as a percentage of net
revenues, was 47 percent, telco ratio fell.
EBIT
In the fourth quarter of 2003, EBIT was R$195 million compared to
R$267 million in the previous 2003 quarter. The decline is
related to reclassification and provision reversals, which raised
EBIT in the third quarter of 2003. Compared to an EBIT of R$31
million in the fourth quarter of 2002, there was a significant
increase, basically reflecting the company's operational
improvements.
In the twelve-month period ending December 2003, EBIT was R$630
million representing an operating margin of 8.9 percent and a
102.4 percent increase when compared to 2002.
NET INCOME
Net income was R$69 million in the fourth quarter of 2003
compared to a net income of R$15 million in the third quarter of
2003. The increase is attributable to both the improvement in the
company's operating performance and to the sale of non-core
assets. Compared to the fourth quarter of 2002 when net income
benefited from the appreciation of the currency, fourth quarter
2003 net income declined.
The financial expense, monetary and exchange variation in the
fourth quarter of 2003 was R$213 million representing a decline
when compared to financial expense of R$303 million in the third
quarter of 2003.
Net income in 2003 was R$224 million compared to a loss of R$626
million in 2002.
FINANCIAL POSITION
Cash position on December 31, 2003 was R$1.7 billion. Embratel
ended the quarter with a total outstanding debt of R$4.6 billion.
Net debt fell to R$2.9 billion from R$3.3 billion in the previous
2003 quarter and from R$4.0 billion in the fourth quarter of
2002. Short-term debt (accrued interest, short-term debt and
current maturity long-term debt in the next 12 months) was R$1.2
billion, reflecting a significant decline from R$2.6 billion of
short-term debt in the fourth quarter of 2002.
During the fourth quarter, Embratel issued US$275 million in 5-
year notes with an 11 percent coupon. "This offering marked
Embratel's entry into the debt capital markets" said Norbert
Glatt, Vice President of Finance of Embratel. The purpose of the
issue was to increase the average term of the company's debt
profile. In the fourth quarter, Embratel used part of these funds
to replace R$151 million of Real CDI+4% debt and R$34 million
foreign currency debt which were part of the March 2003 financing
agreement, by longer term financing. Further replacement of
refinancing agreement debt is expected to occur in the first
quarter of 2004. At least another R$400 million (US$150 million)
is expected to be substituted in the first quarter of 2004.
Approximately 54.4 percent of Embratel's total debt is either
denominated in Reais or hedged against currency fluctuations
(Exhibit 20). The decline in the company's overall cost of debt
results from the reduction of local interest rates.
RECEIVABLES
The company's net receivable position on December 31, 2003 was
R$1.7 billion. The increase in receivables in the fourth quarter
was associated with the growth in SMP but the consolidation of
Vesper also had some impact. The voice aging profile of basic
voice receivables billed by Embratel, has continued to improve:
84.0 percent of net voice receivables were current at the end of
the fourth quarter of 2003 compared to 80.9 percent at the end of
the third quarter 2003.
Days-sales-outstanding (DSO), based on net receivables, rose from
60 days in the third quarter of 2003 to 62 days. The increase is
related to the growth in SMP and the consolidation with Vesper.
CAPEX
Total capital expenditures in the quarter were R$206 million. The
breakout of this expenditure is as follows: local infrastructure
and access - 13.7 percent (including PPIs); data and Internet
services - 17.7 percent; network infrastructure - 3.9 percent,
others - 36.1 percent and Star One - 28.7 percent. Capex in 2003
was R$489 million, lower than anticipated due to the fact that
some satellite investment planned for the fourth quarter of 2003
was delayed to 2004.
OTHER INFORMATION
Embratel completed the acquisition of Vesper on December 2, 2003,
having secured Anatel's approval of the transaction and one month
of its operations were consolidated into Embratel Participacoes.
A transition team is in place to maximize the synergies between
the two companies.
Also in the fourth quarter of 2003, Embratel concluded the sale
of its participation in Inmarsat, an international satellite
consortium. The sale of this asset raised US$30 million of cash
for the company. Embratel continues to look for opportunities to
monetize non-core assets.
Embratel is optimistic with respect to the 2004 environment.
Economic activity is picking up, interest rates have declined and
there has been progress in needed structural reforms. All of
these factors help enable the country to grow.
During 2003, the Government and Regulatory Agencies strengthened
their commitment towards creating a more leveled-playing field
for competition in the telecommunications industry. This will
reinforce Embratel's ability to continue to compete, and to offer
society with the value, quality, service and innovation demanded
in this rapidly evolving sector. Embratel believes that the
Government's commitment towards competition will continue to
progress, and that it will be translated into specific
regulations that will be implemented during 2004.
Embratel is the premier communications provider in Brazil
offering a wide array of advanced communications services over
its own state of the art network. It is the leading provider of
data and Internet services in the country and is well positioned
to be the country's only true national, local service provider
for corporates. Service offerings: include telephony, advanced
voice, high-speed data communication services, Internet,
satellite data communications, corporate networks and local voice
services for corporate clients. Embratel is uniquely positioned
to be the all-distance telecommunications network of South
America. The Company's network is has countrywide coverage with
28,868 km of fiber cables comprising 1,068,657 km of optic
fibers.
To see Exhibits 20 - 30: http://bankrupt.com/misc/Exhibits.htm
CONTACTS: EMBRATEL PARTICIPACOES S.A.
Silvia M.R. Pereira, (55 21) 2121-9662
Fax: (55 21) 2121-6388
Email: silvia.pereira@embratel.com.br
invest@embratel.com.br
ODEBRECHT: S&P Assigns `B+' to MTN Program
------------------------------------------
Standard & Poor's Ratings Services affirmed Tuesday its 'BB-'
local-currency and 'B+' foreign-currency global scale corporate
credit ratings assigned to Brazil's engineering and construction
company Construtora Norberto Odebrecht S.A. (CNO). The outlook on
the local-currency rating is stable, while the outlook on the
foreign-currency rating is positive.
At the same time, Standard & Poor's assigned its 'B+' rating to
CNO's forthcoming MTN program in the amount up to US$250 million
and tenors up to five years to be issued by Odebrecht Overseas
Limited (OOL), unconditionally and irrevocably guaranteed by CNO.
The ratings on CNO reflect the company's exposure to the
competitive, volatile, and cyclical heavy construction business,
some backlog concentration in public works in economically and
politically volatile countries (a risk partly offset by the fact
that projects are prefinanced and on an advanced-payment basis),
and a somewhat leveraged financial profile (in the context of the
more volatile economic environment of its home country Brazil).
These negatives are partially offset by CNO's longstanding
experience in the engineering and construction business, the
quality and sector and geographic diversification of its backlog,
and consistent profitability and cash flow protection measures
within the past several years, as a result of significant efforts
to focus on more profitable projects.
"The stable outlook on the local-currency rating reflects
Standard & Poor's expectations that CNO will be able to maintain
satisfactory profitability and cash flow generation while
continually improving its financial profile by reducing overall
debt leverage and reducing refinancing risk concentrated in
several large maturities," said Standard & Poor's credit analyst
Reginaldo Takara.
CNO is one of the largest engineering and construction (E&C)
companies in Brazil, having reported net revenues of US$1 billion
and EBITDA of US$110 million in the first nine months of 2003.
ANALYSTS: Reginaldo Takara, Sao Paulo (55) 11-5501-8932
Milena Zaniboni, Sao Paulo (55) 11-5501-8945
PARMALAT BRAZIL: Pledges Prompt Filing of Key Documents
-------------------------------------------------------
The Brazilian unit of Italy's Parmalat promised the Brazilian
government that it will expedite filing of critical documents in
its request for bankruptcy protection. According to Reuters,
Brazil has accused the local unit of dragging its feet in filing
the documents, creating uncertainty around the Company's
operations in the country.
However, during a meeting in Milan on Tuesday with Enrico Bondi,
Parmalat's government-appointed administrator, Brazil's Agrarian
Reform Minister Miguel Rossetto won promises that the company's
Brazilian unit would quickly present the necessary documents.
Parmalat Brasil Industria de Alimentos, the company's main
operating unit, and its Brazilian holding group, Parmalat
Participacoes, filed for bankruptcy protection on Jan. 28.
But according to Rossetto, basic information, including
Parmalat's debts and assets in Brazil, have still not been
presented to the courts.
Rossetto said he had told Bondi "that the (Brazilian) government
cannot accept delaying behavior by Parmalat in Brazil surrounding
the bankruptcy."
UNIBANCO: S&P Rates Eurobond 'B+'
---------------------------------
Standard & Poor's Ratings Services said Tuesday that it assigned
its 'B+' foreign currency long-term credit rating to UnibancoA-
UniAœo de Bancos Brasileiros S.A.'s (UBB) long-term notes
(Eurobond) of $100 million with a yearly coupon of 3%, to be
issued on Feb. 10, 2004, maturing on Aug. 10, 2005. The foreign
currency credit ratings on the bank are 'B+/Positive/B'.
The ratings on UBB reflect the bank's solid franchise in Brazil,
its diversified business profile, high-quality management, strong
earnings power, and overall strategy in line with the competitive
Brazilian market.
Balancing these aspects are UBB's low operating efficiency ratio
compared with that of its Latin American peers (but in line with
those of Brazilian peers), its charge-offs' track record (during
the past five years), and exposure to Brazil's volatile
environment and sovereign risk.
UBB ranks third among privately owned banks in Brazil in terms of
total assets and total loans. The bank's growth strategy though
acquisitions, strategic alliances with large retail stores, and
organic growth has helped the bank to position itself as one of
the leading private players in the competitive Brazilian banking
system. "In Standard & Poor's opinion, the bank will continue
benefiting from fees revenues derived from its attractive
franchises in insurance, credit cards, asset management, pension
funds, and consumer credit," said Standard & Poor's credit
analyst Claudio Gallina.
The positive outlook on the foreign currency credit rating on UBB
reflects the sovereign outlook on the Federative Republic of
Brazil. At current levels, an upward change in the foreign
currency sovereign credit rating would lead to a similar action
on the foreign currency rating on UBB.
ANALYSTS: Claudio Gallina, Sao Paulo (55) 11-5501-8938
Daniel Araujo, Sao Paulo (55) 11-5501-8939
=========
C H I L E
=========
ENAMI: Fitch Revises 'A-' Currency Rating Outlook to Positive
-------------------------------------------------------------
Fitch Ratings has revised the rating Outlook on the senior
unsecured foreign currency rating of Empresa Nacional de Mineria
(ENAMI) to Positive from Stable. Fitch has also affirmed ENAMI's
'A-' long-term foreign currency rating and the 'A+' senior
unsecured local currency (Chilean peso) rating. The Rating
Outlook of ENAMI's local currency rating remains Stable. The
ratings reflect the explicit and implicit support the company
receives from the Chilean government.
This rating action follows Monday's change to Positive from
Stable in the Outlook of Fitch's 'A-' long-term foreign currency
rating of the Republic of Chile. Fitch also affirmed the 'A+'
local currency rating of the Republic of Chile.
ENAMI's 'A-' foreign currency rating applies to the company's
US$220 million three-year syndicated bank loan that closed Dec.
31, 2002. The loan carries a full and unconditional guarantee
from the Republic of Chile whose long-term foreign currency
obligations are also rated 'A-'.
The ENAMI ratings also represent the credit quality of all debt
at ENAMI, including debt that does not carry an explicit
government guarantee. Fitch does not differentiate between the
debt with and without the explicit government guarantee due to a
letter from the government to the unsecured lenders, in which the
government expresses its intent to support these loans and states
that it does not consider them subordinate to the syndicated
loan. Fitch believes that the Chilean government will honor this
implicit commitment to ENAMI's lenders due to the negative
externalities that would arise from a default by ENAMI.
ENAMI's financial leverage remains high. Since 1994, the
company's total debt (including non interest-bearing debt) has
grown to approximately US$500 million from about US$250 million,
mainly as a result of the capital expenditures made to adhere to
stricter environmental standards and the cumulative, dividend-
like advances on earnings made to the Chilean government. The
company's ratio EBITDA to interest expense has remained low,
between 1 times (x) and 2x over the last several years.
ENAMI is wholly owned by the Chilean government and provides
copper smelting and refining services to small to midsized mining
operations. ENAMI supports these companies by providing price-
stabilization programs, loans, and technical and marketing
assistance. In 2003, ENAMI registered sales of 213,000 tons of
electrolytic copper, that together with sales of copper
concentrates, gold, silver, sulfuric acid and smelting and
refining services, generated total revenues of US$607 million.
CONTACT: ENAMI (Empresa Nacional de Mineria)
MacIver 459,
Santiago, Chile
Phone: 637 52 78
637 50 00
Fax: 637 54 52
Email: webmaster@enami.cl
Home Page: www.enami.cl/
Contact:
Jorge Rodriguez Grossi, President
===============
C O L O M B I A
===============
PARMALAT COLOMBIA: Regulator's Probe Shows Healthy Finances
-----------------------------------------------------------
Parmalat Colombia is financially healthy, Colombia's Companies
Superintendency indicated after doing a review on the finances
and operations of the local unit of Italian dairy company
Parmalat Finanziaria SpA.
According to Business News Americas, the regulator decided to
conduct the review following reports about the Italian parent's
woes.
In a statement, the regulator said the investigation "found that
it is a company with autonomous management ... and the problems
of its parent company don't compromise, in principle, the
operations in Colombia."
It added: "In accordance with the financial records analyzed, the
company is functioning normally. Its operation is legally and
economically independent of its parent company in Italy."
The investigation showed that Parmalat Colombia's corporate
capital totals COP20.5 billion ($1=COP2,737), of which 91% is
from Dairies Holding International BV - a Dutch subsidiary of
Italy's Parmalat.
The other 9% is from Parmalat Participacoes Do Brasil Ltda, a
Brazilian unit of Parmalat that recently requested bankruptcy
protection.
Parmalat Colombia had total sales of COP134 billion through the
first 11 months of last year and net profits of COP110 million,
the regulator said. Its net assets at the end of November were
COP27.6 billion.
Parmalat Colombia is owed US$1.3 million by various affiliate
firms, including $450,000 plus interest owed by Parmalat Ecuador
from a 1995 loan, the regulator said.
"Parmalat Ecuador hasn't made any payment on principal or
interest," it said.
===================================
D O M I N I C A N R E P U B L I C
===================================
BANCO BHD: Fitch Downgrades Ratings In line with DR's Ratings
-------------------------------------------------------------
Fitch Ratings, the international rating agency, downgraded the
ratings of Dominican Republic bank Banco BHD. (To/From)
--Long-term foreign currency 'CCC+' 'B'
(Rating Watch Negative)
--Short-term foreign currency 'C' 'B'
The downgrade reflects the recent sovereign downgrade on the
Dominican Republic's long-term foreign and local currency
obligations to 'CCC+' from 'B'.
Fitch affirmed the bank's individual rating at 'D' and placed on
Rating Watch Negative.
CONTACT: Carlos Fiorillo, Franklin Santarelli +58 212 286 3356,
Caracas, Gustavo Lopez +1-212-908-0853, New York
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
BANCO DEL PROGRESO: Fitch Lowers Foreign Currency Ratings
---------------------------------------------------------
International rating agency Fitch Ratings downgraded the ratings
of Dominican Republic bank Banco del Progreso. (To/From)
--Long-term foreign currency 'CCC+' 'B-'
(Rating Watch Negative)
--Short-term foreign currency 'C' 'B'
The downgrade reflects the recent sovereign downgrade on the
Dominican Republic's long-term foreign and local currency
obligations to 'CCC+' from 'B'.
Fitch affirmed the bank's individual rating at 'D/E'.
CONTACT: Carlos Fiorillo, Franklin Santarelli +58 212 286 3356,
Caracas, Gustavo Lopez +1-212-908-0853, New York
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
BANCO LEON: Fitch Cuts LTFC Ratings to `CCC+'
---------------------------------------------
International rating agency Fitch Ratings downgraded the ratings
of Dominican Republic bank Banco Leon. (To/From)
--Long-term foreign currency 'CCC+' 'B-'
(Rating Watch Negative)
--Short-term foreign currency 'C' 'B'
The downgrade reflects the recent sovereign downgrade on the
Dominican Republic's long-term foreign and local currency
obligations to 'CCC+' from 'B'.
Fitch affirmed the bank's individual rating at 'E'.
CONTACT: Carlos Fiorillo, Franklin Santarelli +58 212 286 3356,
Caracas, Gustavo Lopez +1-212-908-0853, New York
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
BANCO MERCANTIL: Fitch Affirms Ratings
--------------------------------------
Fitch Ratings affirmed the following ratings of Dominican
Republic bank Banco Mercantil:
--'CCC' Long-term foreign currency rating, (Rating Watch
Negative);
--'C' Short-term foreign currency rating;
--`E' Individual rating;
--`5' Support rating.
CONTACT: Carlos Fiorillo, Franklin Santarelli +58 212 286 3356,
Caracas, Gustavo Lopez +1-212-908-0853, New York
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
=================
G U A T E M A L A
=================
CABCORP: Moody's Assigns B2 to Proposed 5-Yr., Sr. Secured Bonds
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the proposed 5-
year senior unsecured bonds to be issued by Guatemala City-based
Central American Bottling Corporation (CABCORP). The rating
outlook is stable. This is the first time Moody's has rated any
obligations of the Company.
The rating incorporates CABCORP'S valuable beverage franchises
and its role as an anchor bottler for PepsiCo in the Central
American Countries of Guatemala, Nicaragua, Honduras and El
Salvador.
However, the rating also takes into account the fact that the
Company has experienced several years of declining margins,
profitability and cash flows due to a combination of factors both
within and outside its control.
The Company is exposed to currency risk, not only because of
dollar denominated debt, but also because certain raw materials
and nearly 20% of operating costs are dollar denominated, while
most of its revenues are in local currencies.
===========
M E X I C O
===========
ALLEGRO: Aviation Consultant Predicts Impending Bankruptcy
----------------------------------------------------------
Allegro airline is close to buckling up under a heavy debt load
of US$170 million, divided between aircraft leasing fees owed to
Pegasus and back wages owed to its workers, which are currently
on strike.
According to an El Economista report, Simon Garcia, an
independent consultant in aviation, believes that the airline is
on the verge of declaring bankruptcy.
The airline's financial problems arose after it failed to pay the
U.S. company Pegasus for the rental of three aircraft. In
addition, the airline has been operating in a much reduced market
niche, alone, without any code-sharing or other agreements with
other airlines.
Allegro was formed in 1993 to provide charter flights for
tourists on the Tijuana-Mexico City and Tijuana-Guadalajara
routes. It expanded with flights in the north of Mexico and to
Texas in 2001. The company is currently in a pre-bankruptcy
posture.
UNEFON: Signs Deal With America Movil
-------------------------------------
America Movil, Latin America's top mobile phone firm, sealed a
16-year, US$268-million deal with rival Unefon, reports Reuters.
Under the deal, America Movil will use Unefon's network capacity
to keep up with increased demand for wireless voice and internet
services.
Unefon, owned by Mexican media tycoon Ricardo Salinas Pliego, is
in urgent need of cash to remain relevant in a market driven by
America Movil's top Mexican brand, Telcel.
=============
U R U G U A Y
=============
SUDAMTEX: Controllers Analyze German Group's Bid
------------------------------------------------
A German investment group interested in acquiring Uruguayan
textile concern Sudamtex has not left the country, according to a
spokesman for Sudamtex's former workers union. The spokesman,
Enzo Vallejo, said that the group, which earlier offered US$3.5
million in cash to banks Citibank and Banco Republica (BROU) for
the assets of the bankrupt Colonia-based textiles & apparel
company, is carrying on with acquisition talks.
In an interview with El Espectador radio station Saturday,
Vallejo pointed out that the German group sent a letter to Banco
Republica asking for a week's extension on the term for the
submission of a bid and additional information, period that
expired last Friday.
Sudamtex went bankrupt in 2001 and was taken over by state-owned
BROU and Citibank, who were its major creditors, in December
2003.
BROU vice-president, Milka Barbato, said that the banks will
analyze what to do now that the German investor has not complied
with their requirements. They may either grant the extension or
put an end to the negotiations, since two other investors are
also interested in Sudamtex.
The banks had already accepted the German group's initial bid for
Sudamtex but had established a period for the confirmation of the
offer and the submission of further information about the
investor, which has been negotiating through the Argentine firm
Global Master Management.
***********
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
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Copyright 2004. All rights reserved. ISSN 1529-2746.
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