/raid1/www/Hosts/bankrupt/TCRLA_Public/040312.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, March 12, 2004, Vol. 5, Issue 51
Headlines
A N T I G U A & B A R B U D A
LIAT: CEO Wants Quick Conclusion of Capitalization Program
A R G E N T I N A
DISCO: Antitrust Issues Threaten to Block Sale to Cencosud
MASTELLONE HERMANOS: Seeks to Restructure $330M of Debt
PETROBRAS ENERGIA: Issues Independent Public Accountant's Report
TELECOM ARGENTINA: To Up This Year's Capex to $160M
TELECOM ARGENTINA: May Find Growth in Telefonica Deal
* Argentina Reaches Agreement With IMF
B E R M U D A
GLOBAL CROSSING: Ends 2003 With Minimal Debt
GLOBAL CROSSING: Stock Falls Despite $25B Profit
B R A Z I L
CFLCL: Responds to Notice Published by ANIMEC
VASP: President Arrested For Alleged Tax Evasion
C H I L E
AES GENER: Parent Places 21.4% Stake on Local, Int'l. Markets
AES GENER: Selling $300M, 10-Yr. Bonds To Help Settle Debt
TELEFONICA CTC: Gets Subtel's Report
TELEFONICA CTC: S&P Places Rating on CreditWatch Negative
TELEFONICA CTC: Fitch Places Ratings on Rating Watch Negative
H O N D U R A S
HONDURAS: Seeks Full Cancellation of Debt From Paris Club
M E X I C O
AHMSA: Likely To Strike Debt Deal With Creditors Before Year-end
GRUPO MEXICO: SPCC to Maintain Investment Program
SPEIZMAN INDUSTRIES: Revises Agreements With Lonati, SouthTrust
UNEFON: Borrows Money from Inbursa, Banco Azteca
UNEFON: Honors Debt With TV Azteca
P A N A M A
CSS: Banks on New President to Deal With Financial Issues
V E N E Z U E L A
PDVSA: CITGO Reports 2003 Income of $439M
PDVSA: March Crude Oil Production Reaches 3.2 million b/d
- - - - - - - -
=================================
A N T I G U A & B A R B U D A
=================================
LIAT: CEO Wants Quick Conclusion of Capitalization Program
----------------------------------------------------------
LIAT (1974) Ltd's Chief Executive Officer Garry Cullen is
looking forward to a speedy completion of the Antigua-based
carrier's capitalization program, the Trinidad Guardian reports.
In addition, the LIAT executive is hoping that the Organisation
of Eastern Caribbean States (OECS) will soon regain Category 1
Status from the US Federal Aviation Administration so that the
carrier can better compete on routes to and from US territories
in the region.
The Guardian recalls that the OECS, which comprises Anguilla,
Antigua and Barbuda, the British Virgin Islands, Dominica,
Grenada, St Kitts and Nevis, St Lucia and St Vincent and the
Grenadines, was downgraded to Category 2 because of deficiencies
in its civil aviation governance.
As a merger is being proposed between LIAT and BWIA, both
airlines and the countries in which they are based want to
regain Category 1 status so that they can capitalize on
lucrative US routes.
Both airlines are undergoing a review of their operations with
reference to the proposed merger.
Senior executives of both BWIA and LIAT held a secret meeting
last week at the Normandie Hotel in St Ann's to discuss the
details of a proposed merger of the two airlines.
=================
A R G E N T I N A
=================
DISCO: Antitrust Issues Threaten to Block Sale to Cencosud
----------------------------------------------------------
Chilean retailer Cencosud is facing its first obstacle in its
efforts to complete the purchase of Argentina's Disco
supermarket chain, indicates Dow Jones.
Cencosud agreed Friday to pay around US$315 million to buy Disco
from Dutch retail giant Royal Ahold NV (AHO). The purchase would
give Cencosud a 22% market share in Argentina's supermarket
sector.
According to the report, Patricia Vaca Narvaja, the Under
Secretary for Defense of Competition and the Consumer in
Argentina, is strongly opposed to the deal because it would
leave consumers worse off.
"I am strongly opposed to the move, since concentration (of the
sector) is not good for consumers" Vaca Narvaja told reporters
Tuesday. She said she would demand Argentina's antitrust body
organize public hearings before making a decision on the deal,
so that the position of consumers, smaller suppliers and others
will be heard.
Officially, the decision on whether to approve the Cencosud-
Disco deal is in the hands of an independent committee, which is
run by Vaca Narvaja's office. Once the relevant papers are
presented by the companies, the committee has 45 working days to
make a decision on the case.
Its ruling then goes to Argentina's Secretary of Technical
Coordination Leonardo Madcur, who has the power to modify the
ruling. If unhappy with the ruling, the companies can challenge
it in court.
However, sources at Cencosud said that the Company is optimistic
that the deal will eventually get the necessary approval, local
business daily El Cronista said Wednesday.
MASTELLONE HERMANOS: Seeks to Restructure $330M of Debt
-------------------------------------------------------
Argentine dairy company Mastellone Hermanos - owner of the brand
La Serenisima - announced an offer to restructure some US$330
million in non-secured debt.
Mastellone will ask consent from creditors to subscribe an out-
of-court agreement, or APE, which means that after getting two-
thirds agreement, Mastellone can secure legal approval for its
APE that will make the debt restructuring binding for all
creditors.
Like many Argentine companies that are indebted in US dollars,
Mastellone's financial profile worsened as a result of a 70%
depreciation of the peso, which sent the cost of servicing
dollar debts soaring, in 2001.
Mastellone is offering two alternatives. The first one is a cash
payment equal to 60% of face value, up to a maximum of US$85
million of face value, which means the Company is willing to
spend up to US$51 million in the cash option.
The second alternative is an exchange of non-secured notes for
new secured notes at par value. Two new notes will be offered.
One that has a 7% fixed annual interest rate and expires in
2007. The principal will be cancelled in a sole payment in
2014. The second bond has a floating interest rate of Libor
+2.5% (5% maximum), is expiring in 2011 and the principal starts
to be repaid in 2007.
The Company will not recognize accrued and unpaid interests.
The offer is set to expire April 2.
The debt to restructure is composed by US$225 million in bonds
and some US$100 million in bank debt.
PETROBRAS ENERGIA: Issues Independent Public Accountant's Report
----------------------------------------------------------------
LETTER TO THE SHAREHOLDERS:
The year 2003 has ended, a fiscal year -a framework- that marks
an important milestone in the history of the Company.
In May 2003, the Argentine Antitrust Committee (Comisi˘n
Nacional de Defensa de la Competencia) confirmed the acquisition
of the controlling stock of the Company by Petrobras. Pursuant
to the resolutions adopted at the General and Special
Shareholders' Meeting held on April 4, 2003, the corporate name
was officially changed to Petrobras EnergĦa Participaciones
S.A.. A big name such as Pecom joins the magnitude and track
record of a name such as Petrobras.
It is a turning point primarily representing a synergic choice
that preserves and increases the roots of the businesses
involving both companies, significantly enhancing our strategic
positioning in Latin America. This will undoubtedly result in
good medium and long-term returns. And the fact that each
company's businesses are complementary positions the Company at
a leading edge, confirming our expansion goals and strengthening
the positioning desired in the Region.
Following approval, in 2003 management has mainly focused on the
identification of competitive advantages resulting from the
complementary nature of businesses with Petrobras. Some of those
opportunities have already started to materialize, with highly
significant and encouraging results. Along these lines, one of
the main concerns has been the conduct of business under a
transparent governance model, fully respecting the shareholders'
interests as a whole.
The year 2002 marked a period of adjustments and adaptation, of
new evaluations and reformulations for the Company. The year
2003 had started with a new horizon of opportunities, good
prospects in terms of results and operating cash flow. Today I
can proudly and satisfactorily state that the Company -due to
its own dynamics- has strong operating results and greater
financial liquidity, all of the above within the framework of a
highly modern business management and integration process. The
figures show, as expected, that the challenge to reverse a
complex solution is being successfully met, with transparency
and confidence in the foundations of this process and top level
harmonic performance.
The recovery of the economic activity seen in Argentina during
2003, and an international context marked by a strong increase
in commodity prices resulted in a favorable framework for our
activities. Within this scenario, gross profit from operations,
including those of controlled companies, rose by 5.4%,
exhibiting 92% and 88% increases in the Refining and Electricity
businesses.
We have materialized major investment plans supporting business
growth and expansion. In 2003, capital expenditures made by the
Company and its controlled companies amounted to P$758 million,
focused mainly on the oil and gas segment. The 2004 budget
contemplates US$350 million, which ratifies the recovery of the
level of investments seen during 2003, overcoming the impasse
brought about by the nature and complexity of the Argentine
crisis towards late 2001. Sustained growth of investments
towards historical levels is a key factor in the Company's
strategic plans.
In 2003 we prioritized a stringent financial policy, strictly
monitoring liquidity levels. Its implementation has been overly
successful. This can be supported by the 88% growth in
operating cash flow. The above enabled the financing of the
significant increase in investments, while simultaneously
exhibiting strict compliance in meeting financial obligations.
In this regard, we achieved an 8% reduction in the annual
average rate of indebtedness of the Company and its controlled
companies -not a minor detail. In this respect, it must be
pointed out that we have projected its gradual reduction towards
the mid-term in order to promote a capital structure consistent
with the strategy outlined for the development of operations.
Within this framework, the level of investments will be
restricted to cash generation. We will give priority to projects
with financial profitability ensuring faster returns. Thus, we
will maintain our focus on growth; however, this growth will be
built upon a financial solid foundation.
All of these achievements have been significantly appreciated by
the business community. In October 2003, with the issue of
Series R corporate bonds for a nominal value of US$100 million,
the Company was the first company in the country to issue bonds
for the international capital market following the default. This
evidences the markets confidence in the sustainability and
potentiality of our businesses.
Ratifying this perception, credit agreements to finance the
anticipated investment plan were executed abroad through our
subsidiaries Petrobras EnergĦa Venezuela S.A. and Petrobras
EnergĦa del Per£ S.A.
We keep making progress in all our fields of activity. We
clearly understand that our Company will fully achieve its
mission only by accomplishing the same level of excellence
demonstrated in other areas in terms of environmental issues and
occupational safety as well. And there is no doubt that we will
spare no efforts to be a model pioneering entity in one of the
main issues of our time: the environmental issue. We will double
our attention, detail structures, inform and continuously define
the goals to be met. By securing certifications, implementing
projects and investments geared towards environmental impact
minimization, ensuring individual safety and health and
guaranteeing the commitment of all company members, we can talk
about a new drive that will maximize results and consolidate the
remarkable evolution of the Quality, Safety, Environmental and
Health management.
It is clearly not risky to affirm that the Company is already
growing in the Argentine economic history, and due to the volume
of business in the country, it measures up as a first-class
player.
There is no need to point out that the above mentioned
achievements are the result of a joint effort, work performed by
teams identified with and committed to the Company. I would like
to thank all our employees for their professionalism and
generosity, as it would have been impossible to face the new
challenges without them.
It is also worth mentioning that we have a long road ahead of us
forcing us to keep searching for answers. We will target our
most detailed attention on leveraging on synergies and being an
integrated energy company while simultaneously taking advantage
of new business opportunities to expand our presence in the
market and generate value. This is our commitment. All efforts
and all necessary resources will be aimed at responding to this
challenge, forging ahead safely towards the future.
CONTACT: Daniel E. Rennis
drennis@petrobrasenergia.com
Alberto Jankowski
ajankows@petrobrasenergia.com
Tel: (5411) 4344-6655
Web Site: www.petrobrasenergia.com
TELECOM ARGENTINA: To Up This Year's Capex to $160M
---------------------------------------------------
An executive of Telecom Argentina (NYSE: TEO) revealed Wednesday
that the Argentine telco is increasing investments this year in
its fixed and mobile networks, relates Business News Americas.
Speaking at a conference call to review fourth quarter results,
Telecom Argentina Chief Executive Officer Carlos Felices
announced that the Company is planning to invest US$160 million
this year, five times higher than the US$27.7 million invested
in 2002.
The increased expenditure signals Telecom's return to spending
after the Argentine peso's depreciation in 2002 forced the
Company to rein in capital expenditures, Felices said.
Felices told analysts he expects the Company to allocate a
greater portion of investments to mobile services for the next
2-3 years.
The executive said Telecom remains very highly leveraged company
despite efforts to restructure its ARS6.7-billion debt. The
Company proposed an out-of-court debt restructuring initiative
in the first quarter. It will proceed with the offer once it
obtains court authorization, Felices said.
CONTACT: TELECOM ARGENTINA S.A.
Alicia Moreau de Justo 50, 10th Floor
Capital Federal (1107) Republica Argentina
Phone: +54 11 4968 4000
Home Page: http://www.telecom.com.ar
Contacts:
Alberto J. Ricciardi, Chief Financial Officer
Elvira Lazzati, Finance Director
Pedro Insussarry, Investor Relations Manager
Phone: (5411) 4968-3626/3627
Fax: (5411) 4313-5842/3109
E-mail: inversores@intersrv.telecom.com.ar
TELECOM ARGENTINA: May Find Growth in Telefonica Deal
-----------------------------------------------------
Telecom Argentina CEO Carlos Felices is not alarmed by the
looming threat of competition brought about by Telefonica's
recently announced acquisition of BellSouth Corp.'s (BLS) Latin
American assets.
In fact, the deal, which is yet to overcome antitrust hurdles
across the region, could help Telecom Argentina expand its own
cellular client base.
"This acquisition will create a period of turbulence in the
Telefonica group, and I'm sure if we are able to respond to our
customers and to the market with efficiency (and) with good
services, we will be able to capture part of the customers that
are affected by this turbulence," Felices said in response to an
analyst's question on the Telefonica-BellSouth deal.
On Monday, Spanish-owned Telefonica agreed to purchase
BellSouth's Latin American operations for US$5.85 billion. In
Argentina, where Telecom Argentina currently has the largest
customer base, Telefonica would become the dominant cellular
services provider with about a 42% market share.
Telecom Argentina's mobile arm, Telecom Personal, has about 2.6
million users in Argentina. Telefonica has about 1.8 million
subscribers through its Unifon brand. Movicom BellSouth, in
which BellSouth has a 65% stake, has about 2 million clients.
* Argentina Reaches Agreement With IMF
--------------------------------------
Ms. Anne Krueger, Acting Managing Director of the International
Monetary Fund (IMF), made the following announcement on
Wednesday:
"IMF staff have reached agreement with the Argentine authorities
on a letter of intent requesting the completion of the second
review under Argentina's three-year Stand-By Arrangement from
the Fund. The letter of intent has been signed today [Wednesday]
in Buenos Aires by Minister Lavagna, Finance Secretary Nielsen
and Central Bank President Prat-Gay, and will be sent shortly to
the IMF's Executive Board. I plan to recommend to the Executive
Board the completion of this review along with the associated
financing assurances review. I anticipate an Executive Board
meeting later this month. Completion of the review will entitle
Argentina to a disbursement of the equivalent of SDR 2.1 billion
(about US$3.1 billion).
"The authorities' letter notes that considerable progress has
been made in implementing their economic program which has been
supported by the Stand-By Arrangement approved by the IMF in
September 2003. The economy is recovering rapidly and the
disciplined implementation of monetary and fiscal policies has
contributed to strengthening confidence, reducing inflation,
lowering interest rates, and rekindling private investment. All
end-December 2003 quantitative policy targets were met with wide
margins and policies remain on track towards meeting the end-
March 2004 targets. In particular, buoyant tax revenues and firm
control over spending have resulted in larger than programmed
fiscal savings in 2003.
"The letter of intent develops the macroeconomic framework for
2004 and elaborates on the structural policies that would
sustain the ongoing recovery. The macroeconomic framework
anticipates growth in 2004 of about 5Ğ percent, higher than
originally projected. Inflation should remain in the single-
digit range while the central bank's reserve position is
expected to strengthen further. Regarding structural reforms,
the letter of intent develops further the authorities' strategy
for advancing key fiscal structural reforms, strengthening the
banking system, and moving ahead with reforms in the utilities
sector.
"The letter of intent also elaborates on the authorities'
strategy for sovereign debt restructuring. In particular, the
authorities outline the main elements of their approach aimed at
reaching a collaborative agreement with creditors that will
result in a sustainable debt for Argentina. The authorities will
work with the assistance of investment banks to establish a
timetable and process that will ensure meaningful negotiations
with all representative creditor groups. Toward this end, the
authorities intend to finalize shortly a decree that will give
full legal status to the appointment of investment banks."
CONTACT: INTERNATIONAL MONETARY FUND
700 19th Street, NW
Washington, D.C. 20431 USA
IMF EXTERNAL RELATIONS DEPARTMENT
Public Affairs: 202-623-7300 - Fax: 202-623-6278
Media Rela tions: 202-623-7100 - Fax: 202-623-6772
=============
B E R M U D A
=============
GLOBAL CROSSING: Ends 2003 With Minimal Debt
--------------------------------------------
Global Crossing (Nasdaq: GLBC) reported Wednesday its
preliminary financial results for the fourth quarter and year
ended December 31, 2003. In addition, the company announced
several key milestones in 2003 and offered an outlook for 2004.
"Today Global Crossing is a company with a clean balance sheet,
minimal debt, strong corporate governance and a seasoned
management team that will steer the company into a leadership
position within the telecommunications industry," said John
Legere, Global Crossing's chief executive officer. "We expect
these achievements, combined with the growth potential in the
markets we are pursuing, to position the company for a strong
future."
2003 Milestones
Global Crossing announced Wednesday that it reached several
significant milestones throughout 2003, including the completion
of its financial reorganization on December 9, 2003 after 22
months of operating under bankruptcy protection. Other
highlights include:
- Consummating a $250 million investment from Singapore
Technologies Telemedia for a 61.5 percent equity stake in the
company;
- Establishing a new board of directors, comprised of leaders
with distinguished backgrounds in industry and government;
- Completing one of the most extensive Network Security
Agreements ever with the U.S. Government, setting a new security
standard for the industry;
- Signing more than 4,000 new and renewal customer contracts in
2003 totaling $1 billion in revenue over the current terms of
the contracts, including agreements with Vonage and the UK's
Immigration and Nationality Directorate;
- Maintaining average network availability at 99.999 percent,
the highest industry standard, for the second year in a row;
- Growing IP traffic by more than 130 percent, from more than
29 Gbps to 68 Gbps; and
- Carrying a total of 18 billion minutes on its VoIP (Voice
over IP) platform, one of the largest in the world, up from 8
billion in 2002.
2003 Year-End Financial Results
Revenue
Global Crossing's results for 2003 principally reflect the
operations of the company prior to completion of its
restructuring. Results for the fourth quarter include 22 days of
operations following emergence from bankruptcy.
"Global Crossing was able to largely maintain the revenue base
by focusing on customer retention, rather than acquisition,
during our restructuring," noted Legere. "Now that we have
emerged, we expect to grow our business by both adding new
customers and enhancing services for existing customers."
For the year ended December 31, 2003, Global Crossing reported
total revenue of $2.932 billion, a six percent decrease from the
$3.116 billion reported for the prior year. Revenue for the year
was impacted by the company's extended period in bankruptcy as
well as continued pricing pressure in the marketplace. Total
revenue consisted of telecom services revenue of $2.763 billion
and Global Marine revenue of $169 million.
Of the total telecom services revenue reported for 2003,
commercial services accounted for 38 percent compared to 43
percent in 2002, carrier services for 61 percent compared to 55
percent in 2002, and consumer services for one percent compared
to two percent in 2002. The shift towards carrier services in
year-over-year business mix was due in part to carrier
customers' greater willingness to utilize services from
providers undergoing restructuring.
Of the commercial services revenue in 2003, 53 percent was
attributable to voice services compared to 54 percent in 2002,
and 47 percent was attributable to data services compared to 46
percent in 2002.
Of the carrier services revenue in 2003, 83 percent was
attributable to voice services compared to 80 percent in 2002,
and 17 percent was attributable to data services compared to 20
percent in 2002. While data volume grew throughout Global
Crossing's Chapter 11 proceedings, revenue was pressured by
price competition.
Cost Management
"We continued to make strides in controlling operating expenses
throughout 2003, while maintaining a high level of customer
satisfaction and network reliability," continued Legere.
"Moreover, we continued the implementation of our industry-
leading VoIP network, which we expect to carry more than 40
percent of our overall voice traffic by the end of 2004."
Cost of access declined six percent to $1.915 billion for 2003
(representing 69 percent of telecom services revenue), compared
to $2.047 billion for 2002 (representing 71 percent of telecom
services revenue). Consolidated third party maintenance costs
were $112 million in 2003, compared to $158 million in 2002.
Consolidated operating expenses for 2003 were $908 million,
compared to $1.208 billion in 2002. Telecom services operating
expenses were $741 million in 2003, compared to $967 million in
2002. Global Marine operating expenses were $167 million for
2003, compared to $241 million in 2002. Global Crossing's
operating expense reductions reflected a substantial decrease in
employee and facility-related expenses. In addition to cost
savings, these measures improved productivity and efficiency in
the operation of the company's network.
Earnings
Consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA) for 2003 were $12 million, compared to a
loss of $297 million for 2002. Global Marine EBITDA was $30
million, compared to $29 million in 2002. Telecom EBITDA for
2003 was a loss of $18 million, compared to a loss of $326
million in 2002. Net income in 2003 was $24.730 billion, which
included a net gain of $24.842 billion related to the
reorganization. This net reorganization gain in income resulted
from the accounting impact of recording the company's new debt
and equity structure, the write down of pre-petition liabilities
and deferred revenues from prior period Indefeasible Rights of
Use (IRU) sales, vendor settlements, restructuring costs,
retention plan costs and professional fees related to the
bankruptcy.
Pursuant to Regulation G, a reconciliation of EBITDA to the
company's net income for the relevant periods is included in the
attached financial statements.
Capital Expenditures
For 2003, cash capital expenditures totaled $152 million
compared to $281 million for 2002. With a core network that was
substantially completed in June 2001 and as the company's focus
has evolved from network construction to service capabilities,
capital expenditures in 2003 were comprised mostly of success-
based capital spending, which is spending that is tied directly
to revenue. This includes capital spending on edge equipment and
customer premise equipment.
Fourth Quarter 2003 Financial Results
Revenue
For the fourth quarter of 2003, total revenue was $719 million
compared to $765 million for the same period in 2002. The
decrease in total revenue was primarily attributable to the
company's delayed emergence from Chapter 11 and continued
pricing pressures resulting from a competitive market, partially
offset by growth in the company's carrier business segment.
Total revenue consisted of telecom services revenue of $679
million and Global Marine revenue of $40 million.
Of the total telecom services revenue reported for the fourth
quarter of 2003, 36 percent was attributable to commercial
services, 63 percent to carrier services, and one percent to
consumer services. The mix of voice and data was comparable to
that of the full year 2003.
Cost Management
For the fourth quarter of 2003, cost of access declined 12
percent to $471 million (representing 69 percent of telecom
services revenue) compared to $534 million (representing 75
percent of telecom services revenue) for the same period in 2002
as a result of the company's continued initiatives to reduce
access costs. Consolidated third party maintenance costs for the
fourth quarter were $27 million compared to $28 million in the
fourth quarter of 2002. Consolidated operating expenses for the
fourth quarter of 2003 were $208 million compared to $265
million for the same period in 2002. Telecom services operating
expenses declined 12 percent to $178 million, compared to $203
million in the same period of 2002, as a result of the company's
effort to streamline global operations and a one-time benefit
from a UK property tax rebate of $13 million, partially offset
by the hiring of additional salespeople. Global Marine's
operating expenses were $30 million, a 52 percent decline from
$62 million in 2002, resulting primarily from restructuring
efforts, which significantly reduced vessel costs, personnel and
overhead expenses between the two periods, as well as reduced
project costs.
Earnings
For the fourth quarter of 2003, EBITDA improved to $13 million
as compared to a loss of $62 million for the same period in
2002. Global Marine EBITDA was $13 million for the fourth
quarter of 2003 compared to a loss of $5 million for the same
period in 2002. Telecom EBITDA was break-even in the fourth
quarter of 2003 compared to a loss of $57 million for the same
period in 2002. Net income in the fourth quarter of 2003 was
$24.879 billion, which included $24.882 billion in
reorganization-related gains described above.
Capital Expenditures
For the fourth quarter of 2003, cash capital expenditures
totaled $33 million, compared to $91 million for the fourth
quarter of 2002, driven by the need to deploy success-based
capital to meet customer needs.
Key Notes to Evaluate Future Financial Performance
As a result of Global Crossing's emergence from bankruptcy,
certain factors impacted the comparability of results for the
periods prior to December 9, 2003 with results for periods after
that date.
While in bankruptcy, the company reported certain costs,
including vendor settlements, bonus and other retention plan
costs, restructuring costs, and fresh start adjustments as
reorganization items, below operating income in accordance with
bankruptcy accounting standards under U.S. Generally Accepted
Accounting Principles (GAAP). Some of these costs will no longer
exist in future periods, while others will continue to exist but
will directly impact operating income. In addition, upon
emergence from bankruptcy, Global Crossing adopted fresh start
accounting provisions, which required the company to adjust the
carrying value of its assets and liabilities to their estimated
fair value. The reorganization also resulted in a new debt and
equity structure as well as a significant reduction in ongoing
contractual commitments.
The principal factors impacting the comparability of pre-
emergence results with post-emergence results are as follows:
- Elimination of $8 billion in liabilities as a result of the
reorganization;
- Recapitalization of the business, which included the
elimination of $16 billion in common and preferred equity, and
$25 billion in accumulated losses as of the emergence date;
- Elimination of the majority of the $1.4 billion liability
representing deferred revenue from prior period IRU sales.
While a non-cash event, this will reduce future revenue and
EBITDA by about $20 million per quarter starting in the first
quarter of 2004;
- Substantial completion of the company's restructuring
resulting in elimination of most associated costs. Pre-
emergence, significant restructuring costs were recorded as
reorganization costs, where they did not impact EBITDA;
- One-time rebate on UK property taxes of $13 million recorded
in the fourth quarter of 2003; and
- Accrual of normal operating expenses such as incentive cash
compensation, which was recorded as reorganization costs prior
to emergence and are expected to be in the range of $8-12
million per quarter in 2004.
On December 9, 2003, the company issued employee stock options
of approximately 2.2 million shares. On March 8, 2004, the
company issued additional awards of approximately 1.2 million
shares of restricted stock units.
Upon emergence from bankruptcy, the company elected to adopt
fair value basis of accounting for stock and stock options under
SFAS No. 123 as opposed to the predecessor entity's policy of
the intrinsic method under APB No. 25. This will result in stock
compensation expense in 2004 and future periods that was not
present in historical periods. Stock compensation expense is
estimated to be $7 million to $8 million per quarter in 2004.
The following table demonstrates the impact that the above-
described items would have had on fourth quarter 2003 telecom
services EBITDA in order to provide a clearer view of the post-
emergence EBITDA exit rate and in considering 2004 performance.
($ in millions)
Fourth quarter 2003 EBITDA, as reported $0
Adjusted to reflect impact of:
- IRU deferred revenue (15)
- UK Property tax rebate (13)
- Incentive compensation (10)
Total before stock compensation (38)
- Stock compensation (non-cash) (7-8)
Total $(45-46)
2004 Outlook
Global Crossing offered the following 2004 outlook:
- The company is bringing to market an advanced suite of IP and
data products. These service offerings meet the requirements
for high performance IP data networking, VoIP, IP Video and
other mission-critical business applications for both enterprise
and carrier customers.
- Global Crossing is reformulating its marketing strategy to
promote aggressive customer acquisition. Specific target
markets include regional and multi-national enterprises, federal
government agencies, international and domestic carriers, ISP's
and wireless providers. The company's distribution system has
been realigned to target these customers using both direct and
indirect channels, including partnerships with systems
integrators to reach the large enterprise and government
segments.
- The company anticipates that its customer segmentation
strategy and ability to migrate customers to advanced IP
services will support a shift in the revenue mix towards higher
margin services and customers.
- Global Crossing's carrier business is an important part of
its heritage and is expected to remain key to its business going
forward throughout the execution of the company's segmentation
strategy. Further, the company anticipates that the carrier
market will enhance revenue and margin, as a result of increased
network utilization, which leads to greater economies of scale.
- Global Crossing's ability to provide voice services over a
network optimized for IP provides unit cost efficiencies that
drive higher commercial penetration.
- The company continues to pursue a number of key cost of
access initiatives including strategic purchasing agreements,
shifting of suppliers and network optimization. These
initiatives are expected to promote margin improvement.
In addition, Global Crossing continues to review its lines of
business and address volatile and low margin services,
particularly in the international long distance reseller market,
by tightening the terms for pricing and payment. Management
anticipates that these initiatives will improve cash flow, but
will reduce revenue for these services by approximately $75 to
$125 million annually.
For 2004, the company expects:
Telecom Services Guidance (in millions)
Revenue $2,550 - $2,700
EBITDA, excluding stock compensation expense (100 - 130)
EBITDA, including stock compensation expense (130 - 160)
Cash CAPEX 145 - 165
Finally, in an effort to further sharpen its strategic focus,
Global Crossing has retained Citigroup Global Markets Inc. as
its financial advisor to assist it in exploring strategic
alternatives regarding its Global Marine installation and
maintenance services business, including the potential sale of
that business. Any strategic transaction involving Global Marine
would require approval of Global Crossing's Board of Directors.
Global Marine expects maintenance revenue to decline in early
2004 due in large part to the expiration of a large maintenance
contract. Global Marine expects to see some recovery in
installation revenue in the second half of 2004 by applying its
acknowledged market leadership into new areas of marine-activity
beyond telecommunications cable engineering.
Financing and Liquidity
As of December 31, 2003, cash and cash equivalents were reported
at approximately $311 million. As a result of the restructuring,
total debt as December 31, 2003 was $200 million.
As disclosed in its filings with the Securities and Exchange
Commission in December 2003, Global Crossing will require up to
$100 million in additional financing to execute its business
plan through the end of 2004. The company is in active
discussions with financial institutions and is confident it will
be able to raise $100 million or more of new financing in 2004.
ABOUT GLOBAL CROSSING
Global Crossing (Nasdaq: GLBC) provides telecommunications
solutions over the world's first integrated global IP-based
network. Its core network connects more than 200 cities and 27
countries worldwide, and delivers services to more than 500
major cities, 50 countries and 5 continents around the globe.
The company's global sales and support model matches the network
footprint and, like the network, delivers a consistent customer
experience worldwide.
Global Crossing IP services are global in scale, linking the
world's enterprises, governments and carriers with customers,
employees and partners worldwide in a secure environment that is
ideally suited for IP-based business applications, allowing e-
commerce to thrive. The company offers a full range of managed
data and voice products including Global Crossing IP VPN
Service, Global Crossing Managed Services and Global Crossing
VoIP services, to more than 40 percent of the Fortune 500, as
well as 700 carriers, mobile operators and ISPs.
To see financial statements:
http://bankrupt.com/misc/Global_Crossing.txt
CONTACT GLOBAL CROSSING:
Press Contacts
Becky Yeamans
+ 1 973-937-0155
PR@globalcrossing.com
Tisha Kresler
+ 1 973-937-0146
PR@globalcrossing.com
Kendra Langlie
Latin America
+ 1 305-808-5912
LatAmPR@globalcrossing.com
Mish Desmidt
Europe
+ 44 (0) 7771-668438
EuropePR@globalcrossing.com
Analysts/Investors Contact
Mitch Burd
+1 800-836-0342
glbc@globalcrossing.com
GLOBAL CROSSING: Stock Falls Despite $25B Profit
------------------------------------------------
Shares of Global Crossing collapsed Wednesday right after it
posted a US$25 billion quarterly profit, says Reuters.
The stock fell more than 38% in heavy trade on Nasdaq as not a
penny of the reported quarterly profit came from the Company's
actual business. Instead, the entire benefit came from gains
realized as the Company exited Chapter 11 bankruptcy protection,
masking an operating loss from continuing operations.
"I would say the US$25 billion number itself is probably
meaningless," said Shing Yin, a director of telecoms research
and consulting firm RHK. "It really is just a number, it really
is just a result of accounting rules."
Though the profit outdid the 2002 gross domestic products of
Iceland, Jamaica and Mongolia combined, investors rushed for the
exits on doubts that the Company would be able to actually
achieve a profit on its own, or fund its operations to the point
of profitability.
"I've been skeptical for a while and remain skeptical now," said
Romeo Reyes, an analyst with Jefferies & Co., who said he
doubted Global Crossing's business could become profitable.
But in a conference call with analysts, Global Crossing Chief
Executive John Legere said that the Company was confident it
could soon raise the US$100 million in financing it is seeking.
He gave no time frame though.
He said Singapore Technologies Telemedia, which holds a 61.5%
stake in the Company and is controlled by the Singapore
government, would provide the funds this year if Global Crossing
could not raise the money on its own. But Reyes said the
Singapore Tech financing commitment was only oral and was not
written into any contract.
===========
B R A Z I L
===========
CFLCL: Responds to Notice Published by ANIMEC
---------------------------------------------
In response to the "Public Notice" ("Notice") published by the
National Association of Capital Market Investors ("ANIMEC"), the
company Companhia Forca e Luz Cataguazes-Leopoldina hereby
states:
As is widely known, all the amendments to the bylaws proposed to
the Extraordinary Shareholders' Meeting held on December 9, 2003
(" AGE") had been duly analyzed and deemed in compliance with
corporate law and public energy distribution regulations, by the
respective regulatory agencies: the Comissao de Valores
Mobiliarios - CVM (Brazilian Securities And Exchange Commission)
and the Agencia Nacional de Energia Eletrica - ANEEL (National
Electricity Regulatory Agency).
The arguments issued by ANIMEC is therefore impartial and has
been made with the sole intention of distorting public opinion,
given that the resolutions had been analyzed and deemed in
compliance by the CVM, which discredited the supposed losses
claimed by the minority shareholders in the complaint filed to
the aforementioned authority. It should also be noted that
capital reduction is a common transaction in the capital market,
and over 50 instances of this transaction involving publicly
traded companies, including those composing the BOVESPA index,
have been registered over the past few years.
In respect of the sale of the Small Hydroelectric Power Plants
("Power Plants"), it should be stressed that the sale was
approved by the board representatives of the following
shareholders currently engaged in legal proceedings against the
company, namely Alliant Energy Holdings do Brasil Ltda.,
Fondelec Essential Services Growth Fund, L.P. and The Latin
America Energy and Electricity Fund, L.P. The fact that the
Company made a profit in 2003 must have annoyed greatly ANIMEC
and the minority shareholders it represents, who are clearly
being led by the aforementioned shareholders engaged in legal
proceedings against the company, as it completely undermines the
legal argument that the Company cannot afford to the payout
dividends. Any market analyst who had analyzed the sale
impartially and comprehensively in the interests of the Company
and not from the point of view of a party involved in legal
proceedings, would recommend the sale in light of the profit
resulting therefrom. The R$80 million raised from the sale of
the Power Plants, plus the R$51.7 million debt transfer, both
demonstrate the company has the funds to pay out dividends,
which have already been deposited in court.
The company acted in compliance with the provisions of CVM
Instruction 358/2002, requiring the market being formed
immediately of any important facts which may influence decisions
taken by investors, by publishing the Notice announcing the
R$45.2 million profit resulting from the sale of the Power
Plants. The information is complete and opportune, in contrast
to the claims made by ANIMEC, and the financial information
requested by ANIMEC concerning the fourth quarter and
accordingly the 2003 financial year shall be provided within the
time period established by the Brazilian corporate law.
Lastly, there are minority shareholders who, alongside the
company, are legally defending the resolutions taken at the AGE,
these shareholders have been long-standing Company investors for
a number of decades, unlike those investors ANIMEC claims to
represent, which are nothing more than market speculators
looking for quick profits, even if this is to the detriment of
the company.
The Company therefore reiterates that all the resolutions
adopted at the AGE are legal and comply with corporate law and
the public electrical power service regulations. It also
reiterates that the Notice published by ANIMEC proves nothing
other than the notice in question, which was published in
several national publications at great cost (which is out of
line with standard procedure and cost a great deal more than
would be expected) is not the result of any serious analysis of
corporate law and capital market legislation, neither is it an
effective economic/financial examination of the Company's
financial situation.
The company further states that it has no knowledge of the
sources providing information to ANIMEC, as in contrast to
standard procedure, the hasty judgment handed down by ANIMEC was
made without any contact whatsoever with the Company.
To conclude, the company is still awaiting its appeals to be
analyzed and judged, and has great faith in the Courts of the
states of Rio de Janeiro and is confident that Truth and Justice
will prevail!
CONTACT: In Cataguases
Phone: +55 32 3429-6000
Fax: +55 32 3429-6480 / 3429-6317
In Rio de Janeiro
Phone: +55 21 2122-6900
Fax: +55 21 2122-6931
Web site: http://www.cataguazes.com.br
E-mail to: stockinfo@cataguazes.com.br
VASP: President Arrested For Alleged Tax Evasion
------------------------------------------------
VASP, Brazil's fourth largest airline, learned Tuesday that its
President, Wagner Canhedo, was arrested Monday night in Brasilia
on orders from a federal judge, reports EFE.
Federal Judge David Rocha Lima ordered Canhedo's arrest for
allegedly evading his fiscal obligations to the National Social
Security Institute.
Canhedo, 68, who faces a 90-day detention, has been accused of
deducting his employees' social security contributions and using
the money for himself, rather than forwarding those taxes to the
social security institute, amassing in the process a debt of
more than BRL100 million (some $35 million) with the entity.
In a statement released Tuesday, VASP said that the airline's
legal department is taking all possible measures to reverse the
judge's decision.
VASP has been experiencing a financial crisis for the last
decade. In recent years, the airline has lost domestic market
share and has suspended its international flights.
=========
C H I L E
=========
AES GENER: Parent Places 21.4% Stake on Local, Int'l. Markets
-------------------------------------------------------------
AES Gener, Chile's second biggest power generator, announced
Wednesday that its U.S.-based parent, AES Corp. (nyse: AES), is
offering to sell up to 21.4% stake in the unit on local and
international markets, relates Reuters.
Arlington, Virginia-based AES currently holds more than 98% of
Gener through a Chilean holding company Inversiones Cachagua
Limitada, which is offering to sell 1.092 billion ordinary
shares, or 19.2%, of Gener in Santiago and international
markets.
A majority of the shares are to be placed in Chile. The issue
price will be announced March 23, Gener said. A portion of these
will be auctioned at the Santiago bourse March 25. Currently,
less than 1% of Gener trades freely.
Deutsche Securities brokerage in Santiago is handling the offer
in Chile and Deutsche Bank Securities is the international
agent, says Reuters.
The placement is part of an ongoing debt overhaul. Gener wants
to prepay US$700 million in debt due in 2005 and 2006, including
local bonds and Yankee and convertible bonds issued in the U.S.,
in order to win more breathing space and to invest in new
projects.
AES GENER: Selling $300M, 10-Yr. Bonds To Help Settle Debt
----------------------------------------------------------
AES Gener was planning to sell US$300 million of 10-year bonds
on Thursday to help pay debt coming due in the next two years,
Bloomberg News reports, citing investors who were approached by
bankers managing the sale.
The bonds will yield between 3.7 percentage points and 4
percentage points above U.S. Treasuries of similar maturity,
said Antonio Siri, who helps manage US$600 million at insurer
BICE Vida Cia. de Seguros SA in Santiago, and Luis Aliste, who
helps manage US$1.2 billion at insurer Cia. de Seguros de Vida
Corp SA in Santiago.
The sale is the Gener's first since its ratings were cut to junk
in 2002 by Standard & Poor's and Moody's Investors Service. AES
Gener said last month that it would have Deutsche Bank
Securities Inc. sell the bonds in a private sale in
international markets.
TELEFONICA CTC: Gets Subtel's Report
------------------------------------
Compania de Telecomunicaciones de Chile S.A. (NYSE: CTC)
("Telef˘nica CTC Chile" or the "Company") announced that at
11:58 pm of March 5th, 2004, the Company was informed of the
Undersecretary of Telecommunications' (SUBTEL) counterproposal
and objections report, as part of the tariff setting process for
local telephony services. This process will conclude on May 5th,
2004 with the issuance of the final Decree for the May 2004-May
2009 period.
The Company revealed that the potential variations of the
proposed tariffs in the counterproposal and objections report
with respect to the current tariffs are as follows:
Proposed Tariffs
vs. Current Tariffs
Average Variation %
- Fixed Charge -18.9%
- Measured Local Service -38.8%
- Local Tranche (Mobile and Rural) -14.6%
- Complementary Services /10X numbers -4.6%
- Access Charge +9.3%
As a result of the previous, if the local telephony tariffs
proposed in the counterproposal and objections report of the
SUBTEL were applied starting on May 6, 2004, the Company
estimates that for the year 2004, local telephony revenues,
maintaining constant the other variables in the calculation of
revenues, would decrease 13.3%, equivalent to approximately
Ch,000 million, when compared to the estimated revenues for 2004
under the current tariff structure (Tariff Decree Nĝ187 of
1999). This estimate considers 8 months of effect of the Tariff
Decree starting in May 2004.
The Company has 5 days to request an expert panel, which has
until April 4, 2004 to issue their non-binding opinion. The
Authority, in turn, must submit the final decree to the Chilean
General Controller, no later than May 4th, 2004 for its
knowledge and release to the official gazette.
Compania de Telecomunicaciones de Chile S.A., the first South
American company to list shares on the New York Stock Exchange,
is the largest telecommunications enterprise in Chile, providing
local service, as well as domestic and international long
distance services throughout the country. Additionally, the
Company provides equipment marketing, data transmission, value-
added services and information systems services and operates a
nationwide cellular network.
CONTACT: TELEFONICA CTC CHILE
Sofia Chellew - Veronica Gaete
M.Jose Rodriguez - Florencia Acosta
Tel: 562-691-3867
Fax: 562-691-2392
E-mail addresses:
schelle@ctc.cl - vgaete@ctc.cl
mjrodri@ctc.cl - macosta@ctc.cl
THE GLOBAL CONSULTING GROUP
Kevin Kirkeby - Mariana Crespo
Tel: 646-284-9416
E-mail addresses:
kkirkeby@hfgcg.com
mcrespo@hfgcg.com
TELEFONICA CTC: S&P Places Rating on CreditWatch Negative
---------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BBB' rating on
Compania de Telecomunicaciones de Chile S.A. (CTC) on
CreditWatch with negative implications following the release of
a much harsher-than-expected local tariff reduction proposal by
the Chilean telecommunications regulatory authority, Subtel.
"The proposed tariff reduction, which was the result of the
scheduled five-year fixed telephony revision process for 2004-
2009, may be subject to changes before a final decree is issued
in early May," said Standard & Poor's credit analyst Ivana
Recalde. "Nevertheless, Standard & Poor's now expects that the
final results will lead to a significant reduction in CTC's
revenues and EBITDA."
Depending on Standard & Poor's assessment of CTC's ability to
mitigate the impact of the tariff re-setting, the ratings may be
affirmed at 'BBB' or lowered by one notch to 'BBB-'. The current
rating of 'BBB' incorporates the significant efficiencies
obtained by the company since 2002 and the improved financial
profile resulting from the substantial recent debt reduction (to
US$1.4 billion as of Dec. 31, 2003, from the US$2.5 billion peak
in 2000).
The Chilean regulatory authority (Subtel) proposed a reduction
in CTC's fixed line charges and measured local service tariffs
of about 19% and 39%, respectively. According to preliminary
calculations, this proposal could result in an annualized
revenues and EBITDA decline of about US$132 million. Standard &
Poor's also expects an additional EBITDA reduction of about
US$25 million as a result of a 26.5% decline in mobile access
charges determined by a previous decree already enacted in
February 2004.
CTC's recent financial improvement should help to partially
mitigate the unexpected decline in tariffs.
The fixed-tariff revision process has not yet been concluded.
The company is expected to ask for the designation of an expert
commission to discuss the different aspects of the Subtel study,
having up to April 4, 2004, to present a report with the
proposed modifications and appeal to the Subtel's commission.
Subtel should submit the final decree on May 4, 2004.
Although these steps may result in a gentler decline, Standard &
Poor's does not expect significant changes from Subtel's current
proposal. By comparison, Subtel's original proposal for a mobile
access charge reduction of 33% was appealed, and the final
result was a more moderate though still substantial decline of
26.5%. Standard & Poor's will evaluate the impact of the final
decree and mitigating factors to determine the appropriate
rating level.
CTC is the largest integrated telecom provider in Chile, with
about 2.4 million lines in service and 2.3 million mobile
subscribers as of Dec. 31, 2003.
ANALYSTS: Ivana Recalde, Buenos Aires (54) 114-891-2127
Marta Castelli, Buenos Aires (54) 114-891-2128
TELEFONICA CTC: Fitch Places Ratings on Rating Watch Negative
-------------------------------------------------------------
Fitch Ratings has placed Compania de Telecomunicaciones de Chile
S.A.'s (CTC or Telefonica CTC Chile) international scale foreign
and local currency unsecured debt ratings at 'BBB+' on Rating
Watch Negative.
This rating applies to approximately US$557 million in
outstanding securities, including CTC's 5.38% coupon Eurobonds
due 2004, 7.63% coupon Yankee bonds due 2006 and 8.38% coupon
Yankee bonds due 2006. Fitch has also placed CTC's national-
scale senior unsecured debt ratings at 'A+(Ch)' and national
scale short-term debt rating at 'F1+/A+' on Rating Watch
Negative.
The rating action reflects heightened regulatory risk following
the recent announcements related to CTC's local service tariff
resetting process. On March 5, 2004, Chilean telecommunications
regulatory agency Subtel proposed lowering CTC's local service
tariffs by an average of 19%, to become effective on May 5, 2004
for the 2004-2009 period. CTC's local service tariffs are
revised and adjusted every five years. Subtel's proposal is not
necessarily the final tariff framework that will be implemented
because CTC can appeal the proposal under the tariff resetting
process. The Rating Watch Negative status is likely to remain in
place until the final tariffs are implemented and their ultimate
impact on the credit quality of CTC can be assessed.
Fitch estimates that if implemented in its current form,
Subtel's proposed 19% decline in local service tariffs would
lower CTC's revenues by as much as 10% and EBITDA by 15%-20%.
Opportunities available to CTC to offset these declines through
cost cutting efforts and other measures may be limited because
the company has already implemented such measures over the past
few years. Pro forma the new tariffs, EBITDA/Interest during
2003 would have declined to approximately 5.0 times (x) from
6.3x and Debt/EBITDA would have increased to 2.7x from 2.2x at
year-end 2003. CTC's ratings had incorporated a satisfactory
outcome to the upcoming tariff resetting process, with small
expected increases in tariffs that would have allowed CTC to
maintain stable credit protection measures over the medium term.
Over the last few years, CTC's financial performance had
gradually improved due to the implementation and successful
execution of a turnaround plan put in place following the
detrimental regulatory tariff decree implemented in 1999. That
decree resulted in a reduction of EBITDA of more than 30% over
the following two years. The turnaround plan included
significant debt, cost, and capital expenditure reduction
effort. Since mid-1999, CTC had reduced debt levels to US$1.4
billion at December 31, 2003 from a peak of US$2.9 billion.
Labor reductions have reduced the workforce by almost half (to
under 5,000 employees) resulting in significant annual savings
while maintaining service quality. Limiting capital expenditure
levels to US$200 million-US$250 million annually versus
historical levels of US$600 million-US$650 million had further
improved free cash flow available for debt reduction. In
addition, divestitures of non-core business units generated cash
proceeds of close to US$400 million, which were used to pay down
debt.
Telefonica CTC's credit quality may also be impacted in the
future due to the acquisition of BellSouth's Chilean wireless
operations by the wireless division of Telefonica S.A. of Spain.
Telefonica CTC is 43.6% owned by Telefonica S.A. Telefonica CTC
currently has 2.3 million Chilean wireless subscribers while
BellSouth currently has 1.3 million Chilean subscribers.
CTC is the largest communications provider in Chile, with US$1.4
billion in revenues and US$643 million in EBITDA in 2003. CTC is
the largest local exchange operator with a market share of 75%,
the second largest wireless provider with a market share of 30%,
the second largest long distance provider with market shares of
41% in domestic long distance and 29% in international long
distance. CTC is 43.6% owned by Telefonica S.A. of Spain.
CONTACT: Guido Chamorro +1-312-368-5473, Chicago
Ivonne Ibanez +562 206-7171, Santiago
MEDIA RELATIONS: James Jockle +1-212-908-0547, New York
===============
H O N D U R A S
===============
HONDURAS: Seeks Full Cancellation of Debt From Paris Club
---------------------------------------------------------
Honduran President Ricardo Maduro announced Wednesday that the
government will seek 100% forgiveness of a US$1.6-billion debt
from the Paris Club of lending nations, according to a report
released by the Associated Press Worldstream.
The 19-member Paris Club is an informal group of creditor
nations that seeks solutions for payment difficulties of
indebted nations.
Maduro said negotiations were tentatively set for March 15-20.
The President is hopeful that just like it did with neighboring
Nicaragua's US$902-million debt, the Paris Club will also cancel
Honduras' debt.
Honduras' foreign debt stands at US$4.6 billion even after
earlier debt relief initiatives. The Paris Club has written off
US$1 billion of Honduran debt earlier, but Honduras still pays
US$109 million a year in debt service to its members.
The new effort follows an agreement on budget austerity that
Honduras signed in February with the International Monetary
Fund. That paved the way for US$2 billion in fresh financing
over the coming decade.
===========
M E X I C O
===========
AHMSA: Likely To Strike Debt Deal With Creditors Before Year-end
----------------------------------------------------------------
Javier Navarro, a lawyer with international law firm Baker &
McKenzie, announced that talks between Mexican steelmaker AHMSA
(Altos Hornos de Mexico) and foreign creditors are making
progress, relates Business News Americas.
"It is expected that an agreement will be reached before the end
of the year," Navarro, who represents one of the creditors, was
quoted in El Financiero as saying.
The Coahuila-state steelmaker has defaulted on roughly US$2
billion in debt payments and has been in bankruptcy protection
for more than four years.
Creditors include Citibank-Banamex and BBVA-Bancomer.
Earlier, Mexico's Attorney General, Rafael Macedo de la Concha,
said authorities had issued arrest warrants for AHMSA Chairman
Xavier Autrey and Chief Executive Alonso Ancira for "supposed
tax irregularities." Interpol assistance has been requested, de
la Concha added.
GRUPO MEXICO: SPCC to Maintain Investment Program
-------------------------------------------------
The possible acquisition of Minera Mexico by Southern Peru
Copper Corporation (SPCC) does not mean changes in SPCC's
investment program in Peru, Business News Americas reports,
citing President Oscar Gonzalez Rocha.
Both entities are copper mining companies held by Grupo Mexico.
Earlier, Grupo Mexico revealed a proposal to transfer 99%
holdings in Minera Mexico. If approved, Minera Mexico will come
under the control of Delaware-based SPCC, which also controls
the Peruvian branch of SPCC, local miner Los Tolmos and an
exploration company in Chile, said Gonzalez.
"This means that the taxes that SPCC (Peru) pays in our country
will not diminish nor the investments to complete the
modernization of the [Ilo] smelter," the SPCC president said.
In addition, SPCC (Peru) will not be responsible for or
intervene in Minera Mexico's debt of US$1.3 billion, which
Gonzalez believes could be paid off in three years, given
today's metals prices.
The inclusion of Minera Mexico in SPCC would allow important
synergies, better access to credit and lower the copper
company's risk, he said. The operation would create a company
with turnover of US$2 billion, up from the average US$800
million that SPCC manages today, said the executive.
A special SPCC committee formed to analyze the possible share
transfer is expected to decide this week the participation of
investment banks Goldman Sachs or Merrill Lynch as analysts in
the study and evaluation of Minera Mexico, said Gonzalez.
SPEIZMAN INDUSTRIES: Revises Agreements With Lonati, SouthTrust
---------------------------------------------------------------
Speizman Industries, Inc. (the "Company") (OTC Bulletin Board:
SPZN) announced Wednesday that Lonati, SpA, and its affiliated
companies, Santoni SpA, Tecnopea Srl and SRA Srl, have each
terminated their respective agreements with the Company due to
breaches of these agreements by the Company. In addition, Lonati
terminated its agreement to forbear with respect to the
collection of $4.3 million owed to it by the Company and
accelerated payment in full of this debt.
The Company also announced that, subsequent to these events, it
entered into a Distributorship and Forbearance Agreement with
Lonati pursuant to which Lonati agreed to allow the Company to
continue to serve as the exclusive distributor of Lonati sock-
knitting machines in the United States and Canada, and agreed to
forbear from enforcing any remedies with respect to the payment
of the $4.3 million owed by the Company to Lonati, until May 7,
2004, subject to certain terms and conditions set forth therein.
In consideration of this agreement by Lonati, the Company paid
Lonati $197,101 on March 8, 2004 and agreed to pay $196,221 on
April 1, 2004 against the Company's debt to Lonati. An event of
default under this new agreement with Lonati is the Company's
failure to enter into a new forbearance agreement with its
lender, for a period at least through May 7, 2004.
The Company also announced that it is negotiating new agreements
with Tecnopea Srl, Santoni SpA and SRA Srl, extending the
Company's exclusive right to distribute textile machines
manufactured by these companies through May 7, 2004.
Algon Capital, LLC has been retained by the special committee of
the Company's board of directors (comprised of two independent
directors) to advise it in evaluating the Company's strategic
and financial alternatives. Algon Capital is a specialized
investment banking firm that provides sophisticated financial
advisory services to debtors and creditors in complex and
challenging situations.
The Company also announced that SouthTrust Bank has agreed to
extend the Company's existing credit facility until May 7, 2004
to allow the Company time to consider Algon's recommendations
and review them with the Bank. In conjunction with the
extension, the Bank has indicated that the revised credit
facility will be a $9,000,000 revolving line of credit (with
availability subject to certain borrowing base calculations).
The Bank has indicated that it will no longer issue new letters
of credit on the Company's behalf.
Speizman Industries is a leader in the sale and distribution of
specialized industrial machinery, parts and equipment. The
Company acts as exclusive distributor in the United States,
Canada, and Mexico for leading Italian manufacturers of textile
equipment and is a leading distributor in the United States of
industrial laundry equipment representing several United States
manufacturers.
CONTACT: SPEIZMAN INDUSTRIES
Gail Gormly
1-704-559-5777
E-mail ggormly@speizman.com
Web site: www.speizman.com
UNEFON: Borrows Money from Inbursa, Banco Azteca
------------------------------------------------
Mexico's Grupo Financiero Inbursa SA (GFINBUR.MX) and Banco
Azteca granted local wireless phone operator Unefon SA
(UNEFON.MX) a loan of MXN640 million, reports Dow Jones.
Unefon said Inbursa, controlled by telecommunications magnate
Carlos Slim, put up MXN500 million of the loan, and Banco
Azteca, a unit of specialty retailer Grupo Elektra SA (EKT)
provided MXN140 million.
The loan will pay fixed interest of 11.35% a year, and is
guaranteed by a Telefonos de Mexico (Telmex) trust fund. The
loan comes due in February 2006. Principal payments will begin
in November, and increase toward the end of the life of the
loan, Unefon said.
The resources obtained from the operation were used to pay off
debt in dollars, which was acquired at high interest rates,
Unefon said.
The firm stressed that the transaction, which shows that the
financial community has great confidence in Unefon, will allow
the Company to reduce its level of debt and, perhaps more
importantly, the modification of the Company's risk profile.
Unefon said that the operation allowed for a 50% debt reduction
in dollars. Before obtaining the credit, 100% of its debt
(US$100 million) was in dollars. The Company will continue to
carry out similar operations in order to convert liabilities in
dollars into pesos.
UNEFON: Honors Debt With TV Azteca
----------------------------------
TV Azteca, S.A. de C.V. (NYSE: TZA) (BMV: TVAZTCA), one of the
two largest producers of Spanish-language television programming
in the world, announced Wednesday that TV Azteca collected US$17
million in cash from Unefon under the credit support agreement
granted by the company in 2001 in favor of Unefon.
The company also noted that Unefon paid an additional US$12
million to a Mexican bank for a loan guaranteed by TV Azteca
under the support agreement, which releases TV Azteca from any
outstanding contingent liability related to the credit support
agreement.
As of December 31, 2003, the outstanding balance of TV Azteca's
credit support to Unefon was US$39 million. The amount was
composed of US$19 million paid by TV Azteca to Unefon creditors
in 2002, US$12 million of outstanding credit guarantees in favor
of Unefon with a Mexican bank, and US$8 million of interests and
guarantee fees.
The company noted that the remaining debt from Unefon to TV
Azteca under the credit agreement, after those payments from
Unefon announced Wednesday, is US$10 million.
"We are thrilled by Unefon's capacity to honor its financial
obligations earlier than we had anticipated. Today's [Wednesday]
amortization, added to Unefon's ongoing cash payments for
advertising, results in strong inflows for the company,"
commented Carlos Hesles, TV Azteca's Chief Financial Officer.
"The extra boost to our cash balance further strengthens our
plan for debt reduction and for cash distributions to
shareholders."
The company noted its plan for uses of cash entails reducing TV
Azteca's debt by approximately US$250 million, and making cash
distributions to shareholders of over US$500 million by 2008.
Company Profile
TV Azteca is one of the two largest producers of Spanish-
language television programming in the world, operating two
national television networks in Mexico, Azteca 13 and Azteca 7,
through more than 300 owned and operated stations across the
country. TV Azteca affiliates include Azteca America Network, a
new broadcast television network focused on the rapidly growing
US Hispanic market, and Todito.com, an Internet portal for North
American Spanish speakers.
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CSS: Banks on New President to Deal With Financial Issues
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Cesar Tribaldos, coordinator of Panamanian private enterprise
council Conep, suggested that the country's next president will
have to address the financial problems of state-run social
security agency CSS, which ran a US$50-million deficit last
year.
"We are in a position where if the situation is not addressed
the CSS will be left with no funds to pay local pensioners
within seven years," he added.
Citing CSS director general Rolando Villalaz, Business News
Americas reports that the agency's board has introduced new
cost-cutting measures designed to reverse the agency's ailing
financial condition.
Based on a report outlining the agencies finances between
October 2003 and January 2004, Villalaz highlighted that in his
short tenure as director general, efforts have been made to
diversify the agency's investment portfolio to maximize returns
and reduce bad debt levels.
Panama is scheduled to hold an election on May 2.
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PDVSA: CITGO Reports 2003 Income of $439M
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Luis Marin, CITGO Petroleum Corporation's President and CEO,
announced Wednesday that the company's fourth quarter net income
was $87 million and net income for the year ending December 31,
2003 was $439 million. In comparison, 2002 net income for the
fourth quarter was $42 million and for the year was $180
million.
Operating income (income before interest and income taxes) for
the fourth quarter of 2003 was $169 million, which includes
depreciation and amortization expense totaling $88 million. In
comparison, 2002 fourth quarter operating income was $80
million, which includes depreciation and amortization expense
totaling $78 million.
For the year ending December 31, 2003, operating income was $809
million, including depreciation and amortization expense
totaling $334 million. In comparison, for the year 2002 CITGOs
operating income was $350 million, including depreciation and
amortization expense totaling $299 million.
"Clearly, 2003 was a record year for CITGO both financially and
operationally," stated Luis Marin, President and CEO, "with
fourth quarter earnings also coming in higher relative to
previous years.
"As we have throughout the year, we took advantage of favorable
market conditions by increasing the production and sales of
refined products during the fourth quarter of 2003. In fact, we
set several production records across our refining system in
2003, including an overall utilization rate of 98 percent for
our fuels refineries, well above the industry average of 93
percent. Our safety and environmental performance was also
excellent in 2003, with safety setting a new record on an
already industry leading performance.
"Sales volumes for refined products were up for both the fourth
quarter as well as for the year 2003, led primarily by the
growth in diesel/#2 fuel oil sales. Our petrochemicals business
also ended the year strong, and the addition of a new xylene
unit at the Lake Charles refinery was a critical component of
that success. Through our asphalt subsidiary, CITGO Asphalt
Refining Company (CARCO), we continue to be a major player on
the East Coast, setting a new sales record in the fourth quarter
of 2003," Marin said.
Several market factors contributed to CITGO's strong 2003
performance. While fourth quarter industry sour crack spreads
were down from the third quarter, they were higher than the same
period in 2002, supported by strengthening gasoline demand,
lower refinery utilization, and low gasoline inventory levels.
More specifically, for 2003 the Gulf Coast crack spread was up
$1.31 over 2002, while the heavy sour crack spread was up $2.90
over the previous year. In the Midwest, the benchmark Bow River
crack spread increased $3.44 over 2002.
"In addition to our outstanding performance in 2003," continued
Marin, "we also completed several major capital projects,
including the first of two new gasoline hydrotreater units at
the Lake Charles refinery and a new ISAL (Isomerization
Alkylation) unit at the Lemont refinery. The ISAL technology,
developed by INTEVEP, the research and development branch of
Petr˘leos de Venezuela (PDVSA), is designed to remove sulfur
from gasoline. Both of these projects will help us make the
environmentally friendly gasoline that helps to improve air
quality in our marketing areas," Marin concluded.
CITGO's capital expenditures for the fourth quarter of 2003 were
$99-million compared with $234-million for the same quarter in
2002. Capital expenditures for the year 2003 were $414-million
compared with $712-million for the year 2002. The 2002 capital
expenditures include $220-million to rebuild the crude
distillation unit at the Lemont refinery.
About CITGO
CITGO Petroleum Corporation is a leading refining and marketing
company based in Tulsa, Okla., with approximately 4,000
employees and annual revenues of approximately $25 billion.
CITGO's ultimate parent is Petr˘leos de Venezuela, S.A. (PDVSA),
the national oil company of the Bolivarian Republic of Venezuela
and its largest supplier of crude oil.
CITGO operates fuels refineries in Lake Charles, La., Corpus
Christi, Texas, and Lemont, Ill., and asphalt refineries in
Paulsboro, NJ and Savannah, Ga. The company has long-term crude
oil supply agreements with PDVSA for a portion of the crude oil
requirements at these facilities. CITGO is also a 41-percent
participant in LYONDELL-CITGO Refining LP, a joint venture fuels
refinery located in Houston, Texas. CITGO's interests in these
refineries result in a total crude oil capacity of approximately
865,000 barrels per day.
Serving nearly 14,000 branded, independently owned and operated
retail locations, CITGO is also one of the five largest branded
gasoline suppliers within the United States.
CONTACT: CITGO Petroleum Corporation
P.O. Box 3758, Tulsa, OK 74102
Kate Robbins
Phone: 918-495-5764
Fax: 918-495-5269
E-mail: pubaffairs@citgo.com
Jennifer Hill
Phone: 918-495-4260
Fax: 918-495-5269
E-mail: pubaffairs@citgo.com
PDVSA: March Crude Oil Production Reaches 3.2 million b/d
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Petroleos de Venezuela SA President Ali Rodriguez said that
Venezuela increased crude oil production to 3.2 million barrels
a day in March, relates Dow Jones.
The figure surpasses estimates made by independent observers,
who say production is from 2.5 million b/d to 2.7 million b/d.
PDVSA struggled to recover oil production in 2003 after an oil
strike -from late 2002 to early 2003 - forced the Company to
shut production for nearly two months.
Rodriguez said PdVSA was producing 1.9 million b/d in its
western operations and 1.3 million b/d in its eastern
operations.
"All operations are completely normal," said Rodriguez, adding
that the Company will continue to increase production. Rodriguez
didn't specify if the production figure includes crude oil
products such as Orimulsion, Venezuela's trademark boiler fuel.
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